Monadelphous Group Limited Annual Report 2020

FY2020 Annual Report · Monadelphous Group Limited

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ANNUAL
REPORT 2020

OUR PURPOSE

To build, maintain and improve our customers’
operations through the reliable delivery of safe,
cost-effective and customer-focused solutions.

Our Vision
Monadelphous will achieve long-term sustainable growth by being recognised as a
leader in our chosen markets and a truly great company to work for, to work with
and invest in.

We are committed to the safety, wellbeing and development of our people, the
delivery of outstanding service to our customers and the provision of superior
returns to our shareholders.

Our Competitive Advantage
We deliver what we promise.

Our Values
Safety and Wellbeing
We show concern and actively care for others. We always think and act safely.

Integrity
We are open and honest in what we say and what we do. We take responsibility for
our work and our actions.

Achievement
We are passionate about achieving success for our customers, our partners and
each other. We seek solutions, learn and continually improve.

Teamwork
We work as a team in a cooperative, supportive and friendly environment. We are
open-minded and share our knowledge and achievements.

Loyalty
We develop long-term relationships, earning the respect, trust and support of our
customers, partners and each other. We are dependable, take ownership and
work for the Company as our own.

Cover Images
Top left: Monadelphous and BHP employees commemorating ANZAC Day 2020 at BHP’s Mining Area C, Newman, Western Australia.
Middle left: A Monadelphous employee opening a valve at the Dungog Water Treatment Plant, Hunter Valley, New South Wales.
Bottom left: A Monadelphous employee at the Company’s Employee Development Centre, a registered training organisation, Bibra Lake, Western Australia.
Middle: Monadelphous employees working at the Woodside-operated Karratha Gas Plant, Karratha, Western Australia.
Top right: A Monadelphous employee with a Mondium employee at Galaxy Resources’ Mt Cattlin Yield Optimisation Project, Ravensthorpe, Western Australia.
Bottom right: A Monadelphous employee installing communication cables to the long-term evolution (LTE) tower at BHP’s Jimblebar, Newman, Western Australia.

This page
A Monadelphous employee installing
equipment to the long-term evolution
(LTE) tower at BHP’s Jimblebar,
Newman, Western Australia.

CONTENTS

OVERVIEW

About Monadelphous

Our Services and Locations

OPERATING AND FINANCIAL REVIEW

2019/20 Highlights

Performance at a Glance

Markets and Growth Strategy

Chairman’s Report

Managing Director’s Report

Company Performance

Board of Directors

Engineering Construction

Maintenance and Industrial Services

Sustainability

FINANCIAL REPORT

Directors’ Report

Remuneration Report

Independent Audit Report

Directors’ Declaration

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Investor Information

123

About this Report
The purpose of this Annual Report is to provide Monadelphous’ stakeholders, including
shareholders, customers, employees, suppliers and the wider community, with
information about the Company’s performance during the 2020 financial year.

References in this Report to ‘the year’, ‘the reporting period’ and ‘the period’ relate to
the financial year 1 July 2019 to 30 June 2020, unless otherwise stated. All dollar
figures are expressed in Australian currency, unless otherwise stated.

Monadelphous Group Limited (ABN 28 008 988 547) is the parent company of the
Monadelphous group of companies. In this Report, unless otherwise stated, references
to ‘Monadelphous’, ‘the Company’, ‘we’, ‘its’, ‘us’ and ‘our’ refer to Monadelphous
Group Limited and its subsidiaries.

Annual General Meeting
Shareholders are advised that the Monadelphous Group Limited 2020 Annual General
Meeting will be held in person at The University Club, University of Western Australia,
Crawley, Western Australia, and online via the Lumi software platform, on Tuesday,
24 November 2020 at 10am (AWST). Further details are included in the Notice of
Meeting available on the Company’s website at www.monadelphous.com.au.

Monadelphous employees on their way to
the coal bunkers at Synergy’s Muja Power
Station, Collie, Western Australia.

OvERvIEW 5

ABOUT
MONADELPHOUS

Monadelphous is an Australian engineering group headquartered in
Perth, Western Australia, providing construction, maintenance and
industrial services to the resources, energy and infrastructure sectors.

The Company builds, maintains and improves its customers’
operations through safe, reliable, innovative and cost-effective service
solutions. It aims to be recognised as a leader in its chosen markets
and a truly great company to work for, work with and invest in.

Our History

Our Operations

Monadelphous emerged from a business which started in
1972 in Kalgoorlie, Western Australia, providing general
mechanical contracting services to the mining industry.

The name Monadelphous was adopted in 1978 and by the
mid-1980s the Company had expanded into a number of
markets, both interstate and overseas, and its shares were
traded on the second board of the Australian Stock Exchange.

In the late 1980s, a major restructure of the Company took
place with the business refocusing on maintenance and
construction services in the resources industry.

Monadelphous’ shares were relisted on the main board of
the stock exchange during the 1990 financial year and the
Company established the foundation for sustained growth
with a new management team.

The Company has continued to diversify and extend its
reputation as a supplier of multidisciplinary construction,
maintenance and industrial services to many of the largest
companies in the resources, energy and infrastructure sectors.

Monadelphous’ shares are included in the S&P/ASX 200 index.

Monadelphous has two operating divisions working
predominately in Australia, with overseas operations in
New Zealand, China, Papua New Guinea, Mongolia, the
Philippines and Chile.

Engineering Construction
The Engineering Construction division provides large-scale
multidisciplinary project management and construction
services. These include fabrication, modularisation,
procurement and installation of structural steel, tankage,
mechanical and process equipment, piping, commissioning,
demolition, water asset construction and maintenance,
heavy lift, electrical and instrumentation, and engineering,
procurement and construction services.

Maintenance and Industrial Services
The Maintenance and Industrial Services division
specialises in the planning, management and execution
of mechanical and electrical maintenance services,
shutdowns, sustaining capital works, fixed plant
maintenance services, access solutions, specialist coatings
and rail maintenance services.

OUR SERVICES
AND LOCATIONS

Monadelphous operates predominantly in
Australia, with overseas operations in New
Zealand, China, Papua New Guinea, Mongolia,
the Philippines and Chile.

CALAMA
ANTOFAGASTA

SANTIAGO
RANCAGUA
CHILE

ENGINEERING CONSTRUCTION

Market Sector

MAINTENANCE AND INDUSTRIAL SERVICES

Market Sector

Albemarle Lithium - SMP and piping works

Lithium

Australia Pacific LNG - Skids supply, fabrication and assembly

Fabrication Services

BHP - South Flank - SMPE&I works for inflow infrastructure

Iron Ore

BHP - South Flank - SMPE&I works for outflow infrastructure

Iron Ore

BHP - WAIO Asset Projects Panel - various SMPE&I packages

Iron Ore

CWP Asset Management - Crudine Ridge Wind Farm - BOP works

Renewable Energy

Fortescue Metals Group - Crane services

Iron Ore

Goldwind Australia - Moorabool Wind Farm - BOP works

Renewable Energy

Hunter Water Corporation - Capital Works Design and Construct Panel

Water

10 Origin - Construction of Talinga Orana Gas Gathering Station

Oil and Gas

Oyu Tolgoi LLC - Oyu Tolgoi Underground Project - SMPE&I works,
supply and fabrication of structural steel

Copper, Gold,
Fabrication Services

12 Rio Tinto - West Angelas Deposits C & D Project - SMPE&I works

Iron Ore

13 Rio Tinto - Western Turner Syncline Phase 2 mine - D&C

Iron Ore

Sydney Water - Network delivery management
and panel works

Water

BHP - Maintenance and shutdowns

Nickel

BHP - Maintenance, shutdowns and sustaining capital works

Iron Ore

BHP Mitsubishi Alliance - Hay Point shutdown; maintenance
and dragline shutdowns

BHP - Mount Arthur Coal - Shutdown maintenance
and minor projects

Coal

BHP - Olympic Dam - Maintenance and shutdowns

Copper, Uranium, Gold

Glencore - Maintenance and dragline shutdowns

Coal

Incitec Pivot Limited - General mechanical and
maintenance services

Ammonia

INPEX Operations Australia - Offshore maintenance services

Oil and Gas

Newcrest Mining - Maintenance works

Newmont Boddington - Mechanical shutdown and tank
maintenance and refurbishments

Gold

11 Oil Search Limited - EPC services

Oil and Gas

12 Queensland Alumina Limited - Maintenance and projects

Alumina

13 Rio Tinto - Fixed plant maintenance and sustaining capital works

Iron Ore

14 Rio Tinto - Maintenance services for rail network

Iron Ore

15 Talison Lithium - D&C tailings retreatment processing plant

Lithium

15 Shell - Provision of services

thyssenkrupp Industrial Solutions (Australia) - South Flank -
Construction of reclaimer and stackers

Iron Ore

16 Shell - Provision of services

17 Unitywater - Kawana Sewage Treatment Plant upgrade

Water

18 vestas - Australian Wind Technology - Cherry Tree Wind Farm - EPC

Renewable Energy

South32 - Worsley Alumina Refinery - Shutdown and
mechanical services

Synergy - Collie Basin Coal Plant Infrastructure operation
and maintenance

Oil and Gas

Alumina

Power

19 vestas - Australian Wind Technology - Dundonnell Wind Farm - EPC

Renewable Energy

19 Tronox - KMK - Cogeneration Plant operation and maintenance

Power

20 Woodside - Offshore and onshore maintenance services

Oil and Gas

OvERvIEW 7

MONGOLIA

CHINA

ULAANBAATAR

BEIJING

PHILIPPINES

MANILA

PAPUA NEW GUINEA

DARWIN

PORT HEDLAND

PILBARA COASTAL
AND NORTH-WEST REGION
3

7 12 13 16

2 13 14 20

KARRATHA

TOM PRICE

NEWMAN

KALGOORLIE
PERTH
HEAD OFFICE

17 18

BUNBURY

BIBRA LAKE

MAJOR OFFICES & WORKSHOP LOCATIONS

ENGINEERING CONSTRUCTION

MAINTENANCE & INDUSTRIAL SERvICES

AUSTRALIA

ROXBY DOWNS

MACKAY

GLADSTONE

BRISBANE

CHINCHILLA

GUNNEDAH
MUSWELLBROOK
MT THORLEY
RUTHERFORD
NEWCASTLE

SYDNEY
MUDGEE

NEW ZEALAND

2019/20
HIGHLIGHTS

Monadelphous made good progress on its markets and growth strategy
during the period, with the award of approximately $1.2 billion of new
contracts and contract extensions, while continuing to grow its service
offering and geographical footprint.

Record revenue in Maintenance & Industrial Services

The Maintenance and Industrial Services division achieved record annual revenue for the third consecutive year, with strong
demand for shutdown and maintenance services within the resources sector.

OPERATING AND FINANCIAL REvIEW 9

Engineering Construction
achieved outstanding
safety performance

Engineering Construction recorded
its strongest safety performance in
history, achieving zero recordable
injuries in its resources business
for 12 consecutive months,
extending over more than three
million hours worked.

Entered the South
American market

Acquired Chile-based
maintenance and
construction services
contractor, Buildtek, an
established operator
with strong relationships
with major customers in
South America.

Broadened rail
services

Extended its rail
maintenance offering,
securing a contract with
Rio Tinto on its rail
network in the Pilbara
and expanding into the
east coast of Australia.

Image courtesy of Rio Tinto.

Significant contracts secured in iron ore

The Company secured a number of major construction contracts
during the year, including Rio Tinto’s West Angelas Deposits C and
D Project and BHP’s South Flank Project, as well as a long-term
maintenance and turnaround contract at Rio Tinto’s coastal iron
ore operations.

Mondium secured strategically important
contract win

Mondium secured a $400 million engineering,
procurement and construction contract with Rio Tinto for
the Western Turner Syncline Phase 2 mine.

Enhanced diversity
and inclusion

Strong focus on improving female
participation across the business
through a number of key initiatives,
and achieved and maintained the
Company’s Stretch Reconciliation
Action Plan goal for Aboriginal and
Torres Strait Islander employment.

PERFORMANCE
AT A GLANCE

Revenue1

Full year dividend

Net profit after tax

$1,650.8m
$36.5m
35.0c
38.7c
$1.2b

Earnings per share

Contracts secured since beginning of 2020 financial year

1 Includes Monadelphous’ share of joint venture revenue. Refer to reconciliation on page 20.
The financial information contained in this section should be read in conjunction with the Financial Statements and accompanying notes. Financial Statements are prepared
in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards Board and other relevant standards, as outlined on page 75.

Revenue1

Net profit after tax

Earnings per share

OPERATING AND FINANCIAL REvIEW 11

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Financial Year

Dividends per share

Cash

s
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$

Workforce numbers

7,545

7,091

6,532

5,689

4,547

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5

Financial Year

Direct Employees

Subcontractors

Revenue by geography

Revenue by end customer

QLD

59%

14%

INTERNATIONAL

10%

NSW

vIC

Iron ore

Oil and Gas

Other Minerals

Infrastructure

Coal

32%

28%

21%

11%

Operations

Safety and wellbeing

People and culture

· Maintenance and Industrial Services
achieved a record revenue result,
exceeding $1 billion for the first time
in the Company’s history.

· 12 month total recordable injury
frequency rate improved 7.5 per
cent to 3.72 incidents per million
hours worked.

· Secured more than $1.2 billion
in new contracts and contract
extensions.

· Engineering Construction recorded
its strongest safety performance in
history in its resources business.

· Strategic acquisition of Chile-based

· Detailed assessment of safety

maintenance and construction
services contractor, Buildtek.

· Mondium secured strategically

important $400 million engineering,
procurement and construction
contract with Rio Tinto.

· Expanded breadth of services in coal

seam gas and rail.

governance practices, including
reviewing minimum standards for
control of fatal risks and further
enhancing Health and Safety
Management Standards.

· Developed and launched tailored
COvID-19 safety, health and
wellbeing campaigns.

· Continued to focus on retention of
key talent to support long-term,
sustainable growth.

· Progressed gender diversity and

Indigenous engagement initiatives.

Implemented strategic sourcing
initiatives.

· Reviewed succession planning

activities to ensure future skill and
capability requirements are met.

MARKETS AND
GROWTH STRATEGY

Monadelphous will maximise growth and returns from its core markets,
broaden its service offering, grow its presence in infrastructure markets
and expand core services to overseas locations.

Maximise growth and returns from core markets
Progress

Priorities

· Secured $1.2 billion of new contracts and extensions since

· Capitalise on opportunities in iron ore and copper.

the beginning of the financial year.

· Focus on innovation and productivity to deliver value for

· Mondium awarded $400 million engineering, procurement

Monadelphous and its customers.

and construction (EPC) contract with Rio Tinto.

· Progressed work on a number of major resource

construction projects.

Increased levels of maintenance services activity in the
resources sector.

· Develop position in EPC market.

Broaden service offering
Progress

Priorities

· Acquired coal seam gas specialist maintenance services

· Broaden service offering to existing customers.

provider, iPipe Services.

· Strengthened position in rail sector, acquiring Harbinger

Infrastructure and securing Rio Tinto rail maintenance contract.

· Established stand-alone industrial services team in oil and gas.

· Pursue maintenance opportunities in light industrial sector.

Grow presence in infrastructure markets
Progress

Priorities

· Strengthened Zenviron’s reputation as a market leader in

· Further enhance Zenviron’s position in the Australian

renewable energy.

renewable energy market.

· Progressed packages under Hunter Water Panel.

· Restructured Company’s Water Infrastructure business.

Expand core services overseas
Progress

Priorities

· Expanded into Chile through the acquisition of

· Develop market presence in Chile and seek opportunities

maintenance and construction services company, Buildtek.

for expansion in Latin America.

· Successfully completed packages of work at Oyu Tolgoi

· Assess further opportunities at Oyu Tolgoi Underground

Underground Project in Mongolia.

Project in Mongolia.

· Continued to provide maintenance services to the

· Expand construction offering in Papua New Guinea.

resources and energy markets in Papua New Guinea.

OPERATING AND FINANCIAL REvIEW 13

A Monadelphous employee
electrical fault finding a deluge
valve at Synergy’s Muja Power
Station, Collie, Western Australia.

CHAIRMAN’S
REPORT

Total revenue for the financial year was $1,650.8 million1, a 2.6 per cent
increase on the prior year, as a result of strong demand for maintenance,
shutdown and sustaining capital services within the resources sector,
particularly in the first half of the financial year, and the commencement
of a number of large resource construction projects.

Earnings before interest, tax, depreciation and amortisation
(EBITDA) was $92.1 million2. EBITDA for the first half of
the financial year was $59.1 million, with earnings for the
second half significantly impacted by both the disruption
caused by COvID-19, as well as disappointing levels
of profitability experienced in the Water Infrastructure
business. In May 2020, the Company announced several
water projects approaching completion had experienced an
escalation in contract disputes and declining profitability,
resulting in a provision of $14 million before tax for project
underperformance and costs relating to a restructuring of the
Company’s Water Infrastructure business.

Net profit after tax for the period was $36.5 million, with
earnings per share of 38.7 cents.

The Board of Directors declared a final dividend of 13 cents
per share, taking the full year dividend to 35 cents per share
fully franked. This equates to a dividend payout ratio of
approximately 91 per cent of reported net profit after tax.
The Monadelphous Group Limited Dividend Reinvestment
Plan applied to both interim and final dividend payments.

Monadelphous’ balance sheet remains strong despite the
recent challenging economic and operating conditions,
ending the year with a cash balance of $208.3 million.
Cash flow from operations was $119.1 million, resulting in a
cash flow conversion rate of 151 per cent, with the Company
experiencing a material improvement in its working capital
position during the second half of the financial year.

Rio Tinto’s West Angelas mine,
Newman, Western Australia.
Image courtesy of Rio Tinto.

1 Includes Monadelphous’ share of joint venture revenue. Refer to reconciliation on page 20.
2 EBITDA – refer to reconciliation on page 20.

OPERATING AND FINANCIAL REvIEW 15

Monadelphous made good progress on its markets
and growth strategy despite the interruption caused by
COvID-19. The Company continued to maximise growth and
returns from its core markets, broaden its service offering,
grow its presence in infrastructure markets and expand core
services to overseas locations.

In total, approximately $1.2 billion of new contracts and
contract extensions were secured since the beginning of
the financial period, including major construction and
maintenance contracts within the Company’s core resources
and energy markets.

The Company expanded its service offering through a number
of strategic acquisitions totalling $14.3 million, including
iPipe Services, a specialist provider of pipeline solutions to
the coal seam gas sector, Harbinger Infrastructure, a rail
infrastructure maintenance service provider, and Buildtek,
a Chile-based maintenance and construction services
contractor. The strength of the Company’s balance sheet
enables it to invest in suitable business opportunities aligned
to its markets and growth strategy as they arise.

Mondium, the Company’s engineering, procurement and
construction (EPC) joint venture, was awarded its largest
contract to date, advancing its position in the Australian
minerals processing sector. The Mondium EPC delivery
model encompasses full project development and direct
execution, significantly reducing interface risks between
EPC disciplines and providing a more cost-effective solution
to customers.

Since inception in 2016, the Company’s renewable energy
business, Zenviron, has completed work on six wind farms,
with a further two currently in progress. Additionally,
subsequent to year end, Zenviron secured a contract to deliver
the Murra Warra Stage II Wind Farm in regional victoria.

Internationally, the Company continued to provide services
to customers in Papua New Guinea, Mongolia, Chile and
New Zealand.

Monadelphous entered the South American market through the
acquisition of Buildtek, an established, well recognised service
provider, which has strong relationships with major resources
and energy customers. The services provided by Buildtek are
similar to those provided by Monadelphous, and the acquisition
delivers a foundation for growth in Latin America.

On behalf of the Board, I would like to thank our stakeholders
for their ongoing support, including our shareholders and
customers. I would also like to commend our team which has
shown great understanding, resilience and loyalty throughout
the COvID-19 pandemic. Even in these uncertain times, our
team has proven collectively, we deliver what we promise.

John Rubino
Chairman

MANAGING DIRECTOR’S
REPORT

The Company continues to be recognised as a leader in its chosen
markets, securing more than $1.2 billion in new contracts and
contract extensions since the beginning of the 2020 financial year,
ensuring a strong pipeline of work for 2021 and beyond.

The Maintenance and Industrial Services division achieved a
record revenue performance for the third year in a row and
exceeded $1 billion of annual revenue for the first time in
the Company’s history. Activity levels in the resources sector
remained strong, particularly in the first half, falling in the
second half due to the outbreak of COvID-19 and a softening
of commodity prices.

The second half of the financial year was significantly affected
by the economic and social impact resulting from the spread
of COvID-19, as well as the necessary measures implemented
by the Company, its customers and governments across the
globe to manage the risk posed to human life.

The measures implemented to prevent the spread of
COvID-19 significantly impacted the Company’s operating
environment, resulting in the delay, suspension, deferral and
reduction of services across a broad range of the Company’s
projects and worksites, and the temporary deferral of
potential new contract awards. The Company estimates that
approximately ten per cent of its annual revenue has been
deferred into subsequent financial periods.

Customers reduced non-essential work and delayed
discretionary expenditure, particularly in fly-in, fly-out
operations, with supply chain issues causing delays on
several large construction projects. Continuing operations
progressed slower than expected due to the implementation
of a wide variety of health risk management practices and,

combined with an underutilisation of the Company’s fleet
of plant and equipment, resulted in materially disrupted
productivity levels.

Monadelphous has taken, and continues to take, a significant
number of proactive measures to ensure its long-term
sustainability and to protect the safety and wellbeing of its
employees and the communities in which it operates.

Early in 2020, the Company established a dedicated team to
monitor, assess and provide daily guidance to the business on
the ever-changing course of events relating to COvID-19 and
the impact that it was having on the business. The taskforce,
working in partnership with customers globally, took advice
from government agencies and recognised health organisations.
Detailed health risk management protocols were prepared and
implemented across the business in response to the risk posed
by the virus, and to assist in the management of any potential
or active cases which may arise.

A significant number of financial sustainability measures
were implemented, including a targeted cost reduction
and cash protection plan to ensure the Company operated
as productively and profitably as possible during such
challenging times. To support this initiative, the Chairman,
Non-Executive Directors and I agreed to a 30 per cent
salary and fee reduction for a six month period, with the
Executive and General Management teams agreeing to salary
reductions between ten and 20 per cent for the same period.

OPERATING AND FINANCIAL REvIEW 17

The Company’s disciplined and prudent financial
management practices resulted in a strong cash flow from
operations for the financial year and a strengthening of the
balance sheet.

With precautionary measures gradually being lifted by
governments in some parts of Australia, and demand from
customers steadily improving, the business has seen a
stabilisation and slow recovery over recent months.
The Company continues to monitor the situation and
adapt its response plans accordingly.

On 31 July 2020, Monadelphous was notified that Rio
Tinto had filed a Writ of Summons in the Supreme Court
of Western Australia against one of Monadelphous’ wholly
owned subsidiaries, Monadelphous Engineering Associates
Pty Ltd (MEA). The claim has been made by Robe River
Mining Co Pty Ltd and Pilbara Iron Pty Ltd (on behalf of the
Robe River joint venture) in respect of a fire incident which
occurred at Rio Tinto’s iron ore processing facility at Cape
Lambert, Western Australia (WA), on 10 January 2019.

MEA had been performing maintenance shutdown services prior
to the fire commencing, and Rio Tinto has alleged that MEA
was in breach of the maintenance contract, thereby causing
the fire. Although the writ does not specify any damages, Rio
Tinto has separately informed MEA that its claim is for $493
million in loss and damage. This amount comprises $35 million
in material damage costs associated with the re-construction
of the Sinter Fines processing facility, and $458 million for a

temporary operating solution and business interruption losses
arising from the alleged inability to process iron ore during the
period of re-construction of the facility.

MEA denies Rio Tinto’s allegations and claimed losses (which
MEA considers have not been substantiated). Further, the
contract between Rio Tinto and MEA, which governed the
maintenance work performed by MEA, contains exclusions
and limitations of liability which will be relied upon by MEA
in defence of the claim. MEA has public liability insurance
in place with a total limit of $150 million which provides
cover for property damage claims and associated losses.
Monadelphous is unaware of any reason why the insurance
policies would not respond to indemnify MEA for liability it
may have to Rio Tinto. Along with its insurers and their legal
representatives, MEA intends to fully defend Rio Tinto’s
legal action.

The Company remains committed to working with Rio Tinto
to seek a satisfactory outcome in this matter.

On 7 March 2020, we announced with great sadness
that our teammate and colleague Haydyn Grubb had been
fatally injured following a serious incident at the Company’s
Kalgoorlie services facility. The Company has taken a range
of measures since the incident to understand what happened
and has implemented actions to prevent a similar incident
in future. Monadelphous continues to provide support to
Haydyn’s family, friends and colleagues. Haydyn will live long
in our memory.

Monadelphous’ 12-month total recordable injury frequency
rate at 30 June 2020 had improved 7.5 per cent to 3.72
incidents per million hours worked.

Engineering Construction

The Engineering Construction division reported revenue of
$615.9 million1, in line with the previous period, with supply
chain issues resulting from COvID-19 causing delays on
several large construction projects.

With an improved outlook and confidence in the resources
sector, especially towards the end of 2019, the division
secured approximately $640 million in new contracts and
contract extensions since the beginning of the financial year,
including approximately $80 million subsequent to year end.

In the Pilbara region of WA, Monadelphous commenced a
major construction contract with Rio Tinto associated with
the West Angelas Deposits C and D Project, as well as a
contract with thyssenkrupp Industrial Solutions (Australia)
at BHP’s world-class US$3.6 billion South Flank Project,
adding to its two existing multidisciplinary construction
contracts at the Project.

Mondium was awarded a strategically important $400
million engineering, procurement and construction (EPC)
contract with Rio Tinto for the Western Turner Syncline Phase
2 Project, in the Pilbara.

Monadelphous commenced work on a major construction
contract at MARBL Lithium Joint venture’s Kemerton lithium
hydroxide plant in the south-west region of WA, which
includes the delivery of structural, mechanical and piping
work. The work is expected to be completed in 2021.

The Company’s renewable energy joint venture, Zenviron,
continued to strengthen its position in the market, completing
works during the year on the Moorabool North, Moorabool
South, Cherry Tree and Lal Lal wind farms in regional victoria.

The division’s unrelenting commitment to safety resulted
in its resources business achieving its strongest safety
performance in history.

