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Galliford Try HoldingsANNUAL
REPORT
2022
1 ANNUAL REPORT 2022
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.
A Monadelphous employee at Rio Tinto’s Tom Price mine,
Tom Price, Western Australia.
CONTENTS
OVERVIEW
Our History
Our Services and Locations
OPERATING AND FINANCIAL REVIEW
2021/22 Highlights
Performance at a Glance
Markets and Growth Strategy
Chairman’s Report
Managing Director’s Report
Company Performance
Board of Directors
Engineering Construction
Maintenance and Industrial Services
Sustainability
FINANCIAL REPORT
Directors’ Report
Remuneration Report
Independent Audit Report
Directors’ Declaration
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Investor Information
CONTENTS 2
3
13
15
17
19
21
23
27
29
31
37
43
53
58
73
78
79
84
131
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 2022 financial year.
References in this Report to ‘the year’, ‘the reporting period’ and ‘the period’ relate
to the financial year 1 July 2021 to 30 June 2022, 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 2022 Annual
General Meeting will be held at The University Club, University of Western
Australia, Crawley, Western Australia, and online, on Tuesday, 22 November 2022
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 2022 Annual Report has
been printed on FSC Recycled certified paper
as part of the Company’s environmental
commitment to reducing waste.
3 ANNUAL REPORT 2022
CELEBRATING
50 YEARS OF
MONADELPHOUS
OVERVIEW 4
CELEBRATING
50 YEARS OF
MONADELPHOUS
Monadelphous is an engineering group headquartered
in Perth, Western Australia (WA), providing construction,
maintenance and industrial services to the resources,
energy and infrastructure sectors.
The Company was established in Kalgoorlie, WA, in 1972 to
provide general mechanical contracting services to Australia’s
growing mining industry, under the name Contract Engineering
Associates (CEA).
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.
Following a major restructure in the late 1980s, its shares
were relisted on the main board of the stock exchange in
1990 and the Company established the foundation for
sustained growth with a new management team.
The Company 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.
5 ANNUAL REPORT 2022
THE BEGINNING
1972–1990
By the 1970s, Australia was well on its
way to becoming a major minerals and
metals producer, following the discovery
of vast iron ore deposits in the Pilbara
region of WA, and major reserves of
base metals, manganese, nickel and
uranium.
CEA was established to capitalise on
this growth and by the late 1970s, the
business had expanded its offering to
include manufacturing, fabrication and
erection services, and rebranded as
Monadelphous.
As one of the first labour hire
companies to enter the Goldfields region
of WA, demand for Monadelphous’
services was strong. By the mid-
1980s, the Company had expanded
its operations beyond WA, both
domestically and overseas.
The Company experienced financial
difficulties following its rapid expansion
into New Zealand and the failure of
this enterprise to deliver the revenue
envisaged. On 2 September 1988,
Monadelphous Group Limited was
placed into receivership. The Company’s
major shareholder, United Construction
Group, came to an agreement with
the receiver and creditors to bring the
Company out of receivership, and it
was relisted on the Australian Stock
Exchange in 1990.
Monadelphous’ workshop in
Kalgoorlie, Western Australia.
OVERVIEW 6
Monadelphous’ management team outside the Company’s
Sleat Road office in Applecross, Western Australia.
FOUNDATION
YEARS
1991–1995
1991 marked the start of a new era
for Monadelphous, which included a
restructure of the management team
and the pursuit of reliable service
delivery.
The 1990s was a period of significant
change for the mining industry, with
an increased focus on safety and
environmental issues, and reduced
dependence on the majors for minerals
and metals, as more competitors
entered the market. For Monadelphous,
the period was about surviving and
rebuilding its capability and reputation.
There were several initiatives that
helped turn things around, including
recruiting the right people into senior
leadership roles to create a positive
culture, developing a strategic plan for
growth and focusing on improving the
Company’s cash position.
By the mid-1990s, the Company had
started to build a reputation as an
innovative, customer-focused contractor,
and had secured a number of long-term
maintenance contracts.
7 ANNUAL REPORT 2022
BUILDING A TRUSTED
COMPANY
1996–2001
The resources market suffered its most
difficult period in the late 1990s, with
the financial crisis in Asia dampening
the demand for Australian exports.
This resulted in construction work
becoming increasingly limited, and
several competitors disappearing from
the market.
The downturn was a critical point in
Monadelphous’ history, where the
Company focused on building on its
track record for service delivery and
continuing to develop its projects
capability. It started to explore
opportunities in other markets that
required similar skillsets and expertise
to mining and minerals, and continued
to invest in plant, equipment, safety and
technology to ensure it could support
future growth.
A specialist maintenance management
division was established during this
time, with a focus on delivering
a comprehensive, cost-effective,
integrated range of maintenance
services to Australia’s mining and
minerals processing industries.
When the Asian financial crisis hit,
Monadelphous was in a solid position
to weather the tough conditions. The
Company had resisted the temptation to
buy major manufacturing and fabrication
facilities, which were in oversupply
in capital cities, and opted instead to
develop and own smaller-scale support
facilities in key regional resource
centres. This strategy helped the
Company to optimise its service delivery
to customers by shortening supply times
and keeping costs and overheads down.
UNPRECEDENTED
GROWTH
2002–2006
By 2002, another mining boom was
on the horizon and Monadelphous had
developed a reputation as a safe and
reliable contractor, placing it in a strong
position to capitalise on new iron ore
projects.
After completing a strategic review of
the business, more focus was placed
on targeting larger jobs with bigger
customers to take the Company into
the next tier of revenue. The Company
completed a series of major contracts
that really put it on the map, including
the expansion of BHP Billiton’s iron
ore operations in the Pilbara, WA. This
resulted in further major contracts with
big iron ore operators, including Rio
Tinto and Pilbara Iron.
With much of its growth coming out of
the iron ore sector, Monadelphous was
very conscious of the need to diversify
its revenue base to reduce risk and
position itself for sustainable growth.
OVERVIEW 8
A Monadelphous employee working at the
dehydration bed at Karratha Gas Plant, Karratha,
Western Australia.
CREATING A
SUSTAINABLE FUTURE
2007–2015
Iron ore expansion in the north-west
of WA had already provided significant
growth for Monadelphous as a plethora
of other planned resource developments
in mineral processing, coal and oil and
gas continued to present a pipeline of
opportunities.
To support future growth, the Company
implemented new strategies to
combat an ongoing skills shortage and
continued to investigate opportunities in
new markets.
When the global financial crisis hit in
2008, the Company was in a strong
position as a result of having made
solid inroads into new markets, while
continuing to focus on delivering greater
efficiencies and value-add services for
its customers.
People recruitment and retention
was a key focus, with the Company’s
ability to attract and retain the right
people critical to its ongoing success.
It implemented a number of initiatives
to achieve this, including an increased
graduate intake, launching an employee
benefits program and commencing its
Emerging Leaders Program.
Monadelphous engaged an external
agency to conduct a comprehensive
assessment of safety across its
operations and reviewed its health,
safety and environment policies,
procedures and practices, to ensure
consistent application. Two outcomes
of the review were the Monadelphous
Safety Leadership Program and The
Safe Way is the Only Way policy
message.
In line with the changing needs of its
customers, Monadelphous’ focus shifted
from expanding capacity to maximising
efficiency, reducing overhead and fixed
costs, consolidating its organisational
structure and improving labour
productivity.
Record profits continued into 2009/10
when the Company reported an after-
tax profit of $83.2 million for its ninth
consecutive year of earnings growth.
9 ANNUAL REPORT 2022
GROWTH AND
DIVERSIFICATION
2016–2019
By 2015, as activity in the
resources sector started to diminish,
Monadelphous had realigned its focus
on expanding its business into new
markets and sectors in Australia and
beyond, and business development
activity continued to grow within the oil
and gas sector.
This resulted in significant growth, and
Monadelphous was now working on
some of its largest and most challenging
projects yet, demonstrating its broad-
based strength in execution, while
maintaining a focus on productivity
improvement, safety and, most
importantly, people.
Maintenance now made up half of
Monadelphous’ business and provided
a solid recurring revenue base. The
Company made a strong entry into the
offshore oil and gas market, securing
three major long-term maintenance
contracts, all within a three-year period.
In addition, the Company’s largest ever
construction contract was completed in
late-2018, associated with the onshore
LNG production facilities in Darwin for
INPEX-operated Ichthys LNG. Following
this, a key highlight for Monadelphous
was the additional work secured to
support Ichthys LNG’s operations.
Aligned to its growth and diversification
strategy, joint ventures provided the
opportunity to expand the Company’s
capability, culminating in the formation
of two significant joint ventures,
Zenviron and Mondium, which
grew Monadelphous’ competency
in the renewable energy market and
in engineering, procurement and
construction.
As a tier one contractor, operating
confidently with some of the biggest
companies in Australia, it was no
surprise that Monadelphous began to
consider further opportunities overseas,
including in Mongolia and South
America, culminating in the acquisition
of Buildtek.
A Monadelphous
crawler crane being
used in the 2000s to
complete work on a
dragline at Rio Tinto
Coal Australia’s Hunter
Valley Operations,
which has since been
sold by Rio Tinto.
OVERVIEW 10
Mondium employees at Galaxy Resources’
Mt Cattlin operation in Ravensthorpe,
Western Australia.
THE BUSINESS TODAY
2020–2022
In 2020, within the space of a few
short weeks, the spread of COVID-19
caused construction projects to slow to
a crawl due to customers shelving plans
for new developments and protecting
capital. Deemed an essential service,
Monadelphous was permitted to remain
operational. The challenge was to do
so in a way that would keep employees
safe while working productively, and
that meant a complete reappraisal
of how to function, at all levels. The
response was exceptional.
Despite the impacts and uncertainty
caused by COVID-19, Monadelphous
continued to make good progress on its
markets and growth strategy, securing
new work and continuing to build on
its reputation as a leader in its chosen
markets. The Company’s Maintenance
and Industrial Services division
continued to achieve record revenue
performances, while its Engineering
Construction division successfully
completed a selection of major iron
ore construction projects for tier one
customers in the Pilbara.
With better than expected sales revenue
achieved in 2021/22, and $1.45
billion of new contracts and contract
extensions secured, the Company is
well placed as it enters 2022/23.
THANK YOU FOR
YOUR CONTRIBUTION
Although Monadelphous has grown
significantly since 1972, our people
and our values remain at the heart
of how we work. Indeed, of all the
accomplishments we have achieved
over our 50-year history, the most
satisfying achievement is the
development of a group of people with
a team spirit and unrelenting sense of
purpose. This is what has driven our
success to date and helped us realise
our potential, so thank you to all of
our employees, past and present, for
playing your part in our proud history.
Rob Velletri
Managing Director
13 ANNUAL REPORT 2022
OUR SERVICES
AND LOCATIONS
Monadelphous operates predominantly in Australia, with overseas
operations and offices in China, Papua New Guinea, Mongolia,
the Philippines and Chile.
ENGINEERING CONSTRUCTION
Market Sector
Australia Pacific LNG - Skids supply, fabrication and assembly
Oil and Gas
BHP - Olympic Dam Asset Projects Framework -
Multidisciplinary Construction Services - SMPE&I
Copper, Gold,
Uranium
8
9
NMT Logistics - Lifting and haulage services
Rio Tinto - Gudai-Darri Project - SMPE&I
BHP - South Flank - SMPE&I works for inflow and outflow
infrastructure
BHP - WAIO Asset Projects Framework - SMPE&I
Fortescue Metals Group - Crane services
Iron Ore
Iron Ore
Iron Ore
General Electric International - Murra Warra Stage II Wind Farm
- BOP works
Renewable Energy
MARBL Lithium JV - Kemerton Lithium Hydroxide Plant - SMP
Lithium
10 Rio Tinto - West Angelas Deposits C & D Project - SMPE&I
Iron Ore
11 Rio Tinto - Western Turner Syncline Phase 2 Mine - D&C
Iron Ore
12 Rye Park Renewable Energy - Rye Park Wind Farm - BOP works Renewable Energy
13
14
Talison Lithium - Greenbushes Mine - Tailings Retreatment
Plant - D&C
Lithium
Tronox Mining Australia - Broken Hill HMC Upgrade Project -
CSMPE&I
Mineral Sands
15 Woodside - Crane services
Oil and Gas
Market Sector
Iron Ore
Iron Ore
MAINTENANCE AND INDUSTRIAL SERVICES
Market Sector
Anglogold Ashanti - Maintenance services
BHP - Maintenance and shutdowns
Gold
Nickel
BHP - Maintenance, shutdowns and sustaining capital works
Iron Ore
BHP - Mt Arthur Coal - Shutdown maintenance and minor
projects
Coal
12
Minera Escondida - Escondida Mine - Brownfields projects
to concentrator building and water infrastructure
13 Newcrest Mining - Maintenance works
Market Sector
Copper
Gold
14 Queensland Alumina Limited - Maintenance and projects
Alumina
15
Rio Tinto - Fixed plant maintenance, marine maintenance and
sustaining capital works
BHP - Olympic Dam - Maintenance and shutdowns
Copper, Gold,
Uranium
16 Rio Tinto - Gove - Shutdown services
BHP Mitsubishi Alliance - Maintenance and shutdown works
Coal
17 Rio Tinto - Maintenance services for rail network
Codelco - Chuquicamata Mine - Water infrastructure O&M and
maintenance of underground mine infrastructure
Copper
Codelco - El Teniente Mine - Underground mine and water
infrastructure construction
Copper
GNL Quintero - Maintenance works
Oil and Gas
10 INPEX Operations Australia - Offshore maintenance services
Oil and Gas
11
Minera Escondida - Coloso Port - Upgrades to process
buildings and material handling structures
Copper
18 Santos - EPC services
19 Shell - Provision of services
20 Shell - Provision of services
21
22
South32 - Worsley Alumina Refinery - Shutdown and
mechanical services
Synergy - Muja Power Station and Collie Power Station -
Infrastructure O&M
23 Woodside - Offshore and onshore maintenance services
Oil and Gas
Abbreviations: BOP - balance-of-plant; CSMPE&I – civil, structural, mechanical, piping, electrical and instrumentation; D&C - design and construct; EPC - engineering, procurement
and construction; O&M - operation and maintenance; SMP - structural, mechanical and piping; SMPE&I - structural, mechanical, piping, electrical and instrumentation;
WAIO - Western Australia Iron Ore.
Iron Ore
Bauxite
Iron Ore
Oil and Gas
Oil and Gas
Oil and Gas
Alumina
Power
1
2
3
4
5
6
7
1
2
3
4
5
6
7
8
9
MONGOLIA
MONGOLIA
CHINA
OVERVIEW 14
14
Ulaanbaatar
Beijing
Tianjin
PHILIPPINES
Manila
13
18
PAPUA NEW
GUINEA
CHILE
Calama
7
Antofagasta
11
12
Santiago
Rancagua
8
9
Darwin
16
Port Hedland
10
19
Pilbara Coastal
and North-West Region
3
3
4
5
8
9
10 11 15
15
17 23
Karratha
Tom Price
Newman
2
1
Kalgoorlie
PERTH
HEAD OFFICE
Bunbury
21 22
7
13
AUSTRALIA
Capel
Bibra Lake
Roxby Downs
6
14
20
1
4
12
Mackay
Gladstone
BRISBANE
Chinchilla
Muswellbrook
Mt Thorley
Rutherford
Newcastle
Sydney
2
5
14
Whyalla
6
Major offices
Offices and workshops
Engineering Construction
Maintenance and Industrial Services
15 ANNUAL REPORT 2022
2021/22
HIGHLIGHTS
Monadelphous made good progress on its markets and growth strategy,
securing approximately $1.45 billion in new contracts and contract
extensions across the resources, energy and infrastructure sectors,
highlighting the strength of its customer relationships and reputation
for high quality service delivery.
Ongoing growth and
diversification internationally
In Chile, Buildtek continued to
grow, with revenue increasing by
approximately 75 per cent compared
to the prior year, approximately $80
million in new contracts secured this
financial year and its workforce more
than doubling since Monadelphous’
initial investment in late 2019.
Work also ramped up in Papua New
Guinea and a new contract was secured
in Mongolia.
New diversity plans launched
Reconfirming its commitment to diversity and inclusion,
new Stretch Reconciliation Action and Gender Diversity
and Inclusion plans were launched during the year.
Zenviron secures contract at largest wind
farm in New South Wales
Zenviron was awarded a contract valued at approximately
$250 million to deliver the Rye Park Wind Farm,
which will be the largest wind farm in New South Wales.
OPERATING AND FINANCIAL REVIEW 16
Record revenue
in Maintenance and
Industrial Services
The Maintenance and Industrial
Services division achieved record
annual revenue of $1.17 billion, with
strong demand for maintenance services
across the resources and energy sectors.
Mondium successfully
delivers strategically
significant EPC contract
Mondium successfully completed works
at Rio Tinto’s Western Turner Syncline
Phase 2 Project, providing it with a
credible and proven track record in
the successful delivery of large-scale
EPC projects.
Focus on decarbonising
operational activities
A goal of achieving net-zero emissions
by 2050 was formalised, underlining
the Company’s commitment to the
sustainable management of the unique
environments in which it works.
