Mader Group Limited
Annual Report 2023

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Annual Report FINA NCIA L Y E A R 2023 M A DER GR OUP L IMI T ED A BN 51 159 3 40 397 Our Purpose We are dedicated to exceeding the expectations of our clients whilst providing superior technical services, a great workplace for our people and enhanced returns to our investors. Our Vision We will continue to grow and build our reputation as a world class provider of specialist technical services to the mining, energy and industrial sectors. With a business model built on passion, knowledge, and commitment, every decision is made with clients, employees and shareholders in mind. Our Values Backed by a 2,900+ strong team of dynamic and skilled individuals, our rapid growth is a testament to our core values. Central to all of our operations and decision-making, our core values drive us to achieve project objectives with outstanding customer service. t S A F E T Y i O N E T E A M E I N N O V A T E We make it our priority to ensure we do everything in our power to keep ourselves and those around us safe. We are stronger together. Comradery echoes loudly throughout our business. We learn together, we succeed together, we grow together. We think differently, we think bigger, we encourage new ideas and continuously adapt to industry evolution and change. i m p P E R F O R M F A M I LY/ F U N I N T E G R I T Y Driven to succeed, we are mechanically minded and solution focused. We take pride in our unique blend of passion, experience and industry know-how. Our culture is the foundation of our business. We continue to cultivate a nurturing, transparent and mutually respectful workplace. We hold ourselves to the highest standards, constantly keeping ourselves and each other accountable. Corporate Directory Directors Luke Mader Justin Nuich Patrick Conway Craig Burton Company Secretary Sarah Wilson Executive Chairman & Founder Executive Director & Chief Executive Officer Executive Director Non-Executive Director Registered Office and Principal Place of Business Hkew Alpha Building 2 George Wiencke Drive Perth Airport WA 6105 Share Registry Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000 Bankers Australia National Australia Bank 100 St Georges Tce Perth WA 6000 United States UMB Bank 1670 Broadway Denver CO 80202 Canada RBC Royal Bank 20 King St West Toronto M5H IC4 Auditors BDO Audit (WA) Pty Ltd Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth WA 6000 Stock Exchange Listing Australian Securities Exchange (ASX) ASX Code: MAD Company Websites www.madergroup.com.au www.madergroup.com www.maderenergy.com Contents About Mader Group Our Journey Highlights Made for Adventure Chairman’s Letter CEO's Report of Operations Made for Impact Made for our People Three Gears Directors’ Report Remuneration Report - Audited Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Audit Report Shareholder Information 2 3 4 6 8 10 18 22 24 26 34 42 45 46 47 48 49 79 80 85 MADER GROUP 2023 ANNUAL REPORT 1 About Mader Group Mader Group Limited is a leading global provider of specialist technical services across multiple industries. Powered by mechanically minded specialists, the diversified group is dedicated to helping customers enhance their operations through optimal fleet and plant performance. Since 2005, Mader Group Limited (referred to hereafter as Mader, Group or Company) has grown and adapted to provide a wide range of services, broadening its capacity and skillset to comprehensively service a global network of operations. Now servicing the mining, energy and industrial sectors, Mader strategically tailors ‘tap on, tap off’ technical services for more than 380 customers across 530+ locations worldwide. Expanding its service fleet to more than 1,100 vehicles in FY23, Mader keeps heavy mobile equipment and fixed infrastructure operating at peak performance through in-field technical support, major overhauls and repairs, preventative equipment maintenance, training of maintenance teams and a range of ancillary services. The Company’s unique business model provides both flexibility and stability to Mader and its customers alike. With 2,900+ passionate employees, Mader is able to mobilise highly specialised taskforces rapidly, or as required, across Australia, Asia, Africa and North America. Headquartered in Perth, Western Australia, Mader houses regional offices around the globe ensuring easy access to local support for its valued customers. Additionally, Mader has a world-class maintenance centre in Perth which provides offsite repairs, machine refurbishments and rebuilds, specialised tool hire and a component exchange program for operations throughout Australia. 2,900+ STAFF Operating Worldwide Specialist Maintenance Mobile Plant Equipment Fixed Infrastructure Transport & Logistics Energy Sector Power Generation & Marine 2 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Our Journey 2005 • Mader established by Executive Chairman, Luke Mader, providing mechanical services to mining clients in the Kimberley Region of Western Australia. • Mader International launched as the business expands globally to offer services in the major mining regions of Africa and South East Asia. 2011 2015 • Ancillary division launched to supply complementary services alongside core mechanical offerings. • Expanded to Queensland, based out of Mackay. • Employee headcount reached 500+. • Expanded to offer services in New South Wales and South Australia. • Started providing maintenance services for fixed infrastructure. 2017 2018 • Employee headcount reached 1,000+. Fort Collins, Colorado. • Expanded to the United States, based out of • Mader lists on the Australian Securities Exchange (ASX). • Mader Trade Upgrade Program launched to upskill Light Vehicle and Heavy Road Transport Mechanics to Heavy Duty Diesel Mechanics. 2019 2020 • Mader celebrated 15-year anniversary. Canonsburg, Pennsylvania. • Mader opened offices in Reno, Nevada and • Mader relocates from Mackay and opens an office in Brisbane, Queensland. • Justin Nuich appointed as Chief Executive Officer. • Mader entered Canada, based out of Edmonton, Alberta. • Organic start-up Mader Energy launched, based out of Fort Worth, Texas. 2021 2022 • Mader’s Perth workshop moved to a new, 3,400m2 maintenance facility. • Mader enhances two-way internal transfer program, Global Pathways. • Mader continues to expand into multiple industry verticals; rail, infrastructure maintenance, transport and logistics, energy, power generation and marine. 2023 • Employee headcount reaches 2,900+. MADER GROUP 2023 ANNUAL REPORT 3 3 Highlights " Mader’s operational strengths stem from a culture-led business model that has been refined over many years. It has empowered us to expand across multiple industry verticals, whilst providing a superior service to customers and unmatched career opportunities for our people.” Justin Nuich, Chief Executive Officer and Executive Director Awards Our People 2023 Finalist 30+ Specialist Best Candidate Experience Initiative Seek Talent Acquisition Recognition (STAR) Awards 2022 Winner Large Business of the Year RISE Business Awards, sponsored by Business News 2022 Winner Employer of Choice Australian Business Awards 2022 Excellence Workplace Flexibility Australian HR Awards Skillsets Supporting 380+ customers across 8 countries 2,900+ Employees Operating Worldwide 200+ Apprentices inducted throughout FY23 (in Trade Upgrade Program) 200+ Overseas Transfers Through unparalleled Global Pathways Program 18 Years' Strong Longstanding experience and mining excellence 44 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Our Operations 1,100+ Service Vehicles spanning four continents 530+ Locations Providing technical support across more than 530 locations worldwide 380+Customers Diverse network of customers across multiple industries 25+ Services Widening scope of specialist services delivered globally Industry Verticals Multiple Operated in worldwide, with a focus on optimising delivery in these markets 8 Countries Actively supporting customers across four continents Organic start-ups maturing Canada and Mader Energy experienced service and geographical expansion Our Financials $608.8M FY23 sales revenue 51% FY23 revenue growth $75.1M 56% FY23 EBITDA FY23 earnings* growth $38.5M FY23 NPAT 48% FY23 NPAT* growth 19.25 Basic earnings per share FY23 ~30% CAGR Compound Annual Growth Rate over 10 years Low Net Debt and significant financial flexibility *Growth rates calculated based on FY22 adjusted results. See page 17 for calculation. 5 Alberta Made for Adventure Mader provides specialist technical services across multiple industries throughout Australia, Asia, Africa and the Americas. Where We Work Operations in FY23 Australia W E S T E R N A U S T R A L I A Pilbara Kimberley Goldfields Mid West South West Perth S O U T H A U S T R A L I A Roxby Downs North Adelaide North America U S A Alabama Alaska Arizona Arkansas California Colorado Florida Georgia Idaho Illinois Q U E E N S L A N D N O R T H E R N T E R R I T O R Y Tanami Region Gulf of Carpentaria TA S M A N I A Zeehan Brisbane Bowen Basin Surat Basin Far North Queensland N E W S O U T H WA L E S Hunter Valley Gunnedah Basin Riverina Central and Far West Indiana Iowa Kentucky Louisiana Massachusetts Mississippi Missouri Montana Nebraska Nevada New Mexico North Carolina North Dakota Ohio Oklahoma Pennsylvania South Carolina Tennessee Texas Utah West Virginia Wyoming Nevada Asia Indonesia Mongolia C A N A D A Alberta British Columbia Philippines Ontaria Nunavut North West Territories Africa Zambia Oceania Papua New Guinea Christmas Island Global Pathways Connecting tradespeople with incredible opportunities across the world Unmatched global experiences across four continents 6 Alberta Texas Mongolia Papua New Guinea Queensland Western Australia Access to international talent pools and the best technicians worldwide 7 Chairman’s Letter Dear Shareholders, it’s hard to believe that after starting the business back in 2005 out of my ute in the Kimberley, that I would be here today, as Executive Chairman and presenting you Mader’s Annual Report for the financial year ended 30 June 2023 (FY23). Before I comment on the year, I’d first like to thank our outgoing Chairman, Mr. Jim Walker for his valuable contribution to the Group during his tenure. I have known Jim for more than 20 years, going back to when I was an apprentice myself - and I couldn’t think of anyone better suited to have guided the business during its initial years as a publicly listed company. Having surpassed market guidance twice, this year Mader reported $608.8 million in revenue, representing 51% year on year growth. Our disruptive business model continues to prove its effectiveness, penetrating several new markets and regions to deliver a ten-year compound annual growth rate of 30% - an exceptional result! Our achievements would not be possible without the hard work of our 2,900+ strong team, who work around the clock to service our global customer base. Although the days of greasy tools and sweaty engine change outs are behind me, I know the hard work it takes to get the job done, and for that, I am extremely grateful for the commitment our people put in daily. When I founded this business in 2005, it was my goal to build a workplace that people would jump out of bed for; one that promotes adventure, flexibility, leadership and above-all, good times with even better mates. I’m proud to say that I’ve seen this dream become a reality over the last 18 years. Luke Mader Executive Chairman & Founder 8 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au We’re actively expanding our primary culture programs, Global Pathways and Three Gears, which are essential in upholding our foundational values. Alongside 25 services in eight countries, every individual has their own Mader story, largely shaped by these programs, and rest assured – these are not boring stories to tell! As we continue to develop operations in North America, our entry into Canada in particular has been a standout for the financial year. Having been involved in the start up of North America back in 2018, it is fantastic to see the team I worked with at the time now taking their expertise across the border to Canada and making it a success. Whilst growth in North America has been exciting, our Australian business continues to be our largest contributor to the bottom line. With core mechanical services still experiencing high demand, we are diligently working to expand our ancillary offerings to support customers across multiple industries. For many years, market and geographical diversification have been key priorities, with business strength driven by our two-pronged objective of diversifying revenue streams and offering enhanced opportunities for our people. Backed by a proven business model, a solid balance sheet and the continued dedication of our incredible team, we are primed for another remarkable year of success and achievement. On behalf of the Board, I would like to extend my gratitude to our shareholders, customers and workforce for their ongoing support. We have a culture-led foundation, clear goals, and will continue to challenge ourselves, set new benchmarks, create unmatched opportunities for our people, and most importantly, have fun along the way. Yours sincerely, Luke Mader Executive Chairman & Founder MADER GROUP 2023 ANNUAL REPORT 9 CEO's Report of Operations As I reflect on the last financial year, I am immensely proud of the significant achievements of the Mader business; having successfully entered new markets and regions, all whilst continuing to expand our core service offering at a remarkable pace. Our feats would not be possible without our committed and hard-working team, and I would like to extend my heartfelt appreciation to our 2,900+ Mader technicians around the world. Over the past 18 years, we have established a unique culture- led, market-leading business that puts our people first. Our people are our biggest asset, and we will continue to invest in them, providing unmatched global career options and lifestyle experiences. Guided by a passionate leadership team with extensive industry experience, I believe that we are well-placed to navigate an ever-evolving landscape with confidence. Our commitment to continually diversifying service offerings, industries and geographies has unlocked new avenues for growth and strengthened our position as an employer of choice. Today, we are right where we want to be; leveraging our strong foothold in key markets around the globe and creating more opportunities for our people than ever before. As we embark on the next chapter of our journey, we remain focused on building a diversified global services business, which will deliver exceptional value to our stakeholders and shape a sustainable future for Mader. Safety is Paramount Our goal of ‘zero harm’ remains an absolute priority across all operations. We leave no stone unturned in our commitment to creating a safe and secure workplace for our employees, customers and stakeholders. Mr Justin Nuich Executive Director & Chief Executive Officer 10 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Throughout the year, Mader’s Total Recordable Injury Frequency Rate improved by 14% year on year, closing at 3.91 recordable injuries per million hours worked. Whilst this has been a definitive improvement, we will continue our unwavering commitment towards zero harm. During the financial year we continued to invest in preventative safety systems and technology-based solutions to enhance our safety culture at all levels and ensure our people are protected to the highest standard. Over the course of the year we have: Enhanced in-vehicle monitoring systems