Maintenance and Industrial Services
The Maintenance and Industrial Services division achieved
a record revenue performance of $1,049.8 million, up 5.1
per cent on the previous year, on the back of a significant
increase, especially in the first half, in shutdown and
maintenance work across the resources sector.

The division continued to build on its long-term relationships
with major iron ore producers in the Pilbara, securing a
number of maintenance contracts with both Rio Tinto and
BHP, including a major five-year contract with Rio Tinto at
its coastal operations, and the appointment for a further two
years to BHP’s Western Australian Iron Ore Site Engineering
Panel to provide services at its mine and port operations.

In the oil and gas sector, Monadelphous continued to provide
services under its existing onshore and offshore maintenance
contracts at the Woodside-operated gas production facilities
on the Burrup Peninsula and offshore, WA, on the INPEX-
operated Ichthys LNG offshore processing facilities, as well as
in joint operation with Worley for EPC services to Oil Search
at the oil and gas production and support facilities in the
Highland region of Papua New Guinea. The Company also
continued to provide services to Shell in Queensland and WA.

The division broadened its maintenance service offering and
strengthened its capabilities to provide customers with a full
turnkey maintenance service solution. To support this strategy,
the Company acquired iPipe Services early in the period, and
established a stand-alone industrial services team to provide
specialist services to oil and gas customers.

It also continued to build its rail maintenance capability,
expanding to the east coast of Australia with the acquisition
of Harbinger Infrastructure’s business and assets, and
securing a three-year rail maintenance contract with Rio
Tinto on its Pilbara rail network.

Overseas, the division expanded its geographical footprint
with the purchase of Chile-based maintenance and
construction services contractor, Buildtek, providing
opportunities for growth in Latin America.

1 Includes Monadelphous’ share of joint venture revenue.

OPERATING AND FINANCIAL REvIEW 19

Outlook
While the global economic outlook in the wake of COvID-19
remains uncertain, the resources sector is expected to
provide a steady flow of opportunities over coming years.

With a strong iron ore price and demand from China
actively ramping back up, the outlook for Australian iron ore
investment remains solid.

The resumption of a number of Chilean copper projects,
which were suspended or deferred due to the outbreak of
COvID-19, are expected to provide opportunities for the
Company to grow its position in the South American market.

The effect of declining global demand on the oil and gas
sector has resulted in delays in the development of new
LNG projects, with customers reducing operating costs and
deferring non-essential work in the short-term.

The long-term outlook for renewable projects is positive.
Investment in this sector has eased in the short-term
however, as the industry focuses on the development of
improved grid access and transmission capacity.

Maintenance activity is expected to recover slowly from
the effects of COvID-19 and will continue to be impacted
by domestic travel restrictions and physical distancing
requirements in the short-term, particularly in the oil and
gas sector. In the longer-term, demand for maintenance
services is expected to grow on the back of aging assets and
customers deferring non-essential work in prior periods.

The Company has entered the new financial year with a
solid forward workload. The short to medium-term financial
performance of the business will be dependent on the extent
and duration of the impact to the Company’s operational
activity and productivity levels resulting from the spread
of COvID-19.

Monadelphous’ reputation as a leader in its chosen markets,
its long-standing commitment to the delivery of safe, reliable
and cost competitive service solutions, as well as its swift
and decisive response to the outbreak of COvID-19 means
the Company is well positioned to capitalise on opportunities
and deal with the challenges ahead.

Rob velletri
Managing Director

Monadelphous all-terrain crane
working at the Woodside-operated
Karratha Gas Plant, Karratha,
Western Australia.

COMPANY PERFORMANCE

A review of the Company’s performance over the last five years is as follows:

Revenue

EBITDA

Profit before income tax expense

Income tax expense

Profit after income tax expense attributable to equity
holders of the parent

Basic earnings per share

Interim dividends per share (fully franked)

Final dividends per share (fully franked)

Net tangible asset backing per share

Total equity and reserves attributable to equity holders of
the parent

Depreciation

Debt to equity ratio

Return on equity

EBITDA margin

2020
$’000

2019
$’000

2018
$’000

2017
$’000

2016
$’000

1,488,749

1,479,737

1,737,632

1,249,085

1,368,849

92,077

55,086

17,860

36,483

38.65c

22.00c

13.00c

106,791

83,426

31,313

50,565

53.72c

25.00c

23.00c

119,046

102,845

30,570

71,479

76.11c

30.00c

32.00c

98,184

82,664

24,144

57,563

61.41c

24.00c

30.00c

113,630

95,610

28,702

67,014

71.77c

28.00c

32.00c

402.43c

413.93c

415.86c

398.23c

390.64c

384,433

30,570

11.9%

9.5%

5.6%

393,436

19,490

9.7%

12.9%

6.6%

394,481

17,222

5.3%

18.1%

6.7%

377,393

17,892

3.6%

15.3%

7.8%

368,995

21,094

4.8%

18.2%

8.3%

The comparative information has not been restated following the adoption of AASB 16 and continues to be reported under the previous
accounting policy. Refer to note 33 to the financial statements for further details.

Revenue including joint ventures is a non-IFRS measure which does not have any standardised meaning prescribed by IFRS and therefore
may not be comparable to revenue presented by other companies. This measure, which is unaudited, is important to management when
used as an additional means to evaluate the Company’s performance.

Reconciliation of Total Revenue from Contracts with Customers including Joint
Ventures to Statutory Revenue from Contracts with Customers (unaudited):

Total revenue from contracts with customers including joint ventures

Share of revenue from joint ventures 1

Statutory revenue from contracts with customers

2020
$’000

2019
$’000

1,650,768

1,608,277

(163,375)

(131,008)

1,487,393

1,477,269

1 Represents Monadelphous’ proportionate share of the revenue from joint ventures accounted for using the equity method.

EBITDA is a non-IFRS earnings measure which does not have any standardised meaning prescribed by IFRS and therefore may not be
comparable to EBITDA presented by other companies. This measure, which is unaudited, is important to management as an additional
way to evaluate the Company’s performance.

Reconciliation of Profit Before Income Tax to EBITDA (unaudited):

Profit before income tax

Interest expense on loans and hire purchase finance charges

Interest expense on other lease liabilities2

Interest revenue

Depreciation of owned and hire purchase assets

Depreciation of right of use assets2

Amortisation expense

Share of interest, depreciation, amortisation and tax of joint ventures3

2020
$’000

55,086

1,753

1,941

(1,171)

22,608

7,962

644

3,254

2019
$’000

83,426

1,930

(2,269)

19,490

1,306

2,908

EBITDA

92,077

106,791

2 The new accounting standard AASB 16 Leases was adopted from 1 July 2019. Comparatives have not been restated.

3 Represents Monadelphous’ proportionate share of the interest, depreciation, amortisation and tax of joint ventures accounted for using the equity method.

OPERATING AND FINANCIAL REvIEW 21

Woodside-operated Pluto LNG Plant, onshore
gas plant, Karratha, Western Australia.
Image courtesy of Woodside.

BOARD OF
DIRECTORS

Left to right: Helen Gillies, Dietmar Voss, John Rubino, Chris Michelmore, Rob Velletri, Peter Dempsey, Sue Murphy AO.

John Rubino Chairman

John was appointed to the Board on 18 January 1991. John was the founder of
United Construction which later became diversified services company UGL.

Initially serving as Managing Director and Chairman of Monadelphous Group
Limited, John resigned as Managing Director on 30 May 2003 and continued as
Chairman. John has 54 years of experience in the construction and engineering
services industry.

Rob Velletri Managing Director

Rob was appointed to the Board on 26 August 1992 and commenced as
Managing Director on 30 May 2003. He joined Monadelphous in 1989 as
General Manager after serving a ten year career in engineering and management
roles at Alcoa. Rob is a mechanical engineer with 41 years of experience in the
construction and engineering services industry and is a Corporate Member of the
Institution of Engineers Australia.

OPERATING AND FINANCIAL REvIEW 23

Peter Dempsey Lead Independent Non-Executive Director

Peter was appointed to the Board on 30 May 2003. During his 30 year career at
Baulderstone, now part of the multinational group Lendlease, Peter held several
management positions prior to serving as Managing Director for five years. He is
a civil engineer with 48 years of experience in the construction and engineering
services industry throughout Australia, Papua New Guinea, Indonesia and
vietnam. Peter is a Fellow of the Institution of Engineers Australia and a member
of the Australian Institute of Company Directors. Peter is also currently a Director
of Service Stream Limited (ASX: SSM).

Helen Gillies Independent Non-Executive Director

Helen was appointed to the Board on 5 September 2016 and has previously served
as a Director of global engineering company Sinclair Knight Merz and the Australian
Civil Aviation Safety Authority. She has a strong background in risk, law, governance
and finance, as well as extensive experience in mergers and acquisitions, and has 24
years of experience in the construction and engineering services industry. Helen holds
a Master of Business Administration and a Master of Construction Law, as well as
degrees in commerce and law. She is a Fellow of the Australian Institute of Company
Directors. Helen is also currently a Director of Yancoal Australia Limited (ASX: YAL).

Chris Michelmore Independent Non-Executive Director

Chris was appointed to the Board on 1 October 2007. He was formerly a
Director of Connell Wagner, having served 36 years with the company, which
now trades globally as Aurecon. Chris is a civil and structural engineer with
48 years of experience in the construction and engineering services industry
throughout Australia, South East Asia and the Middle East. Chris is a Fellow of
the Institution of Engineers Australia.

Sue Murphy AO Independent Non-Executive Director

Sue was appointed to the Board on 11 June 2019. During her 25 year career at
Clough, she held a wide range of operational and leadership roles before being
appointed to the Board as a Director in 1998. Sue joined the Water Corporation
of Western Australia in 2004 as General Manager of Planning and Infrastructure,
before being appointed as Chief Executive Officer, a role she held for over a
decade. Sue has 41 years of experience in the resources and infrastructure
industries. She holds a Bachelor of Civil Engineering and is an Honorary Fellow
of the Institution of Engineers Australia.

Dietmar Voss Independent Non-Executive Director

Dietmar was appointed to the Board on 10 March 2014. During his career,
Dietmar has worked for a number of global mining and engineering businesses,
including BHP, Bechtel and Hatch throughout Australia, the United States,
Europe, the Middle East and Africa. He is a chemical engineer with 46 years of
experience in the oil and gas, and mining and minerals industries. Dietmar holds
a Master of Business Administration in addition to chemical engineering and law
degrees and is a member of the Australian Institute of Company Directors.

OPERATING AND FINANCIAL REvIEW 25

ENGINEERING
CONSTRUCTION

Our Progress

Recorded revenue of $615.9 million and
secured $640 million of new contracts
since beginning of financial year.

Work continued on several large resources
construction projects.

Mondium secured strategically important
$400 million EPC contract.

Monadelphous’ 600 tonne and 400 tonne crawler cranes lifting the
stacker conveyor boom into final position, supported by the gantry
system, at BHP’s South Flank Project, Newman, Western Australia.

The Engineering Construction division provides large-scale
multidisciplinary project management and construction services.

The division reported revenue of $615.9 million1, in line
with the previous year, with supply chain issues resulting
from COvID-19 causing delays on several large construction
projects. Well established relationships and a track record for
delivering large-scale multidisciplinary projects assisted the
division in securing approximately $640 million worth of new
contracts since the beginning of the financial year, including
approximately $80 million subsequent to year end.

associated with the assembly of the world’s largest ore
handling stockyard machines, comprising a reclaimer and
two stackers.

Mondium accelerated its growth, securing its largest EPC
contract to date, a $400 million contract with Rio Tinto for
the Western Turner Syncline Phase 2 mine, in the Pilbara
region of Western Australia (WA).

Strong progress was made on the Company’s markets and
growth strategy; capitalising on iron ore opportunities,
expanding its engineering, procurement and construction
(EPC) delivery through Mondium, and delivering a strong
performance from its renewable energy business, Zenviron.

Work continued on the division’s two construction
contracts at BHP’s South Flank Project associated
with the inflow and outflow infrastructure, and during
the year the division secured a further contract at
South Flank with thyssenkrupp for multidisciplinary works

During the year, the division’s resources business recorded its
strongest safety performance in its history with a consistent
and focused approach to safety culture, targeted frontline
engagement and supervisor training and resources.

The division continued to progress its digitalisation strategy,
implementing construction materials tracking to ensure
its project teams have access to the right materials at the
right time, as well as establishing a purpose-built virtual
reality room to inspect construction models in an interactive
environment and collaborate in real-time with customers.

A Zenviron employee at Lal Lal
Wind Farm in regional Victoria.

1 Includes Monadelphous’ share of joint venture revenue.

Major lifts completed by Monadelphous’ 750
tonne crawler crane at BHP’s South Flank
Project, Newman, Western Australia.

OPERATING AND FINANCIAL REvIEW 27

CASE STUDY
BHP’s South Flank

The South Flank Project will
be BHP’s single largest iron
ore mine, by production, that
has ever been developed, with
the largest iron ore mining and
processing facility BHP has
built in its more than 50 years
of mining in the Pilbara. It will
also be one of the world’s most
technologically advanced mines.

With three separate construction
packages awarded to date,
Monadelphous will help create
history in partnership with
BHP, delivering structural,
mechanical, piping and electrical
and instrumentation works
associated with the Project’s
inflow and outflow infrastructure,
and on the world’s largest rail
mounted stackers and reclaimer.
The contracts, which have a
combined value of more than
$240 million, are expected to be
completed in mid-2021.

Resources
The division made good progress on its resources projects
during the year, despite experiencing supply chain delays
resulting from COvID-19.

In August 2019, Monadelphous was awarded a major
construction contract with Rio Tinto, including offshore
fabrication through SinoStruct, associated with the West
Angelas Deposits C and D Project, located in the Pilbara.
The contract, valued in excess of $100 million, includes
the supply and installation of structural, mechanical,
piping and electrical and instrumentation works associated
with the construction of new iron ore facilities, as well as
modifications to existing plant. Work commenced during the
year, with the scope extended to include local fabrication
in light of COvID-19 related supply chain issues, and is
expected to be completed in 2021.

The division also secured a major construction contract at
MARBL Lithium Joint venture’s Kemerton lithium hydroxide
plant in the south-west region of WA. Under the contract,
Monadelphous will deliver the pyromet structural, mechanical

and piping package of work, as well as associated piping
fabrication. Since award, the division has made significant
progress on the scope of work which is expected to be
completed in 2021. The division’s safety performance on
the project has been commended by the customer with two
safety awards secured to date.

Monadelphous executed a number of projects under
the BHP Western Australian Iron Ore panel agreement,
providing structural, mechanical, piping and electrical and
instrumentation works across BHP’s Pilbara-based mines
and assets. Three projects were completed during the period,
including Jimblebar Stretch Assist 2, CD2 Dust Collector
Replacement Project and Jimblebar Screens Replacement,
and a further four contracts were awarded. Post year end,
the Company secured a contract for the Port Availability
Improvement Project to provide multidisciplinary brownfield
modification works to conveyers and transfer chutes across
the Nelson Point and Finucane Island facilities, with work
expected to be completed in the second half of the 2021
calendar year.

A 250 tonne crawler crane unloading module 153 at Origin’s Talinga Orana Gas Gathering
Station, Chinchilla, Queensland.

After two years onsite, Monadelphous’ work at Rio Tinto’s
Oyu Tolgoi Underground Project in Mongolia was completed
in early 2020. The Oyu Tolgoi Project remains strategically
important for Monadelphous, with the Company continuing
to operate its office in Ulaanbaatar, with further project
opportunities expected to come to market in the near future.

Mondium
Mondium, the division’s EPC joint venture with Lycopodium,
continued to establish itself as a preferred and trusted
provider of EPC services with the award of a major contract
with Rio Tinto for the design and construction of the Western
Turner Syncline Phase 2 mine in WA.

Mondium also commenced work on its contract with Talison
Lithium for the design and construction of a new tailings
retreatment processing plant at its Greenbushes mine site in
the south-west region of WA, completing earthworks and civil
works during the year.

The Mondium EPC delivery model encompasses full project
development and direct execution, significantly reducing
interface risks between EPC disciplines and providing a more
cost-effective solution to customers.

Energy
At the beginning of the financial year, the division secured
a contract for the construction of the Talinga Orana Gas
Gathering Station for Origin near Chinchilla, Queensland.
The project was successfully completed in March, ahead
of schedule. The strategically important project showcased
Monadelphous’ fully integrated delivery capability,
encompassing fabrication, earthworks, civils, structural,
mechanical, piping and electrical and instrumentation for
the dual train gas gathering station.

Heavy Lift
Demand for the Company’s specialist heavy lift service
offering remained high, securing scope expansions and one-
year extensions to two existing Fortescue Metals Group fixed
plant maintenance and shutdown crane services contracts at
its Solomon Hub and Port operations in the Pilbara.

The Heavy Lift business also provided equipment and
services on several major Monadelphous construction
projects and supported the delivery of Maintenance and
Industrial Services contracts, including a crane services
contract at several Woodside-operated gas production
facilities on the Burrup Peninsula and offshore, WA.

OPERATING AND FINANCIAL REvIEW 29

During the second half, Monadelphous experienced an
escalation in contract disputes and disappointing levels
of profitability on several water projects approaching
completion. After undertaking a strategic review of its Water
Infrastructure business in Australia and New Zealand,
the Company decided to discontinue its operations in
New Zealand and consolidate its east coast engineering
construction operations to reduce costs and improve the
quality of earnings from the water sector.

Outlook

The resources sector is expected to provide a solid pipeline
of construction opportunities over coming years. With
a strong iron ore price and demand from China actively
ramping back up, the outlook for Australian iron ore
investment remains solid.

Mondium continues to establish itself as an EPC leader in
the Australian minerals processing sector. Its performance
to date, and backing from both joint venture partners,
ensures it is well-placed to capitalise on EPC projects within
its core markets as they come to market.

Growth in international markets remains a key strategic
focus, particularly in Mongolia, China, South America
and Papua New Guinea.

Fabrication Services
SinoStruct, the Company’s fabrication business, delivered a
number of packages for repeat customers, including under a
long-standing service agreement with Origin for the supply
and fabrication of wellhead skids, and for works associated
with Rio Tinto’s Oyu Tolgoi Underground Project in Mongolia.

SinoStruct also supported the delivery of a number of key
Monadelphous and Mondium construction projects, including
Rio Tinto’s West Angelas Project and Western Turner
Syncline Phase 2 mine, as well as Origin’s Talinga Orana Gas
Gathering Station.

At the end of the financial year, SinoStruct closed its
fabrication workshop in Houston, United States, due to a
reduction in opportunities resulting from a decline in the oil
price and the impact of COvID-19. SinoStruct continues to
pursue global fabrication opportunities where value from its
local and offshore capability and capacity can be realised.

Infrastructure
Zenviron
Zenviron continued to grow its presence in the renewable
energy market and is now firmly established as a full
service balance of plant contractor of choice for wind farms
in Australia.

During the period, work was completed on four wind farms
across regional victoria, including balance of plant works for
Goldwind Australia’s Moorabool North and Moorabool South
wind farms and for vestas - Australian Wind Technology at
the Cherry Tree and Lal Lal wind farms.

In addition, significant progress was made on the Dundonnell
Wind Farm for vestas - Australian Wind Technology near
Mortlake, victoria, and on CWP Renewables’ Crudine Ridge
Wind Farm, south of Mudgee, New South Wales (NSW).

Subsequent to year end, Zenviron secured a contract with
General Electric International Inc to deliver the Murra Warra
Stage II Wind Farm in regional victoria. It is expected that
Zenviron will perform approximately $80 million of works
under the contract, delivering balance of plant civil and
electrical works.

Water Infrastructure
Under the Hunter Water Corporation Complex Capital Works
Design and Construct Panel program in NSW, construction
was completed on a package of work at the Dungog Water
Treatment Plant, with work progressing well on the Wyee
Backlog Sewer Scheme which is expected to be completed by
the end of 2020. Work continued on Sydney Water’s Network
and Facilities Renewal Program in NSW and on the Kawana
Sewage Treatment Plant on the Sunshine Coast, Queensland.

OPERATING AND FINANCIAL REvIEW 31

MAINTENANCE
AND
INDUSTRIAL
SERVICES

Our Progress

Third consecutive record annual revenue
performance of $1.05 billion.

Strong demand for maintenance, shutdown
and sustaining capital work across the
resources sector.

Strategic acquisitions in coal seam gas,
rail and Chile.

Monadelphous employees preparing
for idler changeout at Cape Lambert,
Pilbara region, Western Australia.

The Maintenance and Industrial Services division specialises in the
planning, management and execution of multidisciplinary maintenance
services, sustaining capital works and turnarounds.

Strong demand for maintenance, shutdown and sustaining
capital services within the resources sector, particularly in the
first half of the year, contributed to the division achieving a
record revenue performance for the third consecutive year of
$1,049.8 million, up 5.1 per cent on the previous year.

Since the beginning of the financial year, the division secured
approximately $515 million of new contracts and contract
extensions, including approximately $60 million subsequent
to year end. It broadened the range of services delivered to

existing and new customers and continued to expand its
geographical footprint, both within Australia and overseas.

This included continuing to strengthen its marine, civil,
fabrication and corrosion management capabilities in order
to provide customers with a full turnkey service solution.
Additionally, new workshop facilities were established in
Bunbury, Western Australia (WA), and workshop facilities
acquired last financial year in Newman, WA, Chinchilla,
Queensland and Mudgee, New South Wales (NSW) were
further embedded.

CASE STUDY
Newcrest Mining Limited’s
Lihir Gold Mine

Newcrest Mining Limited’s Lihir Gold
Mine is located on Niolam Island,
900 kilometres north-east of Port
Moresby in the New Ireland Province of
Papua New Guinea (PNG). The Mine,
which consists of three linked open
pits, Minifie, Lienetz and Kapit, uses
conventional open pit mining methods.

During the period, the Company was
awarded an evergreen contract, with an
expanded scope, at the Mine providing
minor capital project services, including
civil, mechanical, structural, piping and
blast and paint. Monadelphous has
been providing services at Lihir Island
since 2017.

The award reflects the Company’s
position as a leading maintenance and
brownfield project service provider in
PNG, with a strong safety record and
local content strategy, having provided
services in the region since 2007.

Image courtesy of Newcrest Mining Limited.

OPERATING AND FINANCIAL REvIEW 33

Monadelphous employees on their
way to a work front at the Ship
Loader 2 at Cape Lambert, Pilbara
region, Western Australia.

Resources
The division capitalised on its strong relationships with major
iron ore producers in the Pilbara.

A number of contracts were secured with Rio Tinto, including
a major five-year contract for the provision of mechanical and
scaffolding fixed plant maintenance and shutdown services
at its coastal iron ore operations and a three-year contract for
the provision of maintenance services and minor projects on
its Pilbara marine infrastructure.

In addition, the division was awarded a number of contracts
with BHP for upgrades to existing conveyor equipment,
power switching and stackers at Mining Area C mine.

Monadelphous was appointed for a further two years to BHP’s
Western Australian Iron Ore Site Engineering Panel providing
civil, structural, mechanical, piping and marine services at
BHP’s mine and port operations in the Pilbara region of WA.
Subsequent to year end, the Company secured two contracts
under this panel agreement, firstly for the supply and installation
of the Jimblebar Transfer Station, and for the refurbishment of
Car Dumper 3 at Nelson Point, Port Hedland, WA.

The division secured a further three-year contract for the
supply of shutdown and mechanical services at South32’s
Worsley Alumina Refinery in Collie, WA, as well as a
12-month extension to its existing contract with Nickel West
for the provision of maintenance, shutdowns and off site
repair services at Kalgoorlie Nickel Smelter, WA.

In the east, the division secured a three-year contract for
general mechanical and maintenance services as part of
Incitec Pivot’s scheduled turnarounds for its Queensland
manufacturing facilities, a rope access and tank inspection
contract at Rio Tinto’s Yarwun alumina refinery near
Gladstone in Queensland and a minor capital project services
contract, which includes civil, mechanical, structural, piping
and blast and paint services at Newcrest Mining’s gold
mining operations on Lihir Island in PNG.

The acquisition enables Monadelphous to enter the Chilean
market through an established, well recognised operator,
which has strong relationships with major customers.
The services provided by Buildtek are similar to those
offered by Monadelphous and provide a foundation for
Monadelphous’ growth in Latin America.

Outlook

Activity in the maintenance sector is expected to recover
slowly from the impact of COvID-19 and will continue to
be impacted by domestic travel restrictions and physical
distancing requirements in the short-term, particularly
in the oil and gas sector. In the longer-term, demand for
maintenance services is expected to grow on the back of
aging assets and customers deferring non-essential
work in prior periods.

During the year, the Company executed a number of major
shutdowns in Queensland with both BHP Mitsubishi Alliance
at the Hay Point Coal Terminal in Mackay and with Incitec
Pivot at Gibson Island in Brisbane.

Monadelphous continued to build its rail infrastructure and
rolling stock maintenance support service offering, expanding
its services into the east coast through the purchase of
Harbinger Infrastructure’s business and assets. The purchase
secured a five-year contract with Australian Rail Track
Corporation (ARTC) for services on its Hunter valley rail
network in NSW.

The division further strengthened its presence in the rail
sector with the award of a three-year rail maintenance
contract with Rio Tinto on its privately-owned rail network in
the Pilbara. The contract includes general track maintenance
and renewals services on the coastal component of the rail
network and rail workshop services.

Energy
In the oil and gas sector, the division continued to provide
services under its existing onshore and offshore maintenance
contracts at the Woodside-operated gas production facilities
on the Burrup Peninsula and offshore, WA, on the INPEX-
operated Ichthys LNG offshore processing facilities, as
well as in joint operation with Worley for engineering,
procurement and construction services to Oil Search at the
oil and gas production and support facilities in the Highland
region of PNG. The Company also continued to provide
services to Shell in Queensland and WA.

The Company continued to grow its oil and gas service
offering, enhancing equipment preservation services in
Darwin and providing support from its logistics operations
in Perth, WA. It also established a stand-alone industrial
services team, providing services to customers, including
fabric maintenance and ultra-high-pressure blasting services,
and continued to grow its rope access capability, which is
now a leader in the market.

South America
Overseas, the Company acquired Chile-based maintenance
and construction services contractor, Buildtek, and plant
and equipment hire company, MAQrent. Buildtek provides
multidisciplinary construction and maintenance services to
the mining sector in Chile. It has facilities in Antofagasta,
Rancagua and Calama, and a head office in Santiago.
MAQrent provides a range of plant, machinery and
equipment for hire to Buildtek and external customers
in the construction sector.