Heavy lift capability expanded
An unincorporated joint venture was
established with Fagioli, a global heavy
lifting company, to provide turnkey
heavy lift solutions to the Australian
market. The joint venture, named
Alevro, extends Monadelphous’ heavy lift
capability and capacity to deliver large-
scale heavy lift and logistics services.
Image courtesy of Woodside.
Significant number of
contracts secured in core
markets
Continued to maximise growth and
returns from core markets with the
award of approximately $500 million
of contracts in the oil and gas sector
and $400 million of work in the
iron ore market.
17 ANNUAL REPORT 2022
PERFORMANCE
AT A GLANCE
Revenue1
$1.93b
54.9c
Earnings per share
Contracts secured since beginning of FY22
$1.45b
Net profit after tax
$52.2m
49.0c
Full year dividend
Total recordable injury frequency rate
3.07
incidents per million
hours worked
Revenue1
Net profit after tax
Earnings per share
n
o
i
l
l
i
m
$
0
.
4
8
7
,
1
3
.
8
0
6
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1
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.
0
5
6
,
1
2
.
3
5
9
,
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3
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1
,
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$
s
t
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C
5
.
1
7
6
.
0
5
5
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6
3
1
.
7
4
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2
2
5
1
.
6
7
7
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3
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7
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8
3
7
.
9
4
.
9
4
5
18
19
20
21
22
18
19
20
21
22
18
19
20
21
22
Financial Year
Financial Year
Financial Year
Dividends per share
Cash
Workforce numbers
7,545
7,091
5,689
7,791
7,977
s
t
n
e
C
n
o
i
l
l
i
m
$
e
l
p
o
e
P
0
.
2
6
0
.
8
4
0
.
5
3
0
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0
.
9
4
8
.
8
0
2
0
.
4
6
1
3
.
8
0
2
7
.
5
7
1
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.
3
8
1
8
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8
,
5
2
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,
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,
7
1
4
5
,
7
18
19
20
21
22
18
19
20
21
22
18
19
20
21
22
Financial Year
Financial Year
Financial Year
Direct Employees
Subcontractors
1. Includes Monadelphous’ share of joint venture revenue. Refer to reconciliation on page 27.
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 84.
OPERATING AND FINANCIAL REVIEW 18
Revenue by geography
Operations
WA
65%
INTERNATIONAL
10%
QLD
NSW
SA
NT
8%
7%
7%
3%
Iron ore
Oil and gas
Copper
Other minerals
Lithium
Coal
Infrastructure
41%
22%
12%
10%
6%
5%
4%
· Record maintenance revenue with strong demand
across resources and energy sectors.
· Successful completion of major resource construction
projects.
· Extraordinarily high level of demand for labour
exacerbated by interstate travel restrictions impacting
labour costs, productivity and employee retention.
· Secured approximately $1.45 billion of new contracts
and extensions.
Safety and Wellbeing
· High levels of operational activity and large number
of new employees onboarded impacted safety
performance.
· Serious incident frequency rate improved by
approximately 55 per cent.
· Sustained focus on identification, elimination and
mitigation of fatal risk hazards.
Sustainability
· Strategic focus on people retention, attraction,
development and wellbeing.
· Substantial program of work to reinforce acceptable
workplace behaviours.
·
Implemented Employee Retention Plan to support
key talent retention.
· Comprehensive organisational structural review
undertaken.
· Launched new Stretch Reconciliation Action and
Gender Diversity and Inclusion plans.
· Formalised commitment to net-zero emissions by 2050.
TRIFR
3.07
0.58 SIFR
0.16
LTIFR
Revenue by end customer
Safety performance
6.00
4.00
2.00
0.00
2019
2020
2021
2022
Abbreviations: LTIFR - lost time injury frequency rate; SIFR - serious incident frequency rate; TRIFR - total recordable injury frequency rate.
19 ANNUAL REPORT 2022
MARKETS AND
GROWTH STRATEGY
Monadelphous will maximise growth and returns from its core markets,
expand its service offering, grow its presence in non-resources markets
and expand core services in overseas markets.
Maximise growth and returns from core markets
Progress
Priorities
· Secured approximately $1.45 billion in new contracts and
· Continue to strengthen key customer relationships.
extensions.
· Successfully completed major resources construction
projects.
· Delivered a high volume of maintenance, shutdown and
sustaining capital services to the iron ore sector.
· Grow SinoStruct and heavy lift.
· Retain all maintenance services contracts.
Service expansion
Progress
Priorities
· Completed $400 million engineering, procurement and
· Maximise EPC work through Mondium.
construction (EPC) contract via Mondium.
· Established turnkey heavy lift services solutions joint
venture, Alevro.
· Commenced early decommissioning work with Petrofac
in offshore oil and gas sector.
· Acquired fabrication business, RTW Steel Fabrication
and Construction, in the south-west of Western Australia.
· Grow Alevro joint venture in the Australian market.
· Further develop civil capability.
· Grow industrial service offering within offshore oil and gas.
· Establish offshore decommissioning team.
· Grow dewatering and non-process infrastructure.
Market development
Progress
Priorities
· Zenviron cemented its reputation as a market leader
in the delivery of balance-of-plant works for wind farms.
· Continue to enhance Zenviron’s market leading position
for delivery of wind farms in Australia.
· Buildtek secured approximately $80 million in
· Grow Buildtek in Chile and explore Peru entry.
new contracts.
OPERATING AND FINANCIAL REVIEW 20
Woodside-operated Karratha Gas Plant, Karratha,
Western Australia. Image courtesy of Woodside.
21 ANNUAL REPORT 2022
CHAIRMAN’S
REPORT
In its 50th year in operation, Monadelphous achieved total revenue of
$1.93 billion1, with high levels of maintenance activity and the successful
completion of major resources construction projects.
Monadelphous experienced strong demand for maintenance
services across the resources and energy sectors as customers
maintained high levels of production, capitalising on favourable
commodity prices. As forecast in the 31 December 2021
interim report, construction revenue declined in the second
half due to a number of major projects being successfully
completed in the first half, with a wave of new construction
opportunities currently in the tendering phase.
Statutory revenue, which excludes Monadelphous’ share of
revenue from joint ventures, was $1.81 billion, up 3.2 per
cent on the previous year.
Monadelphous ended the year with a strong cash balance of
$183.3 million.
During the year, the Board of Directors conducted a
comprehensive review to assess the appropriateness of the
Company’s capital structure with the assistance of a global
investment bank. Following the review, the Board concluded
the Company’s current capital structure was appropriate and
reflects the necessary level of tolerance to accommodate
business needs in the current operating environment, the
changing market conditions and the medium-term outlook for
the business.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) was $111.2 million2, an increase of 2.3 per cent on
the prior corresponding period, generating an EBITDA margin
percentage for the period of 5.76 per cent.
The strength of Monadelphous’ balance sheet provides the
Company with the financial capacity required in the current
economic environment and enables it to take advantage of
suitable investment opportunities which may arise.
Strong demand for labour within the industry, along with
interstate travel restrictions in place for a significant portion of
the year, hindered the efficient recruitment and mobilisation
of the Company’s workforce and impacted labour costs,
productivity and employee retention.
Net profit after tax for the period was $52.2 million, an
increase of 11.0 per cent on the prior corresponding period,
representing earnings per share of 54.9 cents.
The Board of Directors declared a final dividend of 25 cents
per share, taking the full year dividend to 49 cents per share
fully franked, yielding 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.
During the year, the Company announced several changes
to its Board and subcommittees. On 11 October 2021,
Ric Buratto, a Civil Engineer with more than 45 years of
contracting experience in the resources and infrastructure
sectors, was appointed as a Non-Executive Director. Ric
has extensive leadership and management experience in
engineering, mining and construction across a range of
disciplines including earthworks, marine, civil, structural,
mechanical and piping construction, as well as maintenance
and shutdown execution. He brings an abundance of industry
knowledge, experience and relationships, and complements
the existing capabilities of the Board.
At the close of the Company’s Annual General Meeting on 23
November 2021, Chris Michelmore retired as a Non-Executive
Director following a 14-year term with Monadelphous.
1. Includes Monadelphous’ share of joint venture revenue. Refer to reconciliation on page 27.
2. EBITDA – refer to reconciliation on page 28.
OPERATING AND FINANCIAL REVIEW 22
The Company’s renewable energy joint venture, Zenviron,
continued to perform strongly, completing two projects during
the period and securing a contract to deliver balance-of-plant
civil and electrical works at the largest wind farm to ever be
constructed in New South Wales.
On behalf of the Board, I would like to take this opportunity
to thank our stakeholders for their support over the last 50
years, particularly our loyal and dedicated team, as well as
our shareholders and customers. 2022 has been a particularly
special year for Monadelphous, as we celebrate our past and
look forward to building an even stronger future.
John Rubino
Chairman
Chris was a highly valued member of the Board and its
subcommittees and contributed significantly to the Company’s
continued growth and success. Sue Murphy AO was appointed
Chair of the Company’s Remuneration Committee on
1 October 2021, following Chris’ resignation from the role
on 30 September 2021. On 11 October 2021, Sue replaced
Peter Dempsey as Deputy Chair / Lead Independent Non-
Executive Director of the Company.
Monadelphous made good progress on its markets and
growth strategy, securing approximately $1.45 billion in
new contracts and contract extensions across the resources,
energy and infrastructure sectors, highlighting the strength
of its customer relationships and reputation for high quality
service delivery. This included approximately $400 million
of new work in the Western Australian iron ore market, more
than $500 million in the oil and gas sector and approximately
$175 million of new work internationally, in Chile, Papua New
Guinea and Mongolia.
The Company also extended its heavy lift capability and
capacity, establishing Alevro, an unincorporated joint venture
with global heavy lifting company, Fagioli, to provide turnkey
heavy lift solutions to the Australian market.
Mondium, the Company’s engineering, procurement and
construction (EPC) joint venture with Lycopodium, successfully
completed its largest ever contract, the Western Turner
Syncline Phase 2 Project for Rio Tinto, providing Mondium
with a credible and proven track record in the successful
delivery of large-scale EPC projects.
23 ANNUAL REPORT 2022
MANAGING
DIRECTOR’S REPORT
Monadelphous was awarded approximately $1.45 billion in new contracts
and contract extensions since the beginning of the 2022 financial year,
highlighting the strength of its customer relationships and reputation for
high quality service delivery.
Buoyant conditions across the resources and energy sectors in
Australia, Chile and Papua New Guinea contributed to another
record full year revenue for the Maintenance and Industrial
Services division, while the Engineering Construction division
experienced a busy first half and subdued activity in the
second half.
High levels of industry activity, exacerbated by the interstate
travel restrictions imposed to reduce the spread of COVID-19,
significantly impacted the Company’s ability to source and
retain talent during the year. With strong demand expected to
continue due to the large number of construction opportunities
forecast for coming years, and the continued demand for
maintenance services, skilled labour shortages are likely to
continue to constrain capacity.
Monadelphous continued to focus on employee retention,
attraction, development and wellbeing initiatives, including
a substantial program of work to review and reinforce its
expectations in relation to acceptable workplace behaviours.
The Company also formalised its goal of achieving net-zero
emissions by 2050, underlining its commitment to the
sustainable management of the unique environments
in which it works.
Growth in the Company’s Chile and Papua New Guinea
operations contributed to the Company’s total workforce
(including subcontractors) reaching 7,977 by year end,
partially offset by the demobilisation of employees from
the concurrent completion of a number of major resource
construction projects.
The Company’s total recordable injury frequency rate at
year end was 3.07 incidents per million hours worked,
with performance impacted by high activity levels and the
large number of new employees onboarded during the year.
1. Includes Monadelphous’ share of joint venture revenue.
Pleasingly, the Company’s serious incident frequency rate
improved by approximately 55 per cent compared to the prior
year as a result of Monadelphous’ sustained focus on the
identification, elimination and mitigation of fatal risk hazards.
Engineering Construction
The Engineering Construction division reported revenue
of $774.4 million1, down 20.9 per cent on the previous
corresponding period, following the successful completion of
a number of large resources construction projects in the first
half of the year, with lower levels of activity in the second
half due to the timing of the award and commencement of
new major projects.
OPERATING AND FINANCIAL REVIEW 24
Monadelphous employees preparing to install
conveyor belt change out stations at Rio
Tinto’s Western Turner operation,
Tom Price, Western Australia.
Monadelphous employees on the newly
constructed primary crusher at Rio Tinto’s West
Angelas Deposits C & D Project, Newman,
Western Australia.
The Company successfully completed its work scopes at
BHP’s South Flank Project, Rio Tinto’s West Angelas Deposits
C & D Project and at the Kemerton lithium hydroxide plant
for MARBL Lithium Joint Venture.
Subsequent to year end, the Company secured a contract for
the construction of surface infrastructure for the Oyu Tolgoi
Underground Project located in the South Gobi region of
Mongolia, where it has been operating since 2017.
four new cranes to its heavy lift fleet, offering additional
capacity and alternative lifting solutions
to its customers.
Mondium, the Company’s engineering, procurement and
construction joint venture with Lycopodium, successfully
completed works at Rio Tinto’s Western Turner Syncline
Phase 2 Project and Talison Lithium’s tailings retreatment
plant at the Greenbushes mine.
In addition to establishing Alevro, its unincorporated joint
venture with global heavy lifting company, Fagioli, the
Company continued to provide heavy lift services to Fortescue
Metals Group under a long-term services contract and added
Zenviron, the Company’s renewable energy joint venture,
was awarded a contract to deliver balance-of-plant civil and
electrical works at the Rye Park Wind Farm, the largest wind
farm to be constructed in New South Wales.
25 ANNUAL REPORT 2022
Maintenance and Industrial Services
The Maintenance and Industrial Services division achieved
a record full year revenue of $1.166 billion, up 19.4 per cent
on the previous year.
A significant volume of maintenance, shutdown and project
work was delivered during the year, both in the iron ore and
oil and gas sectors for the Company’s long-term customers.
In addition, Monadelphous continued to diversify its customer-
base, securing new contracts with both Fortescue Metals
Group and Roy Hill.
Overseas, the Company experienced significant growth in
Chile, via its maintenance and construction services business,
Buildtek, which has more than doubled in revenue and
workforce since its acquisition by Monadelphous in 2019.
Since the beginning of the financial year, Buildtek has secured
approximately $80 million in new work including a number of
new contracts with long-term customer, Codelco, as well as its
first contract with Collahuasi Mining Company.
In support of its customers, the Company grew its
geographical footprint within Western Australia, opening an
expanded facility in Tom Price, significantly progressing the
construction of a new facility in Port Hedland and approving
the development of a new, larger facility in Karratha.
The Company continued to expand its service offering,
increasing the provision of fabric maintenance and rope
access services to its customers. In addition, the Company
commenced early decommissioning work with Petrofac on
the Northern Endeavour floating production, storage and
offtake facility and continued to explore further offshore
decommissioning activities.
Outlook
The outlook for Monadelphous’ core markets continues
to be strong.
The resources sector in Australia and in the Company’s overseas
locations will continue to provide a large number of significant
opportunities across a broad range of commodity markets.
Monadelphous employees installing new
hawser rails at Rio Tinto’s Parker Point,
Karratha, Western Australia.
The outlook for the Australian iron ore industry is expected
to remain buoyant with capital and operating expenditures
required to sustain iron ore production levels continuing to
drive strong demand for the Company’s services.
High levels of global demand for battery metals are driving
significant investment in lithium, copper, nickel and rare
earths which will provide numerous prospects in the coming
years. These markets, along with the gold sector, will present
ongoing opportunities for Monadelphous in Australia, South
America, Mongolia and Papua New Guinea.
Conditions in the oil and gas sector are also buoyant, with
construction opportunities from the development of new
liquefied natural gas projects currently in the pipeline and
demand for oil and gas maintenance services expected to
remain strong.
Australia’s transition towards clean energy will continue to
strengthen and provide opportunities in the renewable energy
sector. An increasing pipeline of new wind farms coming
to market in the next few years will provide opportunities
OPERATING AND FINANCIAL REVIEW 26
for Zenviron, both in the electricity market as well as in the
private sector, as industrial operators move rapidly to meet
their decarbonisation objectives. The rapid development of the
hydrogen sector is also expected to provide opportunities in
coming years.
More broadly, buoyant conditions and ageing assets across
all resources and energy sectors will continue to drive strong
demand for maintenance services.
The shortage of skilled labour will be the most significant
challenge for the Company’s operations, especially in
Australia. The Company is also mindful of the challenges
posed by heightening supply chain risks and an escalating
cost environment.
With capacity constrained, the Company will be taking a
strategic and targeted approach to new work opportunities,
engaging and collaborating earlier with customers and
focusing on earnings quality.
The Company will continue to focus on employee attraction,
training and development practices and making Monadelphous
a great place to work. With travel restrictions lifted, the
Company has recently re-engaged its international labour
sourcing strategy.
Supported by its strong balance sheet, the Company will
continue to assess acquisition opportunities to achieve ongoing
service and customer market diversification and support long-
term sustainable growth.
As highlighted in the 31 December 2021 interim results,
following a ramp-down in construction activity as a number of
large-scale projects completed in the first half of the financial
year, a new wave of construction projects, currently in the
tendering phase, is expected to see activity ramp-up over the
2022/23 financial year and into following years. Revenue
for 2022/23 will be dependent on the timing of awards and
commencement of these projects, and will likely be skewed to
the second half.
