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2023 ReportPeers and competitors of Monadelphous Group Limited:
NRW Holdings LimitedANNUAL
REPORT
2023
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.
This page: A Monadelphous scaffolder working on the bucket wheel reclaimer
at Rio Tinto’s Parker Point, Pilbara region, Western Australia.
Cover images
Left: Monadelphous employees at Rio Tinto’s ship loader at Cape Lambert,
Pilbara region, Western Australia.
Middle: A Monadelphous employee at Rio Tinto’s Parker Point, Pilbara region,
Western Australia.
Right: The Lal Lal Wind Farm, located in the Moorabool Shire, Victoria.
CONTENTS
OVERVIEW
In Memory of John Rubino
About Monadelphous
Our Services and Locations
OPERATING AND FINANCIAL REVIEW
2022/23 Highlights
Performance at a Glance
Markets and Growth Strategy
Chair’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 the Consolidated Financial Statements
CONTENTS 2
CONTENTS 2
3
5
7
9
11
13
15
17
21
23
25
31
37
49
53
70
75
76
81
Investor Information
124
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 2023 financial year.
References in this Report to ‘the year’, ‘the reporting period’ and ‘the period’ relate to the financial
year 1 July 2022 to 30 June 2023, 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 2023 Annual General Meeting
will be held at The University Club, University of Western Australia, Crawley, Western Australia,
and online, on Tuesday, 21 November 2023 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 2023 Annual Report has
The Monadelphous 2023 Annual Report has
been printed on FSC Recycled certified paper
been printed on FSC Recycled certified paper
as part of the Company’s environmental
as part of the Company’s environmental
commitment to reducing waste.
commitment to reducing waste.
3 ANNUAL REPORT 2023
3 ANNUAL REPORT 2023
IN MEMORY OF
19 45 – 2 023
many, he was incredibly generous and
a winner fair and square. He was the
best kind of winner, because when John
won, everyone around him won.
It goes without saying that John’s
proudest achievement of all is much
closer to home, his family – his
beloved wife, three daughters and eight
grandchildren.
John’s memory will always be present
in our corridors at Monadelphous and in
the stories of our people.
We will continue
to do you proud,
John.
Calogero Giovanni Battista (John) Rubino was
born in Delia, a small agricultural town in Sicily,
Italy, on 26 June 1945.
An only son, with three younger sisters,
John made the tough decision to leave
his tight-knit family in Italy at the age
of 21 in search of adventure, arriving in
Australia on 6 September 1966.
From 1966 to 1970 John worked
throughout the country, gaining
experience in a range of roles across the
structural and civil sectors, from rigging
and surveying to project management,
and eventually based himself in Western
Australia (WA). In partnership with
three great friends, John formed Rubino
and Company, which later became
the successful United Construction
Group (today, UGL). So reflective of
the way John did business, the United
partnership was built on a trusting
handshake with no signed agreement
between them. All four were equal
partners from the outset and remained
friends for life.
In 1987, John and his partners bought
into Monadelphous, only to discover
the Company was insolvent. He went
on to describe this as the ‘best mistake
he ever made’. With an initial six-
month commitment to stand in as
Monadelphous’ Chair and Managing
Director, John ended up leading the
Company for more than 30 years.
Under John’s exceptional leadership,
Monadelphous’ fortunes turned around.
The Company became a place where
people were proud to come and work,
that suppliers had confidence in and
that customers knew and respected.
During John’s time at the helm,
Monadelphous was trusted with the
construction and maintenance of
some of the largest and most complex
projects and facilities across Australia,
as well as internationally. This included
projects with BHP, Rio Tinto, Woodside,
Chevron, Shell, Origin, INPEX, Newcrest
and South32, amongst others. The
Company John helped build has grown
to employ up to 8,000 people at any
one time across its global operations.
John’s business acumen was
breathtaking, and his ability to form
long-term trusting and mutually
rewarding relationships is the stuff of
legend. With his thick Sicilian accent
and his cracking sense of humour,
John was a born leader, with enormous
charisma and an ability to inspire
people like no other. A mentor to
OVERVIEW 4
CONTENTS 4
Celebrating
the life and
legend
5 ANNUAL REPORT 2023
ABOUT
MONADELPHOUS
Monadelphous is an Australian engineering group headquartered in Perth,
Western Australia, providing construction, maintenance and industrial
services to the resources, energy and infrastructure sectors.
The Company builds, maintains and improves its customers’ operations
through safe, reliable, innovative and cost-effective service solutions.
It aims to be recognised as a leader in its chosen markets and a truly
great company to work for, work with and invest in.
Our History
Our Operations
Monadelphous emerged from a business which started in
1972 in Kalgoorlie, Western Australia, providing general
mechanical contracting services to the growing mining
industry.
Monadelphous has two operating divisions working
predominately in Australia, with overseas operations and
offices in China, Mongolia, Papua New Guinea and the
Philippines.
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. In the late 1980s, a
major restructure of the Company took place with the business
refocusing on maintenance and construction services in the
resources industry.
By the 1990s, under a new management team, the Company
had established the foundations for sustained growth and
continued to diversify and extend its reputation as a supplier
of multidisciplinary construction, maintenance and industrial
services to many of the largest companies.
Today, Monadelphous’ shares are included in the S&P/ASX
200 index.
Engineering Construction
The Engineering Construction division provides large-scale
multidisciplinary project management and construction
services. These include fabrication, modularisation,
procurement and installation of structural steel, tankage,
mechanical and process equipment, piping, commissioning,
demolition, water asset construction, heavy lift, electrical
and instrumentation and engineering, procurement and
construction services.
Maintenance and Industrial Services
The Maintenance and Industrial Services division specialises
in the planning, management and execution of mechanical
and electrical maintenance services, shutdowns, sustaining
capital works, fixed plant maintenance services, access
solutions, specialist coatings and rail maintenance services.
Rio Tinto’s West Angelas mine,
Pilbara region, Western Australia.
OVERVIEW 6
7 ANNUAL REPORT 2023
OUR SERVICES
AND LOCATIONS
Monadelphous operates predominately in Australia, with overseas
operations and offices in China, Mongolia, Papua New Guinea
and the Philippines.
Engineering Construction
Market Sector
Market Sector
1
2
3
4
5
6
7
Australia Pacific LNG - Supply, fabrication and assembly
of wellhead separator skids
Energy
Bechtel - Pluto Train 2 Project - Haulage and lifting services
Energy
BHP - Car Dumper 3 Renewal Project - SMP works
Iron Ore
BHP - South Flank Project - SMPE&I works for inflow
infrastructure
BHP - WAIO Asset Projects Framework - Various SMPE&I
packages
Iron Ore
Iron Ore
11 MARBL Lithium JV - SMPE&I works for lithium hydroxide plant
Lithium
12
13
NMT Logistics - Iron Bridge Magnetite Project - Lifting and
haulage services
Iron Ore
Oyu Tolgoi - Oyu Tolgoi Underground Project - Construction
services
Copper
14 Rio Tinto - Gudai-Darri Project - SMPE&I works
Iron Ore
15
Rio Tinto - Western Turner Syncline Phase 2 Project - Shutdown
works
Iron Ore
CPB Contractors and John Holland JV - West Gate Tunnel
Project - Movement of structural steel
Infrastructure
16 Rye Park Renewable Energy - Rye Park Wind Farm - BOP works Renewable Energy
Fabrication of structural steel for construction project
in Ashburton
8
Fortescue - Crane services
Iron Ore
Iron Ore
17
18
Talison Lithium - Greenbushes Mine - Mine services area
facilities construction
Lithium
Tronox Mining Australia - Broken Hill HMC Upgrade Project -
CSMPE&I works
Mineral Sands
9
Fortescue subsidiary FMG Magnetite Pty Ltd and Formosa Steel
IB Pty Ltd - Iron Bridge Magnetite Project - SME&I works
Iron Ore
19 Woodside - Crane services
Energy
10
Liontown Resources - Kathleen Valley Lithium Project - Supply
and fabrication of structural steel
Lithium
Maintenance and Industrial Services
Market Sector
Market Sector
1
BHP - General maintenance, shutdowns and sustaining capital
works
Iron Ore
11 Queensland Alumina Limited - Maintenance and projects
Alumina
2
BHP - Maintenance and shutdowns
3
BHP - Mt Arthur Coal - Shutdown maintenance and minor
projects
4
BHP - Olympic Dam - Maintenance and shutdowns
Nickel
Coal
Copper, Gold,
Uranium
5
6
7
BHP Mitsubishi Alliance - Maintenance and shutdown works
Coal
Fortescue - Maintenance, shutdowns and minor projects
Iron Ore
INPEX Operations Australia - Offshore maintenance services
Energy
8 Newcrest Mining - Maintenance works
9
Origin - Turnaround and shutdown services
Gold
Energy
12
Rio Tinto - Fixed plant maintenance, marine maintenance and
sustaining capital works
Iron Ore
13 Rio Tinto - Shutdown services
14
Roy Hill - Construction of pipeline, access road and transfer
pond infrastructure
15 Santos - EPC services
16 Shell - Provision of services
17 Shell - Provision of services
18
19
South32 - Worsley Alumina Refinery - Shutdown and
mechanical services
Synergy - Muja Power Station and Collie Power Station -
Infrastructure O&M
Bauxite
Iron Ore
Energy
Energy
Energy
Alumina
Power
10
Petrofac - O&M and industrial services for decommissioning of
Northern Endeavour FPSO
Oil & Gas
20 Woodside - Onshore and offshore maintenance services
Energy
Abbreviations:
BOP - balance of plant; CSMPE&I - civil, structural, mechanical, piping, electrical and instrumentation; EPC - engineering, procurement and construction; FPSO - floating production, storage and
offtake facility; O&M - operation and maintenance; SME&I - structural, mechanical, electrical and instrumentation; SMP - structural, mechanical and piping; SMPE&I - structural, mechanical,
piping, electrical and instrumentation; WAIO - Western Australian Iron Ore.
OVERVIEW 8
Mongolia
13
China
Ulaanbaatar
Beijing
Tianjin
Philippines
Manila
Papua New Guinea
8
15
Australia
Darwin
13
Port Hedland
7
10 16
Pilbara Coastal
and North-West Region
2
1
3
6
4
5
7
8
9 12 14 15 19
12 14 20
Karratha
Tom Price
Newman
2
10
Kalgoorlie
PERTH
HEAD OFFICE
Bunbury
18 19
11
17
Australia
4
18
Mackay
Gladstone
BRISBANE
Chinchilla
Muswellbrook
Mt Thorley
Rutherford
Newcastle
5
11
17
1
9
3
16
Capel
Bibra Lake
Roxby Downs
Legend
Major offices
Offices and workshops
Engineering Construction
Maintenance and Industrial Services
Whyalla
6
Morwell
9 ANNUAL REPORT 2023
2022/23
HIGHLIGHTS
Monadelphous made solid progress on its markets and growth strategy,
securing approximately $2 billion in new contracts and extensions since
the beginning of the financial year, including several significant construction
contracts post year end.
Record revenue in Maintenance and Industrial Services
The Maintenance and Industrial Services division achieved record annual revenue of $1.3 billion, reflecting sustained buoyant
conditions across the resources and energy sectors.
Improving margin
Continued focus on driving improved
productivity, maintaining operational
discipline and increasing efficiency
across the business delivered an
increased Earnings Before Interest,
Tax, Depreciation and Amortisation
margin of 5.96 per cent, up from
5.76 per cent on the prior year.
OPERATING AND FINANCIAL REVIEW 10
Awarded long-term maintenance contracts
in lithium sector
Monadelphous was awarded two five-year contracts for
the provision of maintenance services and sustaining
capital projects at Albemarle’s operations in Kemerton,
Western Australia.
Formalised Emissions and Energy Reduction
Roadmap
As part of its goal of achieving net zero emissions by 2050,
the Company formalised its Emissions and Energy Reduction
Roadmap and established working groups focused on
its transition to renewable power, ‘greening’ its fleet and
optimising operational activities.
Acquired BMC to establish presence in east coast
energy market
The Company acquired Victorian-based specialist high voltage
and instrumentation installation, calibration and maintenance
service provider BMC, enabling Monadelphous to develop a
presence in the east coast energy generation, transmission and
storage market and expand its geographical footprint in the
growing offshore oil and gas decommissioning sector.
Awarded new major
resources construction
contracts post year end
Monadelphous was awarded
several major resources
construction projects in the
iron ore and lithium sectors
post year end.
Significant contracts secured in iron ore
Since the beginning of the financial year, the Company was
awarded more than $750 million of new work in the Western
Australian iron ore sector with long-term customers, including
BHP, Rio Tinto and Fortescue.
11 ANNUAL REPORT 2023
PERFORMANCE
AT A GLANCE
Revenue1
EBITDA margin
$1.83b
5.96%
Net profit after tax
Earnings per share
$53.5m
55.8c
Full year dividend
Contracts secured since beginning of FY23
49.0c
$2b
Revenue by geography
Revenue by end customer
WA
NSW
International
QLD
NT
SA
57%
12%
12%
10%
7%
2%
Iron ore
Energy
Other minerals
Energy transition
metals
Infrastructure
31%
30%
18%
13%
8%
Safety performance
6.00
4.00
2.00
0.00
2020
2021
2022
2023
TRIFR
3.45
0.63 SIFR
0.13
LTIFR
Revenue1
Net profit after tax
Earnings per share
OPERATING AND FINANCIAL REVIEW 12
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23
Financial Year
Financial Year
Financial Year
Dividends per share
Cash
Workforce numbers2
7,091
7,055
6,252
5,674
5,270
s
t
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23
Financial Year
Financial Year
Financial Year
Direct Employees
Subcontractors
Operations
› Record maintenance revenue with strong demand
across resources and energy sectors.
Sustainability
› Revised Sustainability Policy and developed
new Sustainability Framework.
› High levels of major project tendering activity.
› Serious incident frequency rate remained at
› Secured $2 billion of new work, including a number
of major construction contracts in the iron ore and
lithium sectors.
historically low levels.
› Sustained focus on identification, elimination and
mitigation of fatal risk hazards.
› Awarded two long-term maintenance services
› Formalised Emissions and Energy Reduction
contracts in the lithium sector.
Roadmap.
› Acquired BMC to establish presence in east coast
› Key Board changes in line with long-term succession
energy market.
plan.
› Launched Respect@Monadelphous behavioural
framework.
› Launched second Stretch Reconciliation Action Plan.
Abbreviations:
EBITDA - earnings before interest, tax, depreciation and amortisation; LTIFR - lost time injury frequency rate; SIFR - serious incident frequency rate; TRIFR - total recordable injury frequency rate.
1. Includes Monadelphous’ share of joint venture revenue. Refer to reconciliation on page 21.
2. Comparatives restated to exclude Chile employee numbers.
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 81.
Safety performance
13 ANNUAL REPORT 2023
MARKETS AND
GROWTH STRATEGY
Monadelphous will grow earnings by improving returns from core markets,
growing new services in core markets and expanding into new markets
and geographies.
Improving returns from core markets
Progress
› Secured approximately $2 billion in new contracts
and extensions.
› Executed multiple construction and maintenance
contracts in the battery metals sector.
› Delivered a high volume of maintenance, shutdown
and sustaining capital services to the iron ore sector.
› Rebranded SinoStruct to Inteforge and expanded
its fabrication capability into South East Asia.
Growing new services
Priorities
› Continue to strengthen customer relationships.
› Retain all maintenance services contracts.
› Secure and execute next wave of construction projects.
Progress
› Heavy lift services joint venture, Alevro, secured Pluto
Priorities
› Grow Alevro joint venture in the Australian market.
Train 2 Project with Bechtel.
› Secured and commenced decommissioning work in the
offshore oil and gas sector.
› Further develop civil capability.
› Grow industrial service offering within offshore energy
sector.
› Establish offshore decommissioning team.
› Grow non-process infrastructure and dewatering services.
Market expansion
Progress
› Zenviron delivered Rye Park Wind Farm and undertook early
works on multiple wind farm and battery storage projects.
Priorities
› Build capacity for Zenviron to deliver wind, solar and battery
storage projects in Australia.
› Acquired Victorian-based BMC.
› Successfully integrate BMC and leverage their specialist
capability.
Iron Bridge Magnetite Project, Pilbara
region, Western Australia.
OPERATING AND FINANCIAL REVIEW 14
15 ANNUAL REPORT 2023
CHAIR’S
REPORT
Monadelphous achieved sales revenue of $1.83 billion1, with strong
demand for maintenance services across all sectors and high levels
of construction tendering activity.
Monadelphous experienced sustained buoyant conditions
across the resources and energy sectors contributing to a
record result for the Maintenance and Industrial Services
division, with Engineering Construction activity levels impacted
by delays in the timing of award and commencement of new
major projects.
Earnings before interest, tax, depreciation and amortisation
(EBITDA) for the period was $109.1 million2, delivering
an EBITDA margin percentage of 5.96 per cent, up from
5.76 per cent in the previous financial year. The Company’s
continued focus on driving improved productivity, maintaining
operational discipline and increasing efficiency across the
business was a significant factor in this margin improvement,
and was key to mitigating the effects of the current period of
heightened inflation and escalating cost.