OPERATING AND FINANCIAL REvIEW 35

A Monadelphous employee installing equipment
in the equipment shelter at BHP’s Jimblebar,
Newman, Western Australia.

OPERATING AND FINANCIAL REvIEW 37

SUSTAINABILITY

Our Progress

Engineering Construction division recorded
its strongest safety performance in history.

Implemented strategic sourcing initiatives
and reviewed succession planning.

Retention and attraction initiatives
continue to be a focus as the
labour market tightens across the
resources sector.

Focused on improving Indigenous and
female participation by proactively
identifying job and development
opportunities.

A Monadelphous employee hears from students
of the Graham (Polly) Farmer Foundation’s
Bunbury Follow the Dream Program.

At Monadelphous, sustainability involves retaining and attracting a
values-aligned and highly competent workforce, ensuring their safety
and wellbeing, maintaining strong customer relationships, being
environmentally responsible, and leaving a positive legacy within the
local communities in which the Company operates.

People
The Company’s unique, values-based culture, which has
been built over almost 50 years, is driven by the collective
experience, knowledge and behaviour of its people.
This culture influences the way things are done and how
decisions are made at Monadelphous, and contributes to
the Company being able to ‘deliver what we promise’.

At year end, the Company directly employed 5,579 employees,
a decrease of almost six per cent from 30 June 2019 and 14
per cent from December 2019. Total workforce numbers at 30
June 2020, including subcontractors, were 5,689.

Safety and wellbeing
On 7 March 2020, we announced with great sadness
that our teammate and colleague Haydyn Grubb had been
fatally injured following a serious incident at the Company’s
Kalgoorlie services facility in Western Australia (WA).
The Company has taken a range of measures since the
incident to understand what happened and has implemented
actions to prevent a similar incident in future. Monadelphous
continues to provide support to Haydyn’s family, friends and
colleagues. Haydyn will live long in our memory.

To support the Company’s commitment to zero harm, the
Company undertook a detailed assessment of its safety
governance practices during the period, including reviewing its
minimum standards for the control of fatal risks, and further
enhancing its Health and Safety Management Standards.

The Engineering Construction division recorded its strongest
safety performance in history, achieving zero recordable
injuries in its resources business for 12 consecutive months,
extending over more than three million hours worked.
The Maintenance and Industrial Services division’s
performance was supported by the roll-out of the division’s
safety behavioural framework, with all employees expected
to have participated in training by September 2020.

Overall, Monadelphous’ 12-month total recordable injury
frequency rate (TRIFR) improved 7.5 per cent to 3.72 incidents
per million hours worked by the end of the financial year.

Monadelphous remains committed to zero harm, executing
work in line with its safety philosophy of ‘The Safe Way is the
Only Way’.

Retention of talent
The Company continues to focus on the retention and
development of its people, as well as the attraction of the
right people to support its markets and growth strategy.
This culture of leadership and talent development, supported
by retention initiatives that foster an ‘owner’s mindset’, are
critical to the ongoing delivery of outstanding service to the
Company’s customers and the provision of superior returns to
its shareholders.

During the year, the Company reviewed talent management
and succession planning across the business to ensure it
has the critical skills and capabilities required. In addition,
to support key talent retention, employee equity participation
was encouraged through the Company’s employee equity
incentive programs, aligning the interests of employees
and shareholders.

The Company’s retention and development initiatives will
become increasingly important as the labour market tightens
across the resources sector.

Developing our people
Employee Development Centre
The Company’s Employee Development Centre, a registered
training organisation (RTO 52582) based in Bibra Lake,
WA, delivered over 4,000 high quality training interactions
for trades personnel throughout the year, including high
risk work licence training accreditation and verification of
competency for the Company’s workforce.

Certificate Iv and Diploma of Leadership and Management
More than 20 employees completed their Certificate Iv
or Diploma of Leadership and Management during the
year, a reduction in comparison to last year as a result of
COvID-19. These courses aim to inspire positive change in
behaviours relating to leadership and encourage creativity
to develop and implement innovative solutions that address
workplace challenges.

OPERATING AND FINANCIAL REvIEW 39

Monadelphous employees completing floor
replacement work on a conveyor walkway at Newmont
Boddington, Bannister, Western Australia.

Certificate Iv and Diploma of Project Management
Introduced at Monadelphous in early 2019, this course
provides a sound theoretical knowledge base for current and
aspiring project managers who are looking to further their
range of specialised technical and managerial competencies.
During the year, almost 40 employees completed either their
Certificate Iv or Diploma of Project Management.

Live the Behaviours
The Live the Behaviours Program was introduced in late
2019, enabling participants to learn about and ultimately
‘live’ the key leadership behaviours critical to success at
Monadelphous. The program afforded 37 employees the
opportunity to practice, learn and acquire key leadership
behaviours in an immersive learning environment.

Emerging Leaders Program
The Emerging Leaders Program, which centres on behavioural
leadership, provides the foundation for high-performing
individuals who are new to, or on the cusp of, leadership
roles, to develop their leadership capabilities to match the
requirements of the business. During the year, 27 emerging
leaders participated in the program.

Leading at Monadelphous Program
Nominated by the Company’s Executive Management Team,
14 employees participated in the Leading at Monadelphous
Program during the year. Participation in the Program is
intended to enhance leadership capability and ensure
business sustainability through leadership self-awareness
and innovative thinking.

Monadelphous employees at the Company’s Employee Development Centre, a registered
training organisation, Bibra Lake, Western Australia.

Attraction of future talent
Graduate Development Program
The Monadelphous Graduate Development Program provides
graduates with a variety of career pathways through rotations
and additional learning and development opportunities.
During the year, approximately 100 graduates were engaged
on the Program across various disciplines, including
engineering, construction management, human resources,
accounting and health, safety, environment and quality.
Almost 25 per cent of engineering appointments to the 2020
Graduate Program were female.

Apprenticeship program
In late 2019, the Company launched a Group-wide
apprentice attraction campaign, which contributed to
an increase in apprentices across the business in 2020.
Monadelphous is currently supporting almost 60 apprentices
in their journey to becoming fully qualified boilermakers,
mechanical fitters, electricians and heavy-duty mechanics.
In support of its focus on diversity, 20 per cent of these
apprentices are female and 16 per cent are Indigenous.
While some apprentices work fly-in-fly-out from Perth, WA,
or Brisbane, Queensland, more than 50 per cent are locally
employed in regional towns, such as Karratha, Newman,
Kalgoorlie and Bunbury in WA, Roxby Downs in South
Australia and Gladstone in Queensland.

Strategic sourcing
Monadelphous experienced strong demand for personnel in
the resources sector in the first half of the year and continued
to implement a number of strategic sourcing initiatives,
including the use of its specialist, in-house resourcing team
to target potential candidates for senior, strategic roles and
positions in high demand across the industry.

Technological workforce attraction and engagement solutions
Attracting talent remains a key priority and has seen
Monadelphous invest in a range of new technologies.

Project Phoenix, a project focused on replacing the
Company’s recruitment and onboarding systems,
commenced during the period. The Project will ensure
Monadelphous can continue to source, select and mobilise
new talent efficiently and effectively. Further, Project Phoenix
will deliver enhanced line-of-sight to internal talent, enabling
improved redeployment and development opportunities.

During the year, the Company launched an employee
application (app), MonaWork. The app is designed to
improve the employee experience by giving employees
greater access to job and mobilisation information, as well
as the ability to manage their own work schedule.

In addition, the Company continues to leverage new
technologies, including augmented learning technologies,
as a means for proactively identifying candidates.

Diversity and inclusion
Monadelphous remains committed to retaining and attracting
a workforce where people of all backgrounds, skills and
cultures are able to work together collaboratively and
contribute equally, inspiring them to reach their full potential
and contribute to the long-term success of the business.

Indigenous engagement
Monadelphous recognises and respects the traditional owners
of the land upon which it operates and considers culture and
heritage an important part of its business.

The Company continued to make significant progress on
targets set out in its Stretch Reconciliation Action Plan 2017
– 2020. Significantly, the Company reached Indigenous
‘Employment Parity’, achieving its goal of three per cent
Indigenous employment for the first time in August 2019.
Actions aimed at sustaining this level longer-term continue
to be implemented.

Another major highlight during the period was the provision
of employment opportunities to more than 70 Indigenous
jobseekers and maintaining this employment for a period of

CASE STUDY
Graham (Polly) Farmer Foundation partnership

Long-term, sustainable partnerships with Indigenous
businesses and community groups continue to be a
key focus for Monadelphous. During the year, a new
partnership was established with the Graham (Polly)
Farmer Foundation for 2020. The partnership will
support high school students in the south-west region
of WA through the Follow the Dream program.
It will also support the establishment of the Living
the Dream program across Australia, supporting
alumni students from all Graham (Polly) Farmer
Foundation Follow the Dream programs as they
enter the workforce.

In addition to the partnership agreement,
Monadelphous continued to support the
Foundation’s Newman Follow the Dream program,
introducing an after-school engagement activity
for students. The engagement activity is designed
to help promote trades roles and related career
avenues by allowing students to enhance their
mechanical skills and gain hands-on experience
in a fun and friendly environment.

OPERATING AND FINANCIAL REvIEW 41

more than six months as part of Monadelphous’ participation
in the Australian Government’s Employment Parity Initiative.
The program, which was launched in 2015, aims to increase
the participation level of Indigenous employees in Australian
businesses. Last financial year, Monadelphous committed to
creating 200 new Indigenous jobs over four years.

Monadelphous’ commitment to developing sustainable
relationships with new and existing Aboriginal and Torres
Strait Islander businesses continued with the launch of
the Company’s second Indigenous Business Directory, an
index of the Indigenous businesses that are active within
the Monadelphous enterprise resource planning system and
which have completed all necessary pre-qualifications.
This year around 20 new Indigenous businesses were added
to the Directory, across civil, medical pre-employment, labour
hire and weld integrity services.

Finally, leaders from across Monadelphous’ eastern region
businesses were invited to partake in a cultural immersion
program at the Mudgee waterhole in Queensland in late
2019. The program provided leaders with the opportunity to
immerse themselves in Aboriginal culture, viewing historical
sites and spending time participating in open and honest
conversations about perceptions and challenges.

A Monadelphous employee attending the
launch of the Company’s partnership with the
Graham (Polly) Farmer Foundation.

Gender diversity and inclusion
Monadelphous’ commitment to gender diversity and inclusion
saw a continued focus on the retention and attraction of
women throughout the year, in line with targets set in its
Gender Diversity and Inclusion Plan 2018 – 2020, launched
last financial year.

The Plan focuses on the three core areas of retention,
attraction and education in order to enable strategic,
sustainable and meaningful change at Monadelphous.

Actions include the promotion of science, technology,
engineering and mathematics (STEM) as a career path,
and education to challenge stereotypes that exist within the
industries in which the Company operates. The Plan also
details the Company’s ongoing commitment to targets of no
greater than ten per cent attrition of key female talent per
annum and an intake of at least 20 per cent female engineers
into the Company’s Graduate Development Program.

To support gender diversity and inclusion, the Company
focused on the promotion of job opportunities to female
candidates. In addition, more than 20 per cent of
participants in the Company’s key development programs,
its Emerging Leaders and Leading at Monadelphous
programs, were female. This was supported externally
by the Company’s participation in a number of women
in leadership, mining, oil and gas and technology events,
encouraging female participation within the sectors.

Monadelphous presented its 2019/20 Workplace Gender
Equality Report, which can be found on the Workplace
Gender Equality Agency and Monadelphous websites.

Innovation and productivity
The Company remained focused on enhancing productivity
and safety through process standardisation, system
optimisation and the implementation of robotics and
automated solutions.

The Company continues to build on its Innovation
Framework, leveraging insights from learnings across the
business and ongoing monitoring of the external technology
landscape. The Framework guides Monadelphous’ approach
to innovation, providing strategic direction and governance
structures to direct and focus the Company’s efforts.

To support collaboration, the Company hosted quarterly
senior leadership innovation sessions and monthly innovation
forums and continued to utilise and promote engagement in
its Innovation Ideas Hub, including to aid in the collation of
cost reduction ideas during the COvID-19 response.

Remaining focused on delivering value for Monadelphous
and its customers through innovation and the application
of technology, the Company extended the use of data
visualisation tools across the business. These included
linking multiple data sources to provide enhanced, real-time
reporting and measurement with high levels of accuracy,
developing and launching a digital employee application
to improve engagement with its workforce, establishing a
virtual reality room in the Perth office to support 3D model
interpretation, and expanding its in-house drone capability by
obtaining a remote operator certificate (ReOC).

A Monadelphous employee
mechanically inspecting a Franna
Boom at BHP’s South Flank.

During the year, the Company’s in-house developed
remote-controlled vehicle, known as ‘The Prospector’,
which was designed to conduct skirt inspections and detect
wear, damage or faults to the skirts and chute liners, was
nominated as a finalist in the 2019 Pinnacles Award for
Innovation Excellence.

Community
Monadelphous remains committed to contributing positively
to society and the communities in which it operates. Its social
value activities focus on four strategically important areas:
diversity, community, education and environment.

During the period, the Company participated in more than
50 community initiatives, including establishing a major
partnership with the Graham (Polly) Farmer Foundation and
continuing its partnership with the University of Western
Australia’s Girls in Engineering program in support of its
commitment to workforce diversity. In addition, sponsorships,
donations and employee volunteering activities included
supporting the Neon Fun Run in Port Hedland, WA, the
GWABA Football Carnival in Bunbury, WA, the Deadly Jobs
Expo in Perth, WA, the Shire of East Pilbara NAIDOC Week
concert in Newman, WA, the World Festival of Magic in
Kalgoorlie, WA, the Sarina Rugby League Football Club in
Mackay, Queensland, and Arid Recovery in Roxby Downs,
South Australia.

In early 2020, Australia experienced devastating bushfires
across the country. Monadelphous employees generously
came together to raise funds, donate goods and services and
volunteer their time in support of those affected.

Similarly, the Company and its employees rallied together
through the COvID-19 pandemic, supporting the local
medical community by sourcing essential personal protective
equipment and donating it to frontline medical personnel.

Environment
Monadelphous understands the importance of the natural
environment in which it operates and is committed
to environmental sustainability through the diligent
management of the activities it undertakes, including
the identification and mitigation of risks to the natural
environment. This is achieved through leadership, resources,
processes, education and a demonstrable commitment to the
Company’s environmental policy.

Ensuring compliance with customer requirements and
environmental legislation and regulation is critical to maintaining
a reputation as a contractor of choice. The Company’s history of
zero serious environmental incidents continued this year, in line
with its commitment to zero harm.

OPERATING AND FINANCIAL REvIEW 43

The move towards a low-carbon economy will continue to
influence change in a number of industries within which
the Company operates. Monadelphous remains committed
to the ongoing monitoring of its environmental risk profile,
taking into consideration the impacts of climate change on
its business and strategy and developing innovative climate
change solutions in an effort to reduce emissions and energy
consumption within its operations and those of its customers.
The Company is undertaking a review of its exposure to
climate change risks with reference to the recommendations
of the Financial Stability Board’s Task Force on Climate-
related Financial Disclosures (TCFD).

Recognising the importance of alternative sources
of energy, Monadelphous continued to grow its footprint
in the renewable energy sector through Zenviron.
Since its establishment, Zenviron has been involved in
the construction of nine wind farms, comprising a total of
425 wind turbines with generation capacity of 1,601 MW.
This represents power for 927,000 homes and the
displacement of 5.1 million tonnes of carbon dioxide each
year. To date, 294 turbines are complete and in operation,
with 131 turbines under construction.

During the period, Monadelphous completed its scope of
work on the Malpas Dam project in Armidale, New South
Wales (NSW), which forms part of the NSW Government’s
and Armidale Regional Council’s drought proofing plan.

CASE STUDY
Automated welding machine
It’s part of Monadelphous’ innovation culture for teams
to come together to identify better ways of undertaking
work tasks, particularly those which are highly manual
and time consuming. In previous years, this has resulted
in innovations such as the Company’s remote-controlled,
skirt inspection vehicle, The Prospector, and conveyor idler
change out equipment, the Idler Slider.

During the year, a similar approach was undertaken at
the Company’s Gladstone operations in Queensland.
The team developed an innovative solution for welding
pure nickel overlay in pipework elbows, a task which
previously took almost 200 hours to complete.
The solution, an automated welding machine, is fondly
known as ‘Boris’ and saves the team almost 160 hours of
work each time they complete the task. Importantly, it also
reduces manual handling risks and prevents employees
from being exposed to heat for extended periods of time.

Carbon footprint
Monadelphous recognises the need to conduct its operations
in an environmentally responsible manner. The Company’s
overall carbon footprint is deemed small, but it continues to
look for ways to reduce its emissions.

Carbon emissions data is monitored for environmental
planning, legislative requirements and sustainability reporting
purposes. This involves the collection of data relating to fuel
use, energy consumption and indirect emissions. The Company
has voluntarily engaged in greenhouse gas monitoring and
reporting, highlighting efforts to minimise its carbon footprint.

Energy usage is predominantly in the areas of gases for
welding processes and fuel used in vehicles, and plant and
equipment required for the execution of services.

Monadelphous undertakes greenhouse and energy reporting
under the National Greenhouse and Energy Reporting Act.
For the year ended 30 June 2020, reportable scope 1 and 2
carbon emissions (CO2e) were equivalent to 15.5kt, down
20 per cent compared to the prior year, and significantly
below the legislative reporting threshold of 50kt of CO2e.
Total scope 1, 2 and 3 emissions were 22.1kt of CO2e, down
31 per cent on the prior year. The Company routinely collects
and monitors carbon reporting data and has assessed that
its current reporting is appropriate for all stakeholders in
consideration of the risks, impacts and costs of reporting,
and is consistent with the principles of the ESG Reporting
Guide for Australian Companies (2015).

Governance
The Board of Directors of Monadelphous Group Limited
is responsible for establishing the Company’s corporate
governance framework with regard to the ASX Corporate
Governance Council Principles and Recommendations.
The Board guides and monitors the business and affairs
of Monadelphous on behalf of its shareholders, by whom
they are elected and to whom they are accountable.
The Company has in place charters, policies and
procedures which support the framework to ensure
a high standard of governance is maintained.

Monadelphous’ full Corporate Governance Statement, Board
and Sub-Committee charters and the Company’s governance
policies, are published on the Company’s website.

Monadelphous has exposure to a number of material
economic, environmental and social sustainability risks
which are identified and managed within the Group’s Risk
Management Framework. These risks, and the Company’s
approach to their management, are disclosed in the
Company’s Corporate Governance Statement.

Monadelphous has been certified to ISO 9001 quality
management systems, and AS/NZS 4801 and ISO 45001
for occupational health and safety management systems.

Mitigation of environmental risks includes the maintenance
and implementation of a certified environmental management
system (ISO 14001) to ensure sustainable work practices
and monitoring and minimising environmental impacts as far
as practicable.

Code of Conduct
The Monadelphous values form the foundation of a
way of life that stands the Company apart from all others.
They represent what the Company stands for and provide a
basis for appropriate standards of behaviour. The Company’s
Code of Conduct is underpinned by the Company values
and provides guidance on the expected behaviour of all
employees, so that decisions and actions reflect the highest
standards of conduct.

During the year, the Code of Conduct was reviewed and
enhanced for updates associated with the whistleblower
protection regime and the Australian Modern Slavery Act.
The Company also formalised its policy on human rights,
articulating its commitment to operating in accordance with
the United Nations (UN) Universal Declaration of Human
Rights and the UN Guiding Principles on Business and
Human Rights. Monadelphous does not accept any form of
modern slavery in the conduct of its own operations and its
supply chain and is committed to ensuring that all workers
are treated fairly, ethically and with respect. This is also
reflected in the Monadelphous Supplier Code of Conduct,
which outlines minimum expectations of the conduct
of its suppliers in the areas of human rights, including
compliance with laws on employment practices, zero use
of forced or compulsory labour and equal opportunity in
employment, as well as health and safety, environmental
impacts, business integrity and ethics. A number of
processes were updated during the year to address the
requirements of the Australian Modern Slavery Act and
improve the identification and mitigation of modern slavery
risks in the Company’s operations and supply chain.
The Company is committed to monitoring and improving
these processes on an ongoing basis.

The Company has an integrity hotline service, facilitated
by an independent service provider, where employees,
contractors and members of the public can report instances
of actual or suspected unethical or unlawful conduct
associated with Monadelphous operations.

OPERATING AND FINANCIAL REvIEW 45

A Monadelphous employee and
all-terrain crane working at the
Woodside-operated Karratha Gas
Plant, Karratha, Western Australia.

FINANCIAL REPORT

A Monadelphous employee contacting
operations to discuss coal movements
at Synergy’s Muja Power Station,
Collie, Western Australia.

Contents

Director’s Report

Director’s Declaration

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

FINaNCIal REPoRt 47

DIRECTORS’ REPORT

Your directors submit their report for the year ended 30 June 2020.

DIRECTORS

the names and details of the directors of the Company in office during the financial year and until the date of this report are as follows.
Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

Calogero Giovanni Battista Rubino
Chairman

appointed 18 January 1991

Resigned as Managing Director on 30 May 2003 and continued as Chairman

54 years experience in the construction and engineering services industry

Robert Velletri
Managing Director

Peter John Dempsey
lead Independent Non-Executive Director

appointed 26 august 1992

Mechanical Engineer, Corporate Member of Engineers australia

appointed as Managing Director on 30 May 2003

41 years experience in the construction and engineering services industry

appointed 30 May 2003

Civil Engineer, Fellow of Engineers australia, Member of the australian Institute
of Company Directors

48 years experience in the construction and engineering services industry

also a non-executive director of the following other publicly listed entity, Service Stream
limited (aSX: SSM) – appointed 1 November 2010

Christopher Percival Michelmore
Independent Non-Executive Director

appointed 1 october 2007

Civil Engineer, Fellow of Engineers australia

Dietmar Robert Voss
Independent Non-Executive Director

Helen Jane Gillies
Independent Non-Executive Director

48 years experience in the construction and engineering services industry

appointed 10 March 2014

Chemical Engineer, Member of the australian Institute of Company Directors

46 years experience in the oil and gas, and mining and minerals industries

appointed 5 September 2016

Solicitor, Master of Business administration and Construction law, Fellow of the
australian Institute of Company Directors

24 years experience in the construction and engineering services industry

also a non-executive director of the following other publicly listed entity, Yancoal
australia limited (aSX: Yal) – appointed 30 January 2018

Susan Lee Murphy AO
Independent Non-Executive Director

appointed 11 June 2019

Civil Engineer, Honorary Fellow of Engineers australia

41 years experience in the resources and infrastructure industries

COMPANY SECRETARIES

Philip Trueman
Company Secretary and Chief Financial officer

Kristy Glasgow
Company Secretary

appointed 21 December 2007

Chartered accountant, Member of Chartered accountants australia and New Zealand

20 years experience in the construction and engineering services industry

appointed 8 December 2014

Chartered accountant, Member of Chartered accountants australia and New Zealand

15 years experience in the construction and engineering services industry

DIRECTORS’ REPORT

INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE

as at the date of this report, the interests of the directors in the shares and options of Monadelphous Group limited were:

C. G. B. Rubino

R. Velletri

P. J. Dempsey

C. P. Michelmore

D. R. Voss

H. J. Gillies

S. l. Murphy ao

EARNINGS PER SHARE

Basic Earnings Per Share

Diluted Earnings Per Share

DIVIDENDS

Final dividends declared

– on ordinary shares

Dividends paid during the year:

Current year interim

– on ordinary shares

Final for 2019

– on ordinary shares

CORPORATE INFORMATION

Corporate structure

Ordinary
Shares

1,022,653

2,119,776

Performance
Rights over
Ordinary Shares

Nil

19,545

Nil

78,000

50,000

2,852

8,571

Nil

Cents

38.65

38.52

Cents

$’000

13.00

12,303

22.00

20,767

23.00

21,688

Monadelphous Group limited is a company limited by shares that is incorporated and domiciled in australia. Monadelphous Group limited has
prepared a consolidated financial report incorporating the entities that it controlled during the financial year (refer note 21 in the financial report).

the registered office of Monadelphous Group limited is located at:

59 albany Highway
Victoria Park
Western australia 6100

FINaNCIal REPoRt 49

DIRECTORS’ REPORT

CORPORATE INFORMATION (continued)

Nature of operations and principal activities

Engineering Services
Monadelphous is a diversified services company operating in the resources, energy and infrastructure industry sector.

Services provided include:

• Fabrication, modularisation, offsite pre-assembly, procurement and installation of structural steel, tankage, mechanical

and process equipment, piping, demolition and remediation works

• Multi-disciplined construction services

• Plant commissioning

• Electrical and instrumentation services

• Engineering, procurement and construction services

• Process and non-process maintenance services

• Front-end scoping, shutdown planning, management and execution

• Water and waste water asset construction and maintenance

• Irrigation services

• Construction of transmission pipelines and facilities

• operation and maintenance of power and water assets

• Heavy lift and specialist transport

• access solutions

• Dewatering services

• Corrosion management services

• Specialist coatings

• Rail maintenance services

General
Monadelphous operates from major offices in Perth and Brisbane, with regional offices in Sydney, Newcastle, Beijing (China), Ulaanbaatar
(Mongolia), Manila (Philippines) and Santiago (Chile), and a network of workshop facilities in Kalgoorlie, Karratha, Port Hedland, Newman,
tom Price, Darwin, Roxby Downs, Gladstone, Hunter Valley, Mackay, Bibra lake, Bunbury, Chinchilla, Mudgee and Rutherford.

the consolidated entity’s revenue is earned predominantly from the resources, energy and infrastructure industry sector.

there have been no significant changes in the nature of those activities during the year.

Employees

the consolidated entity employed 5,579 employees as of 30 June 2020 (2019: 5,942 employees).

OPERATING AND FINANCIAL REVIEW

Review

a review of operations of the consolidated entity during the financial year, the results of those operations, the changes in the state of affairs
and the likely developments in the operations of the consolidated entity are set out in the operating and Financial Review section.

Operating results for the year

Revenue from contracts with customers

Profit after income tax expense attributable to equity holders of the parent

2020
$’000

2019
$’000

1,487,393

1,477,269

36,483

50,565

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

there have been no significant changes in the state of affairs of the parent entity or the consolidated entity during the financial year.