Monadelphous’ reputation as a leader in its markets and as an
employer of choice, together with its ever-broadening services
and geographical footprint, places it in a strong position
to capitalise on the many opportunities and deal with the
challenging environment that lies ahead.
I would like to take this opportunity to thank our employees for
their contribution to another successful year. It is our people
of today who will help shape the future of Monadelphous -
a future that will see us continue to grow from strength to
strength.
Rob Velletri
Managing Director
27 ANNUAL REPORT 2022
COMPANY
PERFORMANCE
A review of the Company’s performance over the last five years is as follows:
Revenue
Total revenue from contracts with customers including
joint ventures
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
2022
$’000
1,810,390
2021
$’000
1,754,242
2020
$’000
1,488,749
2019
$’000
1,479,737
2018
$’000
1,737,632
1,930,040
1,953,180
1,650,768
1,608,277
1,783,999
111,201
108,696
73,511
21,227
52,219
54.90c
24.00c
25.00c
70,372
21,906
47,060
49.70c
24.00c
21.00c
92,077
55,086
17,860
36,483
38.65c
22.00c
13.00c
106,791
83,426
31,313
119,046
102,845
30,570
50,565
53.72c
25.00c
23.00c
71,479
76.11c
30.00c
32.00c
427.54c
413.31c
402.43c
413.93c
415.86c
412,184
395,572
384,433
393,436
394,481
33,097
14.3%
12.7%
5.8%
32,476
10.1%
11.9%
5.6%
30,570
11.9%
9.5%
5.6%
19,490
17,222
9.7%
12.9%
6.6%
5.3%
18.1%
6.7%
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
2022
$’000
2021
$’000
1,930,040
1,953,180
(120,589)
(199,442)
1,809,451
1,753,738
1. Represents Monadelphous’ proportionate share of the revenue from joint ventures accounted for using the equity method.
OPERATING AND FINANCIAL REVIEW 28
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
2022
$’000
73,511
1,841
1,511
(740)
24,523
8,574
-
1,981
111,201
2021
$’000
70,372
1,476
1,598
(414)
23,542
8,934
445
2,743
108,696
2. Represents Monadelphous’ proportionate share of the interest, depreciation, amortisation and tax of joint ventures accounted for using the equity method.
Monadelphous employees at Rio Tinto’s
West Angelas Deposits C & D Project,
Newman, Western Australia.
29 ANNUAL REPORT 2022
BOARD OF
DIRECTORS
Left to right: Sue Murphy AO, Dietmar Voss, Rob Velletri, Peter Dempsey, John Rubino, Ric Buratto and Helen Gillies.
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 56 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 43 years of experience in the construction and engineering
services industry and is a Member of the Institution of Engineers Australia.
OPERATING AND FINANCIAL REVIEW 30
Sue Murphy AO Deputy Chair and Lead Independent Non-Executive Director
Sue was appointed to the Board on 11 June 2019, and as Deputy Chair / Lead
Independent Non-Executive Director on 11 October 2021. 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 43 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 Chair
of the Company’s Remuneration Committee and a member of its Audit and Nomination
committees. Sue is currently a Director of MMA Offshore Limited (ASX: MRM).
Peter Dempsey 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 50 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 26
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).
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 48 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.
Ric Buratto Independent Non-Executive Director
Ric was appointed to the Board on 11 October 2021. He is a civil engineer with 47
years of contracting experience in the resources and infrastructure sectors. He has
held senior executive positions at various ASX listed entities, including Cimic, Decmil
and NRW and has extensive leadership and management experience in engineering,
mining and construction across a wide range of disciplines, as well as maintenance
and shutdown execution. He holds a Bachelor of Engineering (Honours) and is a Fellow
of the Institution of Engineers Australia. Ric is a member of the Company’s Audit,
Remuneration and Nomination committees.
Monadelphous undertaking construction work
at Rio Tinto’s West Angelas Deposits C & D
Project, Newman, Western Australia.
ENGINEERING
CONSTRUCTION
Our Progress
Annual revenue of $774.4 million.
Successfully completed major resources construction
projects.
Secured approximately $325 million of additional work.
Secured strategically important work at Oyu Tolgoi
Underground Project in Mongolia.
Established specialist heavy lift joint venture, Alevro.
Mondium successfully completed Rio Tinto’s Western Turner
Syncline Phase 2 Project.
Zenviron secured a contract to construct New South Wales’
largest wind farm.
ANNUAL REPORT 2021 33 ANNUAL REPORT 2022
The Engineering Construction division provides large-scale multidisciplinary
project management and construction services.
The division reported revenue of $774.4 million1 for the year,
down 20.9 per cent on the previous corresponding period.
The result followed the successful completion of a number
of large resources construction projects in the first half of the
period, with lower levels of activity experienced in the second
half of the year as a result of the timing of the award and
commencement of new major projects.
In total, the division secured approximately $325 million of
additional work since 1 July 2021.
An unrelenting commitment to improving safety performance
and strengthening safety culture was maintained throughout
the year, resulting in a strong safety performance. To support
this, the Engineering Construction division launched a safety
cultural program, Tinny Time, which recognises employees for
positive safety behaviours and promotes these more broadly
across the division.
Resources
In the Pilbara region of Western Australia (WA), the
Company completed two packages of work at BHP’s US$3.6
billion South Flank Project, which included the structural,
mechanical, piping and electrical and instrumentation work
associated with the Project’s inflow and outflow infrastructure.
These packages were in addition to the installation and
construction of the world’s largest rail mounted stockyard
machines for thyssenkrupp Industrial Solutions (Australia)
at South Flank, completed last financial year.
The Company successfully delivered one of the largest
shutdown campaigns ever undertaken at BHP’s Olympic Dam
mine in Roxby Downs, South Australia, which comprised
major deconstruction and reconstruction activities to improve
the integrity of critical plant and infrastructure. In addition,
the Company executed the Port Availability Improvement
Project for BHP in the Pilbara, WA, under its existing WA Iron
Ore Panel Agreement, which included 20 shutdowns over the
course of the project.
Monadelphous delivered a number of packages of work
for Rio Tinto in the Pilbara, WA, during the period,
including structural, mechanical, piping and electrical and
instrumentation works at the West Angelas Deposits C & D
Project, as well as the provision of multidisciplinary services
at the Gudai-Darri iron ore project and shutdown works at the
Western Turner Syncline Phase 2 Project.
Structural, mechanical and piping work associated with the
pyromet plant at the Kemerton lithium hydroxide plant in
the south-west of WA was completed for MARBL Lithium
Joint Venture and, on the back of a strong performance, the
Company was awarded electrical and instrumentation work at
the project.
Work underway at BHP’s US$3.6 billion
South Flank Project, which was completed in
the first half of the year.
1. Includes Monadelphous’ share of joint venture revenue.
OPERATING AND FINANCIAL REVIEW 34
CASE STUDY
WESTERN TURNER SYNCLINE PHASE 2
The Western Turner Syncline Phase 2 (WTS2) project
is an expansion of the existing Rio Tinto Western Turner
Syncline mine, located 35 kilometres north-west of Tom
Price in the Pilbara, WA.
WTS2 is an investment by Rio Tinto in its existing Greater
Tom Price operations to help sustain the production
capacity of its world-class iron ore business. The project,
which facilitates mining of existing and new deposits,
included the construction of a new crusher, as well as a
13-kilometre conveyor.
WTS2 was successfully completed during the year
by Monadelphous’ engineering, procurement and
construction (EPC) joint venture, Mondium, whose
scope of work included design, procurement and site
construction works associated with the process plant,
overland conveyor and non-process infrastructure.
In New South Wales (NSW), a multidisciplinary construction
services contract was secured with Tronox Mining Australia
in Broken Hill, with work expected to be completed in the
second half of 2022.
After year end, Monadelphous was awarded a contract for
the construction of surface infrastructure for the Oyu Tolgoi
Underground Project located in the South Gobi region of
Mongolia.
Also subsequent to year end, the Company secured a contract
with Talison Lithium Australia for the construction of a range
of facilities forming the mine services area at Talison Lithium’s
Greenbushes mine site in the south-west of WA, with work
expected to be completed in the first half of 2023.
Mondium
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 successfully completed its
strategically important $400 million design and construct
contract with Rio Tinto for the Western Turner Syncline Phase
2 mine, located in the Pilbara, WA.
The joint venture also completed works on the tailings
retreatment plant at Talison Lithium’s Greenbushes mine in
the south-west region of WA.
35 ANNUAL REPORT 2022
A Monadelphous all-terrain crane working in
the Pilbara, Western Australia. The crane is
wrapped with Clifton Bieundurry’s artwork, which
was commissioned by the Company in 2012,
representing an artistic interpretation of the
Monadelphous values.
OPERATING AND FINANCIAL REVIEW 36
Heavy Lift
Outlook
During the period, Monadelphous established an
unincorporated joint venture with Fagioli, a global heavy
lifting company, to provide turnkey heavy lift solutions to the
Australian market. The joint venture, named Alevro, extends
Monadelphous’ heavy lift capability and capacity to deliver
large-scale heavy lift and logistics services.
The outlook for the Australian iron ore industry is expected to
remain buoyant, whilst high levels of global demand for battery
metals are driving significant investment in lithium, copper,
nickel and rare earths. These markets, along with the gold
sector, will present ongoing opportunities for Monadelphous in
Australia, South America, Mongolia and Papua New Guinea.
Conditions in the oil and gas sector are also buoyant with
construction opportunities from the development of new
liquefied natural gas projects currently in the pipeline.
Australia’s transition towards clean energy will continue to
strengthen and provide opportunities in the renewable energy
sector, whilst the rapid development of the hydrogen sector will
present prospects in coming years.
Murra Warra Stage II Wind Farm, located in
regional Victoria, comprising 38 wind turbines
with a capacity of 209MW.
Monadelphous’ existing Heavy Lift business will continue
to provide its current services to customers, with Alevro
providing an additional delivery option to service opportunities
which would benefit from the extended and complementary
capabilities of both Monadelphous and Fagioli.
Monadelphous has already commenced working with Fagioli,
providing services for NMT Logistics at Fortescue Metals
Group’s (Fortescue) Iron Bridge Project in the Pilbara, WA.
Monadelphous’ Heavy Lift business continued to provide
heavy lift services under its existing long-term contract at
Fortescue’s Solomon and Eliwana mine sites in WA, in
addition to specialist services and equipment to Woodside,
BHP and Rio Tinto under existing construction and
maintenance contracts, and continued to upgrade its heavy lift
fleet in support of its customers.
Fabrication Services
The Company’s fabrication business, SinoStruct, was awarded
work in the oil and gas sector, securing a new four-year
agreement to continue supplying wellhead equipment to Origin
which is used to separate, meter and control coal seam gas
at the Australia Pacific LNG project in Queensland. SinoStruct
has been supplying packaged and modularised equipment to
Origin since 2015.
In the Pilbara, WA, SinoStruct secured a contract for the
design and fabrication of four tanks for an oil and gas
construction project for Bechtel, as well as to fabricate over
2,000 tonnes of structural steel for a construction project in
Ashburton, in the Pilbara, WA.
In addition to these new contracts, SinoStruct delivered stand-
alone packages of work for major Monadelphous construction
and maintenance projects, including for Newcrest Mining
Limited in Papua New Guinea and Rio Tinto in Australia.
Infrastructure
Zenviron, the Company’s renewable energy joint venture,
continued to perform strongly, commencing activities to deliver
approximately $250 million of balance-of-plant civil and
electrical works at the Rye Park Wind Farm in NSW.
In addition, Zenviron completed its works and demobilised
from the Murra Warra Stage II Wind Farm in regional Victoria
for General Electric International and Crudine Ridge Wind
Farm in NSW for CWP Renewables.
In total, since its establishment in 2016, Zenviron has
constructed 425 wind turbines, with an additional 66
currently under construction.
Monadelphous undertaking Car Dumper 1
Mega Shut at BHP’s Nelson Point, Port
Hedland, Western Australia.
MAINTENANCE
AND INDUSTRIAL
SERVICES
Our Progress
Record annual revenue of $1.166 billion.
Buoyant conditions across most sectors with significant
activity in oil and gas, Chile and Papua New Guinea.
Secured $1.125 billion in new contracts and extensions.
Strengthened geographical footprint in the Pilbara
and overseas.
ANNUAL REPORT 2021 39 ANNUAL REPORT 2022
The Maintenance and Industrial Services division specialises in the planning,
management and execution of multidisciplinary maintenance services,
sustaining capital works and turnarounds.
The division achieved a record full year revenue of $1.166
billion, up 19.4 per cent on the prior corresponding period.
This is the second time in the Company’s history the division’s
annual revenue has exceeded $1 billion. The result reflects
strong demand for maintenance services across the resources
and energy sectors as customers seek to maintain high levels
of production and capitalise on favourable commodity prices.
The division experienced buoyant conditions across most
sectors, with increased levels of activity in the oil and gas
sector, as well as in the Company’s Chile and Papua New
Guinea operations. Approximately $1.125 billion in new
contracts and extensions were secured, including around
$270 million subsequent to year end, with a large proportion
of the work won during the year in the iron ore and oil and gas
sectors. In infrastructure, new work included a five-year panel
award with the Water Corporation in Western Australia (WA)
for coating and concrete repair services.
Monadelphous continued to develop its presence in the
Pilbara region of WA, diversifying its customer base, as well
as opening an expanded facility in Tom Price, significantly
progressing the construction of a new facility in Port Hedland
and approving the development of a new, larger facility in
Karratha.
During the year, the Company acquired fabrication business,
RTW Steel Fabrication and Construction, complementing
its service offering in the south-west of WA and further
broadening its customer base in the region.
In safety, the division implemented business unit specific
actions relating to its safety behavioural framework, Delivering
the Safe Way, following a comprehensive employee feedback
process. In addition, it launched its Fatal Risk Control
Verification process to ensure the Company’s Fatal Risk
Control Standards are being implemented.
Resources
The Company delivered a significant volume of maintenance,
shutdown and project works during the year across its
contracts in the iron ore sector in the Pilbara region of WA.
Rio Tinto awarded the Company several packages of work,
including a contract for work associated with the Marandoo
Dewatering Sump Project, as well as new contracts under
its existing Sustaining Capital Projects Panel Agreement at
Cape Lambert and East Intercourse Island and, after year
end, a multidisciplinary construction contract for a new
conveyor at the Tom Price mine site and upgrades to conveyor
facilities at the Marandoo mine site. In addition, the Company
commenced the construction of new hawser rails and
upgrades to the existing dolphins at Cape Lambert wharf and
successfully executed a conveyor gravity take up program of
works across several mine sites, as well as a marine project at
Parker Point wharf.
BHP extended the Company’s existing general maintenance
services contract across its Pilbara-based operations for a
further 12-month period, with Monadelphous also being
awarded two additional packages of work at BHP’s Nelson
Point and Jimblebar mine sites under the WA Iron Ore
(WAIO) Site Engineering Panel Agreement. The Company
also successfully completed the Car Dumper 1 Mega Shut
at Nelson Point, significantly progressed an extension to the
haul road at the Jimblebar mine, completed a light vehicle
workshop fit out at Mining Area C and undertook bridge
bearing replacement work on BHP’s Pilbara rail network.
The Company continued to diversify its customer-base,
securing a five-year maintenance and shutdown services
contract across Fortescue Metals Group’s Pilbara operations,
in addition to a contract for the construction of a pipeline,
access road and transfer pond infrastructure at the Roy Hill
mine site.
Outside of iron ore, the Company was awarded a number
of contracts, including a 12-month extension to its existing
contract for the supply of shutdown and major mechanical
services at South32’s Worsley Alumina Refinery in Collie, WA;
a 12-month extension to its existing mechanical and electrical
maintenance, shutdown and project services contract
across BHP’s Nickel West operations in the Goldfields, WA;
a 12-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, Queensland; and a three-year general mechanical
maintenance services contract with Queensland Alumina
Limited at its operations in Gladstone, Queensland.
OPERATING AND FINANCIAL REVIEW 40
Image courtesy of Woodside.
CASE STUDY
Woodside
In 2017, Monadelphous was awarded a major Outline
Agreement with Woodside Energy Ltd for the provision
of gas asset general maintenance services and offshore
brownfields implementation for its gas production
facilities.
This year, Monadelphous was awarded a two-year
extension to this Outline Agreement, which allows
for contracts to be created between the parties for
maintenance, turnaround and offshore brownfields
implementation for Woodside’s onshore facilities,
Karratha Gas Plant and Pluto LNG Plant, as well as its
offshore facilities, Pluto LNG Platform, North Rankin
Complex, Goodwyn A platform and Angel platform.
Monadelphous has worked with Woodside since 2002
undertaking project activities and, since 2012, has been
performing shutdown and maintenance services for
Karratha Gas Plant and Pluto LNG Plant.
Energy
In the energy sector, demand for maintenance services
increased significantly during the year, with the Company
continuing to provide services under its existing, major
onshore and offshore contracts at the Woodside-operated
gas production facilities and on INPEX-operated Ichthys
LNG’s offshore processing facilities, both in WA. Services
were also provided to Shell in both Queensland and WA.
Additionally, the Company continued to plan for a program of
major turnarounds scheduled across customers’ facilities over
coming years.
