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Monadelphous Group Limited 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
Left: Monadelphous employees inspecting construction at Rio Tinto’s West Angelas Deposits C & D Project, Newman, Western Australia.
Middle: A Monadelphous employee inspecting pipe installation plans at BHP’s Jimblebar mine site, Newman, Western Australia.
Right: Woodside-operated North Rankin Complex, located 135 kilometres north-west of Karratha, Western Australia. Photo courtesy of Woodside.
CONTENTS
OVERVIEW
About Monadelphous
Our Services and Locations
OPERATING AND FINANCIAL REVIEW
2020/21 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
5
6
8
10
12
14
16
20
22
24
30
36
48
52
65
70
71
76
Investor Information
122
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 2021 financial year.
References in this Report to ‘the year’, ‘the reporting period’ and ‘the period’ relate to
the financial year 1 July 2020 to 30 June 2021, 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 2021 Annual
General Meeting will be held at The University Club, University of Western
Australia, Crawley, Western Australia, and online via the Lumi software platform, on
Tuesday, 23 November 2021 at 10am (AWST). Further details are included in the
Notice of Meeting available on the Company’s website at www.monadelphous.com.au.
The Monadelphous 2021 Annual Report has been printed
on FSC Recycled certified paper as part of the Company’s
environmental commitment to reducing waste.
4 ANNUAL REPORT 2021
Monadelphous employees on the newly constructed primary crusher at Rio Tinto’s West Angelas Deposits C & D Project, Newman, Western Australia.
Image caption goes here
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, 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.
6 ANNUAL REPORT 2021
6 ANNUAL REPORT 2021
OUR SERVICES
AND LOCATIONS
Monadelphous operates predominantly in Australia,
with overseas operations in New Zealand, China,
Papua New Guinea, Mongolia, the Philippines and Chile.
ENGINEERING CONSTRUCTION
Market Sector
Market Sector
Australia Pacific LNG - Skids supply, fabrication and assembly
Oil and Gas
BHP - Olympic Dam - Multidisciplinary Construction Services
Panel - SMPE&I
Copper, Uranium,
Gold
8
9
MARBL Lithium JV - SMP and piping works
General Electric International - Murra Warra Stage II Wind Farm
- BOP works
Renewable Energy
BHP - South Flank - SMPE&I works for inflow infrastructure
Iron Ore
10 Rio Tinto - West Angelas Deposits C & D Project - SMPE&I
BHP - South Flank - SMPE&I works for outflow infrastructure
Iron Ore
11 Rio Tinto - Western Turner Syncline Phase 2 Mine - D&C
BHP - WAIO Asset Projects Panel - SMPE&I
Iron Ore
12 Talison Lithium - D&C tailings retreatment processing plant
Lithium
CWP Asset Management - Crudine Ridge Wind Farm - BOP works
Renewable Energy
13
thyssenkrupp Industrial Solutions (Australia) - South Flank -
Construction of reclaimer and stackers
Iron Ore
Fortescue Metals Group - Crane services
Iron Ore
MAINTENANCE AND INDUSTRIAL SERVICES
Market Sector
AGL Macquarie - Bayswater Fly Ash Plant refurbishment and slurry
lines replacement
Power
16
Minera Escondida - Escondida Copper Mine - Construction and
assembly of communications tower
Alcoa - Crusher relocation and recommissioning
Anglogold - Maintenance services
BHP - Maintenance and shutdowns
Bauxite
Gold
Nickel
BHP - Maintenance, shutdowns and sustaining capital works
Iron Ore
BHP - Mt Arthur Coal - Shutdown maintenance and minor projects
Coal
BHP - Olympic Dam - Maintenance and shutdowns
Copper, Uranium, Gold
BHP Mitsubishi Alliance - Maintenance and shutdown works
Coal
Codelco - Chuquicamata Mine - Underground maintenance services
Copper
10 Codelco - El Teniente Mine - Maintenance services
11 Codelco - Radomiro Tomic Mine - Maintenance services
12 GNL Quintero - Maintenance works
13
Incitec Pivot - Turnarounds, general mechanical
and maintenance services
Copper
Copper
Oil and Gas
Ammonia
17 Newcrest Mining - Maintenance works
18 Oil Search Limited - EPC services
Oil and Gas
19 Queensland Alumina Limited - Maintenance and projects
Alumina
20
Rio Tinto - Fixed plant maintenance, marine maintenance and
sustaining capital works
21 Rio Tinto - Gove - Shutdown services
22 Rio Tinto - Maintenance services for rail network
Iron Ore
Bauxite
Iron Ore
23 Rio Tinto - Yarwun Alumina Refinery - Maintenance services
Alumina
24 Shell - Provision of services
25 Shell - Provision of services
26
27
South32 - Worsley Alumina Refinery - Shutdown
and mechanical services
Synergy - Muja Power Station and Collie Power Station -
Infrastructure operation and maintenance
Oil and Gas
Oil and Gas
Alumina
Power
14 INPEX Operations Australia - Offshore maintenance services
Oil and Gas
28 Woodside - Offshore and onshore maintenance services
Oil and Gas
15 Minera Escondida - Coloso Port - Upgrade to conveyor system
Copper
Abbreviations: BOP - Balance of plant; D&C - Design and construct; EPC - Engineering, procurement and construction; SMP - Structural, mechanical and piping;
SMPE&I - Structural, mechanical, piping, electrical and instrumentation; WAIO - Western Australia Iron Ore
Lithium
Iron Ore
Iron Ore
Market Sector
Copper
Gold
1
2
3
4
5
6
7
1
2
3
4
5
6
7
8
9
OPERATING AND FINANCIAL OVERVIEW 7
MONGOLIA
MONGOLIA
CHINA
ULAANBAATAR
BEIJING
TIANJIN
PHILIPPINES
MANILA
17
18
PAPUA NEW
GUINEA
9
11
15
16
12
10
CALAMA
ANTOFAGASTA
SANTIAGO
RANCAGUA
CHILE
DARWIN
14
24
21
PORT HEDLAND
PILBARA COASTAL
AND NORTH-WEST REGION
3
10 11 13
5
4
7
5
20
22 28
KARRATHA
TOM PRICE
NEWMAN
KALGOORLIE
PERTH
HEAD OFFICE
4
3
2
9
26 27
12
BUNBURY
BIBRA LAKE
13
8
19
23
25
1
1
6
6
MACKAY
GLADSTONE
BRISBANE
CHINCHILLA
GUNNEDAH
MUSWELLBROOK
MT THORLEY
RUTHERFORD
NEWCASTLE
SYDNEY
MUDGEE
AUSTRALIA
2
7
ROXBY DOWNS
8
MAJOR OFFICES & WORKSHOP LOCATIONS
ENGINEERING CONSTRUCTION
MAINTENANCE & INDUSTRIAL SERVICES
NEW ZEALAND
8 ANNUAL REPORT 2021
2020/21
HIGHLIGHTS
Monadelphous made good progress on its markets and growth
strategy, despite the impacts and uncertainty caused by
COVID-19. In total, the Company was awarded approximately
$950 million of new contracts and contract extensions.
Strong progress on resource
construction projects
The Engineering Construction division made significant
execution progress on its large portfolio of major
construction projects, including BHP’s US$3.6 billion
South Flank, which achieved first production in May 2021,
Rio Tinto’s West Angelas Deposits C and D and the
Kemerton lithium hydroxide plant, which is owned 60 per
cent by Albemarle in connection with its MARBL Lithium
Joint Venture with Mineral Resources Limited.
Mondium progressed significant EPC project
Mondium made good progress on its strategically important $400
million contract with Rio Tinto for the Western Turner Syncline Phase
2 mine, located in the Pilbara region of Western Australia (WA).
Outstanding safety performance
Achieved a substantial improvement in safety performance,
with a 39 per cent reduction in the Company’s total
recordable injury frequency rate to 2.26 incidents per
million hours worked.
OPERATING AND FINANCIAL REVIEW 9
Strong demand for
maintenance services
Significant demand for
maintenance, shutdown
and sustaining capital services,
particularly within the iron ore
sector in the Pilbara.
Expanded rail services
Continued to grow its rail
portfolio on the east coast of
Australia, commenced providing
underground rail maintenance
services in South Australia and
invested in plant and equipment
to support customers.
Multiple new contract awards
in South America
Buildtek awarded approximately
$100 million of new maintenance
and construction contracts in Chile
with major copper producers, Codelco
and Minera Escondida.
Developed new diversity plans
Supporting sustainable change, and in
line with its commitment to diversity and
inclusion, new Stretch Reconciliation
Action and Gender Diversity and Inclusion
plans were developed for launch in the
2022 financial year.
Significant number of contracts secured in iron ore
A large proportion of construction and maintenance contracts were secured with
major iron ore producers during the year, including with BHP, Rio Tinto and
Fortescue Metals Group.
10 ANNUAL REPORT 2021
PERFORMANCE
AT A GLANCE
Revenue1
Net profit after tax
Earnings per share
$1,953m
$47.1m
49.7c
45.0c
Contracts secured since beginning of 2021 financial year 2.26
$950m
Full year dividend
Total recordable injury frequency rate
incidents per million
hours worked
Safety performance
6.00
4.00
2.00
0.00
2.26
TRIFR
0.27
LTIFR
2018
2019
2020
2021
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 76.
Revenue1
Net profit after tax
Earnings per share
OPERATING AND FINANCIAL REVIEW 11
n
o
i
l
l
i
m
$
7
.
4
6
2
,
1
0
.
4
8
7
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6
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4
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C
17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
Financial Year
Financial Year
Financial Year
Dividends per share
Cash
Workforce numbers
7,545
7,091
6,532
7,791
5,689
s
t
n
e
C
n
o
i
l
l
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$
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17
18
19
20
21
17
18
19
20
21
17
18
19
20
21
Financial Year
Financial Year
Financial Year
Direct Employees
Subcontractors
Revenue by geography
Operations
Revenue by end customer
WA
QLD
INTERNATIONAL
NSW
NT
SA
VIC
74%
8%
6%
4%
3%
3%
2%
· Demand for services increased as industry recovered
from COVID-19.
· Significantly progressed major construction projects.
· Strong demand for maintenance services.
· Unprecedented skilled resources shortage.
· Secured approximately $950 million of new contracts
and contract extensions.
Safety and Wellbeing
· 12-month total recordable injury frequency rate improved
by 39 per cent to 2.26 incidents per million hours worked.
·
Initiatives implemented to reinforce line-of-fire fatal
risk controls.
· Continued focus on employee mental health and wellbeing.
Iron ore
Oil and gas
Copper
Coal
Other minerals
Lithium
Infrastructure
53%
18%
7%
7%
6%
5%
4%
People and Culture
· Substantial increase in employee numbers.
· Skilled labour supply impacted by very high industry
activity levels and COVID-19 restrictions.
· Enhanced employee development programs
and reviewed employee benefits and rewards.
· Formalised commitment to workplace flexibility.
· Progressed Indigenous and gender diversity
engagement initiatives.
12 ANNUAL REPORT 2021
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.
Conveyor installed by Monadelphous at BHP’s US$3.6 billion South Flank Project, Pilbara, Western Australia.
OPERATING AND FINANCIAL REVIEW 13
Car dumper refurbishment work undertaken by Monadelphous at
BHP’s Nelson Point, Port Hedland operations, Western Australia.
Maximise growth and returns from core markets
Progress
· Secured approximately $950 million of new contracts
Priorities
· Continue to capitalise on opportunities in iron ore,
and extensions since the beginning of the financial year.
copper and other resource commodities.
· Significantly progressed work on major resource
· Maximise fabrication opportunities and expand
construction projects.
heavy lift capability.
· Delivered a high volume of maintenance, shutdown
and sustaining capital services to the iron ore sector.
· Grow position in engineering, procurement
and construction market.
· Focus on innovation and productivity to deliver
value for Monadelphous and its customers.
Broaden service offering
Progress
· Expanded rail services to include general rail maintenance
on east coast of Australia and underground rail maintenance
services in South Australia.
·
Invested in plant and equipment to support the growth
of its industrial services and civil capabilities.
· Strategic collaboration with Fagioli to increase heavy
lift capacity and capability.
Grow presence in infrastructure markets
Progress
· Zenviron secured its ninth wind farm contract, cementing
its reputation as a market leader in the delivery of balance
of plant works for wind farms.
Expand core services overseas
Progress
· Buildtek secured $100 million of new contracts in the
resources and energy sectors in Chile.
· Continued to provide maintenance services to the resources
and energy markets in Papua New Guinea.
· SinoStruct established a new facility in Tianjin, China,
enabling it to self-perform fabrication work.
Priorities
· Broaden service offering to existing customers.
· Continue to pursue maintenance opportunities
in light industrial and utilities sectors.
· Deliver core services to new markets in Australia.
Priorities
· Continue to enhance Zenviron’s position in the Australian
renewable energy market.
Priorities
· Grow operations in Chile and seek opportunities for expansion
in Latin America.
· Assess further opportunities at Oyu Tolgoi Project in Mongolia.
· Expand construction offering in Papua New Guinea.
14 ANNUAL REPORT 2021
CHAIRMAN’S
REPORT
Demand for the Company’s services improved as the industry recovered
from the delays and disruptions experienced during the initial phases
of COVID-19, resulting in revenue for the year of $1,953 million1,
an 18.3 per cent increase on the prior period.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) was $108.7 million2, an improvement of 18 per
cent on last year.
capital levels. The average cash flow conversion rate for
the two financial years ending 30 June 2020 and 30 June
2021 is a solid 87 per cent.
Industry activity levels were very high during the year,
significantly increasing the demand for labour, particularly
in Western Australia (WA). Measures taken by state
governments across the country to control the spread of the
COVID-19 pandemic, including interstate border restrictions,
impacted the industry’s ability to source the required levels
of skilled labour, further exacerbating the already stretched
labour market. The resultant shortfall of available skilled
resources was unprecedented and resulted in labour cost and
productivity pressures being experienced across the industry.
Net profit after tax for the period was $47.1 million, an
increase of 29 per cent on the prior period, representing
earnings per share of 49.7 cents.
The Board of Directors declared a final dividend of 21
cents per share, taking the full year dividend to 45 cents
per share fully franked. This equates to a payout ratio of
approximately 90 per cent of reported net profit after tax.
The Monadelphous Group Limited Dividend Reinvestment
Plan applied to both the interim and final dividend payments.
Monadelphous ended the year with a strong cash balance
of $175.7 million.