DIRECTORS’ REPORT

SIGNIFICANT EVENTS AFTER REPORTING PERIOD

Notification of filing of writ of summons

on 31 July 2020, Monadelphous was notified that Rio tinto had filed a Writ of Summons in the Supreme Court of Western australia against one of
Monadelphous’ wholly owned subsidiaries, Monadelphous Engineering associates Pty ltd (MEa). the claim has been made by Robe River Mining
Co Pty ltd and Pilbara Iron Pty ltd (on behalf of the Robe River joint venture) in respect of a fire incident which occurred at Rio tinto’s iron ore
processing facility at Cape lambert, Western australia on 10 January 2019. the writ has not yet been served on MEa.

MEa had been performing maintenance shutdown services prior to the fire commencing, and Rio tinto has alleged that MEa was in breach of the
maintenance contract, thereby causing the fire. although the writ does not specify any damages, Rio tinto has separately informed MEa that its
claim is for $493 million in loss and damage. this amount comprises $35 million in material damage costs associated with the re-construction of
the Sinter Fines processing facility, and $458 million for a temporary operating solution and business interruption losses arising from the alleged
inability to process iron ore during the period of reconstruction of the facility.

MEa denies Rio tinto’s allegations and claimed losses (which MEa considers have not been substantiated). Further, the contract between
Rio tinto and MEa, which governed the maintenance work performed by MEa, contains exclusions and limitations of liability which will be relied
upon by MEa in defence of the claim. MEa has public liability insurance in place with a total limit of $150 million which provides cover for
property damage claims and associated losses. Monadelphous is unaware of any reason why the insurance policies would not respond to indemnify
MEa for liability it may have to Rio tinto. along with its insurers and their legal representatives, MEa intends to fully defend Rio tinto’s legal action.

Dividends declared

on 17 august 2020, the directors of Monadelphous Group limited declared a final dividend on ordinary shares in respect of the 2020 financial year.
the total amount of the dividend is $12,303,392 which represents a fully franked final dividend of 13 cents per share. this dividend has not been
provided for in the 30 June 2020 financial statements. the Monadelphous Group limited Dividend Reinvestment Plan will apply to the dividend.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

Refer to the operating and Financial Review section for information regarding the likely developments and future results.

ENVIRONMENTAL REGULATION AND PERFORMANCE

Monadelphous Group limited is subject to a range of environmental regulations.

During the financial year, Monadelphous Group limited met all reporting requirements under any relevant legislation. there were no incidents
which required reporting.

the Company strives to continually improve its environmental performance.

SHARE OPTIONS

Unissued shares

as at the date of this report, there were 244,892 performance rights and 2,400,000 options on issue as follows:

• 161,307 performance rights to take up one ordinary share in Monadelphous Group limited. the performance rights have a vesting

date 1 July 2021

• 83,585 performance rights to take up one ordinary share in Monadelphous Group limited. the performance rights have a vesting

date 1 July 2022

• 600,000 options to take up one ordinary share in Monadelphous Group limited. the options have a vesting date 1 September 2021

• 600,000 options to take up one ordinary share in Monadelphous Group limited. the options have a vesting date 1 September 2022

• 1,200,000 options to take up one ordinary share in Monadelphous Group limited. the options have a vesting date 1 September 2023

Performance rights and options holders do not have any right, by virtue of the performance right or option, to participate in any share issue
of the Company or any related body corporate or in the interest of any other registered Scheme.

Shares issued as a result of the exercise of options

on 1 July 2019, 82,771 performance rights vested and were exercised.

on 1 July 2020, 161,250 performance rights vested and were exercised.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

During the financial year, the Company has paid premiums in respect of a contract insuring all the directors and officers of Monadelphous
Group limited against a liability incurred in their role as directors of the Company, except where:

(a) the liability arises out of conduct involving a wilful breach of duty; or

(b) there has been a contravention of Sections 182 or 183 of the Corporations Act 2001.

FINaNCIal REPoRt 51

DIRECTORS’ REPORT

INDEMNIFICATION OF AUDITORS

the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against certain
liabilities to third parties arising from the audit to the extent permitted by law. the indemnity does not extend to any liability resulting from a
negligent, wrongful or wilful act or omission by Ernst & Young. No payment has been made to indemnify Ernst & Young during or since the audit.

INTERESTS IN CONTRACTS OR PROPOSED CONTRACTS WITH THE COMPANY

During or since the end of the financial year, no director has had any interest in a contract or proposed contract with the Company being
an interest the nature of which has been declared by the director in accordance with Section 300(11)(d) of the Corporations Act 2001.

REMUNERATION REPORT (AUDITED)

the Remuneration Report for the year ended 30 June 2020 outlines the Key Management Personnel remuneration arrangements
of the Group in accordance with the requirements of the Corporations Act 2001.

For the purposes of this report Key Management Personnel of the Group are defined as those persons having the authority and
responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including
any director (whether executive or otherwise) of the parent Company. For the purposes of this report, the term ‘executive’ encompasses
the Managing Director (MD), Chief Financial officer (CFo) and Executive General Managers (EGM) of the Group.

Details of Key Management Personnel

(i) Directors

C. G. B. Rubino

R. Velletri

P. J. Dempsey

Chairman

Managing Director

Deputy Chair and lead Independent Non-Executive Director

C. P. Michelmore

Independent Non-Executive Director

D. R. Voss

H. J. Gillies

S. l. Murphy

(ii) Senior executives

D. Foti

Z. Bebic

P. trueman

Independent Non-Executive Director

Executive General Manager, Engineering Construction

Executive General Manager, Maintenance & Industrial Services

Chief Financial officer and Company Secretary

Remuneration Philosophy
the performance of the Company depends predominantly and primarily upon the quality of its employees. to prosper, the Company must
attract, motivate and retain highly skilled employees, which includes the directors and executives of the Company.

to this end, the Company embodies the principles of providing competitive rewards to attract and retain high calibre executives, and the
linking of executive rewards to the creation of shareholder value.

Remuneration Committee
the Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation
arrangements for the directors and the executive management team.

the Remuneration Committee utilises remuneration survey data compiled by a recognised remuneration research organisation across a range
of industries and geographic regions. the remuneration survey data is updated every 6 months and is used to assess the appropriateness of
the nature and amount of remuneration of directors and the executive management team. this assessment is made with reference to relevant
employment market conditions, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board
and executive team.

In determining the remuneration levels of directors and executives, the Remuneration Committee takes into consideration the performance of
the Group, divisions and business units as well as that of the individual.

Remuneration Structure
In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct.

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Executive remuneration

Objective
the Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within
the Company so as to:

• Reward executives for Group, divisional, business unit, and individual performance;
• align the interests of executives with those of shareholders; and
• Ensure total remuneration is competitive by market standards.

all executives have non-fixed term employment contracts. the Company or executive may terminate the employment contract by providing
3 months written notice. the Company may terminate the contract at any time without notice if serious misconduct has occurred.

Structure
In determining the level and make-up of executive remuneration, the Remuneration Committee receives external survey data from a recognised
remuneration research organisation and considers market levels for comparable executive roles when making its recommendations to the Board.

Executive remuneration consists of a fixed remuneration element and a variable remuneration element. the variable remuneration element can
be provided under the Combined Reward Plan and/or the Employee option Plan.

Remuneration Element

Individual Components

Purpose

Link to Performance

Fixed Remuneration

Comprises base salary,
superannuation and other
benefits.

Variable Remuneration
– Combined Reward Plan

Comprises cash payment, and/
or performance rights issued
under the Monadelphous
Group limited Performance
Rights Plan.

to provide market competitive
fixed remuneration appropriate
to the position and competitive
in the market, taking into
account the individual’s skills,
experience and qualifications.

assessed at an individual
level based on performance
of responsibilities and cultural
alignment with the Company’s
values.

to recognise and reward the
senior leaders of the business
who contribute to the Group’s
success, to align these rewards
to the creation of shareholder
wealth over time and ensure
the long term retention of
employees.

Performance assessed against
financial, safety, people,
customer satisfaction and
strategic progress targets set by
the Board on an annual basis.
Vesting of awards is dependent
on continuity of employment.

Variable Remuneration
– Employee option Plan

Comprises options issued
under the Monadelphous Group
limited Employee option Plan.

to retain and reward key
employees in a manner aligned
to the creation of shareholder
wealth.

Vesting of awards is dependent
on exceeding EPS growth targets
and continuity of employment.

the proportion of fixed remuneration and variable remuneration is established for each member of the executive management team by the
Remuneration Committee. tables 1 and 2 on pages 57 and 58 of this report detail the proportion of fixed and variable remuneration for
each of the executive directors and the senior executives of the Company.

FINaNCIal REPoRt 53

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Fixed remuneration

Objective
Monadelphous has a structured approach aimed at delivering fixed remuneration which is market competitive and rewards performance.
the Company participates in a number of respected remuneration surveys from which it receives quarterly or six-monthly market and forecast
data, and its remuneration system is designed to analyse detailed market and sector information at various levels.

the level of fixed remuneration is set to provide a base level of remuneration which is both appropriate to the position and competitive in the
market, taking into account the individual’s skills, experience and qualifications.

Fixed remuneration levels are considered annually by the Remuneration Committee having reviewed an individual’s performance, alignment
with the Company’s values and comparative remuneration levels in the market.

Structure
Executive team members are given the opportunity to receive their fixed remuneration in a variety of forms including base salary,
superannuation and other benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating
undue cost for the Company.

the fixed remuneration component of the executives of the Company is detailed in tables 1 and 2 on pages 57 and 58 of this report.

Variable remuneration – Combined Reward Plan

Objective
the objective of the Combined Reward Plan (the CR Plan) is to recognise and reward the senior leaders of the business who positively
contribute to the Company’s success, to align these rewards to the creation of shareholder wealth over time and to ensure the long term
retention of the Company’s key talent.

the CR Plan combines short and long term incentive elements and rewards performance of both the Company and the employee. the equity
component of the award is subject to service vesting conditions and disposal restrictions, encouraging employee retention and linking rewards
to the creation of shareholder value through long term share ownership, with employee and shareholder alike benefitting from the long term
growth in the share price.

Structure
Under the CR Plan, the Board has the discretion to make awards on an annual basis subject to Company and individual performance.
awards may be delivered in the form of a combination of cash and/or Performance Rights.

For the year ended 30 June 2020, the Board determined that no award would be made under the CR Plan.

For the year ended 30 June 2019, 100 per cent of the award under the CR Plan was issued in the form of Performance Rights granted
in august 2019 (except for those issued to the Managing Director which were granted at the aGM in November 2019). the number of
Performance Rights issued were calculated using the arithmetic average of the ten-day daily volume weighted average market price of the
Company’s shares commencing on the second trading day after the record date in respect of the FY19 Final Dividend; in other words, the
dividend reinvestment plan price of $15.37.

on 1 November 2019, 246,128 performance rights were issued under the terms of the CR Plan for the year ended 30 June 2019 and subject
to the Monadelphous Group limited Performance Rights Plan Rules. 27,975 performance rights were issued to Key Management Personnel.

on 19 November 2019, following approval by shareholders at the Company’s aGM, 19,310 performance rights were issued to the
Managing Director, Robert Velletri, under the terms of the CR Plan for the year ended 30 June 2019 and subject to the Monadelphous
Group limited Performance Rights Plan Rules.

the Performance Rights component for the 2019 award vests into shares in equal instalments, one, two and three years subsequent to the
year of allocation, subject to the employee remaining in the employ of the Company at those particular dates. the Performance Rights are
exercisable into shares at those dates, with one share issued for each vested Performance Right. the total number of shares issued are held
in escrow until a date three years after the Performance Rights were originally granted.

Unvested performance rights remain subject to Monadelphous’ clawback policy. the Board has the discretion as to the circumstances
that would result in a clawback of unvested performance rights. Factors resulting in material financial misstatement or underperformance,
gross negligence, material lack of compliance, significant personal underperformance or behaviour that is likely to damage the Company’s
reputation, would likely result in a clawback of unvested Performance Rights.

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Variable remuneration – Combined Reward Plan (continued)

Performance Requirements
at the beginning of each financial year, the Board sets quantified, challenging, performance targets for the key performance areas of the
business, taking into account the prevailing economic conditions for the year ahead, the Company’s strategic objectives and the key risk
factors facing the business at that time. the targets are designed to focus the activities of the business on the key areas of performance
that deliver long term sustainable growth for shareholders.

For the year ended 30 June 2020, the Managing Director had a target opportunity of 40% of fixed remuneration, and a maximum
opportunity of 60%. Executives had a target opportunity of 30% of fixed remuneration, and a maximum opportunity of 45%. the target
opportunity is awarded for achieving the objectives set by the Board at the beginning of each financial year. In order for the maximum
opportunity to be awarded, performance must be a clear margin above the planned targets that were set.

at the end of each financial year, the Board assesses the Group’s net profit before tax performance against the budgeted target prior to
any awards being considered under the CR Plan.

once the Board has approved that an award can be made under the CR Plan, executive performance is assessed against the relevant
targets set at the beginning of the financial year at a Group, division, business unit and individual level. this assessment is taken into
account when determining the amount, if any, of the award to be made to each individual under the CR Plan, with annual awards being
subject to approval by the Remuneration Committee and Board. the following key performance areas (KPas) are considered in the
assessment process, covering a number of financial and non-financial, Group and divisional measures of performance. the table below
provides an overview of these KPas and the weighting applied when assessing performance.

Earnings Performance

Other

Earnings per Share

Divisional
Contribution

Group KPAs

Divisional KPAs

60%

30%

40%

CFo

EGM

other Group or divisional KPas relate to:

• Working capital management
• Safety performance
• People performance
• Customer satisfaction
• Strategic progress

the Company regards the performance targets and the actual result as confidential and commercially sensitive in nature and if disclosed,
would provide an unfair advantage to competitors.

the Board has reviewed the financial performance for the year ended 30 June 2020 and determined that no award would be made under
the CR Plan.

FINaNCIal REPoRt 55

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Variable remuneration – Combined Reward Plan (continued)

Performance Requirements (continued)
the following table sets out the awards under the CR Plan for each executive for the financial years ended 30 June 2019 and 30 June 2020:

Executive

R. Velletri

P. trueman

D. Foti

Z. Bebic

2020
Total Award
$

2019
total award
$

296,800

118,400

154,800

156,800

2020
% of Maximum
Opportunity Earned

2019
% of Maximum
opportunity Earned

Not applicable

49%

51%

43%

52%

tables 1 and 2 on pages 57 and 58 of this report detail the proportion of fixed and variable remuneration for each of the executive
directors and the senior executives of the Company for the financial years ended 30 June 2020 and 30 June 2019.

the deferred performance right component of the awards relating to the years ended 30 June 2018 and 2019 are being amortised over three
and four years respectively.

on 1 July 2019, 82,771 performance rights representing the first tranche of the award under the terms of the CR Plan for the year ended
30 June 2018 vested and were exercised into Monadelphous Group limited ordinary shares.

on 1 July 2020, 161,250 performance rights representing the first tranche of the award under the terms of the CR Plan for the year ended
30 June 2019 and the second tranche of the award under the terms of the CR Plan for the year ended 30 June 2018 vested and were
exercised into Monadelphous Group limited ordinary shares.

Variable remuneration – Employee Option Plan

Objective
the objective of the Employee option Plan is to retain and reward key employees in a manner which aligns this element of remuneration with
the creation of shareholder wealth.

Structure
Monadelphous Group limited Employee option Plan

Equity-based grants to executives are at the discretion of the Remuneration Committee and Board, and may be delivered in the form of options.
Should any issue of options be considered, the individual performance rating of each executive and the annual cost to the Company, on an
individual basis, is taken into account when determining the amount, if any, of options granted.

on 14 october 2019, 560,000 options were issued to Key Management Personnel under the terms of the Monadelphous Group limited Employee
option Plan and subject to the Monadelphous Group limited Employee option Plan Rules.

In accordance with the terms of the offer and the rules of the Monadelphous Group limited Employee option Plan, the options can only be
exercised in specified window periods (or at the discretion of the Board in particular circumstances) and are subject to the financial performance of
the Company during the option vesting period (measurement period).

Earnings Per Share (EPS) growth is the means for measuring the performance of the Company over the measurement period. In order for 100 per
cent of the options to be exercisable EPS growth of 10 per cent per annum (compounded over the measurement period) is required. If EPS growth
of 5 per cent per annum (compounded) is achieved, 50 per cent of the options will be exercisable and if EPS growth of between 5 per cent and 10
per cent per annum (compounded) is achieved, a pro-rata number of options will be exercisable.

In subsequent window periods, performance will be re-tested and any options that were incapable of exercise in earlier window periods will become
available for exercise to the extent that EPS performance has ‘caught up’ and the EPS growth hurdle is met over the longer measurement period.
at the end of the final window period, any options remaining that are not capable of exercise, as a result of the performance hurdle not being
achieved, will be forfeited. No options will be exercisable if an EPS growth rate is achieved that is less than 5 per cent per annum (compounded).

Subject to the satisfaction of the EPS performance hurdle, the options may be exercised in the following window periods:

• Up to a maximum of 25% during the window period commencing 1 September 2021;

• Up to a maximum of 25%, plus any options rolled over from the previous window period, during the window period commencing

1 September 2022; and

• Up to a maximum of 50%, plus any options rolled over from the previous window period, during the window period commencing

1 September 2023.

Hedging of equity awards
the Company prohibits executives from entering into arrangements to protect the value of unvested equity-based awards. the prohibition
includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package.

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Non-executive director remuneration

Objective
the Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain directors of the
highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure
the Constitution and the aSX listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from
time to time by a general meeting. the most recent determination was at the annual General Meeting held on 19 November 2019 when
shareholders approved an aggregate remuneration of $850,000 in the ‘not to exceed sum’ paid to non-executive directors.

the amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors
is reviewed annually. the Board considers the fees paid to non-executive directors of comparable companies when undertaking the annual
review process.

Non-executive director fees consist of base fees and committee chair fees. the Deputy Chair/lead Independent Non-executive Director also
receives an additional fee. the payment of committee chair fees recognises the additional time commitment required by non-executive
directors to chair the Board committees. Committee members do not receive a separate fee for sitting on a committee.

In March 2020, the Directors agreed to a 30 per cent salary and fee reduction for a six month period to support the cost reduction measures
implemented by the Company in response to CoVID-19.

the table below summarises Board and Committee fees payable to non-executive directors for the financial year ended 30 June 2020
(inclusive of superannuation):

Board Fees
Non-executive Director fee
Board Deputy Chair and lead Independent Non-executive Director additional fee

Committee Chair Fees

audit
Remuneration
Nomination

Annualised Fee Applicable
July 2019 to
March 2020
$

Annualised Fee Applicable
April 2020 to
September 2020
$

118,000
20,000

15,000
15,000

82,600
20,000

15,000
15,000

*the Nomination Committee is chaired by the Executive Chairman.

Non-executive directors have long been encouraged by the Board to hold shares in the Company (purchased by the director on-market).
It is considered good governance for directors to have a stake in the Company.

Fees for non-executive directors are not linked to the performance of the Company. the non-executive directors do not receive retirement
benefits, nor do they participate in any incentive programs.

the remuneration of non-executive directors for the year ending 30 June 2020 is detailed in table 1 on page 57 of this report.

Employment contracts
all executives have non-fixed term employment contracts. the Company or executive may terminate the employment contract by providing
3 months written notice. the Company may terminate the contract at any time without notice if serious misconduct has occurred.

Company performance

the profit after income tax expense and basic earnings per share for the Group for the last five years is as follows:

2020
$’000

2019
$’000

2018
$’000

2017
$’000

2016
$’000

Profit after income tax expense attributable to equity
holders of the parent

Basic earnings per share

Share price as at 30 June

36,483

38.65c

$10.82

50,565

53.72c

71,479

76.11c

57,563

61.41c

67,014

71.77c

$18.81

$15.06

$13.99

$7.46

the comparative information has not been restated following the adoption of aaSB 16 and continues to be reported under the previous accounting policy. Refer to note 33 for further details.

a review of the Company’s performance and returns to shareholders over the last five years has been provided on page 20 of this report.

FINaNCIal REPoRt 57

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Remuneration of Key Management Personnel

Table 1: Remuneration for the year ended 30 June 2020
as mentioned earlier, during the period, the Board agreed to a 30 per cent salary and fee reduction for a six month period in response to
the impact of CoVID-19 on the Company’s business and operations, with the Executive and General Management teams agreeing to salary
reductions of between 10 and 20 per cent for the same period.

Short Term Benefits

Post
Employment

Long Term
Benefits

Share-Based
Payments3

Salary
& Fees
$

Leave1
$

Non-
Monetary2
$

Cash
Award
$

Superannuation
$

Leave
$

Performance
Rights and
Options
$

Total
Performance
Related
%

Total
$

Total
Performance
Rights and
Options
Related
%

Non-Executive Directors

P. J. Dempsey

133,509

C. P. Michelmore

115,244

D. R. Voss

H. J. Gillies

101,545

S. l. Murphy

101,545

Subtotal
Non-Executive
Directors

Executive Directors

553,388

C. G. B. Rubino

388,231

35,097

R. Velletri

946,494

24,444

17,850

Subtotal
Executive
Directors

1,334,725

59,541

17,850

Other Key Management Personnel

D. Foti

Z. Bebic

756,731

18,057

7,965

652,500

31,419

15,270

P. trueman

494,550

8,176

12,690

Subtotal
Other Key
Management
Personnel

1,903,781

57,652

35,925

Total

3,791,894

117,193

53,775

1. leave reflects annual leave accrual less annual leave taken.
2. Non-monetary benefits consist of life and Salary Continuance insurance premiums.
3. Relates to both the 2018 and 2019 awards under the CR Plan.

12,683

10,948

9,647

52,572

21,003

8,095

146,192

126,192

111,192

605,960

452,426

21,003

22,669

176,236 1,208,696

14.58

42,006

30,764

176,236 1,661,122

10.61

21,003

30,487

99,309

933,552

21,003

29,865

96,554

846,611

21,003

(10,616)

73,442

599,245

10.64

11.40

12.26

10.64

11.40

12.26

63,009

49,736

269,305 2,379,408

11.32

157,587

80,500

445,541 4,646,490

9.59

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Remuneration of Key Management Personnel (continued)

Table 2: Remuneration for the year ended 30 June 2019

Short Term Benefits

Post
Employment

Long Term
Benefits

Share-Based
Payments3

Salary
& Fees
$

Leave1
$

Non-
Monetary2
$

Cash
Award
$

Superannuation
$

Performance
Rights
$

Leave
$

Total
Performance
Related
%

Total
$

Total
Performance
Rights
Related
%

Non-Executive Directors

P. J. Dempsey

131,861

C. P. Michelmore 113,596

D. R. Voss

H. J. Gillies

104,464

S. l. Murphy4

4,968

Subtotal
Non-Executive
Directors

459,353

Executive Directors

21,199

1,045

85,841

C. G. B. Rubino

412,000

37,261

21,199

R. Velletri

973,000 (127,989)

32,387

Subtotal
Executive
Directors

1,385,000

(90,728)

53,586

Other Key Management Personnel

D. Foti

Z. Bebic

758,800

41,217

24,004

643,400

52,685

31,309

P. trueman

483,500

(5,003)

29,813

Subtotal
Other Key
Management
Personnel

1,885,700

88,899

85,126

Total

3,730,053

(1,829) 224,553

12,527

10,792

9,925

472

43,641

20,531

8,073

165,587

145,587

135,588

6,485

588,835

499,064

20,531

31,658

265,788 1,195,375

22.23

41,062

39,731

265,788 1,694,439

15.69

20,531

(13,477) 155,654

986,729

20,531

30,920

155,876

934,721

20,531

13,907

118,927

661,675

15.77

16.68

17.97

15.77

16.68

17.97

61,593

31,350

430,457 2,583,125

16.66

146,296

71,081

696,245 4,866,399

14.31

1. leave reflects annual leave accrual less annual leave taken.
2. Non-monetary benefits consist of Directors and officers, and life and Salary Continuance, insurance premiums.
3. Relates to both the 2018 and 2019 awards under the CR Plan.
4. S. l. Murphy was appointed as an Independent Non-Executive Director on 11 June 2019.

Table 3: Performance Rights: Granted during the year ended 30 June 2020

Terms and Conditions for Each Grant

Granted
Number

Grant Date

Fair Value
per Right at
Grant Date

Exercise
Price
per Right

Expiry Date

First
Exercise Date

Last
Exercise Date

19,310

19/11/2019

$14.51

Nil

1/7/2022

1/7/2020

1/7/2022

10,071

27/8/2019

10,201

27/8/2019

7,703

27/8/2019

$14.26

Nil

1/7/2022

1/7/2020

1/7/2022

1/7/2020

1/7/2022

1/7/2020

1/7/2022

47,285

Executive Directors

R. Velletri

Other Key Management
Personnel

D. Foti

Z. Bebic

P. trueman

Total

FINaNCIal REPoRt 59

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Remuneration of Key Management Personnel (continued)

Table 4: Options: Granted during the year ended 30 June 2020

Terms and Conditions for Each Grant

Granted
Number

Grant Date

Weighted
Average
Fair Value
per Right at
Grant Date

Exercise
Price
per Right

Expiry Date

First
Exercise Date

Last
Exercise Date

200,000

14/10/2019

200,000

14/10/2019

160,000

14/10/2019

$2.12

$14.84

14/9/2023

1/9/2021

14/9/2023

$14.84

14/9/2023

1/9/2021

14/9/2023

$14.84

14/9/2023

1/9/2021

14/9/2023

560,000

Executive Directors

R. Velletri

Other Key Management
Personnel

D. Foti

Z. Bebic

P. trueman

Total

Table 5: Shares issued on exercise of performance rights during the year ended 30 June 2020

Performance Rights
Vested

Performance Rights
Excercised

Shares
Issued

Paid Per Share
$

Directors

R. Velletri^

Executives

D. Foti^

Z. Bebic^

P. trueman^

Total

6,670

4,000

3,793

2,911

17,374

6,670

4,000

3,793

2,911

17,374

6,670

4,000

3,793

2,911

17,374

Nil

^ on 1 July 2019, the date of exercise of the above performance rights, the closing share price was $18.96.