During the period, the Company was awarded a two-year
extension to its existing Outline Agreement with Woodside
which allows for contracts to be created between the parties
for the maintenance, shutdown and brownfields project
services at the Woodside-operated onshore and offshore gas
production facilities, a two-year extension for the provision
of maintenance, turnarounds and brownfields modifications
at another customer’s offshore LNG facility and a three-year
contract with Origin to provide turnaround and shutdown
support services at Australia Pacific LNG’s coal seam gas
upstream project in Queensland.
In addition to building on its industrial services capability,
which includes fabric maintenance and rope access services,
the Company commenced early decommissioning work with
Petrofac on the Northern Endeavour floating production,
storage and offtake facility and continued to explore further
offshore decommissioning opportunities.
41 ANNUAL REPORT 2022
South America
Papua New Guinea
Buildtek, the Company’s Chile-based maintenance and
construction services business, saw significant growth during
the period, securing construction and maintenance contracts
with major copper producers. Buildtek was awarded a number
of contracts with Codelco, the world’s largest copper producer,
including a three-year mine infrastructure maintenance services
contract at the Chuquicamata underground mine, a five-year
maintenance contract at the Radomiro Tomic mine, as well as
construction work associated with the development of a new
underground section of the El Teniente mine. Buildtek also
secured its first contract with Collahuasi Mining Company to
install a new tank and complete associated plant modifications
at its maritime terminal in Punta Patache near Iquique.
Buildtek continues to grow and, during the period,
Monadelphous increased its shareholding in the business
to 90 per cent. Buildtek has achieved revenue growth of
approximately 75 per cent compared to the prior year, secured
around $80 million in new contracts during the year and its
workforce has more than doubled to over 1,700 employees
since Monadelphous’ initial investment in late 2019.
In Papua New Guinea, the Company was awarded further
work with Newcrest at Lihir Island, providing engineering,
procurement and construction (EPC) services on the Tank
Refurbishment Project, as well as structural, mechanical,
piping and electrical and instrumentation works on the Front
End Recovery Project.
In addition, the Company continued to provide EPC services,
in joint venture with Worley, to Santos (formerly Oil Search)
at its oil and gas production and support facilities in the
Highlands region of Papua New Guinea.
The Company has cemented its position as a leading
maintenance and brownfield project service provider in Papua
New Guinea, with a strong safety record and local content
strategy, and has provided services in the region since 2007.
Rail
The Company continued to grow its rail maintenance services
offering across Australia, providing a range of rail track, rail
infrastructure and facility maintenance support services to
multiple customers across various states, including Pacific
National, Aurizon and ARTC. In the Pilbara, WA, the Company
continued to provide services under its rail services contract
with Rio Tinto.
Outlook
Buoyant conditions and ageing assets across all resources
and energy sectors will continue to drive strong demand for
maintenance services in Australia, as well as overseas in
South America and Papua New Guinea.
Buildtek employees completing asset integrity
improvement works to the LNG import terminal
jetty, operated by GNL Quintero.
OPERATING AND FINANCIAL REVIEW 42
Monadelphous employees undertaking work at
Perth Freight Terminal, Perth, Western Australia.
Monadelphous employees at a pre-start meeting
at Rio Tinto’s Parker Point, Karratha,
Western Australia.
SUSTAINABILITY
Our Progress
Rolled out It’s Up to Us campaign in relation to the
prevention of sexual harassment and sexual assault.
Launched new Stretch Reconciliation Action and Gender
Diversity and Inclusion plans.
Formalised goal of achieving net-zero emissions by 2050.
Serious Incident Frequency Rate improved by approximately
55 per cent during the year.
Named as a finalist in three safety innovation awards.
ANNUAL REPORT 2021 45 ANNUAL REPORT 2022
Monadelphous is focused on ensuring the safety, wellbeing and development
of its people, the delivery of outstanding service to its customers, caring for
the environment and communities in which it works and providing superior
returns to its shareholders.
By focusing on these areas, the Company will achieve long-term sustainable
growth, be recognised as a leader in its chosen markets and a truly great
company to work for, to work with and invest in.
Monadelphous’ strong reputation and success, built over
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 ended the year with a total workforce
(including subcontractors) of 7,977, up 2.4 per cent on the
prior corresponding period, with growth experienced in the
Company’s Chilean and Papua New Guinean workforces being
partially offset by the demobilisation of employees from a
number of major construction projects completed during
the year.
The retention and attraction of highly capable employees
aligned with the Monadelphous values remains a priority,
particularly considering the high demand for talent across
the industry. A variety of initiatives were undertaken during
the year to enhance employee retention, wellbeing and job
satisfaction.
Importantly, the Company undertook a comprehensive review
of its organisational structure during the period to ensure that
it is appropriately organised to achieve its strategic objectives
and deliver long-term, sustainable growth. The review
identified a number of structural improvements to enhance
the Company’s approach to growth and diversification and
optimise project delivery.
Safety and wellbeing
Monadelphous’ Total Recordable Injury Frequency Rate at
year end was 3.07 incidents per million hours worked. The
Company’s performance was impacted by the high levels of
operational activity and the large number of new employees
onboarded during the period.
Pleasingly, the Company’s Serious Incident Frequency Rate
improved by approximately 55 per cent over the course of the
year as a result of its sustained focus on the identification,
elimination and mitigation of fatal risk hazards, and the
continued application of Fatal Risk Control Standards.
Monadelphous increased its focus on the provision of front-
line programs to further promote and support in-field safety
leadership. In addition, the Company launched a number of
targeted safety campaigns aimed at addressing common risks,
such as hand and finger injuries.
The Company continued to invest effort in the important
area of safety innovation and was pleased to be named as a
finalist in three safety innovation awards during the period.
Monadelphous’ smart conveyor module assembly system,
which was used at BHP’s South Flank Inflow Project, was
recognised in the National Safety Awards of Excellence.
The specially designed self-propelled modular transporter
davit frame, used to safely move and install gas pipeline
sections at the Woodside-operated Pluto Liquefied Natural
Gas Plant, was named as a finalist in the Western Australian
(WA) Department of Mines’ Industry Regulation and Safety
Excellence Awards. Finally, the Company was named as a
finalist in the WA Association for Mental Health’s Mental
Health Awards for its commitment to breaking down the
stigma associated with mental health.
Monadelphous continued to make significant progress on its
Health and Wellbeing Strategy which, amongst other things,
promotes healthy lifestyle choices and focuses on increasing
mental wellbeing amongst employees. The Company
supported mental health initiatives across its offices and
sites which promote and encourage ongoing conversations
regarding the importance of 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.
People
Acceptable workplace behaviour
During the period, the Company undertook a substantial
program of work to review its processes and practices, and
reinforce its high expectations of its workforce, in relation to
the prevention of sexual harassment and sexual assault.
A comprehensive review of the Company’s Code of Conduct
and supporting policies was carried out in respect to
acceptable workplace behaviours across its operations,
culminating in the implementation of the Monadelphous
It’s Up to Us campaign. The campaign, which highlights the
important role every employee at Monadelphous plays in
creating a safe, respectful and inclusive work environment,
is a positive and proactive step towards preventing such
incidents within the Company’s workplaces.
Employee Retention Plan
The significantly high industry activity levels experienced
during the year, which were exacerbated by the interstate
travel restrictions imposed to reduce the spread of COVID-19,
extensively impacted the Company’s ability to source and
retain talent. This extremely competitive labour market is
predicted to continue in the foreseeable future, with labour
demands expected to increase further as a result of the large
number of construction opportunities forecast for coming years,
and the continued strong demand for maintenance services.
In response, the Company implemented the Monadelphous
2021 Employee Retention Plan (ER Plan) during the period.
The ER Plan acts as a retention incentive for those employees
whose sustained contribution is of critical strategic and
operational importance to the success of the business in a
manner aligned to the creation of shareholder wealth. The
ER Plan provides a one-off issue of Retention Rights to select
employees, which vest over a three-year period subject to
continued service conditions, enabling employees critical to
the achievement of the Company’s strategic objectives to
share in the long-term performance of the Company.
Employee benefits program
A review of Monadelphous’ employee benefits program
was undertaken during the year to ensure the program is
appropriately aligned to market conditions and best supports
the Company’s employee retention and attraction strategies.
The review included a comparison of similar benefits
programs across related industry sectors to identify potential
opportunities for improvement.
Training and talent development
Recognising the important role leaders play in the delivery
of services to customers and in retaining talent, participants
from across the organisation took part in the Leading at
Monadelphous, Emerging Leaders and Group Mentoring
programs, as well as in the Company’s site-based senior
leadership coaching program, Leading the Safe Way. In
addition, a number of leaders at Monadelphous commenced
their Diploma of Leadership and Management, and Diploma of
Project Management.
For new managers at Monadelphous, the Company launched
its Red Book, a practical overview of what new managers
need to know as they step into people management roles at
Monadelphous.
The Company’s Employee Development Centre, a registered
training organisation (RTO 52582) based in Bibra Lake,
WA, delivered approximately 4,800 high quality training
interactions for trades personnel throughout the year, including
high risk work licence training accreditation and verification of
competency for the Company’s craft employees.
OPERATING AND FINANCIAL REVIEW 46
Talent acquisition and performance management system
Monadelphous’ new talent acquisition and performance
management system, Avature, was launched during the
second half of the year. Avature will drive efficiencies in the
sourcing, onboarding and re-deployment of the Company’s
workforce, and support the Company’s talent management
and succession planning processes.
Monadelphous employees at Rio Tinto’s West
Angelas Deposits C & D Project, Newman,
Western Australia.
Strategic sourcing
During the period, the Company undertook activities to
improve its attraction systems, including enhancing its
employee referral programs, reinforcing its Alumni program
and reinvigorating its international sourcing strategy which
was placed on hold during the period of international travel
restriction.
Attraction of future talent
Monadelphous’ Graduate, Vacation, Apprenticeship and
Traineeship programs continue to attract and nurture a diverse
group of talented people as they enter the workforce. During
the year, this included 75 participants in the Graduate and
Vacation programs, 56 in the Apprenticeship program and
seven in the Traineeship program. Through these programs,
participants had the opportunity to explore a range of career
pathways through rotations and additional learning and
development opportunities.
Graduate and Vacation program disciplines included
engineering, construction management, accounting and
health, safety, environment and quality, while Apprenticeship
program disciplines included boilermakers, mechanical fitters,
electricians and heavy-duty mechanics.
47 ANNUAL REPORT 2022
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, inspiring
them to reach their full potential and contribute to the long-
term success of the business.
Indigenous engagement
As part of Monadelphous’ 2022 NAIDOC Week celebrations,
the Company launched its latest Stretch Reconciliation
Action Plan (RAP) for the period 2022 to 2025 following
endorsement of the Plan by Reconciliation Australia. The
Company’s fourth RAP, and second Stretch RAP, articulates
Monadelphous’ pledge to take meaningful action to advance
reconciliation for Aboriginal and Torres Strait Islander peoples,
and is based around the core pillars of relationships, respect
and opportunities.
Commitments contained in the 2022-2025 RAP include the
provision of long-term Indigenous employment opportunities
and training and development programs, as well as supporting
First Nations businesses through the establishment of
meaningful and mutually beneficial commercial partnerships.
As part of the RAP, the Company has committed to continuing
to maintain in excess of three per cent Indigenous employment
across its Australian workforce and growing spend with
Indigenous-owned businesses.
Since its launch in July 2021, more than 20 participants have
taken part in Monadelphous’ Indigenous Pathways Program,
delivered in partnership with Rio Tinto. The Program, which
provides current and future Indigenous employees with
traineeships, apprenticeships and tertiary study support, aims
to increase the amount of skilled and qualified Indigenous
people in the resources sector, and create rewarding, long-
term careers.
Monadelphous continued to contribute financial support and
resources as a part of its partnership with the Polly Farmer
Foundation (PFF), which aims to empower Indigenous
students to complete school and progress into early career
pathways. As a founding corporate sponsor of PFF’s Living
the Dream alumni network, Monadelphous contributed to the
provision of 12 bursaries for PFF Living the Dream alumni
to support their tertiary education. Company employees also
presented to PFF Follow the Dream students at regional
schools during the year, with Follow the Dream students from
Bunbury and Katanning, both in WA, visiting Monadelphous
facilities to learn about careers available with the Company.
Gender diversity and inclusion
In late 2021, the Company launched its second Gender
Diversity and Inclusion Plan 2021-2024. The Plan focuses
on ensuring a safe, respectful and inclusive workplace for all,
increasing female participation through early career pathways,
nurturing key female talent, removing gender-based barriers
to entering trade roles, and connecting women through
networking and mentoring.
Students from Newton Moore Senior High School
painting a Monadelphous shipping container
as part of the Company’s partnership with Polly
Farmer Foundation, Bunbury, Western Australia.
OPERATING AND FINANCIAL REVIEW 48
over $370,000 in funds and supported its employees in the
provision of 600 hours of voluntary work in the communities
where Monadelphous works.
Initiatives included donations towards the construction of
family-friendly, gender diverse changerooms at the sporting
precinct in Roxby Downs, South Australia (SA), sponsorship of
the Yallarm STEM Camp in Gladstone, Queensland, a donation
to the Queensland State Emergency Services to support flood
assistance efforts, the provision of financial contributions to
approximately 40 regional sporting clubs across Australia and
support for major community organisations, such as Beyond
Blue, Red Nose Day and Police and Community Youth Centres.
Environment
Monadelphous formalised its goal of achieving net-zero
emissions by 2050, underlining its commitment to the
sustainable management of the unique environments in which
it works. The Company’s environmental strategy is focused on
decarbonising operational activities, and includes objectives
supporting the transition to renewable power, ‘greening’ its
fleet and offsetting carbon emissions.
The Company’s commitment to net-zero emissions by 2050
was supported by the establishment of an Environmental
Strategy Steering Committee and a Greening the Fleet Working
Group to identify green-fuel options that advance both the
Company’s, and its customers’, decarbonisation goals.
Working Groups are also being established for the focus areas
associated with switching to renewable power, and optimising
operational activities.
Monadelphous continues to monitor advances in technology
that provide opportunities to reduce emissions across the
business. The Company will also maintain its focus on
minimising potential environmental impact areas, including
waste, natural environment clearing activities and the
prevention of pollution. During the period, the Company
supported a variety of environmental initiatives, including
participating nationally in Keep Australia Beautiful Day,
foreshore rehabilitation programs in Karratha, WA, and
support for Arid Recovery wildlife reserve in Roxby Downs, SA.
Ensuring compliance with customer requirements and
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.
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, and maintaining an ability to adapt
to customer and market shifts. 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 and reports
its material risks and the management of those risks in its
Corporate Governance Statement.
Lorna Rechichi, Monadelphous General Manager
Heavy Lift Services, speaking at the launch of the
Company’s second Gender Diversity and Inclusion
Plan in Perth, Western Australia.
The Plan contains measurable targets, including achieving
a minimum of 20 per cent female intake in the Company’s
Graduate and Vacation Programs, 30 per cent female
composition of the Monadelphous Board, 90 per cent
retention of key female talent and a minimum of 12 per cent
female representation in the Company’s key talent program.
Monadelphous is pleased to confirm all targets were reached
or exceeded during the period.
In line with its commitment to connecting women through
networking and mentoring, the Company launched a new
corporate partnership with the National Association of Women
in Operations. Through this partnership, Monadelphous
employees are able to participate in industry events focused
on facilitating networking and mentoring opportunities with
industry peers.
Monadelphous extended its partnerships with the University
of Western Australia’s Girls in Engineering Program and
Queensland University of Technology’s Gender Equity in
Engineering Makes Sense Program, to aid the Company’s
objective of increasing female participation in the sectors
where it works through early career pathways. The Company
facilitated the Girls in Engineering Karratha tour in WA, where
students attended Monadelphous facilities and were afforded
the opportunity of learning about a career in engineering from
experienced professionals.
Community
The Company’s approach to community engagement
continued to focus on delivering meaningful value through a
combination of partnerships and initiatives in key operational
areas, as well as employee-led community projects.
During the year, the Company participated in more than
100 community initiatives across 25 locations, contributed
49 ANNUAL REPORT 2022
Australia’s transition towards clean energy continues to
strengthen and Monadelphous continues to grow its footprint
in the renewable energy sector through Zenviron. An
increasing pipeline of new wind farms coming to market in the
next few years will provide opportunities, both in the electricity
market as well as in the private sector, as industrial operators
move rapidly to meet their decarbonisation objectives.
Since its establishment, Zenviron has been involved in the
construction of ten wind farms, including New South Wales’
largest ever wind farm. To date, Zenviron has constructed
425 wind turbines with generation capacity of 1,607MW,
representing power for 1.11 million homes and 6.57 million
tonnes of carbon displaced each year. A further 66 turbines
are under construction, representing 396MW.
Rapid development of the hydrogen sector is also expected to
provide opportunities for Monadelphous in the coming years.
Greenhouse gas reporting
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, particularly
in light of its net-zero commitment.
Greenhouse gas emissions data is monitored for environmental
planning, legislative requirements, tracking progress towards
net-zero emissions 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 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 18,355 tonnes,
significantly below the legislative reporting threshold of
50,000 tonnes CO2e. Total emissions were 22,974 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 2021/22
period was 268 TJ. The Company routinely collects and
monitors greenhouse gas emissions 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).