across the global fleet Tested fatigue and driver monitoring systems to mitigate vehicle-based risks Launched a series of proactive safety campaigns via the custom-built Mader mobile app Improved safety systems for efficient incident reporting and investigations Prioritised mental wellbeing and further developed internal management's understanding of mental health issues Streamlined digital communication with a focus on connectivity of our largely remote workforce The Financial Highlights Our ability to apply our proven service delivery model across multiple industry verticals and regions demonstrates the strength of our unique value proposition. The compounding effect of additional revenue streams operating in parallel, has enabled us to deliver the following financial results in FY23: • Revenue of $608.8m, a 51% increase from $402.1m in FY22 • EBITDA of $75.1 m delivered, up 56% from $48.0m* in FY22 • NPAT of $38.5m, up 48% from $26.0m* in FY22 • Net debt of $42.7m, equating to net leverage of 0.57x • Enhanced returns for shareholders with dividend growth of 45% In August 2022, Mader initially forecasted Group revenue of at least $510 million and NPAT of at least $33 million. Then, in October 2022, Mader upgraded that guidance to revenue of at least $550 million and NPAT of at least $35.5 million. Finally, in February 2023, Mader upgraded its financial guidance for a second time, to revenue of at least $580 million and NPAT of at least $37 million. To surpass guidance that was twice upgraded, delivering a 51% revenue growth year on year is an incredible achievement. This result underscores the Group’s ability to penetrate new and existing markets and deliver strong sustainable growth, all whilst remaining laser focused on safety and culture. * Adjusted to remove impact of sale of associate. Net leverage is calculated based on adjusted EBITDA. See page 17 for calculation of adjusted results. MADER GROUP 2023 ANNUAL REPORT 11 C E O ' S R E P O R T O F O P E R A T I O N S Operational Milestones Active in eight countries, we diligently expanded our operations geographically and diversified our service offerings to support over 380 customers across more than 530 locations - backed by a dedicated workforce of 2,900+ skilled technicians. This strategic approach has enabled us to achieve unprecedented growth and surpass all previous revenue records, marking FY23 as another exceptional year for the business. Australia Mader’s Australia segment performed strongly, generating $468.5 million in revenue, a 37% increase on FY22. The core mechanical business experienced strong growth, with customer demand for our specialist services sustained amid immense structural skilled labour shortages. Demand for our ancillary products increased, with industry verticals; infrastructure maintenance, rail, road transport, power generation and marine all experiencing growth year on year. North America Operations in North America gained momentum, reporting revenue of $132.2 million for the year ended 30 June 2023, increasing by 164% on the $50.0 million delivered in FY22 (146% increase on a constant currency basis). In the United States, the team focused on refining their service delivery model and ensuring sustainable growth as the business unit matures. Supporting new and existing customers, the team provided mechanical and electrical services across 32 states. Performance in Canada exceeded expectations with the team of 160+ technicians delivering support across five provinces and territories. Growth can be attributed to local recruitment efforts, and is further enhanced by Mader’s Global Pathways program, an unparalleled initiative that provides our skilled technicians with career and adventure opportunities 12 around the world. Central to our growth strategy, the outlook for Canada remains extremely positive, with significant further unmet demand in the region. Mader Energy provided support across the United States’ oil and gas sector, with the business unit providing natural gas compressor maintenance in multiple states. This organic start up remains focused on developing meaningful customer relationships and expanding its geographical service delivery across a range of shale formations. Rest of World (Africa and Asia) Our Rest of World segment delivered $8.1 million in revenue, a decrease of 20% vs the previous financial year. Specialist support and training was delivered to customers in five countries across Africa, Asia and Oceania. Despite the decline in revenue, the business unit is operating steadily and we remain focused on strategically increasing growth as appropriate opportunities and jurisdictions are identified. Global business highlights included: Surpassing all previous revenue records to report revenue of $608.8 million Further refining our service delivery model in diverse industries and regions Experiencing high customer demand in core mechanical and ancillary services globally Operations in Canada exceeding expectations MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Our People and Culture When defining what sets Mader apart from others, the answer is simple – it is our people. Our people, who are fueled by their dedication and passion to get the job done. Guided by our culture-led business model we have continued to invest in our two culture centered programs, Global Pathways and Three Gears. Creating global career and adventure opportunities, Mader’s unparalleled Global Pathways program expanded throughout the year, with the highly sought-after program offering short and long- term secondment opportunities in North America, Africa and Asia. Designed to provide the best of both work and play, many of our team kick-started their journey and immersed themselves in new cultures, challenged their skills and unlocked their full potential. Driven by a strong sense of adventure, our people and their families enjoyed multiple trips and activities created by our internal adventure division, Three Gears. Currently unmatched in the industry, Three Gears is a leading employee engagement program that connects our people with the business, its leadership and most importantly, each other. Crafting some of the best adventures, our team enjoyed canyoning, sailing, camping, hiking and much more. We look forward to further expanding this program across our global operations in the years to come. These two culture programs, endless training and development opportunities, and an extensive employee benefits program has earned Mader external recognition, winning Large Employer of the Year at the 2022 RISE Business Awards, Employer of Choice at the 2022 Australian Business Awards, an Excellence Awarde for Workplace Flexibility at the Australian HR Awards and most recently, named finalists for Best Candidate Experience Initiative at the 2023 SEEK Talent Acquisition Recognition (STAR) Awards. Investing in our people and their careers included: Fostering opportunity, growth, flexibility and job diversity for our people Creating overseas opportunities for 200+ employees via Global Pathways A multitude of activities and trips through adventure division Three Gears Being recognised nationally for our employee engagement programs MADER GROUP 2023 ANNUAL REPORT 13 "Mader continues to diligently address opportunities in new markets; ultimately leading to proactive solutions for customers and fulfilling careers for our people." Justin Nuich Executive Director & Chief Executive Officer 14 14 MADER GROUP 2021 ANNUAL REPORT madergroup.com.au Strengthening our Workforce Equipping the Community Having formally introduced our Tools for Life community engagement program last financial year, we are pleased to have made significant strides forward to support numerous volunteer, charity and sponsorship initiatives. The wide-ranging, global program is aimed at equipping individuals and communities with the tools they need to succeed. A highlight for the year was introducing our youth engagement sessions, ‘Introduction to Mining’ for local high school students at our Mader Maintenance Centre in Perth. Dedicated to empowering the next generation of technicians, we are proud to be encouraging the future generation by giving participants an exclusive insight into the endless opportunities available within the industry. Having raised funds for our charity partner, the Kijilamatambo Primary School in Solwezi, Zambia through the Strong Minds, Strong Mines boxing event, I’m pleased to say that copping a few hits to an already ordinary looking head was all for a good cause, with the business raising just over $26,000 to go towards improving the quality of education for the students. I really appreciate the team for getting behind me, and I will reveal more about this exciting project in the months to come! Our success at Mader is in part attributed to the guidance and vision provided by our exceptional Management team. Many of our leaders have been an integral part of the company since inception, showcasing their commitment to our values throughout their tenure. With their long-term experience, they possess valuable industry knowledge, strategic insight and a deep understanding of our unique business model and company culture, which they embed daily into operations. Their dedication and expertise sets an example for the entire business, and empowers our workforce to strive for excellence and continuously innovate. We believe that continuous training and development is key to building the most skilled technical specialists. To achieve this, we invest significantly into comprehensive training and leadership development for our people. Our innovative Team Leader program has proven to be instrumental in transforming our people into exceptional leaders. This program aims to empower our workforce with the skills and qualities necessary to become reliable mentors for our field teams. With a largely remote workforce, equipping our people with the confidence and abilities to lead and guide fosters a sense of comradery and mutual support on site. Further, our tailored Mader Trade Upgrade program provides an opportunity for light vehicle and heavy road transport mechanics to gain their heavy mobile plant qualifications, with FY23 seeing more than 60 apprentices graduate and join our existing service lines throughout Australia. The program also continues to address the skills shortage by feeding trained technicians into the resources industry. MADER GROUP 2023 ANNUAL REPORT 15 C E O ' S R E P O R T O F O P E R A T I O N S Markets and Growth It is an exciting time in the growth journey of Mader, and it’s a privilege to have been a part of the process to get here. The financial year saw the business continue to grow as a global, diversified provider of specialist technical services. We have doubled down on our focus to extend our service delivery across multiple industry verticals, operating with conviction across the resources, energy, infrastructure maintenance, transport and logistics, and power generation and marine sectors. Through service diversification, we can deliver top-tier support across a range of markets and regions and introduce new revenue streams to the Group. Key to driving future growth, and ensuring sustainability of the business, diversified operations will create compounding returns for our shareholders, with our long-term historical growth rate of around 30% year on year expected to continue into FY24 and beyond. Central to our diversification strategy is geographical expansion across North America. Having established strong foundations in Canada for FY23, we look forward to further growth as we expand our reach across further provinces and territories, and venture into various commodities. Demand across the Canadian market remains largely unfulfilled, presenting a significant opportunity for the business, especially given the skilled labour shortages in the region. Our business model has been well-received to date and has bolstered our confidence in the growth prospects available within Canada. Operations in the United States continue to evolve as the company matures. We remain focused on expanding our service offerings and volume of labor to existing customers, whilst attracting new customers and advancing our market share beyond the 32 States we are currently working in. Organic start up, Mader Energy will continue its dedication to delivering field maintenance across a number of large shale formations whilst exploring further opportunities in the energy industry. In the pursuit of building a large, resilient and diversified global services provider, Mader has conducted research into new and emerging markets to assess the suitability of Mader's business model. We will continue to do this, exploring the business model’s viability in penetrating large addressable markets, some of which are directly relevant to our existing operations, and others further removed. 16 "When defining what sets Mader apart from others, the answer is simple – it is our people. Our people, who are fueled by their dedication and passion to get the job done." Justin Nuich Executive Director & Chief Executive Officer A Bright Future Today, if we circled the globe, you would find someone proudly wearing a Mader shirt on four continents. From the snow in North America, tropics in Asia or the Outback of Australia – our dedicated team will be there. Concluding another successful financial year, full of new records, I’d like to again thank our people for their passion for delivering a superior service. Our people are more than just employees to us; they are individuals who are empowered to shape their own journey within and beyond the workplace. Without their driving force and spirit of adventure, our achievements would not be possible. We remain committed to achieving our vision of becoming a diversified, global services business – chosen by our people, selected by customers and backed by investors. Looking ahead we embrace the bright future that awaits us, confident in our abilities to seize opportunities, disrupt markets and provide a culture-led workplace worthy of our people. Yours sincerely, Justin Nuich Chief Executive Officer & Executive Director *During FY22, the Group disposed of its investment in Western Plant Hire Limited. Therefore, the prior corresponding periods reported results have been adjusted for this one off occurrence as follows: A$'000 Reported Results Less Sale of Associate Adjusted Results NPAT 27,945 (1,939) 26,006 EBIT EBITDA 41,832 (2,921) 38,911 50,885 (2,921) 47,964 MADER GROUP 2023 ANNUAL REPORT 17 Made for Impact Community Engagement Some highlights this year included: • Participating in the 2022 MACA Cancer 200: Ride for Research and raising more than $75,000 for cancer research at the Harry Perkins Institute. • Mader's CEO, Justin Nuich lacing up for the Strong Minds, Strong Mines boxing event, with over $26,000 raised for charity partner, the Kijilamatambo School in Solwezi, Zambia. • Sponsoring the 2022 Happiness Gala as a Gold Sponsor, helping to create a positive impact for men’s mental health. 18 • Getting involved in the local community in Queensland and sponsoring the Mount Isa Rodeo, and Hunter Valley Charity Golf Day to raise funds for the Westpac Rescue Helicopter. • Providing sponsorship for the Heart Warrior Open, an annual fundraising golf tournament held in Phoenix, Arizona in support of the Phoenix Children's Hospital. “FY23 marked Mader’s seventh year participating in the Cancer 200: Ride for Research. We’re incredibly grateful for their support, and for the valuable funds they have contributed to lifesaving cancer research.” Steve Currie, Corporate Partnerships Manager (Harry Perkins Institute of Medical Research) 19 Made for Impact Tools for Life Our Tools for Life Program aims to equip individuals and communities with the tools they need to build a better future and succeed in life. Consisting of a series of volunteer, charity and sponsorship initiatives, this program recognises the opportunity the mining sector has to improve socio-economic development. With a strong focus on youth, education and support to remote areas and disadvantaged groups, our program aims to empower communities, improve social dynamics and lessen inequality across the globe. 