Net profit after tax (NPAT) for the year increased slightly on
the prior corresponding period to $53.5 million, generating
earnings per share of 55.8 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 88 per
cent of reported NPAT. The Monadelphous Group Limited
Dividend Reinvestment Plan applied to both the interim and
final dividend payments.
The Company ended the year with a strong cash balance of
$178.3 million, a cash flow from operations of $93.3 million
and a very pleasing cashflow conversion rate of 112 per cent.
The Company’s continued focus on cash generation and the
maintenance of a strong balance sheet is key to supporting
its operational performance and growth strategy, enabling
the Company to take advantage of suitable investment
opportunities which may arise.
Statutory revenue, which excludes Monadelphous’ share of
revenue from joint ventures, was $1.72 billion, down 4.9 per
cent on the previous year.
1. Includes Monadelphous’ share of joint venture revenue. Refer to reconciliation on page 21.
2. EBITDA – refer to reconciliation on page 22.
On 17 October 2022, in accordance with the Company’s long-
term succession plan, Monadelphous announced a number of
changes to the Board of Directors which came into effect at
the conclusion of the Company’s Annual General Meeting held
on 22 November 2022.
After more than 30 years of service, John Rubino, the
Company’s long-serving Executive Chair, retired as a Director
of the Company. Following his retirement, I assumed the role
of Executive Chair of the Board after serving as Managing
Director for 19 years and Zoran Bebic, Executive General
Manager of Maintenance and Industrial Services, was
appointed to the role of Managing Director. In addition,
Peter Dempsey, who served on the Board for 19 years,
retired as Non-Executive Director of the Company.
OPERATING AND FINANCIAL REVIEW 16
At the Company’s 2022 Annual General Meeting, the Board
recognised John and Peter for their outstanding commitment,
effort and dedication to Monadelphous over the years. They
both played an integral role in the Company’s development,
success and history.
Following this, in early 2023, it was with great sadness that
the Company announced the passing of its former, long-term
Chair, John Rubino. John’s memory will always be present in
the corridors of Monadelphous and in the stories of its people.
Monadelphous continued to strategically target new work
opportunities while ensuring the appropriate allocation of
risk. Since the beginning of the financial year, the Company
secured approximately $2 billion in new contracts and
extensions, primarily in the resources and energy sectors.
This included a number of significant construction contracts
in the iron ore and lithium sectors post year end, representing
the first in a new wave of major construction projects to come
to market.
A Monadelphous Franna crane lifting a
belt platform at Fortescue’s Solomon mine,
Pilbara region, Western Australia.
More than $750 million of new work was secured in the
Western Australian iron ore sector with long-term customers,
including BHP, Rio Tinto and Fortescue.
In support of its efforts to develop a presence in the east
coast-based energy generation, transmission and storage
market, as well as its ambitions to secure more work in
the growing offshore oil and gas decommissioning sector,
Monadelphous acquired Victorian-based BMC late in the year.
On behalf of the Board, I would like to take this opportunity
to thank our various stakeholders, including our very dedicated
and hard working team, as well as our shareholders,
customers and the communities in which we operate.
Rob Velletri
Chair
17 ANNUAL REPORT 2023
MANAGING
DIRECTOR’S REPORT
Monadelphous continued to be recognised as a leader in its chosen
markets, securing approximately $2 billion in new contracts and extensions,
including a number of major construction projects secured post year end.
The Maintenance and Industrial Services division achieved
a record full year revenue reflecting sustained buoyant
conditions across the resources and energy sectors, with
Monadelphous supporting customers to maintain high levels of
production and capitalise on favourable commodity prices.
Following the completion of a number of significant projects
in the previous financial year and a temporary slowing
in construction activity as a result of industry delays, the
Engineering Construction division’s focus shifted to the strong
pipeline of new resource development projects coming to
market, with the division experiencing high levels of tendering
activity.
The Company remained focused on retaining, developing and
attracting high calibre employees who actively contribute
to the successful achievement of the Company’s vision and
strategic objectives, particularly in light of the shortfall of
skilled labour in Australia, which continues to be a challenge.
The Company ended the year with a total workforce (including
subcontractors) of 5,674 people, which was markedly lower
than the prior corresponding period, primarily as a result of
Buildtek ceasing operations in Chile.
Following a substantial program of work last financial year, the
Company launched its Respect@Monadelphous behavioural
framework to ensure its workplaces remain safe, respectful
and inclusive. It also undertook a people engagement
survey to identify key employee motivations and enhanced
its understanding of talent availability in key geographical
locations across Australia, and internationally, to ensure it is
best placed to meet its future resourcing requirements.
Monadelphous continued its unrelenting focus on improving
the safety and wellbeing of its workforce through the
identification, elimination and mitigation of fatal risks within
its operations and the delivery of sustained improvement in
health and safety outcomes. Pleasingly, the Company’s serious
incident frequency rate remained at a historically low level,
and its total recordable injury frequency rate at year end was
3.45 incidents per million hours worked.
As part of its goal of achieving net zero emissions by 2050,
during the year the Company formalised its Emissions and
Energy Reduction Roadmap and established working groups
focused on its transition to renewable power, ‘greening’ its
fleet and optimising operational activities.
In July 2023, the Company announced that Northern
SEQ Distributor – Retailer Authority, trading as UnityWater
(UnityWater) had served a Claim and Statement of Claim
(the Claim) in the Supreme Court of Queensland against one
of Monadelphous’ wholly owned subsidiaries, Monadelphous
Engineering Pty Ltd (ME).
The Claim, which totals claims made by UnityWater in an
amount of approximately $80 million, relates to a contract
entered into between UnityWater and ME in 2016 for
the design and construction of an upgrade to the Kawana
OPERATING AND FINANCIAL REVIEW 18
Monadelphous employees inspecting the
outloading conveyor at Rio Tinto’s Parker
Point, Pilbara region, Western Australia.
Sewerage Treatment Plant on the Sunshine Coast in
Queensland. The Company has informed its insurers of
the claims.
Monadelphous denies the allegations and claimed losses
contained in the Claim and will vigorously defend those
claims, as well as pursuing available counterclaims.
In March 2023, the Company announced that Chile-based
construction and maintenance services business, Buildtek,
would cease operations. Monadelphous acquired 75 per
cent of Buildtek in 2019 for approximately AUD$8 million
and subsequently purchased an additional 15 per cent of
Buildtek’s share capital, predominantly from the proceeds
of post-acquisition earnings. For the financial year ended 30
June 2023, Buildtek contributed approximately 4 per cent of
Monadelphous’ total revenue from contracts with customers
(including joint ventures).
Over recent years, the Chilean resources sector was
significantly impacted by the economic effects resulting from
the COVID-19 pandemic, experiencing a major shortfall in
available resources, significant labour cost and productivity
pressures, a heightened level of supply chain risk and an
inflationary cost environment. These pressures impacted
Buildtek’s financial performance during that period, as well
as significantly increasing the working capital requirements
of the business. Buildtek had undertaken a wide variety of
operational and commercial activities to protect and sustain its
financial position. Disappointingly, despite considerable effort,
Buildtek’s financial position and working capital continued
to be impacted and the business was not able to source the
necessary level of funding required to continue.
The cessation of Buildtek’s operations did not have a material
impact on Monadelphous’ net assets, or on its earnings for the
year ended 30 June 2023.
19 ANNUAL REPORT 2023
Engineering Construction
The Engineering Construction division reported revenue
of $541.9 million1, down 30 per cent on the previous
corresponding period due to delays in the timing of awards
and commencement of new major projects. Since the
beginning of the financial year, the division has secured
$640 million in new contracts, including a number of major
construction contracts post year end, with construction
revenue expected to progressively ramp up over the 2024
financial year.
High levels of tendering activity continued and the Company
was engaged on a number of early contractor involvement
assignments.
In the Pilbara region of Western Australia (WA), the Company
was reappointed to BHP’s Western Australian Iron Ore Asset
Projects Framework Agreement for a further three years, and
was awarded a major contract for the Car Dumper 3 Renewal
Project at Nelson Point in Port Hedland. It also completed
construction services at the Iron Bridge Magnetite Project,
an unincorporated joint venture between FMG Magnetite
Pty Ltd and Formosa Steel IB Pty Ltd, and was awarded a
construction contract at Fortescue’s Christmas Creek mine site
subsequent to year end.
In the lithium sector, Monadelphous secured a major
construction contract with Albemarle associated with the
expansion of the Kemerton lithium hydroxide plant.
Overseas, the Company was awarded a contract for the
construction of surface infrastructure for the Oyu Tolgoi
Underground Project in Mongolia, and a strategic review of
SinoStruct, the Company’s China-based fabrication business,
was undertaken, resulting in its rebranding as Inteforge.
The Company’s renewable energy joint venture, Zenviron,
achieved substantial completion on its scope of work at the Rye
Park Wind Farm and was engaged on early works packages for a
number of wind farm and battery storage projects.
Monadelphous’ heavy lift services business continued to
expand its fleet, capability and customer-base and was
awarded a contract on the West Gate Tunnel Project in
Melbourne, Victoria. Alevro, its heavy lifting services joint
venture with Fagioli, secured a contract with Bechtel to
provide haulage and lifting services at Woodside’s Pluto Train
2 Project in Karratha, WA.
Maintenance and Industrial Services
The Maintenance and Industrial Services division achieved a
record full year revenue of $1.3 billion, up 11.4 per cent on
the prior year. The division secured approximately $1.34 billion
in new work since the beginning of the 2023 financial year.
In the lithium sector, on the back of the successful delivery of
construction packages and the strong relationship developed,
Monadelphous was awarded two five-year contracts for the
provision of maintenance services and sustaining capital
projects at Albemarle’s operations in Kemerton, WA, both with
two-year extension options.
1. Includes Monadelphous’ share of joint venture revenue.
In the Pilbara region of WA, the Company continued to
perform a significant volume of maintenance, shutdown and
project works in the iron ore sector. This included securing a
12-month extension to its general maintenance and shutdown
services contract with BHP, completing work under its long-
term maintenance and non-process infrastructure contracts
with Fortescue and executing several contracts under its
Sustaining Capital Projects Panel Agreement with Rio Tinto.
In the energy sector, Monadelphous was awarded both
available two-year extensions to its long-term offshore
maintenance services contract with INPEX Operations
Australia supporting the Ichthys LNG Project. It also secured
an operations, maintenance and industrial services contract
supporting Petrofac in the decommissioning of the Northern
Endeavour floating production, storage and offtake facility
in the Timor Sea, the Company’s first offshore
decommissioning contract.
Outlook
Longer-term demand trends are forecast to remain strong
across most commodity markets, despite some short to
medium-term uncertainty relating to Chinese domestic
consumption and a possible US recession.
The resources and energy sectors are expected to provide
a significant pipeline of prospects across a broad range of
commodities, with expenditure related to energy transition
representing an increasingly larger proportion of investment
activity over coming years.
High levels of mining and mineral processing development
activity are anticipated in lithium, nickel, copper, mineral
sands and rare earths, as well as continued investment to
sustain iron ore production levels.
In the energy sector, there are several new gas construction
projects currently in the development pipeline and heightened
demand for maintenance and decommissioning services is
expected over coming years. The development of the hydrogen
market will likewise provide opportunities in the future.
Maintenance activity levels in the resources sector are forecast
to grow on the back of an increasingly larger asset base
from recently completed capital projects, as well as from
new mining developments and expansions moving into the
operating phase.
Accelerating decarbonisation efforts in Australia’s power
sector are driving an expanding pipeline of renewable energy
opportunities, including a large number of new wind farms
and battery storage projects. Zenviron is well placed to
capitalise on the significant market growth expected in this
sector over coming years, having developed an enviable
track record since its inception. Following the substantial
completion of the Rye Park Wind Farm project this financial
year, Zenviron has been engaged by customers on early works
packages for several new wind and battery storage projects.
OPERATING AND FINANCIAL REVIEW 20
A Monadelphous rope access technician working
A Monadelphous rope access technician working
at the Woodside-operated Karratha Gas Plant,
at the Woodside-operated Karratha Gas Plant,
Karratha, Western Australia.
Karratha, Western Australia.
The Company will also continue to assess potential
acquisition opportunities to facilitate ongoing service
expansion and market diversification and support long-term
sustainable growth.
In conclusion, I would like to thank our fantastic employees for
another strong year – we have a very loyal and talented team
at Monadelphous who are committed to helping the Company
continue to grow and prosper. I would also like to extend
my appreciation to our shareholders, customers and other
stakeholders for their ongoing support.
Zoran Bebic
Managing Director
The shortage of skilled labour in Australia, with high levels
of activity across multiple industries, continues to be a
challenge, and the Company remains focused on improving
the effectiveness of its employee attraction, training and
development initiatives, as well as ensuring Monadelphous
remains a great place to work. An escalating cost environment
and the potential for ongoing supply chain risks are also
expected to continue.
With capacity constrained, the Company will leverage its
strong position and take a strategic and targeted approach to
new work; engaging and collaborating early with customers,
maintaining an appropriate approach to the allocation of risk
and focusing on earnings quality.
With Monadelphous securing a number of new construction
contracts post 30 June 2023, and further awards expected
over coming months, the Company anticipates construction
revenue will progressively ramp up over the 2024 financial
year, with overall Group revenue weighted to the second half.
21 ANNUAL REPORT 2023
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
2023
$’000
1,725,691
2022
$’000
1,810,390
2021
$’000
1,754,242
2020
$’000
1,488,749
2019
$’000
1,479,737
1,828,755
1,930,040
1,953,180
1,650,768
1,608,277
109,083
111,201
108,696
73,446
21,520
53,543
55.85c
24.00c
25.00c
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
50,565
53.72c
25.00c
23.00c
437.29c
427.54c
413.31c
402.43c
413.93c
437,978
412,184
395,572
384,433
393,436
33,157
8.7%
12.2%
6.0%
33,097
32,476
14.3%
12.7%
5.8%
10.1%
11.9%
5.6%
30,570
11.9%
9.5%
5.6%
19,490
9.7%
12.9%
6.6%
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 ventures1
Statutory revenue from contracts with customers
2023
$’000
2022
$’000
1,828,755
1,930,040
(107,799)
(120,589)
1,720,956
1,809,451
1. Represents Monadelphous’ proportionate share of the revenue from joint ventures accounted for using the equity method.
2. Represents Monadelphous’ proportionate share of the interest, depreciation, amortisation and tax of joint ventures accounted for using the equity method.
Abbreviation: EBITDA - earnings before interest, tax, depreciation and amortisation.
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.
OPERATING AND FINANCIAL REVIEW 22
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
Share of interest, depreciation, amortisation and tax of joint ventures2
EBITDA
2023
$’000
73,446
1,986
1,509
(4,300)
25,128
8,029
3,285
2022
$’000
73,511
1,841
1,511
(740)
24,523
8,574
1,981
109,083
111,201
Monadelphous employees at Rio Tinto’s Yarwun
Alumina Refinery, Gladstone, Queensland.
23 ANNUAL REPORT 2023
BOARD OF
DIRECTORS
Left to right: Sue Murphy AO, Ric Buratto, Helen Gillies, Rob Velletri, Zoran Bebic and Dietmar Voss.
Rob Velletri Chair
Rob was appointed to the Board on 26 August 1992 and commenced as Chair
on 22 November 2022 after serving 19 years as Managing Director. He joined
Monadelphous in 1989 as General Manager after a 10-year career in engineering
and management roles at Alcoa. Rob is a mechanical engineer with 44 years
of experience in the construction and engineering services industry and is a
Member of the Institution of Engineers Australia. Rob is Chair of the Company’s
Nomination Committee.
Zoran Bebic Managing Director
Zoran was appointed to the Board and commenced as Managing Director on 22
November 2022. He has 30 years of experience in the engineering construction
and maintenance services industry and has held a broad range of operational,
financial and senior management positions at Monadelphous, including Executive
General Manager of Maintenance and Industrial Services, Chief Financial Officer and
Company Secretary. Zoran is a Fellow of CPA Australia.
OPERATING AND FINANCIAL REVIEW 24
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, Sue 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. She has 44 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. She is Chair of the Company’s Remuneration
Committee and a member of its Audit and Nomination committees. Sue is
also currently a Director of MMA Offshore Limited (ASX: MRM) and RemSense
Technologies Limited (ASX: REM).
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
27 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 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
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 49 years of experience in the energy, 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 48
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.
25 ANNUAL REPORT 2023
Aerial view of the Albemarle Kemerton Lithium Hydroxide Plant,
south west region, Western Australia.
Monadelphous undertaking construction work at Rio Tinto’s West Angelas Deposits C & D Project, Newman, Western Australia. CONTENTS 26
ENGINEERING
CONSTRUCTION
Our Progress
» Annual revenue of $541.9 million.
» Secured approximately $640 million of new work,
including a number of major construction contracts
in the iron ore and lithium sectors.
» A number of early contractor involvement
assignments.
» Successfully completed packages at the Gudai-Darri
and Iron Bridge Magnetite projects.
» Secured strategically important work at Oyu Tolgoi
Underground Project in Mongolia.