Additional disclosures relating to options and shares

Table 6: Performance rights holdings of Key Management Personnel

Performance Rights
held in Monadelphous
Group Limited

Balance at
Beginning of Period
1 July 2019

Granted as
Remuneration

Rights Exercised
and Lapsed

Net Change Other

Balance at
End of Period
30 June 2020

Directors

C. G. B. Rubino

R. Velletri

P. J. Dempsey

C. P. Michelmore

D. R. Voss

H. J. Gillies

S. l. Murphy

Executives

D. Foti

Z. Bebic

P. trueman

Total

20,011

19,310

(6,670)

12,000

11,381

8,734

52,126

10,071

10,201

7,703

47,285

(4,000)

(3,793)

(2,911)

(17,374)

32,651

18,071

17,789

13,526

82,037

DIRECTORS’ REPORT

REMUNERATION REPORT (AUDITED) (continued)

Additional disclosures relating to options and shares (continued)

Table 7: Options holdings of Key Management Personnel

Options held in
Monadelphous Group
Limited

Balance at
Beginning of Period
1 July 2019

Granted as
Remuneration

Options Exercised
and Lapsed

Net Change Other

Balance at
End of Period
30 June 2020

Directors

C. G. B. Rubino

R. Velletri

P. J. Dempsey

C. P. Michelmore

D. R. Voss

H. J. Gillies

S. l. Murphy

Executives

D. Foti

Z. Bebic

P. trueman

Total

200,000

160,000

560,000

200,000

160,000

560,000

Table 8: Shareholdings of Key Management Personnel

Shares held in
Monadelphous Group
Limited

Balance at
Beginning of Period
1 July 2019

Granted as
Remuneration

On Exercise
of Performance
Rights

Net Change
Other

Balance at
End of Period
30 June 2020

Directors

C. G. B. Rubino

R. Velletri

P. J. Dempsey

C. P. Michelmore

D. R. Voss

H. J. Gillies

S. l. Murphy

Executives

D. Foti

Z. Bebic

P. trueman

Total

1,022,653

2,100,000

78,000

40,000

2,852

8,278

54,316

3,306,099

6,670

4,000

3,793

2,911

17,374

10,000

293

1,022,653

2,106,670

78,000

50,000

2,852

8,571

58,316

3,793

2,911

10,293

3,333,766

Loans to Key Management Personnel and their related parties
No directors or executives, or their related parties, had any loans during the reporting period.

Other transactions and balances with Key Management Personnel and their related parties
there were no other transactions and balances with Key Management Personnel or their related parties.

END OF REMUNERATION REPORT

FINaNCIal REPoRt 61

DIRECTORS’ REPORT

DIRECTORS’ MEETINGS

the number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings
attended by each director are shown in the table below.

Directors’ Meetings

Audit

Remuneration

Nomination

Meetings of Committees

Number of meetings held:

Number of meetings attended:

C. G. B. Rubino

R. Velletri

P. J. Dempsey

C. P. Michelmore

D. R. Voss

H. J. Gillies

S. l. Murphy^

^ S. l. Murphy was appointed to the audit, Nomination and Remuneration Committees on 2 September 2019 and attended all meetings she was eligible to attend.

COMMITTEE MEMBERSHIP

as at the date of this report, the Company had an audit committee, a remuneration committee and a nomination committee.
Members acting on the committees of the Board during the year were:

Audit

P. J. Dempsey (c)

D. R. Voss

H. J. Gillies

Remuneration

C. P. Michelmore (c)

D. R. Voss

H. J. Gillies

Nomination

C. G. B. Rubino (c)

C. P. Michelmore

P. J. Dempsey

S. l. Murphy (appointed 2 September 2019) S. l. Murphy (appointed 2 September 2019) H. J. Gillies

D. R. Voss

S. l. Murphy (appointed 2 September 2019)

Note: (c) Designates the chair of the committee.

ROUNDING

the amounts contained in this report and in the financial report have been rounded to the nearest thousand dollars ($’000) (where rounding
is applicable) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191. the Company is an entity to which the legislative instrument applies.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Monadelphous Group limited
support and have adhered to the principles of Corporate Governance. the Company’s Corporate Governance Statement is detailed on the
Company’s website.

DIRECTORS’ REPORT

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

the directors have received an independence declaration from the auditor of Monadelphous Group limited, as shown on page 63.

the following non-audit services were provided by the entity’s auditor, Ernst & Young. the directors are satisfied that the provision of non-
audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. the nature and
scope of each type of non-audit service provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:

tax compliance services

Signed in accordance with a resolution of the directors.

101,332

C. G. B. Rubino
Chairman
Perth, 17 august 2020

AUDITOR’S INDEPENDENCE DECLARATION

FINaNCIal REPoRt 63

INDEPENDENT AUDIT REPORT

FINaNCIal REPoRt 65

INDEPENDENT AUDIT REPORT

FINaNCIal REPoRt 67

INDEPENDENT AUDIT REPORT

FINaNCIal REPoRt 69

DIRECTOR’S DECLARATION

In accordance with a resolution of the Directors of Monadelphous Group limited, I state that:

1) In the opinion of the directors:

(a) the financial statements, notes and the additional disclosures included in the Directors’ Report designated as audited,

of the consolidated entity are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for

the year ended on that date; and

(ii) complying with accounting Standards and Corporations Regulations 2001; and

(b) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due

and payable; and

(c) the financial statements and notes also comply with International Financial Reporting Standards as disclosed on page 75.

2) this declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295a

of the Corporations Act 2001 for the year ended 30 June 2020.

3) In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the closed
group identified in note 21 will be able to meet any obligations or liabilities to which they are or may become subject to, by virtue of the
Deed of Cross Guarantee.

on behalf of the Board

C. G. B. Rubino
Chairman
Perth, 17 august 2020

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020

Continuing Operations

REVENUE

Cost of services rendered

GROSS PROFIT

other income

Business development and tender expenses

occupancy expenses

administrative expenses

Finance costs

Share of profit from joint ventures

Unrealised foreign currency (loss)/gain

PROFIT BEFORE INCOME TAX

Income tax expense

PROFIT AFTER INCOME TAX

ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

NON-CONTROLLING INTERESTS

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

Notes

2020
$’000

2019
$’000

1,488,749

1,479,737

(1,386,327)

(1,351,482)

102,422

128,255

4,778

(17,196)

(3,663)

(32,351)

(3,694)

4,932

(142)

5,737

(20,755)

(3,675)

(31,759)

(1,930)

7,144

409

55,086

83,426

(17,860)

(31,313)

37,226

52,113

36,483

743

37,226

38.65

38.52

50,565

1,548

52,113

53.72

53.62

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020

NET PROFIT FOR THE YEAR

OTHER COMPREHENSIVE INCOME

Items that may be reclassified subsequently to profit or loss:

Foreign currency translation

Items that will not be reclassified subsequently to profit or loss:

Net (loss)/gain on equity instruments designated at fair value through other comprehensive income

Income tax effect

OTHER COMPREHENSIVE (LOSS)/ INCOME FOR THE YEAR, NET OF TAX

FINaNCIal REPoRt 71

2020
$’000

2019
$’000

37,226

52,113

(1,244)

(48)

(35)

(1,279)

275

115

(34)

356

TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX

35,947

52,469

ATTRIBUTABLE TO:

EQUITY HOLDERS OF THE PARENT

NON-CONTROLLING INTERESTS

35,204

743

35,947

50,921

1,548

52,469

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020

Notes

2020
$’000

2019
$’000

ASSETS

Current assets

Cash and cash equivalents

trade and other receivables

Contract assets

Inventories

Income tax receivable

Total current assets

Non-current assets

Property, plant and equipment*

Contract assets

Intangible assets and goodwill

Investment in joint venture

Deferred tax assets

other non-current assets

Total non-current assets

TOTAL ASSETS

LIABILITIES

Current liabilities

trade and other payables

Interest bearing loans and borrowings*

lease liabilities*

Income tax payable

Provisions

Total current liabilities

Non-current liabilities

Interest bearing loans and borrowings*

lease liabilities*

Provisions

other financial liability

Deferred tax liabilities

Total non-current liabilities

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed equity

Reserves

Retained earnings

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

Non-Controlling Interests

TOTAL EQUITY

*the new accounting standard aaSB 16 Leases was adopted from 1 July 2019. Comparatives have not been restated. Refer to note 33 for details.

208,292

262,437

27,379

4,786

164,042

322,849

29,372

4,607

205

502,894

521,075

163,666

115,437

124

4,181

11,649

28,775

2,873

211,268

289

3,120

7,980

34,164

2,921

163,911

714,162

684,986

165,752

1,580

18,733

3,766

59,365

249,196

1,943

69,636

4,340

4,480

125

80,524

184,341

10,868

63,053

258,262

27,361

4,542

140

32,043

329,720

290,305

384,442

394,681

131,307

33,062

220,064

384,433

384,442

128,723

33,707

231,006

393,436

1,245

394,681

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020

FINaNCIal REPoRt 73

Attributable to equity holders

Share-
Based
Payment
Reserve
$’000

Foreign
Currency
Translation
Reserve
$’000

Non-
controlling
Interests
$’000

Fair Value
Reserve for
Financial
Assets
$’000

Retained
Earnings
$’000

Issued
Capital
$’000

Equity
Reserve
$’000

at 1 July 2019 as previously stated

128,723

32,721

231,006

1,245

902

opening balance adjustment on
application of aaSB 16*

(4,970)

at 1 July 2019 as restated

128,723

32,721

226,036

1,245

other comprehensive income

Profit for the period

Total comprehensive
income for the period

Transactions with owners
in their capacity as owners

Recognition of non-controlling
interest at the date of acquisition
of controlled entities (note 22)

Reclassification of non controlling
interest to liabilities (note 22)

Share-based payments

adjustment to deferred tax asset
recognised on employee share trust

Dividend reinvestment plan

2,584

Dividends paid

Foreign currency movements

2,186

(97)

(1,244)

36,483

(1,244)

36,483

743

2,831

(3,026)

(42,455)

(1,650)

(134)

902

(35)

Total
$’000

394,681

(4,970)

389,711

(1,279)

37,226

35,947

2,831

(1,455)

(4,481)

2,186

(97)

2,584

(44,105)

(134)

At 30 June 2020

131,307

34,810

(1,160)

220,064

867

(1,455)

384,442

*Refer to note 33 for details of the opening balance adjustments made on application of the new accounting standards applicable for the Group from 1 July 2019.

Attributable to equity holders

Issued
Capital
$’000

Share-Based
Payment
Reserve
$’000

Foreign
Currency
Translation
Reserve
$’000

Retained
Earnings
$’000

Non-
controlling
Interests
$’000

Fair Value
Reserve for
Financial
Assets
$’000

Total
$’000

at 1 July 2018

125,703

29,662

(191)

234,114

1,647

821

391,756

other comprehensive income

Profit for the period

Total comprehensive
income for the period

Transactions with owners
in their capacity as owners

Share-based payments

adjustment to deferred tax asset
recognised on employee share trust

Dividend reinvestment plan

Dividends paid

At 30 June 2019

3,020

2,953

106

275

50,565

1,548

275

50,565

1,548

(53,673)

(1,950)

356

52,113

52,469

2,953

106

3,020

(55,623)

128,723

32,721

231,006

1,245

902

394,681

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers (inclusive of GSt)

Payments to suppliers and employees (inclusive of GSt)

Interest received

Finance costs paid

other income

Income tax paid

Dividends received

Notes

2020
$’000

2019
$’000

1,734,620

1,596,337

(1,610,556)

(1,546,389)

1,171

(3,694)

2,306

(4,954)

185

2,269

(1,930)

2,295

(36,816)

199

NET CASH FLOWS FROM OPERATING ACTIVITIES

119,078

15,965

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment

Purchase of property, plant and equipment

Repayment of loans to joint ventures and associates

Purchase of intangible assets

acquisition of controlled entities

3,770

(12,126)

1,230

(460)

(681)

4,970

(19,707)

600

NET CASH FLOWS USED IN INVESTING ACTIVITIES

(8,267)

(14,137)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid

Proceeds from borrowings

Repayment of borrowings

Payment of principal portion of hire purchase liabilities

Payment of principal portion of other lease liabilities*

(41,521)

594

(6,256)

(12,398)

(7,322)

(52,603)

15,054

(300)

(9,995)

NET CASH FLOWS USED IN FINANCING ACTIVITIES

(66,903)

(47,844)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

Net foreign exchange differences

Cash and cash equivalents at beginning of period

43,908

342

164,042

(46,016)

1,285

208,773

CASH AND CASH EQUIVALENTS AT END OF PERIOD

208,292

164,042

*the new accounting standard AASB 16 Leases was adopted from 1 July 2019. Comparatives have not been restated. Refer to note 33 for details.

FINaNCIal REPoRt 75

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2020

GENERAL INFORMATION

the consolidated financial report of Monadelphous Group limited (the Group) and its subsidiaries for the year ended 30 June 2020 was
authorised for issue in accordance with a resolution of directors on 17 august 2020.

Monadelphous Group limited is a for profit company limited by shares incorporated and domiciled in australia whose shares are publicly
traded on the australian Securities Exchange. the Group’s registered office is 59 albany Highway, Victoria Park, Western australia.

the nature of the operations and principal activities of the Group are described in the Directors’ Report.

Basis of preparation

the financial report is a general purpose financial report, which:

• has been prepared in accordance with the requirements of the Corporations Act 2001, australian accounting Standards and other

authoritative pronouncements of the australian accounting Standards Board (“aaSB”) and International Financial Reporting Standards
(IFRS) as issued by the International accounting Standards Board as applicable to a for-profit entity.

• has also been prepared on a historical cost basis except for certain financial assets that have been measured at fair value.

•

is presented in australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under the
option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191.
the Company is an entity to which the legislative instrument applies.

• adopts all new and amended accounting Standards and Interpretations issued by the aaSB that are relevant to the operations of the

Group and effective for reporting periods beginning on or before 1 July 2019 (Refer to note 33).

• does not early adopt any accounting Standards and Interpretations that have been issued or amended but are not yet effective.

Basis of consolidation

the consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2020. Control is
achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Generally, there is a presumption that a majority of voting rights results in control.

a list of controlled entities (subsidiaries) at year end is contained in note 21. Consolidation of the subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control over the subsidiary. assets, liabilities, income and expenses of a
subsidiary acquired or disposed during the year are included in the consolidated financial statements from the date the Group gains control
until the date the Group ceases to control the subsidiary.

the financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting
policies. adjustments are made to bring into line any dissimilar accounting policies that may exist.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses
resulting from intra-group transactions have been eliminated.

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 debit balance.

Business combinations

Business combinations are accounted for using the acquisition method. the consideration transferred in a business combination shall be
measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred by the acquirer,
the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer. acquisition-related costs are
expensed as incurred.

Foreign currency translation

Functional and presentation currency
Each entity in the Group determines its own functional currency. Both the functional and presentation currencies of Monadelphous Group
limited, its australian subsidiaries and its Papua New Guinea subsidiary (Monadelphous PNG ltd) are australian dollars (a$).

the functional currency is United States dollars (US$) for the Hong Kong subsidiary (Moway International limited), the Singapore subsidiary
(Monadelphous Singapore Pte ltd) and the US subsidiaries (Monadelphous Inc. and Monadelphous Marcellus llC). the functional currency
of the Chinese subsidiary (Moway austasia Steel Structures trading (Beijing) Company limited) is Chinese Renminbi (RMB). the functional
currency of the New Zealand subsidiary (Monadelphous Engineering NZ Pty ltd) is New Zealand dollars (NZD). the functional currency
of the Mongolian subsidiary (Monadelphous Mongolia llC) is Mongolian tugrik (MNt). the functional currency of the Chilean subsidiaries
(Monadelphous Chile Spa, Buildtek Spa and MaQrent Spa) is Chilean Pesos (ClP).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2020

GENERAL INFORMATION (continued)

Foreign currency translation (continued)

Transactions and balances
transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rate ruling at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of
the initial transaction.

Translation of Group companies’ functional currency to presentation currency
as at the reporting date the assets and liabilities of the foreign operations are translated into the presentation currency of Monadelphous Group
limited at the rate of exchange ruling at the reporting date and the income statements are translated at the weighted average exchange rates
for the year. Exchange variations arising from the translation are recognised in the foreign currency translation reserve in equity.

Other accounting policies

Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial
statements are provided throughout the notes to the financial statements or at note 33.

Key judgements and estimates

the preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. actual results may differ from these estimates under different assumptions and conditions and may
materially affect financial results or the financial position reported in future periods. Management have identified the following critical
accounting policies for which significant judgements, estimates and assumptions are made:

Revenue from contracts with customers
Where performance obligations are satisfied over time, revenue is recognised in the consolidated income statement by reference to the
progress towards complete satisfaction of each performance obligation.

For construction contracts, revenue is recognised using an output method based on work certified to date which the Group believes depicts
the transfer of goods and services as it is based on completed work as agreed by our customers.

Fundamental to this calculation is a reliable estimate of the transaction price (total contract revenue). In determining the transaction price,
variable consideration including claims and certain contract variations are only included to the extent it is highly probable that a significant
reversal in revenue will not occur in the future. Where a variation in scope has been agreed with the customer but the corresponding change
in the transaction price has not been agreed the variation is accounted for as variable consideration. the estimate of variable consideration is
determined using the expected value approach taking into account the facts and circumstances of each individual contract and the historical
experience of the Group and is reassessed throughout the life of the contract.

When it is probable that total contract costs will exceed total contract revenue, the contract is considered onerous and the present obligation
under the contract is recognised immediately as a provision. Key assumptions regarding costs to complete contracts include estimation of
labour, technical costs, impact of delays and productivity.

Taxation
Judgement is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised in the consolidated statement of
financial position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised
only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits.

assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. Judgements are also required
about the application of income tax legislation. these judgements and assumptions are subject to risk and uncertainty, hence there is a possibility
that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised in
the statement of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or
all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustments, resulting in a corresponding credit or charge to
the income statement.

Impairment
Refer to notes 6 and 9 for details.

Workers’ Compensation
Refer note 16 for details.

Consolidation of MGJV Pty Ltd
Refer to note 21 for details.

Determination of the lease term of contracts with renewal options
Refer to note 33 for details.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2020

1. REVENUE AND OTHER INCOME

Revenue from contracts with customers

Services revenue

Construction revenue

Finance revenue

Dividends received

Net gains on disposal of property, plant and equipment

other income

Disaggregation of revenue from contracts with customers by end customer industry:

oil and gas

other minerals

Iron ore

Infrastructure

Coal

less share of revenue from joint ventures accounted for using the equity method

FINaNCIal REPoRt 77

2020
$’000

2019
$’000

1,049,801

437,592

998,435

478,834

1,487,393

1,477,269

1,171

185

2,269

199

1,488,749

1,479,737

2,472

2,306

4,778

460,915

339,231

528,397

181,837

140,388

3,442

2,295

5,737

594,868

219,918

368,164

282,090

143,237

1,650,768

1,608,277

(163,375)

(131,008)

1,487,393

1,477,269

The following amounts are included in revenue from contracts with customers:

Revenue recognised as a contract liability in the prior period

Revenue from performance obligations satisfied in prior periods

11,988

10,944

24,872

8,500

Unsatisfied performance obligations

transaction price expected to be recognised in future years for unsatisfied performance obligations
at 30 June:

Services revenue

Construction revenue

Total

1,607,339

2,137,094

384,544

405,869

1,991,883

2,542,963

In line with the Group’s accounting policy described following, the transaction price expected to be recognised in future years excludes
variable consideration that is constrained.

the average duration of contracts is given below, however some contracts will vary from these typical lengths. Revenue is typically
earned over these varying timeframes.

1 to 5 years
Services:
Construction: 1 to 2 years

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2020

1. REVENUE AND OTHER INCOME (continued)

Recognition and measurement

Revenue from contracts with customers

the Group is in the business of providing construction and maintenance services. Revenue from contracts with customers is recognised
when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group is
expected to be entitled in exchange for those goods or services. the Group has generally concluded that it is the principal in its revenue
arrangements because it typically controls the goods and services before transferring them to the customer.

Construction services
Construction contracts are assessed to identify the performance obligations contained in the contract. the total transaction price is
allocated to each individual performance obligation. typically, the Group’s construction contracts contain a single performance obligation.

Work is performed on assets that are controlled by the customer or on assets that have no alternative use to the Group, with the Group
having right to payment for performance to date. as performance obligations are satisfied over time, revenue is recognised over time using
an output method based on work certified to date.

Customers are typically invoiced on a monthly basis and invoices are paid on normal commercial terms.

Services contracts
Contracts for performance of maintenance activities cover servicing of assets and involve various activities. these activities tend to be
substantially the same with the same pattern of transfer to the customer. Where this is the case, which is the majority of the services contracts,
these services are taken to be one performance obligation and the total transaction price is allocated to the performance obligation identified.

Performance obligations are fulfilled over time as the Group largely enhances assets which the customer controls. Customers are typically
invoiced monthly for an amount that is calculated on either a schedule of rates or a cost plus basis. For these contracts, the transaction price is
determined as an estimate of this variable consideration.

Variable consideration
If the consideration in the contract includes a variable amount, the Group estimates the amount of the consideration to which it is entitled
in exchange for transferring the goods and services to the customer. the Group includes some or all of this variable consideration in the
transaction price only to the extent it is highly probable that a significant reversal of the cumulative revenue recognised will not occur when
the associated uncertainty with the variable consideration is subsequently resolved.

Certain contracts are subject to claims which are enforceable under the contract. If the claim does not result in any additional goods or
services, the transaction price is updated and the claim accounted for as variable consideration.

Significant financing component
Using the practical expedient in aaSB 15, the Group does not adjust the promised amount of consideration for the effects of a
significant financing component if it expects, at contract inception, that the period between the transfer or the promised good or service
to the customer and when the customer pays for that good or service will be one year or less.

Interest income

Revenue is recognised as interest accrues using the effective interest method.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2020

2. EXPENSES

Finance costs

loans and overdrafts

Finance charges payable under hire purchase contracts

Interest on other lease liabilities

tax shortfall interest charge

Depreciation and amortisation

Depreciation expense of owned property, plant and equipment

Depreciation expense of right of use hire purchase assets

Depreciation expense of right of use assets

amortisation of intangible assets

amortisation of deferred contract fulfilment costs

Employee benefits expense

Defined contribution superannuation expense

Lease payments and other expenses

Expense relating to short-term leases and low value leases
(included in cost of sales)

Recognition and measurement

FINaNCIal REPoRt 79

2020
$’000

2019
$’000

1,048

820

1,930

14,350

5,140

1,306

20,796

772,161

53,871

826,032

254

1,499

1,941

3,694

15,589

7,019

7,962

479

165

31,214

801,907

56,479

858,386

2,318

Finance costs
the Group does not currently hold qualifying assets but, if it did, the borrowing costs directly associated with the qualifying assets
would be capitalised. all other finance costs are expensed as incurred.

Depreciation and amortisation
Refer to notes 9 and 10 for details on depreciation and amortisation.

Employee benefits expense
Refer to note 16 for employee benefits expense and note 28 for share-based payments expense.

Contributions to defined contribution superannuation plans are recognised as an expense as they become payable.

Lease Payments
Refer to note 33 for details on lease payments.

Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will
be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that
the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income
in equal amounts over the expected useful life of the related asset.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2020

INCOME TAX

the major components of income tax expense are:

Income statement

Current income tax

Current income tax charge

adjustments in respect of previous years

Deferred income tax

temporary differences

adjustments in respect of previous years

Income tax expense reported in the income statement

Statement of Comprehensive Income

Deferred tax related to items recognised in Statement of Comprehensive income during the year:

Unrealised (loss)/gain on equity instrument designated at fair value through other
comprehensive income

Amounts credited directly to equity

Share based payment

Income tax expense/(benefit) reported in equity

Tax reconciliation

a reconciliation between tax expense and the product of accounting profit before
income tax multiplied by the Group’s applicable income tax rate is as follows:

accounting profit before income tax

Income tax rate of 30% (2019: 30%)

- Share based payment expense

- R&D repayment

- other

aggregate income tax expense

2020
$’000

2019
$’000

11,704

(2,779)

5,728

3,207

17,860

(13)

55,086

16,526

382

952

26,338

1,757

4,985

(1,767)

31,313

(106)

83,426

25,028

389

6,311

(415)

17,860

31,313

FINaNCIal REPoRt 81

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2020

2020
$’000
Current
Income Tax

2020
$’000
Deferred
Income Tax

2019
$’000
Current
Income tax

2019
$’000
Deferred
Income tax

INCOME TAX (continued)

Recognised deferred tax assets and liabilities

opening balance

205

34,024

(8,522)

37,177

opening balance adjustment on application
of aaSB 16 (refer note 33)

acquisition of subsidiaries

Charged to income

Charged to equity

other / payments

Closing balance

amounts recognised on the consolidated
statement of financial position:

Deferred tax asset

Deferred tax liability

(8,925)

4,954

(3,766)

2,130

1,667

(8,935)

(84)

(152)

28,650

28,775

(125)

28,650

Deferred income tax at 30 June relates to the following:

Deferred tax assets

Provisions

other

Gross deferred tax assets

Set-off of deferred tax liabilities

Net deferred tax assets

Deferred tax liabilities

accelerated depreciation

other

Gross deferred tax liabilities

Set-off against deferred tax assets

Net deferred tax liabilities

(28,095)

(3,218)

36,822

205

2020
$’000

22,523

8,691

31,214

(2,439)

28,775

(1,097)

(1,467)

(2,564)

2,439

(125)

(7)

34,024

34,164

(140)

34,024

2019
$’000

28,842

6,148

34,990

(826)

34,164

(288)

(678)

(966)

826

(140)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2020

INCOME TAX (continued)

Unrecognised temporary differences

at 30 June 2020, there are no unrecognised temporary differences associated with the Group’s investments in subsidiaries.

Tax consolidation

Monadelphous Group limited and its 100% owned australian resident subsidiaries formed a tax consolidated group with effect from
1 July 2003. Members of the tax consolidated group have entered into a tax funding agreement. the head entity, Monadelphous Group
limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts.
the Group has applied the Group allocation approach in determining the appropriate amount of current taxes and deferred taxes to
allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, Monadelphous Group limited also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in
the tax consolidated group.

assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or
payable to other entities in the Group.

any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a
contribution to (or distribution from) wholly-owned tax consolidated entities.

Recognition and measurement

Current taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to
the taxation authorities based on the current period’s taxable income. the tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the reporting date.