20 “At Mader, we believe in showcasing the realities of being a technician and offering students an exclusive chance to gain insight into the rewarding aspects of a career in the mining sector.” Charlotte Wagner, General Manager - HR & Training (Mader Group) Hero Project Unlocking Youth Potential in Mining • Intro to Mining sessions were held at the Mader Maintenance Centre in Perth for students in year 10, 11 and 12 from local high schools. • Sessions were led by expert Mader personnel and guest speakers relevant to the industry. • Students were given a facility tour, and learned about the various equipment that is serviced in the state-of-the-art workshop, before gaining practical exposure on a CAT 3196 core engine. 21 Made for our People The driving force behind our purpose as an organisation. 22 22 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au MADER GROUP 2023 ANNUAL REPORT 23 23 THREE GEARS Our adventure division, Three Gears is all about creating epic adventures with a difference! Kicking into gear, our team experienced heart-pumping experiences, like abseiling, hiking and mountain biking, mixed with chilled-out moments of BBQ’s, ocean swims and breath-taking sunsets! 24 2424 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au MADER GROUP 2023 ANNUAL REPORT madergroup.com.au “Our mantra is simple. We bring people together, challenge theIR limitS and have fun whilst doing so.” Ben Nash, General Manager - Culture (Mader Group) 15,780KM Biked around islands 2,034 Snags consumed 845 Flights in a helicopter 36,400KM Hiked in picturesque locations 2,375KM Traversed through canyons MADER GROUP 2023 ANNUAL REPORT MADER GROUP 2023 ANNUAL REPORT 25 25 25 Directors' Report The Directors submit their report with the financial report on the consolidated entity consisting of Mader Group Limited (Mader) and the entities it controlled (Group) at the end of, or during, the year ended 30 June 2023 (FY23). Directors The following persons were directors of the Company (the Directors) at any time during the whole of the financial year and up to the date of this report, unless otherwise stated. Director Name Position Luke Mader Executive Chairman & Founder - Appointed Executive Chairman from Executive Director, effective 21 April 2023 Justin Nuich Executive Director & Chief Executive Officer (CEO) Patrick Conway Executive Director Craig Burton Non-Executive Director Jim Walker Non-Executive Chairman - Resigned effective 21 April 2023 LUKE MADER EXECUTIVE CHAIRMAN JUSTIN NUICH CHIEF EXECUTIVE OFFICER PATRICK CONWAY EXECUTIVE DIRECTOR CRAIG BURTON NON-EXECUTIVE DIRECTOR Principal Activities The principal activities of Mader during the financial year was for the provision of specialist technical services in the mining, energy and industrial sectors around the globe. The services provided include in-field technical support, major overhauls and repairs, preventative equipment maintenance, training of maintenance teams, and a range of ancillary services. 26 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Overview and Financial Results Mader generated revenue of $608.8 million, an increase of 51% versus the prior year. Relative to the increase in demand for Mader’s services across Australia, revenue increased by 37% to $468.5 million. The North America market generated $132.2 million in revenue, up 164% in comparison to the prior year of $50.0 million. Mader’s Rest of World segment delivered services in Africa, Asia and Oceania, with revenue decreasing 20% to $8.1 million down from $10.1 million the prior year. Similarly, the Group’s EBITDA grew 48% to $75.1 million in comparison with the prior year. EBITDA for the Australian market was $57.0 million, an increase of 42% as opposed to the prior year of $40.1 million. In North America, EBITDA grew to $23.2 million (up 131%) which was a result of the growth in revenue. The Rest of World market contributed $1.1 million to the Group’s EBITDA decreasing 47% compared to the prior year. As at 30 June 2023, Mader maintained its strong liquidity position with net cash inflows from operations for the year of $41.1 million (2022: $35.4 million). Cash outflows from investing activities of $47.3 million is largely due to the expansion of Mader's fleet of service vehicles. The Group’s net debt position as at 30 June 2023 was $42.7 million (2022: $26.7 million). Dividends On 21 August 2023, the Company declared a final fully franked dividend of 3.4 cents per share, taking total FY23 dividends to 5.8 cents per share fully franked, an increase of 45% from FY22. The record date is 20 September 2023 with a payment date of 4 October 2023. A summary of the dividends that have been paid or declared during or in relation to the financial year is set out below: Dividend Type Final FY22 Fully Franked Interim FY23 Fully Franked Final FY23 Fully Franked Dividend Paid Total Value Payment Date 2.0 cents per share 2.4 cents per share 3.4 cents per share $4.0m $4.8m $6.8m 27 September 2022 6 April 2023 4 October 2023 MADER GROUP 2023 ANNUAL REPORT 27 D I R E C T O R S ' R E P O R T Operational Performance Australia North America Australia continues to be the strongest contributor to the Group’s revenue base, delivering $468.5 million for the financial year ended 30 June 2023. The 37% increase is impressive, and a record for the segment as we continue to scale operations through service diversification and geographic expansion. A tight labour market, caused by a structural skills shortage in Australia saw sustained demand for both core mechanical and ancillary products across multiple industry verticals. Having been commissioned in the first quarter of the financial year, our custom-built Mader Maintenance Centre in Perth operated to nameplate capacity, completing a number of major offsite rebuilds and repairs for tier one mining customers. Experiencing high customer demand, the 3,400m2 workshop has a solid forward order book and will continue to expand into FY24 and beyond. Over FY23, more than 60 heavy-duty technicians completed the tailored Mader Trade Upgrade Program, effectively joining our existing teams out in the field across Australia. Since the program’s inception in 2018, more than 200 dual-trade technicians have graduated with their Mobile Plant Trade Certificates via programs in Western Australia and Queensland. Operations in North America delivered revenue of $132.2 million for the year ended 30 June 2023, up 164% on the $50.0 million delivered in FY22 (146% increase on a constant currency basis). In the United States, our team supported a number of customers across 32 states, increasing their volume of delivery for both mechanical and electrical services. Currently based in Edmonton, Alberta and with a second operational office opening in Calgary in early FY24, our new, organic start up in Canada has exceeded expectations. Delivering incredible revenue growth, demand in the region has been unprecedented, with our team deployed throughout five provinces and territories; amongst key mineral producing regions. Mader Energy was introduced in the previous financial year to target the gas compression industry across the United States. Based in Fort Worth, Texas, the business unit has established itself in the new sector and will continue to focus on diversifying its customer base across a variety of shale formations. Rest of World (Africa and Asia) In FY23, Rest of World operations generated $8.1 million revenue, down 20% from the prior year, yet maintained support and advisory services across Asia, Africa, and Oceania. In Asia, we provided maintenance support in Indonesia, Mongolia and Philippines and in Oceania, Papua New Guinea. In Africa, we completed technical advisory services in Zambia. For FY24, we anticipate growth through strategic planning, local partnerships, and business development. 28 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Significant Changes in the State of Affairs There have been no significant changes in the state of affairs of the Group that occurred during the financial year not otherwise disclosed in this report or the financial statements. Future Developments Mader is well positioned to address growth opportunities and strong commodity markets as they present, with a dedicated focus on diversification to mitigate macro market risks and enhance earnings potential. The Group’s growth pillars seek to improve the strength of its revenue base, with a dedicated focus on service line, geographic and sector diversification to effectively improve profit margins across existing and emerging markets. The Board is confident that Mader’s leading market position will enable the business to continue to grow through the ongoing attraction of high quality and suitably skilled people and the penetration of new and existing addressable markets. Mader’s revenue growth is predominantly driven by three factors: • Increase in demand in regions where Mader already operates (both existing and new customers). Mader believes significant revenue growth potential remains in all regions in which Mader currently operates; • The continued diversification and scaling of supplementary services in established regions, such as Mader’s ancillary services and infrastructure maintenance. These services are complementary and add value to Mader’s core capabilities in mechanical maintenance; and • Sector and geographic diversification through expansion to new addressable markets that suit Mader’s business model, skillsets and/or abilities. Mader's economic performance and future prospects are subject to a number of risks which may impact its business and which include the Group’s ability to maintain its culture; maintaining quality of work and delivery; occupational health, safety and environment; potential downturn in the resources industry; loss of key personnel; management of growth; ability to win new work; the Group’s large casual workforce; changes to industrial relations policy or labour laws; reliance on key customers and projects; foreign operations; increase in labour costs; increased competition; labour shortages; decline in the trend towards outsourcing maintenance activities; customer pricing risk, and capital requirements for growth. Events Subsequent to the End of the Financial Year Apart from the Company declaring a dividend as set out above, there have been no other matters or circumstances that have arisen since 30 June 2023 that has significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. Environmental Regulation and Performance The operations of the Group are subject to various environmental regulations in the countries in which Mader operates. The Directors are not aware of any material breaches of environmental regulations during the year or as at the date of this report. The Group has met all of its reporting requirements under the relevant legislation during the year. MADER GROUP 2023 ANNUAL REPORT 29 29 D I R E C T O R S ' R E P O R T Information on current and prior Directors LUKE MADER MAICD JUSTIN NUICH MBA, GRAD DIP MAINTENANCE PATRICK CONWAY BBUS, CPA, GACG MANAGEMENT Experience and expertise: Justin has over 20 years’ experience in the mining and energy industries in Australia and globally. Currently Mader's Executive Director and CEO, Justin is well versed with the business having sat on the Board since January 2019. He formerly held senior roles with Fortescue Metals Group Limited (ASX: FMG), Mineral Resources Limited (ASX: MIN) and BHP Group Ltd (ASX: BHP). Experience and expertise: Patrick has over 13 years’ experience in the mining and mining services industries in Australia and globally. Patrick has been with the Company for over 9 years and has previously held roles as CEO and CFO. He currently plays a pivotal role in influencing the Group’s strategic direction as the Director Emerging Business. Directorships held in other listed entities Directorships held in other listed entities • None • None Former directorships held in listed companies in the last three years Former directorships held in listed companies in the last three years • None Special responsibilities • Chair of the Audit and Risk Committee • Member of the Nomination and Remuneration Committee Interest in securities • 113,824 Ordinary Shares • None Special responsibilities • Member of the Audit and Risk Committee • Member of the Nomination and Remuneration Committee Interest in securities • 191,081 Ordinary Shares • 2,250,000 Performance Rights, on the terms and conditions as set out in the Notice of Meeting dated 7 September 2021. • 1,000,000 Share Appreciation Rights, on the terms and conditions as set out in the Notice of Meeting dated 7 September 2021. Experience and expertise: Founder of Mader, Luke is trade qualified with 25 years’ experience in the mining services industry. Luke leads Mader’s strategic growth and development and has built Mader into a leading global provider of specialist technical services across multiple industries. Luke formerly completed a mechanical apprenticeship for an Original Equipment Manufacturer (OEM) before entering into a marketing role and then identifying an underserviced niche in the industry. Directorships held in other listed entities • None Former directorships held in listed companies in the last three years • None Special responsibilities • Member of the Audit and Risk Committee • Member of the Nomination and Remuneration Committee Interest in securities • 113,697,095 Ordinary Shares 30 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au CRAIG BURTON BJURIS, LLB, MAICD Experience and expertise: Craig is a venture capital investor in emerging projects and businesses. He has a track record of providing financing backing and strategic advice to successful management teams and start-up entrepreneurs. Directorships held in other listed entities • Grand Gulf Energy Limited from 16 September 2013 to current Former directorships held in listed companies in the last three years • Cradle Resources Limited from 5 March 2019 to 12 October 2021 Special responsibilities • Member of the Audit and Risk Committee • Chair of the Nomination and Remuneration Committee Interest in securities • 39,000,000 Ordinary Shares JIM WALKER GAICD, FAIM RESIGNED 21 APRIL 2023 Experience and expertise: Jim has over 45 years’ experience in the resources sector. He was the former Managing Director of WesTrac and a Director of Seven Group Holdings and National Hire Group. Jim was formerly the Non-Executive Chairman of Macmahon Holdings Ltd (ASX: MAH) having been a member of the Macmahon board since 2013. Jim is currently Chairman of Austin Engineering Ltd (ASX: ANG), State Training Board (WA) and Motor Museum of WA. Jim is a Non-Executive Director of M G Kailis Pty Ltd. Jim is a member of the RAC Council, Chair of RACWA Holdings Pty Ltd, RAC Insurance Pty Ltd and RAC Finance Ltd. Directorships held in other listed entities • Austin Engineering Limited from 8 July 2016 to current Former directorships held in listed companies in the last three years • Australian Potash Limited from 15 August 2018 to 15 December 2021 • Macmahon Holdings Limited from 11 October 2013 to 27 June 2019 • MLG Oz Limited from 21 January 2021 to 21 April 2023 MADER GROUP 2023 ANNUAL REPORT 31 3232 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Directors’ meetings The number of meetings of the Company’s Board of Directors and of each Board committee held during the year ended 30 June 2023 and the number of meetings attended by each Director were as follows: Director’s Meeting Audit and Risk Committee Nomination and Remuneration Committee Eligible to attend Attended Eligible to attend Attended Eligible to attend Attended Luke Mader Justin Nuich Patrick Conway Craig Burton Jim Walker1 7 7 7 7 6 1 Resigned as Chairman, effective 21 April 2023. 