» Strategic review of China-based fabrication business
and rebranded SinoStruct as Inteforge.
» Zenviron engaged on early works packages for a
number of wind farm and battery storage projects.
27 ANNUAL REPORT 2023
The Engineering Construction division provides large-scale multidisciplinary
project management and construction services.
The division reported revenue of $541.9 million1 for the
year, down 30 per cent on the previous corresponding
period. Following the completion of a number of significant
projects in the previous financial year and a temporary
slowing in construction activity as a result of industry delays,
the Company’s focus shifted to the strong pipeline of new
resource development projects coming to market. The division
experienced high levels of tendering activity and engagement
on a number of early contractor involvement assignments.
Since the beginning of the financial year, the division secured
approximately $640 million in new contracts, including a
number of major construction contracts awarded subsequent
to year end.
Resources
Monadelphous continued to provide construction services
under its Western Australian Iron Ore (WAIO) Asset Projects
Framework Agreement with BHP throughout the year and
was reappointed to the Framework Agreement for a further
three years. The Company was awarded a contract for the
Car Dumper 3 Renewal Project at Nelson Point, Western
Australia (WA), valued at over $115 million. The first portion
of the contract is for early works and planning, including an
early works shutdown which was completed in May 2023.
The second portion includes structural, mechanical and
piping works associated with the Car Dumper 3 replacement,
with work expected to be completed in the first half of
2025. Subsequent to year end, the Company has also been
awarded the electrical and instrumentation package of works
associated with this project. These awards come on the
back of the successful completion of numerous car dumper
refurbishment projects by Monadelphous in previous years.
1. Includes Monadelphous’ share of joint venture revenue.
A Monadelphous employee completing training
on the Company’s newest 400 tonne capacity
crawler crane in Perth, Western Australia.
OPERATING AND FINANCIAL REVIEW 28
A Monadelphous 600 tonne crawler
crane undertaking work at the Iron
Bridge Magnetite Project, Pilbara
region, Western Australia.
CASE STUDY
IRON BRIDGE MAGNETITE PROJECT
Located 145 kilometres south of Port Hedland, WA,
the Iron Bridge Magnetite Project is an unincorporated
joint venture between FMG Magnetite Pty Ltd and
Formosa Steel IB Pty Ltd. It incorporates the world leading
North Star and Glacier Valley magnetite ore bodies and
will deliver 22 million tonnes per annum of high grade
67 per cent Fe magnetite concentrate.
Monadelphous was engaged in the first half of the 2023
financial year to provide multidisciplinary construction
services including structural, mechanical and electrical
and instrumentation services at the wet process plant.
The Company’s scope was later expanded to support the
construction of a 135-kilometre pipeline connecting the
plant to the Port of Port Hedland.
The first wet concentrate was produced from the ore
processing facility at the Iron Bridge Magnetite Project
in April 2023, before being pumped to Port Hedland.
The Company was engaged to provide construction services
at the Iron Bridge Magnetite Project, an unincorporated joint
venture between FMG Magnetite Pty Ltd and Formosa Steel
IB Pty Ltd. The scope included structural, mechanical and
electrical and instrumentation services for the wet process
plant and a 135-kilometre pipeline connecting the plant to
the Concentrate Handling Facility at Port Hedland, WA. On the
back of its strong performance on this project, the Company
was also awarded a multidisciplinary contract for the supply
and construction of an overland conveyor and transfer station
at Fortescue’s Christmas Creek mine site, WA, post year end.
Also in the Pilbara region of WA, Monadelphous provided
multidisciplinary construction services for Rio Tinto at the
Gudai-Darri iron ore project, as well as completing a series
of shutdowns at Rio Tinto’s Western Turner Syncline Phase
2 Project. Following the delivery of a number of packages
of work associated with BHP’s South Flank Project’s inflow
and outflow infrastructure last financial year, the Company
was also engaged by BHP to assist with the commissioning
process of the project.
After the successful completion last financial year of the
structural, mechanical and piping work associated with
trains 1 and 2 of the pyromet plant at the Kemerton lithium
hydroxide plant in the south west of WA, then part of the
MARBL Lithium Joint Venture, Monadelphous completed
its electrical and instrumentation scope, and demobilised
from site in September 2022 with an enviable safety record.
Post year end, the Company was also awarded a new major
construction contract by Albemarle, valued at approximately
$200 million, for work associated with the expansion of the
Kemerton facility. The contract includes front-end pyromet
structural, mechanical, piping, electrical and instrumentation
works associated with two new lithium processing trains
(trains 3 and 4).
29 ANNUAL REPORT 2023
Also in the lithium sector, the Company completed its
construction scope of work at Talison Lithium’s Greenbushes
mine site in the south west region of WA which included a
range of facilities forming the mine services area.
In Mongolia, the Company was awarded a contract for the
construction of surface infrastructure for the Oyu Tolgoi
Underground Project. The work includes the construction of
two conveyors and an electrical substation, and associated
integration to existing facilities.
In New South Wales (NSW), Monadelphous completed
multidisciplinary construction services for Tronox Mining
Australia in Broken Hill.
Fabrication Services
During the year, Monadelphous undertook a strategic review
of SinoStruct, its China-based fabrication business, to ensure
the business remains aligned to customer expectations
and is appropriately structured to grow in its core markets,
geographically diversify its supply chain into South East Asia
and deliver in new and related sectors. The review outcomes
included a recommendation to rebrand the business as
Inteforge, to better align with its revised strategic direction and
the expectations of its customers.
On the back of the review, Inteforge secured a number of
fabrication contracts, including for Liontown Resources’
Kathleen Valley Lithium Project in the Goldfields, WA,
New Inteforge logo on the Lingang Facility, Tianjin, China.
as well as for the fabrication of structural steel for a project
in Ashburton in the Pilbara, WA. Inteforge also secured
a contract with HydrogenPro to fabricate and assemble
hydrogen gas separator modules for a renewable energy
project in the United States of America, as well as a contract
to fabricate mechanical platework and piping for the Oyu
Tolgoi Underground Project in Mongolia.
An overland conveyor at Oyu Tolgoi
Underground Project, Mongolia.
OPERATING AND FINANCIAL REVIEW 30
Infrastructure
The Company’s renewable energy joint venture, Zenviron,
continued to enhance its reputation as a market leader in the
delivery of balance-of-plant works for wind farms.
During the year, Zenviron achieved substantial completion on
its scope of work at the Rye Park Wind Farm, the largest wind
farm to ever be constructed in NSW, valued at approximately
$250 million. Additionally, it was engaged on early works
packages for a number of other wind farm and battery storage
projects on the east coast of Australia.
In total, since its establishment in 2016, Zenviron has
supported the construction of 464 wind turbines, with an
additional 27 in the commissioning phase.
Heavy Lift
Monadelphous continued to expand its heavy lift and shift
capability and customer-base, and was awarded a contract
with the CPB Contractors and John Holland Joint Venture on
the West Gate Tunnel Project in Melbourne, Victoria.
As part of its long-term services contract with Fortescue at
the Solomon and Eliwana mine sites in WA, Monadelphous
provided heavy lift services to support a campaign of
shutdowns at Fortescue’s Kings Valley, Eliwana and Firetail
operations during the period.
The Company also provided specialist heavy lift services to
Woodside, BHP and Rio Tinto under existing construction and
maintenance contracts.
In partnership with Fagioli, Monadelphous continued to deliver
heavy haul services at the Iron Bridge Magnetite Project under
a contract with NMT Logistics.
Finally, Alevro, Monadelphous’ heavy lifting services joint
venture with Fagioli, secured a contract with Bechtel to
provide haulage and lifting services at Woodside’s Pluto Train
2 Project in Karratha, WA.
Outlook
The resources and energy sectors are expected to provide a
significant pipeline of construction prospects across a broad
range of commodities, with expenditure related to energy
transition representing an increasingly larger proportion over
coming years.
High levels of mining and mineral processing development
activity are anticipated in lithium, nickel, copper, mineral sands
and rare earths, as well as continued investment to sustain iron
ore production levels.
In the energy sector, there are a number of new gas
construction projects currently in the pipeline.
Australia’s transition towards clean energy is strengthening
and an increasing pipeline of new wind farms and battery
storage projects will provide opportunities for Zenviron.
The development of the hydrogen market will also provide
prospects in coming years.
Rye Park Wind Farm, comprising 66 wind turbines,
located in New South Wales.
31 ANNUAL REPORT 2023
Monadelphous undertaking construction work at Rio Tinto’s West Angelas Deposits C & D Project, Newman, Western Australia. Monadelphous employees at the
Woodside-operated Karratha Gas Plant,
Karratha, Western Australia.
CONTENTS 32
MAINTENANCE
AND INDUSTRIAL
SERVICES
Our Progress
» Record annual revenue of $1.3 billion.
» Significant volume of maintenance, shutdown and
project work in the energy and iron ore sectors.
» Awarded approximately $1.34 billion in new contracts
and extensions.
» Awarded strategic long-term maintenance contracts
in the lithium sector.
» Acquired BMC to establish presence in east coast
energy market.
33 ANNUAL REPORT 2023
The Maintenance and Industrial Services division specialises in the
planning, management and execution of multidisciplinary maintenance
services and sustaining capital works.
The division reported full year revenue of $1.3 billion, up 11.4
per cent on the prior corresponding period. The result reflects
sustained buoyant conditions across the resources and energy
sectors, with the division being awarded approximately
$1.34 billion in new work since the beginning of the
2023 financial year.
In June 2023, Monadelphous acquired Victorian-based
specialist high voltage and instrumentation installation,
calibration and maintenance service provider BMC. BMC
provides services to major industry and key utilities throughout
Australia, employs around 180 personnel and generates
approximately $60 million of revenue per annum. The strategic
acquisition enables Monadelphous to develop a presence in the
east coast-based energy generation, transmission and storage
market and expand its geographical footprint in the growing
offshore oil and gas decommissioning sector.
Monadelphous continued to cement its commitment to its
customers in the Pilbara region of Western Australia (WA),
commencing the construction of its new, larger facility in
Karratha, which includes provisions for vehicle and crane
servicing, a fabrication workshop, warehousing facilities and
office space. The investment follows the opening of expanded
facilities in Tom Price and Port Hedland over the last two years.
Monadelphous employees
Monadelphous employees
working on a rope shovel hoist
working on a rope shovel hoist
gearbox at the Company’s
gearbox at the Company’s
workshop in Mount Thorley,
workshop in Mount Thorley,
New South Wales.
New South Wales.
OPERATING AND FINANCIAL REVIEW 34
CASE STUDY
Rio Tinto
Over the last five years, Monadelphous has been
awarded more than 80 conveyor gravity take-up
upgrades across Rio Tinto’s Pilbara operations under its
Rio Tinto iron ore fixed plant maintenance services and
construction contracts.
A typical gravity take-up tower upgrade consists of
retrofitting an electric winch and associated cable
and sheaves, replacing the mass, installing a pulley
removal platform and trolley, electrical controls and
limits, and guarding and structural bracing upgrades.
The Company’s scope of work can include design and
detailing, civil, structural, mechanical, piping, electrical,
instrumentation and software controls.
Monadelphous has held a number of maintenance,
shutdown and sustaining capital contracts with Rio Tinto
which date back to 1999 (initially with Hamersley Iron).
Monadelphous completing conveyor gravity take-up upgrades across
Rio Tinto’s operations in the Pilbara, Western Australia.
Resources
Monadelphous performed a significant volume of
maintenance, shutdown and project works in the WA iron ore
sector throughout the year.
The Company extended its relationship with Fortescue and
was also awarded a number of significant new contracts,
including a five-year contract to provide maintenance, general
shutdown services and minor projects across Fortescue’s
Pilbara operations, as well as being appointed to a panel for
the provision of non-process infrastructure services for a term
of three years.
Several contracts were executed under its Sustaining Capital
Projects Panel Agreement with Rio Tinto, including upgrades
to the conveyor gravity take-up systems at the Brockman 2
mine, Tom Price mine and Cape Lambert Port A, an upgrade
to the wet plant dilution water system at the Nammuldi mine,
and the supply, installation and commissioning of a potable
water distribution system at the Hope Downs 1 mine.
The Company also secured contracts for the replacement of an
overland conveyor belt at Rio Tinto’s Western Turner Syncline
mine and a two-year extension to an existing contract with Rio
Tinto for the provision of marine infrastructure maintenance
services and minor projects at the Cape Lambert and
Dampier ports.
Monadelphous was reappointed for a further three years to
BHP’s Western Australian Iron Ore Site Engineering Panel and
secured a number of packages under the agreement. It also
secured a 12-month extension to its general maintenance and
shutdown services contract for BHP’s iron ore operations.
In the lithium sector, the Company was awarded two five-
year contracts for the provision of maintenance services
and sustaining capital projects at Albemarle’s operations
in Kemerton, WA, both with two-year extension options.
The award builds on the strong relationship Monadelphous
developed with Albemarle through the initial construction
phase of the project.
Monadelphous was awarded a 12-month contract extension
for the supply of major shutdown and mechanical services at
South32’s Worsley Alumina operations in WA and a 12-month
extension to its existing maintenance, shutdown and project
services contract across BHP’s Nickel West operations in
WA. The Company also secured a two-year extension to its
contract for fixed plant maintenance services at Rio Tinto’s
Gove operations in the Northern Territory, as well as a two-
year contract to provide construction services and a two-year
extension to continue providing maintenance services at BHP’s
Olympic Dam in South Australia.
35 ANNUAL REPORT 2023
On the east coast of Australia, Monadelphous was appointed
to a panel for the provision of construction services across
Rio Tinto’s Queensland aluminium operations for a term
of three years, with extension options. The Company also
secured a three-year contract with BHP Mitsubishi Alliance
(BMA), with two one-year extension options, to continue
providing shutdown and maintenance services and minor
capital projects on BMA’s draglines and coal preparation plant
operations in Mackay and the Bowen Basin. Furthermore,
it was awarded a contract with Yancoal for the provision of
major overhaul and heavy shutdown services at the Mount
Thorley Warkworth Mine.
Energy
In the energy sector, Monadelphous was awarded both
available two-year extensions to its long-term offshore
maintenance services contract with INPEX Operations
Australia supporting the Ichthys LNG Project, valued at
approximately $350 million in total. The scope of work
includes operational, campaign and shutdown maintenance
services and brownfield projects implementation.
Monadelphous commenced work on its first oil and gas
decommissioning project with Petrofac on the Northern
Endeavour floating production, storage and offtake
facility, positioning itself for the growing number of similar
opportunities expected to come to market over coming years.
The Company continued to provide services and plan for
a number of major turnarounds under its existing major
onshore and offshore contract at the Woodside-operated
gas production facilities, and provided services to Shell in
both Queensland and WA, as well as Origin in Queensland.
The Company was also awarded a five-year contract for the
provision of pipeline maintenance services in the Queensland
coal seam gas market.
Overseas
In Papua New Guinea, the Company continued to deliver
project services for Newcrest at Lihir Island and engineering,
procurement and construction services, in joint venture with
Worley, to Santos at its production and support facilities in
the Highlands region. During the period, the Company was
awarded a 12-month extension to its contract with Santos.
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.
During the year, the Company announced that Chile-
based construction and maintenance services business,
Buildtek, would cease operations, due to the challenges of
the COVID-19 pandemic on the Chilean resources sector
and the impacts on Buildtek’s financial performance during
that period. Disappointingly, despite considerable effort,
Buildtek’s financial position and working capital continued
to be impacted and the business was not able to source the
necessary level of funding required to continue.
Rail
Monadelphous continued to offer rail maintenance services
across Australia, including the provision of rail track, rail
infrastructure and facility maintenance support services to
customers, including Pacific National, Aurizon and ARTC,
across a number of states. In addition, the Company provided
rail services in the Pilbara, WA, under its rail services contract
with Rio Tinto.
Outlook
Maintenance levels in the resources sector are forecast to grow
on the back of an increasingly larger asset base from recently
completed capital projects, as well as from new mining
developments and expansions moving into operating phase.
In the energy sector, heightened demand for maintenance and
decommissioning services is expected over coming years.
Favourable conditions and ageing assets across all resources
and energy sectors are driving strong demand for maintenance
services.
OPERATING AND FINANCIAL REVIEW 36
A Monadelphous employee working at
A Monadelphous employee working at
the Woodside-operated Karratha Gas
the Woodside-operated Karratha Gas
Plant, Karratha, Western Australia.
Plant, Karratha, Western Australia.
37 ANNUAL REPORT 2023
The Bindjareb Middars, a traditional
Aboriginal dance group, performing
for NAIDOC Week 2023 at the
Company’s head office in Perth,
Western Australia.
Monadelphous undertaking construction work at Rio Tinto’s West Angelas Deposits C & D Project, Newman, Western Australia. CONTENTS 38
SUSTAINABILITY
Our Progress
» Revised Sustainability Policy and developed
new Sustainability Framework.
» Serious incident frequency rate remained at
a historically low level.
» Launched Respect@Monadelphous behavioural
framework.
» Undertook people engagement survey to identify
key employee motivations.
» Formalised Emissions and Energy Reduction
Roadmap.