Productivity and innovation
Monadelphous continues to identify opportunities to improve
productivity and deliver value for its customers through
business-aligned innovation and technology.
During the period, a trial of robotic process automation (RPA),
which aims to remove manual tasks and improve productivity
by automating business processes, resulted in RPA being
deployed across Monadelphous more broadly, freeing up
employees to work on higher-value, skilled work. In addition,
the Company continued to progress its digital transformation
journey, maximising value from data-backed decision-
making through ongoing digitalisation of in-field processes.
Monadelphous is focused on consolidating and streamlining
applications to enable the delivery of high-quality customer
service, on-time project delivery and improved productivity.
Monadelphous has developed the internal capability to provide
sites with a tool for the rapid creation of electronic forms
and digital workflows, including safety-based inspections,
electronic timesheets, progress capture and asset inspections.
Electronic forms and voice capture are recognised as efficient
methods of delivering improvements in the accuracy and
timeliness of data capture required to support service delivery.
The Company also continues to focus on standardising data
capture processes and producing dynamic and interactive
visualisations to support rapid decision-making and gain
improved visibility of project performance.
Across its operations, employees continued to focus on
improving safety and efficiency through innovation. In the
south-west region of WA, the Monadelphous team designed
and implemented a prefabricated, adjustable tool to enable
new calciner weigh feeder belts to be easily and safely
transferred into position. The unique design eliminated manual
handling and the related risk of injury, and removed both cost
and time from the process, with the innovative solution saving
the customer over 100 hours of work on every belt change
and reduced the task duration by 24 hours.
Ongoing collaboration between the Company’s project
engineers and drone pilots has seen the Company utilise
drones for a number of safety and efficiency inspections during
the period, particularly in difficult to access locations and in
support of incident investigations.
The Company’s commitment to net-zero emissions by 2050
was supported by the establishment of an Innovation Working
Group to identify green-fuel options that advance both the
Company’s and its customers’ decarbonisation goals.
Always seeking to add value to its customers by leveraging
the collective knowledge and experience of its people,
Monadelphous continued to participate in selected customer
Open Innovation Challenges, and in recognition of its
problem-solving skills, the Company was named as a finalist
in a recent Challenge.
OPERATING AND FINANCIAL REVIEW 50
Monadelphous employees participating
in the Karratha Foreshore Rehabilitation
Program, Karratha, Western Australia
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 its website.
Monadelphous has exposure to a number of material 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 operates management systems 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.
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
53
73
78
79
80
81
82
83
84
Monadelphous employees working at Rio Tinto’s
West Angelas Deposits C & D Project,
Newman, Western Australia.
53 ANNUAL REPORT 2022
DIRECTORS’ REPORT
Your directors submit their report for the year ended 30 June 2022.
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
56 years experience in the construction and engineering services industry
Robert Velletri
Managing Director
Appointed 26 August 1992
Mechanical Engineer, Member of Engineers Australia
Appointed as Managing Director on 30 May 2003
43 years experience in the construction and engineering services industry
Susan Lee Murphy AO
Lead Independent Non-Executive Director
Appointed 11 June 2019
Civil Engineer, Honorary Fellow of Engineers Australia
43 years experience in the resources and infrastructure industries
Peter John Dempsey
Independent Non-Executive Director
Dietmar Robert Voss
Independent Non-Executive Director
Helen Jane Gillies
Independent Non-Executive Director
Also a non-executive director of the following other publicly listed entity, MMA Offshore
Limited (ASX: MRM) – appointed 30 April 2021
Appointed 30 May 2003
Civil Engineer, Fellow of Engineers Australia, Member of the Australian Institute of
Company Directors
50 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
Appointed 10 March 2014
Chemical Engineer, Member of the Australian Institute of Company Directors
48 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
26 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
Enrico Paul Buratto
Independent Non-Executive Director
Appointed 11 October 2021
Civil Engineer, Fellow of Engineers Australia
47 years experience in the construction and engineering services industry
Christopher Percival Michelmore
Independent Non-Executive Director
Appointed 1 October 2007, Retired 23 November 2021
Civil Engineer, Fellow of Engineers Australia
50 years experience in the construction and engineering services industry
FINANCIAL REPORT 54
DIRECTORS’ REPORT
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
22 years experience in the construction and engineering services industry
Appointed 8 December 2014
Chartered Accountant, Member of Chartered Accountants Australia and New Zealand
17 years experience in the construction and engineering services industry
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
D. R. Voss
H. J. Gillies
S. L. Murphy
E. P. Burrato
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 2021
– on ordinary shares
Ordinary
Shares
1,022,653
2,139,321
78,000
72,630
9,260
8,000
Nil
Performance
Rights over
Ordinary Shares
Options
over
Ordinary Shares
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
600,000
Nil
Nil
Nil
Nil
Nil
Cents
54.90
54.54
Cents
$’000
25.00
23,834
24.00
22,829
21.00
19,933
55 ANNUAL REPORT 2022
DIRECTORS’ REPORT
CORPORATE INFORMATION
Corporate structure
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
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 7,541 employees as of 30 June 2022 (2021: 7,559 employees).
FINANCIAL REPORT 56
DIRECTORS’ REPORT
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
2022
$’000
2021
$’000
1,809,451
1,753,738
52,219
47,060
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.
SIGNIFICANT EVENTS AFTER REPORTING PERIOD
Dividends declared
On 22 August 2022, the directors of Monadelphous Group Limited declared a final dividend on ordinary shares in respect of the 2022 financial
year. The total amount of the dividend is $23,834,482 which represents a fully franked final dividend of 25 cents per share. This dividend has
not been provided for in the 30 June 2022 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 1,086,800 retention rights and 5,640,000 options on issue as follows:
• 362,202 retention rights to take up one ordinary share in Monadelphous Group Limited. The retention rights have a vesting date
20 December 2022
• 362,202 retention rights to take up one ordinary share in Monadelphous Group Limited. The retention rights have a vesting date
20 December 2023
• 362,396 retention rights to take up one ordinary share in Monadelphous Group Limited. The retention rights have a vesting date
22 December 2024
• 2,047,500 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2022
• 2,047,500 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2023
• 1,545,000 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2024
Retention rights and options holders do not have any right, by virtue of the retention 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 performance rights
On 1 July 2021, 155,556 performance rights vested and were exercised.
On 1 July 2022, 75,224 performance rights vested and were exercised.
57 ANNUAL REPORT 2022
DIRECTORS’ REPORT
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.
FINANCIAL REPORT 58
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
The Remuneration Report for the year ended 30 June 2022 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
Chairman
R. Velletri
S. L. Murphy
P. J. Dempsey
Managing Director
Deputy Chair and Lead Independent Non-Executive Director
Independent Non-Executive Director
C. P. Michelmore
Independent Non-Executive Director – Retired 23 November 2021
D. R. Voss
H. J. Gillies
E. P. Buratto
(ii) Senior executives
D. Foti
Z. Bebic
P. Trueman
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director – Appointed 11 October 2021
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.
59 ANNUAL REPORT 2022
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 recognised
remuneration research organisations 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, Employee Retention 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.
The significantly high industry activity levels experienced during the year, which were exacerbated by the interstate travel restrictions imposed to
reduce the spread of COVID-19, extensively impacted the Company’s ability to source and retain talent. This extremely competitive labour market
is predicted to continue in the foreseeable future, with labour demands expected to increase further as a result of the large number of construction
opportunities forecast for coming years, and the continued strong demand for maintenance services. The predicted shortfall of skilled labour will be a
major capacity constraint for the industry and for Monadelphous, and will significantly challenge the company’s ability to retain people, as well as to
attract new employees.
In response, the Company implemented the Monadelphous 2021 Employee Retention Plan (ER Plan) during the period. The ER Plan acts as a
retention incentive for those employees whose sustained contribution is of critical strategic and operational importance to the success of the business,
in a manner aligned to the creation of shareholder wealth.
Remuneration Element
Individual Components
Purpose
Link to Performance
Fixed Remuneration
Comprises base salary,
superannuation and other
benefits.
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.
Variable
Remuneration –
Combined Reward
Plan
Comprises cash payment,
and/or performance
rights issued under the
Monadelphous Group
Limited Performance
Rights Plan.
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.
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.
Variable
Remuneration –
2021 Employee
Retention Plan
Comprises a one-off
issue of Retention
Rights granted in the
form of Performance
Rights subject to the
Monadelphous Group
Limited Performance
Rights Plan rules.
Specifically developed to mitigate the effects of
the extremely tight labour market.
To retain and recognise key employees whose
contribution is of critical strategic and operational
importance to Monadelphous, enabling them
to share in the long term performance of the
Company in a manner which is aligned to the
creation of shareholder wealth.
Assessed at an individual
level based on performance
of responsibilities and
cultural alignment with the
Company’s values.
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.
Vesting of awards is
dependent on exceeding EPS
growth targets and continuity
of employment.
Vesting of awards is
dependent on continuity of
employment.
FINANCIAL REPORT 60
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Executive remuneration (continued)
Structure (continued)
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 65 and 66 of this report detail the proportion of fixed and variable remuneration for each of
the executive directors and the senior executives of the Company.
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 65 and 66 of this report.
Variable remuneration – Combined Reward Plan
Objective
The objective of the Combined Reward Plan (the CR Plan) is to recognise and reward the senior leaders of the business who positively contribute
to the Company’s success, to align these rewards to the creation of shareholder wealth over time and to ensure the long term retention of the
Company’s key talent.
The CR Plan combines short and long term incentive elements and rewards performance of both the Company and the employee. The equity
component of the award is subject to service vesting conditions and disposal restrictions, encouraging employee retention and linking rewards to
the creation of shareholder value through long term share ownership, with employee and shareholder alike benefitting from the long term growth
in the share price.
Structure
Under the CR Plan, the Board has the discretion to make awards on an annual basis subject to Company and individual performance. Awards
may be delivered in the form of a combination of cash and/or Performance Rights.
For the year ended 30 June 2021, the Board determined that no award would be made under the CR Plan.
For the year ended 30 June 2022, awards comprised of a 25 per cent cash payment, which was paid in July 2022, with 75 per cent of the
award to be offered in the form of performance rights in or around October 2022. The number of performance rights to be offered will be
calculated using the arithmetic average of the ten-day daily volume weighted average market price of the Company’s ordinary shares commencing
on the second trading day after the record date in respect of the FY22 final dividend. This calculation is the same as that used to determine the
undiscounted share price for the Dividend Reinvestment Plan.
It is intended that the Performance Rights component will vest into shares in equal instalments, on 1 July 2023, 1 July 2024 and 1 July 2025,
subject to the employee remaining in the employ of the Company at those particular dates. It is intended that one share be issued for each vested
Performance Right, with the resulting shares being restricted from disposal until the opening of the Monadelphous share trading window following
the release of the 30 June 2025 financial results, in or around August 2025.
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.
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.
61 ANNUAL REPORT 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Variable remuneration – Combined Reward Plan (continued)
Performance Requirements (continued)
For the year ended 30 June 2022, 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.
Subsequent to year end, based on the financial performance of the Company for the year ended 30 June 2022, the Board determined that an
award would be made under the CR Plan with approximately 150 employees eligible for an award of Performance Rights.
Group and Divisional performance for the year ended 30 June 2022 was as follows:
Earnings Performance
Other
EPS
Divisional
Contribution
Working
Capital
Management
Safety
People
Customer
Satisfaction
Strategic
Progress
Group
Engineering Construction
Maintenance & Industrial Services
Legend:
Between target and maximum
On target
Between threshold and target
FINANCIAL REPORT 62
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Variable remuneration – Combined Reward Plan (continued)
Performance Requirements (continued)
The following table sets out the awards under the CR Plan for each executive for the financial years ended 30 June 2022 and 30 June 2021:
R. Velletri
P. Trueman
D. Foti
Z. Bebic
2022
Total Award $
2021
Total Award $
2022
% of Maximum
Opportunity Earned
2021
% of Maximum
Opportunity Earned
509,600
207,700
291,100
250,800
-
-
-
-
78%
81%
77%
74%
-
-
-
-
Tables 1 and 2 on pages 65 and 66 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 2022 and 30 June 2021.
The Performance Right component of the award relating to the year ended 30 June 2022, which is to be offered in or around October 2022, will
be amortised over three years. It is estimated, based on the share price at 30 June 2022, that approximately 95,000 Performance Rights will be
offered to Key Management Personnel under the terms of the CR Plan for the year ended 30 June 2022 (2021: nil Performance Rights).
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.
On 1 July 2022, 75,224 Performance Rights representing the third tranche of the award under the terms of the CR Plan for the year ended
30 June 2019 vested and were exercised into Monadelphous Group Limited ordinary shares.
Variable remuneration – Employee Option Plan
Objective
The objective of the Employee Option Plan is to retain and reward key employees in a manner which aligns this element of remuneration with the
creation of shareholder wealth.
Structure
Monadelphous Group Limited Employee Option Plan
Equity-based grants to executives are at the discretion of the Remuneration Committee and Board, and may be delivered in the form of options.
Should any issue of options be considered, the individual performance rating of each executive and the annual cost to the Company, on an
individual basis, is taken into account when determining the amount, if any, of options granted.
In November 2020, the Company offered 300,000 options to the Managing Director, subject to shareholder approval, 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. The timing of the proposed grant did not allow for a resolution to be tabled at the 2020 Annual General meeting. As a result, shareholder
approval was sought and obtained at the Company’s 2021 Annual General Meeting on 23 November 2021, and the options were issued to the
Managing Director on the same date.
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.
63 ANNUAL REPORT 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Variable remuneration – Employee Option Plan (continued)
Structure (continued)
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.
In respect of the 2019 award of options, the EPS performance hurdle was not met for the first 25 per cent of options to be exercised during the
window period commencing 1 September 2021. In accordance with the terms of the offer, these options have been rolled over to be re-tested in
the next window period commencing 1 September 2022.
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.
Variable remuneration – 2021 Employee Retention Plan
Objective
The significantly high industry activity levels experienced during the year, which were exacerbated by the interstate travel restrictions imposed to
reduce the spread of COVID-19, extensively impacted the Company’s ability to source and retain talent. This extremely competitive labour market
is predicted to continue in the foreseeable future, with labour demands expected to increase further as a result of the large number of construction
opportunities forecast for coming years, and the continued strong demand for maintenance services. The predicted shortfall of skilled labour will
be a major capacity constraint for the industry and for Monadelphous, and will significantly challenge the company’s ability to retain people, as
well as to attract new employees.
In response, the Company implemented the Monadelphous 2021 Employee Retention Plan (ER Plan) during the period. The ER Plan acts as
a retention incentive for those employees whose sustained contribution is of critical strategic and operational importance to the success of the
business, in a manner aligned to the creation of shareholder wealth.
Structure
The ER Plan provides a one-off issue of Retention Rights to key employees and is subject to continued service vesting conditions and disposal
restrictions. It enables employees critical to the achievement of the Company’s strategic objectives to share in the long-term performance of the
Company.
The Retention Rights were allocated under the terms of the Monadelphous Group Limited Employee Retention Plan and granted in the form of
Performance Rights subject to the Monadelphous Group Limited Performance Rights Plan Rules.
On 20 December 2021, 1,115,200 Retention Rights were issued under the terms of the ER Plan. 92,600 Retention Rights were issued to Key
Management Personnel. A further 43,600 Retention Rights were offered to the Company’s Managing Director, Rob Velletri, with the issue being
subject to shareholder approval at the Company’s Annual General Meeting in November 2022.
The Retention Rights vest into shares in equal instalments one, two and three years subsequent to the date of issue (i.e. 20 December 2022,
20 December 2023 and 20 December 2024) subject to the employee remaining in the employ of the Company at those particular dates, with
one share issued for each Retention Right that vests. Any shares acquired upon vest of Retention Rights are restricted from disposal until the
earlier of: three years from the date of grant (i.e. 20 December 2024), subject to that date being within a Monadelphous share trading window,
and if not, when the next share trading window opens (which is expected to be in February 2025); and the date on which the employee ceases to
be employed by the Company.
Unvested Retention Rights remain subject to Monadelphous’ clawback policy. The Board has the discretion as to the circumstances that would
result in a clawback of unvested Retention 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 Retention Rights.
The 2021 ER Plan Retention Right award is being amortised over three years.
Tables 1 and 2 on pages 65 and 66 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 2022 and 30 June 2021.
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 64
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.
The table below summarises Board and Committee fees payable to non-executive directors for the financial year ended 30 June 2022 (inclusive
of superannuation):
Board / Committee Chair Fees
Non-executive Director fee
Board Deputy Chair, Lead Independent Non-executive Director & Chair of Remuneration Committee additional fee
Chair of Audit Committee additional fee
Note, the Nomination Committee is chaired by the Executive Chairman and there is no additional fee.
$
123,000
20,000
15,000
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 ended 30 June 2022 is detailed in Table 1 on page 65 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:
2022
$’000
2021
$’000
2020
$’000
2019
$’000
2018
$’000
Profit after income tax expense attributable to equity holders
of the parent
Basic earnings per share
Share price as at 30 June
52,219
54.90c
$9.95
47,060
49.70c
$10.45
36,483
38.65c
$10.82
50,565
53.72c
$18.81
71,479
76.11c
$15.06
A review of the Company’s performance and returns to shareholders over the last five years has been provided on page 27 of this report.