6 7 7 7 6 Company Secretary 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 2 2 2 2 1 SARAH WILSON APPOINTED 23 AUGUST 2022 Sarah is an experienced company secretary with more than 10 years’ experience in governance and compliance. She is an Executive Director of national corporate advisory firm Source Governance, and is currently company secretary to a number of ASX listed companies with a strong focus on resources. SHANNON COATES APPOINTED 6 NOVEMBER 2018, RESIGNED 25 JULY 2023 Shannon is a qualified lawyer, Chartered Secretary and graduate of the AICD’s Company Directors course. She has more than 25 years’ experience in corporate law and compliance, is an Executive Director of national corporate advisory firm Emerson CoSec, and is currently company secretary to a number of ASX listed companies with a strong focus on resources. MADER GROUP 2023 ANNUAL REPORT 33 Remuneration Report - Audited Overview The Directors of Mader Group Limited present the Remuneration Report (the Report) for the Company and its controlled entities for the year ended 30 June 2023. This Report forms part of the Directors’ Report and has been audited in accordance with section 300A of the Corporations Act 2001. The Report details the remuneration arrangements for Mader's Key Management Personnel (KMP) being: • Non-Executive Directors • Executive Directors and Senior Executives (collectively the Executives) KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the major activities of the Group and the Company. The table below outlines the KMP of the Company and their movements during the financial year: Name Luke Mader Justin Nuich Position Term as KMP Executive Chairman & Founder Appointed Executive Chairman 21 April 2023 Executive Director & Chief Executive Officer Full financial year Patrick Conway Executive Director Craig Burton John Greville Paul Hegarty Jim Walker Non-Executive Director Chief Operating Officer Chief Financial Officer Non-Executive Chairman Full financial year Full financial year Full financial year Full financial year Resigned 21 April 2023 Executive Remuneration How we determine executive remuneration policies and structures Four principles guide our decisions about executive remuneration at Mader: • Fairness: provide a fair level of reward to all employees; • Transparency: build a culture of achievement by transparent links between reward and performance; • Alignment: promote mutually beneficial outcomes by aligning employee, customer, shareholder interests; and • Mader Culture: drive leadership performance and behaviours that create a culture that promotes safety, peformance, diversity and employee satisfaction. How remuneration is governed Mader has established a Nomination and Remuneration Committee (the Committee) to assist the Board in fulfilling its corporate governance responsibilities. The Committee provides advice, recommendations and assistance to the Directors with respect to: • Remuneration policies for Non-Executive Directors; • Remuneration policies for Executive Directors; • Remuneration policies for Senior Executives; • Equity participation; • Human resources policies; and • Other matters referred to the Committee by the Board. 3 4 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au The Committee presently consists of Messrs Craig Burton, Justin Nuich, Luke Mader and Patrick Conway. Mr Burton acts as the Chairman of the Committee. The Committee may, when it considers necessary or appropriate, obtain advice from external consultants or specialists in relation to remuneration related matters at the Company’s expense. During the financial year, the Company did not engage any such advisors. Elements of executive remuneration Fixed remuneration Executive fixed remuneration is competitively structured and may include cash, superannuation and other non-financial benefits. Non-financial benefits generally consist of items to enable the effective discharge of the executive’s duties and may include the provision of motor vehicles, mobile phones and computers. Fixed remuneration is designed to reward the Executive for their relevant skills, experience and qualifications with reference to their role. Variable remuneration - short-term incentives (STI) STIs currently take the form of a cash bonus which is paid to Executives following the end of the financial year. The Committee is responsible for determining the achievement of the targets and whether a bonus amount is paid. The Committee will consider the Executive’s performance and contributions in making their determination. Features of the STI plan are set out below. Feature Description Maximum opportunity Executives can earn a pre-determined amount, which is agreed upon at the commencement of each financial year. Performance metrics The STI metrics align with the Group’s strategic targets as follows: • Economic profit is a core component and aligns to growth in shareholder’s wealth • Attract and retain qualified, experienced and high calibre executives rewarding long term commitment to the Group • Reward performance and achievement of the Group’s strategic targets Metric Target Weighting Reason for selection Compounding annual revenue growth and minimum NPAT threshold Total recordable injury frequency rate (TRIFR) Labour retention rate Not less than 25% p.a with NPAT target agreed by the board each financial year. 50% Reflects improvements in both revenue and cost control <4.5 incidents per million hours worked Achieving appropriate labour turnover rate as set by the Board considering labour market conditions 30% 20% Our people operating safely both in our and our client’s environments is paramount Staff retention is core to maintaining a safe, well trained workforce MADER GROUP 2023 ANNUAL REPORT 35 R E M U N E R A T I O N R E P O R T - A U D I T E D Variable remuneration - long-term incentives (LTI) LTIs currently take the form of an equity incentive plan for eligible participants. The LTI offered to Executives forms a key part of their remuneration and assists to align their interest with the long term interest of shareholders. The purpose of the LTI is to reward Executives for attaining results over a long, measurable period and also as a retention mechanism. In accordance with the terms of the plan, as approved by the shareholders at the 2021 annual general meeting, rights may be offered by the Board to Executives and are an entitlement to receive ordinary shares in the Company upon satisfaction of applicable performance conditions. The Committee is responsible for determining the achievement of the targets and whether the performance hurdles have been satisfied. Features of the LTI plan are set out below. Component Description Types of securities The plan provides the Company with the ability to grant Performance Rights or Share Appreciation Rights (Rights). Type Terms Performance Rights Each Performance Right constitutes a right to receive one share upon satisfaction of the applicable vesting or exercise conditions. Share Appreciation Rights Each Share Appreciation Right constitutes a right to receive a number of shares upon satisfaction of the applicable vesting or exercise conditions. The number of shares granted is calculated in accordance with the following formula: • Resulting Value divided by the Subsequent Market Value; • Resulting Value is defined as the Subsequent Market Value less the market value of the share as at the date of grant; • Subsequent Market Value is defined as the market value of a share as at the date of exercise. Grants Vesting and exercise Equity or cash settlement Expiry Lapse / forfeiture Rights may be granted under the Equity Incentive Plan to eligible participants from time to time at the absolute discretion of the Board. Luke Mader and non-executive directors are not eligible to participate in the plan. Rights will vest if and to the extent that any applicable performance, service and other vesting conditions specified at the time of the grant are satisfied, deemed to be satisfied or waived and the Company has given the participant a vesting notice. The plan has the flexibility for vested Rights to be settled in either shares or cash. Cash settlement will only be available if the Company sets out in the terms and conditions of an invitation to participate in the plan that cash settlement is available. Rights will be issued with an expiry date. If a participant ceases employment, their vested and unvested Rights will automatically be forfeited unless the Board determines otherwise. Performance metrics In line with the Group's long term strategic plan, the LTI rewards performance and achievements through the following targets: Type Target FY24 Performance Rights The Group achieves net profit after tax of $40 million FY26 Performance Rights The Group achieves net profit after tax of $60 to $65 million Share Appreciation Rights KMP to continue employment to 30 June 2024 36 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Non-Executive Director Remuneration Mader's Non-Executive Director fee policy is designed to attract and retain high calibre directors who can discharge the roles and responsibilities required in terms of good governance, strong oversight, independence and objectivity. The fees reflect the demands and responsibilities of the Directors whilst incurring a cost which is acceptable to shareholders. Directors currently do no receive any additional fees for participation in Board Committees. The Committee reviews non-executive directors’ remuneration annually against comparable companies and may consider advice from external advisors if deemed necessary. Non-Executive director fees are determined within an aggregated non-executive director fee pool limit of $300,000 per annum. Executive Service Agreements Each KMP has entered into a service agreement with the Company. All KMP are entitled to receive payment in lieu of notice of any accrued statutory entitlement (i.e. annual leave and long service leave) on cessation of their employment. In addition, all KMP are entitled to participate in the STI Plan and LTI Plan that has been disclosed above. The following table outlines the contractual terms of the executive service agreements: Component Luke Mader Executive Directors Senior Executives Fixed Remuneration Variable Remuneration Allowances Notice Period $2,000 per day worked Range between $250,000 and $600,000 per annum Range between $400,000 and $650,000 per annum None None As per STI scheme As per STI scheme May include motor vehicle allowance May include accommodation allowance 6 months Up to 6 months Up to 6 months Annual and Long Service Leave None Statutory requirements plus 17.5% annual leave loading Statutory requirements plus 17.5% annual leave loading Redundancies None Statutory requirements May include 12 months payout on change of control event Relationship between Remuneration and Group Performance Mader rewards the performance of KMPs with regard to the achievement of operational and financial targets having regard to the duties, performance and contribution of the KMP during the financial year. The table below sets out information about the Group’s earnings and movements in shareholder wealth for the past five years up to and including the current financial year. Net profit for the year ($’m) Basic earnings per share (cents) Diluted earnings per share (cents) Total dividends ($'m) Share price at end of year ($) 2023 38.5 19.25 18.21 11.6 5.70 2022 27.9 13.97 13.60 8.0 2.66 2021 2020 2019 19.3 9.67 9.67 6.0 0.85 17.5 8.75 8.75 7.3 0.78 14.9 8.77 8.77 11.1 - MADER GROUP 2023 ANNUAL REPORT 37 R E M U N E R A T I O N R E P O R T - A U D I T E D Remuneration of KMP for the Years Ended 30 June 2023 and 30 June 2022 Short-term employee benefits Post- employment Long-term benefits Share Based Payments Salary & fees Short Term incentives1 Non- monetary2 Super- annuation Long service leave Performance & Share Appreciation Rights Total remuneration Perform- ance related $ $ $ $ $ $ $ % Non-executive directors Jim Walker3 Craig Burton Total Non- executive Directors 2023 2022 2023 2022 88,917 110,000 60,000 60,000 2023 148,917 2022 170,000 Executive directors Luke Mader 2023 215,000 2022 198.500 - - - - - - - - - - - - - - - - Justin Nuich 2023 624,203 500,000 67,718 2022 527,475 500,000 40,484 9,336 11,000 6,300 6,000 15,636 17,000 18,241 17,592 26,677 51,905 - - - - - - - - - - - - - - - - - - 98,253 121,000 66,300 66,000 164,553 187,000 233,241 216,092 936,777 2,155,375 561,960 1,681,824 Patrick Conway 2023 260,564 250,000 2022 269,509 810,847 - - 24,503 5,835 23,954 46,604 - - 540,902 1,150,914 Senior executives John Greville 2023 639,284 602,393 50,031 2022 288,309 1,142,749 Paul Hegarty 2023 399,725 400,000 2022 305,957 200,000 - - - 37,037 18,126 26,163 27,441 61,472 510,359 1,900,576 (5,327)4 99,602 1,543,459 - - 236,216 1,062,104 140,960 674,358 Total Executive Directors and Senior Executives Total KMP 2023 2,138,776 1,752,393 117,749 132,620 67,307 1,683,352 5,892,197 2022 1,589,750 2,653,596 40,484 139,018 41,277 802,522 5,266,647 2023 2,287,693 1,752,393 117,749 148,257 67,307 1,683,352 6,056,751 2022 1,759,750 2,653,596 40,484 156,018 41,277 802,522 5,453,647 1 Short-term incentives relate to cash bonuses provided under the Group’s STI plan. 2 Non-monetary benefits relate to the provision of motor vehicles, motor vehicle related expenses and accommodation allowances. 3 Resigned as Chairman, effective 21 April 2023. 4 Negative long service leave value is a result of more days taken than accrued during the year. - - - - - - - - 67 63 46 70 59 80 60 51 58 66 57 63 38 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au The table below shows the percentage of each Executives’ STI that was awarded or forfeited during the financial year. It also shows the value of long-term incentives granted and exercised during the year. Justin Nuich Patrick Conway John Greville Paul Hegarty Short-term Incentives Long-term Incentives Awarded Forfeited Granted Exercised % 100% 100% 100% 100% % $ $ - - - - - - 1,007,391 - - - - - Details of the rights issued during the year are as follows: Rights series Grant date Expiry date Method of valuation Fair value at grant Share Appreciation Rights 9-Jan-2023 30-Jun-2024 Black Scholes 2.52 Shareholdings of Key Management Personnel The number of shares in the Company held directly or indirectly during the financial year by each director and KMP of the Group, including their related parties, are set out below. Balance 1 July 2022 Granted as remuneration On market purchase Disposals/ Other changes Balance 30 June 2023 Craig Burton Luke Mader Justin Nuich Patrick Conway John Greville Paul Hegarty Jim Walker1 Total 39,000,000 113,697,095 186,081 113,824 166,667 55,000 66,667 153,285,334 1 Resigned as Chairman, effective 21 April 2023. - - - - - - - - - - 5,000 - - - - - - - - - - (66,667) 39,000,000 113,697,095 191,081 113,824 166,667 55,000 - 5,000 (66,667) 153,223,667 The number of rights (Performance Rights and Share Appreciation Rights) held directly or indirectly during the financial year by each director and KMP of the Group are set out below. All rights remain unvested as at the end of the year. Justin Nuich Patrick Conway John Greville Paul Hegarty Total Balance 1 July 2022 3,250,000 - 750,000 1,150,000 5,150,000 Granted as remuneration - - 400,000 - 400,000 Vested Forfeited - - - - - - - - - - Balance 30 June 2023 3,250,000 - 1,150,000 1,150,000 5,550,000 MADER GROUP 2023 ANNUAL REPORT 39 R E M U N E R A T I O N R E P O R T - A U D I T E D Loans to Key Management Personnel There were no loans to Directors or Executives during the financial year ended 30 June 2023 (2022: Nil). Other Transactions and Balances with KMP and their Related Parties The following transactions occurred and were outstanding at reporting date in relation to transactions with related parties. The services have been provided on normal commercial terms and conditions. Transactions Receivables Payables 2023 2022 2023 2022 2023 2022 Related KMP $ $ $ $ $ $ Services provided to MLG Oz Limited Services provided to Austin Engineering Ltd Services provided to Western Plant Hire Holdings Limited Services provided by Venture South Pty Ltd Services provided to Premium Plant Hire Pty Ltd Services provided to L&A Trust Services provided by Naturaliste Aviation Pty Ltd Consultancy services provided by Allscope Holdings Pty Ltd Jim Walker 4,612,393 3,316,744 1,572,8741 69,091 Jim Walker 34,579 114,452 Luke Mader2 Patrick Conway - 561,761 Luke Mader 5,871 36,694 -1 - - 5,143 11,0773 - Luke Mader 328,521 310,078 31,562 77,524 Luke Mader 113,567 101,256 84,169 33,103 Justin Nuich 12,705 - Justin Nuich 17,909 29,836 - - - - - - - - - - - - - - - - - - - - 1 Balances are as at the date Jim Walker resigned as Chairman, effective 21 April 2023. 