» Launched second Stretch Reconciliation Action Plan.
» Progressed commitments under Gender Diversity
and Inclusion Plan.
» Developed a Local Community Engagement Plan
for key regional locations.
39 ANNUAL REPORT 2023
SUSTAINABILITY
S
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People
Our people are the key to our success. We are committed to retaining, attracting
and developing people who are highly competent, live the Monadelphous values
and actively contribute to the long-term success of the business. We foster a safe,
inclusive and respectful workplace where people of all backgrounds, skills and
cultures can work together collaboratively, and reach their full potential. Our actions
reflect high standards of conduct.
Safety & wellbeing
We are committed to the safety and wellbeing of everyone working in connection
with our activities. We believe that all injuries are preventable, and our goal is zero
harm. The Safe Way is the Only Way.
Responsible business delivery
We build, maintain and improve our customers’ operations through the reliable
delivery of safe, innovative, cost-effective and customer-focused solutions. We take a
long-term approach to our relationships and maintain high levels of governance and
ethics in everything we do. We deliver strong financial performance, generating long-
term sustainable value for our shareholders. We Deliver What We Promise.
Environment
We care for the environment and commit to minimising the environmental impact
of our operations and working towards net zero emissions by 2050. We pursue
opportunities to leave a lasting positive legacy.
Communities
We actively engage with our local communities, providing opportunities for local
people and businesses and are committed to leaving a positive legacy within the
communities where we work.
OPERATING AND FINANCIAL REVIEW 40
Monadelphous’ vision is to achieve long-term, sustainable growth by being
recognised as a leader in its chosen markets and a truly great company to
work for, to work with and invest in. The Company prioritises the support
of its local workforce and community interests, ensuring it leaves a positive
legacy, and that its employees can take pride in working for Monadelphous.
The Company believes the key to achieving sustainable growth
is by ensuring the safety, wellbeing and development of its
people, the delivery of outstanding service to customers,
caring for the environment and communities where it works
and providing superior returns to shareholders. By focusing on
these areas, Monadelphous will ensure the business delivers
on its strategy and achieves long-term sustainable growth and
value for all stakeholders.
The Company continues to develop its approach to
sustainability and during the year it revised its Sustainability
Policy and developed a new Sustainability Framework. These
documents highlight the Company’s commitment to its five
key sustainability pillars of people, safety and wellbeing,
responsible business delivery, communities and environment.
People
The Company ended the year with a total workforce (including
subcontractors) of 5,674 people, which was markedly lower
than the prior corresponding period, primarily as a result of
Buildtek ceasing operations in Chile.
Employee engagement survey
During the year, the Company undertook an employee
engagement survey to better understand employee perceptions
and identify key motivations for attracting and retaining talent,
including targeted questioning in relation to unacceptable
workplace behaviour. The feedback obtained has been a key
input into the design and enhancement of Monadelphous’
People and Culture Strategy, which is designed to support the
retention, development and attraction of high calibre employees
who actively contribute to the success of the Company.
Monadelphous employees at pre-start at
Talison Lithium’s Greenbushes mine site,
south west region, Western Australia.
41 ANNUAL REPORT 2023
Acceptable workplace behaviour
The Company’s commitment to ensuring its workplaces
remain safe, respectful and inclusive saw the launch of its
Respect@Monadelphous behavioural framework which aims
to further embed respectful behaviours. The program includes
Acceptable Workplace Behaviour and Code of Conduct training
and is rolled out to all employees.
It’s launch follows a substantial program of work to review the
Company’s processes and practices, completed last financial
year, and reinforces its expectations of its workforce in relation
to the prevention of sexual harassment and sexual assault.
This culminated in the implementation of the Company’s It’s
Up to Us campaign.
Training and talent development
Aligned to Monadelphous’ philosophy of fostering a culture of
leadership and talent development, the Company’s in-house
development programs, Leading@Monadelphous, Emerging
Leaders, Group Mentoring and Leading the Safe Way, continue
to shape Monadelphous’ current and future leaders and the
role they play in delivering services to customers.
The Company’s registered training organisation delivered
more than 4,000 training interactions for trades personnel
throughout the year, including high risk work license training
accreditation and verification of competency.
Strategic sourcing
To ensure Monadelphous is best placed to meet its future
resourcing requirements, the Company enhanced its
understanding of talent availability in key geographical
locations across Australia and internationally. It also continued
to strengthen its approach to people data, leveraging its talent
acquisition and performance management system to provide
deeper insights into recruitment activity. The system enables
the Company to better analyse its labour demand profile and
recruitment completion rates, employee training compliance
and performance management, and turnover trends.
Attraction of future talent
Monadelphous’ Graduate, Vacation, Apprenticeship and
Traineeship programs continue to attract and nurture a diverse
group of new talent. During the year, more than 200 people
participated in these programs, exploring a range of career
pathways through learning and development opportunities.
The Company was honoured to have been recognised as
Australia’s top Construction and Property Services Graduate
Employer for 2023 by Prosple (formerly Grad Australia).
Celebrating Monadelphous’ success
2022 marked a particularly special year for Monadelphous
as the Company celebrated 50 years in operation. To
commemorate this magnificent milestone, the Company
hosted events across its key locations throughout 2022 to
recognise the contributions of its people, as well as publishing
a Monadelphous history book to showcase the individuals,
teams, projects and events that have made Monadelphous
into the Company it is today.
Safety and wellbeing
Monadelphous continued its unrelenting focus on improving
the safety and wellbeing of its workforce through the
identification, elimination and mitigation of fatal risks within
its operations and the delivery of sustained improvement in
health and safety outcomes.
The Company’s efforts in the area of fatality prevention
centred on the continued improvement of relevant infield
risk management tools and a series of fatal risk awareness
initiatives. Activities undertaken included a refreshed The Safe
Way is the Only Way campaign and updated Life Saving Rules
communications and fatal risk control modules.
A number of innovative, technology-based safety improvement
trials were undertaken relating to the use of mobile fleet,
including the implementation of software aimed at aiding
pedestrian avoidance, as well as distraction and fatigue
monitoring. The Company also conducted Franna crane
awareness training to help prevent equipment roll overs.
Monadelphous delivered a range of programs throughout the
year to support the physical and mental health and wellbeing
of its people. The Company launched its annual Summer of
Safety and Finishing Strong, Starting Stronger health and
safety campaigns, aimed at refocusing on common safety risks
which prevail over the summer months. Additional initiatives
included a range of general health checks for employees,
conducting Healthy Heart Week education sessions, as well
as partnering with the Resilience Project and offering Lived
Experience talks, which focus on sharing stories related to
mental illness.
Pleasingly, the Company was recognised for its efforts and
contribution in safety innovation, being named an award
winner at the WA Department of Mines, Industry Regulation
and Safety’s Work Health and Safety Excellence Awards,
as well as at the NSCA Foundation’s National Safety Awards
of Excellence.
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. The Company’s serious incident
frequency rate pleasingly remained at a historically low level,
and the total recordable injury frequency rate at year end was
3.45 incidents per million hours worked.
Monadelphous employees at pre-start at the Iron Bridge
Monadelphous employees at pre-start at the Iron Bridge
Magnetite Project, Pilbara region, Western Australia.
Magnetite Project, Pilbara region, Western Australia.
OPERATING AND FINANCIAL REVIEW 42
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
During the period, Monadelphous launched the latest version
of the Company’s Stretch Reconciliation Action Plan (RAP)
(2022 – 2025) following endorsement by Reconciliation
Australia. The Company’s fourth RAP, and second Stretch RAP,
articulates Monadelphous’ pledge to take meaningful action to
advance reconciliation, ensuring Aboriginal and Torres Strait
Islander peoples have equal access to meaningful employment
and development opportunities.
Commitments contained in the 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. 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.
During the period, the Company welcomed a new trainee
cohort to its Indigenous Pathways Program. The Program,
which is run in partnership with Rio Tinto, provides current
and future employees with traineeships, apprenticeships and
tertiary study support. In the second half of the financial year,
the Program collaborated with Madalah to support Indigenous
students from regional communities with their tertiary studies.
This collaboration is currently supporting students who are
studying business and engineering.
Monadelphous renewed its partnership with the Polly Farmer
Foundation (PFF), which aims to empower Indigenous
students to complete school and progress into early career
pathways. During the year, a number of PFF students and
alumni attended the Company’s Employee Development
Centre in Bibra Lake, WA, and head office in Perth, WA, to
gain an understanding of potential career pathways, as well as
to participate in pro-bono training offerings.
Also at the Employee Development Centre, the Company
proudly launched the Nintirri Room, a new training facility
designed to support the training of the Company’s Aboriginal
and Torres Strait Islander employees, as well as for the
provision of Indigenous cultural awareness training for its
broader workforce.
An Indigenous Pathways Program mentor
An Indigenous Pathways Program mentor
and participant at an Indigenous Pathways
and participant at an Indigenous Pathways
Program networking event at the Company’s
Program networking event at the Company’s
head office in Perth, Western Australia.
head office in Perth, Western Australia.
43 ANNUAL REPORT 2023
Monadelphous employees working at
Monadelphous employees working at
BHP’s Mt Arthur mine, Muswellbrook,
BHP’s Mt Arthur mine, Muswellbrook,
New South Wales.
New South Wales.
Gender diversity and inclusion
As part of its ongoing commitment to gender diversity and
inclusion, Monadelphous progressed the actions outlined in its
second Gender Diversity and Inclusion Plan (2021 – 2024),
which 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.
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.
To support its objective of inspiring young women to take up
careers in science, technology, engineering and mathematics,
and as part of its membership with the National Association
of Women in Operations (NAWO), the Company hosted an
event for school students and their parents, called ‘When
I grow up’. The event aimed to inform participants about
potential career pathways in operations through sharing
the experiences of women in trades and professional roles,
and breaking down preconceived, gender-based barriers
and biases. In addition, the Company continued to foster
networking and mentoring opportunities for women through
NAWO, participating in several panel discussions and in-school
engagements, as well as celebrating International Women’s
Day through a range of activities across the business, including
a live panel discussion facilitated by NAWO.
The Company’s partnership with the University of Western
Australia’s Girls in Engineering Program saw Monadelphous
participate in the Girls in Engineering Discovery Day, which
was attended by more than 100 female school students.
Monadelphous also hosted in-school engineering workshops
in Perth and facilitated regional tours for female engineering
students to Port Hedland, Karratha and the south west
region of WA.
Productivity and innovation
Monadelphous continues to seek opportunities to innovate and
improve the safe and efficient delivery of its service offering.
To support this, the Company monitors its core markets, and
adjacent industries, for relevant emerging trends, ideas and
converging technologies that may offer new solutions.
During the year, Monadelphous achieved efficiency gains
through the development of a digital solution for real-time
capture and dissemination of operational information in-field.
The solution reduces reliance on in-field paperwork, enables
instant creation of manufacturer’s data reports, provides
immediate access to the latest drawings, simplifies the sharing
of changes and job progress and supports effective decision-
making at all levels.
Leveraging machine learning technology for image and video
processing, the Company continues to investigate and trial
opportunities to extract further value from drone-captured
imagery to streamline site surveys, maintenance assessments
and identify potential safety hazards.
The Company’s safety culture continues to drive product trials
of new technological solutions, which leverage computer
vision and artificial intelligence. Monadelphous also continues
to identify and assess new opportunities and evolving
technologies that support the reduction of greenhouse gas
emissions and the electrification of fleet assets, advancing
both the Company’s and its customers’ decarbonisation goals.
OPERATING AND FINANCIAL REVIEW 44
Environment
Monadelphous is committed to minimising the impact of its
operations on the environment. In June 2022, the Company
formalised its commitment to net zero emissions by 2050
and has since progressed a number of initiatives which aim
to address its environmental impact and protect the natural
environment for current and future generations.
The Company formalised its Emissions and Energy Reduction
Roadmap, which outlines a series of interim targets towards
achieving this goal. This included establishing working groups
focused on its transition to renewable power, ‘greening’ its
fleet and optimising operational activities.
As part of the Roadmap, the Company commenced a small-
scale trial of B5 biodiesel fuel blend; registered an expression
of interest to convert diesel vehicles into electric engine
vehicles and identified opportunities to rent converted vehicles
to supplement trialling electric vehicle performance in a
variety of operating environments; conducted energy audits at
workshop facilities to identify opportunities to reduce power
consumption; and increased collaboration with industry peers
regarding their decarbonisation journeys. The Company also
progressed a comprehensive greenhouse gas (GHG) data
review to assist with the identification of further improvements
and confirmed the Company’s Scope 1 and 2 GHG footprint
for its base reporting year.
Monadelphous employees at the solar
powered radio tower at BHP’s Jimblebar
mine, Newman, Western Australia.
45 ANNUAL REPORT 2023
Monadelphous continued to monitor advances in technology
that may provide opportunities to reduce emissions across its
business, and maintained its focus on minimising potential
environmental impact areas, including waste, natural
environment clearing activities and the prevention of pollution.
The Company’s history of zero serious environmental incidents
continued this year in line with its commitment to zero harm.
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 continued to monitor its exposure to
climate change risks and opportunities with reference to
the recommendations of the Financial Stability Board’s Task
Force on Climate-related Financial Disclosures. The Company
reports its climate change risks and opportunities and the
management thereof in its Corporate Governance Statement.
Australia’s transition towards clean energy continues to
provide opportunities for Monadelphous. Expenditure
related to energy transition in the resources and energy
sectors is expected to increase over coming years with high
levels of investment anticipated in lithium, nickel, copper,
mineral sands and rare earths. In addition, accelerating
decarbonisation efforts in the power sector continue to provide
an expanding pipeline of prospects, including a large number
of new wind farms and battery storage projects, with Zenviron
well placed to capitalise on these.
Greenhouse gas reporting
The Company’s overall carbon footprint is deemed small,
however 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
dioxide equivalent (CO2-e) emissions were 16,440 tonnes
CO2-e, significantly below the legislative reporting threshold
of 50,000 tonnes CO2-e. 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 2022/23
period was 240 TJ.
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
120 community initiatives across 20 locations, contributing
over $300,000 in funds to local communities, as well as
supporting its employees in the provision of more than
600 hours of voluntary work.
Initiatives included a major sponsorship of the FeNaClNG
Festival and Youth Week in Karratha, WA; the Hedland
Reds Football Club in Port Hedland, WA; the Yallarm STEM
Camp in Gladstone, Queensland; providing funding to the
Digital Technologies Program in the south west region of WA;
donating school supplies in Lihir Island, Papua New Guinea;
making a financial contribution to the Wickham Wolves in
Wickham, WA; and donating to the Starick Foundation.
Additionally, a quarterly volunteering opportunity with Perth
Homeless Support Group was established for Perth-based
employees, and more than 70 Papua New Guinea-based
employees participated in the Lihir Island Cleanathon.
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 and ensure a high standard of governance is
maintained.
Monadelphous’ full Corporate Governance Statement, Board
and 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 Company’s Risk
Management Framework. These risks, and the Company’s
approach to their management, are disclosed in the
Company’s Corporate Governance Statement.
OPERATING AND FINANCIAL REVIEW 46
During the year, the Company further enhanced its risk
assessment and reporting processes, implementing improved
risk reporting tools for the reporting of risks to Executive
Management and the Board. The Company also undertook a
number of updates to its anti-bribery, corruption and modern
slavery processes, to ensure continuous improvement in the
identification, mitigation and management of these types of
risks. Key improvements during the period included updates
to its supplier assessment questionnaire and third-party
due diligence process, along with welfare checks for new
employees sourced internationally.
Monadelphous operates management systems certified to
ISO 9001 quality management systems, ISO 45001 for
occupational health and safety management systems and ISO
14001 for environmental management systems.
A Monadelphous employee donating
sporting equipment on behalf of
Monadelphous to a local school in
Lihir Island, Papua New Guinea.
47 ANNUAL REPORT 2023
Work completed on Rio Tinto’s 11CM conveyor,
Tom Price, Western Australia.
Monadelphous undertaking construction work at Rio Tinto’s West Angelas Deposits C & D Project, Newman, Western Australia. CONTENTS 48
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
49
70
75
76
77
78
79
80
81
FINANCIAL REPORT
49 ANNUAL REPORT 2023
DIRECTORS’ REPORT
Your directors submit their report for the year ended 30 June 2023.