The Company has experienced vastly different cash flow
conversion rates over the last two financial years as a
result of the initial impact of COVID-19 and the
subsequent recovery therefrom, and the effects these
events have had on the Company’s activity and working
1. Includes Monadelphous’ share of joint venture revenue. Refer to reconciliation on page 20.
2. EBITDA – refer to reconciliation on page 21.
The materially reduced operating activity levels experienced
in the months leading up to 30 June 2020, at the initial
height of the COVID-19 pandemic, significantly reduced the
working capital requirements of the business at that time,
and delivered an unusually high cash flow conversion rate
of 151 per cent for the financial year ended 30 June 2020.
The improvement in the operating environment post 30 June
2020, and the consequent increase in working capital as
the Company’s requirements returned to more normal levels,
meant the cash flow conversion rate for the financial year
ended 30 June 2021 was 35 per cent.
The strength of Monadelphous’ balance sheet provides the
Company with the financial capacity required to effectively
deal with the unpredictable and volatile effects of the
pandemic and take advantage of any potential investment
opportunities that may arise.
To show leadership support during the pandemic, and in
response to the impact of COVID-19 on the Company’s
business and operations, the Managing Director, Non-
Executive Directors and I agreed to a 30 per cent salary and
fee reduction for a six month period from May to October
2020, with the Executive and General Management teams
agreeing to salary reductions of between 10 and 20 per cent
for the same period.
OPERATING AND FINANCIAL REVIEW 15
During August 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 in respect of a fire incident which
occurred at Rio Tinto’s iron ore processing facility at
Cape Lambert, WA, in January 2019. In April 2021,
the Company announced that a confidential out-of-court
settlement had been reached in this matter, with the
settlement being covered by the proceeds of insurance.
Monadelphous made good progress on its markets and
growth strategy during the year, despite the impacts and
uncertainty caused by COVID-19.
The Company was awarded approximately $950 million in
new contracts and contract extensions across the resources,
energy and infrastructure markets since the beginning of the
financial year, including approximately $200 million
subsequent to year end.
A large proportion of the Company’s new work was
secured in the iron ore sector, with Monadelphous
awarded a significant number of sustaining capital work
projects under panel agreements with both BHP and
Rio Tinto, as well as a five-year crane services contract
with Fortescue Metals Group.
Monadelphous’ Chile based maintenance and construction
services business, Buildtek, continued to perform strongly,
securing approximately $100 million of new work.
Monadelphous continued to grow its rail portfolio and, in
addition to providing track resurfacing services in New South
Wales, now provides general rail maintenance services to
multiple customers on the east coast and in the Pilbara
region of WA, as well as underground rail maintenance
services in South Australia.
The Company will continue to assess opportunities
to achieve ongoing service and customer market
diversification and support long-term sustainable growth.
Monadelphous’ reputation as a leader in its markets and
as an employer of choice, together with its longstanding
commitment to the delivery of safe, reliable and cost
competitive service solutions, places it in a strong position
to capitalise on the opportunities and deal with the
challenges ahead.
In conclusion, I would like to take this opportunity to
sincerely thank our loyal and talented team for their truly
herculean efforts. Our team has worked incredibly hard
to deal with extraordinary challenges and unprecedented
constraints imposed on them throughout the COVID-19
pandemic. I also extend my appreciation to our
shareholders, customers and other stakeholders for their
ongoing support during these difficult and unusual times.
Mondium, the Company’s engineering, procurement and
construction (EPC) joint venture, made good progress on its
largest ever contract, the Western Turner Syncline Phase 2
mine project for Rio Tinto.
John Rubino
Chairman
16 ANNUAL REPORT 2021
MANAGING DIRECTOR’S
REPORT
Reinforcing its leadership position, Monadelphous was awarded
approximately $950 million in new contracts and contract extensions
since the beginning of the 2021 financial year, with a large
proportion of new work secured in the iron ore sector.
Monadelphous experienced an increase in demand for its
services during the year as the industry recovered from the
delays and disruptions experienced during the initial phase
of COVID-19.
Significant progress was made on the Company’s large
portfolio of major construction projects. Demand for
maintenance services within the iron ore sector was
particularly strong, with reduced levels of activity
experienced in the oil and gas sector.
Strong demand across the industry in an already tight
labour market, combined with COVID-19 related travel
restrictions and border closures, placed significant pressure
on the Company’s ability to attract and retain labour.
Monadelphous undertook a number of initiatives to bolster
its employee engagement and attraction processes to ensure
it can continue to retain and attract highly competent
employees who are culturally aligned to its core values.
These strong activity levels saw the Company’s direct
employee numbers peak at over 7,600 employees during
the period, its largest employee base since May 2013.
The Company’s total recordable injury frequency rate
improved by 39 per cent over the year to 2.26 incidents
per million hours worked, a particularly pleasing result
given the extraordinarily high levels of recruitment activity
experienced. The improvement comes on the back of the
implementation of a number of health and safety initiatives,
including reinforcing controls around line-of-fire fatal risks,
updating supervisor safety leadership and a focus on
employee mental health and wellbeing.
During the year, Monadelphous made significant progress
on its gender diversity and Indigenous inclusion initiatives
and continued to focus on the implementation of proven
technologies to improve productivity and deliver value
for customers.
OPERATING AND FINANCIAL REVIEW 17
Monadelphous employees at BHP’s US$3.6 billion South Flank Project, Pilbara, Western Australia.
18 ANNUAL REPORT 2021
Engineering Construction
The Engineering Construction division reported revenue
of $979.0 million1, a 59 per cent increase on last year,
reflecting the significant execution progress made on its large
portfolio of major construction contracts during the period.
In the Pilbara region of Western Australia (WA), the division
completed its first package of work at BHP’s world-class
US$3.6 billion South Flank Project, with two additional
scopes of work on the project’s inflow and outflow
infrastructure expected to be completed in the second half of
2021. Construction substantially progressed at Rio Tinto’s
West Angelas Deposits C and D Project, as well as at the
Kemerton lithium hydroxide plant, which is owned 60 per
cent by Albemarle in connection with its MARBL Lithium
Joint Venture with Mineral Resources Limited, in the south-
west region of WA.
The Company’s heavy lift business secured a five-year crane
services contract with Fortescue Metals Group, and the
division was awarded a number of packages of work under its
BHP panel agreements for work in the Pilbara and at Olympic
Dam copper mine in South Australia, as well as a construction
contract at Rio Tinto’s Gudai-Darri iron ore project.
Good progress was made on Mondium’s strategically
important engineering, procurement and construction
contract with Rio Tinto for the Western Turner Syncline
Phase 2 mine, located in the Pilbara.
Zenviron, the Company’s renewable energy joint venture,
performed well, securing its ninth wind farm contract for
works at the Murra Warra Stage II Wind Farm in regional
Victoria, as well as completing the Dundonell Wind Farm
and substantially progressing the Crudine Ridge Wind Farm.
SinoStruct continued to provide services for major
Monadelphous construction and maintenance projects,
and delivered stand alone packages of work for customers
in both Australia and Mongolia.
Maintenance and Industrial Services
The Maintenance and Industrial Services division reported
revenue of $976.9 million, down 6.9 per cent on the prior
corresponding period.
A significant amount of work was undertaken in the iron
ore sector, with customers seeking to optimise production
levels and capitalise on the strong iron ore price, as well
as manage a maintenance deficit created during the initial
stages of COVID-19. Lower demand was experienced
within the oil and gas sector, albeit improving steadily
following the early impact of the pandemic.
1. Includes Monadelphous’ share of joint venture revenue.
A significant number of sustaining capital projects were
secured in the iron ore sector under panel agreements with
BHP and Rio Tinto, contributing to a strong pipeline of work
into next financial year.
In the oil and gas sector, the division continued to
provide services under its existing major onshore and
offshore contracts, executing major turnarounds for both
Woodside and INPEX, and commencing planning for major
turnarounds scheduled across Woodside, Shell and INPEX-
operated facilities over the next couple of years.
The division continued to broaden its service offering,
expanding its rail maintenance capability and investing in
specialist equipment to support the growth of its industrial
services and civil capabilities.
Overseas, the Company’s Chile-based maintenance and
construction services contractor, Buildtek, performed strongly,
securing new work valued at approximately $100 million
with major customers in the resources and energy sectors,
including Codelco, Minera Escondida and GNL Quintero.
Outlook
The buoyant economic conditions forecast for the resources,
energy and infrastructure sectors in coming years are
expected to provide Monadelphous with a strong pipeline
of opportunities.
In the resources sector, the outlook for the Australian iron
ore industry remains positive, with ongoing significant levels
of capital and operating expenditures to sustain high levels
of production driving strong demand. Maintenance activity
is expected to grow steadily on the back of aging assets and
customers deferring discretionary work in prior periods.
Strong commodity prices are also contributing to a positive
outlook for developments in lithium, gold, copper and
nickel. These markets will continue to present opportunities
for Monadelphous in Australia, as well as its international
operations in South America, Mongolia and Papua
New Guinea.
After unprecedented demand disruption during the height
of the pandemic, conditions in the oil and gas sector
are improving with construction opportunities from the
development of new liquefied natural gas projects expected
to emerge in the next one or two years.
Australia’s transition towards clean energy continues to gain
momentum, with the portfolio of new wind farms coming
to market in the next few years expected to provide
opportunities for Zenviron, particularly as electrical grid
OPERATING AND FINANCIAL REVIEW 19
A Monadelphous mechanic at BHP’s US$3.6 billion South Flank Project, Pilbara, Western Australia.
access improves in New South Wales and Victoria.
Rapid development of the hydrogen sector will also
provide opportunities in the coming years.
mobility of personnel due to unpredictable interstate border
restrictions are impeding labour mobilisation and impacting
operational productivity.
The 2020/21 year has seen an extraordinary surge in
construction activity after the initial impact of COVID-19.
With several large construction projects all completing in
the next six months, full year 2021/22 revenues are likely to
be lower than the previous year due to the timing of award
and commencement of new major projects. Construction
activity is forecast to be stronger in the 2022/23 financial
year. The performance of the business will be dependent on
the unpredictable and uncertain nature of the COVID-19
pandemic and its impact on the Company’s operations.
The shortage of skilled labour will continue to be the
major challenge for the Company’s operations in Australia.
High levels of industry activity and the prolonged effects
of COVID-19 international border restrictions limiting
skilled migration are major contributing factors. The impacts
are particularly acute for fly-in fly-out construction work in
the resources and energy sectors where restrictions in the
In response, Monadelphous will strategically target new
work opportunities that best utilise the skills of its workforce,
working collaboratively with customers in this regard.
The Company will also focus on bolstering its employee
attraction and retention practices, including performing a
review of its variable remuneration practices to support the
retention of key talent.
Rob Velletri
Managing Director
20 ANNUAL REPORT 2021
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
2021
$’000
1,754,242
108,696
70,372
21,906
47,060
49.70c
24.00c
21.00c
2020
$’000
1,488,749
92,077
55,086
17,860
36,483
38.65c
22.00c
13.00c
2019
$’000
1,479,737
106,791
83,426
31,313
50,565
53.72c
25.00c
23.00c
2018
$’000
1,737,632
2017
$’000
1,249,085
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
413.31c
402.43c
413.93c
415.86c
398.23c
395,572
384,433
393,436
394,481
377,393
32,476
10.1%
11.9%
5.6%
30,570
11.9%
9.5%
5.6%
19,490
17,222
17,892
9.7%
12.9%
6.6%
5.3%
18.1%
6.7%
3.6%
15.3%
7.8%
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
2021
$’000
2020
$’000
1,953,180
1,650,768
(199,442)
(163,375)
1,753,738
1,487,393
1. Represents Monadelphous’ proportionate share of the revenue from joint ventures accounted for using the equity method.
OPERATING AND FINANCIAL REVIEW 21
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 liabilities
Interest revenue
Depreciation of owned and hire purchase assets
Depreciation of right of use assets
Amortisation expense
Share of interest, depreciation, amortisation and tax of joint ventures2
EBITDA
2021
$’000
70,372
1,476
1,598
(414)
23,542
8,934
445
2,743
108,696
2020
$’000
55,086
1,753
1,941
(1,171)
22,608
7,962
644
3,254
92,077
2. Represents Monadelphous’ proportionate share of the interest, depreciation, amortisation and tax of joint ventures accounted for using the equity method.
Monadelphous employees at a prestart meeting at Rio Tinto’s
West Angelas mine, Newman, Western Australia.
22 ANNUAL REPORT 2021
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 55 years of
experience in the construction and engineering services industry. John is also Chair of the
Company’s Nomination Committee.
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 10 year career in engineering and management roles at Alcoa. Rob is a
mechanical engineer with 42 years of experience in the construction and engineering
services industry and is a Member of the Institution of Engineers Australia.
OPERATING AND FINANCIAL REVIEW 23
Peter Dempsey Deputy Chair and 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 49 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 a member of the Company’s Audit and Nomination committees.
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 25 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 the Chair of the Company’s Audit Committee, and a
member of its Remuneration and Nomination committees. Helen is also currently a Director of
Yancoal Australia Limited (ASX: YAL) and Aurelia Metals Limited (ASX: AMI).
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 49 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. Chris is the Chair
of the Company’s Remuneration Committee and a member of its Nomination Committee.
Sue Murphy AO Independent Non-Executive Director
Sue was appointed to the Board on 11 June 2019. During her 25 year engineering
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 42
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.
Sue is a member of the Company’s Audit, Remuneration and Nomination committees.
Sue is also currently a Director of MMA Offshore Limited (ASX: MRM).
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 47 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. Dietmar is a member of the Company’s Audit, Remuneration and
Nomination committees.
ENGINEERING
CONSTRUCTION
Our Progress
Recorded revenue of $979 million, up 59 per cent.
Significant progress on major resource
construction projects.
Awarded $480 million of new construction contracts
in resources, energy and infrastructure sectors.
Good progress on Mondium’s significant EPC contract.
Zenviron performed strongly in the renewable
energy market.
Monadelphous employees completing inspections at BHP’s US$3.6 billion South Flank Project, Pilbara, Western Australia.
OPERATING AND FINANCIAL OVERVIEW 25
ANNUAL REPORT 2021 26 ANNUAL REPORT 2021
The Engineering Construction division provides large-scale
multidisciplinary project management and construction services.
The division reported revenue of $979.0 million1,
a 59 per cent increase on the previous corresponding
period. The result reflected the significant execution
progress made during the year on the division’s large
portfolio of major construction contracts.
completing a significant amount of work in its core resources
market, continuing to build on its engineering, procurement
and construction (EPC) delivery through Mondium and
securing additional work in the renewable energy sector
through Zenviron.
Since the beginning of the financial year, the division
secured new construction contracts within the resources,
energy and infrastructure sectors totalling approximately
$480 million.