Deferred Taxes
Deferred income tax is provided for using the full liability balance sheet approach.

the carrying amount of deferred income 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 income tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable
that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to 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 assets and deferred tax liabilities are offset only if a legally enforceable right exists and they relate to the same taxable
entity and the same taxation authority.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2020

4. EARNINGS PER SHARE

the following reflects the income and share data used in the calculation of basic
and diluted earnings per share:

Net profit attributable to ordinary equity holders of the parent

Earnings used in calculation of basic and diluted earnings per share

FINaNCIal REPoRt 83

2020
$’000

2019
$’000

36,483

50,565

Number

Number of shares

Weighted average number of ordinary shares on issue used in the calculation
of basic earnings per share

94,383,189

94,127,723

Effect of dilutive securities

Performance Rights

adjusted weighted average number of ordinary shares used in calculating diluted
earnings per share

Conversions, calls, subscriptions or issues after 30 June 2020:

on 1 July 2020, 161,250 performance rights vested and were exercised.

Calculation of earnings per share

321,459

166,737

94,704,648

94,294,460

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing
equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as net profit attributable to members of the parent, adjusted for:

• costs of servicing equity (other than dividends);

• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised

as expenses; and

• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential

ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

5. CASH AND CASH EQUIVALENTS

For the purposes of the statement of cash flows, cash and cash
equivalents comprise the following at 30 June:

Cash balances comprise:

Cash at bank

Short term deposits

Reconciliation of net profit after tax to the net cash flows from
operating activities

Net profit

Adjustments for

Depreciation of non-current assets

amortisation of intangible assets and fulfilment costs

Net profit on sale of property, plant and equipment

Share-based payment expense

Unrealised foreign exchange loss/(gain)

Share of profits from joint ventures

other

Changes in assets and liabilities

Decrease/(increase) in receivables

Decrease/(increase) in inventories

Decrease/(increase) in contract assets

Decrease/(increase) in deferred tax assets

(Decrease)/increase in payables

(Decrease)/increase in provisions

(Decrease)/increase in income tax payable

(Decrease)/increase in deferred tax liabilities

Net cash flows from operating activities

Non-cash financing and investing activities

2020
$’000

2019
$’000

178,292

30,000

208,292

161,173

2,869

164,042

37,226

52,113

30,570

644

(2,472)

2,186

142

(4,932)

(474)

73,708

(179)

1,870

9,102

(26,068)

(6,201)

3,971

(15)

119,078

19,490

1,306

(3,442)

2,953

(409)

(7,144)

(2,101)

(34,659)

36,698

(31,136)

3,085

19,568

(31,770)

(8,727)

140

15,965

Hire purchase transactions:
During the year, the consolidated entity acquired plant and equipment by means of hire purchase agreements with an aggregate fair
market value of $18,470,751 (2019: $12,498,577).

Reconciliation of liabilities arising from financing activities

2019
$ ’000

On adoption of
AASB 16
$’000

Non-cash changes
New leases/
terminations
$’000

Cash flows
$’000

Hire purchase liabilities

34,929

(11,804)

other lease liabilities

47,261

(7,322)

(6,256)

47,261

(25,382)

18,471

5,438

6,481

30,390

loan

3,300

38,229

Recognition and measurement

Other
$’000

730

666

(2)

1,394

2020
$’000

42,326

46,043

3,523

91,892

Cash and cash equivalents in the consolidated statement of financial position comprise cash at bank and on hand and short term
deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, net of outstanding bank overdrafts.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

6. TRADE AND OTHER RECEIVABLES

CURRENT

trade receivables

less allowance account for expected credit losses

other debtors

less allowance account for expected credit losses

trade receivables generally have 30 to 60 days terms.

Allowance account for trade receivables impairment losses

Movements in loss allowance based on lifetime ECl:

Balance at the beginning of the year - restated

(Decrease)/increase in loss allowance

Balance at the end of the year

Recognition and measurement

Trade receivables
Refer to accounting policies of financial assets in note 33 financial assets.

FINaNCIal REPoRt 85

2020
$’000

2019
$’000

191,105

(3,581)

187,524

75,369

(456)

252,636

(3,634)

249,002

74,117

(270)

262,437

322,849

3,634

(53)

3,581

3,462

172

3,634

Other debtors
other debtors include contract assets that are unconditional (see note 7). these assets are reclassified to trade receivables when invoiced.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

7. CONTRACT ASSETS

CURRENT

Contract assets

NON CURRENT

Contract assets

2020
$’000

2019
$’000

27,379

29,372

124

289

Contract assets are net of expected credit losses of $152,000. Included in contract assets are deferred project fulfilment costs of $289,000.

Recognition and measurement

Contract assets
a contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group transfers goods
or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned
consideration. If the Group’s right to an amount of consideration is unconditional (other than the passage of time), the contract asset is
classified as a receivable.

Refer to accounting policies of revenue from contracts with customers in note 1.

Project fulfilment costs
If project fulfilment costs are within the scope of aaSB 15, the Group recognises these costs as an asset only if the costs relate directly
to a contract, the costs generate or enhance resources and the costs are expected to be recovered.

these costs are amortised on a systematic basis that is consistent with the transfer of goods and services under the contract. If not
capitalised, project fulfilment costs are expensed as incurred.

INVENTORIES

Raw materials and consumables

Recognition and measurement

Raw materials and consumables
Raw materials and consumables are stated at the lower of cost and net realisable value.

2020
$’000

2019
$’000

4,786

4,607

FINaNCIal REPoRt 87

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

9. PROPERTY, PLANT AND EQUIPMENT

Reconciliation of carrying amounts at the beginning and end of the period

Right of Use Assets

Freehold
Land
$’000

Buildings
$’000

Plant and
Equipment
$’000

Plant and
Equipment
Under Hire
Purchase
$’000

Land and
Buildings
$’000

Plant and
Equipment
$’000

Total
$’000

Year ended 30 June 2020

Net carrying amount at 1 July 2019

14,811

17,611

41,062

41,953

115,437

opening balance adjustment on
application of aaSB 16

additions

additions through business
combinations

assets transferred

Disposals

Depreciation charge

Exchange differences

38,940

1,221

12,062

18,471

6,528

40,161

37,125

4,466

1,822

4,910

1,663

(4,910)

981

(940)

(112)

(1,186)

(1,063)

(14,526)

(7,019)

(7,477)

(150)

(485)

(2,388)

(30,570)

(36)

(253)

(276)

(565)

Net carrying amount at 30 June 2020

14,811

16,500

44,108

49,905

37,756

586

163,666

At 30 June 2020

Gross carrying amount – at cost

14,811

28,340

170,819

62,498

44,972

1,071

322,511

accumulated depreciation

(11,840)

(126,711)

(12,593)

(7,216)

(485)

(158,845)

Net carrying amount

14,811

16,500

44,108

49,905

37,756

586

163,666

Year ended 30 June 2019

Net carrying amount at 1 July 2018

additions

assets transferred

Disposals

Depreciation charge

Exchange differences

Freehold land
$’000

Buildings
$’000

Plant and
Equipment
$’000

Plant and
Equipment Under
Hire Purchase
$’000

13,411

1,400

16,425

2,276

(5)

46,762

18,260

(9,209)

(1,523)

25,385

12,499

9,209

(1,085)

(13,265)

(5,140)

total
$’000

101,983

34,435

(1,528)

(19,490)

Net carrying amount at 30 June 2019

14,811

17,611

41,062

41,953

115,437

At 30 June 2019

Gross carrying amount – at cost

accumulated depreciation

Net carrying amount

14,811

28,647

(11,036)

17,611

166,842

(125,780)

41,062

51,436

(9,483)

41,953

261,736

(146,299)

115,437

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

9. PROPERTY, PLANT AND EQUIPMENT (continued)

Recognition and measurement

Property, plant and equipment
all classes of property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the
parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and
equipment as a replacement only if it is eligible for capitalisation. all other repairs and maintenance are recognised in the income
statement as incurred.

Depreciation is calculated on a straight line basis on all classes of property, plant and equipment other than freehold land.
the estimated useful life of buildings is 40 years; plant and equipment is between 3 and 20 years.

the assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

an item of property, plant and equipment is de-recognised upon disposal or when no further future economic benefits are expected from
its use or disposal.

Right of use assets
Refer to note 33 for details.

Impairment of non-financial assets other than goodwill
We have performed an impairment assessment based on the policy below. No material impairment was noted.

at each reporting date, the Group assesses whether there is any indication that an asset may be impaired.

Where an indicator of impairment exists or when annual impairment testing for an asset is required, the Group makes a formal estimate
of the recoverable amount. an asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is
determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other
assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested
for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value.

an assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses
may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. a previously recognised
impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the
last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. that
increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such reversal is recognised in the income statement.

FINaNCIal REPoRt 89

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

10. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets
$’000

Goodwill
$’000

Total
$’000

Year ended 30 June 2020

at 1 July 2019

on business combination

Purchased

amortisation

Exchange differences

at 30 June 2020

Year ended 30 June 2019

at 1 July 2018

at 30 June 2019

759

(479)

280

3,120

815

(34)

3,901

3,120

815

759

(479)

(34)

4,181

3,120

Description of the Group’s intangible assets

Intangible assets relate to the fair value of contracts acquired from iPipe Services on 5 July 2019. Intangible assets have been assessed
as having a finite life and are amortised using the straight line method over a period of 21 months.

Impairment testing of the Group’s intangible assets and goodwill

Goodwill acquired through business combinations has been allocated to cash generating units (“CGU”) for impairment testing purposes.
the CGUs are the entity Monadelphous Electrical & Instrumentation Pty ltd, the Hunter Valley business unit, the entity Monadelphous
Energy Services Pty ltd, the entity arc West Group Pty ltd, the entity R.I.G. Installations (Newcastle) Pty ltd and the entity Buildtek
Spa. None of these CGUs are material to the Group. the recoverable amount of each CGU has been determined based on a value
in use calculation using cash flow projections based on financial budgets approved by management covering a five year period and
applying a discount rate to the cash flow projections in the range of 12% to 15%. No reasonably possible changes in key assumptions
would result in the carrying amount of the individual CGUs exceeding their recoverable amount.

Recognition and measurement

Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the consideration over the fair value of
the Group’s identifiable assets acquired and liabilities assumed. Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses.

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination, is, from the acquisition
date, allocated to each of the Group’s CGUs or groups of CGUs that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the CGU (group of CGUs) to which the goodwill relates. If the
recoverable amount of the CGU (group of CGUs) is less than the carrying amount, an impairment loss is recognised. Impairment losses
recognised for goodwill are not subsequently reversed.

Intangible assets
the cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

the useful lives of intangible assets are assessed to be finite. the intangible assets are amortised over their useful life. Intangible assets
are tested for impairment whenever there is an indication that the intangible asset may be impaired. the amortisation period and the
amortisation method for the intangible assets is reviewed at least each financial year end. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the assets are accounted for prospectively by changing the
amortisation period or method, as appropriate, which is a change in accounting estimate. the amortisation expense on intangible assets
is recognised in the income statement in the expense category consistent with the function of the intangible asset.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

11. INTEREST IN JOINT VENTURES

Mondium Pty Ltd

on 21 october 2016, an australian joint venture company, Mondium Pty ltd was formed between Monadelphous and lycopodium
ltd. the Group has a 60% interest in the joint venture. the principal activity of Mondium is to deliver engineering, procurement and
construction services in the minerals processing sector.

the Group considers that it has joint control with its respective joint venture partner over Mondium Pty ltd as relevant decisions at a
Board and Shareholder level require unanimous agreement.

Mondium Pty ltd results, assets and liabilities are as follows:

Summarised statement of financial position

Cash and cash equivalents

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Equity

Group’s share of Mondium Pty ltd net assets

Summarised statement of financial performance

Revenue from contracts with customers

Cost of sales

Profit before tax

Income tax expense

Profit after tax

Profit and total comprehensive income for the year

Depreciation expense

Interest income

Interest expense

Group’s share of profit for the year

2020
$’000

63,213

80,915

452

2019
$’000

5,267

6,150

(76,213)

(6,465)

(2)

5,152

3,091

134,563

(118,093)

7,610

(2,218)

5,392

(63)

113

(14)

3,190

(2)

(239)

(143)

33,679

(29,626)

1,182

(14)

(2)

868

FINaNCIal REPoRt 91

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

11. INTEREST IN JOINT VENTURES (continued)

Zenviron Pty Ltd

on 26 July 2016, a joint venture company, Zenviron Pty ltd was formed between Monadelphous and ZEM Energy Investments Pty ltd.
the Group has a 55% ownership interest in the joint venture and a 50% interest in the voting rights. the principal activity of Zenviron
is to deliver multi-disciplinary construction services in the renewable energy market in australia and New Zealand.

the Group considers that it has joint control with its respective joint venture partner over Zenviron Pty ltd as relevant decisions at a
Board and Shareholder level require unanimous agreement.

Zenviron Pty ltd results, assets and liabilities are as follows:

Summarised statement of financial position

Cash and cash equivalents

Current assets

Non-current assets

Current liabilities

Current financial liabilities

Non-current liabilities

Non-current financial liabilities

Equity

Group’s share of Zenviron Pty ltd net assets

Summarised statement of financial performance

Revenue from contracts with customers

Cost of sales

Profit before tax

Income tax expense

Profit after tax

Profit and total comprehensive income for the year

Depreciation expense

Interest income

Interest expense

Group’s share of profit for the year

2020
$’000

2019
$’000

14,244

37,378

5,882

23,272

73,127

4,574

(24,070)

(61,486)

(1,161)

(3,630)

(2,777)

15,560

8,558

(735)

(3,824)

(2,037)

12,392

6,815

175,695

(163,388)

220,618

(197,171)

4,528

(1,360)

3,168

(2,073)

(202)

1,742

16,326

(4,915)

11,411

(770)

362

(23)

6,276

Commitments and contingent liabilities relating to Joint Ventures

the Group’s share of insurance bond guarantees issued by Joint Ventures at 30 June 2020 was $92,033,477 (2019: $9,782,482).

Joint ventures had no capital commitments at 30 June 2020 (2019: $nil).

Recognition and measurement

a joint venture is a type of arrangement whereby the parties that have joint control of the arrangement have the rights to the net assets
of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent of the parties sharing control.

the considerations made in determining significant influence or joint control are similar to those necessary to determine control
over subsidiaries.

the Group’s investments in its joint ventures are accounted for using the equity method. Under the equity method, the investment is
initially recognised at cost. the carrying value of the investment is adjusted to recognise changes in the Group’s share of net assets of
the joint venture since the acquisition date. the income statement reflects the Group’s share of the results of the joint venture.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

12. OTHER NON-CURRENT ASSETS

other non-current assets

other non-current assets consist of investments as follows:

2020
$’000

2019
$’000

2,873

2,921

ordinary shares at fair value in lycopodium limited (aSX Code: lYl). the investment is classified as a financial asset at fair value
through other comprehensive income. Fair value is calculated using quoted prices in active markets.

13. TRADE AND OTHER PAYABLES

CURRENT

trade payables

Contract liabilities

Sundry creditors and accruals

Recognition and measurement

2020
$’000

2019
$’000

73,640

61,322

30,790

113,661

33,579

37,101

165,752

184,341

Trade and other payables
trade and other payables are carried at amortised cost and are not discounted due to their short term nature. they represent liabilities
for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchase of these goods and services. the amounts are unsecured, non-interest
bearing and are usually paid within 30 to 45 days of recognition.

Sundry creditors and accruals are non-interest bearing and have terms of 7 to 30 days.

Contract liability
a contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an
amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the
customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Group performs under the contract.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

14. INTEREST BEARING LOANS AND BORROWINGS

CURRENT

Hire purchase lease liabilities – secured

loan – secured

NON-CURRENT

Hire purchase lease liabilities – secured

loan – secured

FINaNCIal REPoRt 93

2020
$’000

2019
$’000

1,580

1,943

9,668

1,200

10,868

25,261

2,100

27,361

Defaults and breaches

During the current and prior year, there were no defaults and breaches on any of the loans.

Recognition and measurement

Interest bearing loans and borrowings
Interest bearing loans and borrowings are initially recognised at fair value of the consideration received less directly attributable
transaction costs. after initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using
the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
twelve months after the reporting date.

Gains or losses are recognised in the income statement when the liabilities are derecognised.

From 1 July 2019, hire purchase liabilities have been reclassified as lease liabilities (refer note 15).

Leases - policy applied prior to 1 July 2019
the determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset.

leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to
reflect the risks and benefits incidental to ownership.

Finance leases - policy applied prior to 1 July 2019
leases which effectively transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item are
classified as finance leases. the financed asset is stated at the lower of its fair value and the present value of the minimum lease
payments at inception of the lease, less accumulated depreciation and impairment losses. an interest bearing liability of equal
value is also recognised at inception. Minimum lease payments are apportioned between the finance charge and the reduction of
the lease liability.

the finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability. Finance charges are recognised as an expense in the income statement.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

15. LEASE LIABILITIES

CURRENT

Hire purchase lease liabilities

other lease liabilities

NON-CURRENT

Hire purchase lease liabilities

other lease liabilities

Set out below are the carrying amounts of lease liabilities and the movements during the year:

opening balance adjustment on application of aaSB 16

additions through business combinations

additions

accretion of interest

Payments

terminations

Foreign currency movement

Carrying amount at the end of the financial year

Terms and conditions

2020
$’000

12,535

6,198

18,733

29,791

39,845

69,636

82,190

1,889

24,999

3,440

(22,566)

(1,090)

(493)

88,369

Hire purchase agreements have an average term of three years. the average discount rate implicit in the hire purchase liability is
3.09% (2019: 3.35%).

other lease liabilities arise following the adoption of aaSB 16 Leases. Prior to the adoption of aaSB 16, hire purchase liabilities were
classified as finance leases and disclosed within interest bearing loans and borrowings. Refer note 33 for details.

the maturity analysis of lease liabilities is set out in note 24.

Recognition and measurement

Refer to note 33 for details.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2020

16. PROVISIONS

CURRENT

Employee benefits

Workers’ compensation

other

NON-CURRENT

Employee benefits – long service leave

Movements in provisions

Workers’ compensation

Carrying amount at the beginning of the year

additional provision

amounts utilised during the year

Carrying amount at the end of the financial year

Recognition and measurement

FINaNCIal REPoRt 95

2020
$’000

2019
$’000

46,869

9,349

3,147

59,365

44,690

18,363

63,053

4,340

4,542

18,363

635

(9,649)

9,349

Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.

When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually certain. the expense relating to any provision is presented
in the income statement net of any reimbursement.

Provisions are measured at the present value of management’s best estimate of the expenditure to settle the present obligation at
the reporting date using a discounted cash flow methodology. the risks specific to the provision are factored into the cash flows and
as such a risk-free government bond rate relevant to the expected life of the provision is used as a discount rate. the increase in the
provision resulting from the passage of time is recognised as a finance cost.

Employee benefits
Employee benefits includes liabilities for wages and salaries, rostered days off, vesting sick leave, project incentives and project
redundancies. It is customary within the engineering and construction industry for incentive payments and redundancies to be paid to
employees at the completion of a project. the provision has been created to cover the expected costs associated with these statutory and
project employee benefits.

liabilities for short term benefits expected to be wholly settled within twelve months of the reporting date are recognised in respect
of employees’ services up to the reporting date. they are measured at the amounts expected to be paid when the liability is settled.
Expenses for non-vesting sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

the liability for long term benefits is recognised and measured as the present value of the expected future payments to be made in respect
of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market
yields at the reporting date on high quality corporate bonds, which have terms to maturity approximating the estimated future cash outflows.

Workers’ compensation
It is customary for all entities within the engineering and construction industry to be covered by workers’ compensation insurance.
Payments under these policies are calculated differently depending on which state of australia the entity is operating in. Premiums are
generally calculated based on actual wages paid and claims experience. Wages are estimated at the beginning of each reporting period.
Final payments are made when each policy is closed out based on the difference between actual wages and the original estimated
amount. the amount of each payment varies depending on the number of incidents recorded during each period and the severity
thereof. the policies are closed out within a five year period through negotiation with the relevant insurance company. the provision
has been created to cover the expected costs associated with closing out each insurance policy and is adjusted accordingly based on
the actual payroll incurred and the severity of incidents that have occurred during each period.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2020

17. CAPITAL MANAGEMENT

Capital is managed by the Group’s Chief Financial officer in conjunction with the Group’s Finance and accounting department.
Management continually monitor the Group’s net cash/debt position and the gearing levels to ensure efficiency and compliance with the
Group’s banking facility covenants, including the gearing ratio, operating leverage ratio and fixed charge coverage ratio. at 30 June 2020,
the Group is in a net cash position of $162,443,000 (2019: $125,813,000) and has a debt to equity ratio of 11.9% (2019: 9.7%)
which is within the Group’s net cash and debt to equity target levels.

During the year ended 30 June 2020, management paid dividends of $42,455,000. the policy is to payout dividends of 80% to 100% of
annual net profit after tax, subject to the working capital requirements of the business, potential investment opportunities and business and
economic conditions generally.

the capital of the Company is considered to be contributed equity.

2020
$’000

2019
$’000

18. DIVIDENDS PAID AND PROPOSED

Declared and paid during the year

Current year interim

Interim franked dividend for 2020 (22 cents per share) (2019: 25 cents per share)

20,767

23,561

Previous year final

Final franked dividend for 2019 (23 cents per share) (2018: 32 cents per share)

21,688

30,112

Unrecognised amounts

Current year final

Final franked dividend for 2020 (13 cents per share) (2019: 23 cents per share)

12,303

21,688

Franking credit balance

Franking credits available for future reporting years at 30% adjusted for
franking credits that will arise from the payment of income tax payable as at
the end of the financial year

Impact on the franking account of dividends proposed or declared before the
financial report was authorised for issue but not recognised as a distribution to
equity holders during the period

40,475

58,351

(5,273)

35,202

(9,295)

49,056

Tax rates

the tax rate at which paid dividends have been franked is 30% (2019: 30%). Dividends payable will be franked at the rate of 30%
(2019: 30%).

Recognition and measurement

a provision for dividends is not recognised as a liability unless the dividends are declared on or before the reporting date.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2020

19. CONTRIBUTED EQUITY

ordinary shares – Issued and fully paid

Reserved shares

Ordinary shares

FINaNCIal REPoRt 97

2020
$’000

2019
$’000

132,576

129,992

(1,269)

131,307

128,723

ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the Company, to participate in
the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.

2020

2019

Number of Shares

$’000

Number of Shares

$’000

Beginning of the financial year

94,294,487

129,992

94,108,311

Dividend reinvestment plan

End of the financial year

195,346

2,584

186,176

94,489,833

132,576

94,294,487

126,972

3,020

129,992

During the year ended 30 June 2020, 82,771 performance rights were exercised through the issue of reserved shares.

Reserved shares

Beginning of the financial year

Conversion of performance rights

acquisition of reserved shares

End of the financial year

Recognition and measurement

2020

2019

Number of Shares

$’000

Number of Shares

$’000

92,375

(82,771)

9,604

(1,269)

85,500

(1,269)

6,875

92,375

(1,269)

Contributed equity
ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognised
directly in equity as a deduction, net of tax, from the proceeds.

Reserved shares
he Group’s own equity instruments, which are reacquired for later use in employee share-based payment arrangements (reserved
shares), are deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation
of the Group’s own equity instruments.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
CAPITAL STRUCTURE
CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2020
FOR THE YEAR ENDED 30 JUNE 2020

20. RESERVES AND RETAINED EARNINGS

Foreign currency translation reserve

Share-based payment reserve

Fair value reserve for financial assets

Equity reserve

Retained earnings

Movements in retained earnings

Balance at the beginning of the year

opening balance adjustment of aaSB 16

Balance at the beginning of the year – restated

Net profit attributable to equity holders of the parent

total available for appropriation

Dividends paid

Balance at the end of the year

Movements in reserves

Foreign
Currency
Translation
Reserve
$’000

(191)

275

at 30 June 2018

Foreign currency translation

Share-based payment

adjustment to deferred tax asset recognised
on employee share trust

Net fair value gain of financial assets

29,662

2,953

106

821

902

(35)

867

At 30 June 2019

32,721

Foreign currency translation

(1,244)

Share-based payment

adjustment to deferred tax asset recognised
on employee share trust

Reclassification of non-controlling interest
to liabilities

Net fair value gain of financial assets

2,186

(97)

At 30 June 2020

(1,160)

34,810

(4,970)

226,036

36,483

262,519

(42,455)

220,064

Share-Based
Payment
Reserve
$’000

Fair Value
Reserve for
Financial Assets
$’000

Equity
Reserve
$’000

2020
$’000

2019
$’000

(1,160)

34,810

867

(1,455)

33,062

220,064

32,721

902

33,707

231,006

234,114

50,565

284,679

(53,673)

231,006

Total
$’000

30,292

275

2,953

106

33,707

(1,244)

2,186

(97)

(1,455)

(35)

(1,455)

33,062

FINaNCIal REPoRt 99

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2020

20. RESERVES AND RETAINED EARNINGS (continued)

Nature and purpose of reserves

Foreign currency translation reserve
the foreign currency translation reserve is used to record exchange differences arising from translation of the financial statements of
foreign subsidiaries.

Share-based payment reserve
the share-based payment reserve is used to record the value of equity benefits provided to employees and directors as part of their
remuneration. Refer to note 28 for further details of these plans.

Fair value reserve for financial assets
the fair value reserve for financial assets is used to record the movement in fair value of financial assets.

Equity reserve
the equity reserve is used to record the changes in the carrying amount of the financial liability representing the minority put and call
option over the remaining 25% of the shares on issue of Buildtek Spa and MaQrent Spa. Refer to note 22.

100

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2020

21. SUBSIDIARIES

the consolidated financial statements include the financial statements of Monadelphous Group limited and subsidiaries:

Name

Parent:

Monadelphous Group limited

Controlled entities of Monadelphous Group Limited:

Monadelphous Engineering associates Pty ltd#

Monadelphous Properties Pty ltd#

Monadelphous Engineering Pty ltd#

Genco Pty ltd#

Monadelphous Workforce Pty ltd#

Monadelphous Electrical & Instrumentation Pty ltd#

Monadelphous Kt Pty ltd#

Monadelphous Energy Services Pty ltd#

M Workforce Pty ltd#

M Maintenance Services Pty ltd#

M&ISS Pty ltd

SinoStruct Pty ltd

Monadelphous Group limited Employee Share trust

Monadelphous Holdings Pty ltd

MGJV Pty ltd

Evo access Pty ltd

Monadelphous Investments Pty ltd

MWoG Pty ltd

MoaG Pty ltd

Monadelphous International Holdings Pty ltd

arc West Group Pty ltd

R.I.G. Installations (Newcastle) Pty ltd

RE&M Services Pty ltd

Pilbara Rail Services Pty ltd

EC Projects Pty ltd

Monadelphous PNG ltd

Moway International limited

Moway austasia Steel Structures trading (Beijing) Company limited

Monadelphous Singapore Pte ltd

Monadelphous Mongolia llC

Monadelphous Inc.