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
Chair
Robert Velletri
Chair
Zoran Bebic
Managing Director
Susan Lee Murphy AO
Lead Independent Non-Executive Director
Dietmar Robert Voss
Independent Non-Executive Director
Helen Jane Gillies
Independent Non-Executive Director
Appointed 18 January 1991, retired 22 November 2022
Resigned as Managing Director on 30 May 2003 and continued as Chair until retirement
on 22 November 2022
56 years experience in the construction and engineering services industry
Appointed as Director 26 August 1992
Appointed as Managing Director on 30 May 2003 and ceased as Managing Director
following his appointment as Chair on 22 November 2022
Mechanical Engineer, Member of Engineers Australia
44 years experience in the construction and engineering services industry
Appointed as Managing Director 22 November 2022
Certified Practising Accountant, Fellow Member of CPA Australia
30 years experience in the construction and engineering services industry
Appointed 11 June 2019
Civil Engineer, Honorary Fellow of Engineers Australia
44 years experience in the resources and infrastructure industries
Also a non-executive director of the following other publicly listed entities:
MMA Offshore Limited (ASX: MRM) – appointed 30 April 2021
RemSense Technologies Limited (ASX: REM) – appointed 17 May 2023
Appointed 10 March 2014
Chemical Engineer, Member of the Australian Institute of Company Directors
49 years experience in the energy, 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
27 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 Buratto
Independent Non-Executive Director
Appointed 11 October 2021
Civil Engineer, Fellow of Engineers Australia
48 years experience in the construction and engineering services industry
Peter John Dempsey
Independent Non-Executive Director
Appointed 30 May 2003, retired 22 November 2022
FINANCIAL REPORT 50
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
23 years experience in the construction and engineering services industry
Appointed 8 December 2014
Chartered Accountant, Member of Chartered Accountants Australia and New Zealand
18 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:
R. Velletri
Z. Bebic
D. R. Voss
H. J. Gillies
S. L. Murphy
E. P. Buratto
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 2022
• on ordinary shares
Ordinary Shares
2,183,992
50,885
72,630
9,633
13,000
2,400
Performance
Rights over
Ordinary Shares
Retention Rights over
Ordinary Shares
Options over
Ordinary Shares
19,347
9,522
Nil
Nil
Nil
Nil
29,067
21,800
Nil
Nil
Nil
Nil
Cents
55.85
55.02
Cents
25.00
24.00
25.00
525,000
350,000
Nil
Nil
Nil
Nil
$’000
24,126
23,028
23,891
51 ANNUAL REPORT 2023
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
• 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 Newcastle, Beijing (China), Ulaanbaatar (Mongolia)
and Manila (Philippines), and a network of workshop facilities in Kalgoorlie, Karratha, Port Hedland, Newman, Tom Price, Darwin, Roxby Downs,
Gladstone, Hunter Valley, Mackay, Bibra Lake, Bunbury, Capel, Chinchilla, Rutherford, Whyalla, Morwell 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 5,317 employees as of 30 June 2023 (2022: 7,541 employees).
OPERATING AND FINANCIAL REVIEW
Review
A review of operations of the consolidated entity during the financial year, the results of those operations, the changes in the state of affairs and
the likely developments in the operations of the consolidated entity are set out in the Operating and Financial Review section.
Operating results for the year
Revenue from contracts with customers
Profit after income tax expense attributable to equity holders of the parent
2023
$’000
1,720,956
53,543
2022
$’000
1,809,451
52,219
DIRECTORS’ REPORT
FINANCIAL REPORT 52
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
Notification of claim and statement of claim
On 26 July 2023, Monadelphous was notified that Northern SEQ Distributor – Retailer Authority, trading as UnityWater, has served a Claim and
Statement of Claim in the Supreme Court of Queensland against one of Monadelphous’ wholly owned subsidiaries, Monadelphous Engineering Pty
Ltd. Refer to note 26 for further details.
Dividends declared
On 21 August 2023, the directors of Monadelphous Group Limited declared a final dividend on ordinary shares in respect of the 2023 financial year.
The total amount of the dividend is $24,126,200 which represents a fully franked final dividend of 25 cents per share. This dividend has not been
provided for in the 30 June 2023 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 696,996 retention rights, 324,930 performance rights and 4,652,500 options on issue as follows:
• 348,404 retention rights to take up one ordinary share in Monadelphous Group Limited. The retention rights have a vesting date 20 December
2023
• 348,592 retention rights to take up one ordinary share in Monadelphous Group Limited. The retention rights have a vesting date 20 December
2024
• 162,416 performance rights to take up one ordinary share in Monadelphous Group Limited. The performance rights have a vesting date 1 July
2024
• 162,514 performance rights to take up one ordinary share in Monadelphous Group Limited. The performance rights have a vesting date 1 July
2025
• 3,117,500 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2023.
Of these, 2,350,000 options in respect of the 2019 award will lapse in September 2023 as a consequence of the performance hurdle not
having been achieved.
• 1,535,000 options to take up one ordinary share in Monadelphous Group Limited. The options have a vesting date 1 September 2024
Performance right, retention right and option holders do not have any right, by virtue of the performance right, 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, retention rights and options
On 1 July 2023, 163,080 performance rights vested and were exercised.
On 20 December 2022, 370,402 retention rights vested and were exercised.
On 7 September 2022, 772,500 options vested and were exercised.
On 1 July 2022, 75,224 performance rights vested and were exercised.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Company has paid premiums in respect of a contract insuring all the directors and officers of Monadelphous Group
Limited against a liability incurred in their role as directors of the Company, except where:
(a) the liability arises out of conduct involving a wilful breach of duty; or
(b) there has been a contravention of Sections 182 or 183 of the Corporations Act 2001.
53 ANNUAL REPORT 2023
DIRECTORS’ REPORT
INDEMNIFICATION OF AUDITORS
The Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against certain
liabilities to third parties arising from the audit to the extent permitted by law. The indemnity does not extend to any liability resulting from a
negligent, wrongful or wilful act or omission by Ernst & Young. No payment has been made to indemnify Ernst & Young during or since the audit.
INTERESTS IN CONTRACTS OR PROPOSED CONTRACTS WITH THE COMPANY
During or since the end of the financial year, no director has had any interest in a contract or proposed contract with the Company being an
interest the nature of which has been declared by the director in accordance with Section 300(11)(d) of the Corporations Act 2001.
REMUNERATION REPORT (AUDITED)
The Remuneration Report for the year ended 30 June 2023 outlines the Key Management Personnel (KMP) remuneration arrangements of the
Group in accordance with the requirements of the Corporations Act 2001.
For the purposes of this report Key Management Personnel of the Group are defined as those persons having the authority and responsibility
for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether
executive or otherwise) of the parent Company. For the purposes of this report, the term ‘executive’ encompasses the Managing Director (MD),
Chief Financial Officer (CFO) and Executive General Managers (EGM) of the Group.
Details of Key Management Personnel
(i) Directors
C. G. B. Rubino
R. Velletri
Z. Bebic
S. L. Murphy
P. J. Dempsey
D. R. Voss
H. J. Gillies
E. P. Buratto
(ii) Senior executives
A. Reid
A. Cook
P. Trueman
D. Foti
Remuneration Philosophy
Chair – Retired 22 November 2022
Chair – Appointed 22 November 2022 (previously Managing Director)
Managing Director – Appointed 22 November 2022 (previously Executive General Manager,
Maintenance & Industrial Services)
Deputy Chair and Lead Independent Non-Executive Director
Independent Non-Executive Director – Retired 22 November 2022
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Executive General Manager, Maintenance & Industrial Services – Appointed 23 November 2022
Executive General Manager, Engineering Construction – Appointed 21 December 2022
Chief Financial Officer and Company Secretary
Executive General Manager, Engineering Construction – Ceased to be KMP on 21 December 2022
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 recognised remuneration research organisations 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.
DIRECTORS’ REPORT
FINANCIAL REPORT 54
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration Structure
In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and
distinct.
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 to 6 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.
Remuneration Element
Individual Components
Purpose
Link to Performance
Fixed Remuneration
Comprises base salary,
superannuation and other benefits.
Variable Remuneration –
Combined Reward Plan
Comprises cash payment, and/or
performance rights issued under
the Monadelphous Group Limited
Performance Rights Plan.
To provide market competitive
fixed remuneration appropriate to
the position and competitive in the
market, taking into account the
individual’s skills, experience and
qualifications.
Assessed at an individual
level based on performance
of responsibilities and cultural
alignment with the Company’s
values.
To recognise and reward the
senior leaders of the business
who contribute to the Group’s
success, to align these rewards to
the creation of shareholder wealth
over time and ensure the long
term retention of employees.
Performance assessed against
financial, safety, people, customer
satisfaction and strategic progress
targets set by the Board on an
annual basis. Vesting of awards
is dependent on continuity of
employment.
Variable Remuneration –
Employee Option Plan
Comprises options issued under
the Monadelphous Group Limited
Employee Option Plan.
To retain and reward key
employees in a manner aligned to
the creation of shareholder wealth.
Vesting of awards is dependent on
exceeding EPS growth targets and
continuity of employment.
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.
Vesting of awards is dependent on
continuity of employment.
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.
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 60 and 61 of this report detail the proportion of fixed and variable remuneration for each of
the executive directors and the senior executives of the Company.
55 ANNUAL REPORT 2023
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Fixed Remuneration
Objective
Monadelphous has a structured approach aimed at delivering fixed remuneration which is market competitive and rewards performance. The
Company participates in a number of respected remuneration surveys from which it receives quarterly or six-monthly market and forecast data,
and its remuneration system is designed to analyse detailed market and sector information at various levels.
The level of fixed remuneration is set to provide a base level of remuneration which is both appropriate to the position and competitive in the
market, taking into account the individual’s skills, experience and qualifications.
Fixed remuneration levels are considered annually by the Remuneration Committee having reviewed an individual’s performance, alignment with
the Company’s values and comparative remuneration levels in the market.
Structure
Executive team members are given the opportunity to receive their fixed remuneration in a variety of forms including base salary, superannuation
and other benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the
Company.
The fixed remuneration component of the executives of the Company is detailed in Tables 1 and 2 on pages 60 and 61 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 2023, awards comprised of a 25 per cent cash payment, which was paid in July 2023, with 75 per cent of the
award to be offered in the form of performance rights in or around October 2023. 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 FY23 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 2024, 1 July 2025 and 1 July 2026,
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 2026 financial results, in or around August 2026.
For the year ended 30 June 2022, 25 per cent of the award was paid in cash shortly after year end, with 75 per cent of the award issued in
the form of Performance Rights granted in November 2022 (including Performance Rights issued to the Company’s Managing Director following
shareholder approval at the Company’s Annual General Meeting). The number of performance rights issued were calculated using the arithmetic
average of the ten-day daily volume weighted average market price of the Company’s ordinary shares commencing on the second trading day after
the record date in respect of the FY22 final dividend, in other words the dividend reinvestment plan price which was $13.17.
The Performance Rights component for the 2022 award vests 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. One share will 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, and may give consideration to factors resulting in material financial misstatement,
significant Company financial underperformance, negligence, lack of compliance, significant personal underperformance or behaviour that is likely
to damage the Company’s reputation.
FINANCIAL REPORT 56
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Variable Remuneration – Combined Reward Plan (continued)
Performance Requirements
At the beginning of each financial year, the Board sets quantified, challenging, performance targets for the key performance areas of the business,
taking into account the prevailing economic conditions for the year ahead, the Company’s strategic objectives and the key risk factors facing
the business at that time. The targets are designed to focus the activities of the business on the key areas of performance that deliver long term
sustainable growth for shareholders.
For the year ended 30 June 2023, 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.
MD
CFO
EGM
Earnings Performance
Other
Earnings Per Share
Divisional Contribution
Group KPAs
Divisional KPAs
60%
60%
30%
-
-
30%
40%
-
-
-
40%
40%
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 2023, the Board determined that an
award would be made under the CR Plan with approximately 180 employees eligible for an award of Performance Rights.
Group and Divisional performance for the year ended 30 June 2023 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
57 ANNUAL REPORT 2023
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 2023 and 30 June 2022:
Executive
Z. Bebic
A. Cook
A. Reid
P. Trueman
D. Foti
2023
Total Award $
340,300
178,500
166,000
200,700
-
2022
Total Award $
250,800
NA
NA
207,700
291,100
2023
% of Maximum
Opportunity Earned
2022
% of Maximum
Opportunity Earned
73%
71%
65%
74%
-
74%
NA
NA
81%
77%
The total award under the CR Plan for the financial year ended 30 June 2023 for the Managing Director and the Executive General Managers
recognises that the incumbents have only been in these roles for approximately 6 months. The 2023 total award under the CR Plan for the Managing
Director and the Executive General Managers is an aggregation of a CR Plan outcome from their previous role (at the previous remuneration for the
first half of the 2023 financial year) and the value determined by the CR Plan KMP model (for the second half of the 2023 financial year).
Tables 1 and 2 on pages 60 and 61 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 2023 and 30 June 2022.
The Performance Right component of the award relating to the year ended 30 June 2023, which is to be offered in or around October 2023,
will be amortised over four years. It is estimated, based on the share price at 30 June 2023, that approximately 57,000 Performance Rights will
be offered to Key Management Personnel under the terms of the CR Plan for the year ended 30 June 2023 (2022: 71,707 Performance Rights).
On 1 July 2023, 163,080 Performance Rights representing the first tranche of the award under the terms of the CR Plan for the year ended
30 June 2022 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 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 lapse. No options will be exercisable if an EPS growth rate is achieved that is less than 5 per cent per annum (compounded)
for the 2019 award of options and 4 per cent per annum (compounded) for the 2020 award of options.
Subject to the satisfaction of the EPS performance hurdle, the 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.
DIRECTORS’ REPORT
FINANCIAL REPORT 58
REMUNERATION REPORT (AUDITED) (CONTINUED)
Variable Remuneration – Employee Option Plan (continued)
In respect of the 2019 award of options, the EPS performance hurdle was not met for any of the options to be exercised during the window
periods commencing either 1 September 2021, 1 September 2022 or 1 September 2023. In accordance with the terms of the offer, these
options will lapse at the end of the window period commencing 1 September 2023.
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.
In respect of the 2020 award of options, the EPS performance hurdle was achieved for the first 25 per cent of options to be exercised during the
window period commencing 1 September 2022, resulting in 225,309 shares being issued on 7 September 2022 (20,000 options exercised
at an exercise price of $9.30, resulting in 20,000 shares, and 752,500 options exercised at $nil (pursuant to cashless exercise), resulting in
205,309 shares).
Variable Remuneration – 2021 Employee Retention Plan
Objective
The Company has experienced significantly high industry activity levels over recent years, extensively impacting 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) in December 2021. 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 were granted in the form
of Performance Rights subject 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 at the time, Rob Velletri, subject
to shareholder approval. The timing of the grant did not allow for a resolution to be tabled at the 2021 Annual General Meeting. As a result,
shareholder approval was sought and obtained at the Company’s 2022 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, and may give consideration to factors resulting in material financial misstatement, significant
Company financial underperformance, negligence, lack of compliance, significant personal underperformance or behaviour that is likely to damage
the Company’s reputation.
The 2021 ER Plan Retention Right award is being amortised over three years.
On 20 December 2022, 370,402 Retention Rights representing the first tranche of the award under the terms of the 2021 ER Plan vested and
were exercised into Monadelphous Group Limited ordinary shares.
Tables 1 and 2 on pages 60 and 61 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 2023 and 30 June 2022.
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.
59 ANNUAL REPORT 2023
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 2023
(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
$
128,000
20,000
15,000
Note, the Nomination Committee is chaired by the Executive Chair and there is no additional fee.
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 2023 is detailed in Table 1 on page 60 of this report.
Employment Contracts
All executives have non-fixed term employment contracts. On appointment during the year, the new Managing Director and Executive General
Managers have an employment contract providing for a 6 month written notice, and the Chief Financial Officer a 3 month written notice,
of termination of contract by the Company or the executive. 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:
2023
$’000
2022
$’000
2021
$’000
2020
$’000
2019
$’000
Profit after income tax expense attributable to equity holders
of the parent
Basic earnings per share
Share price as at 30 June
53,543
55.85c
$11.72
52,219
54.90c
$9.95
47,060
49.70c
$10.45
36,483
38.65c
$10.82
50,565
53.72c
$18.81
A review of the Company’s performance and returns to shareholders over the last five years has been provided on page 21 of this report.
FINANCIAL REPORT 60
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration of Key Management Personnel
Table 1: Remuneration for the year ended 30 June 2023
Short Term Benefits
Post
Employment
Long Term
Benefits
Share-Based
Payments3
Total
Performance
Related
Total Rights
and Options
Related
Total
Non-
Monetary2
Cash
Award
Superannuation
Leave1
Rights
and Options
$
$
$
$
$
$
%
%
Salary &
Fees
$
Leave1
$
Non-Executive Directors
S. L. Murphy
133,937
P. J. Dempsey4
46,017
D. R. Voss
H. J. Gillies
E. P. Buratto
Subtotal
Non-Executive
Directors
115,837
129,412
115,837
541,040
-
-
-
-
-
-
Executive Directors
C. G. B. Rubino4
163,671
18,112
R. Velletri5
Z. Bebic5
Subtotal
Executive
Directors
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,063
4,832
12,163
13,588
12,163
56,809
-
-
-
-
-
-
10,048
4,490
-
-
-
-
-
-
-
148,000
50,849
128,000
143,000
128,000
597,849
196,321
25,292
(70,933)
605,579
1,380,389
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43.87
27.89
43.87
22.95
823,682
(11,591)
8,360
850,967 217,210
16,319
85,075
25,292
132,204
395,191
1,722,258
1,838,320 223,731
24,679
85,075
60,632
65,761
1,000,770
3,298,968
32.91
30.34
Other Key Management Personnel
D. Foti6
A. Cook7
A. Reid7
402,390
8,449
7,331
-
12,057
31,405
179,913
641,545
335,424
12,342
6,340
23,474
384,340
2,770
7,265
25,014
13,304
15,244
6,095
7,472
24,512
421,491
107,289
549,394
P. Trueman
569,000
(36,442)
10,680
50,175
25,292
18,878
303,648
941,231
28.04
11.38
24.08
37.59
28.04
5.82
19.53
32.26
Subtotal
Other Key
Management
Personnel
1,691,154
(12,881)
31,616
98,663
65,897
63,850
615,362
2,553,661
Total
4,070,514 210,850
56,295 183,738
183,338
129,611
1,616,132
6,450,478
27.96
27.90
24.10
25.05
1. Leave reflects annual and long service leave accrual less annual and long service leave taken.
2. Non-monetary benefits consist of Life and Salary Continuance insurance premiums.
3. Relates to the 2022 and 2023 awards under the CR Plan, 2019 and 2020 awards under the Options Plan and 2021 awards under the ER Plan.