65 ANNUAL REPORT 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration of Key Management Personnel
Table 1: Remuneration for the year ended 30 June 2022
Short Term Benefits
Post
Employment
Long Term
Benefits
Share-Based
Payments3
Salary
& Fees
$
Leave1
$
Non-
Monetary2
$
Cash
Award
$
Superannuation
$
Leave
$
Rights and
Options
$
Total
Performance
Related
%
Total Rights
and Options
Related
%
Total
$
Non-Executive Directors
S. L. Murphy
P. J. Dempsey
125,629
116,713
C. P. Michelmore5
49,651
D. R. Voss
H. J. Gillies
E. P. Buratto4
Subtotal
Non-Executive
Directors
111,818
128,832
79,563
612,206
Executive Directors
-
-
-
-
-
-
-
C. G. B. Rubino
412,000
2,279
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,563
11,671
4,965
11,182
9,168
7,956
57,505
-
-
-
-
-
-
-
23,568
8,768
-
-
-
-
-
-
-
-
138,192
128,384
54,616
123,000
138,000
87,519
669,711
446,615
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
R. Velletri
1,038,576
(18,926)
12,592 127,400
23,568
43,353
311,066
1,537,629
28.52
20.23
Subtotal
Executive
Directors
1,450,576
(16,647)
12,592 127,400
47,136
52,121
311,066
1,984,244
22.10
15.68
Other Key Management Personnel
D. Foti
Z. Bebic
803,918
(21,980)
6,060
72,775
23,568
28,364
241,528
1,154,233
716,738
82,001
11,302
62,700
23,568
37,213
241,678
1,175,200
P. Trueman
538,743
7,349
10,012
51,925
23,568
17,272
195,603
844,472
27.23
25.90
29.31
20.92
20.56
23.16
Subtotal
Other Key
Management
Personnel
2,059,399
67,370
27,374 187,400
70,704
82,849
678,809
3,173,905
27.29
21.39
Total
4,122,181
50,723
39,966 314,800
175,345
134,970
989,875
5,827,860
22.39
16.99
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 2019 awards under the CR Plan, 2019 and 2020 awards under the Options Plan and 2021 awards under the ER Plan.
4. E. P. Buratto was appointed as Director on 11 October 2021.
5. C. P. Michelmore retired as Director on 23 November 2021.
FINANCIAL REPORT 66
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration of Key Management Personnel (continued)
Table 2: 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
C. P. Michelmore
D. R. Voss
H. J. Gillies
S. L. Murphy
Subtotal
Non-Executive
Directors
118,504
111,514
97,815
109,090
97,815
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.
Table 3: Performance Rights: Granted during the year ended 30 June 2022
No Performance Rights were granted during the year ended 30 June 2022.
67 ANNUAL REPORT 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration of Key Management Personnel (continued)
Table 4: Options: Granted during the year ended 30 June 2022
Terms and Conditions for Each Grant
Granted
Number
Grant Date
Fair Value
per Option at
Grant Date
Exercise
Price
per Option
Expiry Date
First
Exercise Date
Last
Exercise Date
Executive Directors
R. Velletri1
Total
300,000
23/11/2021
$1.71
$9.30
14/9/2024
1/9/2022
14/9/2024
300,000
1. In November 2020, the Company offered 300,000 options to the Company’s Managing Director, Rob Velletri, subject to shareholder approval. The timing of the proposed grant did not allow
for a resolution to be tabled at the 2020 Annual General Meeting. As a result, shareholder approval was sought and obtained at the Company’s 2021 Annual General Meeting in November
2021.
Table 5: Retention Rights: Granted during the year ended 30 June 2022
Terms and Conditions for Each Grant
Granted
Number
Grant Date
Fair Value
per Right at
Grant Date
Exercise
Price
per Right
Expiry Date
First
Exercise Date
Last
Exercise Date
-
-
-
32,700
20/12/2021
32,700
20/12/2021
27,200
20/12/2021
$8.17
$8.17
$8.17
92,600
-
Nil
Nil
Nil
-
-
-
20/12/2024
20/12/2022
20/12/2024
20/12/2024
20/12/2022
20/12/2024
20/12/2024
20/12/2022
20/12/2024
Executive Directors
R. Velletri1
Other Key Management
Personnel
D. Foti
Z. Bebic
P. Trueman
Total
1. 43,600 Retention Rights were offered to the Company’s Managing Director, Rob Velletri, on 20 December 2021 under the terms of the ER Plan, with the issue being subject to shareholder
approval at the Company’s Annual General Meeting in November 2022.
Table 6: Shares issued on exercise of performance rights during the year ended 30 June 2022
Performance Rights
Vested
Performance Rights
Exercised
Shares
Issued
Paid Per Share
$
Executive Directors
R. Velletri^
Executives
D. Foti^
Z. Bebic^
P. Trueman^
Total
13,108
7,357
7,194
5,480
33,139
13,108
7,357
7,194
5,480
33,139
13,108
7,357
7,194
5,480
33,139
Nil
Nil
Nil
Nil
^ On 1 July 2021, the date of exercise of the above performance rights, the closing share price was $10.12.
FINANCIAL REPORT 68
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Additional disclosures relating to rights, options and shares
Table 7: Performance Rights holdings of Key Management Personnel
Performance Rights
held in Monadelphous
Group Limited
Balance at
Beginning of Period
1 July 2021
Granted as
Remuneration
Rights Exercised
and Lapsed
Net Change Other
Balance at
End of Period
30 June 2022
Directors
C. G. B. Rubino
R. Velletri
S. L. Murphy
P. J. Dempsey
D. R. Voss
H. J. Gillies
E. P. Buratto
Executives
D. Foti
Z. Bebic
P. Trueman
Total
-
19,545
-
-
-
-
-
10,714
10,595
8,048
48,902
-
-
-
-
-
-
-
-
-
-
-
-
(13,108)
-
-
-
-
-
(7,357)
(7,194)
(5,480)
(33,139)
-
-
-
-
-
-
-
-
-
-
-
Table 8: Options holdings of Key Management Personnel
Options held in
Monadelphous Group Limited
Balance at
Beginning of Period
1 July 2021
Granted as
Remuneration
Options Exercised
and Lapsed
Net Change Other
Directors
C. G. B. Rubino
R. Velletri
S. L. Murphy
P. J. Dempsey
D. R. Voss
H. J. Gillies
E. P. Buratto
Executives
D. Foti
Z. Bebic
P. Trueman
Total
-
-
300,000
300,000
-
-
-
-
-
400,000
400,000
320,000
-
-
-
-
-
-
-
-
1,420,000
300,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,437
-
-
-
-
-
3,357
3,401
2,568
15,763
Balance at
End of Period
30 June 2022
-
600,000
-
-
-
-
-
400,000
400,000
320,000
1,720,000
69 ANNUAL REPORT 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Additional disclosures relating to rights, options and shares (continued)
Table 9: Retention Rights holdings of Key Management Personnel
Retention Rights held in
Monadelphous Group Limited
Balance at
Beginning of Period
1 July 2021
Granted as
Remuneration
Rights Exercised
and Lapsed
Net Change
Other
Balance at
End of Period
30 June 2022
Directors
C. G. B. Rubino
R. Velletri1
S. L. Murphy
P. J. Dempsey
C. P. Michelmore
D. R. Voss
H. J. Gillies
E. P. Buratto
Executives
D. Foti
Z. Bebic
P. Trueman
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,700
32,700
27,200
92,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,700
32,700
27,200
92,600
1. 43,600 Retention Rights were offered to the Company’s Managing Director, Rob Velletri, on 20 December 2021 under the terms of the ER Plan, with the issue being subject to shareholder
approval at the Company’s Annual General Meeting in November 2022.
Table 10: Shareholdings of Key Management Personnel
Shares held in
Monadelphous Group Limited
Balance at
Beginning of Period
1 July 2021
Granted as
Remuneration
On Exercise
of Performance
Rights
Net Change
Other
Balance at
End of Period
30 June 2022
Directors
C. G. B. Rubino
R. Velletri
S. L. Murphy
P. J. Dempsey
C. P. Michelmore1
D. R. Voss
H. J. Gillies
E. P. Buratto2
Executives
D. Foti
Z. Bebic
P. Trueman
Total
1,022,653
2,119,776
-
78,000
50,000
32,910
8,865
-
65,673
10,987
8,389
3,397,253
-
-
-
-
-
-
-
-
-
-
-
-
-
13,108
-
-
1,022,653
2,132,884
-
-
-
-
-
-
7,357
7,194
5,480
33,139
8,000
-
(50,000)
39,720
395
-
-
-
(8,734)
(10,619)
8,000
78,000
-
72,630
9,260
-
73,030
18,181
5,135
3,419,773
1. Retired as a Non-Executive Director on 23 November 2021.
2. Appointed as a Non-Executive Director on 11 October 2021.
Loans to Key Management Personnel and their related parties
No directors or executives, or their related parties, had any loans during the reporting period.
Other transactions and balances with Key Management Personnel and their related parties
There were no other transactions and balances with Key Management Personnel or their related parties.
END OF REMUNERATION REPORT
FINANCIAL REPORT 70
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. Michelmore1
D. R. Voss
H. J. Gillies
S. L. Murphy
E. Buratto2
14
14
14
14
6
14
13
14
10
6
-
-
6
-
6
6
6
-
3
-
-
-
-
3
3
3
-
2
2
-
2
1
2
2
2
-
1. Retired as a Non-Executive Director on 23 November 2021 and attended all meetings he was eligible to attend.
2. Appointed as a Non-Executive Director on 11 October 2021 and attended all meetings he was eligible to attend.
COMMITTEE MEMBERSHIP
As at the date of this report, the Company had an audit committee, a remuneration committee and a nomination committee.
Members acting on the committees of the Board during the year were:
Audit
H. J. Gillies (c)
P. J. Dempsey
D. R. Voss
S. L. Murphy
E. P. Buratto – appointed to committee
on 14 June 2022
Remuneration
S. L. Murphy (c)
D. R. Voss
H. J. Gillies
C. P. Michelmore – resigned as committee
chair on 30 September 2021, retired 23
November 2021
E. P. Buratto – appointed to committee
on 14 June 2022
Nomination
C. G. B. Rubino (c)
C. P. Michelmore – retired 23 November 2021
P. J. Dempsey
H. J. Gillies
D. R. Voss
S. L. Murphy
E. P. Buratto – appointed to committee
on 14 June 2022
Note: (c) Designates the chair of the committee. S. L. Murphy was appointed chair of the remuneration committee from 1 October 2021, replacing C. P. Michelmore.
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.
71 ANNUAL REPORT 2022
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 72.
The following non-audit services were provided by the entity’s auditor, Ernst & Young. The directors are satisfied that the provision of non-audit
services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of
each type of non-audit service provided means that auditor independence was not compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
Tax compliance services
Signed in accordance with a resolution of the directors.
$
37,710
37,710
C. G. B. Rubino
Chairman
Perth, 22 August 2022
AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL REPORT 72
73 ANNUAL REPORT 2022
INDEPENDENT AUDIT REPORT
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 74
75 ANNUAL REPORT 2022
INDEPENDENT AUDIT REPORT
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 76
77 ANNUAL REPORT 2022
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 78
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 2022 and of its performance for
the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001;
(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 84.
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 2022.
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, 22 August 2022
79 ANNUAL REPORT 2022
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2022
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)
Notes
2022
$’000
2021
$’000
1
1
2
11
3
4
4
1,810,390
1,754,242
(1,686,937)
(1,641,572)
123,453
112,670
8,496
(16,959)
(3,640)
(35,139)
(3,352)
652
11,195
(16,845)
(3,935)
(32,645)
(3,074)
3,006
73,511
70,372
(21,227)
(21,906)
52,284
48,466
52,219
65
52,284
54.90
54.54
47,060
1,406
48,466
49.70
49.45
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
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 on equity instruments designated at fair value through other comprehensive income
Income tax effect
OTHER COMPREHENSIVE LOSS FOR THE YEAR, NET OF TAX
FINANCIAL REPORT 80
2022
$’000
2021
$’000
52,284
48,466
(1,181)
(796)
181
(54)
127
(1,054)
386
(116)
270
(526)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
51,230
47,940
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
NON-CONTROLLING INTERESTS
51,165
65
51,230
46,534
1,406
47,940
81 ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets and goodwill
Investment in joint ventures
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
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
Notes
2022
$’000
2021
$’000
5
6
7
8
9
10
11
3
6
12
13
14
15
3
16
14
15
16
17
20
21
21
183,329
371,987
23,773
3,220
582,309
175,708
318,648
59,685
3,600
557,641
161,904
162,891
4,902
11,181
27,625
-
3,440
209,052
3,917
11,904
31,455
6,000
3,259
219,426
791,361
777,067
168,686
168,117
10,901
25,967
14,753
77,220
900
21,978
22,093
77,016
297,527
290,104
771
71,841
5,832
3,206
81,650
-
74,710
6,521
10,151
91,382
379,177
381,486
412,184
395,581
136,096
34,534
241,554
132,608
30,867
232,097
412,184
395,572
-
9
412,184
395,581
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
FINANCIAL REPORT 82
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
Total
$’000
At 1 July 2021
132,608
37,337
(1,956)
232,097
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 (Note 17)
Remeasurement of financial liability
Share-based payments
Adjustment to deferred tax asset
recognised on employee share trust
Dividend reinvestment plan
Dividends paid
At 30 June 2022
-
-
-
-
-
-
-
3,488
-
-
-
-
-
-
5,234
195
-
-
(1,181)
-
-
52,219
(1,181)
52,219
-
-
-
-
-
-
-
-
-
-
-
(42,762)
(156)
1,137
(5,651)
395,581
127
-
127
-
-
-
-
-
-
-
-
-
(1,054)
52,284
51,230
(82)
(626)
-
-
-
-
-
(626)
5,234
195
3,488
(42,918)
136,096
42,766
(3,137)
241,554
-
1,264
(6,359)
412,184
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 (Note 17)
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)
-
-
-
(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
9
-
65
65
82
-
-
-
-
9
-
83 ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Finance costs paid
Other income
Income tax paid
Dividends received
Notes
2022
$’000
2021
$’000
1,957,889
1,786,360
(1,872,101)
(1,756,244)
740
(3,352)
4,162
(24,040)
1,573
414
(3,074)
3,252
(6,813)
2,840
NET CASH FLOWS FROM OPERATING ACTIVITIES
5
64,871
26,735
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Repayment/(payment) of loans from/(to) joint ventures
Payment of financial liability
Acquisition of intangible assets
8,246
(9,118)
6,000
(7,571)
(738)
11,206
(8,191)
(6,000)
-
-
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(3,181)
(2,985)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Proceeds/(repayment) of borrowings
Payment of principal portion of hire purchase liabilities
Payment of principal portion of other lease liabilities
(39,430)
10,771
(18,038)
(7,892)
(33,726)
(2,085)
(13,017)
(5,501)
NET CASH FLOWS USED IN FINANCING ACTIVITIES
(54,589)
(54,329)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Net foreign exchange differences
Cash and cash equivalents at beginning of period
7,101
520
175,708
(30,579)
(2,005)
208,292
CASH AND CASH EQUIVALENTS AT END OF PERIOD
5
183,329
175,708
FINANCIAL REPORT 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2022
GENERAL INFORMATION
The consolidated financial report of Monadelphous Group Limited (the Group) and its subsidiaries for the year ended 30 June 2022 was
authorised for issue in accordance with a resolution of directors on 22 August 2022.
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 2021 (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 2022. 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,
are Australian dollars (A$).
For each entity, the Group determines the functional currency and items included are measured using the functional currency.
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.
85 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2022
GENERAL INFORMATION (CONTINUED)
Foreign currency translation (continued)
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.
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.
FINANCIAL REPORT 86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2022
GENERAL INFORMATION (CONTINUED)
Key judgements and estimates (continued)
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 9 and 10 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.
87 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2022
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
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
Unsatisfied performance obligations
Transaction price expected to be recognised in future years for unsatisfied
performance obligations at 30 June 2022:
Services revenue
Construction revenue
Total
2022
$’000
2021
$’000
1,166,004
643,447
976,921
776,817
1,809,451
1,753,738
740
199
414
90
1,810,390
1,754,242
4,334
4,162
8,496
789,344
632,068
425,353
83,275
7,943
3,252
11,195
1,034,104
489,621
349,449
80,006
1,930,040
1,953,180
(120,589)
(199,442)
1,809,451
1,753,738
22,617
3,457
61,322
11,978
1,075,326
1,176,689
62,912
177,331
1,138,238
1,354,020
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 (2021: 1 to 5 years)
Construction 1 to 2 years (2021: 1 to 2 years)
FINANCIAL REPORT 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2022
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.
89 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2022
2. EXPENSES
Finance costs
Finance charges
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)
Recognition and measurement
2022
$’000
2021
$’000
1,841
1,511
3,352
13,158
11,365
8,574
-
-
1,476
1,598
3,074
14,000
9,542
8,934
280
165
33,097
32,921
954,265
67,561
1,021,826
895,104
60,310
955,414
1,749
1,464
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2022
FINANCIAL REPORT 90
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% (2021: 30%)
- Share-based payment expense
- Other
Aggregate income tax expense
2022
$’000
2021
$’000
16,580
173
4,446
28
21,227
54
54
(195)
(195)
73,511
22,053
413
(1,239)
21,227
24,518
211
(2,133)
(690)
21,906
116
116
11
11
70,372
21,112
289
505
21,906
91 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2022
3.