Monadelphous Marcellus llC

MKt Pipelines ltd

Monadelphous Engineering NZ Pty ltd

Monadelphous Chile Spa*

MaQrent Spa

Buildtek Spa

Monadelphous Sdn Bhd

Percentage Held by
Consolidated Entity

Country of
Incorporation

2020
%

2019
%

australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
australia
Papua New Guinea
Hong Kong
China
Singapore
Mongolia
USa
USa
Canada
New Zealand
Chile
Chile
Chile
Malaysia

100
100
100
100
100
100
100
100
100
100
100
100
100
100
70^
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
75
75
100

100
100
100
100
100
100
100
100
100
100
100
100
100
100
70^
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
100

# Controlled entities subject to the Class order (Refer to note 32).
*
^ the Group considers that it controls these companies as it has a casting vote at Board Meetings.

Incorporated during the year.

Ultimate parent

Monadelphous Group limited is the ultimate holding company.

Material partly-owned subsidiaries

there were no subsidiaries that have a material non-controlling interest during the year.

FINaNCIal REPoRt 101

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2020

22. BUSINESS COMBINATION

Acquisition of Buildtek SpA and MAQrent SpA

on 14 November 2019, Monadelphous Group limited acquired 75% of Chile-based construction and maintenance services
contractor, Buildtek Spa (“Buildtek”) and plant and equipment hire company, MaQrent Spa (“MaQrent”). the acquisitions form part of
Monadelphous’ market growth strategy.

the consideration comprised a cash payment for existing shares of $3,964,000 and a subscription for new shares of $5,343,000.

the provisional fair values of the identifiable assets and liabilities acquired from Buildtek and MaQrent as of the date of acquisition were:

Cash

trade and other receivables

Property, plant and equipment

other

Total assets

trade and other payables

lease liabilities

Interest bearing loans and borrowings

Provisions

Total liabilities

Fair value of identifiable net assets

attributable to non-controlling interest (25%)

Goodwill arising on acquisition

Purchase consideration

acquisition-date fair-value of consideration transferred:

Cash paid

Total consideration

The cash outflow on acquisition is as follows:

Net cash acquired with the business including cash contribution for subscription to new shares

Cash paid

Net consolidated cash outflow

Provisional fair value
at acquisition date
$’000

8,626

13,399

4,466

2,994

29,485

7,481

1,889

6,481

2,311

18,162

11,323

(2,831)

815

9,307

8,626

(9,307)

(681)

adjustments to the provisional fair value of net assets at acquisition date, as disclosed in the financial statements for the six months
ended 31 December 2019 totalled $240,000, resulting in an increase in goodwill.

Sales revenue of $30,339,000 and net profit of $711,000 has been recognised from Buildtek and MaQrent for the period since
acquisition. If the acquisition date had been 1 July 2019, Buildtek and MaQrent would have contributed revenue of $55,789,000 and
net profit of $2,024,000.

acquisition costs of $416,477 have been expensed in the period and are included in administrative costs in the Income Statement and
are part of operating cashflows in the Statement of Cash Flows.

Key factors contributing to the $815,000 of goodwill are the synergies existing within the acquired business, and synergies expected to be
achieved as a result of combining Buildtek and MaQrent with the rest of the Group. the goodwill is not deductible for income tax purposes.

the non-controlling interest has been determined based on a proportionate share of the net assets.

at the date of acquisition, the Group obtained an option to acquire the remaining 25% of the shares on issue of Buildtek and MaQrent in
three years’ time. Similarly, the existing holders of the remaining 25% have the option to require the Group to purchase the remaining shares
on the same terms and conditions as the option held by the Group.

102

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2020

22. BUSINESS COMBINATION (continued)

Acquisition of Buildtek SpA and MAQrent SpA (continued)

In relation to the option held by the minority shareholders, the Group has made an accounting policy choice to reclassify the non-
controlling interest in these controlled entities as a liability at each reporting date until such time as the option is exercised or expires.
the financial liability, representing the minority put and call option, has been recognised on the balance sheet with a corresponding
adjustment to equity. Subsequent to initial recognition, changes to the carrying amount of the financial liability are also recognised
directly in equity.

the financial liability was initially measured at fair value, being the present value of the estimated amount payable in three years’ time.
the amount payable will be determined based on a multiple of the average annual earnings for the three years ending 31 December 2022.

at 30 June 2020, the financial liability associated with the option held by the minority shareholders was $4,480,811.

Acquisition of iPipe Services assets

on 5 July 2019, Monadelphous Group limited completed the purchase of assets of iPipe Services, a provider of technology solutions,
construction and maintenance services to the coal seam gas sector. total consideration of the acquisition was $3,649,151. the acquisition
was not material to the group.

23. INTEREST IN JOINT OPERATIONS

Joint operations interests

the Group’s interests in joint operations are as follows:

Joint Arrangement

Principal Activity

Group Interest

Principal Place
of Business

2020
%

2019
%

Monadelphous Worley JV PNG

Engineering, Procurement and Construction
& Maintenance Support Work in PNG

PNG

Monadelphous Worley JV

Engineering, Procurement and Construction
& Maintenance Support Work

Brisbane, QlD

China Petroleum Engineering
& Construction (australia)
Pty ltd and Monadelphous
Engineering Pty ltd Joint Venture

Maintenance Support Work

Brisbane, QlD

Commitments and contingent liabilities relating to joint operations

there were no capital commitments or contingent liabilities relating to the joint operations at 30 June 2020 (2019: $nil).

Impairment

there were no assets employed in the joint operations during the year ended 30 June 2020 (2019: $nil).

Recognition and Measurement

Joint arrangements are arrangements of which two or more parties have joint control. Joint control is the contractual agreed sharing
of control of the arrangement which exists only when decisions about the relevant activities require unanimous consent of the parties
sharing control. Joint arrangements are classified as either a joint operation or joint venture, based on the rights and obligations arising
from the contractual obligations between the parties to the arrangement.

to the extent the joint arrangement provides the Group with rights to the individual assets and obligations arising from the joint
arrangement, the arrangement is classified as a joint operation and as such, the Group recognises its:

• assets, including its share of any assets held jointly;
• liabilities, including its share of any liabilities incurred jointly;
• Revenue from the sale of its share of the output arising from the joint operation; and
• Expenses, including its share of any expenses incurred jointly.

to the extent the joint arrangement provides the Group with rights to the net assets of the arrangement, the investment is classified as
a joint venture and accounted for using the equity method. Under the equity method, the cost of the investment is adjusted by the post-
acquisition changes in the Group’s share of the net assets of the venture.

FINaNCIal REPoRt 103

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2020

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

the Group’s principal financial instruments comprise receivables, payables, loans, leases and hire purchase contracts, cash and
short-term deposits.

the Group is exposed to financial risks which arise directly from its operations. the Group has policies and measures in place to
manage financial risks encountered by the business.

Primary responsibility for the identification of financial risks rests with the Board. the Board determines policies for the management
of financial risks. It is the responsibility of the Chief Financial officer and senior management to implement the policies set by the
Board and for the constant day to day management of the Group’s financial risks. the Board reviews these policies on a regular
basis to ensure that they continue to address the risks faced by the Group.

the main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity
risk. the Group’s policy to minimise risk from fluctuations in interest rates is to utilise fixed interest rates in its loans, leases and hire
purchase contracts. Cash and short term deposits are exposed to floating interest rate risks. the Group manages its foreign currency
risk arising from significant supplier contracts in foreign currencies by holding foreign currency or taking out forward exchange
contracts. analysis is performed on a customer’s credit rating prior to signing contracts and analysis is performed regularly of credit
exposures and aged debt to manage credit and liquidity risk.

the policies in place for managing the financial risks encountered by the Group are summarised below.

Risk exposures and responses

Interest rate risk
the Group’s exposure to variable interest rates is as follows:

Financial assets/liabilities

Cash and cash equivalents

loan - secured

Net exposure

Notes

2020
$’000

2019
$’000

208,292

164,042

(2,100)

(3,300)

206,192

160,742

the Group utilises a number of financial institutions to obtain the best interest rate possible and to manage its risk. the Group does
not enter into interest rate hedges.

at 30 June 2020, reasonably possible movements in variable interest rates, based on a review of historical movements and forward
rate curves for forward rates would not have had a material impact on the Group.

104

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2020

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Risk exposures and responses (continued)

Foreign currency risk
as a result of operations in the USa, Papua New Guinea, China, Mongolia, New Zealand and Chile the Group’s statement of financial
position can be affected by movements in the US$/a$, PGK/a$, RMB/a$, MNt/a$, NZ$/a$ and ClP/a$ exchange rates.

the Group also has transactional currency exposures. Such exposure arises from sales or purchases by an operating entity in currencies
other than the functional currency. Where possible, Monadelphous does not take on foreign exchange risk. at 30 June 2020, the Group
had no forward contracts.

the Group also mitigates its exposure to foreign currency risk by minimising excess foreign currency balances in overseas jurisdictions
not required for working capital.

at 30 June 2020, the Group had the following exposure to foreign currency:

Year ended 30 June 2020

Financial assets

Cash and cash equivalents

trade and other receivables

Financial liabilities

trade and other payables

Net Exposure

Year ended 30 June 2019

Financial assets

Cash and cash equivalents

trade and other receivables

Financial liabilities

trade and other payables

Net Exposure

PGK
AUD $’000

USD
AUD $’000

6,825

6,684

(872)

12,637

5,835

5,826

(1,250)

10,411

26,088

11,439

(2,218)

35,309

32,974

15,771

(1,615)

47,130

at 30 June 2020, reasonably possible movements in PGK foreign exchange rates, based on a review of historical movements, would
not have had a material impact on the Group.

at 30 June 2020, if the USD foreign exchange rates had moved, as illustrated in the table below, with all other variables held constant,
post tax profit and equity would have been affected as follows:

Judgements of reasonably possible movements
relating to financial assets and liabilities
denominated in USD:

+5% (2019: +5%)

-5% (2019: -5%)

Post Tax Profit
Higher/(Lower)

Other Comprehensive Income
Higher/(Lower)

2020
$’000

(1,236)

1,236

2019
$’000

(1,650)

1,650

2020
$’000

2019
$’000

the reasonably possible movements have been based on review of historical movements.

FINaNCIal REPoRt 105

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2020

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Risk exposures and responses (continued)

Credit risk
Credit risk is the risk that a counterparty will not meet its obligations 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, foreign exchange transactions and other financial instruments.
the Group’s maximum exposure to credit risk is its cash, trade and other receivables and contract assets representing $498,232,000
at 30 June 2020 (2019: $516,263,000).

Following the adoption of aaSB 9, the Group considers the probability of default upon initial recognition of a financial asset and
whether there has been a significant increase in credit risk on an ongoing basis throughout the reporting period.

Except for trade receivables, contract assets and other short-term receivables (see below), expected credit losses (ECl’s) are recognised
in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECls are
provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECl). For those credit
exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit
losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECl).

to assess whether there is a significant increase in credit risk the Group compares the risk of a default occurring on the asset as
at the reporting date with the risk of default as at the date of initial recognition. In making this assessment, the Group considers
information that is reasonable and supportable, including historical experience and forward-looking information. Forward-looking
information considered includes consideration of external sources of economic information. In particular, the Group takes into account
the counterparties external credit rating (as far as available), actual or expected significant changes in the operating results of the
counterparty and macroeconomic indicators when assessing significant movements in credit risk.

Trade receivables and contract assets
the Group trades with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit
terms are subject to credit verification procedures. Publicly available credit information from recognised providers is utilised for this
purpose where available.

In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

the Group minimises concentrations of credit risk in relation to accounts receivable and contract assets by undertaking transactions
with a number of customers within the resources, energy and infrastructure industry sector. there are multiple contracts with our
significant customers, across a number of their subsidiaries, divisions within those subsidiaries and locations.

For transactions that are not denominated in the functional currency of the relevant operating unit, the Group does not offer credit terms
without the specific approval of the Chairman, Managing Director or Chief Financial officer.

Since the Group trades with recognised third parties, there is no requirement for collateral.

the Group applies a simplified approach in calculating ECls for trade receivables and contract assets. therefore, the Group does not
track changes in credit risk, but instead recognises a loss allowance based on lifetime ECls at each reporting date. an impairment
analysis is performed at each reporting date using a provision matrix to measure expected credit losses. the provision rates are based
on days past due ageing for groupings of various customer segments with similar loss patterns. the calculation reflects the probability-
weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about
past events, current conditions and forecasts of future economic conditions.

a receivable is considered to be credit-impaired when one or more events that have a detrimental impact on the estimated future cash
flows have occurred. Evidence that a receivable is credit-impaired includes observable data about significant financial difficulty of the
debtor or a breach of contract, such as a default or past due event.

106

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2020

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Risk exposures and responses (continued)

Credit risk (continued)
Set out below is the information about the credit risk exposure on the Group’s trade receivables and contract assets, for which lifetime
expected credit losses are recognised, using a provision matrix:

Trade receivables

Days past due

Contract
assets

Current

<31
days

31-60
days

61-90
days

>91
days

Total

30 June 2020

Expected credit loss rate

0.55%

0.52%

0.74%

1.60%

4.55%

23.8%

total estimated gross carrying
amount at default ($’000)

27,503

142,695

30,532

Expected credit loss ($’000)

152

749

225

5,305

2,459

112

10,114

191,105

2,410

3,581

Trade receivables

Days past due

Contract
assets

Current

<31
days

31-60
days

61-90
days

>91
days

Total

30 June 2019

Expected credit loss rate

0.93%

0.78%

1.32%

2.01%

13.56%

total estimated gross carrying
amount at default ($’000)

29,661

202,152

26,770

Expected credit loss ($’000)

275

1,570

209

7,325

4,023

12,366

252,636

1,677

3,634

other balances within trade and other receivables did not contain impaired assets and were not past due. It was expected that these
other balances would be received when due.

Financial instruments and cash deposits

With respect to credit risk arising from the other financial assets of the Group, which comprises cash and cash equivalents, the Group’s
exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these
instruments. the Group minimises its exposure to credit risk for cash and cash equivalents, by investing funds with counter parties
rated a+ or higher by Standard & Poor’s where possible. term deposits typically have an original maturity of three months or less and
other bank deposits are on call. these financial assets are considered to have low credit risk.

Write off policy

the Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and
there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or entered into bankruptcy
proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking
into account legal advice where appropriate. any recoveries made are recognised in profit or loss.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2020

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Risk exposures and responses (continued)

Liquidity risk

Financing facilities available

at balance date the following financing facilities had been negotiated
and were available

total facilities:

- Bank guarantee and performance bonds

- Revolving credit

Facilities used at balance date:

- Bank guarantee and performance bonds

- Revolving credit

Facilities unused at balance date:

- Bank guarantee and performance bonds

- Revolving credit

FINaNCIal REPoRt 107

2020
$’000

2019
$’000

490,000

96,112

586,112

229,388

45,849

275,237

260,612

50,263

310,875

490,000

90,300

580,300

209,925

38,229

248,154

280,075

52,071

332,146

Nature of bank guarantees and performance bonds
the contractual term of the bank guarantees and performance bonds match the underlying obligation to which it relates.

Nature of revolving credit
the revolving credit includes hire purchase/leasing facilities. Refer to note 14 and 15 for terms and conditions.

the Group’s objective is to manage the liquidity of the business by monitoring project cash flows and through the use of financing
facilities. the Group currently utilises financing facilities in the form of hire purchase liabilities and secured loans. the liquidity of the
group is managed by the Group’s Finance and accounting department.

108

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2020

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Risk exposures and responses (continued)

Liquidity risk (continued)

the table below reflects all contractually fixed pay-offs, repayments and interest resulting from financial liabilities as of 30 June 2020.

Maturity analysis of financial liabilities:

6 months
or less
$’000

6 months
to 1 year
$’000

1 year to
5 years
$’000

Total
Contractual
Cash Flows
$’000

Total
Carrying
Amount
$’000

Year ended 30 June 2020

Financial liabilities

trade and other payables

165,752

Hire purchase liability

other lease liabilities

Bank loans

other financial liability

6,640

4,100

911

7,129

3,842

904

165,752

31,213

45,646

2,220

4,848

44,982

53,588

4,035

4,848

42,326

46,043

3,523

4,480

Net maturity

177,403

11,875

83,927

273,205

262,124

Year ended 30 June 2019

Financial liabilities

trade and other payables

Hire purchase liability

Bank loans

Net maturity

184,341

6,053

654

191,048

4,738

644

5,382

184,341

26,917

2,172

29,089

37,708

3,470

34,929

3,300

225,519

222,570

Net fair values of financial assets and liabilities

the carrying amounts and estimated fair values of financial assets and financial liabilities at balance date are materially the same.

Interest bearing liabilities with fixed interest rates: the fair value includes the value of contracted cash flows, discounted at market rates.

Cash and cash equivalent: the carrying amount approximates fair value because of their short-term maturity.

Receivables and payables: the carrying amount approximates fair value due to short term maturity.

listed equity investments measured at fair value through other comprehensive income. the carrying amount is equal to the fair value
calculated using quoted prices in active markets (level 1 – see below).

the Group uses various methods in estimating the fair value of a financial instrument. the methods comprise:

level 1: the fair value is calculated using quoted prices in active markets.

level 2: the fair value is estimated using inputs other than quoted prices included in level 1 that are observable for the asset

or liability, either directly (as prices) or indirectly (derived from prices).

level 3: the fair value is estimated using inputs for the asset or liability that are not based on observable market data.

there were no material financial assets or liabilities measured at fair value at 30 June 2020 or 30 June 2019.

FINaNCIal REPoRt 109

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
UNRECOGNISED ITEMS
FOR THE YEAR ENDED 30 JUNE 2020

25. COMMITMENTS AND CONTINGENCIES

Capital commitments

the consolidated group has capital commitments of $1,436,867 at 30 June 2020 (2019: $4,355,277).

Guarantees

2020
$’000

2019
$’000

Guarantees given to various clients for satisfactory contract performance

229,388

209,925

Monadelphous Group limited and all controlled entities marked # in note 21 have entered into a deed of cross guarantee. Refer to note
32 for details.

Contingent Liabilities

on 31 July 2020, Monadelphous was notified that Rio tinto had filed a Writ of Summons in the Supreme Court of Western australia
against one of Monadelphous’ wholly owned subsidiaries, Monadelphous Engineering associates Pty ltd (MEa). the claim has been
made by Robe River Mining Co Pty ltd and Pilbara Iron Pty ltd (on behalf of the Robe River joint venture) in respect of a fire incident
which occurred at Rio tinto’s iron ore processing facility at Cape lambert, Western australia on 10 January 2019. the writ has not yet
been served on MEa.

MEa had been performing maintenance shutdown services prior to the fire commencing, and Rio tinto has alleged that MEa was in
breach of the maintenance contract, thereby causing the fire. although the writ does not specify any damages, Rio tinto has separately
informed MEa that its claim is for $493 million in loss and damage. this amount comprises $35 million in material damage costs
associated with the re-construction of the Sinter Fines processing facility, and $458 million for a temporary operating solution and
business interruption losses arising from the alleged inability to process iron ore during the period of reconstruction of the facility.

MEa denies Rio tinto’s allegations and claimed losses (which MEa considers have not been substantiated). Further, the contract
between Rio tinto and MEa, which governed the maintenance work performed by MEa, contains exclusions and limitations of liability
which will be relied upon by MEa in defence of the claim. MEa has public liability insurance in place with a total limit of $150 million
which provides cover for property damage claims and associated losses. Monadelphous is unaware of any reason why the insurance
policies would not respond to indemnify MEa for liability it may have to Rio tinto. along with its insurers and their legal representatives,
MEa intends to fully defend Rio tinto’s legal action.

Recent court decisions, not involving Monadelphous, in respect of the correct application of certain employee entitlements may have a
financial impact on the Group. the Group does not consider the majority of the principles relating to these Court decisions directly apply
to the Group’s employment arrangements. No provision has therefore been recognised in relation to these matters at 30 June 2020.

the Group is subject to various other actual and pending claims arising in the normal course of business. the Group has regular claims
reviews to assess the need for accounting recognition or disclosure. the Directors are of the opinion that based on information currently
available there is no material exposure to the Group arising from these various actual and pending claims.

26. SUBSEQUENT EVENTS

Notification of filing of writ of summons

on 31 July 2020, Monadelphous was notified that Rio tinto had filed a Writ of Summons in the Supreme Court of Western australia
against one of Monadelphous’ wholly owned subsidiaries, Monadelphous Engineering associates Pty ltd (MEa). the claim has been
made by Robe River Mining Co Pty ltd and Pilbara Iron Pty ltd (on behalf of the Robe River joint venture) in respect of a fire incident
which occurred at Rio tinto’s iron ore processing facility at Cape lambert, Western australia on 10 January 2019. the writ has not yet
been served on MEa.

Refer to note 25 for further details.

Dividends declared

on 17 august 2020, the directors of Monadelphous Group limited declared a final dividend on ordinary shares in respect of the
2020 financial year. the total amount of the dividend is $12,303,392 which represents a fully franked final dividend of 13 cents per
share. this dividend has not been provided for in the 30 June 2020 financial statements. the Monadelphous Group limited Dividend
Reinvestment Plan will apply to the dividend.

110

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

27. PARENT ENTITY INFORMATION

Information relating to Monadelphous Group Limited parent entity

Notes

2020
$’000

2019
$’000

Current assets

total assets

Current liabilities

total liabilities

Net assets

Contributed equity

Share-based payment reserve

Fair value reserve for financial asset at FVoCI

Retained earnings

total equity

Profit after tax

total comprehensive income of the parent entity

Contingent liabilities

Guarantees

173,899

140,758

2,597,568

2,064,004

(2,335,491)

(1,842,800)

(2,405,409)

(1,870,677)

192,159

193,327

131,307

32,690

867

27,295

192,159

43,311

43,276

128,723

32,293

902

31,409

193,327

48,526

48,607

229,388

209,925

Guarantees entered into by the Group are via the parent entity. Details are contained in note 25.

Capital commitments

the parent entity has capital commitments of $nil at 30 June 2020 (2019: $nil).

FINaNCIal REPoRt 111

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

28. SHARE BASED PAYMENT EXPENSE

the share-based payment expense for the year ended 30 June 2020 was $2,186,390 (2019: $3,513,531) for the consolidated entity.

Performance Rights

During the year, 265,438 performance rights were granted by Monadelphous Group limited under the Combined Reward Plan (“CR
Plan”) in respect of the 2019 award. the performance rights vest into shares in equal instalments, one, two and three years subsequent
to award, subject to the employee remaining in the employ of the company at those particular dates.

the fair value of each performance right issued during the period was estimated on the date of grant using a discounted cash flow
calculation. Specifically, the Monadelphous Group limited share price has been discounted at the dividend yield in order to account for
the dividends that the rights holder forgoes over the life of the rights. a dividend yield of 3.59% to 4.13% has been used in the calculation.

the weighted average fair value of performance rights granted in the period was $14.28. the weighted average remaining contractual
life for the performance rights outstanding at 30 June 2020 was 1 year.

the following table illustrates the number and weighted average exercise prices of and movements in performance rights granted,
exercised and forfeited during the year.

2020

2019

Number of
Performance
Rights

Weighted Average
Exercise Price
$

Number of
Performance
Rights

Weighted average
Exercise Price
$

248,407

265,438

(82,771)

(24,932)

406,142

161,250

nil

257,379

(8,972)

248,407

82,771

nil

Balance at the beginning of the year

Issued during the year

Exercised during the year

Forfeited during the year

Balance at the end of the year

Exercisable during the next year

Options

In october 2019, a total of 2,450,000 options were granted by Monadelphous Group limited under the Employee option Plan at an
exercise price of $14.84. the exercise price of the options granted under the Employee option Plan was calculated as the average
closing market price of the shares for the five trading days prior to the invitation date to apply for the options of 14 october 2019.
the fair value of each option issued during the year was estimated on the date of grant using a Binomial option-pricing model.

the following weighted average assumptions were used for grants during the year:

Dividend yield

3.72%

Volatility

25.0% - 30.0%

Risk-free interest rate

0.72%

Expected life of option

25% - 2 years

25% - 3 years

50% - 4 years

the dividend yield reflects an analysis of past dividends and future dividend expectations. the expected life of the options is based on
historical data and is not necessarily indicative of exercise patterns that may occur. the expected volatility reflects the assumption that
the historical volatility is indicative of future trends, which also may not necessarily be the actual outcome. No other features of options
granted were incorporated into the measurement of fair value.

112

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

28. SHARE BASED PAYMENT EXPENSE (continued)

Options (continued)

the resulting weighted average fair values for options outstanding at 30 June 2020 are:

Number

600,000

1,200,000

Grant Date

14/10/2019

Final Vesting Date

14/09/2023

Fair Value Per Option
at Grant Date

$1.84

$2.10

$2.27

the following table illustrates the number and weighted average exercise prices of and movements in options granted, exercised and
forfeited during the year.

2020

2019

Number of
Options

2,450,000

(50,000)

2,400,000

Weighted Average
Exercise Price
$

Number of
options

Weighted average
Exercise Price
$

14.84

Balance at the beginning of the year

Granted during the year

Forfeited during the year

Balance at the end of the year

Exercisable during the next year

No options were exercised during the period.

Recognition and Measurement

the Group provides benefits to employees (including Key Management Personnel) of the Group in the form of share-based payments,
whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). these benefits are provided
through the Monadelphous Group limited Combined Reward Plan and the Monadelphous Group limited Employee option Plan.

the cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date
on which they are granted. the fair value is determined by an external valuer. In valuing equity-settled transactions, no account is taken of
any performance conditions, other than conditions linked to the price of the shares of Monadelphous Group limited (market conditions), if
applicable. the cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become
fully entitled to the award (the vesting date).

the cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects (i) the extent to which
the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest. this
opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at grant date. the income statement
charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally
anticipated to do so. any award subject to market condition is considered to vest irrespective of whether or not that market condition is
fulfilled, provided that all other conditions are satisfied.

the dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

29. AUDITORS’ REMUNERATION

the auditor of Monadelphous Group limited is Ernst & Young.