2 Luke Mader was a director of Western Plant Hire Holdings Limited and Patrick Conway was an alternate director for Luke Mader during the period of Mader's investment in Western Plant Hire Holdings Limited. 3 Balance is as at the date Luke Mader and Patrick Conway resigned as director's of Western Plant Hire Holdings Limited. Voting of Shareholders at Last Year's Annual General Meeting Mader received more than 90% of "yes" votes on its remuneration report for the financial year ended 30 June 2022. The Company did not receive any specific feedback at the annual general meeting or throughout the year on its remuneration practices. End of audited remuneration report. 40 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au D I R E C T O R S ' R E P O R T Shares Under Option There were no unissued ordinary shares of Mader Group Limited under option at the date of this report. Indemnification and Insurance of Officers and Auditors The Company has executed a deed of access, indemnity and insurance in favour of each Director during the financial year. The indemnity deed requires the Company to indemnify each Director for liability incurred by the Director as an officer of the Company subject to the restrictions prescribed in the Corporations Act 2001. The deed also gives each Director a right of access to Board papers and requires the Company to mainta in insurance cover for the Directors. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. Proceedings on Behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Non-Audit Services Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in Note 23 to the financial statements. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence of auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporation Act 2001 for the following reasons. • all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor, and • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. Auditors Independence Declaration The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 42. Rounding The Company is a company of the kind referred to in ASIC Corporations Instrument 2016/191 issued by the Australian Securities and Investments Commission dated 24 March 2016, and in accordance with the Corporations Instrument, amounts in this report have been rounded off to the nearest thousand dollars, unless otherwise stated. This directors’ report is made in accordance with a resolution of Directors, pursuant to Section 298(2)(a) of the Corporations Act 2001. Luke Mader Executive Chairman & Founder 21 August 2023 MADER GROUP 2023 ANNUAL REPORT 41 Auditor’s Independent Declaration Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF MADER GROUP LIMITED Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia As lead auditor of Mader Group Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been: Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF MADER GROUP LIMITED relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. As lead auditor of Mader Group Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in This declaration is in respect of Mader Group Limited and the entities it controlled during the period. relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Mader Group Limited and the entities it controlled during the period. Dean Just Director BDO Audit (WA) Pty Ltd Dean Just Perth Director 21 August 2023 BDO Audit (WA) Pty Ltd Perth 21 August 2023 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 42 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au MADER GROUP 2023 ANNUAL REPORT 43 43 4 44 4 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Consolidated Statement of Profit or Loss & Other Comprehensive Income For the Year Ended 30 June 2023 Revenue Cost of Sales Gross profit Distribution expense Marketing expenses Administration expenses Other operating expenses Finance costs Share of profit from associates Other income Profit before income tax Income tax expense Profit for the year Other comprehensive income/(loss) Items that may be reclassified to profit or loss Exchange differences arising on translation of foreign operations Total comprehensive income for the year Earnings per share Basic earnings per share (cents per share) Dilulted earnings per share (cents per share) NOTE 4 5 5 5 4 6 8 8 2023 $’000 608,793 (472,942) 135,851 (20) (2,405) (77,724) (263) (3,542) - 2,700 54,597 (16,089) 38,508 2022 $’000 402,084 (323,499) 78,585 (20) (1,580) (42,051) 187 (1,432) 532 6,179 40,400 (12,455) 27,945 1,951 40,459 1,955 29,900 19.25 18.21 13.97 13.60 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the notes to the financial statements. MADER GROUP 2023 ANNUAL REPORT 45 Consolidated Statement of Financial Position As at 30 June 2023 NOTE 2023 $’000 Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Property, plant and equipment Investment in associates Right of use of asset Other assets Deferred tax assets Total non-current assets Total assets Current liabilities Trade and other payables Lease liabilities Provisions Tax liabilities Borrowings Total current liabilities Non-current liabilities Lease liabilities Deferred tax liabilities Borrowings Total non-current liabilities Total Liabilities Net Assets Equity Issued capital Reserves Retained earnings Total equity 11 12 13 14 12 6 15 16 6 17 6 17 18 19 2022 $’000 6,648 87,614 3,466 97,728 13,010 122,819 4,861 140,690 100,163 67,944 110 8,086 331 3,317 112,007 252,697 49,968 1,394 5,314 2,644 15,056 74,376 7,298 10,723 40,656 58,677 133,053 119,644 2 7,099 112,543 119,644 110 7,965 391 944 77,354 175,082 41,255 1,233 3,902 306 21,264 67,960 7,000 3,081 12,059 22,140 90,100 84,982 2 2,145 82,835 84,982 The above Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements. 46 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Consolidated Statement of Changes in Equity For the Year Ended 30 June 2023 Issued Capital $’000 NOTE Balance at 1 July 2022 Comprehensive income/(loss) Profit for the year Other comprehensive income for the year Total comprehensive income/(loss) for the year Dividends paid or provided for Equity settled share based payments Balance at 30 June 2023 9 20 2 - - - - - 2 Retained Earnings $’000 82,835 38,508 - 38,508 (8,800) - Foreign Currency Translation $’000 Share Based Payments $’000 Total $’000 735 1,410 84,982 - 1,951 1,951 - - - - - - 3,003 4,413 38,508 1,951 40,459 (8,800) 3,003 119,644 112,543 2,686 Issued Capital $’000 Retained Earnings $’000 NOTE Foreign Currency Translation $’000 Share Based Payments $’000 Balance at 1 July 2021 Comprehensive income/(loss) Profit for the year Other comprehensive income for the year Total comprehensive income/(loss) for the year Dividends paid or provided for Equity settled share based payments Balance at 30 June 2022 9 20 2 - - - - - 2 61,890 (1,220) 27,945 - 27,945 (7,000) - - 1,955 1,955 - - 82,835 735 - - - - - 1,410 1,410 Total $’000 60,672 27,945 1,955 29,900 (7,000) 1,410 84,982 The above Consolidated Statement of Changes of Equity should be read in conjunction with the notes to the financial statements. MADER GROUP 2023 ANNUAL REPORT 47 Consolidated Statement of Cash Flows For the Year Ended 30 June 2023 Note 2023 $’000 2022 $’000 Cash flows from operating activities Receipts from Customers Payments to Suppliers & Employees Interest Paid Income Tax Paid Net cash generated from Operating Activities 10 Cash flows from investing activities Proceeds from Sale of Property, Plant & Equipment Payments for Property, Plant & Equipment Sale of Associates Investments in Associates Net cash used in Investing Activities Cash flows from financing activities Proceeds from Borrowings Repayment of Borrowings Payment of Dividends Net cash (used in)/provided by Financing Activities Net Cash Increase / (Decrease) in Cash and Cash Equivalents Held Effect of Exchange Rates on Cash and Cash Equivalent Holdings Cash and Cash Equivalents at Beginning of Financial Year Cash and Cash Equivalents at End of Financial Year 630,949 (578,257) (3,124) (8,482) 41,086 422,748 (374,329) (1,196) (11,835) 35,388 242 73 (47,535) (39,461) - - 8,400 (20) (47,293) (31,008) 42,559 (21,444) (8,800) 12,315 6,108 254 6,648 13,010 20,235 (14,623) (7,000) (1,388) 2,992 447 3,209 6,648 The above Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements. 48 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Notes to the Consolidated Financial Statements For the Year Ended 30 June 2023 1. Corporate Information These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and other authoritative pronouncements issued by the Australian Accounting Standards Board (AASB), and comply with other requirements of the law. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Consequently, this financial report has been prepared in accordance with and complies with IFRS as issued by the IASB. The financial statements comprise the consolidated financial statements of the Group and were authorised for issue in accordance with a resolution of the board of directors dated 21 August 2023. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. These financial statements are presented in Australian Dollars ($). Foreign operations are included in accordance with policies set out in note 2. In addition, the financial statements have been prepared on a historical cost basis. Historical costs are generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. The Company is a company of the kind referred to in ASIC Corporations Instrument 2016/191 issued by the Australian Securities and Investments Commission dated 24 March 2016, and in accordance with the Corporations Instrument, amounts in this report have been rounded off to the nearest thousand dollars, unless otherwise stated. 2. Summary of Significant Accounting Policies (a) Going Concern The Directors have, at the time of approving the financial statements, a reasonable expectation that the Group have adequate resources to continue the operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements. (b) Basis of Consolidation The consolidated financial statements comprises the financial statements of the Company and the entities controlled by the Company (its subsidiaries). Control is achieved when the Company has: • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) • Exposure, or rights, to variable returns from its involvement with the investee • The ability to use its power over the investee to affect its returns The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. The results of subsidiaries acquired or disposed of during the year are included in the profit and loss from the date of the Company gains control until the date the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non- controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expense and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. MADER GROUP 2023 ANNUAL REPORT 49 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 2. Summary of Significant Accounting Policies (continued) A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it derecognises the related assets (including goodwill), assets, liabilities and other components of equity, with any resultant gain or loss resulting from the difference between the consideration received and the net financial position of the subsidiary is recognised in profit or loss. (c) Income Tax Current income tax Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income. Current income tax relating to items recognised directly in equity is recognised in equity and not in the Statement of Profit or Loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except: • When the deferred tax liabilities arises from the initial recognition of goodwill or asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. • In respect of taxable temporary differences associated with investments in subsidiaries, 50 associates and interests in joint arrangements, when the timing of reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: • When the deferred tax assets relating to the deductible temporary difference arises from initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. • In respect to deductible temporary differences associated with investments in subsidiaries, associates and interest in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax items are recognised in correlation to the underlying transaction either in other MADER GROUP 2023 ANNUAL REPORT madergroup.com.au comprehensive income or directly in equity. The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. (d) Property, Plant and Equipment Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Freehold land is not depreciated. Plant and equipment Plant and equipment are measured on a cost basis. At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating units for which a reasonable and consistent allocation basis can be identified. The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre- tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash- generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of impairment loss is recognised immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognised for the asset in prior years. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gains or loss on disposal or retirement of the asset is determined by comparing proceeds with the carrying amount. These gains or losses are included in the Statement of Profit or Loss and Other Comprehensive Income. Depreciation Depreciation is recognised so as to write off the cost (other than freehold land) less their residual values over the useful lives, using the diminishing value method. The depreciation rates used for each class of depreciable assets are as follows: Class of fixed assets Depreciation rate Computer equipment Office furniture and fittings Motor vehicles Plant and equipment 37.5% 10 – 40% 20 – 30% 10 – 30% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. MADER GROUP 2023 ANNUAL REPORT 51 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 2. Summary of Significant Accounting Policies (continued) Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the Statement of Profit or Loss and Other Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (e) Leases Right of use assets A right of use asset is recognised at the commencement date of a lease. The right of use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the asset. Right of use assets are depreciated on a straight- line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The Group determines whether a right of use asset is impaired and accounts for any identified impairment loss as described in the ‘Property, Plant and Equipment’ policy above. The Group has elected not to recognise a right of use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease 52 payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payment less any lease incentives receivable, variable lease payments that depends on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: • future lease payments arising from a change in an index or a rate used • residual guarantee • lease term • certainty of a purchase option • termination penalties When a lease liability is remeasured, an adjustment is made to the corresponding right of use asset, or to the profit or loss if the carrying amount of the right of use asset is fully written down. (f) Financial Instruments Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value, except for trade receivables that do not have a significant financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Transaction costs attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial assets All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of financial assets. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. For financial assets other than assets that are credit-impaired on initial recognition, the effective interest rate is the rate that exactly discounts estimated cash receipts, excluding expected credit losses, through the expected life of the debt instrument or where appropriate a shorter period to the gross carrying amount of the debt instrument on initial recognition. The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised costs of a financial asset before adjusting for any loss allowance. Interest income is recognised in profit or loss and is included in the ‘Other Revenue’ line item. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. On derecognition of a financial asset measured at amortised costs, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. Financial liabilities Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. All financial liabilities are measured subsequently at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability. The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. MADER GROUP 2023 ANNUAL REPORT 53 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 2. Summary of Significant Accounting Policies (continued) (g) Impairment of Financial Assets The Group recognises a loss allowance for expected credit losses (ECLs) on lease receivables, trade receivables and contract assets. The amount of ECLs is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The ECLs are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as forecast direction of conditions at the reporting date, including time value of money where appropriate. In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring at the reporting date with the risk of a default occurring at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Group’s debtors operate, obtained from economic expert reports, financial analysts, government bodies, relevant think- tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Group’s core operations. The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy 5 4 proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, considering legal advice where appropriate. Any recoveries made are recognised in profit or loss. (h) Short-Term and Other Long-Term Employee Benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date. (i) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within financial liabilities in current liabilities on the Statement of Financial Position. (j) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances the GST is recognised as part of the costs of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the tax authority is included within ‘Other Receivables or Other Payables’ in the Statement of Financial Position. Cash flows are presented in the Statement of Cash Flows on a gross basis. The GST component of cashflows arising from investing and financing activities which is recoverable from, or payable to, MADER GROUP 2023 ANNUAL REPORT madergroup.com.au the taxation authority is classified within operating cash flows. equity to profit or loss on disposal or partial disposal of the net investment. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a foreign exchange translation reserve (attributed to non-controlling interests as appropriate). On the disposal of a foreign operation (i.e. disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation of which the retained interest becomes a financial asset), all the exchange differences accumulated in a foreign exchange translation reserve in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non- controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do no result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. (k) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are recognised in profit or loss in the year in which they occur. (l) Foreign Currency Translation In preparing the financial statements of the Group entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary Items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise except for: • Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings • Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur in the foreseeable future (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from MADER GROUP 2023 ANNUAL REPORT 55 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 2. Summary of Significant Accounting Policies (continued) (m) Revenue Recognition The Group derives revenue from labour hire and support and maintenance services to the mining sector. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer. Services revenue Contracts entered into can cover services which may involve various different processes or servicing of related assets. Where these processes and activities are highly interrelated, and the Group provides a significant service of integration for these activities, they are taken as one performance obligation. The transaction price is allocated across each performance obligation based on contracted prices. Variable consideration may be included in the transaction price. The performance obligation is fulfilled over time as the Group enhances the assets which the customer controls, for which the Group has no alternative use and has a right to payment for performance to date. Revenue is recognised in the accounting period in which services are rendered. Customers are in general invoiced for an amount that is calculated based on agreed contract terms in accordance with stand-alone selling prices for each performance obligation. 56 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au (n) Share Based Payments Equity settled share based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market based vesting conditions. Details regarding the determination of the fair value of equity settled share based transactions are set out in the Share Based Payments note. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on the Group’s estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves. Equity settled share based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the enity obtains the goods or the counterparty renders the service. (o) Adoption of New and Amended Standards and Interpretations Impact of the initial application of new and amended Standards that are effective for the current year In the current year, the Group has applied a number of amendments to the Australian Standards and Interpretations issued by the Australian Standards Board (AASB) that are effective for an annual period that begins on or after 1 July 2022. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements. MADER GROUP 2023 ANNUAL REPORT 57 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 2. Summary of Significant Accounting Policies (continued) New and revised Australian Accounting Standards and Interpretations on issue but not yet effective. At the date of authorisation of the financial statements, the Group has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective: Standard / amendment AASB 2014-10 Amendments to Australia Accounting Standards – Sale or Contribution of Assets between an investor and its Associate or Joint Venture, AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128, AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections and AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current Deferral of Effective Date AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction Effective for annual reporting periods beginning on or after 1 January 2025 1 January 2023 1 January 2023 1 January 2023 3. Critical Accounting Judgements and Key Sources of Estimation Uncertainty In applying the Group’s accounting policies, which are described above, management are required to make judgements that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the review and future periods if the revision affects both current and future periods. The following are the critical judgements and estimations that management have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements: • Assessment and impairment of property, plant and equipment (Note 2(d)) • Estimation of expected useful lives of property, plant and equipment (Note 2(d)) • Estimation of allowance for expected credit losses on financial assets (Note 2(g)) • Estimation of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions and valuation of the equity instruments (Note 2(n)) 58 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au 4. Revenue Operating revenue Maintenance services Hire recoveries Direct expense recoveries Total operating revenue Timing of revenue recognition At a point in time Over time Total operating revenue Other income Interest income Gain on sale of associate Other income Total other income 5. Expenses Expenses Depreciation Employee benefits expense Share based payment expense Finance costs Interest expense Other finance costs 2023 $’000 2022 $’000 545,924 374,242 369 62,500 183 27,659 608,793 402,084 62,500 546,293 608,793 27,659 374,425 402,084 1 - 2,699 2,700 - 3,354 2,825 6,179 2023 $’000 2022 $’000 16,955 405,103 3,003 9,053 279,039 1,410 3,124 418 1,196 236 MADER GROUP 2023 ANNUAL REPORT 59 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 6. Tax (a) Income tax expense Components of income tax expense Current income tax expense Deferred tax expense Under/(over) provision in respect of prior year - current tax expense Under/(over) provision in respect of prior year - deferred tax expense Numerical reconciliation of income tax expense to prima facie tax payable Profit before income tax Tax at the Australian tax rate of 30% (2022: 30%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: • Differences in foreign tax rates • Differences in state tax rates • Other Under/(over) provision in respect of prior year (b) Deferred tax Deferred tax assets The balance comprises temporary differences attributed to: • Lease liabilities • Accrued expenses and provision • Employee leave entitlements • Share based payments • Tax losses • Other Tax offset Deferred tax liabilities The balance comprises temporary differences attributed to: • Accrued revenue and prepayment • Right of use asset • Property, plant and equipment Tax offset 60 2023 $’000 2022 $’000 12,402 3,141 (2,281) 2,827 16,089 8,011 4,807 (363) - 12,455 54,870 16,461 40,400 12,120 (1,304) 282 104 546 (263) - 961 (363) 16,089 12,455 2,538 5,890 1,391 1,277 1,284 1,713 14,093 (10,776) 3,317 645 2,370 18,484 21,499 (10,776) 10,723 2,351 5,081 1,063 271 394 62 9,222 (8,278) 944 207 2,271 8,881 11,359 (8,278) 3,081 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au (c) Reconciliation 2023 Deferred tax assets Lease liability Accrued expenses and provision Employee leave entitlements Share based payments Tax losses Other Deferred tax liabilities Accrued revenue and prepayment Right of use asset Property, plant and equipment 2022 Deferred tax assets Lease liabilities Accrued expenses and provision Employee leave entitlements Share based payments Tax losses Other Deferred tax liabilities Accrued revenue and prepayment Right of use asset Property, plant and equipment Other Opening balance $’000 Recognised in Profit or Loss $’000 Charged to tax provision $’000 Closing balance $’000 2,351 5,081 1,063 271 394 62 9,222 207 2,271 8,881 11,359 1,018 2,175 937 - 480 462 5,072 - 1,009 1,442 (50) 2,401 187 809 328 1,006 890 1,651 4,871 438 99 9,603 10,140 1,333 2,906 126 271 (86) (400) 4,150 207 1,262 7,439 50 8,958 - - - - - - - - - - - - - - - - - - - - - - - 2,538 5,890 1,391 1,277 1,284 1,713 14,093 645 2,370 18,484 21,499 2,351 5,081 1,063 271 394 62 9,222 207 2,271 8,881 - 11,359 MADER GROUP 2023 ANNUAL REPORT 61 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 7. Segment Information Management has determined that the strategic operating segments comprise of Australia, North America, Rest of World and Corporate. These reporting segments provide a balanced view of cross-operational performance across business units, recognising and compensating for inter-regional differences in relation to technical methodologies and processes, the cost of labour, the existence of competition and differing customer requirements that may affect product pricing. Segment information provided to the Chief Executive Officer for the year ended 30 June is as follows: Australia $’000 North America $’000 Rest of World $’000 Corporate Total $’000 $’000 427,238 111,198 7,488 369 - 40,878 20,975 468,485 132,173 3,016 24 471,501 132,197 56,950 23,202 (7,701) (7,859) 49,249 15,343 (2,033) (13,873) 33,343 (840) (3,484) 11,019 - 647 8,135 (351) 7,784 1,096 (9) 1,087 (33) (405) 649 - - - - 545,924 369 62,500 608,793 11 11 2,700 611,493 (6,154) (1,386) (7,540) 75,094 (16,955) 58,139 (636) (3,542) 1,673 (16,089) (6,503) 38,508 150,519 80,929 84,027 40,905 5,607 966 12,543 252,696 10,253 133,053 2023 Financial performance Maintenance services Hire recoveries Direct expense recoveries Other revenue Revenue EBITDA Depreciation and amortisation EBIT Finance costs Income tax (expense)/benefit Net profit after tax Other Segment Information Assets Liabilities 62 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au 2022 Financial performance Maintenance services Hire recoveries Direct expense recoveries Other revenue Revenue EBITDA Depreciation and amortisation EBIT Finance costs Income tax (expense)/benefit Net profit after tax Other Segment Information Assets Liabilities Australia $’000 North America $’000 Rest of World $’000 Corporate Total $’000 $’000 319,960 45,316 8,966 183 21,818 341,961 3,304 - 4,695 50,011 128 - 1,146 10,112 (528) - - - - 374,242 183 27,659 402,084 3,275 6,179 345,265 50,139 9,584 3,275 408,263 40,089 (6,075) 34,014 (974) (8,517) 24,523 10,057 (2,595) 7,462 (269) (1,699) 5,494 2,062 (27) 2,035 (36) (905) 1,094 (1,323) (356) (1,679) (153) (1,334) (3,166) 50,885 (9,053) 41,832 (1,432) (12,455) 27,945 114,492 67,438 46,582 10,159 7,029 2,792 5,014 7,746 173,117 88,135 8. Earnings Per Share (EPS) Basic earnings per share (cents) Diluted earnings per share (cents) Earnings used in the calculation of basic and diluted earnings per share Earnings used in the calculation of basic and diluted earnings per share 2023 19.25 18.21 $'000 38,508 2022 13.97 13.60 $'000 27,945 Weighted average number of ordinary shares $'000 $'000 Weighted average number of ordinary shares used in the calculation of basic earnings per share Effect of dilutive potential ordinary shares • Rights Weighted average number of ordinary