The Engineering Construction division continued to
contribute to the Company’s markets and growth strategy,
The division’s consistent and proactive approach to safety
saw initiatives such as a new supervisor competency
development program, which includes one-on-one coaching
for all supervisors, and a new construction training workshop
designed for new employees, implemented during the period.
A Monadelphous employee at Rio Tinto’s West Angelas mine, Newman, Western Australia.
1. Includes Monadelphous’ share of joint venture revenue.
OPERATING AND FINANCIAL REVIEW 27
CASE STUDY
RIO TINTO WEST ANGELAS DEPOSITS
C AND D
The West Angelas open-pit iron ore mine is located
in the Pilbara region of Western Australia (WA). It is
owned by Robe River, a joint venture between Rio
Tinto, Mitsui Iron Ore Development and Nippon Steel
Australia Pty Ltd. Deposits C and D are currently
being developed to sustain production at the existing
West Angelas iron ore operations.
In August 2019, Monadelphous was awarded a major
construction contract by Rio Tinto at West Angelas,
associated with the Deposits C and D Project. The
contract, which is valued at 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.
The Company’s scope of work has subsequently been
expanded and is expected to be completed in 2021.
Resources
During the year, the division secured a number of packages
of work under its BHP Western Australia Iron Ore (WAIO)
Panel Agreement across various sites in the Pilbara,
including for the provision of multidisciplinary brownfield
modification works at Nelson Point and Finucane Island,
structural, mechanical and electrical upgrades at the
Newman Hub, and dewatering of surplus water and
fabrication of the train loadout rectification works at
Jimblebar mine site.
The division continued to provide construction services on its
three packages of work at BHP’s US$3.6 billion South Flank
Project. The structural, mechanical, piping and electrical
instrumentation work on the project’s inflow and outflow
infrastructure is expected to be completed in the second half
of 2021, with the division having completed the installation
and construction of the world’s largest rail mounted
stockyard machines for thyssenkrupp Industrial Solutions
(Australia) during the period. The division also completed
a number of other packages of work for BHP secured under
the WAIO Panel Agreement.
Construction activities substantially progressed at Rio Tinto’s
West Angelas Deposits C and D Project, located in the
Pilbara. The fully integrated project, which includes
structural, mechanical, piping, electrical and instrumentation
works associated with new iron ore facilities, as well as
the supply and erection of fabricated products provided by
SinoStruct, is expected to be completed in the second half
of 2021.
Work also continued on the structural, mechanical and
piping package associated with the pyromet plant at the
Kemerton lithium hydroxide plant, which is owned 60 per
cent by Albemarle in connection with its MARBL Lithium
Joint Venture with Mineral Resources Limited, in the south-
west of WA.
Monadelphous was awarded a construction contract at Rio
Tinto’s Gudai-Darri iron ore project in the Pilbara during
the period. The scope includes construction and support
services and is expected to be completed by the end of
2021, ready for the mine to commence production in 2022.
During the year, the division secured a contract for the
supply and construction of acid storage tanks and smelter
campaign maintenance works at BHP’s Olympic Dam
copper mine in South Australia. Olympic Dam will continue
to provide Monadelphous with construction opportunities in
years to come.
28 ANNUAL REPORT 2021
Mondium
Heavy Lift
Mondium, the Company’s EPC joint venture with
Lycopodium, continued to advance its position within 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.
During the year, Mondium made good progress on its
strategically important $400 million design and construct
contract with Rio Tinto for the Western Turner Syncline
Phase 2 mine, located in the Pilbara. The project is due
to be completed in 2021.
The joint venture also recommenced works at Talison
Lithium’s Greenbushes mine in the south-west region of
WA. Work on the tailings retreatment processing plant,
which includes engineering, procurement and management
of subcontractors, is expected to be completed by the end
of 2021.
The Company’s specialist heavy lift business continued to
perform well, providing services to both external customers
and internal projects.
During the year, the Company was awarded a five-year crane
services contract with Fortescue Metals Group (Fortescue),
valued at approximately $150 million in total. The contract
is for the provision of crane services supporting general
repairs, maintenance and shutdown activities to Fortescue’s
Solomon and Eliwana operations in the Pilbara.
In addition, Monadelphous, in collaboration with global
heavy lifting services company Fagioli, secured a contract
with NMT International (Australia) to deliver lifting and
haulage services at Fortescue’s Iron Bridge Magnetite
Project in the Pilbara. The strategic collaboration with Fagioli
enables the heavy lift business to offer increased capacity
and broadened capability within the Australian resources and
energy markets.
Heat exchanger module being lifted into position by Monadelphous at the
Woodside-operated Pluto Liquefied Natural Gas Plant, Karratha, Western Australia.
The heavy lift business continued to provide specialist
heavy lift support and equipment to major Monadelphous
construction projects, as well as on the Maintenance and
Industrial Services division’s contracts with Woodside at its
Karratha-based operations and Alcoa.
Fabrication Services
SinoStruct, the Company’s fabrication business, established
its own fabrication facility in Tianjin, China, enabling it to
support customers through the self-performance of selected
fabrication and assembly work.
In addition to securing several new contracts, the business
delivered stand-alone packages of work for Origin and Rio
Tinto, in both Australia and Mongolia, as well as for major
Monadelphous construction and maintenance projects,
including for Newcrest Mining Limited in Papua New
Guinea. The business also provided professional services
in South America for the first time.
Subsequent to year end, SinoStruct secured a new four-
year agreement to supply wellsite equipment to Origin.
The packaged equipment is used to separate, meter and
control coal seam gas for the Australia Pacific LNG project
in Queensland. SinoStruct has been supplying packaged and
modularised equipment to Origin since 2015.
Infrastructure
Zenviron
Zenviron performed well during the year, completing its work
at the Dundonnell Wind Farm in regional Victoria for Vestas
– Australian Wind Technology and significantly progressing
work on the Crudine Ridge Wind Farm for CWP Renewables
in regional New South Wales (NSW).
Highlighting its reputation as a leader in the market,
Zenviron was awarded, and commenced, the balance
of plant work on the Murra Warra Stage II Wind Farm
in regional Victoria for General Electric International.
In total, since its establishment five years ago, Zenviron
has constructed 387 wind turbines, with an additional
38 currently under construction.
OPERATING AND FINANCIAL REVIEW 29
Outlook
The resources sector is expected to continue to provide
the Company with a solid pipeline of construction
opportunities over years to come.
Developments overseas in South America, Papua New
Guinea and Mongolia are also expected to provide ongoing
prospects for Monadelphous.
After unprecedented demand disruption during the early
part of the pandemic, conditions in the oil and gas
sector are improving with new construction opportunities
expected to emerge in the next few years.
Mondium’s growing experience and strong performance
to date, as well as backing from its joint venture partners,
ensures it is well placed to capitalise on EPC opportunities
within its core markets as they arise.
The long-term outlook for the renewable energy sector
is positive with a number of large wind farm projects
expected to come to market.
Construction of a wind turbine foundation at the
Murra Warra Stage II Wind Farm, Horsham, Victoria.
30 ANNUAL REPORT 2021
MAINTENANCE
AND INDUSTRIAL
SERVICES
Our Progress
Recorded revenue of $976.9 million.
Strong demand for maintenance services in the iron ore sector.
Secured $470 million in new contracts and extensions.
Significant number of sustaining capital project awards.
Buildtek performed strongly, securing new work in Chile.
Growth in rail portfolio.
OPERATING AND FINANCIAL OVERVIEW 31
A Monadelphous engineer conducting quality conformance on pipe
installation at BHP’s Jimblebar mine site, Newman, Western Australia.
32 ANNUAL REPORT 2021
The Maintenance and Industrial Services division specialises in the
planning, management and execution of multidisciplinary maintenance
services, sustaining capital works and turnarounds.
The division reported revenue of $976.9 million, down
6.9 per cent on the prior corresponding period. The result
reflects the significant amount of work undertaken in the iron
ore sector with customers seeking to optimise production
levels and capitalise on the strong iron ore price, as well
as manage a maintenance deficit created during the initial
stages of COVID-19. The division experienced lower levels
of demand for maintenance and turnaround services within
the oil and gas sector, albeit improving steadily following the
early impact of the pandemic.
The division secured approximately $470 million in new
contracts and contract extensions. A significant portion of
this work was within the resources sector with major, long-
term customers, aligning to the Company’s markets and
growth strategy of maximising returns from its core markets.
The division continued to invest in plant and equipment to
support growth within its rail, civil and industrial services
portfolios, providing further opportunities across the
Company’s existing major, long-term contracts, as well as
with new customers in the resources and oil and gas sectors.
In line with its strategy of expanding its core services
overseas, the Company’s Chile-based maintenance and
construction services business, Buildtek, was awarded a
number of new contracts.
In safety, the division continued to invest in robust safety
initiatives, including its safety behaviour framework,
Delivering the Safe Way. During the period, a safety cultural
survey was conducted as a means for collecting employee
feedback regarding safety behaviours across the division.
The results will shape and influence the division’s safety
focus and initiatives into the future.
CASE STUDY
BHP Nelson Point Car Dumper 3
Refurbishment Project
During the year, Monadelphous was engaged
to remove, refurbish and reinstall two car
dumper cells at BHP’s Nelson Point in Port
Hedland, Western Australia (WA). The scope
included civil, mechanical, structural, electrical
and blast and paint work.
Completing the complex, multidisciplinary
project to a high standard and on time was
essential given car dumpers are an integral
part of the site’s inflow infrastructure and have
a direct impact on production.
The project, which required a comprehensive
planning process and collaborative approach
with the customer, was successfully and safely
executed over a five-month period. The work
adds to the Company’s existing car dumper
experience and positions Monadelphous as
a leader in car dumper refurbishment.
OPERATING AND FINANCIAL REVIEW 33
A Monadelphous employee commissioning a newly installed switchboard
at BHP’s Newman Operations, Newman, Western Australia.
Resources
The division continued to strengthen its long-term relationships
with major customers in the iron ore sector in the Pilbara
region of WA and secured a number of new contracts.
Major contracts awarded to the Company within the iron ore
sector included three three-year master services contracts
with Rio Tinto for the delivery of sustaining capital projects
across various mine sites and port operations, as well as
contracts with BHP under its existing Western Australian Iron
Ore (WAIO) Site Engineering Panel Framework Agreement.
The division successfully completed a number of packages
of work under these contracts during the period, including
supplying and installing the Jimblebar Transfer Station and
completing the Car Dumper 3 Mega Shut at Nelson Point,
both for BHP. A number of other major shutdowns were also
completed under these contracts with both BHP and Rio Tinto.
Outside of the iron ore sector, the division was awarded a
12-month extension to its existing mechanical and electrical
maintenance, shutdown and project services contract
across BHP’s WA nickel operations, as well as a three-year
contract with Rio Tinto to provide mechanical, electrical and
access maintenance services for fixed plant shutdowns at
its Gove operations in the Northern Territory. The division
was also awarded a two-year extension to its existing
maintenance services contract at BHP’s Olympic Dam mine
in Roxby Downs, South Australia (SA), which includes civil,
structural, mechanical, building maintenance and electrical
services, as well as underground rail maintenance services.
This was in addition to a contract to undertake a major
dragline shutdown for BHP Mitsubishi Alliance at its
Saraji Mine in Queensland and a multidisciplinary contract
with AGL Macquarie for the Bayswater Fly Ash Plant
Refurbishment and Slurry Lines Replacement project near
Muswellbrook in New South Wales (NSW).
Subsequent to year end, the Company announced the award
of a number of new contracts, including a new three-year
contract with Queensland Alumina Limited to continue
to provide general mechanical maintenance services at
its operations in Gladstone, and a 10-month extension to
its existing contract with BHP Mitsubishi Alliance for the
provision of dragline shutdown and maintenance services
to its operations in the Bowen Basin, both in Queensland.
Subsequent to year end, Buildtek secured a further
contract with Codelco for construction associated with
the development of a new underground section of the
El Teniente mine.
Leveraging Monadelphous’ experience within the LNG
sector, Buildtek secured its most significant LNG contract
to date with GNL Quintero for the removal and replacement
of five LNG discharge arms, three of which have been
replaced to date.
The Company remains committed to strengthening its
position in South America and is currently reviewing further
growth opportunities.
Rail
Adding to its track resurfacing capability in NSW, the
division commenced providing general rail maintenance
services to multiple customers on the east coast of
Australia, as well as underground rail maintenance services
at BHP’s Olympic Dam mine site in Roxby Downs, SA.
In the Pilbara, dedicated equipment was purchased to
support the Company’s strategically important rail services
contract with Rio Tinto, and the team was the recipient of
a number of customer safety awards.
Outlook
Activity in the maintenance sector is expected to grow
with stronger demand in the longer-term driven by aging
assets and customers deferring non-essential work in
prior periods, including throughout the early stages of the
COVID-19 pandemic. The availability of skilled labour will
remain a challenge for the division.
34 ANNUAL REPORT 2021
Energy
Within the oil and gas sector, demand for maintenance
services improved steadily throughout the year, with the
division continuing to provide services under its existing,
major onshore and offshore contracts at the Woodside-
operated gas production facilities and on the INPEX-
operated Ichthys liquefied natural gas (LNG) offshore
processing facilities, both in WA. The division continued to
provide EPC services, in joint venture with Worley, to Oil
Search at the oil and gas production and support facilities
in the Highland region of Papua New Guinea. Services were
also provided to Shell in both Queensland and WA.
During the period, significant turnarounds were executed
for both Woodside and INPEX. Planning also commenced
on a major program of turnarounds scheduled across
Woodside, Shell and INPEX-operated facilities, which will
be completed in the next couple of years.
The division continued to invest in plant and equipment
to support the growth of its specialist oil and gas fabric
maintenance capability, purchasing its sixth ultra-high
pressure (UHP) pump. The oil and gas business now
provides fabric maintenance services across its entire
customer portfolio.
South America
Buildtek, the Company’s Chile-based maintenance and
construction services business, continued to perform
strongly, securing new work valued at approximately
$100 million, despite operating in an environment which
continues to be impacted significantly by COVID-19.
Capitalising on strong copper prices, the business secured
and progressed several contracts in the Antofagasta region
with major operator, Minera Escondida, which is majority
owned by BHP. The contracts included the construction of
modularised pump stations and associated infrastructure,
and the relocation, construction and assembly of a
communications tower and associated infrastructure at the
Escondida copper mine in Coloso, as well as a contract for
an upgrade to the conveyor system feeding the Filter Plant
Warehouse at Coloso Port.
In addition, Buildtek was awarded a number of contracts
with its long-term customer, Codelco, including a three-
year contract for the operations and maintenance of water
infrastructure at the Chuquicamata underground mine in
Calama and two new contracts for maintenance activities
associated with the concentrator plant at El Teniente mine
in Rancagua.