Amounts received or due and receivable by Ernst & Young Australia for:

- an audit or review of the financial report of the entity and any other

entity in the consolidated entity

- other services in relation to the entity and any other entity in the

consolidated entity

- tax compliance

FINaNCIal REPoRt 113

2020
$

2019
$

289,692

296,053

101,332

391,024

36,089

332,142

Ernst & Young has provided an auditor’s independence declaration to the Directors of Monadelphous Group limited confirming that the
provision of the other services has not impaired their independence as auditors.

30. RELATED PARTY DISCLOSURES

Compensation of key management personnel

Short term benefits

Post-employment

long term benefits

Share-based payments

total compensation

Zenviron

2020
$

2019
$

3,962,862

3,952,777

157,587

80,500

445,541

146,296

71,081

696,245

4,646,490

4,866,399

the group had sales to the joint venture during the year totalling $8,285,352 (2019: $12,954,834).

Mondium

at 30 June 2020, an amount totalling $nil (2019: $1,264,000) had been loaned to Mondium Pty ltd. the loan is included in the
statement of financial position within Investment in Joint Venture.

the group had sales to the joint venture during the year totalling $14,040,100 (2019: $5,799,662).

114

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

31. OPERATING SEGMENTS

Revenue is derived by the consolidated entity from the provision of engineering services to the resources, energy and infrastructure
industry sector. For the year ended 30 June 2020, the Engineering Construction division contributed revenue of $615.9 million (2019:
$622.9 million) and the Maintenance and Industrial Services division contributed revenue of $1,049.8 million (2019: $998.4 million).
Included in these amounts is $14.9 million (2019: $13.0 million) of inter-entity revenue and $163.4 million (2019: $131.0 million)
of revenue of joint ventures, which is eliminated on consolidation. the operating divisions are exposed to similar risks and rewards from
operations, and are only segmented to facilitate appropriate management structures.

the directors believe that the aggregation of the operating divisions is appropriate for segment reporting purposes as they:

• have similar economic characteristics in that they have similar gross margins;

• perform similar services for the same industry sector;

• have similar operational business processes;

• provide a diversified range of similar engineering services to a large number of common clients;

• utilise a centralised pool of engineering assets and shared services in their service delivery models, and the services provided to

customers allow for the effective migration of employees between divisions; and

• operate predominately in one geographical area, namely australia.

accordingly all services divisions have been aggregated to form one segment.

the Group has a number of customers to which it provides services. the largest customer represented 28% (2019: 19%) of the Group’s
revenue. two other customers individually contributed 15% and 13% of the Group’s revenue. there are multiple contracts with these
customers, across a number of their subsidiaries, divisions within those subsidiaries and locations.

Geographical Information

Revenue from external customers

australia

New Zealand

Chile

Mongolia

other overseas locations

2020
$’000

2019
$’000

1,324,475

1,308,515

20,328

30,339

46,490

65,761

29,484

80,622

58,648

1,487,393

1,477,269

FINaNCIal REPoRt 115

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

32. DEED OF CROSS GUARANTEE

Pursuant to aSIC Corporations (Wholly-owned Companies) Instrument 2016/785, relief has been granted to these controlled entities
of Monadelphous Group limited from the Corporations Act 2001 requirements for preparation, audit and publication of accounts.

as a condition of the Class order, Monadelphous Group limited and the controlled entities subject to the Class order, entered into a
deed of indemnity on 9 June 2011, 1 June 2012, 9 June 2014 and 8 June 2016. the effect of the deed is that Monadelphous Group
limited has guaranteed to pay any deficiency in the event of winding up of these controlled entities. the controlled entities have also
given a similar guarantee in the event that Monadelphous Group limited is wound up.

the consolidated income statement and statement of financial position of the entities that are members of the ‘Deed’ are as follows:

Consolidated Income Statement and Comprehensive Income

Profit before income tax

Income tax expense

Net profit after tax for the period

Reconciliation of Retained Earnings

Retained earnings at the beginning of the period

opening balance adjustment on application of aaSB 16

Dividends paid

Net profit after tax for the period

Retained earnings at the end of the period

2020
$’000

2019
$’000

30,667

(9,673)

20,994

227,975

(4,970)

(42,455)

20,994

201,544

61,949

(23,251)

38,698

242,950

(53,673)

38,698

227,975

116

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

32. DEED OF CROSS GUARANTEE (continued)

Consolidated Statement of Financial Position

ASSETS

Current assets

Cash and cash equivalents

trade and other receivables

Contract assets

total current assets

Non-current assets

Investments in subsidiaries

Property, plant and equipment

Deferred tax assets

Intangible assets and goodwill

other non-current assets

total non-current assets

TOTAL ASSETS

LIABILITIES

Current liabilities

trade and other payables

Interest bearing loans and borrowings

lease liabilities

Income tax payable

Provisions

total current liabilities

Non-current liabilities

Interest bearing loans and borrowings

lease liabilities

Provisions

total non-current liabilities

TOTAL LIABILITIES

NET ASSETS

EQUITY

Contributed equity

Reserves

Retained earnings

TOTAL EQUITY

2020
$’000

2019
$’000

169,005

316,057

16,287

501,349

17,179

150,415

22,144

3,400

2,872

196,010

697,359

198,277

1,200

17,189

438

41,775

258,879

900

67,477

3,695

72,072

129,277

326,156

30,566

485,999

7,872

106,220

28,021

3,120

2,921

148,154

634,153

153,318

10,868

198

48,693

213,077

27,361

3,822

31,183

330,951

244,260

366,408

389,893

131,307

33,557

201,544

366,408

128,723

33,195

227,975

389,893

FINaNCIal REPoRt 117

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

33. OTHER ACCOUNTING STANDARDS

Other accounting policies

Financial assets

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through oCI, and fair value
through profit or loss.

With the exception of trade receivables, that do not have a significant financing component, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. trade receivables that
do not contain a significant financing component are measured at the transaction price determined under aaSB 15.

Financial assets at amortised cost
the Group measures financial assets at amortised cost where the objective is to hold financial assets in order to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding. this assessment is referred to as the SPPI test and is performed at an instrument level.

Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

the Group’s financial assets at amortised cost includes trade receivables.

Financial assets at fair value
For financial assets at fair value, gains and losses will either be reported in profit or loss or other comprehensive income. For investments
in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of
initial recognition to account for the equity instruments at fair value through oCI.

Gains and losses on financial assets designated at fair value through oCI are not recycled to profit or loss. Dividends are recognised as
other income in the statement of profit or loss when the right of payment has been established. Equity instruments designated at fair
value through oCI are not subject to impairment assessment.

Impairment of financial assets
the Group recognises an allowance for ECls for trade receivables, contract assets and other debt financial assets not held at fair value
through profit or loss. ECls are based on the difference between the contracted cash flows due in accordance with the contract and all
the cash flows the Group expects to receive, discounted at an approximation of the original effective interest rate.

For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses and recognises
a loss allowance based on lifetime expected credit losses at each reporting date. the Group has established a provision matrix that is
based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Definition of default
the Group considers a financial asset to be in default when contractual payments are 90 days past due or when internal or external
information indicates that the Group is unlikely to receive the outstanding contractual amounts in full.

Write off policy
a financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GSt except:

• when the GSt incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GSt

is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GSt included.

the net amount of GSt recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GSt component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GSt recoverable from, or payable to, the taxation authority.

118

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

33. OTHER ACCOUNTING STANDARDS (continued)

New and amended Accounting Standards and Interpretations

Monadelphous Group limited and its subsidiaries (‘the Group’) has adopted all new and amended australian Standards and
Interpretations mandatory for reporting periods beginning on or before 1 July 2019.

the Group applies, for the first time, aaSB 16 Leases (aaSB 16). the nature and effect of these changes are disclosed below. In accordance
with elections available under these new accounting standards (see below for further details), the new accounting policies are effective from
1 July 2019 and comparative information continues to be prepared in line with the accounting policies as disclosed in the 30 June 2019
Financial Report. the cumulative effect of initially applying the Standards has been recognised as an adjustment to the opening balance of
retained earnings.

other revised Standards and Interpretations which apply from 1 July 2019 did not have any material effect on the financial position or
performance of the Group.

AASB 16 Leases

aaSB 16, which supersedes aaSB 117 Leases (aaSB 117) and related interpretations, sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model.

the Group adopted aaSB 16 using the modified retrospective method of adoption with the date of initial application of 1 July 2019.
Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the
date of initial application, with no restatement to comparative information. the Group elected to use the transition practical expedient
allowing the standard to be applied only to contracts that were previously identified as leases applying aaSB 117 and IFRIC 4 at the
date of initial application.

lessor accounting under aaSB 16 is substantially unchanged from aaSB 117. lessors will continue to classify leases as either operating
or finance leases using similar principles as in aaSB 117.

Impact on Application
the Group has lease contracts for properties and items of plant, vehicles and equipment. Before the adoption of aaSB 16, the Group
classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. For operating leases, the
leased property was not capitalised and the lease payments were recognised as rent expense in profit or loss on a straight-line basis
over the lease term. Upon adoption of aaSB 16, the Group has applied a single recognition and measurement approach for all leases,
except for short-term leases and leases of low-value assets (refer below).

Leases previously classified as finance leases
the Group did not change the carrying amounts of recognised lease assets and liabilities at the date of initial application for leases
previously classified as finance leases. the carrying values of the lease assets and lease liabilities under aaSB 117 became the carrying
values of the right of use assets and lease liabilities at transition.

on adoption of aaSB 16 at 1 July 2019 lease liabilities of $34,929,000 were reclassified from interest bearing loans and borrowings
to lease liabilities. the Group continues to present lease assets within Property, Plant and Equipment.

Leases previously accounted for as operating leases
Effective from 1 July 2019 the Group recognised lease assets and lease liabilities for those leases previously classified as operating
leases. the Group elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of
12 months or less and do not contain a purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of
low value (‘low-value assets’). lease assets for the two largest leases were recognised based on the carrying amount as if the standard
had always been applied, apart from applying the incremental borrowing rate at the date of initial application. For all other leases,
the lease assets were recognised based on the amount equal to the lease liabilities. there were no related prepaid and accrued lease
payments previously recognised that required the lease assets to be adjusted. lease liabilities were recognised based on the present
value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application. as a result of
adopting aaSB 16 additional lease liabilities of $47,261,000 and lease assets of $40,161,000 were recognised at 1 July 2019.

the principal component of lease payments is recognised as a financing activity in the statement of cashflow (previously presented as
an operating activity).

FINaNCIal REPoRt 119

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

33. OTHER ACCOUNTING STANDARDS (continued)

New and amended Accounting Standards and Interpretations (continued)

AASB 16 Leases (continued)

Impact on Application (continued)
on transition the Group also applied the available practical expedients wherein it:

• Used a single discount rate to a portfolio of leases with reasonably similar characteristics

• Relied on its assessment of whether leases are onerous immediately before the date of initial application

• applied the short-term leases exemption to leases with lease terms that end within 12 months of the date of initial application

•

Excluded the initial direct costs from the measurement of the lease asset at the date of initial application

• Used hindsight with regards to determination of the lease term.

the impact on the balance sheet of adoption of aaSB 16 at 1 July 2019 is as follows:

Balance Sheet at 1 July 2019

Property, plant and equipment

Deferred tax asset

Total Assets Impact

Current interest bearing loans and borrowings

Non-current interest bearing loans and borrowings

Current lease liabilities

Non-current lease liabilities

Total Liabilities Impact

Net Assets Impact

Retained earnings

Total Equity Impact

the lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as of 30 June 2019 as follows:

operating lease commitments disclosed as at 30 June 2019

Less:

Present value discounting of lease liabilities

Commitments relating to short-term leases and low value assets

Add:

Present value of existing hire purchase leases at 1 July 2019

Lease liabilities as at 1 July 2019

Increase /
(Decrease)
$’000

40,161

2,130

42,291

(9,668)

(25,261)

16,748

65,442

47,261

(4,970)

$’000

53,154

(4,616)

(1,277)

34,929

82,190

lease liabilities, for leases that were previously classified as operating leases, were discounted using a weighted average incremental
borrowing rate as at 1 July 2019 of 4.41%.

120

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

33. OTHER ACCOUNTING STANDARDS (continued)

New and amended Accounting Standards and Interpretations (continued)

Accounting policies applied from 1 July 2019

the Group assesses at contract inception whether a contract is, or contains, a lease. that is, if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee
the Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value
assets. the Group recognises lease liabilities to make lease payments and lease assets representing the right to use the underlying assets.

Right of use assets
the Group recognises lease assets at the commencement date of the lease (i.e., the date the underlying asset is available for use).
lease assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. the cost of lease assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received.

Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised lease assets
are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets as follows:

- Property

1 to 8 years

- Plant and equipment

1 to 10 years

If ownership of leases assets transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset.

lease assets are subject to impairment.

Lease liabilities
at the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to
be made over the lease term. the lease payments include fixed payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. the lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group
and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily determinable. after the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or
a change in the assessment to purchase the underlying asset.

Short-term leases and leases of low-value assets
the Group applies the short-term lease recognition exemption for those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to leases
of plant and equipment that are considered of low value. lease payments on short-term leases and leases of low-value assets are
recognised as expense on a straight-line basis over the lease term.

Significant judgement in determining the lease term of contracts with renewal options

the Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend
the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain
not to be exercised.

the Group has the option, under some of its leases to lease the assets for additional terms of one to five years. the Group applies judgement
in evaluating whether it is reasonably certain to exercise the option to renew and considers all relevant factors that create an economic
incentive for it to exercise the renewal. after the commencement date, the Group reassesses the lease term if there is a significant event or
change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew.

FINaNCIal REPoRt 121

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

33. OTHER ACCOUNTING STANDARDS (continued)

New accounting standards and interpretations issued but not yet effective

australian accounting Standards and Interpretations that have recently been issued or amended but are not yet effective
(including those below) have not been adopted by the Group for the annual reporting period ended 30 June 2020.

Reference

Summary

Conceptual
Framework AASB
2019-1

the revised Conceptual Framework includes some new concepts,
provides updated definitions and recognition criteria for assets and
liabilities and clarifies some important concepts.

Application date
of standard

Application date
for Group

1 January 2020

1 July 2020

aaSB 2019-1 has also been issued, which sets out the
amendments to other pronouncements for references to the revised
Conceptual Framework. the changes to the Conceptual Framework
may affect the application of accounting standards in situations
where no standard applies to a particular transaction or event.
In addition, relief has been provided in applying aaSB 3 and
developing accounting policies for regulatory account balances
using aaSB 108, such that entities must continue to apply the
definitions of an asset and a liability (and supporting concepts) in
the Framework for the Preparation and Presentation of Financial
Statements (July 2004), and not the definitions in the revised
Conceptual Framework.

AASB 2018-6
Amendments to
Australian Accounting
Standards –
Definition of a
Business

the Standard amends the definition of a business in aaSB 3
Business Combinations. the amendments clarify the minimum
requirements for a business, remove the assessment of whether
market participants are capable of replacing missing elements, add
guidance to help entities assess whether an acquired process is
substantive, narrow the definitions of a business and of outputs,
and introduce an optional fair value concentration test.

AASB 2018-7
Amendments to
Australian Accounting
Standards –
Definition of Material

this Standard amends aaSB 101 Presentation of Financial
Statements and aaSB 108 accounting Policies, Changes in
accounting Estimates and Errors to align the definition of ‘material’
across the standards and to clarify certain aspects of the definition.
the amendments clarify that materiality will depend on the nature
or magnitude of information. an entity will need to assess whether
the information, either individually or in combination with other
information, is material in the context of the financial statements.
a misstatement of information is material if it could reasonably be
expected to influence decisions made by the primary users.

1 January 2020

1 July 2020

1 January 2020

1 July 2020

122

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2020

33. OTHER ACCOUNTING STANDARDS (continued)

New accounting standards and interpretations issued but not yet effective (continued)

Reference

Summary

this Standard amends aaSB 1054 by adding a disclosure
requirement for an entity intending to comply with IFRS Standards to
disclose the information specified in paragraphs 30 and 31 of aaSB
108 on the potential effect of an IFRS Standard that has not yet been
issued by the aaSB so that such entity complying with australian
accounting Standards can assert compliance with IFRS Standards.

Application date
of standard

Application date
for Group

1 January 2020

1 July 2020

the amendments clarify that a full gain or loss is recognised when
a transfer to an associate or joint venture involves a business
as defined in aaSB 3 Business Combinations. any gain or loss
resulting from the sale or contribution of assets that does not
constitute a business, however, is recognised only to the extent of
unrelated investors’ interests in the associate or joint venture.

1 January 2022

1 July 2022

AASB 2019-5
Amendments to
Australian Accounting
Standards –
Disclosure of the
Effect of New IFRS
Standards Not Yet
Issued in Australia

AASB 2014-10
Amendments to
Australian Accounting
Standards – Sale
or Contribution of
Assets between
an Investor and its
Associate or Joint
Venture

AASB 2020-1
Amendments to AASs
– Classification of
Liabilities as current
or non-current

a liability is classified as current if the entity has no right at the end
of the reporting period to defer settlement for at least 12 months
after the reporting period. the aaSB recently issued amendments
to aaSB 101 to clarify the requirements for classifying liabilities as
current or non-current. Specifically:

1 January 2022

1 July 2022

• the amendments specify that the conditions which exist at

the end of the reporting period are those which will be used to
determine if a right to defer settlement of a liability exists.

• Management intention or expectation does not affect

classification of liabilities.

• In cases where an instrument with a conversion option is

classified as a liability, the transfer of equity instruments would
constitute settlement of the liability for the purpose of classifying
it as current or non-current.

FINaNCIal REPoRt 123

INVESTOR INFORMATION
INVESTOR INFORMATION
FOR THE YEAR ENDED 30 JUNE 2020
FOR THE YEAR ENDED 30 JUNE 2020

additional information required by the australian Securities Exchange limited and not shown elsewhere in this report is as follows.
the information is current at 14 September 2020.

a) Distribution of equity securities

the number of shareholders, by size of holding, in each class of share is:

Range

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 over

total

Total holders

6,501

4,030

744

562

11,877

the number of shareholders holding less than marketable parcels is 468.

b) Twenty largest shareholders

the names of the twenty largest holders of quoted shares are:

Rank Name

HSBC Custody Nominees (australia) limited

J P Morgan Nominees australia Pty limited

Citicorp Nominees Pty limited

National Nominees limited

BNP Paribas Nominees Pty ltd

BNP Paribas Noms Pty ltd

Velham Nominees Pty ltd

Wilmar Enterprises Pty ltd

Rubi Holdings Pty ltd

Citicorp Nominees Pty limited

HSBC Custody Nominees (australia) limited-GSCo ECa

Brispot Nominess Pty ltd

Mr arif Erdash

UBS Nominess Pty ltd

Neale Edwards Pty ltd

aMP life limited

3rd Wave Investors ltd

CPU Share Plans Pty ltd

Borromini Pty ltd

Marsden Holdings (Canberra) Pty ltd

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

total

Number of
Ordinary Shares

% of Issued
Capital

2,947,579

9,620,183

5,561,174

13,934,494

62,578,049

94,641,479

3.11

10.17

5.88

14.72

66.12

100.00

Number of
Ordinary Shares

24,315,585

13,269,295

% of Issued
Capital

25.69

14.02

5,338,571

2,910,544

2,619,375

2,379,258

2,100,000

1,320,000

1,022,653

820,154

512,152

508,305

480,000

416,232

385,085

301,716

300,000

240,604

224,000

219,423

5.64

3.08

2.77

2.51

2.22

1.39

1.08

0.87

0.54

0.51

0.44

0.41

0.32

0.25

0.24

0.23

59,682,952

63.07

c) Substantial shareholders

d) Voting rights

the following shareholders have declared a relevant interest in the
number of voting shares at the date of giving notice under Part 6C.1
of the Corporations Act 2001.

Shareholder

Pendal Group limited

the Vanguard Group Inc.
(and its subsidiaries)

Ordinary
Shares

9,794,803

% Held

10.35

4,955,614

5.24

Each ordinary shareholder present at a general meeting (whether
in person, online, by proxy or by representative) is entitled to one
vote on a show of hands, or on a poll, one vote for each fully paid
ordinary share subject to any voting restrictions that may apply.

e) Securities exchange listing

Quotation has been granted for all the ordinary shares of the
company on all Member Exchanges of the australian Securities
Exchange limited.

124

INVESTOR INFORMATION
FOR THE YEAR ENDED 30 JUNE 2020

ANNUAL GENERAL MEETING
the annual General Meeting will be held in person at the University
Club, University of Western australia, Crawley, Wa, and online via the
lumi software platform, on tuesday 24 November 2020 at 10.00am
(aWSt). Full details of the meeting are contained in the Notice of
annual General Meeting available on the Company’s website
at www.monadelphous.com.au.

DIVIDENDS
the following options are available regarding payment of dividends.

(i) By cheque payable to the shareholder; or

(ii) By direct deposit to a bank, building society or credit

union account.

lost or stolen cheques should be reported immediately to the
Share Registry, in writing. Electronic payments are credited on the
dividend payment date and confirmed by a payment advice sent to
the shareholder. Request forms for this service are available from
the Company’s Share Registry at the address shown below.

SHAREHOLDER ENQUIRIES
all enquires should be directed to the Company’s Share Registry at:

Computershare Investor Services Pty limited
level 11, 172 St Georges terrace
Perth Western australia 6000

telephone:

1300 364 961 (australia)
+61 3 9946 4415 (overseas)

Email:
Website:

web.queries@computershare.com.au
www.investorcentre.com

CHANGE OF NAME
Shareholders who change their name should notify the Share
Registry, in writing, and attach a copy of a relevant marriage
certificate or deed poll.

TAX FILE NUMBER (TFN)
although it is not compulsory for each shareholder to provide a tFN
or exemption details, for those shareholders who do not provide
the necessary details, the Company will be obliged to deduct tax
from any unfranked portion of their dividends at the top marginal
rate. tFN application forms can be obtained from the Share
Registry, any australian Post office or the australian taxation office.

MONADELPHOUS PUBLICATIONS
In an effort to reduce its impact on the environment Monadelphous
will only post printed copies of this annual Report to those
shareholders who elect to receive one through the share registry.
Shareholders may alternatively elect to receive an electronic copy
of the annual Report. Monadelphous Group limited financial reports
are also available on its website.

INFORMATION ABOUT MONADELPHOUS
Requests for specific information on the Company can be directed
to the Company Secretary at the following address:

Monadelphous Group limited
Po Box 600
Victoria Park, Wa 6979

telephone: +61 8 9316 1255
Facsimile: +61 8 9316 1950

all written enquires should include your Security Holder Reference
Number or Holder Identification Number as it appears on your
Holding Statement along with your current address.

MONADELPHOUS WEBSITE
Further information about Monadelphous Group limited is available
on the Company website: www.monadelphous.com.au

CHANGE OF ADDRESS
It is very important that shareholders notify the Share
Registry immediately, in writing, if there is any change to
their registered address.

LOST HOLDING STATEMENTS
Shareholders should inform the Share Registry immediately,
in writing, so that a replacement statement can be arranged.

CORPORATE DIRECTORY

DIRECTORS
Calogero Giovanni Battista Rubino
Chairman

Robert Velletri
Managing Director

Peter John Dempsey
lead Independent Non-Executive Director

Christopher Percival Michelmore
Independent Non-Executive Director

Dietmar Robert Voss
Independent Non-Executive Director

Helen Jane Gillies
Independent Non-Executive Director

Susan Lee Murphy AO
Independent Non-Executive Director

COMPANY SECRETARIES
Kristy Glasgow
Philip Trueman

PRINCIPAL REGISTERED OFFICE
IN AUSTRALIA
59 albany Highway
Victoria Park
Western australia 6100

telephone: +61 8 9316 1255
Facsimile: +61 8 9316 1950
Website: www.monadelphous.com.au

POSTAL ADDRESS
Po Box 600
Victoria Park
Western australia 6979

SHARE REGISTRY
Computershare Investor Services Pty Limited
level 11, 172 St George’s terrace
Perth
Western australia 6000
telephone: 1300 364 961 (australia)

+61 3 9946 4415 (overseas)

Facsimile: +61 8 9473 2500

ASX CODE
MND – Fully Paid ordinary Shares

125

BANKERS
National Australia Bank Limited
100 St George’s terrace
Perth Western australia 6000

HSBC
188-190 St George’s terrace
Perth Western australia 6000

Westpac Banking Corporation
109 St George’s terrace
Perth Western australia 6000

AUDITORS
Ernst & Young
11 Mounts Bay Road
Perth Western australia 6000

SOLICITORS
Johnson, Winter & Slattery
level 4, 167 St George’s terrace
Perth Western australia 6000

CONTROLLED ENTITIES
Monadelphous Engineering associates Pty ltd
Monadelphous Engineering Pty ltd
Monadelphous Properties Pty ltd
Monadelphous Workforce Pty ltd
Genco Pty ltd
Monadelphous Electrical & Instrumentation Pty ltd
Monadelphous PNG ltd
Monadelphous Holdings Pty ltd
Moway International limited
SinoStruct Pty ltd
Moway austasia Steel Structures trading (Beijing)
Company limited
Monadelphous Group limited Employee Share trust
Monadelphous Kt Pty ltd
Monadelphous Energy Services Pty ltd
Monadelphous Singapore Pte ltd
Monadelphous Mongolia llC
M&ISS Pty ltd
M Maintenance Services Pty ltd
Monadelphous Engineering NZ Pty ltd
Monadelphous Marcellus llC
Evo access Pty ltd
Monadelphous Inc.
MGJV Pty ltd
M Workforce Pty ltd
Monadelphous Investments Pty ltd
MWoG Pty ltd
arc West Group Pty ltd
MoaG Pty ltd
Monadelphous International Holdings Pty ltd
Monadelphous Sdn Bhd
R.I.G. Installations (Newcastle) Pty ltd
R E & M Services Pty ltd
Pilbara Rail Services Pty ltd
EC Projects Pty ltd
Monadelphous Chile Spa
MaQrent Spa
Buildtek Spa

PERTH HEAD OFFICE

BRISBANE OFFICE

MONADELPHOUS.COM.AU

59 albany Highway
Victoria Park
Western australia 6100

Po Box 600
Victoria Park
Western australia 6979

level 6, 19 lang Parade
Milton
Queensland 4064

Po Box 1872
Milton
Queensland 4064

T +61 8 9316 1255
F +61 8 9316 1950

T +61 7 3368 6700
F +61 7 3368 6777

Monadelphous Group limited
aBN 28 008 988 547