shares used in the calculation of diluted earnings per share 200,000 200,000 11,489 5,500 211,489 205,500 MADER GROUP 2023 ANNUAL REPORT 63 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 9. Dividends Dividends paid Dividends declared and paid during the year • Final fully franked ordinary dividend for the year ended 30 June 2021 of 1.5 cents per share paid on 28 September 2021 franked at the tax rate of 30% • Interim fully franked ordinary dividend for the year ended 30 June 2022 of 2.0 cents per share paid on 23 March 2022 franked at the tax rate of 30% • Final fully franked ordinary dividend for the year ended 30 June 2022 of 2.0 cents per share paid on 27 September 2022 franked at the tax rate of 30% • Interim fully franked ordinary dividend for the year ended 30 June 2023 of 2.4 cents per share paid on 6 April 2023 franked at the tax rate of 30% 2023 $’000 2022 $’000 - - 4,000 4,800 8,800 3,000 4,000 - - 7,000 Dividends declared after 30 June 2023 • The Company has resolved to declare a final fully franked ordinary dividend of 3.4 cents per share payable on 4 October 2023 franked at the tax rate of 30% 6,800 - Franking account balance Dividends declared and paid during the year • Franking credits available for subsequent financial years as at 30 June • Imputation debits that will arise from the payments of dividends declared but not recognised in the financial statements Adjusted franking account balance 11,557 (2,914) 8,643 2,472 (1,714) 758 64 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au 10. Cash and Cash Equivalents (a) Reconciliation of cash flow from operations with Profit after Income Tax Profit for the year Depreciation Share of Profit from Associates Disposal of Property, Plant and Equipment Impact of Foreign Exchange Share Based Payments Gain on Sale of Associates Change in assets and liabilities: - (Increase)/decrease in Trade and Other Receivables - (Increase)/decrease in Other Assets - (Increase)/decrease in Deferred Tax Assets - (Decrease)/increase in Trade and Other Payables - (Decrease)/increase in Provisions - (Decrease)/increase in Tax Liability - (Decrease/Increase) in Deferred Tax Liability Net cash flow from operating activities (b) Changes in liabilities arising from financing activities Balance as at 1 July 2022 Financing cash flows New leases Other changes Balance as at 30 June 2023 Balance as at 1 July 2021 Net financing cash inflows/(outflows) New leases Other changes Balance as at 30 June 2022 2023 $’000 38,508 16,955 - (269) 1,697 3,003 - (35,205) (1,335) (2.373) 8,713 1,412 2,338 7,642 2022 $’000 27,945 9,053 (532) (2) 1,507 1,410 (3,354) (17,768) (2,581) 4,128 17,746 1,344 (4,188) 680 41,086 35,388 Borrowings $'000 Leases $'000 33,322 22,389 - - 55,711 27,159 6,163 - - 33,322 8,234 (1,275) 1,707 25 8,691 3,683 (551) 5,119 (17) 8,234 Total $'000 41,556 21,115 1,707 25 64,403 30,842 5,612 5,119 (17) 41,556 MADER GROUP 2023 ANNUAL REPORT 65 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 11. Trade and Other Receivables Current Trade receivables Other receivables Allowance for expected credit losses 2023 $’000 116,216 7,259 (656) 122,819 2022 $’000 84,493 3,759 (638) 87,614 Trade receivables are non-interest bearing and are generally on terms between 30 and 90 days. Refer to the Financial Instruments note for further details on credit risk. 66 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au 12. Other Assets Current Prepayments Other Non-current Other 2023 $’000 4,448 413 4,861 331 331 13. Property, Plant and Equipment Buildings & property $’000 Office furniture & equipment $’000 Plant equipment & motor vehicles $’000 Capital work in progress $'000 30 June 2023 Cost Accumulated depreciation 3,973 (512) 3,461 Movement in property, plant and equipment At 1 July Additions Disposals Depreciation expense Foreign exchange 860 2,826 - (227) 2 3,461 2,766 (1,548) 1,218 1,153 551 (8) (486) 8 1,218 129,863 (48,203) 81,660 55,305 41,823 (1,879) (14,646) 1,057 81,660 13,824 - 13,824 10,626 3,198 - - - 2022 $’000 3,323 143 3,466 391 391 Total $’000 150,426 (50,263) 100,163 67,944 48,398 (1,887) (15,359) 1,067 13,824 100,163 Buildings & property $’000 Office furniture & equipment $’000 Plant equipment & motor vehicles $’000 Capital work in progress $'000 30 June 2022 Cost Accumulated depreciation 1,160 (300) 860 Movement in Property, Plant and Equipment At 1 July Additions Disposals Depreciation expense Foreign exchange 417 514 (7) (64) - 860 2,230 (1,077) 1,153 898 511 - (290) 34 1,153 86,923 (31,618) 55,305 35,607 29,182 (2,188) (8,739) 1,443 55,305 10,626 - 10,626 - 10,626 - - - 10,626 Total $’000 100,939 (32,995) 67,944 36,922 40,833 (2,195) (9,093) 1,477 67,944 MADER GROUP 2023 ANNUAL REPORT 67 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 14. Right of Use Assets Buildings and property Cost Accumulated depreciation Opening balance Additions Depreciation expense Foreign exchange Amounts recognised in profit or loss Depreciation expense on right of use asset Interest expense on lease liabilities Expense relating to short-term leases or low value assets 2023 $’000 10,961 (2,875) 8,086 7,965 1,707 (1,596) 10 8,086 1,596 358 2,121 2022 $’000 9,759 (1,794) 7,965 3,499 5,119 (671) 18 7,965 671 152 1,152 The Group leases land and buildings for its offices and workshops under agreements of between 2 to 10 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. 15. Trade and Other Payables Current Trade payables Accrued expenses Other payables Total Trade payables are non-interest bearing and are normally settled on 30-day terms. 16. Provisions Current Employee entitlements 2023 $’000 7,691 21,920 20,357 49,968 2023 $’000 5,314 5,314 2022 $’000 7,135 18,527 15,593 41,255 2022 $’000 3,902 3,902 The current provision for employee benefits includes all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount is presented as current, since the consolidated entity does not have an unconditional right to defer settlement. However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. 68 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au 17. Borrowings Current Secured borrowings – asset financing Secured borrowings – working capital Unsecured borrowings – other Non-current Secured borrowings - asset financing Secured borrowings - working capital The Group has access to the following lines of credit: Facilities used: Secured borrowings – asset financing Secured borrowings – working capital Unsecured borrowings – other Facilities not used: Secured borrowings – asset financing Secured borrowings – working capital Facilities available: Secured borrowings – asset financing1 Secured borrowings – working capital1 Unsecured borrowings – other 2023 $’000 14,410 - 646 15,056 32,656 8,000 40,656 2023 $’000 47,066 8,000 646 55,712 73,089 39,530 112,619 120,155 47,530 646 168,331 2022 $’000 6,492 14,093 679 21,264 12,059 - 12,059 2022 $’000 18,551 14,093 679 33,323 23,626 28,810 52,436 42,177 42,903 679 85,759 1 Borrowings comprise (a) comitted and uncommited working capital facilities held with the Group's primary Australian lender and secondary US based lender, and (b) asset facilities held with the Group's primary Australian lender and secondary lenders in Australia, Canada and the USA. Australian based working capital facilities and relevant asset finance facilities are subject to a general security charge over the current and future assets of the applicable obligor group but excluding security over specific assets financed by secondary lenders. Asset finance facilities held with secondary lenders (both onshore and offshore) are subject to individual security arrangements over the assets financed and in some cases an ultimate parent entity guarantee. Borrowings held with the Group's primary lender are subject to an annual review and customary covenant reporting. MADER GROUP 2023 ANNUAL REPORT 69 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 18. Issued Capital Issued Capital Ordinary shares 30 June 2023 Number of shares 30 June 2022 Number of shares 200,000,000 200,000,000 30 June 2023 $’000 2 30 June 2022 $’000 2 Fully paid ordinary shares carry one vote per share and entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limit on the amount of authorised capital. 19. Reserves Nature and purpose of reserves (a) Foreign Currency Translation Reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of foreign operations with functional currencies other than those of the presentation currency of these financial statements. (b) Share Based Payments Reserve The share based payments reserve is used to recognise the value of the vesting of equity settled share based payments provided to employees, including key management personnel, as part of their remuneration. 20. Share Based Payments Equity Settled Rights Plan The Group has an equity incentive plan for eligible participants by offering them Performance Rights (PRs) and/or Share Appreciation Rights (SARs). In accordance with the terms of the plan, as approved by the shareholders at a previous annual general meeting, eligible participants include employees and certain Executive Directors of the Group as declared by the Board from time to time. In accordance with the plan, each performance right constitutes a right to receive one share and each share appreciation right constitutes a right to receive a number of shares upon satisfaction of the applicable vesting or exercise conditions. The number of shares granted for share appreciation rights is calculated in accordance with the formula approved by the shareholders at the 2021 annual general meeting. 70 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Details of the rights issued during the year are as follows. For vesting conditions for the rights issued, refer to the Remuneration Report. Performance Rights Series Number Grant Date Expiry Date Method of Valuation Fair Value at Grant Date Share Appreciation Rights 400,000 09-Jan-23 30-Jun-24 Black Scholes FY26 Performance Rights 220,000 3 & 20-Oct-26 30-Jun-26 Black Scholes 2.52 2.59 The following assumptions were used: Input Dividend Yield (%) Expected Volatility (%) Risk Free Interest Rate (%) Expected Life of Performance Rights (Years) Rights Exercise Price (A$) Share Price at Grant (A$) Details of the rights outstanding as at the end of the year are as follows: Number of Rights Outstanding at beginning of year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at end of year SARs 3.01 55.50 3.31 2.00 1.00 3.64 FY26 PRs 3.01 55.50 3.74 4.00 - 2.90 2023 2022 11,140,000 620,000 (120,000) - - - 11,140,000 - - - 11,640,000 11,140,000 MADER GROUP 2023 ANNUAL REPORT 71 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 21. Financial Instruments Financial risk management objectives In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments which include foreign currency risk, interest rate risk, credit risk and liquidity risk. This note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. The Group’s principal financial liabilities comprise borrowings, lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets include trade and other receivables and cash and cash equivalents that derive directly from its operations. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the business. Different methods are used to measure different types of risk to which the Group is exposed to. These methods include age analysis in the case of credit risk and monitoring market rates in the case of interest rate risk. Risk management is carried out by the finance function under principles and parameters approved by the Board of Directors. The finance function identifies and evaluates financial risks in close co-operation with the Group’s operating units. Foreign currency risk The Group operates internationally and undertakes transactions denominated in foreign currencies, primarily with respect to the US dollar. Consequently, exposures to exchange rate fluctuations arise as a result of transactions that are denominated in a currency other than the Group’s functional currency. To minimise the risk, management utilises a natural hedge by ensuring both the customer contracts and recoverable costs are denominated in the same foreign currency. As a result, the impact to the profit or loss would be immaterial. Interest rate risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s debt obligations based on floating interest rates. Management minimizes the interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings and analyses its interest rate exposure on an ongoing basis. 72 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Fixed interest rate maturing within Weighted average interest rate Floating interest rate $’000 1 year or less $’000 Over 1 year $’000 Non-interest bearing $’000 Total $’000 2023 Financial assets Cash and cash equivalents 0.0% Trade and other receivables Financial Liabilities Trade and other payables Lease liabilities Borrowings - - 4.3% 7.0% 2022 Financial assets Cash and cash equivalents 0.0% Trade and other receivables Financial Liabilities Trade and other payables Lease liabilities Borrowings - - 4.3% 3.9% - - - - - 8,000 8,000 - - - - - 14,093 14,093 - - - - - - - - 1,394 15,056 16,450 7,298 32,656 39,954 13,010 122,819 135,829 13,010 122,819 135,829 49,968 49,968 - - 8,692 55,712 49,968 114,372 - - - - - - - - 1,233 7,171 8,404 7,000 12,059 19,059 6,648 87,614 6,648 87,614 94,262 94,262 41,255 - - 41,255 41,255 8,233 33,323 82,811 A sensitivity analysis has not been disclosed in relation to the floating interest rate financial instruments as the net results of a reasonable change in interest rates has been determined to be immaterial to the profit or loss. MADER GROUP 2023 ANNUAL REPORT 73 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S Credit risk Credit risk is the risk that a counterparty will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions. The credit risk associated with the Group’s financing activities is limited because counterparties are banks with high credit ratings assigned by international credit-rating agencies. As the Group’s activities are largely focused on the mining and mining services industry, its credit risk for trade receivables is concentrated in this sector. The Group’s exposure to credit risk for trade receivables is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate. To further minimise the Group’s credit risk exposure, transactions are entered into with a number of key operators within the resources industry. During the financial year, one customer individually contributed greater than 10% of group revenue. Individual risk exposures are set for customers in accordance with specified limits established by management based on independent credit reports, financial information, credit references and the Group’s credit and trading history with the customer. Outstanding trade receivables are regularly monitored with focus being placed on customers that exceed their credit terms and who are not within the specified limits established by management. Refer to the ‘Trade and Other Receivables’ note for further details on the expected credit loss allowance recognised. The maximum exposure to credit risk, without considering the value of any collateral or other security in the event that other parties fail to perform their obligations, is the carrying amount of the financial assets as indicated in the Statement of Financial Position. The following table details the risk profile of trade and other receivables based on the Group’s provision matrix. As the Group’s historical credit loss experience does not show significantly different loss patterns for different cus- tomer segments, the provision for loss allowance based on past due status is not further distinguished between the Group’s different customer segments. Aging (Days) Current $'000 31-60 $'000 61-90 $'000 69,470 39,593 10,920 - - - 69,470 39,593 10,920 51,746 25,292 - - 51,746 25,292 7,885 - 7,885 >91 $'000 3,494 (657) 2,837 3,329 (638) 2,691 Total $'000 123,476 (657) 122,819 88,252 (638) 87,614 2023 Trade and other receivables Expected loss allowance 2022 Trade and other receivables Expected loss allowance 74 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations when they fall due. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of its available financing facilities. The Group has established a number of policies and processes for managing liquidity risks which include: • maintaining adequate borrowing and finance facilities • monitoring the maturity profiles of financial assets and liabilities in order to match inflows and outflows The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments: 2023 Trade and other payables Lease liabilities Borrowings 2022 Trade and other payables Lease liabilities Borrowings 1 year or less 1 to 5 years More than 5 years Contractual cash flows Carrying amount $’000 $’000 $’000 $’000 $’000 49,968 1,841 25,175 76,984 41,255 1,565 22,997 65,817 - 9,858 35,277 45,135 - 6,487 11,059 17,546 - 753 - 753 - 1,417 - 1,417 49,968 12,452 60,452 122,872 41,255 9,469 34,056 84,780 49,968 8,691 55,712 114,371 41,255 8,234 33,323 82,812 22. Commitments and Contingencies (a) Capital Expenditure Commitments Capital Commitments Committed at the reporting date but not recognised as liabilities: • Property, plant and equipment 2023 $’000 2022 $’000 17,813 17,813 29,869 29,869 (b) Contingencies Other than guarantees that are issued to third parties arising out of dealings in the normal course of business, there are no contingent liabilities as at 30 June 2023 (2022 nil). MADER GROUP 2023 ANNUAL REPORT 75 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 23. Auditors’ Remuneration BDO Audit (WA) Pty Ltd and related network firms Audit and review of financial statements • Group • Subsidiaries Non-audit services • Taxation compliance services • Consulting services Total services provided by BDO Remuneration of other auditors and their related network firms Audit and review of financial statements • Subsidiaries Non-audit services • Taxation compliance services Total services provided by other auditors Total auditor’s remuneration 2023 $ 2022 $ 151,907 37,228 189,135 - - - 189,135 127,022 8,390 135,412 15,757 - 15,757 151,169 190,586 29,278 - - 190,586 29,278 379,721 180,447 76 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au 24. Material Subsidiaries The consolidated financial statements of the Group include the following material subsidiaries: Mader Contracting Pty Ltd Mader Queensland Pty Ltd Mader Corporation Mader Energy LLC Mader Assets LLC Mader Mining (Canada) Limited Mader International Limited Mader Gobi LLC Mader Mechanical Limited Mader PNG Limited 25. Parent Entity Information Country of Incorporation Australia Australia USA USA USA Canada Hong Kong Mongolia Zambia Papua New Guinea Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Issued capital Reserves Retained earnings Total equity % of Equity Interest 2023 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2022 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2023 $’000 2022 $’000 116 40,011 40,127 3,535 6,718 10,253 136 16,477 16,613 5,391 2,355 7,746 29,874 8,867 2 6,310 23,562 29,874 2 2,095 6,770 8,867 Profit after income tax for the year 25,592 2,372 26. Deed of Cross Guarantee As at 30 June 2023 and/or 30 June 2022, the Group had not entered into a deed of cross guarantee in relation to the debts of its subsidiaries. MADER GROUP 2023 ANNUAL REPORT 7 7 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 28. Related Party Information (a) Parent entity The parent entity is Mader Group Limited, which is incorporated in Australia. (b) Subsidiaries Interests in subsidiaries are disclosed in the note ‘Subsidiaries’. (c) Key management personnel compensation Short-term employee benefits Post-employment benefits Other long-term benefits Share based payments Total 2023 $’000 4,158 148 68 1,683 6,057 2022 $’000 4,454 156 41 803 5,454 Detailed remuneration disclosures are provided in the Remuneration Report. (d) Loans and other transactions with key management personnel Other than the transactions disclosed in the Remuneration Report, there were no loans to or other transactions with Directors and executives during the financial year ended 30 June 2023 and 30 June 2022. 29. Events After the End of the Reporting Period On 21 August 2023, the Company declared a final fully franked dividend of 3.4 cents per share. The total value of the dividend payment is $6.8 million. The record date is 20 September 2023 with a payment date of 4 October 2023. Other than the matter described above, there have been no other matters or circumstances that have arisen after the reporting period that have significantly affected, or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods. 787878 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Directors' Declaration In the Directors' opinion: 1. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and accompanying notes are in accordance with the Corporations Act 2001, including: (a) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (b) Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of the performance for the financial year ended on that date. 2. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1. 3. The remuneration disclosures contained in the Remuneration Report in the Directors’ Report comply with section 300A of the Corporations Act 2001. 4. There are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Board of Directors and is signed on behalf of the Directors by: Luke Mader Executive Chairman & Founder Dated this 21st day of August 2023 MADER GROUP 2023 ANNUAL REPORT 79 Independent Audit Report INDEPENDENT AUDITOR'S REPORT Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia To the members of Mader Group Limited INDEPENDENT AUDITOR'S REPORT Report on the Audit of the Financial Report Opinion To the members of Mader Group Limited We have audited the financial report of Mader Group Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2023, the Report on the Audit of the Financial Report consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to Opinion the financial report, including a summary of significant accounting policies and the directors’ We have audited the financial report of Mader Group Limited (the Company) and its subsidiaries (the declaration. Group), which comprises the consolidated statement of financial position as at 30 June 2023, the In our opinion the accompanying financial report of the Group, is in accordance with the Corporations consolidated statement of profit or loss and other comprehensive income, the consolidated statement Act 2001, including: of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial (i) declaration. performance for the year ended on that date; and Complying with Australian Accounting Standards and the Corporations Regulations 2001. Complying with Australian Accounting Standards and the Corporations Regulations 2001. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations (ii) Act 2001, including: Basis for opinion Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial (i) We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under performance for the year ended on that date; and those standards are further described in the Auditor’s responsibilities for the audit of the Financial (ii) Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Basis for opinion Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical those standards are further described in the Auditor’s responsibilities for the audit of the Financial responsibilities in accordance with the Code. Report section of our report. We are independent of the Group in accordance with the Corporations Act We confirm that the independence declaration required by the Corporations Act 2001, which has been 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 given to the directors of the Company, would be in the same terms if given to the directors as at the Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are time of this auditor’s report. relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the Key audit matters time of this auditor’s report. Key audit matters are those matters that, in our professional judgement, were of most significance in We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit of the financial report of the current period. These matters were addressed in the context of our opinion. our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 80 80 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Revenue Recognition Key audit matter How the matter was addressed in our audit Revenue is disclosed in Note 2(m) and Note 4 of the Our audit procedures included but were no limited to the financial report. following: Revenue is generated from multiple streams and across different geographic locations. This area is a key audit matter as revenue is one of the key drivers to the Group’s performance and there is a significant volume of transactions included in revenue. • • • Performing analytical procedures to understand movements and trends in revenue for comparisons against expectations; Testing the operating effectiveness of internal controls surrounding revenue relating to the existence of labour hours sold; Assessing credit notes issued post year end and performing cut-off testing to ensure revenue transactions around year end have been recorded in the correct reporting period; • Agreeing, for a sample of revenue transactions, the amounts recorded by the Group to supporting documentation to confirm the existence and accuracy of the revenue recognised and to consider whether the transaction was recorded in the correct period; and • Assessing the adequacy of the relevant disclosures within the financial report. MADER GROUP 2023 ANNUAL REPORT 81 I N D E P E N D E N T A U D I T R E P O R T Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. 82 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 34 to 40 of the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Mader Group Limited, for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Dean Just Director Perth, 21 August 2023 MADER GROUP 2023 ANNUAL REPORT 83 848484 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Shareholder Information Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows. The information is current as at 9 August 2023. Distribution of Ordinary Shares The number of shareholders, by size of holding, are: Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Total Number of Holders Number of Shares 1,485 1,100 240 251 42 3,118 649,706 2,762,923 1,811,870 6,927,605 187,847,896 200,000,000 The number of shareholders holding less than a marketable parcel of ordinary shares is 62 (being 79 Shares as at 8 August 2023). Performance Rights The Company has 9,840,000 Performance Rights on issue. Performance Rights do not entitle the holders to vote in respect of that Performance Right, nor participate in dividends, when declared, until such time as the performance rights vest and are subsequently registered as ordinary shares. Distribution of Performance Rights The number of rights holders, by size of holding, are: Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Total Number of Holders Number of Rights - - - 15 281 43 - - - 760,000 9,080,000 9,840,000 1 Mr Justin Nuich, as trustee for the J&C Nuich Family Trust, holds 2,250,000 performance rights comprising 22.87% of this class. MADER GROUP 2023 ANNUAL REPORT 85 S H A R E H O L D E R I N F O R M A T I O N Share Appreciation Rights The Company has 1,800,000 Share Appreciation Rights on issue. Share Appreciation Rights do not entitle the holders to vote in respect of that Share Appreciation Right, nor participate in dividends, when declared, until such time as the Share Appreciation Rights vest and are subsequently registered as ordinary shares. Distribution of Share Appreciation Rights The number of rights holders, by size of holding, are: Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Total Number of Holders Number of Rights - - - - 31 3 - - - - 1,800 ,000 1,800,000 1 Mr Justin Nuich, as trustee for the J&C Nuich Family Trust, holds 1,000,000 share appreciation rights comprising 55.56% of this class; Ms Joanna Kiernan, the spouse of Mr Paul Hegarty, holds 400,000 share appreciation rights, comprising 22.22% of this class; Mrs Breanna Greville, the spouse of Mr John Greville, holds 400,000 share appreciation rights, comprising 22.22% of this class. Voting Rights All ordinary shares carry one vote per share without restriction. Restricted Securities There are no restricted securities on issue. Substantial Shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Name 1. Luke Mader, Amy Mader, and Maidment Bridge Farm Investments Pty Ltd1 2. Skye Alba Pty Ltd2 1 See ASX Announcement on 30 September 2019. 2 See ASX Announcement on 9 March 2021. Number of Shares % of Shares 112,000,000 40,000,000 56.00 20.00 86 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au Twenty Largest Shareholders The names of the twenty largest registered holders of quoted ordinary shares are: Name 1. MAIDMENT BRIDGE FARM INVESTMENTS PTY LTD 2. MR LUKE BENJAMIN MADER 3. SKYE ALBA PTY LTD 4. CITICORP NOMINEES PTY LIMITED 5. J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 6. MS AMY MADER 7. NATIONAL NOMINEES LIMITED 8. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 9. GOTTERDAMERUNG PTY LIMITED 10. BNP PARIBAS NOMINEES PTY LTD 11. CAVES HOUSE HOLDINGS PTY LTD 12. UBS NOMINEES PTY LTD 13. MR GREGORY ROSS MADER + MRS IRENE THERESE MADER 14. W FAIRWEATHER & SON PTY LTD 15. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 16. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 17. WARBONT NOMINEES PTY LTD 18. GANG - GANG PTY LTD 19. BNP PARIBAS NOMS PTY LTD 20. BOND STREET CUSTODIANS LIMITED Number of Shares % of Shares 63,750,000 42,500,000 39,000,000 11,159,348 6,874,815 5,750,000 3,005,622 2,859,760 2,138,000 1,408,116 1,390,000 806,306 600,000 475,000 426,671 410,675 335,134 330,000 322,354 307,095 31.88 21.25 19.50 5.58 3.44 2.88 1.50 1.43 1.07 0.70 0.70 0.40 0.30 0.24 0.21 021 0.17 0.17 0.16 0.15 Total 183,848,896 91.92 Securities Exchange Quotation The Company’s ordinary shares are listed on the Australian Securities Exchange (Code: MAD). The Home Exchange is Perth. On-market Share Buy-back There is no current on-market buy-back. Corporate Governance Statement The Company’s Corporate Governance Statement for the 2023 financial year can be accessed at: www.madergroup.com.au/investor-centre/corporate-governance MADER GROUP 2023 ANNUAL REPORT 87 88 MADER GROUP 2023 ANNUAL REPORT madergroup.com.au MADER GROUP 2023 ANNUAL REPORT 89 CANADA Alberta Edmonton Office Suite 310 13220 St. Albert Trail Edmonton, Alberta Calgary Office Suite 320 7326 10 Street Northeast Calgary, Alberta USA Colorado Fort Collins Office 2950 E. Harmony Road Suite #220 Fort Collins, Colorado Nevada Reno Office 5470 Kietzke Lane Suite #300 Reno, Nevada Texas Fort Worth Office 3116 W 6th Street Fort Worth, Texas AUSTRALIA Western Australia Head Office Suite A1, Hkew Alpha Building 2 George Wiencke Drive Perth Airport, Western Australia Mader Maintenance Centre 43/49 Nardine Close High Wycombe, Western Australia Kalgoorlie Office Unit 7 19 Cheetham Street Kalgoorlie, Western Australia Queensland Brisbane Office Level 2 1/485 Kingsford Smith Drive Hamilton, Queensland New South Wales Singleton Office Unit 5 108 John Street Singleton, New South Wales O www.madergroup.com.au www.madergroup.com O O www.maderenergy.com

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