OPERATING AND FINANCIAL REVIEW 35
Woodside-operated Karratha Gas Plant, Karratha, Western Australia.
Photo courtesy of Woodside.
36 ANNUAL REPORT 2021
SUSTAINABILITY
Our Progress
Strong safety performance, with a 39 per cent
improvement in total recordable injury frequency rate.
Substantial increase in total workforce numbers.
Enhanced employee development initiatives and reviewed
employee benefit and reward programs.
Progressed strategic attraction initiatives and launched
updated employer brand program.
Progressed Indigenous and gender diversity
engagement initiatives.
OPERATING AND FINANCIAL OVERVIEW 37
A Monadelphous shipping container painted by local Indigenous artist,
Patricia Coleman, in Gladstone, Queensland.
38 ANNUAL REPORT 2021
Monadelphous is committed to the long-term sustainability of its
business and recognises the important roles played by its people,
its customers and the communities in which it operates. For the
Company, this means retaining and attracting a values-aligned
and highly competent workforce, and ensuring their safety and
wellbeing, continuing to build on its customer relationships, being
environmentally responsible and leaving a positive legacy within the
communities local to its operations.
People
Monadelphous’ strong reputation and success, built over
nearly 50 years, is attributed to the collective experience,
knowledge and behaviour of its people. Its unique, values-
based culture influences the way things are done and how
decisions are made, and contributes to the Company being
able to ‘deliver what we promise’.
Monadelphous’ direct employee numbers peaked at more
than 7,600 employees during the period, its largest employee
base since May 2013. It ended the year with a total
workforce, including subcontractors, of 7,791 representing
an increase of 37 per cent from 12 months prior.
High levels of industry activity in an already tight
labour market, combined with COVID-19 related travel
restrictions and border closures, placed significant
pressure on the Company’s ability to attract and retain
labour. During the period, Monadelphous undertook a
number of initiatives to bolster its employee engagement
and attraction processes to ensure it continues to retain
and attract highly competent employees who are culturally
aligned to the Company’s core values.
Safety and wellbeing
The Company’s total recordable injury frequency rate (TRIFR)
improved by 39 per cent over the year to 2.26 incidents per
million hours worked, which was a very pleasing result given
the extraordinarily high levels of recruitment activity.
A number of health and safety initiatives were implemented,
including the introduction of a new Fatal Risk Standard
and Life Saving Rule relating to the use of mobile plant and
equipment, the release of the Company’s revised and updated
supervisor safety leadership program and further training in
relation to the Delivering the Safe Way behaviour framework.
The Company continued to maintain focus on the mental
health and wellbeing of its employees, implementing and
participating in a range of initiatives relating to resilience
development and improving mental health awareness.
Monadelphous remains committed to its goal of zero harm,
executing work in line with its safety philosophy of ‘The Safe
Way is the Only Way’.
Retention of talent
The continued retention and development of key talent is
critical to Monadelphous’ ongoing growth and success.
The Company’s culture of leadership and talent development,
supported by retention initiatives that foster an ‘owner’s
mindset’, are vital to the delivery of outstanding service
and the provision of superior returns to its shareholders.
During the year, the Company strengthened its employee
development programs with a focus on performance
management and succession planning processes to ensure
the pipeline of key talent is provided with challenging
and rewarding career opportunities. Some of its highest
achieving future leaders were also invited to participate in the
Company’s Emerging Leaders and Group Mentoring programs
during the year. In addition, the Company performed a
review of its benefit and reward programs to ensure that
remuneration and employee benefits remain competitive.
To support its commitment to attracting and retaining a
diverse workforce and acknowledging the important role
workplace flexibility plays in improving employee wellbeing
and job satisfaction, Monadelphous formalised its Workplace
Flexibility Policy and implemented further improvements to
its existing Parental Leave Policy.
OPERATING AND FINANCIAL REVIEW 39
CASE STUDY
Smart Conveyor Module
Assembly System
To support Monadelphous’ safety and innovation culture,
Managing Director, Rob Velletri, launched an annual
Safety Innovation Award back in 2017. The award
recognises outstanding safety innovations which eliminate
and control hazards and reduce risk.
This year, the recipient was Monadelphous’ Smart
Conveyor Module Assembly System at the BHP South
Flank Inflow Project which was used to install 22
kilometres of overland conveyor. To reduce the risks
associated with repetitive movements, lifting heavy
loads in often awkward positions and hot conditions,
the assembly methodology was modified to incorporate
a production line approach with rail mounted mobile
assembly frames, specially designed module assembly
jigs with lifting aids and shaded workspaces.
The innovation enabled the onsite pre-assembly of more
than 3,500 conveyor modules and is highly effective in
reducing the risk associated with multiple safety hazards,
as well as improving quality and productivity. Importantly,
the concept is transferrable to other Monadelphous projects.
Developing our people
Employee Development Centre
The Company’s Employee Development Centre, a registered
training organisation (RTO 52582) based in Bibra Lake,
Western Australia (WA), delivered over 7,000 high quality
training interactions for trades personnel throughout the year,
up almost 50 per cent on the prior corresponding period,
including high risk work licence training accreditation and
verification of competency for the Company’s workforce.
Certificate IV and Diploma of Project Management
Introduced at Monadelphous in early 2019, these courses
provide 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, 12 employees completed either their
Certificate IV or Diploma of Project Management.
Live the Behaviours
The Live the Behaviours Program enables participants
to learn about, and ultimately ‘live’, the key leadership
behaviours critical to success at Monadelphous.
The program afforded almost 50 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,
17 emerging leaders participated in the program.
Group Mentoring Program
This highly effective internal mentoring program matched
Monadelphous leaders with Monadelphous high performing
employees. Using a guided and structured mentoring
framework, mentees were encouraged to leverage off the
knowledge and experiences of some of the Company’s most
senior leaders, while having the opportunity to expand their
professional network across the business.
40 ANNUAL REPORT 2021
A Monadelphous trainee working in Newman, Western Australia.
Attraction of future talent
Throughout the year, Monadelphous progressed a number
of strategic attraction initiatives, including launching
its updated employer branding program, advancing the
implementation of its new and improved recruitment,
onboarding and talent management system, and reviewing
its approach to alumni relations with the view to winning
back departed talent. These initiatives focus on optimising
the sourcing, selection and mobilisation of new talent
across the business.
In addition, the Monadelphous recruitment team grew by
more than 40 per cent as demand for sourcing, selecting
and mobilising new talent increased significantly across
the business.
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, 75 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 participants were female.
Apprenticeship program
This year, Monadelphous’ approach to apprenticeship
recruitment, onboarding, mentoring, training and performance
management was realigned to a more centralised model,
ensuring apprentices across the business are better supported
on their journey to becoming fully qualified boilermakers,
mechanical fitters, electricians and heavy-duty mechanics.
Monadelphous is currently supporting more than 50
apprentices. Over 20 per cent of these apprentices are
female and almost 15 per cent are Indigenous.
Strategic sourcing
With a tightened labour market, the business continued
to implement a number of strategic sourcing initiatives,
including the use of its dedicated, in-house resourcing team
to identify talent for specialist, strategic and senior roles
across its business.
Technological workforce attraction and engagement solutions
Project Phoenix, which commenced last financial year,
aims to improve Monadelphous’ recruitment and talent
management system to continue to source, select and
mobilise new talent efficiently and effectively, while
delivering enhanced line-of-sight to internal talent, enabling
improved redeployment and development opportunities.
During the year, the project moved from design phase
through to configuration phase, with the system expected
to go live in the 2022 financial year.
OPERATING AND FINANCIAL REVIEW 41
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 lands where it operates and considers culture
and heritage an important part of its business.
The Company continued to make significant progress
on its reconciliation journey, underpinned by its Stretch
Reconciliation Action Plan for 2017 – 2020. Monadelphous
is proud to have once again reached Indigenous
‘Employment Parity’, achieving its goal of more than three
per cent Indigenous employment.
In late 2018, Monadelphous became a signatory to the
Employment Parity Initiative and committed to creating 200
new roles for Aboriginal and Torres Strait Islander jobseekers
by 2022. Pleasingly, the Company has now employed more
than 190 Indigenous jobseekers, and upskilled in excess of 50
Aboriginal and Torres Strait Islander members of its workforce.
Monadelphous was proud to launch a three-year Indigenous
Employment Pathways Program, in partnership with
Rio Tinto, showcasing our joint commitment to creating
meaningful and sustainable employment for Aboriginal
and Torres Strait Islander peoples. Supported by dedicated
coaching and mentoring, the program aims to increase the
number of skilled and tertiary qualified Aboriginal and Torres
Strait Islander peoples in the resources industry. It will be
open to prospective apprentices, trainees and tertiary cadets
in a variety of fields including mechanical fitting, electrical,
boiler making and welding, civil construction, business
administration and health, safety and environment.
In addition, the Company commenced its first Pre-
employment Upskilling Program for Aboriginal and Torres
Strait Islander jobseekers in WA in May 2021. The program,
which is in collaboration with APM Employment Services and
Footprints, assists candidates to obtain their intermediate
rigging ticket, expanding their employment opportunities.
As a means for better articulating the broad range of career
pathways available to Aboriginal and Torres Strait Islander
jobseekers at Monadelphous, the Company participated in
and hosted more than 20 career information sessions this
financial year across Australia.
Monadelphous’ commitment to developing sustainable
relationships with new and existing Aboriginal and Torres
Strait Islander businesses and community groups continued
with a 45 per cent increase in Indigenous business spend
during the period. In addition, the business continued its
partnership with the Graham (Polly) Farmer Foundation
supporting Aboriginal and Torres Strait Islander high school
students in the Follow the Dream program and alumni
students as they enter the workforce via the Living the
Dream program.
Throughout the period, the Company continued to provide
cultural awareness training for its employees. The training
aims to improve understanding and recognition of Aboriginal
and Torres Strait Islander cultures, histories, knowledge and
rights, promoting respect for Aboriginal and Torres Strait
Islander communities.
During the year, the Company developed its fourth
Reconciliation Action Plan 2021 – 2024, which will
come into effect in the first half of the 2022 financial
year. The plan, which was informed by consultation with
Aboriginal and Torres Islander employees and the broader
workforce, places a renewed emphasis on engagement
with Indigenous businesses to increase opportunities for
business spend, maintaining a minimum of three per
cent Indigenous employment, and improving mentoring
and support for existing and new Aboriginal and Torres
Strait Islander employees. It demonstrates Monadelphous’
continued commitment toward achieving reconciliation
within its business, and its sincere desire to make a positive
contribution toward Australia’s Aboriginal and Torres Strait
Islander community.
CASE STUDY
Monadelphous Yallarm STEM Camp
In May 2021, Monadelphous sponsored the second
Yallarm science, technology, engineering and mathematics
(STEM) camp for Aboriginal and Torres Strait Islander high
school students from the Gladstone region in Queensland.
The four-day camp aims to help close a key education gap
by enhancing Indigenous students’ engagement with
STEM subjects.
Featuring a range of inspiring speakers, and utilising
the latest hands-on technology at CQUniversity’s STEM
Central, students were challenged to expand their
understanding of STEM in the real world and learn
more about STEM career pathways.
This important event is a product of Monadelphous’
partnership with CQUniversity and Boyne Island
Environmental Education Centre, who share the Company’s
interests in STEM, innovation, education and diversity.
42 ANNUAL REPORT 2021
Gender diversity and inclusion
In keeping with its ongoing commitment to gender diversity
and inclusion, the Company successfully retained more
than 90 per cent of its key female talent and announced the
appointment of its first female operational General Manager.
To support sustainable and meaningful change, the
Company rolled out a number of training initiatives across
its workforce relating to unconscious bias and equal
employment opportunities. In addition, Monadelphous
employees presented at, and participated in, a number
of events focused on positively challenging perceptions
around gender diversity, including the Women in Mining and
Resources Leadership Summit and an in-house International
Women’s Day panel discussion, viewed online by almost
1,000 Monadelphous employees.
During the year, the Company commenced the consultation
process for its second Gender Diversity and Inclusion Plan
2021 – 2023, which will focus on ensuring a safe working
environment for women, removing gender-based barriers,
offering opportunities for women to enter trade roles, and
extending targets for female candidates in the Company’s
Vacation and Graduate programs. The plan will be launched
in the first half of the 2022 financial year.
Monadelphous submitted its 2020/21 Workplace Gender
Equality Report to the Workplace Gender Equality Agency and
a copy of the report is available on the Company’s website.
Monadelphous scaffolders at BHP’s US$3.6 billion
South Flank Project, Pilbara, Western Australia.
Productivity and innovation
Monadelphous continues to develop and implement
improved operational and support methodologies, practices
and processes to enhance its competitive position in the
market and deliver high quality, safe, value-adding services.
The Company continues to focus on the implementation
of proven technologies to improve productivity and deliver
value for its customers.
During the year, further progress was made on systems
optimisation and the digitalisation of data capture and
processing, as an enabler of future initiatives focused on
data analytics and automation.
In-field productivity remains a priority for Monadelphous,
ensuring employees are equipped with the tools and
technology to efficiently and safely execute their work.
A number of technology trials were conducted during the
period, including robotic process automation and asset
tracking. Different hardware and software technologies
were also evaluated to determine their compatibility with
Monadelphous’ processes, and to assess suitability for
widespread replication across the business. The use of
drone technology increased for both videography and survey
purposes, as well as equipment installation on customer sites.
OPERATING AND FINANCIAL REVIEW 43
Engineering Makes Sense group at Queensland University
of Technology in Brisbane.
Across its operations, the Company also hosted and
participated in initiatives supporting Beyond Blue, Fight
Cancer Foundation, White Ribbon Day, RUOK? Day,
Movember, International Women’s Day and the Royal Flying
Doctors Service.
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.
As part of its commitment to the environment, the Company
encourages its team to identify and implement initiatives
which are beneficial to the environment. During the period,
some of these initiatives included using solar power as an
alternative to diesel for lighting, using a surface miner for
the removal of non-rippable material instead of blasting
preventing potential impacts to heritage sites, developing
a purpose-built jig to reduce spillage when mixing grout,
introducing disposable earplug waste buckets to ensure
polyurethane foam earplugs are captured for recycling,
returning empty pallets to the supplier for reuse, using
sealable drums for the disposal of concrete to minimise
silica dust also ensuring this specific waste is segregated,
developing an auto-close feature on a gas release valve to
stop leaks, and printing the annual report on FSC Recycled
certified paper. These initiatives reduce the potential for
uncontrolled emissions and impacts to the atmosphere,
minimise waste to landfill, prevent ground and water
pollution and remove potential impacts to heritage sites
associated with the Company’s works.