INCOME TAX (CONTINUED)
Recognised deferred tax assets and liabilities
Opening balance
Charged to income
Charged to equity
Other / payments
Closing balance
Amounts recognised on the consolidated
statement of financial position:
Deferred tax assets
2022
$’000
Current
Income Tax
2022
$’000
Deferred
Income Tax
2021
$’000
Current
Income Tax
2021
$’000
Deferred
Income Tax
(22,093)
(16,753)
-
24,093
(14,753)
(3,766)
(24,729)
-
6,402
(22,093)
31,455
(4,474)
141
503
27,625
27,625
27,625
28,650
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 liabilities
Tax losses
Other
Gross deferred tax assets
Set-off of deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
Accelerated depreciation
Right of use assets
Other
Gross deferred tax liabilities
Set-off against deferred tax assets
Net deferred tax liabilities
2022
$’000
2021
$’000
26,087
659
882
13,877
2,979
3,148
47,632
(20,007)
27,625
(7,723)
(10,853)
(1,431)
(20,007)
20,007
-
26,172
748
1,530
16,117
156
3,485
48,208
(16,753)
31,455
(3,276)
(12,990)
(487)
(16,753)
16,753
-
FINANCIAL REPORT 92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2022
3.
INCOME TAX (CONTINUED)
Unrecognised temporary differences
At 30 June 2022, there are no unrecognised temporary differences associated with the Group’s investments in subsidiaries (2021: no
unrecognised temporary differences).
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.
93 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2022
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
2022
$’000
2021
$’000
52,219
52,219
47,060
47,060
Number
Number
Number of shares
Weighted average number of ordinary shares on issue used in the calculation
of basic earnings per share
95,107,986
94,692,124
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 2022:
On 1 July 2022, 75,224 performance rights vested and were exercised.
Calculation of earnings per share
637,870
476,763
95,745,856
95,168,887
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity
(other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends);
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
FINANCIAL REPORT 94
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
Share of profits from joint ventures
Dividends from joint ventures
Other
Changes in assets and liabilities
(Increase)/decrease in receivables
Decrease/(increase) in inventories
Decrease/(increase) in contract assets
Decrease/(increase) in deferred tax assets
Increase/(decrease) in payables
(Decrease)/increase in provisions
(Decrease)/increase in income tax payable
Net cash flows from operating activities
2022
$’000
2021
$’000
183,329
-
183,329
167,663
8,045
175,708
52,284
48,466
33,097
-
(4,334)
5,234
(652)
1,375
(1,454)
(53,339)
380
35,912
4,098
569
(959)
(7,340)
64,871
32,476
445
(7,943)
2,538
(3,006)
2,750
748
(56,211)
1,186
(32,306)
(2,932)
2,365
19,832
18,327
26,735
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 $26,128,243 (2021: $9,710,911).
Reconciliation of liabilities arising from financing activities
Hire purchase liabilities
Other lease liabilities
Loan
Non-cash Changes
New Leases/
Terminations
$’000
26,128
937
-
27,065
Cash Flows
$’000
(18,038)
(7,892)
10,771
(15,159)
2021
$ ’000
39,027
57,661
900
97,588
Other
$’000
(15)
-
1
2022
$’000
47,102
50,706
11,672
(14)
109,480
95 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
5. CASH AND CASH EQUIVALENTS (CONTINUED)
Reconciliation of liabilities arising from financing activities (continued)
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.
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
Release in ECL
Balance at the end of the year
Recognition and measurement
Trade receivables
Refer to accounting policies of financial assets in note 33.
Notes
2022
$’000
2021
$’000
284,776
(2,226)
282,550
90,007
(570)
89,437
371,987
225,861
(2,504)
223,357
96,181
(890)
95,291
318,648
30
-
6,000
2,504
(278)
2,226
3,581
(1,077)
2,504
Other debtors
Other debtors include contract assets that are unconditional (see note 7). These assets are reclassified to trade receivables when invoiced.
FINANCIAL REPORT 96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
7. CONTRACT ASSETS
CURRENT
Contract assets
2022
$’000
2021
$’000
23,773
59,685
Contract assets are net of expected credit losses of $154,818 (2021: $275,803).
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.
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.
2022
$’000
2021
$’000
3,220
3,600
97 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
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
Year ended 30 June 2022
Net carrying amount at 1 July 2021
14,811
15,395
37,456
Additions
Additions from business combination
Assets transferred
Disposals
Depreciation charge
Exchange differences
-
515
-
-
-
-
154
855
-
-
Plant and
Equipment
Under Hire
Purchase
$’000
48,674
26,128
-
6,752
842
5,981
(5,981)
Land and
Buildings
$’000
Plant and
Equipment
$’000
Total
$’000
46,173
937
-
-
382
162,891
-
-
-
33,971
2,212
-
(3,804)
(108)
(54)
(12)
(3,978)
(847)
(12,311)
(11,365)
(8,270)
(304)
(33,097)
34
(363)
(69)
294
9
75
(95)
161,904
Net carrying amount at 30 June 2022
15,326
15,591
34,553
57,279
39,080
At 30 June 2022
Gross carrying amount – at cost
15,326
28,822
149,918
79,628
59,305
1,399
334,398
Accumulated depreciation
Net carrying amount
-
(13,231)
(115,365)
(22,349)
(20,225)
(1,324)
(172,494)
15,326
15,591
34,553
57,279
39,080
75
161,904
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
Net carrying amount
-
(12,337)
(108,571)
(19,136)
(15,193)
(1,022)
(156,259)
14,811
15,395
37,456
48,674
46,173
382
162,891
FINANCIAL REPORT 98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
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 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.
99 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
10. INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
$’000
Goodwill
$’000
Total
$’000
Year ended 30 June 2022
At 1 July 2021
Amortisation
On business combination
Exchange differences
At 30 June 2022
Year ended 30 June 2021
At 1 July 2020
Amortisation
Exchange differences
At 30 June 2021
-
-
-
-
-
280
(280)
-
-
3,917
-
1,085
(100)
4,902
3,901
-
16
3,917
3,917
-
1,085
(100)
4,902
4,181
(280)
16
3,917
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 RTW 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. 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. On 12 July 2021, the Group acquired RTW business for a purchase price consideration of $2,950,000 which resulted
in goodwill of $1,085,057.
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.
FINANCIAL REPORT 100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
11. INVESTMENT 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
2022
$’000
11,181
652
652
2021
$’000
11,904
3,006
3,006
Commitments and contingent liabilities relating to Joint Ventures
The Group’s share of insurance bond guarantees issued by Joint Ventures at 30 June 2022 was $45,604,100 (2021: $52,716,995).
Joint ventures had no capital commitments at 30 June 2022 (2021: $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.
101 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
12. OTHER NON-CURRENT ASSETS
Other non-current assets
Other non-current assets consist of investments as follows:
2022
$’000
2021
$’000
3,440
3,259
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
2022
$’000
2021
$’000
123,451
119,652
12,539
32,696
22,617
25,848
168,686
168,117
Trade and other payables
Trade and other payables are carried at amortised cost and are not discounted due to their short-term nature. They represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged
to make future payments in respect of the purchase of these goods and services. The amounts are unsecured, non-interest bearing and are
usually paid within 30 to 45 days of recognition.
Sundry creditors and accruals are non-interest bearing and have terms of 7 to 30 days.
Contract liability
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount
of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a
contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as
revenue when the Group performs under the contract.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
FINANCIAL REPORT 102
14. INTEREST BEARING LOANS AND BORROWINGS
CURRENT
Loan – secured
NON-CURRENT
Loan – secured
Terms and conditions
2022
$’000
2021
$’000
10,901
900
771
-
Interest bearing loans and borrowings includes property loans and a $8,900,000 working capital facility secured against Buildtek’s trade
receivables.
Defaults and breaches
During the current and prior year, there were no defaults and breaches on any of the loans.
Recognition and measurement
Interest bearing loans and borrowings
Interest bearing loans and borrowings are initially recognised at fair value of the consideration received less directly attributable transaction
costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method.
Borrowings are classified as current liabilities unless the Group has 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.
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
Accretion of interest
Payments
Other
Carrying amount at the end of the financial year
2022
$’000
2021
$’000
17,922
8,045
25,967
29,180
42,661
71,841
96,688
27,065
3,288
14,091
7,887
21,978
24,936
49,774
74,710
88,369
26,895
2,987
(29,218)
(20,965)
(15)
97,808
(598)
96,688
103 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
15. LEASE LIABILITIES (CONTINUED)
Terms and conditions
Hire purchase agreements have an average term of three years. The average discount rate implicit in the hire purchase liability is 2.8%
(2021: 2.9%).
Other lease liabilities have an average term of 1.3 years. The average discount rate implicit in the other lease liability is 4.6% (2021:
3.8%).
The Group has total cash outflows for leases during 30 June 2022 of $11,152,000 (2021: $8,486,075)
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 lease assets transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset.
Lease assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be
made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of
penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption for those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to leases of
plant and equipment that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised
as expense on a straight-line basis over the lease term.
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the
lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be
exercised.
The Group has the option, under some of its leases to lease the assets for additional terms of one to five years. The Group applies judgement in
evaluating whether it is reasonably certain to exercise the option to renew and considers all relevant factors that create an economic incentive
for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
FINANCIAL REPORT 104
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
2022
$’000
2021
$’000
60,952
13,036
3,232
77,220
5,832
-
5,832
11,938
11,951
(10,853)
13,036
63,555
11,938
1,523
77,016
5,145
1,376
6,521
9,349
11,285
(8,696)
11,938
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 obligations.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in
the income statement net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure to settle the present obligation at the
reporting date using a discounted cash flow methodology. The risks specific to the provision are factored into the cash flows and as such a
risk-free government bond rate relevant to the expected life of the provision is used as a discount rate. The increase in the provision resulting
from the passage of time is recognised as a finance cost.
Employee benefits
Employee benefits includes liabilities for wages and salaries, rostered days off, vesting sick leave, project incentives and project
redundancies. It is customary within the engineering and construction industry for incentive payments and redundancies to be paid to
employees at the completion of a project. The provision has been created to cover the expected costs associated with these statutory and
project employee benefits.
Liabilities for short term benefits expected to be wholly settled within twelve months of the reporting date are recognised in respect of
employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liability is settled. Expenses
for non-vesting sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
The liability for long term benefits is recognised and measured as the present value of the expected future payments to be made in respect
of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using
market yields at the reporting date on high quality corporate bonds, which have terms to maturity approximating the estimated future cash
outflows.
105 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OPERATING ASSETS
AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2022
16. PROVISIONS (CONTINUED)
Recognition and measurement (continued)
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”). The Group had an option (put/call) to acquire 25%
of the share capital of Buildtek and MAQ Rent from the Minority Interest owner.
On 20 August 2021, the Group exercised its option to purchase an additional 15% of the share capital of Buildtek and MAQ Rent
increasing its share to 90%.
The Group retained its option to acquire the remaining 10% of the shares on issue of Buildtek and MAQ Rent in three years’ time. Similarly,
the existing holders of the remaining 10% 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 at the end of the option period.
The amount payable will be determined based on a multiple of the average annual earnings for the three years ending 31 December 2025.
At 30 June 2022, the financial liability associated with the option held by the minority shareholders was $3,206,357 (2021: $10,150,590).
FINANCIAL REPORT 106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2022
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 2022, the Group is in a
net cash position of $124,555,000 (2021: $135,781,000) and has a debt to equity ratio of 14.3% (2021: 10.1%) which is within the
Group’s net cash and debt to equity target levels.
During the year ended 30 June 2022, management paid dividends of $42,762,000 (2021: $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.
2022
$’000
2021
$’000
19. DIVIDENDS PAID AND PROPOSED
Declared and paid during the year
Current year interim
Interim franked dividend for 2022 (24 cents per share) (2021: 24 cents per share)
22,829
22,724
Previous year final
Final franked dividend for 2021 (21 cents per share) (2020: 13 cents per share)
19,933
12,303
Unrecognised amounts
Current year final
Final franked dividend for 2022 (25 cents per share) (2021: 21 cents per share)
23,834
19,933
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
39,101
44,961
(10,215)
28,886
(8,543)
36,418
Tax rates
The tax rate at which paid dividends have been franked is 30% (2021: 30%). Dividends payable will be franked at the rate of 30% (2021:
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.
107 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2022
20. CONTRIBUTED EQUITY
Ordinary shares – Issued and fully paid
Ordinary shares
2022
$’000
2021
$’000
136,096
132,608
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.
Beginning of the financial year
Transfer from reserved shares
Dividend reinvestment plan
Exercise of performance rights
End of the financial year
Recognition and measurement
2022
2021
Number of Shares
$’000
Number of Shares
$’000
94,761,152
132,608
94,489,833
132,576
-
345,997
155,556
-
3,488
-
-
119,673
151,646
(1,269)
1,301
-
95,262,705
136,096
94,761,152
132,608
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2022
FINANCIAL REPORT 108
21. RESERVES AND RETAINED EARNINGS
Foreign currency translation reserve
Share-based payment reserve
Fair value reserve for financial assets
Equity reserve
2022
$’000
2021
$’000
(3,137)
42,766
1,264
(6,359)
34,534
(1,956)
37,337
1,137
(5,651)
30,867
Retained earnings
241,554
232,097
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from translation of the financial statements of foreign
subsidiaries.
Share-based payment reserve
The share-based payment reserve is used to record the value of equity benefits provided to employees and directors as part of their
remuneration. Refer to note 28 for further details of these plans.
Fair value reserve 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 10% (2021: 25%) of the shares on issue of Buildtek SpA and MAQ Rent SpA.
109 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2022
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 Ltd2
Evo Access Pty Ltd
Monadelphous Investments Pty Ltd
MWOG Pty Ltd
MOAG Pty Ltd
Monadelphous International Holdings Pty Ltd
Arc West Group Pty Ltd
R.I.G. Installations (Newcastle) Pty Ltd
RE&M Services Pty Ltd
Pilbara Rail Services Pty Ltd
EC Projects Pty Ltd
Monadelphous RTW Pty Ltd*
MMW 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 LLC1
Monadelphous Engineering NZ Pty Ltd
Monadelphous Chile SpA
MAQ Rent SpA (Note 17)
Buildtek SpA (Note 17)
Monadelphous Sdn Bhd
Incorporated during the year
# 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.
1. Deregistered during the year
2. Remaining 30% acquired during the year
Percentage Held by
Consolidated Entity
Country of
Incorporation
2022
%
2021
%
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
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
90
90
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70^
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
75
75
100
FINANCIAL REPORT 110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2022
22. SUBSIDIARIES (CONTINUED)
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 (2021: none).
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
2022
%
2021
%
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
During the period, Monadelphous established an unincorporated joint venture, Alevro, to provide turnkey heavy lift solutions.
Commitments and contingent liabilities relating to joint operations
There were no capital commitments or contingent liabilities relating to the joint operations at 30 June 2022 (2021: $nil).
Impairment
There were no assets employed in the joint operations during the year ended 30 June 2022 (2021: $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.
111 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: FINANCIAL RISK
MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2022
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
5
14
2022
$’000
2021
$’000
183,329
(10,013)
173,316
175,708
(900)
174,808
The Group utilises a number of financial institutions to obtain the best interest rate possible and to manage its risk. The Group does not
enter into interest rate hedges.
At 30 June 2022, reasonably possible movements in variable interest rates, based on a review of historical movements and forward rate
curves for forward rates would not have had a material impact on the Group.
Foreign currency risk
As a result of operations in Papua New Guinea, China, Mongolia, New Zealand and Chile the Group’s statement of financial position can be
affected by movements in the US$/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 2022, the Group had
no forward contracts (2021: nil).
The Group also mitigates its exposure to foreign currency risk by minimising excess foreign currency balances in overseas jurisdictions not
required for working capital.
FINANCIAL REPORT 112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: FINANCIAL RISK
MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2022
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
Foreign currency risk (continued)
At 30 June 2022, the Group had the following exposure to foreign currency:
Year ended 30 June 2022
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
Year ended 30 June 2021
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
PGK
AUD $’000
USD
AUD $’000
28,666
18,404
(3,189)
43,881
13,008
9,454
(2,710)
19,752
5,844
7,512
(623)
12,733
15,086
774
(268)
15,592
At 30 June 2022, reasonably possible movements in USD foreign exchange rates, based on a review of historical movements, would not
have had a material impact on the Group (2021: no material impact).
At 30 June 2022, if the PGK 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 PGK:
+5% (2021: +5%)
-5% (2021: -5%)
Post Tax Profit
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2022
$’000
(1,535)
1,535
2021
$’000
(446)
446
2022
$’000
-
-
2021
$’000
-
-
The reasonably possible movements have been based on review of historical movements.
113 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: FINANCIAL RISK
MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2022
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 $579,089,000 at 30 June 2022
(2021: $554,041,000).
The Group considers the probability of default upon initial recognition of a financial asset and whether there has been a significant increase
in credit risk on an ongoing basis throughout the reporting period.