4. C.G.B. Rubino retired as Chair and P.J. Dempsey retired as Non-Executive Director on 22 November 2022.
5. R. Velletri appointed as Chair (previously Managing Director) and Z. Bebic appointed as Managing Director (previously Executive General Manager, Maintenance & Industrial Services) on 22
November 2022.
6. D. Foti ceased to be KMP on 21 December 2022.
7. A. Cook and A. Reid were appointed as Executive General Managers on 21 December 2022 and 23 November 2022 respectively.
61 ANNUAL REPORT 2023
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration of Key Management Personnel (continued)
Table 2: Remuneration for the year ended 30 June 2022
Short Term Benefits
Post
Employment
Long Term
Benefits
Share-Based
Payments3
Total
Performance
Related
Total Rights
and Options
Related
Total
Salary
& Fees
$
Leave1
$
Non-
Monetary2
Cash
Award
Superannuation
Leave
Rights
and Options
$
$
$
$
$
$
%
%
Non-Executive Directors
S. L. Murphy
125,629
P. J. Dempsey
116,713
C. P. Michelmore
49,651
D. R. Voss
H. J. Gillies
111,818
128,832
E. P. Buratto4
79,563
Subtotal
Non-Executive
Directors
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
Subtotal
Other Key
Management
Personnel
2,059,399
67,370
27,374 187,400
70,704
82,849
678,809
3,173,905
Total
4,122,181
50,723
39,966 314,800
175,345
134,970
989,875
5,827,860
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 the 2019 award 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 Non-Executive Director on 11 October 2021.
27.23
25.90
29.31
20.92
20.56
23.16
27.29
22.39
21.39
16.99
DIRECTORS’ REPORT
FINANCIAL REPORT 62
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration of Key Management Personnel (continued)
Table 3: Performance Rights: Granted during the year ended 30 June 2023
Executive Directors
R. Velletri1
Z. Bebic1
Other Key Management Personnel
D. Foti2
P. Trueman
Total
Granted
Number
Grant Date
29,020
22/11/2022
14,282
3/8/2022
16,577
11,828
71,707
3/8/2022
3/8/2022
Terms and Conditions for Each Grant
Fair Value
per Right at
Grant Date
$
Exercise
Price per
Right
$
Expiry Date
First
Exercise
Date
Last
Exercise
Date
12.70
9.79
9.79
9.79
Nil
Nil
Nil
Nil
1/7/2025
1/7/2023
1/7/2025
1/7/2025
1/7/2023
1/7/2025
1/7/2025
1/7/2023
1/7/2025
1/7/2025
1/7/2023
1/7/2025
1. Granted to R. Velletri and Z. Bebic in their previous roles as Managing Director and Executive General Manager, Maintenance & Industrial Services, respectively.
2. Ceased to be a KMP on 21 December 2022.
No performance rights were issued to A. Reid or A. Cook, who were appointed as Executive General Managers during the year, during the period they were classified as KMP.
Table 4: Options: Granted during the year ended 30 June 2023
No options were granted during the year ended 30 June 2023.
Table 5: Retention Rights: Granted during the year ended 30 June 2023
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
43,600
22/11/2022
12.96
Nil
20/12/2024
20/12/2022
20/12/2024
43,600
Executive Directors
R. Velletri1
Total
1. 43,600 Retention Rights were offered to R. Velletri on 20 December 2021, the Company’s Managing Director at the time, under the terms of the ER Plan, with the issue being subject to
shareholder approval. The timing of the grant did not allow for a resolution to be tabled at the 2021 Annual General Meeting. As a result, shareholder approval was sought and obtained at the
Company’s 2022 Annual General Meeting in November 2022.
63 ANNUAL REPORT 2023
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Remuneration of Key Management Personnel (continued)
Table 6: Shares issued on exercise of performance rights during the year ended 30 June 2023
Directors
R. Velletri^
Z. Bebic^
Executives
D. Foti^1
P. Trueman^
Total
Performance Rights
Vested
Performance Rights
Exercised
Shares Issued
Paid
per Share $
6,437
3,401
3,357
2,568
15,763
6,437
3,401
3,357
2,568
15,763
6,437
3,401
3,357
2,568
15,763
Nil
Nil
Nil
Nil
^ On 1 July 2022, the date of exercise of the above performance rights, the closing share price was $9.95.
1. Ceased to be KMP on 21 December 2022.
No shares were issued on exercise of performance rights to A. Reid or A. Cook, who were appointed as Executive General Managers during the year, during the period they were classified as KMP.
Table 7: Shares issued on exercise of options during the year ended 30 June 2023
Directors
R. Velletri^
Z. Bebic^
Executives
D. Foti^1
P. Trueman^
Total
Options Vested
Options Exercised
Shares Issued
75,000
50,000
50,000
40,000
215,000
75,000
50,000
50,000
40,000
215,000
20,465
13,643
13,643
10,914
58,665
Exercise
Price $
9.30
9.30
9.30
9.30
^ On 7 September 2022, the date of exercise of the above options, the closing share price was $12.95.
1. Ceased to be KMP on 21 December 2022.
No shares were issued on exercise of options to A. Reid or A. Cook, who were appointed as Executive General Managers during the year, during the period they were classified as KMP.
Table 8: Shares issued on exercise of retention rights during the year ended 30 June 2023
Directors
R. Velletri^
Z. Bebic^
Executives
D. Foti^1
A. Reid^
P. Trueman^
Total
Retention Rights
Vested
Retention Rights
Exercised
Shares Issued
Paid
per Share $
14,533
10,900
10,900
5,433
9,066
50,832
14,533
10,900
10,900
5,433
9,066
50,832
14,533
10,900
10,900
5,433
9,066
50,832
Nil
Nil
Nil
Nil
Nil
^ On 20 December 2022, the date of exercise of the above retention rights, the closing share price was $13.03.
1. Ceased to be KMP on 21 December 2022.
No shares were issued on exercise of retention rights to A. Cook, who was appointed as an Executive General Manager during the year, during the period he was classified as a KMP.
DIRECTORS’ REPORT
FINANCIAL REPORT 64
REMUNERATION REPORT (AUDITED) (CONTINUED)
Additional disclosures relating to rights, options and shares
Table 9: Performance rights holdings of Key Management Personnel
Performance Rights
held in Monadelphous
Group Limited
Balance at
Beginning of Period
1 July 2022
Granted as
Remuneration
Rights Exercised
and Lapsed
Net Change
Other
Directors
C. G. B. Rubino1
R. Velletri
Z. Bebic
S. L. Murphy
P. J. Dempsey1
D. R. Voss
H. J. Gillies
E. P. Buratto
Executives
D. Foti2
A. Cook3
A. Reid4
P. Trueman
Total
-
6,437
3,401
-
-
-
-
-
-
29,020
14,282
-
-
-
-
-
-
(6,437)
(3,401)
-
-
-
-
-
-
-
-
-
-
-
-
-
3,357
16,577
(3,357)
(16,577)
-
-
2,568
15,763
-
-
11,828
71,707
-
-
(2,568)
(15,763)
-
7,972
-
(8,605)
1. C.G.B. Rubino retired as Chair and P.J. Dempsey retired as Non-Executive Director on 22 November 2022.
2. Ceased to be KMP on 21 December 2022.
3. Appointed as Executive General Manager, Engineering Construction on 21 December 2022.
4. Appointed as Executive General Manager, Maintenance & Industrial Services on 23 November 2022.
Table 10: Options holdings of Key Management Personnel
Options held in
Monadelphous Group
Limited
Balance at
Beginning of Period
1 July 2022
Granted as
Remuneration
Options Exercised
and Lapsed
Net Change
Other
Directors
C. G. B. Rubino1
R. Velletri
Z. Bebic
S. L. Murphy
P. J. Dempsey1
D. R. Voss
H. J. Gillies
E. P. Buratto
Executives
D. Foti2
A. Cook3
A. Reid4
P. Trueman
Total
-
600,000
400,000
-
-
-
-
-
400,000
-
-
320,000
1,720,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(75,000)
(50,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
(350,000)
-
-
(40,000)
(215,000)
-
175,000
-
Balance at
End of Period
30 June 2023
-
29,020
14,282
-
-
-
-
-
-
-
7,972
11,828
63,102
Balance at
End of Period
30 June 2023
-
525,000
350,000
-
-
-
-
-
-
-
175,000
280,000
The EPS performance hurdle was not met for the 2019 options, and these will lapse at the end of the window period commencing 1 September 2023.
1. C.G.B. Rubino retired as Chair and P.J. Dempsey retired as Non-Executive Director on 22 November 2022.
2. Ceased to be KMP on 21 December 2022.
3. Appointed as Executive General Manager, Engineering Construction on 21 December 2022.
4. Appointed as Executive General Manager, Maintenance & Industrial Services on 23 November 2022.
(175,000)
1,330,000
65 ANNUAL REPORT 2023
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Additional disclosures relating to rights, options and shares (continued)
Table 11: Retention rights holdings of Key Management Personnel
Retention Rights held
in Monadelphous
Group Limited
Balance at
Beginning of Period
1 July 2022
Granted as
Remuneration
Rights Exercised
and Lapsed
Net Change
Other
Directors
C. G. B. Rubino1
R. Velletri2
Z. Bebic
S. L. Murphy
P. J. Dempsey1
D. R. Voss
H. J. Gillies
E. P. Buratto
Executives
D. Foti3
A. Cook4
A. Reid5
P. Trueman
Total
-
-
32,700
-
-
-
-
-
32,700
-
-
27,200
92,600
-
43,600
-
-
-
-
-
-
-
-
-
-
43,600
-
(14,533)
(10,900)
-
-
-
-
-
(10,900)
-
(5,433)
(9,066)
(50,832)
-
-
-
-
-
-
-
-
(21,800)
-
16,300
-
(5,500)
Balance at
End of Period
30 June 2023
-
29,067
21,800
-
-
-
-
-
-
-
10,867
18,134
79,868
1. C.G.B. Rubino retired as Chair and P.J. Dempsey retired as Non-Executive Director on 22 November 2022.
2. 43,600 Retention Rights were offered to R. Velletri on 20 December 2021, the Company’s Managing Director at that time, under the terms of the ER Plan, with the issue being subject to
shareholder approval. The timing of the proposed grant did not allow for a resolution to be tabled at the 2021 Annual General Meeting. As a result, shareholder approval was sought and
obtained at the Company’s 2022 Annual General Meeting in November 2022.
3. Ceased to be KMP on 21 December 2022.
4. Appointed as Executive General Manager, Engineering Construction on 21 December 2022.
5. Appointed as Executive General Manager, Maintenance & Industrial Services on 23 November 2022.
FINANCIAL REPORT 66
Balance at
End of Period
30 June 2023
-
2,174,319
46,125
13,000
-
72,630
9,633
2,400
-
-
23,037
27,683
(1,176,206)
2,368,827
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Additional disclosures relating to rights, options and shares (continued)
Table 12: Shareholdings of Key Management Personnel
Shares held in
Monadelphous Group
Limited
Balance at
Beginning of Period
1 July 2022
On Exercise of
Performance Rights,
Options and
Retention Rights
Granted as
Remuneration
Net Change
Other
Directors
C. G. B. Rubino1
R. Velletri
Z. Bebic
S. L. Murphy
P. J. Dempsey1
D. R. Voss
H. J. Gillies
E. P. Buratto
Executives
D. Foti2
A. Cook3
A. Reid4
P. Trueman
Total
1,022,653
2,132,884
18,181
8,000
78,000
72,630
9,260
-
73,030
-
-
5,135
3,419,773
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,022,653)
-
-
5,000
(78,000)
-
373
2,400
(100,930)
-
17,604
-
41,435
27,944
-
-
-
-
-
27,900
-
5,433
22,548
125,260
1. C.G.B. Rubino retired as Chair and P.J. Dempsey retired as Non-Executive Director on 22 November 2022.
2. Ceased to be KMP on 21 December 2022.
3. Appointed as Executive General Manager, Engineering Construction on 21 December 2022.
4. Appointed as Executive General Manager, Maintenance & Industrial Services on 23 November 2022.
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
67 ANNUAL REPORT 2023
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.
Number of meetings held
Number of meetings attended:
C. G. B. Rubino1
R. Velletri
Z. Bebic2
P. J. Dempsey3
D. R. Voss
H. J. Gillies
S. L. Murphy
E. Buratto
Directors’ Meetings
Audit
Remuneration
Nomination
Meetings of Committees
15
4
15
7
8
15
15
15
15
6
-
-
-
3
6
6
6
6
2
-
-
-
-
2
2
2
2
1
-
1
-
-
1
1
1
1
1. Retired as Chair on 22 November 2022.
2. Appointed as Managing Director on 22 November 2022 and attended all meetings he was eligible to attend.
3. Retired as a Non-Executive Director on 22 November 2022 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)
Remuneration
S. L. Murphy (c)
P. J. Dempsey – retired on 22 November 2022
D. R. Voss
D. R. Voss
S. L. Murphy
E. P. Buratto
H. J. Gillies
E. P. Buratto
Note: (c) Designates the chair of the committee.
Nomination
R. Velletri (c) – appointed on 22 November
2022
C. G. B. Rubino (c) – retired on 22 November
2022
P. J. Dempsey – retired on 22 November 2022
H. J. Gillies
D. R. Voss
S. L. Murphy
E. P. Buratto
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.
DIRECTORS’ REPORT
FINANCIAL REPORT 68
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.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The directors have received an independence declaration from the auditor of Monadelphous Group Limited, as shown on page 69.
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
Agreed upon procedures
Signed in accordance with a resolution of the directors.
$
38,095
5,200
43,295
R. Velletri
Chair
Perth, 21 August 2023
69 ANNUAL REPORT 2023
AUDITOR’S INDEPENDENCE DECLARATION
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 70
71 ANNUAL REPORT 2023
INDEPENDENT AUDIT REPORT
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 72
73 ANNUAL REPORT 2023
INDEPENDENT AUDIT REPORT
INDEPENDENT AUDIT REPORT
FINANCIAL REPORT 74
75 ANNUAL REPORT 2023
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 2023 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 81.
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 2023.
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.