The 2021 Work Health and Safety Excellence Awards finalist, the Davit
Arm, in operation at the Woodside-operated Pluto Liquefied Natural Gas
Plant, Karratha, Western Australia. The self-propelled modular transporter
was designed and constructed by the Monadelphous Heavy Lift team.
Coupled with an internal focus on improving efficiency,
Monadelphous recognises the benefits of open innovation
activities that seek to drive innovation at an industry level.
During the year, Monadelphous employees participated in
several open innovation challenges hosted by customers.
The initiatives provided the Company with greater insight
into operational challenges faced by customers and provided
Monadelphous with an opportunity to build on its reputation
as a collaborative partner with an innovative approach to
problem solving.
Employee engagement with the Company’s internal
collaboration platform, the Ideas Hub, increased during
the period following the addition of new functionality.
Community
Monadelphous is committed to making a positive
contribution to the communities in which it operates and
focuses its efforts in the key strategic areas of diversity,
community support and education.
During the year, the Company participated in almost 70
community events and initiatives, including commencing a
three-year Indigenous Employment Pathways Program, in
partnership with Rio Tinto, and extending its partnership
with the Graham (Polly) Farmer Foundation.
Sponsorships, donations and employee volunteering
opportunities in WA included supporting the Monadelphous
Mechanical Mob in Newman, the Explore the Goldfields
Community Expo in Kalgoorlie, the Welcome to Hedland
Community Expo in Port Hedland and the Shift Youth
Festival in Bunbury, and in Queensland, the Monadelphous
Yallarm STEM Camp in Gladstone and the Gender Equity in
44 ANNUAL REPORT 2021
The move towards a low-carbon economy continues 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, maintaining an ability to adapt
to customer and market shifts, 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 continues to review its
exposure to climate change risks by reference to the
recommendations of the Financial Stability Board’s Task
Force on Climate-related Financial Disclosures (TCFD). The
Company reports its material risks and the management of
those risks in its Corporate Governance Statement.
As Australia’s transition towards clean energy continues
to gain momentum, 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,
387 turbines are complete and in operation, with 38
turbines under construction.
Rapid development of the hydrogen sector will also provide
opportunities for Monadelphous in the coming years.
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,
which have been relatively stable for the last few years.
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 continues to undertake
greenhouse gas reporting to monitor its emissions
and reduce its overall carbon footprint.
Energy usage is predominantly in the areas of gases utilised
in welding processes, fuel used in vehicles and plant and
equipment required for execution of services.
Monadelphous undertakes greenhouse and energy reporting
under the National Greenhouse and Energy Reporting
(NGER) Act. During the year, reportable scope 1 and 2
carbon emissions (CO2e) were equivalent to 17,463 tonnes,
significantly below the legislative reporting threshold of
50,000 tonnes CO2e. Total emissions were 22,283 tonnes
CO2e. The Company triggers the energy consumption
threshold of 200 Terajoules (TJ) under the NGER Act
and annually reports this information to the Clean Energy
Regulator. The total energy consumption for the 2020/21
period was 254 TJ. 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 which is
available on its website.
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.
OPERATING AND FINANCIAL REVIEW 45
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 Company commenced a process to
review and refresh its Code of Conduct and supporting
human resources policies with the aim of supporting
inclusion and reinforcing acceptable workplace standards.
The Company submitted its first Modern Slavery Statement
during the year, in accordance with the requirements of the
Australian Modern Slavery Act, and continues to evolve its
processes to ensure identification and mitigation of modern
slavery risks in the Company’s operations and supply chain.
The Company has an integrity hotline service, facilitated
by an independent professional services provider, where
employees, contractors and members of the public can
report instances of actual or suspected unethical or unlawful
conduct associated with Monadelphous operations.
The Crudine Ridge Wind Farm constructed
by Zenviron, Mudgee, New South Wales.
46 ANNUAL REPORT 2021
FINANCIAL
REPORT
Directors’ Report
Independent Audit Report
Directors’ 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
48
65
70
71
72
73
74
75
76
A Monadelphous employee reviewing engineering plans for a major lift at BHP’s US$3.6 billion South Flank Project, Pilbara, Western Australia.
FINANCIAL REPORT 47
48 ANNUAL REPORT 2021
DIRECTORS’ REPORT
Your directors submit their report for the year ended 30 June 2021.
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
55 years experience in the construction and engineering services industry
Robert Velletri
Managing Director
Peter John Dempsey
Deputy Chair and Lead Independent
Non-Executive Director
Appointed 26 August 1992
Mechanical Engineer, Member of Engineers Australia
Appointed as Managing Director on 30 May 2003
42 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
49 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
Susan Lee Murphy AO
Independent Non-Executive Director
49 years experience in the construction and engineering services industry
Appointed 10 March 2014
Chemical Engineer, Member of the Australian Institute of Company Directors
47 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
25 years experience in the construction and engineering services industry
Also a non-executive director of the following other publicly listed entities,
Yancoal Australia Limited (ASX: YAL) – appointed 30 January 2018
Aurelia Metals Limited (ASX: AMI) – appointed 21 January 2021
Appointed 11 June 2019
42 years experience in the resources and infrastructure industries
Civil Engineer, Honorary Fellow of Engineers Australia
Also a non-executive director of the following other publicly listed entity,
MMA Offshore Limited (ASX: MRM) – appointed 30 April 2021
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
21 years experience in the construction and engineering services industry
Appointed 8 December 2014
Chartered Accountant, Member of Chartered Accountants Australia and New Zealand
16 years experience in the construction and engineering services industry
FINANCIAL REPORT 49
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 2020
– on ordinary shares
CORPORATE INFORMATION
Corporate structure
Ordinary
Shares
1,022,653
2,132,884
78,000
50,000
32,910
8,865
Nil
Performance
Rights over
Ordinary Shares
Options
over
Ordinary Shares
Nil
6,437
Nil
300,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Cents
49.70
49.45
Cents
$’000
21.00
19,933
24.00
22,724
13.00
12,303
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 22 in the financial report).
The registered office of Monadelphous Group Limited is located at:
59 Albany Highway
Victoria Park
Western Australia 6100
50 ANNUAL REPORT 2021
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
• 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, Rutherford and Tianjin (China).
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 7,559 employees as of 30 June 2021 (2020: 5,579 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
2021
$’000
2020
$’000
1,753,738
1,487,393
47,060
36,483
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.
FINANCIAL REPORT 51
DIRECTORS’ REPORT
SIGNIFICANT EVENTS AFTER REPORTING PERIOD
Dividends declared
On 23 August 2021, the directors of Monadelphous Group Limited declared a final dividend on ordinary shares in respect of the 2021
financial year. The total amount of the dividend is $19,932,509 which represents a fully franked final dividend of 21 cents per share.
This dividend has not been provided for in the 30 June 2021 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 79,980 performance rights and 5,530,000 options on issue as follows:
• 79,980 performance rights to take up one ordinary share in Monadelphous Group Limited. The performance rights have a vesting
date 1 July 2022
• 652,500 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2021
• 1,382,500 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2022
• 2,035,000 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2023
• 1,460,000 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2024
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 2020, 161,250 performance rights vested and were exercised.
On 1 July 2021, 155,556 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.
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.
52 ANNUAL REPORT 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
The Remuneration Report for the year ended 30 June 2021 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
Independent Non-Executive Director
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 reviewing and recommending 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 recommending 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.
FINANCIAL REPORT 53
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. From time to time, the Company reviews the structure
and composition of variable remuneration to ensure it remains relevant and market competitive.
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 58 and 59 of this report detail the proportion of fixed and variable remuneration for
each of the executive directors and the senior executives of the Company.
54 ANNUAL REPORT 2021
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 58 and 59 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 years ended 30 June 2020 and 2021, the Board determined that no award would be made under the CR Plan.
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.
FINANCIAL REPORT 55
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 2021, 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%
60%
30%
-
-
30%
40%
-
-
-
40%
40%
MD
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 2021 and determined that no award would be made under
the CR Plan.
Tables 1 and 2 on pages 58 and 59 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 2021 and 30 June 2020.
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 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.
On 1 July 2021, 155,556 performance rights representing the second tranche of the award under the terms of the CR Plan for the year
ended 30 June 2019 and the third 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.
56 ANNUAL REPORT 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (continued)
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 24 November 2020, following shareholder approval at the Company’s Annual General Meeting, 300,000 options were issued to the
Managing Director under the terms of the 2019 award of the Monadelphous Group Limited Employee Option Plan and subject to the
Monadelphous Group Limited Employee Option Plan Rules.
On 4 December 2020, a further 560,000 options were issued to Key Management Personnel under the terms of the 2020 award 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 respect of the
2019 award of options, 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 respect of the 2020 award of options, in order for 100 per cent of the options to be exercisable EPS growth of 8 per cent per annum
(compounded over the measurement period) is required. If EPS growth of 4 per cent per annum (compounded) is achieved, 50 per cent of
the options will be exercisable and if EPS growth of between 4 per cent and 8 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) for the 2019 award of options and 4 per cent per annum (compounded) for the 2020 award of options.
Subject to the satisfaction of the EPS performance hurdle, the 2020 award of options may be exercised in the following window periods:
• Up to a maximum of 25% during the window period commencing 1 September 2022;
• Up to a maximum of 25%, plus any options rolled over from the previous window period, during the window period commencing
1 September 2023; and
• Up to a maximum of 50%, plus any options rolled over from the previous window period, during the window commencing
1 September 2024.
Subject to the satisfaction of the EPS performance hurdle, the 2019 award of 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 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.
FINANCIAL REPORT 57
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 2021
(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 2020 to
September 2020
$
Annualised Fee Applicable
October 2020 to
June 2021
$
82,600
20,000
15,000
15,000
*
118,000
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 2021 is detailed in Table 1 on page 58 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:
2021
$’000
2020
$’000
2019
$’000
2018
$’000
2017
$’000
Profit after income tax expense attributable to equity
holders of the parent
Basic earnings per share
Share price as at 30 June
47,060
49.70c
$10.45
36,483
38.65c
50,565
53.72c
71,479
76.11c
57,563
61.41c
$10.82
$18.81
$15.06
$13.99
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.
58 ANNUAL REPORT 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (continued)
Remuneration of Key Management Personnel
Table 1: Remuneration for the year ended 30 June 2021
In March 2020, 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
118,504
C. P. Michelmore
111,514
D. R. Voss
97,815
H. J. Gillies
109,090
S. L. Murphy
97,815
Subtotal
Non-Executive
Directors
534,738
Executive Directors
-
-
-
-
-
-
C. G. B. Rubino
373,969
38,843
-
-
-
-
-
-
-
R. Velletri
915,243
5,204
11,380
Subtotal
Executive
Directors
1,289,212
44,047
11,380
Other Key Management Personnel
D. Foti
Z. Bebic
739,867
12,793
637,680
44,548
P. Trueman
486,360
8,737
5,385
9,905
8,379
Subtotal
Other Key
Management
Personnel
1,863,907
66,078
23,669
Total
3,687,857
110,125
35,049
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,258
10,594
9,292
10,364
9,292
50,800
-
-
-
-
-
-
21,694
7,819
-
-
-
-
-
-
-
129,762
122,108
107,107
119,454
107,107
585,538
442,325
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,694
(12,403) 224,713 1,165,831
19.27
19.27
43,388
(4,584) 224,713 1,608,156
13.97
13.97
21,694
(2,882) 140,542
917,399
21,694
12,117
139,751
865,695
21,694
9,194
110,004
644,368
15.32
16.14
17.07
15.32
16.14
17.07
65,082
18,429
390,297 2,427,462
16.08
16.08
159,270
13,845
615,010 4,621,156
13.31
13.31
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 and 2019 and 2020 awards under the Options Plan.
FINANCIAL REPORT 59
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (continued)
Remuneration of Key Management Personnel (continued)
Table 2: Remuneration for the year ended 30 June 2020
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
133,509
C. P. Michelmore 115,244
D. R. Voss
H. J. Gillies
S. L. Murphy
101,545
101,545
101,545
Subtotal
Non-Executive
Directors
553,388
Executive Directors
-
-
-
-
-
-
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,683
10,948
9,647
9,647
9,647
52,572
-
-
-
-
-
-
21,003
8,095
-
-
-
-
-
-
-
146,192
126,192
111,192
111,192
111,192
605,960
452,426
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,003
22,669
176,236 1,208,696
14.58
14.58
42,006
30,764
176,236 1,661,122
10.61
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
11.32
157,587
80,500
445,541 4,646,490
9.59
9.59
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.
Table 3: Performance Rights: Granted during the year ended 30 June 2021
No performance rights were granted during the year ended 30 June 2021.
60 ANNUAL REPORT 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (continued)
Remuneration of Key Management Personnel (continued)
Table 4: Options: Granted during the year ended 30 June 2021
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
300,000
24/11/2020
$2.12
$14.84
14/9/2023
1/9/2021
14/9/2023
200,000
5/11/2020
200,000
5/11/2020
160,000
5/11/2020
$2.07
$2.07
$2.07
$9.30
14/9/2024
1/9/2022
14/9/2024
$9.30
14/9/2024
1/9/2022
14/9/2024
$9.30
14/9/2024
1/9/2022
14/9/2024
860,000
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 2021
Performance Rights
Vested
Performance Rights
Excercised
Shares
Issued
Paid Per Share
$
Directors
R. Velletri^
Executives
D. Foti^
Z. Bebic^
P. Trueman^
Total
13,106
7,357
7,194
5,478
33,135
13,106
7,357
7,194
5,478
33,135
13,106
7,357
7,194
5,478
33,135
Nil
Nil
Nil
Nil
^ On 1 July 2020, the date of exercise of the above performance rights, the closing share price was $10.81.