Except for trade receivables, contract assets and other short-term receivables (see below), expected credit losses (ECL’s) are recognised in
two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided
for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures
for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
To assess whether there is a significant increase in credit risk the Group compares the risk of a default occurring on the asset as at the
reporting date with the risk of default as at the date of initial recognition. In making this assessment, the Group considers information that
is reasonable and supportable, including historical experience and forward-looking information. Forward-looking information considered
includes consideration of external sources of economic information. In particular, the Group takes into account the counterparties external
credit rating (as far as available), actual or expected significant changes in the operating results of the counterparty and macroeconomic
indicators when assessing significant movements in credit risk.
Trade receivables and contract assets
The Group trades with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms
are subject to credit verification procedures. Publicly available credit information from recognised providers is utilised for this purpose where
available.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
The Group minimises concentrations of credit risk in relation to accounts receivable and contract assets by undertaking transactions with
a number of customers within the resources, energy and infrastructure industry sector. There are multiple contracts with our significant
customers, across a number of their subsidiaries, divisions within those subsidiaries and locations.
For transactions that are not denominated in the functional currency of the relevant operating unit, the Group does not offer credit terms
without the specific approval of the Chairman, Managing Director or Chief Financial Officer.
Since the Group trades with recognised third parties, there is no requirement for collateral.
The Group applies a simplified approach in calculating ECLs for trade receivables and contract assets. Therefore, the Group does not track
changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. An impairment analysis is
performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due
ageing for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the
time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions
and forecasts of future economic conditions.
A receivable is considered to be credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows
have occurred. Evidence that a receivable is credit-impaired includes observable data about significant financial difficulty of the debtor or a
breach of contract, such as a default or past due event.
FINANCIAL REPORT 114
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: FINANCIAL RISK
MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2022
24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
Credit risk (continued)
Set out below is the information about the credit risk exposure on the Group’s trade receivables and contract assets, for which lifetime
expected credit losses are recognised, using a provision matrix:
Trade Receivables
Days Past Due
Contract
Assets
Current
<31
Days
31-60
Days
61-90
Days
>91
Days
Total
30 June 2022
Expected credit loss rate
0.6%
0.6%
0.6%
0.6%
0.6%
17.0%
Total estimated gross carrying
amount at default ($’000)
23,928
236,840
36,095
Expected credit loss ($’000)
155
1,349
218
4,927
30
3,335
21
3,579
284,776
608
2,226
Trade Receivables
Days Past Due
Contract
Assets
Current
<31
Days
31-60
Days
61-90
Days
>91
Days
Total
30 June 2021
Expected credit loss rate
0.5%
0.5%
0.7%
1.7%
5.0%
21.3%
Total estimated gross carrying
amount at default ($’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
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.
115 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: FINANCIAL RISK
MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2022
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
2022
$’000
2021
$’000
390,000
121,230
511,230
140,370
58,774
199,144
249,630
62,456
312,086
440,000
102,648
542,648
218,331
39,927
258,258
221,669
62,721
284,390
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 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.
CONTINUED
FINANCIAL REPORT 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: FINANCIAL RISK
MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2022
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 2022.
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 2022
Financial liabilities
Trade and other payables
168,686
Hire purchase liability
Other lease liabilities
Bank loans
Other financial liability
9,019
4,898
184
-
-
10,256
4,434
10,801
-
-
30,202
30,576
794
3,577
-
-
15,546
-
-
168,686
168,686
49,477
55,454
11,779
3,577
47,102
50,706
11,672
3,206
Net maturity
182,787
25,491
65,149
15,546
288,973
281,372
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 liability
Other lease liabilities
Bank loans
Other financial liability
7,680
4,761
608
-
-
7,283
4,644
302
-
Net maturity
181,166
12,229
Net fair values of financial assets and liabilities
-
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
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 2022 or 30 June 2021.
117 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
25. COMMITMENTS AND CONTINGENCIES
Capital commitments
The consolidated group has capital commitments of $5,066,769 at 30 June 2022 (2021: $8,988,277).
Guarantees
2022
$’000
2021
$’000
Guarantees given to various clients for satisfactory contract performance
140,370
218,331
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
The Group is subject to various 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 at balance date.
26. SUBSEQUENT EVENTS
Dividends declared
On 22 August 2022, the directors of Monadelphous Group Limited declared a final dividend on ordinary shares in respect of the 2022
financial year. The total amount of the dividend is $23,834,482 which represents a fully franked final dividend of 25 cents per share. This
dividend has not been provided for in the 30 June 2022 financial statements. The Monadelphous Group Limited Dividend Reinvestment
Plan will apply to the dividend.
FINANCIAL REPORT 118
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
27. PARENT ENTITY INFORMATION
Information relating to Monadelphous Group Limited parent entity
Notes
2022
$’000
2021
$’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
121,851
253,369
127,283
929,001
-
(670,348)
(30,293)
(728,926)
223,076
200,075
136,096
132,608
41,578
1,264
44,138
35,335
1,137
30,995
223,076
200,075
49,714
50,218
38,727
38,727
25
140,370
218,331
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 2022 (2021: $nil).
119 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
28. SHARE BASED PAYMENT EXPENSE
The share-based payment expense for the year ended 30 June 2022 was $5,234,640 (2021: $2,537,803) for the consolidated entity.
Performance Rights
No performance rights were granted during the year ended 30 June 2022 and 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.
2022
2021
Number of
Performance
Rights
Weighted
Average Exercise
Price $
Number of
Performance
Rights
Weighted
Average Exercise
Price $
236,193
-
(155,556)
(5,413)
75,224
75,224
nil
nil
nil
nil
nil
nil
406,142
-
(161,250)
(8,699)
236,193
155,556
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
Retention Rights
On 20 December 2021, 1,115,200 retention rights were granted by Monadelphous Group Limited under the 2021 Monadelphous
Employee Retention Plan. The retention rights were issued in the form of performance rights and vest into shares in equal instalments, one,
two and three years subsequent to award, subject to the employee remaining in the employment of the Company at those particular dates.
A further 43,600 retention rights have been offered to the Group’s Managing Director, Robert Velletri, with the issue being subject to
shareholder approval at the 2022 Annual General Meeting.
The fair value of each retention right issued during the period was estimated on the date of grant using a discounted cash flow calculation.
The weighted average fair value of retention rights granted in the period was $8.17.
The following table illustrates the number and weighted average exercise prices of and movements in retention rights granted, exercised and
forfeited during the year.
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
2022
2021
Number of
Retention
Rights
Weighted
Average Exercise
Price $
Number of
Retention
Rights
Weighted
Average Exercise
Price $
-
1,115,200
-
(28,400)
1,086,800
362,202
nil
nil
nil
nil
nil
nil
-
-
-
-
-
-
nil
nil
nil
nil
nil
nil
FINANCIAL REPORT 120
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
28. SHARE BASED PAYMENT EXPENSE (CONTINUED)
Options
In November 2021, 300,000 options, which had been offered to the Company’s Managing Director in November 2020, were approved
to be granted at the Company’s Annual General Meeting at an exercise price of $9.30. 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
Risk-free interest rate
Expected life of option
5.44%
44.0%
0.21% - 0.95%
25% - 1 years
25% - 2 years
50% - 3 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.
The resulting weighted average fair values for options outstanding at 30 June 2022 are:
Number
562,500
562,500
1,125,000
75,000
75,000
150,000
697,500
697,500
1,395,000
75,000
75,000
150,000
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
23/11/2021
23/11/2021
23/11/2021
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
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
$1.23
$1.69
$1.96
121 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
28. SHARE BASED PAYMENT EXPENSE (CONTINUED)
Options (continued)
The following table illustrates the number and weighted average exercise prices of and movements in options granted, exercised and
forfeited during the year.
Balance at the beginning of the year
Granted during the year
Forfeited during the year
Balance at the end of the year
2022
2021
Number of
Options
Weighted
Average Exercise
Price $
5,590,000
300,000
(250,000)
5,640,000
11.92
9.30
11.29
11.80
Number of
Options
2,400,000
3,250,000
(60,000)
5,590,000
Exercisable during the next year
2,047,500
11.43
660,000
Weighted
Average Exercise
Price $
14.84
9.81
14.84
11.92
14.84
No options were exercised during the period. As a result of the EPS performance hurdle not being met, the first tranche of the 2019 award
of options did not vest and have been rolled over to be re-tested in the next window period commencing 1 September 2022.
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, the 2021 Monadelphous Group Limited Employee Retention Plan and
the Monadelphous Group Limited Employee Option Plan.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date
on which they are granted. The fair value is determined by an external valuer. In valuing equity-settled transactions, no account is taken of
any performance conditions, other than conditions linked to the price of the shares of Monadelphous Group Limited (market conditions), if
applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become
fully entitled to the award (the vesting date).
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects (i) the extent to which
the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest. This
opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement
charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally
anticipated to do so. Any award subject to market condition is considered to vest irrespective of whether or not that market condition is
fulfilled, provided that all other conditions are satisfied.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
29. AUDITOR’S 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 of 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
FINANCIAL REPORT 122
2022
$
2021
$
375,282
342,221
28,200
49,350
-
403,482
122,567
514,138
9,174
11,202
9,510
18,684
18,457
29,659
422,166
543,797
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
The Group had sales to the joint venture during the year totalling $3,413,805 (2021: $4,110,085).
Mondium
There were no loans receivable from Mondium at 30 June 2022 (2021: $6,000,000).
The Group had sales to the joint venture during the year totalling $94,357,476 (2021: $102,607,792).
2022
$
2021
$
4,527,670
3,833,031
175,345
134,970
989,875
159,270
13,845
615,010
5,827,860
4,621,156
123 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
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 2022, the Engineering Construction division contributed revenue of $774.4 million (2021: $979.0
million) and the Maintenance and Industrial Services division contributed revenue of $1,166.0 million (2021: $976.9 million). Included in
these amounts is $10.3 million (2021: $2.8 million) of inter-entity revenue and $120.6 million (2021: $199.4 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 26% (2021: 36%) of the Group’s
revenue. One other customer individually contributed 23% (2021: 11%) of the Group’s revenue. There are multiple contracts with these
customers, across a number of their subsidiaries and divisions within those subsidiaries and locations.
GEOGRAPHICAL INFORMATION
Revenue from external customers
Australia
Chile
Papua New Guinea
Other overseas locations
Total non-current assets
Australia
Chile
Papua New Guinea
Other overseas locations
2022
$’000
2021
$’000
1,624,561
1,631,457
97,727
83,289
3,874
55,998
47,421
18,862
1,809,451
1,753,738
186,759
14,854
6,647
792
207,696
6,600
3,957
1,173
209,052
219,426
FINANCIAL REPORT 124
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
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
2022
$’000
2021
$’000
72,234
(20,546)
51,688
198,368
(42,762)
51,688
207,294
49,299
(17,448)
31,851
201,544
(35,027)
31,851
198,368
125 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
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
2022
$’000
2021
$’000
118,863
278,894
25,648
423,405
18,948
140,191
15,629
3,440
4,203
182,411
605,816
115,082
287,623
59,685
462,390
17,345
152,549
20,723
3,120
3,259
196,996
659,386
67,593
124,531
-
21,708
15,154
46,311
900
20,584
21,466
44,683
150,766
212,164
771
64,530
5,056
70,357
221,123
384,693
136,096
41,303
207,294
384,693
-
73,899
5,874
79,773
291,937
367,449
132,608
36,473
198,368
367,449
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
FINANCIAL REPORT 126
33. OTHER ACCOUNTING STANDARDS
Other accounting policies
Financial assets
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through OCI, and fair value
through profit or loss.
With the exception of trade receivables, that do not have a significant financing component, the Group initially measures a financial asset
at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not
contain a significant financing component are measured at the transaction price determined under AASB 15.
Financial assets at amortised cost
The Group measures financial assets at amortised cost where the objective is to hold financial assets in order to collect contractual cash
flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost includes trade receivables.
Financial assets at fair value
For financial assets at fair value, gains and losses will either be reported in profit or loss or other comprehensive income. For investments
in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of
initial recognition to account for the equity instruments at fair value through OCI.
Gains and losses on financial assets designated at fair value through OCI are not recycled to profit or loss. Dividends are recognised as
other income in the statement of profit or loss when the right of payment has been established. Equity instruments designated at fair value
through OCI are not subject to impairment assessment.
Impairment of financial assets
The Group recognises an allowance for ECLs for trade receivables, contract assets and other debt financial assets not held at fair value
through profit or loss. ECLs are based on the difference between the contracted cash flows due in accordance with the contract and all the
cash flows the Group expects to receive, discounted at an approximation of the original effective interest rate.
For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses and recognises a
loss allowance based on lifetime expected credit losses at each reporting date. The Group has established a provision matrix that is based
on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
Definition of default
The Group considers a financial asset to be in default when contractual payments are 90 days past due or when internal or external
information indicates that the Group is unlikely to receive the outstanding contractual amounts in full.
Write off policy
A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement
of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and
financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
127 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
33. OTHER ACCOUNTING STANDARDS (CONTINUED)
New and amended Accounting Standards and Interpretations
Monadelphous Group Limited and its subsidiaries has adopted all new and amended Australian Standards and Interpretations mandatory
for reporting periods beginning on or before 1 July 2021.
Revised Standards and Interpretations which apply from 1 July 2021 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 2022.
Reference
Summary
AASB 2020-3
Amendments to AASB
3 – Reference to the
Conceptual Framework
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.
Application date
of standard
Application date
for Group
1 January 2022 1 July 2022
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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
FINANCIAL REPORT 128
33. OTHER ACCOUNTING STANDARDS (CONTINUED)
New accounting standards and interpretations issued but not yet effective (continued)
Reference
Summary
AASB 2020-3
Amendments to AASB
116 – Property, Plant
and Equipment:
Proceeds before
Intended Use
AASB 2020-3
Amendment to AASB 9 –
Fees in the ‘10 per cent’
Test for Derecognition of
Financial Liabilities
AASB 2014-10
Amendments to
Australian Accounting
Standards – Sale or
Contribution of Assets
between an Investor and
its Associate or Joint
Venture
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.
Under AASB 9, an existing financial liability that has been modified
or exchanged is considered extinguished when the contractual terms
of the new liabilities are substantially different, measured by the ’10
per cent’ test. That is, when the present value of the cash flows under
the new terms, including any fees paid or received, is at least 10 per
cent different from the present value of the remaining cash flows of the
original financial liability.
The amendment to AASB 9 clarifies that fees included in the 10 per
cent test are limited to fees paid or received between the borrower and
the lender, including amounts paid or received by them on the other’s
behalf. When assessing the significance of any difference between the
new and old contractual terms, only the changes in contractual cash
flows between the lender and borrower are relevant. Consequently,
fees incurred on the modification or exchange of a financial liability
paid to third parties are excluded from the 10 per cent test.
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.
Application date
of standard
Application date
for Group
1 January 2022 1 July 2022
1 January 2022 1 July 2022
1 January 2025 1 July 2025
129 ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
33. OTHER ACCOUNTING STANDARDS (CONTINUED)
New accounting standards and interpretations issued but not yet effective (continued)
Reference
Summary
AASB 2021-5
Amendments to AASs
– Deferred Tax related
to Assets and Liabilities
arising from a Single
Transaction
AASB 112 Income Taxes requires entities to account for income tax
consequences when economic transactions take place, and not at the
time when income tax payments or recoveries are made. Accounting
for such tax consequences, means entities need to consider the
differences between tax rules and accounting standards. These
differences could either be:
• Permanent – e.g., when tax rules do not allow a certain expense to
Application date
of standard
Application date
for Group
1 January 2023 1 July 2023
ever be deducted Or
• Temporary – e.g., when tax rules treat an item of income as taxable
in a period later than when included in the accounting profit
Deferred taxes representing amounts of income tax payable or
recoverable in the future must be recognised on temporary differences
unless prohibited by AASB 112 in certain circumstances. One of these
circumstances, known as the initial recognition exception, applies
when a transaction affects neither accounting profit nor taxable profit,
and is not a business combination. Views differ about applying this
exception to transactions that, on initial recognition, create both an
asset and liability (and could give rise to equal amounts of taxable and
deductible temporary differences) such as:
• Recognising a right-of-use asset and a lease liability when
commencing a lease
• Recognising decommissioning, restoration and similar liabilities with
corresponding amounts included in the cost of the related asset
Some entities have previously recognised deferred tax consequences
for these types of transactions, having concluded that they did not
qualify for the initial recognition exception. The amendments to
AASB 112 clarify that the exception would not normally apply. That
is, the scope of this exception has been narrowed such that it no
longer applies to transactions that, on initial recognition, give rise to
equal amounts of taxable and deductible temporary differences. The
amendments apply from the beginning of the earliest comparative
period presented to:
• All transactions occurring on or after that date
• Deferred tax balances, arising from leases and decommissioning,
restoration and similar liabilities, existing at that date
The cumulative effect of initial application is recognised as an
adjustment to the opening balance of retained earnings or other
component of equity, as appropriate.
FINANCIAL REPORT 130
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2022
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.
Application date
of standard
Application date
for Group
1 January 2023 1 July 2023
131 ANNUAL REPORT 2022
INVESTOR INFORMATION
FOR THE YEAR ENDED 30 JUNE 2022
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows.
The information is current at 12 September 2022.
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
6,115
4,063
755
598
30
11,561
The number of shareholders holding less than marketable parcels is 392.
b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
Rank Name
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
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