R. Velletri
Chair
Perth, 21 August 2023
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
Continuing Operations
REVENUE
Cost of services rendered
GROSS PROFIT
Other income
Business development and tender expenses
Occupancy expenses
Administrative expenses
Finance costs
Share of profit from joint ventures
PROFIT BEFORE INCOME TAX
Income tax expense
PROFIT AFTER INCOME TAX
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
NON-CONTROLLING INTERESTS
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
FINANCIAL REPORT 76
Notes
2023
$’000
2022
$’000
1
1
2
11
3
4
4
1,725,691
1,810,390
(1,602,298)
(1,686,937)
123,393
123,453
5,306
(20,292)
(3,544)
(35,637)
(3,495)
7,715
8,496
(16,959)
(3,640)
(35,139)
(3,352)
652
73,446
73,511
(21,520)
(21,227)
51,926
52,284
53,543
(1,617)
51,926
55.85
55.02
52,219
65
52,284
54.90
54.54
77 ANNUAL REPORT 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
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
Items that have been reclassified to profit or loss:
Foreign currency translation
OTHER COMPREHENSIVE INCOME / (LOSS) FOR THE YEAR, NET OF TAX
2023
$’000
2022
$’000
51,926
52,284
(3,275)
(1,181)
2,274
(682)
1,592
1,940
257
181
(54)
127
-
(1,054)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
52,183
51,230
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
NON-CONTROLLING INTERESTS
53,800
(1,617)
52,183
51,165
65
51,230
FINANCIAL REPORT 78
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Notes
2023
$’000
2022
$’000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Total current assets
Non-current assets
Contract assets
Property, plant and equipment
Intangible assets and goodwill
Investment in joint ventures
Deferred tax assets
Other non-current assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Lease liabilities
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Lease liabilities
Provisions
Other financial liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Non-controlling interests
TOTAL EQUITY
5
6
7
8
7
9
10
11
3
12
13
14
15
3
16
14
15
16
17
20
21
21
178,323
333,745
5,770
1,463
183,329
371,987
7,994
3,220
519,301
566,530
23,832
172,133
16,683
14,770
21,455
-
15,779
161,904
4,902
11,181
27,625
3,440
248,873
224,831
768,174
791,361
158,087
168,686
342
24,130
11,623
64,562
10,901
25,967
14,753
77,220
258,744
297,527
428
63,828
6,361
835
71,452
771
71,841
5,832
3,206
81,650
330,196
379,177
437,978
412,184
141,115
48,685
248,178
136,096
34,534
241,554
437,978
412,184
-
-
437,978
412,184
79 ANNUAL REPORT 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Attributable to Equity Holders
At 1 July 2022
136,096
42,766
(3,137)
241,554
Share-
Based
Payment
Reserve
$’000
Foreign
Currency
Translation
Reserve
$’000
Issued
Capital
$’000
Retained
Earnings
$’000
Non-
Controlling
Interests
$’000
Fair Value
Reserve for
Financial
Assets
$’000
1,264
1,592
-
-
-
Equity
Reserve
$’000
Total
$’000
(6,359)
412,184
-
-
-
257
51,926
52,183
(1,335)
-
-
53,543
(1,617)
(1,335)
53,543
(1,617)
1,592
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
Exercise of employee options
Share-based payments
Adjustment to deferred tax asset
recognised on employee share trust
Dividend reinvestment plan
Dividends paid
At 30 June 2023
-
-
-
-
-
186
-
-
4,833
-
-
-
-
-
-
-
10,725
1,520
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(46,919)
1,617
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,617)
-
3,266
3,266
-
-
-
-
-
186
10,725
1,520
4,833
(46,919)
2,856
(4,710)
437,978
141,115
55,011
(4,472)
248,178
Attributable to Equity Holders
Share-
Based
Payment
Reserve
$’000
Foreign
Currency
Translation
Reserve
$’000
Issued
Capital
$’000
Retained
Earnings
$’000
Non-
Controlling
Interests
$’000
Fair Value
Reserve for
Financial
Assets
$’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
9
-
65
65
82
-
-
-
-
1,137
(5,651)
395,581
127
-
127
-
-
-
-
-
-
-
-
-
(1,054)
52,284
51,230
(82)
(626)
-
-
-
-
-
(626)
5,234
195
3,488
(42,918)
-
-
-
-
-
-
-
-
-
-
-
(42,762)
(156)
136,096
42,766
(3,137)
241,554
-
1,264
(6,359)
412,184
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Finance costs paid
Other income
Income tax paid
Dividends received
FINANCIAL REPORT 80
Notes
2023
$’000
2022
$’000
1,881,560
1,957,889
(1,773,958)
(1,872,101)
4,300
(3,495)
1,992
(21,669)
4,560
740
(3,352)
4,162
(24,040)
1,573
NET CASH FLOWS FROM OPERATING ACTIVITIES
5
93,290
64,871
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Repayment of loan from joint venture
Payment of financial liability
Acquisition of intangible assets
Proceeds from sale of financial assets
Acquisition of controlled entities (note 23)
4,570
(19,042)
-
-
-
5,714
(23,498)
8,246
(9,118)
6,000
(7,571)
(738)
-
-
NET CASH FLOWS USED IN INVESTING ACTIVITIES
(32,256)
(3,181)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid
Proceeds from issue of shares on exercise of options
Proceeds of borrowings
Payment of principal portion of hire purchase liabilities
Payment of principal portion of other lease liabilities
NET CASH FLOWS USED IN FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
Net foreign exchange differences
Cash and cash equivalents at beginning of period
(42,086)
(39,430)
186
3,090
(19,410)
(8,460)
-
10,771
(18,038)
(7,892)
(66,680)
(54,589)
(5,646)
640
7,101
520
183,329
175,708
CASH AND CASH EQUIVALENTS AT END OF PERIOD
5
178,323
183,329
81 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2023
GENERAL INFORMATION
The consolidated financial report of Monadelphous Group Limited (the Group) and its subsidiaries for the year ended 30 June 2023 was
authorised for issue in accordance with a resolution of directors on 21 August 2023.
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 2022 (Refer to note 34).
• 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 2023. 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.
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.
FINANCIAL REPORT 82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2023
GENERAL INFORMATION (CONTINUED)
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 34.
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.
83 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GENERAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2023
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 note 16 for details.
Determination of the lease term of contracts with renewal options
Refer to note 15 for details.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2023
FINANCIAL REPORT 84
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
Energy transition metals and other minerals
Oil and gas
Infrastructure
Less share of revenue from joint ventures accounted for using the equity method
2023
$’000
2022
$’000
1,298,403
422,553
1,720,956
4,300
435
1,166,004
643,447
1,809,451
740
199
1,725,691
1,810,390
2,928
2,378
5,306
576,164
562,842
545,521
144,228
1,828,755
(107,799)
1,720,956
4,334
4,162
8,496
789,344
632,068
425,353
83,275
1,930,040
(120,589)
1,809,451
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
12,280
2,389
22,617
3,457
Unsatisfied performance obligations
Transaction price expected to be recognised in future years for unsatisfied performance
obligations at 30 June 2023:
Services revenue
Construction revenue
Total
1,389,560
229,254
1,618,814
1,075,326
62,912
1,138,238
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
Construction
1 to 5 years
1 to 2 years
85 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2023
1. REVENUE AND OTHER INCOME (CONTINUED)
Recognition and measurement
Revenue from contracts with customers
The Group is in the business of providing construction and maintenance services. Revenue from contracts with customers is recognised when
control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group is expected to be
entitled in exchange for those goods or services. The Group has generally concluded that it is the principal in its revenue arrangements because it
typically controls the goods and services before transferring them to the customer.
Construction services
Construction contracts are assessed to identify the performance obligations contained in the contract. The total transaction price is allocated to
each individual performance obligation. Typically, the Group’s construction contracts contain a single performance obligation.
Work is performed on assets that are controlled by the customer or on assets that have no alternative use to the Group, with the Group having
right to payment for performance to date. As performance obligations are satisfied over time, revenue is recognised over time using an output
method based on work certified to date.
Customers are typically invoiced on a monthly basis and invoices are paid on normal commercial terms.
Services contracts
Contracts for performance of maintenance activities cover servicing of assets and involve various activities. These activities tend to be substantially
the same with the same pattern of consumption by the customer. Where this is the case, which is the majority of the services contracts, these
services are taken to be one performance obligation and the total transaction price is allocated to the performance obligation identified.
Performance obligations are fulfilled over time as the Group largely performs maintenance over the assets which the customer controls. Customers
are typically invoiced monthly for an amount that is calculated on either a schedule of rates or a cost plus basis. For these contracts, the
transaction price is determined as an estimate of this variable consideration.
Variable consideration
If the consideration in the contract includes a variable amount, the Group estimates the amount of the consideration to which it is entitled in
exchange for transferring the goods and services to the customer. The Group includes some or all of this variable consideration in the transaction
price only to the extent it is highly probable that a significant reversal of the cumulative revenue recognised will not occur when the associated
uncertainty with the variable consideration is subsequently resolved.
Certain contracts are subject to claims which are enforceable under the contract. If the claim does not result in any additional goods or services,
the transaction price is updated and the claim accounted for as variable consideration.
Significant financing component
Using the practical expedient in AASB 15, the Group does not adjust the promised amount of consideration for the effects of a significant
financing component if it expects, at contract inception, that the period between the transfer or the promised good or service to the customer and
when the customer pays for that good or service will be one year or less.
Interest income
Revenue is recognised as interest accrues using the effective interest method.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2023
FINANCIAL REPORT 86
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
Employee benefits expense
Employee benefits expense
Defined contribution superannuation expense
Lease payments and other expenses
2023
$’000
2022
$’000
1,986
1,509
3,495
13,948
11,180
8,029
33,157
895,702
69,552
965,254
1,841
1,511
3,352
13,158
11,365
8,574
33,097
954,265
67,561
1,021,826
Expense relating to short-term leases and low value leases (included in cost of sales)
2,638
1,749
Recognition and measurement
Finance costs
The Group does not currently hold qualifying assets but, if it did, the borrowing costs directly associated with the qualifying assets would be
capitalised. All other finance costs are expensed as incurred.
Depreciation and amortisation
Refer to notes 9 and 10 for details on depreciation and amortisation.
Employee benefits expense
Refer to note 16 for employee benefits expense and note 29 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.
87 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2023
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 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% (2022: 30%)
- Share-based payment expense
- Other
Aggregate income tax expense
2023
$’000
2022
$’000
18,197
(494)
3,858
(41)
21,520
682
682
(1,520)
(1,520)
73,446
22,034
(579)
65
21,520
16,580
173
4,446
28
21,227
54
54
(195)
(195)
73,511
22,053
413
(1,239)
21,227
FINANCIAL REPORT 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2023
2023
$’000
Current Income Tax
2023
$’000
Deferred Income Tax
2022
$’000
Current Income Tax
2022
$’000
Deferred Income Tax
3.
INCOME TAX (CONTINUED)
Recognised deferred tax assets
and liabilities
Opening balance
Charged to income
Charged to equity
Acquisition / loss of control of subsidiary
Other / payments
Closing balance
Amounts recognised on the consolidated statement
of financial position:
Deferred tax assets
(14,753)
(17,703)
-
(1,420)
22,253
(11,623)
27,625
(3,817)
838
(3,933)
742
21,455
21,455
21,455
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
(22,093)
(16,753)
-
-
24,093
(14,753)
2023
$’000
26,021
831
3,802
14,091
1,725
144
46,614
(25,159)
21,455
(13,841)
(11,318)
-
(25,159)
25,159
-
31,455
(4,474)
141
-
503
27,625
27,625
27,625
2022
$’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
-
89 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2023
3.
INCOME TAX (CONTINUED)
Unrecognised temporary differences
At 30 June 2023, there are no unrecognised temporary differences associated with the Group’s investments in subsidiaries (2022: 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2023
FINANCIAL REPORT 90
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
2023
$’000
2022
$’000
53,543
53,543
52,219
52,219
Number
Number
Number of shares
Weighted average number of ordinary shares on issue used in the calculation
of basic earnings per share
95,870,712
95,107,986
Effect of dilutive securities
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 2023:
On 1 July 2023, 163,080 performance rights vested and were exercised.
Calculation of earnings per share
1,446,468
637,870
97,317,180
95,745,856
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.
91 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
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
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
Decrease/(increase) in receivables
Decrease/(increase) in inventories
(Increase)/decrease in contract assets
Decrease in deferred tax assets
Increase in payables
Decrease in provisions
Decrease in income tax payable
Net cash flows from operating activities
Non-cash financing and investing activities
Hire purchase transactions:
2023
$’000
2022
$’000
167,180
11,143
178,323
183,329
-
183,329
51,926
52,284
33,157
(2,928)
10,725
(7,715)
4,125
455
7,798
1,127
(5,829)
4,444
11,128
(12,410)
(2,713)
93,290
33,097
(4,334)
5,234
(652)
1,375
(1,454)
(53,339)
380
35,912
4,098
569
(959)
(7,340)
64,871
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 $12,234,905 (2022: $26,128,243).
Dividend reinvestment plan
During the year, the participation in the dividend reinvestment plan totalled $4,833,202 (2022: $3,488,000)
FINANCIAL REPORT 92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
5. CASH AND CASH EQUIVALENTS (CONTINUED)
Reconciliation of liabilities arising from financing activities
2022
$’000
Cash Flows
$’000
Non-Cash Changes
New Leases/
Terminations
$’000
47,102
50,706
11,672
109,480
2021
$’000
39,027
57,661
900
97,588
(19,410)
(8,460)
3,090
(24,780)
12,235
8,552
-
20,787
Non-Cash Changes
New Leases/
Terminations
$’000
26,128
937
-
27,065
Cash Flows
$’000
(18,038)
(7,892)
10,771
(15,159)
Other
$’000
(2,770)
3
(13,992)
(16,759)
Other
$’000
(15)
-
1
(14)
2023
$’000
37,157
50,801
770
88,728
2022
$’000
47,102
50,706
11,672
109,480
Hire purchase liabilities
Other lease liabilities
Loan
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.
93 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
6. TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
Less allowance account for expected credit losses
Other debtors
Less allowance account for expected credit losses
Trade receivables generally have 30 to 60 days terms.
Allowance account for trade receivables impairment losses
Movements in loss allowance based on lifetime ECL:
Balance at the beginning of the year
Increase/(decrease) in loss allowance
Balance at the end of the year
Recognition and measurement
Trade receivables
Refer to accounting policies of financial assets in note 34.
Other debtors
2023
$’000
2022
$’000
257,161
(2,884)
254,277
79,997
(529)
79,468
333,745
284,776
(2,226)
282,550
90,007
(570)
89,437
371,987
2,226
658
2,884
2,504
(278)
2,226
Other debtors include contract assets that are unconditional (see note 7). These assets are reclassified to trade receivables when invoiced.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
7. CONTRACT ASSETS
CURRENT
Contract assets
NON CURRENT
Contract assets
FINANCIAL REPORT 94
2023
$’000
2022
$’000
5,770
7,994
23,832
15,779
Contract assets are net of expected credit losses of $275,803 (2022: $154,818).
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.
2023
$’000
2022
$’000
1,463
3,220
95 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
9. PROPERTY, PLANT AND EQUIPMENT
Reconciliation of carrying amounts at the beginning and end of the period
Freehold Land
and Buildings
$’000
Assets Under
Construction
$’000
Plant and
Equipment
$’000
Right of Use Assets
Plant and
Equipment
Under Hire
Purchase
$’000
Land and
Buildings
$’000
Plant and
Equipment
$’000
Total
$’000
Year ended 30 June 2023
Net carrying amount
at 1 July 2022
Additions
Additions from business
combination
Assets transferred
Disposals
Assets derecognised from loss of
control of subsidiary
Depreciation charge
Exchange differences
Net carrying amount
at 30 June 2023
At 30 June 2023
30,917
120
321
-
-
-
(873)
68
-
6,809
-
-
-
-
-
-
34,553
14,669
7,335
3,620
(1,381)
57,279
12,235
39,080
6,192
-
2,360
(3,620)
(261)
-
-
-
(1,060)
(5,471)
(13,075)
(11,180)
(7,984)
250
1,251
(50)
(45)
(1)
75
161,904
-
-
-
-
-
40,025
10,016
-
(1,642)
(6,531)
(33,157)
1,518
30,553
6,809
44,911
50,233
39,598
29
172,133
Gross carrying amount – at cost
Accumulated depreciation
Net carrying amount
43,475
(12,922)
30,553
6,809
169,769
76,173
67,233
1,400
364,859
-
(124,858)
(25,940)
(27,635)
(1,371)
(192,726)
6,809
44,911
50,233
39,598
29
172,133
Freehold Land
and Buildings
$’000
Assets Under
Construction
$’000
Plant and
Equipment
$’000
Right of Use Assets
Plant and
Equipment
Under Hire
Purchase
$’000
Land and
Buildings
$’000
Plant and
Equipment
$’000
Total
$’000
Year ended 30 June 2022
Net carrying amount
at 1 July 2021
Additions
Additions from business
combination
Assets transferred
Disposals
Depreciation charge
Exchange differences
Net carrying amount
at 30 June 2022
At 30 June 2022
30,206
154
1,370
-
-
(847)
34
30,917
Gross carrying amount – at cost
Accumulated depreciation
Net carrying amount
44,148
(13,231)
30,917
-
-
-
-
-
-
-
-
-
-
-
37,456
6,752
842
5,981
(3,804)
48,674
26,128
-
(5,981)
(108)
46,173
937
-
-
(54)
(12,311)
(11,365)
(8,270)
(363)
(69)
294
382
162,891
-
-
-
(12)
(304)
9
33,971
2,212
-
(3,978)
(33,097)
(95)
34,553
57,279
39,080
75
161,904
149,918
79,628
59,305
1,399
334,398
(115,365)
(22,349)
(20,225)
(1,324)
(172,494)
34,553
57,279
39,080
75
161,904
FINANCIAL REPORT 96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
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.
Assets under construction is stated at cost, net of accumulated impairment losses, if any.
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.
97 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
10. INTANGIBLE ASSETS AND GOODWILL
Year ended 30 June 2023
At 1 July 2022
On business combination (Note 23)
Other
At 30 June 2023
Year ended 30 June 2022
At 1 July 2021
On business combination
Exchange differences
At 30 June 2022
Goodwill
$’000
Total
$’000
4,902
12,478
(697)
16,683
3,917
1,085
(100)
4,902
4,902
12,478
(697)
16,683
3,917
1,085
(100)
4,902
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 BMC
Holdings (Vic) Pty Ltd. 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 9 June 2023, the Group acquired BMC Holdings (Vic) Pty Ltd which resulted in a provisional goodwill of $12,478,000. Refer to note
23. (2022: 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.
FINANCIAL REPORT 98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
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 aggregate 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
2023
$’000
14,770
7,715
7,715
2022
$’000
11,181
652
652
Commitments and contingent liabilities relating to Joint Ventures
The Group’s share of insurance bond guarantees issued by Joint Ventures at 30 June 2023 was $14,840,863 (2022: $45,604,100).
Joint ventures had $nil capital commitments at 30 June 2023 (2022: 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.