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 2020
Granted as
Remuneration
Rights Exercised
and Lapsed
Net Change Other
Balance at
End of Period
30 June 2021
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
-
32,651
-
-
-
-
-
18,071
17,789
13,526
82,037
-
-
-
-
-
-
-
-
-
-
-
-
(13,106)
-
-
-
-
-
(7,357)
(7,194)
(5,478)
(33,135)
-
-
-
-
-
-
-
-
-
-
-
-
19,545
-
-
-
-
-
10,714
10,595
8,048
48,902
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 2020
Granted as
Remuneration
Options Exercised
and Lapsed
Net Change Other
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
200,000
160,000
560,000
-
300,000
-
-
-
-
-
200,000
200,000
160,000
860,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FINANCIAL REPORT 61
Balance at
End of Period
30 June 2021
-
300,000
-
-
-
-
-
400,000
400,000
320,000
1,420,000
Table 8: Shareholdings of Key Management Personnel
Shares held in
Monadelphous Group
Limited
Balance at
Beginning of Period
1 July 2020
Granted as
Remuneration
On Exercise
of Performance
Rights
Net Change
Other
Balance at
End of Period
30 June 2021
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
2,106,670
78,000
50,000
2,852
8,571
-
58,316
3,793
2,911
3,333,766
-
-
-
-
-
-
-
-
-
-
-
-
13,106
-
-
-
-
-
7,357
7,194
5,478
33,135
-
-
-
-
30,058
294
-
-
-
-
1,022,653
2,119,776
78,000
50,000
32,910
8,865
-
65,673
10,987
8,389
30,352
3,397,253
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
62 ANNUAL REPORT 2021
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
COMMITTEE MEMBERSHIP
17
17
17
16
17
17
17
17
8
-
-
8
-
8
8
8
5
-
-
-
5
5
5
5
2
2
-
2
1
2
2
2
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
H. J. Gillies (c)
P. J. Dempsey
D. R. Voss
S. L. Murphy
Remuneration
C. P. Michelmore (c)
D. R. Voss
H. J. Gillies
S. L. Murphy
Nomination
C. G. B. Rubino (c)
C. P. Michelmore
P. J. Dempsey
H. J. Gillies
D. R. Voss
S. L. Murphy
Note: (c) Designates the chair of the committee. H. J. Gillies was appointed chair of the audit committee from 1 September 2020, replacing P. J. Dempsey.
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.
FINANCIAL REPORT 63
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 64.
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
Other agreed upon procedures services
Signed in accordance with a resolution of the directors.
$
67,807
122,567
190,374
C. G. B. Rubino
Chairman
Perth, 23 August 2021
64 ANNUAL REPORT 2021
AUDITOR’S INDEPENDENCE DECLARATION
Ernst & Young
11 Mounts Bay Road
Perth WA 6000, Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the directors of Monadelphous
Group Limited
As lead auditor for the audit of the financial report of Monadelphous Group Limited for the financial
year ended 30 June 2021, I declare to the best of my knowledge and belief, there have been:
a.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b.
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Monadelphous Group Limited and the entities it controlled during the
financial year.
Ernst & Young
D S Lewsen
Partner
23 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DL:AJ:MND:003
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 65
Ernst & Young
11 Mounts Bay Road
Perth WA 6000, Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Monadelphous Group
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Monadelphous Group Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2021,
the consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes to the financial statements, including a
summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its
consolidated financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial report of the current year. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report
section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the financial report.
The results of our audit procedures, including the procedures performed to address the matters below, provide
the basis for our audit opinion on the accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DL:AJ:MND:002
66 ANNUAL REPORT 2021
INDEPENDENT AUDIT REPORT
Recognition of revenues and profits on long-term contracts
Why significant
How our audit addressed the key audit matter
The Group’s business involves entering into
contractual relationships with customers to provide a
range of services. A significant proportion of the
Group’s revenues and profits are derived from long-
term contracts.
Revenue recognition involves a significant degree of
judgement, with estimates being made to:
We examined a sample of key contracts and held
discussions with Group key executives to understand the
specific terms and risks of those contracts to assess the
revenue recognition policies adopted by the Group.
We assessed the operating effectiveness of controls over
the recording of revenue recognised in the financial report,
including controls relating to:
►
►
►
Determine the transaction price under the
customer contract
Assess the total contract costs
Measure the Group’s progress towards the
complete satisfaction of the performance
obligations under the customer contract
►
Appropriately provide for onerous contracts.
The Group’s accounting policies and disclosures for
revenue are detailed in General Information – Key
Judgements – Revenue, Note 1 Revenue and Other
Income and Note 7 Contract Assets of the financial
report.
►
►
►
Contract reviews performed by the Group that
included estimating total costs, stage of completion
of contracts and contract profitability, including
consideration of historical estimation accuracy
Revenue recording and billing processes
Contract cost recording processes including the
purchases, payments and payroll processes.
For a sample of contracts in progress at 30 June 2021, we
performed the following additional procedures:
►
►
►
►
Understood the performance and status of the
contracts through enquiries with the key executives
with oversight over the various contract portfolios
Assessed the contract status through the
examination of external evidence, such as approved
variations and customer correspondence
Analysed the Group’s estimates of total contract
costs and forecast costs to complete
For projects with known disputes, sighted claim
documentation, met with the Group’s internal General
Counsel and reviewed supporting documentation in
relation to the status, entitlement, obligations and
disclosure of these matters
We assessed the provisions for onerous contracts and
whether these appropriately reflected the expected
contractual positions
We assessed the Group’s accounting policies and the
adequacy of its related disclosures in the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 67
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2021 annual report, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance
opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
68 ANNUAL REPORT 2021
INDEPENDENT AUDIT REPORT
►
►
►
►
►
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the
direction, supervision and performance of the Group audit. We remain solely responsible for our audit
opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated to the directors, we determine those matters that were of most significance in
the audit of the financial report of the current year and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 69
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2021.
In our opinion, the Remuneration Report of Monadelphous Group Limited for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Ernst & Young
D S Lewsen
Partner
Perth
23 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
70 ANNUAL REPORT 2021
DIRECTORS’ 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 2021 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 76.
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 2021.
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 22 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, 23 August 2021
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2021
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
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)
FINANCIAL REPORT 71
Notes
2021
$’000
2020
$’000
1
1
2
11
3
4
4
1,754,242
1,488,749
(1,641,572)
(1,386,327)
112,670
102,422
11,195
(16,845)
(3,935)
(32,645)
(3,074)
3,006
4,778
(17,196)
(3,663)
(32,493)
(3,694)
4,932
70,372
55,086
(21,906)
(17,860)
48,466
37,226
47,060
1,406
48,466
49.70
49.45
36,483
743
37,226
38.65
38.52
72 ANNUAL REPORT 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
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 gain/(loss) on equity instruments designated at fair value through other comprehensive income
Income tax effect
OTHER COMPREHENSIVE LOSS FOR THE YEAR, NET OF TAX
2021
$’000
2020
$’000
48,466
37,226
(796)
(1,244)
386
(116)
270
(526)
(48)
13
(35)
(1,279)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
47,940
35,947
ATTRIBUTABLE TO:
EQUITY HOLDERS OF THE PARENT
NON-CONTROLLING INTERESTS
46,534
1,406
47,940
35,204
743
35,947
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
FINANCIAL REPORT 73
Notes
2021
$’000
2020
$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Total current assets
Non-current assets
Property, plant and equipment
Contract assets
Intangible assets and goodwill
Investment in joint venture
Deferred tax assets
Other receivables
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
5
6
7
8
9
7
10
11
3
6
12
13
14
15
3
16
14
15
16
17
3
20
21
21
175,708
318,648
59,685
3,600
557,641
208,292
262,437
27,379
4,786
502,894
162,891
163,666
-
3,917
11,904
31,455
6,000
3,259
219,426
124
4,181
11,649
28,775
-
2,873
211,268
777,067
714,162
168,117
165,752
900
21,978
22,093
77,016
1,580
18,733
3,766
59,365
290,104
249,196
-
74,710
6,521
10,151
-
91,382
1,943
69,636
4,340
4,480
125
80,524
381,486
329,720
395,581
384,442
132,608
30,867
232,097
131,307
33,062
220,064
395,572
384,433
9
9
395,581
384,442
74 ANNUAL REPORT 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
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
At 1 July 2020
131,307
34,810
(1,160)
220,064
Other comprehensive income
Profit for the period
Total comprehensive
income for the period
Transactions with owners
in their capacity as owners
Reclassification of non-controlling
interest to liabilities
Remeasurement of financial liability
Share-based payments
Adjustment to deferred tax asset
recognised on employee share trust
-
-
-
-
-
-
-
Dividend reinvestment plan
1,301
Dividends paid
Foreign currency movements
-
-
-
-
-
-
-
2,538
(11)
-
-
-
9
-
(796)
-
-
47,060
1,406
(796)
47,060
1,406
-
-
-
-
-
-
-
-
-
-
-
-
(35,027)
-
(1,406)
-
-
-
-
-
-
Equity
Reserve
$’000
Total
$’000
(1,455)
384,442
-
-
-
(526)
48,466
47,940
1,406
-
(5,671)
(5,671)
-
-
-
-
2,538
(11)
1,301
(35,027)
69
69
867
270
-
270
-
-
-
-
-
-
-
At 30 June 2021
132,608
37,337
(1,956)
232,097
9
1,137
(5,651)
395,581
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
128,723
32,721
84
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
Reclassification of non-controlling
interest to liabilities
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
743
-
-
-
-
-
-
-
-
-
-
-
-
2,831
(3,026)
-
-
-
(42,455)
(1,650)
-
(134)
902
(35)
-
(35)
-
-
-
-
-
-
-
Total
$’000
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
9
867
(1,455)
384,442
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
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
FINANCIAL REPORT 75
Notes
2021
$’000
2020
$’000
1,786,360
1,734,620
(1,756,244)
(1,610,556)
414
(3,074)
3,252
(6,813)
2,840
1,171
(3,694)
2,306
(4,954)
185
NET CASH FLOWS FROM OPERATING ACTIVITIES
5
26,735
119,078
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
(Payment)/repayment of loans to joint ventures
Purchase of intangible assets
Acquisition of controlled entities
11,206
(8,191)
(6,000)
-
-
3,770
(12,126)
1,230
(460)
(681)
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(2,985)
(8,267)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Proceeds from borrowings
Repayment of borrowings
Payment of principal portion of hire purchase liabilities
Payment of principal portion of other lease liabilities
(33,726)
(41,521)
540
(2,625)
(13,017)
(5,501)
594
(6,256)
(12,398)
(7,322)
NET CASH FLOWS USED IN FINANCING ACTIVITIES
(54,329)
(66,903)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Net foreign exchange differences
Cash and cash equivalents at beginning of period
(30,579)
(2,005)
208,292
43,908
342
164,042
CASH AND CASH EQUIVALENTS AT END OF PERIOD
5
175,708
208,292
76 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2021
GENERAL INFORMATION
The consolidated financial report of Monadelphous Group Limited (the Group) and its subsidiaries for the year ended 30 June 2021
was authorised for issue in accordance with a resolution of directors on 23 August 2021.
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 2020 (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 2021. 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 22. 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 MAQ Rent SpA) is Chilean Pesos (CLP).
FINANCIAL REPORT 77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2021
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:
Accounting for contracts with customers
The Group accounts for construction contracts in accordance with AASB 15 Revenue from Contracts with Customers.
Accounting for construction contracts involves the continuous use of estimates based on a number of detailed assumptions. Construction
contracts can span accounting periods, requiring estimates and assumptions to be updated on a regular basis.
Accounting estimates resulting from judgements in relation to individual projects may be materially different to actual results due to the size,
scale and complexity of projects.
Revenue
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.
There are a number of factors considered in assessing variable consideration including status of negotiations with the customer, outcomes
of previous negotiations and legal evidence that provides a basis for entitlement.
Forecast Costs
Forecast costs to complete construction contracts are regularly updated and are based on costs expected to be incurred when the related
activity is undertaken. Key assumptions regarding costs to complete contracts include estimation of labour costs, technical costs, impact
of delays and productivity.
Construction contracts may incur additional costs in excess of original cost estimates. Liability for such costs may rest with the customer
if considered to be a change to the original scope of works. Any additional contractual obligations, including liquidated damages, are also
assessed to the extent these are due and payable under the contract.
When it is considered 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.
78 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2021
GENERAL INFORMATION (continued)
Key judgements and estimates (continued)
Contract claims and disputes
Claims arising out of construction contracts may be made by or against the Group in the ordinary course of business, some of which may involve
litigation or arbitration.
Estimates and assumptions regarding the likely outcome of these claims are made and recognised in the carrying value of contract assets
and liabilities. In making these estimates and assumptions, legal opinions are obtained as appropriate.
The Directors do not consider the outcome of these claims to have a material adverse effect on the financial position of the Group, however
uncertainty remains until the final outcome is determined.
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 to note 16 for details.
Determination of the lease term of contracts with renewal options
Refer to note 15 for details.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2021
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:
Iron ore
Other minerals
Oil and gas
Infrastructure
Less share of revenue from joint ventures accounted for using the equity method
FINANCIAL REPORT 79
2021
$’000
2020
$’000
976,921
776,817
1,049,801
437,592
1,753,738
1,487,393
414
90
1,171
185
1,754,242
1,488,749
7,943
3,252
11,195
1,034,104
489,621
349,449
80,006
2,472
2,306
4,778
528,397
479,619
460,915
181,837
1,953,180
1,650,768
(199,442)
(163,375)
1,753,738
1,487,393
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
61,322
11,978
11,988
10,944
Unsatisfied performance obligations
Transaction price expected to be recognised in future years for unsatisfied
performance obligations at 30 June 2021:
Services revenue
Construction revenue
Total
1,176,689
1,607,339
177,331
384,544
1,354,020
1,991,883
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.
Services:
1 to 5 years
Construction: 1 to 2 years
80 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2021
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 consumption by 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 performs maintenance over the 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 2021
2. EXPENSES
Finance costs
Loans and overdrafts
Finance charges payable under hire purchase contracts
Interest on other lease liabilities
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
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)
Government Grants - JobKeeper
FINANCIAL REPORT 81
2021
$’000
2020
$’000
87
1,389
1,598
3,074
14,000
9,542
8,934
280
165
254
1,499
1,941
3,694
15,589
7,019
7,962
479
165
32,921
31,214
895,104
60,310
955,414
801,907
56,479
858,386
1,464
2,318
Certain Monadelphous subsidiaries received wage subsidy support under the Australian Government’s JobKeeper scheme during the
year totalling $7,143,000. The Company utilised the JobKeeper subsidy to pay employees placed on stand down, provide temporary
uplifts for those eligible under the scheme, and to maintain, where possible, employment levels.
Recognition and measurement
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 15 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.
82 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2021
3.
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 gain/(loss) on equity instrument designated at fair value through other
comprehensive income
Amounts credited directly to equity
Share-based payment
Income tax expense 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% (2020: 30%)
- Share-based payment expense
- Other
Aggregate income tax expense
2021
$’000
2020
$’000
24,518
211
(2,133)
(690)
21,906
116
116
11
11
70,372
21,112
289
505
11,704
(2,779)
5,728
3,207
17,860
(13)
(13)
97
97
55,086
16,526
382
952
21,906
17,860
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2021
FINANCIAL REPORT 83
2021
$’000
Current
Income Tax
2021
$’000
Deferred
Income Tax
2020
$’000
Current
Income Tax
2020
$’000
Deferred
Income Tax
3.
INCOME TAX (continued)
Recognised deferred tax assets and liabilities
Opening balance
Acquisition of subsidiaries
Charged to income
Charged to equity
Other / payments
Closing balance
Amounts recognised on the consolidated
statement of financial position:
Deferred tax assets
Deferred tax liabilities
(3,766)
28,650
-
(24,729)
-
6,402
(22,093)
-
2,823
(127)
109
31,455
31,455
-
31,455
Deferred income tax at 30 June relates to the following:
Deferred tax assets
Employee provisions
Provisions for doubtful debts
Other provisions
Lease assets and lease liabilities
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
205
-
(8,925)
-
4,954
(3,766)
2021
$’000
36,154
1,667
(8,935)
(84)
(152)
28,650
28,775
(125)
28,650
2020
$’000
26,172
19,075
748
1,530
3,127
3,641
35,218
(3,763)
31,455
(3,276)
(487)
(3,763)
3,763
-
1,041
2,407
2,345
6,346
31,214
(2,439)
28,775
(1,097)
(1,467)
(2,564)
2,439
(125)
84 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2021
3.
INCOME TAX (continued)
Unrecognised temporary differences
At 30 June 2021, there are no unrecognised temporary differences associated with the Group’s investments in subsidiaries.
Research and Development tax incentives refund
In 2019, the Company received Notices of Amended Assessments (NOAAs) from the Australian Taxation Office (ATO) for research
and development tax incentives claimed in previous years which were determined to be ineligible, and consequently included a one-off
provision of $6.5 million in the 2019 financial year. The NOAAs were issued by the ATO to give effect to adverse findings made by
Innovation and Science Australia, which determined that the activities undertaken were ineligible for such incentives. Monadelphous
applied for an internal review of these findings and, prior to issuing the NOAAs, the ATO advised the Company in writing that if the
finding was subsequently set aside then the Commissioner would make further amendments to accord with such findings.
In December 2020, the Company was notified that, upon review, the original findings had been set aside in full, and the research and
development activities conducted by the Company were in fact eligible activities. As a consequence, and based on the earlier advice
provided by the ATO, the Company reversed the provision made in the 2019 financial year in its half-year results for the period ended
31 December 2020, and commenced the process to obtain a refund of the amounts paid to the ATO.
Subsequent to 30 June 2021, the Company has been informed by the ATO that the amended assessments required to facilitate the
refund will not be issued. Monadelphous has lodged Notices of Objection with the ATO in respect of this matter. The Company has
reinstated the provision, which was reversed earlier in the reporting period, until the matter is finalised.
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 2021
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 85
2021
$’000
2020
$’000
47,060
47,060
36,483
36,483
Number
Number
Number of shares
Weighted average number of ordinary shares on issue used in the calculation
of basic earnings per share
94,692,124
94,383,189
Effect of dilutive securities
Performance rights and options
Adjusted weighted average number of ordinary shares used in calculating
diluted earnings per share
Conversions, calls, subscriptions or issues after 30 June 2021:
On 1 July 2021, 155,556 performance rights vested and were exercised.
Calculation of earnings per share
476,763
321,459
95,168,887
94,704,648
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.
86 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
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 (gain)/loss
Share of profits from joint ventures
Dividends 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
2021
$’000
2020
$’000
167,663
8,045
175,708
178,292
30,000
208,292
48,466
37,226
32,476
445
(7,943)
2,538
(1)
(3,006)
2,750
749
(56,211)
1,186
(32,306)
(2,807)
2,365
19,832
18,327
(125)
26,735
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
Non-cash financing and investing activities
Hire purchase transactions:
During the year, the consolidated entity acquired right of use plant and equipment assets by means of hire purchase agreements
with an aggregate fair market value of $9,710,911 (2020: $18,470,751).
Reconciliation of liabilities arising from financing activities
Non-cash changes
New leases/
terminations
$’000
9,711
17,184
-
26,895
Cash flows
$’000
(12,477)
(5,501)
(2,625)
(20,603)
2020
$ ’000
42,326
46,043
3,523
91,892
Other
$’000
(533)
(65)
2
(596)
2021
$’000
39,027
57,661
900
97,588
Hire purchase liabilities
Other lease liabilities
Loan
Recognition and measurement
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 2021
FINANCIAL REPORT 87
6. TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
Less allowance account for expected credit losses
Other debtors
Less allowance account for expected credit losses
NON-CURRENT
Other debtors
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
Decrease 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.
Notes
2021
$’000
2020
$’000
225,861
(2,504)
223,357
96,181
(890)
191,105
(3,581)
187,524
75,369
(456)
318,648
262,437
30
6,000
-
3,581
(1,077)
2,504
3,634
(53)
3,581
Other debtors
Other debtors include contract assets that are unconditional (see note 7). These assets are reclassified to trade receivables when invoiced.
88 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
7. CONTRACT ASSETS
CURRENT
Contract assets
NON-CURRENT
Contract assets
2021
$’000
2020
$’000
59,685
27,379
-
124
Contract assets are net of expected credit losses of $275,803. Included in contract assets are deferred project fulfilment costs of $124,022.
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.
8.
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.
2021
$’000
2020
$’000
3,600
4,786
FINANCIAL REPORT 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
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 2021
Net carrying amount at 1 July 2020
14,811
16,500
44,108
49,905
Additions
Assets transferred
Disposals
Depreciation charge
Exchange differences
-
-
-
-
-
428
-
7,763
1,334
9,711
(1,334)
(11)
(3,066)
(140)
37,756
16,814
-
-
586
370
-
163,666
35,086
-
(46)
(3,263)
(1,515)
(12,485)
(9,542)
(8,397)
(537)
(32,476)
(7)
(198)
74
-
9
(122)
Net carrying amount at 30 June 2021
14,811
15,395
37,456
48,674
46,173
382
162,891
At 30 June 2021
Gross carrying amount – at cost
14,811
27,732
146,027
67,810
61,366
1,404
319,150
Accumulated depreciation
-
(12,337)
(108,571)
(19,136)
(15,193)
(1,022)
(156,259)
Net carrying amount
14,811
15,395
37,456
48,674
46,173
382
162,891
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
Additions
Additions through business
combinations
Assets transferred
Disposals
Depreciation charge
Exchange differences
-
-
-
-
-
-
41,062
12,062
41,953
18,471
38,940
6,528
64
-
-
1,822
4,910
1,663
(4,910)
981
-
(940)
(112)
(1,186)
-
(1,063)
(14,526)
(7,019)
(7,477)
1,221
155,598
-
-
-
37,125
4,466
-
(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
90 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
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
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.
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 91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
10. INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
$’000
Goodwill
$’000
Total
$’000
Year ended 30 June 2021
At 1 July 2020
Amortisation
Exchange differences
At 30 June 2021
Year ended 30 June 2020
At 1 July 2019
On business combination
Purchased
Amortisation
Exchange differences
At 30 June 2020
280
(280)
-
-
-
-
759
(479)
-
280
3,901
-
16
3,917
3,120
815
-
-
(34)
3,901
4,181
(280)
16
3,917
3,120
815
759
(479)
(34)
4,181
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 pre-tax 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.
92 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
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.
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.
The aggregated results, assets and liabilities of Zenviron Pty Ltd and Mondium Pty Ltd are as follows:
Group’s share of net assets of joint ventures
Group’s share of profit after tax from continuing operations
Group’s share of profit and total comprehensive income
2021
$’000
11,904
3,006
3,006
2020
$’000
11,649
4,932
4,932
Commitments and contingent liabilities relating to Joint Ventures
The Group’s share of insurance bond guarantees issued by Joint Ventures at 30 June 2021 was $52,716,995 (2020: $92,033,477).
Joint ventures had no capital commitments at 30 June 2021 (2020: $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 2021
12. OTHER NON-CURRENT ASSETS
Other non-current assets
Other non-current assets consist of investments as follows:
FINANCIAL REPORT 93
2021
$’000
2020
$’000
3,259
2,873
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
2021
$’000
2020
$’000
119,652
22,617
25,848
73,640
61,322
30,790
168,117
165,752
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.
94 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
14. INTEREST BEARING LOANS AND BORROWINGS
CURRENT
Loan – secured
NON-CURRENT
Loan – secured
Defaults and breaches
2021
$’000
2020
$’000
900
1,580
-
1,943
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 a 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
15. LEASE LIABILITIES
CURRENT
Hire purchase lease liabilities
Other lease liabilities
NON-CURRENT
Hire purchase lease liabilities
Other lease liabilities
Carrying amount at the beginning of the financial year
Additions through business combinations
Additions
Accretion of interest
Payments
Other
Carrying amount at the end of the financial year
Terms and conditions
FINANCIAL REPORT 95
2021
$’000
2020
$’000
14,091
7,887
21,978
24,936
49,774
74,710
88,369
-
26,895
2,987
12,535
6,198
18,733
29,791
39,845
69,636
82,190
1,889
24,999
3,440
(20,965)
(22,566)
(598)
96,688
(1,583)
88,369
Hire purchase agreements have an average term of three years. The average discount rate implicit in the hire purchase liability is 2.9%
(2020: 3.1%).
Other lease liabilities have an average term of 1.3 years. The average discount rate implicit in the other lease liability is 3.8% (2020: 3.9%).
The maturity analysis of lease liabilities is set out in note 24.
Recognition and measurement
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.
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.
96 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
15. LEASE LIABILITIES (continued)
Recognition and measurement (continued)
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
16. PROVISIONS
CURRENT
Employee benefits
Workers’ compensation
Other
NON-CURRENT
Employee benefits – long service leave
Other
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 97
2021
$’000
2020
$’000
63,555
11,938
1,523
77,016
5,145
1,376
6,521
9,349
11,285
(8,696)
11,938
46,869
9,349
3,147
59,365
4,340
-
4,340
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.
98 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2021
16. PROVISIONS (continued)
Recognition and measurement (continued)
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.
17. OTHER FINANCIAL LIABILITY
In November 2019, Monadelphous Group Limited acquired 75% of Chile-based construction and maintenance services contractor,
Buildtek SpA (“Buildtek”) and plant and equipment hire company, MAQ Rent SpA (“MAQ Rent”).
At the date of acquisition, the Group obtained an option to acquire the remaining 25% of the shares on issue of Buildtek and MAQ Rent
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.
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 2021, the financial liability associated with the option held by the minority shareholders was $10,150,590 (2020: $4,480,811).
FINANCIAL REPORT 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2021
18. 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
2021, the Group is in a net cash position of $135,781,000 (2020: $162,443,000 ) and has a debt to equity ratio of 10.1% (2020:
11.9%) which is within the Group’s net cash and debt to equity target levels.
During the year ended 30 June 2021, management paid dividends of $35,027,000. 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.
2021
$’000
2020
$’000
19. DIVIDENDS PAID AND PROPOSED
Declared and paid during the year
Current year interim
Interim franked dividend for 2021 (24 cents per share) (2020: 22 cents per share)
22,724
20,767
Previous year final
Final franked dividend for 2020 (13 cents per share) (2019: 23 cents per share)
12,303
21,688
Unrecognised amounts
Current year final
Final franked dividend for 2021 (21 cents per share) (2020: 13 cents per share)
19,933
12,303
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
44,961
40,475
(8,543)
36,418
(5,273)
35,202
Tax rates
The tax rate at which paid dividends have been franked is 30% (2020: 30%). Dividends payable will be franked at the rate of 30%
(2020: 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.
100 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2021
20. CONTRIBUTED EQUITY
Ordinary shares – Issued and fully paid
Reserved shares
Ordinary shares
2021
$’000
2020
$’000
133,877
132,576
(1,269)
(1,269)
132,608
131,307
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.
2021
2020
Number of Shares
$’000
Number of Shares
$’000
Beginning of the financial year
94,489,833
132,576
94,294,487
Dividend reinvestment plan
Exercise of performance rights
119,673
151,646
1,301
195,346
-
-
129,992
2,584
-
End of the financial year
94,761,152
133,877
94,489,833
132,576
During the year ended 30 June 2021, 9,604 performance rights were exercised through the issue of reserved shares.
Reserved shares
Beginning of the financial year
Conversion of performance rights
End of the financial year
Recognition and measurement
2021
2020
Number of Shares
$’000
Number of Shares
$’000
9,604
(9,604)
-
(1,269)
-
(1,269)
92,375
(82,771)
9,604
(1,269)
-
(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
The 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:
CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2021
21. RESERVES AND RETAINED EARNINGS
Foreign currency translation reserve
Share-based payment reserve
Fair value reserve for financial assets
Equity reserve
Retained earnings
Nature and purpose of reserves
FINANCIAL REPORT 101
2021
$’000
2020
$’000
(1,956)
37,337
1,137
(5,651)
30,867
(1,160)
34,810
867
(1,455)
33,062
232,097
220,064
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 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 MAQ Rent SpA.
102 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2021
22. 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
R E & 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
SinoStruct Engineering & Fabrication (Tianjin) Co. Ltd*
Monadelphous Singapore Pte Ltd
Monadelphous Mongolia LLC
Monadelphous Inc.
Monadelphous Marcellus LLC
Monadelphous Engineering NZ Pty Ltd
Monadelphous Chile SpA
MAQ Rent SpA
Buildtek SpA
Monadelphous Sdn Bhd
Percentage Held by
Consolidated Entity
Country of
Incorporation
2021
%
2020
%
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
China
Singapore
Mongolia
USA
USA
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
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
75
75
100
# Controlled entities subject to the Class Order (Refer to note 32)
*
^ The Group considers that it controls this company 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 103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2021
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
2021
%
2020
%
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
65
65
65
65
Commitments and contingent liabilities relating to joint operations
There were no capital commitments or contingent liabilities relating to the joint operations at 30 June 2021 (2020: $nil).
Impairment
There were no assets employed in the joint operations during the year ended 30 June 2021 (2020: $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.
104 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2021
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
2021
$’000
2020
$’000
5
175,708
208,292
(900)
(2,100)
174,808
206,192
The Group utilises a number of financial institutions to obtain the best interest rate possible and to manage its risk. The Group does
not enter into interest rate hedges.
At 30 June 2021, reasonably possible movements in variable interest rates, based on a review of historical movements and forward
rate curves for forward rates would not have had a material impact on the Group.
FINANCIAL REPORT 105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2021
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Risk exposures and responses (continued)
Foreign currency risk
As a result of operations in the USA, Papua New Guinea, China, Mongolia, New Zealand and Chile the Group’s Statement of Financial
Position can be affected by movements in the US$/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 2021, 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 2021, the Group had the following exposure to foreign currency:
Year ended 30 June 2021
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
Year ended 30 June 2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
PGK
AUD $’000
USD
AUD $’000
13,008
9,454
(2,710)
19,752
6,825
6,684
(872)
12,637
15,086
774
(268)
15,592
26,088
11,439
(2,218)
35,309
At 30 June 2021, 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 2021, 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% (2020: +5%)
-5% (2020: -5%)
Post Tax Profit
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2021
$’000
(546)
546
2020
$’000
(1,236)
1,236
2021
$’000
-
-
2020
$’000
-
-
The reasonably possible movements have been based on review of historical movements.
106 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2021
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 $554,041,000
at 30 June 2021 (2020: $498,232,000).
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.
In the prior period, impairment losses were recognised when there was objective evidence of impairment.
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.
FINANCIAL REPORT 107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2021
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Risk exposures and responses (continued)
Credit risk (continued)
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.
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 2021
Expected credit loss rate
0.5%
0.5%
0.7%
1.7%
5.0%
21.3%
Total estimated gross carrying
amount at default ($’000)
59,685
194,324
20,963
Expected credit loss ($’000)
276
947
143
2,961
50
1,603
80
6,010
1,284
225,861
2,504
Trade receivables
Days past due
Contract
assets
Current
<31
days
31-60
days
61-90
days
>91
days
Total
30 June 2020
Expected credit loss rate
0.55%
0.52%
0.74%
1.60%
4.55%
23.8%
Total estimated gross carrying
amount at default ($’000)
27,503
142,695
30,532
Expected credit loss ($’000)
152
749
225
5,305
85
2,459
112
10,114
191,105
2,410
3,581
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.
108 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2021
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
2021
$’000
2020
$’000
440,000
102,648
542,648
218,331
39,927
258,258
221,669
62,721
284,390
490,000
96,112
586,112
229,388
45,849
275,237
260,612
50,263
310,875
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 has financing facilities in the form of hire purchase liabilities, secured loans and a receivable facility.
The liquidity of the Group is managed by the Group’s Finance and Accounting department.
FINANCIAL REPORT 109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2021
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 2021.
Maturity analysis of financial liabilities:
6 months
or less
$’000
6 months
to 1 year
$’000
1 year to
5 years
$’000
5 years
or more
$’000
Total
Contractual
Cash Flows
$’000
Total
Carrying
Amount
$’000
Year ended 30 June 2021
Financial liabilities
Trade and other payables
168,117
Hire purchase liabilities
Other lease liabilities
Bank loans
Other financial liability
7,680
4,761
608
-
-
7,283
4,644
302
-
Net maturity
181,166
12,229
-
25,727
33,250
-
10,644
69,621
-
-
21,245
-
-
168,117
168,117
40,690
63,900
910
39,027
57,661
900
10,644
10,151
21,245
284,261
275,856
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 liabilities
Other lease liabilities
Bank loans
Other financial liability
6,640
4,100
911
-
-
7,129
3,842
904
-
Net maturity
177,403
11,875
Net fair values of financial assets and liabilities
-
165,752
165,752
31,213
45,646
2,220
4,848
83,927
44,982
53,588
4,035
4,848
42,326
46,043
3,523
4,480
273,205
262,124
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 2021 or 30 June 2020.
110 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
UNRECOGNISED ITEMS
FOR THE YEAR ENDED 30 JUNE 2021
25. COMMITMENTS AND CONTINGENCIES
Capital commitments
The consolidated group has capital commitments of $8,988,277 at 30 June 2021 (2020: $1,436,867).
Guarantees
2021
$’000
2020
$’000
Guarantees given to various clients for satisfactory contract performance
218,331
229,388
Monadelphous Group Limited and all controlled entities marked # in note 22 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. The claim was 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.
On 16 April 2021, Monadelphous announced that a confidential settlement had been reached in respect of this matter, with the
settlement being covered by the proceeds of insurance. The parties consider the matter has been concluded.
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
Dividends declared
On 23 August 2021, the directors of Monadelphous Group Limited declared a final dividend on ordinary shares in respect of the
2021 financial year. The total amount of the dividend is $19,932,509 which represents a fully franked final dividend of 21 cents per
share. This dividend has not been provided for in the 30 June 2021 financial statements. The Monadelphous Group Limited Dividend
Reinvestment Plan will apply to the dividend.
FINANCIAL REPORT 111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
27. PARENT ENTITY INFORMATION
Information relating to Monadelphous Group Limited parent entity
Notes
2021
$’000
2020
$’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
127,283
929,001
173,899
2,597,568
(670,348)
(2,335,491)
(728,926)
(2,405,409)
200,075
192,159
132,608
35,335
1,137
30,995
200,075
38,727
38,727
131,307
32,690
867
27,295
192,159
43,311
43,276
25
218,331
229,388
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 2021 (2020: $nil).
112 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
28. SHARE-BASED PAYMENT EXPENSE
The share-based payment expense for the year ended 30 June 2021 was $2,537,803 (2020: $2,186,390) for the consolidated entity.
Performance Rights
No performance rights were granted during the year ended 30 June 2021.
The following table illustrates the number and weighted average exercise prices of and movements in performance rights granted,
exercised and forfeited during the year.
2021
2020
Number of
Performance
Rights
Weighted Average
Exercise Price
$
Number of
Performance
Rights
Weighted Average
Exercise Price
$
406,142
-
(161,250)
(8,699)
236,193
155,556
nil
nil
nil
nil
nil
nil
248,407
265,438
(82,771)
(24,932)
406,142
161,250
nil
nil
nil
nil
nil
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 November 2020, 300,000 options, which had been offered to the Company’s Managing Director in October 2019, were approved
to be granted at the Company’s Annual General Meeting 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.
In November 2020, a total of 2,950,000 options were granted by Monadelphous Group Limited under the Employee Option Plan
at an exercise price of $9.30. A further 300,000 options have been offered to the Company’s Managing Director, with the issue of
these options being subject to shareholder approval. 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 5 November 2020. 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
Volatility
3.66%
40.0%
Risk-free interest rate
0.09% - 0.16%
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.
FINANCIAL REPORT 113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
28. SHARE-BASED PAYMENT EXPENSE (continued)
Options (continued)
The resulting weighted average fair values for options outstanding at 30 June 2021 are:
Number
585,000
585,000
1,170,000
75,000
75,000
150,000
737,500
737,500
1,475,000
Grant Date
14/10/2019
14/10/2019
14/10/2019
24/11/2020
24/11/2020
24/11/2020
05/11/2020
05/11/2020
05/11/2020
Final Vesting Date
Fair Value Per Option
at Grant Date
14/09/2023
14/09/2023
14/09/2023
14/09/2023
14/09/2023
14/09/2023
14/09/2024
14/09/2024
14/09/2024
$1.84
$2.10
$2.27
$1.84
$2.10
$2.27
$1.77
$2.04
$2.23
The following table illustrates the number and weighted average exercise prices of and movements in options granted, exercised and
forfeited during the year.
2021
2020
Number of
Options
2,400,000
3,250,000
(60,000)
5,590,000
660,000
Weighted Average
Exercise Price
$
14.84
9.81
14.84
11.92
14.84
Number of
Options
-
2,450,000
(50,000)
2,400,000
-
Weighted Average
Exercise Price
$
-
14.84
14.84
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.
114 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
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
- other agreed upon procedure services where there is discretion as to
whether the service is provided by the auditor or another firm
Total fees to Ernst & Young (Australia)
Amounts received or due and receivable by overseas member firms
of Ernst & Young 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
Total fees to overseas member firms of Ernst & Young
Total auditor’s remuneration
2021
$
2020
$
342,221
280,374
49,350
88,459
122,567
514,138
-
368,833
11,202
9,318
18,457
29,659
12,873
22,191
543,797
391,024
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
2021
$
2020
$
3,833,031
3,962,862
159,270
13,845
615,010
157,587
80,500
445,541
4,621,156
4,646,490
The Group had sales to the joint venture during the year totalling $4,110,085 (2020: $8,285,352).
Mondium
At 30 June 2021, an amount totalling $6,000,000 (2020: $nil) had been loaned to Mondium Pty Ltd. The loan is included
in the Statement of Financial Position within non-current other receivables.
The Group had sales to the joint venture during the year totalling $102,607,792 (2020: $14,040,100).
FINANCIAL REPORT 115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
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 2021, the Engineering Construction division contributed revenue of $979.0 million (2020:
$615.9 million) and the Maintenance and Industrial Services division contributed revenue of $976.9 million (2020: $1,049.8 million).
Included in these amounts is $2.8 million (2020: $14.9 million) of inter-entity revenue and $199.4 million (2020: $163.4 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 36% (2020: 28%) of the
Group’s revenue. One other customer individually contributed 11% 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
2021
$’000
2020
$’000
1,631,457
1,324,475
5,183
55,998
13,679
47,421
20,328
30,339
46,490
65,761
1,753,738
1,487,393
116 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
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
Dividends paid
Net profit after tax for the period
Retained earnings at the end of the period
2021
$’000
2020
$’000
49,299
(17,448)
31,851
201,544
(35,027)
31,851
198,368
30,667
(9,673)
20,994
223,005
(42,455)
20,994
201,544
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
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
FINANCIAL REPORT 117
2021
$’000
2020
$’000
115,082
287,623
59,685
462,390
17,345
152,549
20,723
3,120
3,259
196,996
659,386
169,005
316,057
16,287
501,349
17,179
150,415
22,144
3,400
2,872
196,010
697,359
124,531
198,277
900
20,584
21,466
44,683
212,164
-
73,899
5,874
79,773
1,200
17,189
438
41,775
258,879
900
67,477
3,695
72,072
291,937
330,951
367,449
366,408
132,608
36,473
198,368
367,449
131,307
33,557
201,544
366,408
118 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
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.
FINANCIAL REPORT 119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
33. OTHER ACCOUNTING STANDARDS (continued)
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.
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 2020.
Other revised Standards and Interpretations which apply from 1 July 2020 did not have any material effect on the financial position
or performance of the Group.
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 2021.
Reference
Summary
AASB 2020-8
Amendments to
Australian Accounting
Standards – Interest
Rate Benchmark
The objective of the amendments is to minimise financial reporting
consequences of a change in benchmark interest rates that
Australian Accounting Standards may otherwise require, such as
the derecognition or remeasurement of financial instruments, and
the discontinuation of hedge accounting.
Application date
of standard
Application date
for Group
1 January 2021
1 July 2021
Provided that the interest rate will be substantially similar before
and after the replacement, the amendments:
• Require changes to future cash flows that are directly required
by the IBOR reform to be treated as if they were changes to
a floating interest rate. Applying this expedient would not
affect the carrying amount of the financial instrument. It also
relieves entities of the need to assess whether modification or
derecognition accounting applies under AASB 9 and AASB 139.
• Require changes to lease payments that are directly required by
the IBOR reform to be accounted for as a remeasurement of lease
liability using the original discount rate with a corresponding
adjustment to the right-of-use asset. This expedient exempts
entities from remeasuring the lease liability using a new discount
rate under AASB 16.
The IASB’s assessment of applying the revised definitions of
assets and liabilities in the Conceptual Framework to business
combinations showed that the problem of day 2 gains or losses
would be significant only for liabilities that an acquirer accounts for
after the acquisition date by applying IAS 37 Provisions, Contingent
Liabilities and Contingent Assets or IFRIC 21 Levies. The Board
updated IFRS 3 in May 2020 for the revised definitions of an asset
and a liability and excluded the application of the Conceptual
Framework to liabilities and contingent liabilities within the scope
of IAS 37 or IFRIC 21.
AASB 2020-3
Amendments to
AASB 3 – Reference
to the Conceptual
Framework
1 January 2022
1 July 2022
120 ANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
33. OTHER ACCOUNTING STANDARDS (continued)
New accounting standards and interpretations issued but not yet effective (continued)
Reference
Summary
AASB 2020-3
Amendments to
AASB 137 – Onerous
Contracts – Cost of
Fulfilling a Contract
AASB 137 defines an onerous contract as a contract in which the
unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received under it.
Unavoidable cost is the lower of the cost of fulfilling the contract
and any compensation or penalties arising from failure to fulfil it.
Application date
of standard
Application date
for Group
1 January 2022
1 July 2022
AASB 137 does not specify which costs to include in determining
the cost of fulfilling a contract. Consequently, AASB 137 was
amended to clarify that when assessing whether a contract is
onerous, the cost of fulfilling the contract comprises all costs
that relate directly to the contract, which includes both the:
• Incremental costs of fulfilling that contract (e.g., materials
and labour); and
• An allocation of other costs that relate directly to fulfilling
contracts (e.g., depreciation of property, plant and equipment)
An entity shall apply these amendments to contracts for which it
has not yet fulfilled all its obligations at the beginning of the annual
reporting period in which it first applies the amendments (the date
of initial application). Comparative information is not restated.
Instead, the cumulative effect of initially applying the amendments
is recognised as an adjustment to the opening balance of retained
earnings or other component of equity, as appropriate, at the date
of initial application.
Under AASB 116 Property, Plant and Equipment, net proceeds
from selling items produced while constructing an item of property,
plant and equipment are deducted from the cost of the asset.
The IASB’s research indicated practical diversity in interpreting
this requirement. As a result, AASB 116 was amended to prohibit
an entity from deducting from the cost of an item of property,
plant and equipment, the proceeds from selling items produced
before that asset is available for use. An entity is also required to
measure production costs of the sold items by applying AASB 112
Inventories. Proceeds from selling any such items, and the cost
of those items, are recognised in profit or loss in accordance with
applicable standards.
These amendments are applied retrospectively, but only to items of
property, plant and equipment that are ‘ready to use’ on or after the
beginning of the earliest period presented in the financial statements
in which the entity first applies the amendments — ‘ready to use’
meaning the asset is in the location and condition necessary to be
capable of operating in the manner intended by management.
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.
AASB 2020-3
Amendments
to AASB 116 –
Property, Plant and
Equipment: Proceeds
before Intended Use
AASB 2014-10
Amendments to
Australian Accounting
Standards – Sale
or Contribution of
Assets between
an Investor and
its Associate or
Joint Venture
1 January 2022
1 July 2022
1 January 2022
1 July 2022
FINANCIAL REPORT 121
Application date
of standard
Application date
for Group
1 January 2023
1 July 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OTHER
FOR THE YEAR ENDED 30 JUNE 2021
33. OTHER ACCOUNTING STANDARDS (continued)
New accounting standards and interpretations issued but not yet effective (continued)
Reference
Summary
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:
• 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.
122 ANNUAL REPORT 2021
INVESTOR INFORMATION
FOR THE YEAR ENDED 30 JUNE 2021
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows.
The information is current at 13 September 2021.
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
6,858
4,572
805
642
35
12,912
The number of shareholders holding less than marketable parcels is 501.
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
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