12. OTHER NON-CURRENT ASSETS
Other non-current assets
2023
$’000
2022
$’000
-
3,440
99 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
13. TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Contract liabilities
Sundry creditors and accruals
Recognition and measurement
Trade and other payables
2023
$’000
2022
$’000
91,089
15,919
51,079
158,087
123,451
12,539
32,696
168,686
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 generally 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.
14. INTEREST BEARING LOANS AND BORROWINGS
CURRENT
Loan – secured
NON-CURRENT
Loan – secured
Terms and conditions
2023
$’000
2022
$’000
342
428
10,901
771
Interest bearing loans and borrowings for the year ended 30 June 2023 relates to property loans. (2022: property loans and a $8.9 million
working capital facility secured against 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
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
Acquisition/loss of control of subsidiary
Other
Carrying amount at the end of the financial year
Terms and conditions
FINANCIAL REPORT 100
2023
$’000
2022
$’000
14,812
9,318
24,130
22,345
41,483
63,828
97,808
18,427
2,941
(30,811)
(2,315)
1,908
87,958
17,922
8,045
25,967
29,180
42,661
71,841
96,688
27,065
3,288
(29,218)
-
(15)
97,808
Hire purchase agreements have an average term of three years. The average discount rate implicit in the hire purchase liability is 4.2%
(2022: 2.8%).
Other lease liabilities have an average term of 1.3 years. The average discount rate implicit in the other lease liability is 4.9% (2022: 4.6%).
The Group has total cash outflows for other lease liabilities (including short term leases) during 30 June 2023 of $12,607,000 (2022:
$11,152,000).
The maturity analysis of lease liabilities is set out in note 25.
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
• Plant and equipment
1 to 8 years
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.
101 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
15. LEASE LIABILITIES (CONTINUED)
Recognition and measurement (continued)
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over
the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease,
if the lease term reflects the Group exercising the option to terminate.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption for those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to leases of plant
and equipment that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease
if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the assets for additional terms of one to five years. The Group applies judgement in
evaluating whether it is reasonably certain to exercise the option to renew and considers all relevant factors that create an economic incentive
for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew.
16. PROVISIONS
CURRENT
Employee benefits
Workers’ compensation
Other
NON-CURRENT
Employee benefits – long service leave
Movements in provisions
Workers compensation
Carrying amount at the beginning of the year
Additional provision
Amounts utilised during the year
Carrying amount at the end of the financial year
2023
$’000
2022
$’000
55,807
8,387
368
64,562
6,361
6,361
13,036
16,044
(20,693)
8,387
60,952
13,036
3,232
77,220
5,832
5,832
11,938
11,951
(10,853)
13,036
FINANCIAL REPORT 102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
OPERATING ASSETS AND LIABILITIES
FOR THE YEAR ENDED 30 JUNE 2023
16. PROVISIONS (CONTINUED)
Recognition and measurement
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.
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
The Group has an option (put and call) to acquire 10% of the share capital of MAQ Rent from the Minority Interest owner. 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 this controlled entity 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 2023, the financial liability associated with the option held by the minority shareholders was $835,179 (2022: $3,206,357).
103 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2023
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 2023, the Group is in a net cash
position of $140,396,000 (2022: $124,555,000) and has a debt to equity ratio of 8.7% (2022: 14.3%) which is within the Group’s net cash
and debt to equity target levels.
During the year ended 30 June 2023, management paid dividends of $46,919,000 (2022: $42,762,000). 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.
2023
$’000
2022
$’000
19. DIVIDENDS PAID AND PROPOSED
Declared and paid during the year
Current year interim
Interim franked dividend for 2023 (24 cents per share) (2022: 24 cents per share)
23,028
22,829
Previous year final
Final franked dividend for 2022 (25 cents per share) (2021: 21 cents per share)
23,891
19,933
Unrecognised amounts
Current year final
Final franked dividend for 2023 (25 cents per share) (2022: 25 cents per share)
24,126
23,834
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
35,933
39,101
(10,340)
25,593
(10,215)
28,886
Tax rates
The tax rate at which paid dividends have been franked is 30% (2022: 30%). Dividends payable will be franked at the rate of 30% (2022:
30%).
Recognition and measurement
A provision for dividends is not recognised as a liability unless the dividends are declared on or before the reporting date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: CAPITAL STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2023
FINANCIAL REPORT 104
20. CONTRIBUTED EQUITY
Ordinary shares – Issued and fully paid
Ordinary shares
2023
$’000
2022
$’000
141,115
136,096
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.
2023
Number
of Shares
$’000
2022
Number
of Shares
95,262,705
136,096
94,761,152
408,080
445,626
225,309
4,833
345,997
-
186
-
155,556
$’000
132,608
3,488
-
-
96,341,720
141,115
95,262,705
136,096
Beginning of the financial year
Dividend reinvestment plan
Exercise of performance rights and retention rights
Exercise of options
End of the financial year
Recognition and measurement
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.
21. RESERVES AND RETAINED EARNINGS
Foreign currency translation reserve
Share-based payment reserve
Fair value reserve for financial asset at FVOCI
Equity reserve
Retained earnings
Nature and purpose of reserves
Foreign currency translation reserve
2023
$’000
2022
$’000
(4,472)
55,011
2,856
(4,710)
48,685
(3,137)
42,766
1,264
(6,359)
34,534
248,178
241,554
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 29 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% (2022: 10%) of the shares on issue of MAQ Rent SpA.
105 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2023
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
Inteforge Pty Ltd (formerly SinoStruct Pty Ltd)
Monadelphous Group Limited Employee Share Trust
Monadelphous Holdings Pty Ltd
MGJV Pty Ltd
Evo Access Pty Ltd
Monadelphous Investments Pty Ltd
MWOG Pty Ltd
MOAG Pty Ltd
Monadelphous International Holdings Pty Ltd
Arc West Group Pty Ltd
R.I.G. Installations (Newcastle) Pty Ltd
RE&M Services Pty Ltd
Pilbara Rail Services Pty Ltd
EC Projects Pty Ltd
Monadelphous RTW Pty Ltd
MMW Projects Pty Ltd
Monadelphous PNG Ltd
Moway International Limited
Moway AustAsia Steel Structures Trading (Beijing) Company Limited
Inteforge Engineering & Fabrication (Tianjin) Co. Ltd
(formerly SinoStruct Engineering & Fabrication (Tianjin) Co. Ltd)
Monadelphous Singapore Pte Ltd2
Monadelphous Mongolia LLC
Monadelphous Inc.
Monadelphous Engineering NZ Pty Ltd
Monadelphous Chile SpA
MAQ Rent SpA (Note 17)
Buildtek SpA1
BMC Holdings (Vic) Pty Ltd
BMC Welding & Construction Pty Ltd
BMC HV Electrical & Instrumentation Pty Ltd
BMC Civil Pty Ltd
Country of Incorporation
2023
2022
Percentage Held by
Consolidated Entity
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
New Zealand
Chile
Chile
Chile
Australia
Australia
Australia
Australia
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
-
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
100
100
100
100
90
90
-
-
-
-
# Controlled entities subject to the Class Order (refer to note 33)
1. Control ceased March 2023. Gain associated with loss of control of $389,870 was recognised in the Income Statement.
2. Deregistered during 2022
FINANCIAL REPORT 106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2023
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 (2022: none).
23. BUSINESS COMBINATION
Acquisition of BMC
On 9 June 2023, Monadelphous Group Limited acquired 100% of the share capital of a Victorian-based mechanical and electrical services
business, BMC Holdings (Vic) Pty Ltd (‘BMC’). The acquisition of BMC is a key enabler to Monadelphous’ strategic efforts in developing its
presence in the east coast-based energy generation, transmission and storage market, supporting Australia’s transition to clean energy.
The provisional fair values of the identifiable assets and liabilities acquired from BMC as of date of acquisition were:
Cash
Trade and other receivables
Property, plant and equipment
Right of use assets
Other
Total assets
Trade and other payables
Lease liabilities
Provisions
Total liabilities
Fair value of identifiable net assets
Goodwill arising on acquisition (Note 10)
Purchase consideration
Acquisition-date fair-value of consideration transferred:
Cash paid
Total consideration
The cash outflow on acquisition is as follows:
Net cash acquired with the business
Cash paid
Net consolidated cash outflow
Provisional Fair Value
at Acquisition Date
$’000
2
14,273
7,656
2,360
1,386
25,677
7,409
2,360
4,886
14,655
11,022
12,478
23,500
23,500
23,500
(2)
23,500
23,498
The net assets recognised in the 30 June 2023 financial statements were based on a provisional assessment due to the timing of the finalisation
of the completion statements.
Sales revenue and net profit from BMC for the period were not material.
107 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: GROUP STRUCTURE
FOR THE YEAR ENDED 30 JUNE 2023
24. INTEREST IN JOINT OPERATIONS
Joint operations interests
The Group’s interests in joint operations are as follows:
Joint Arrangement
Principal Activity
Principal Place
of Business
Monadelphous Worley JV PNG
Monadelphous Worley JV
Engineering, Procurement and Construction
& Maintenance Support Work in PNG
PNG
Engineering, Procurement and Construction
& Maintenance Support Work
Brisbane, QLD
Group Interest
2023
%
2022
%
65
65
65
65
During 2022, Monadelphous established an unincorporated joint venture, Alevro JV, to provide turnkey heavy lift solutions. The Group’s interest
in the JV is dependent on each party’s contribution on a contract by contract basis.
Commitments and contingent liabilities relating to joint operations
There were no capital commitments or contingent liabilities relating to the joint operations at 30 June 2023 (2022: $nil).
Impairment
There were no assets employed in the joint operations during the year ended 30 June 2023 (2022: $nil).
Recognition and measurement
Joint arrangements are arrangements of which two or more parties have joint control. Joint control is the contractual agreed sharing of control
of the arrangement which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
Joint arrangements are classified as either a joint operation or joint venture, based on the rights and obligations arising from the contractual
obligations between the parties to the arrangement.
To the extent the joint arrangement provides the Group with rights to the individual assets and obligations arising from the joint arrangement,
the arrangement is classified as a joint operation and as such, the Group recognises its:
• Assets, including its share of any assets held jointly;
• Liabilities, including its share of any liabilities incurred jointly;
• Revenue from the sale of its share of the output arising from the joint operation; and
• Expenses, including its share of any expenses incurred jointly.
To the extent the joint arrangement provides the Group with rights to the net assets of the arrangement, the investment is classified as a joint
venture and accounted for using the equity method. Under the equity method, the cost of the investment is adjusted by the post-acquisition
changes in the Group’s share of the net assets of the venture.
FINANCIAL REPORT 108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2023
25. 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 where
appropriate. 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
2023
$’000
178,323
(770)
177,553
2022
$’000
183,329
(10,013)
173,316
The Group utilises a number of financial institutions to obtain the best interest rate possible and to manage its risk. The Group does not enter into
interest rate hedges.
At 30 June 2023, reasonably possible movements in variable interest rates, based on a review of historical movements and forward rate curves
for forward rates would not have had a material impact on the Group.
Foreign currency risk
As a result of operations in Papua New Guinea, China, Mongolia, New Zealand and Chile the Group’s Statement of Financial Position can be
affected by movements in the US$/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 2023, the Group has foreign exchange
forward contracts in place for Euro 8,900,000 for future capital commitments (2022: 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.
At 30 June 2023, the Group had the following exposure to foreign currency:
Year ended 30 June 2023
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
PGK
AUD $’000
USD
AUD $’000
38,588
9,516
(1,346)
46,758
5,594
8,961
(2,711)
11,844
109 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2023
25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
Foreign currency risk (continued)
Year ended 30 June 2022
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
5,844
7,512
(623)
12,733
At 30 June 2023, 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 (2022: no material impact).
At 30 June 2023, 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% (2022: +5%)
-5% (2022: -5%)
Post Tax Profit
Higher/(Lower)
Other Comprehensive Income
Higher/(Lower)
2023
$’000
(1,637)
1,637
2022
$’000
(1,535)
1,535
2023
$’000
-
-
2022
$’000
-
-
The reasonably possible movements have been based on review of historical movements.
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 $541,670,000 at 30 June 2023 (2022: $579,089,000).
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.
FINANCIAL REPORT 110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2023
25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
Credit risk (continued)
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 has not been
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 Chair, 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.
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
$’000
Current
$’000
<31 Days
$’000
31-60 Days
$’000
61-90 Days
$’000
>91 Days
$’000
Total
$’000
0.9%
0.7%
0.6%
0.6%
0.6%
30.5%
30 June 2023
Expected credit loss rate
Total estimated gross
carrying amount at default
29,878
199,673
42,261
8,377
3,142
Expected credit loss
276
1,403
276
54
19
3,708
1,132
257,161
2,884
30 June 2022
Expected credit loss rate
Total estimated gross
0.6%
0.6%
0.6%
0.6%
0.6%
17.0%
carrying amount at default
23,928
236,840
36,095
4,927
3,335
3,579
284,776
Expected credit loss
155
1,349
218
30
21
608
2,226
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.
111 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2023
25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
Credit risk (continued)
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.
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
2023
$’000
2022
$’000
390,000
126,303
516,303
146,557
37,927
184,484
243,443
88,376
331,819
390,000
121,230
511,230
140,370
58,774
199,144
249,630
62,456
312,086
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.
FINANCIAL REPORT 112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
FINANCIAL RISK MANAGEMENT
FOR THE YEAR ENDED 30 JUNE 2023
25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Risk exposures and responses (continued)
Liquidity risk (continued)
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.
The table below reflects all contractually fixed pay-offs, repayments and interest resulting from financial liabilities as of 30 June 2023.
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 2023
Financial liabilities
Trade and other payables
158,087
Hire purchase liability
Other lease liabilities
Bank loans
Other financial liability
Net maturity
Hire purchase liability
Other lease liabilities
Bank loans
Other financial liability
Net maturity
Year ended 30 June 2022
Financial liabilities
Trade and other payables
168,686
7,794
5,438
180
-
9,019
4,898
184
-
-
8,400
5,263
178
-
-
22,772
33,406
436
903
-
-
11,410
-
-
158,087
158,087
38,966
55,517
794
903
37,157
50,801
770
835
171,499
13,841
57,517
11,410
254,267
247,650
-
10,256
4,434
10,801
-
-
30,202
30,576
794
3,577
65,149
-
-
15,546
-
-
168,686
168,686
49,477
55,454
11,779
3,577
47,102
50,706
11,672
3,206
15,546
288,973
281,372
182,787
25,491
Net fair values of financial assets and liabilities
The carrying amounts and estimated fair values of financial assets and financial liabilities at balance date are materially the same.
Interest bearing liabilities with fixed interest rates: The fair value includes the value of contracted cash flows, discounted at market rates.
Cash and cash equivalent: The carrying amount approximates fair value because of their short-term maturity.
Receivables and payables: The carrying amount approximates fair value due to short term maturity.
Listed equity investments measured at fair value through other comprehensive income. The carrying amount is equal to the fair value calculated
using quoted prices in active markets (level 1 – see below).
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1: The fair value is calculated using quoted prices in active markets.
Level 2:
The fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices).
Level 3: The fair value is estimated using inputs for the asset or liability that are not based on observable market data.
There were no material financial assets or liabilities measured at fair value at 30 June 2023 or 30 June 2022.
113 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
26. COMMITMENTS AND CONTINGENCIES
Capital commitments
The consolidated group has capital commitments of $72,826,123 at 30 June 2023 (2022: $5,066,769), of which $15,120,000 relates to the
construction of a facility in Gap Ridge, Karratha.
2023
$’000
2022
$’000
Guarantees
Guarantees given to various clients for satisfactory contract performance
146,557
140,370
Monadelphous Group Limited and all controlled entities marked # in note 22 have entered into a deed of cross guarantee. Refer to note 33
for details.
Contingent liabilities
On 26 July 2023, Monadelphous was notified that Northern SEQ Distributor – Retailer Authority, trading as UnityWater (“UnityWater”),
has served a Claim and Statement of Claim (“the Claim”) in the Supreme Court of Queensland against one of Monadelphous’ wholly owned
subsidiaries, Monadelphous Engineering Pty Ltd (“ME”). The Claim is in an amount of approximately $80 million and relates to a contract
entered into between UnityWater and ME in 2016 for the design and construction of an upgrade to the Kawana Sewerage Treatment Plant on the
Sunshine Coast in Queensland. ME denies the claimed losses contained in the Claim and will vigorously defend those claims, as well as pursuing
available counterclaims.
The Group is subject to various other actual and pending claims arising in the normal course of business. The Group has regular claims reviews to
assess the need for accounting recognition or disclosure. The Directors are of the opinion that based on information currently available there is no
material exposure to the Group arising from these other actual and pending claims at balance date.
27. SUBSEQUENT EVENTS
Notification of claim and statement of claim
On 26 July 2023, Monadelphous was notified that Northern SEQ Distributor – Retailer Authority, trading as UnityWater, has served a Claim and
Statement of Claim in the Supreme Court of Queensland against one of Monadelphous’ wholly owned subsidiaries, Monadelphous Engineering
Pty Ltd (“ME”).
Refer to note 26 for further details.
Dividends declared
On 21 August 2023, the directors of Monadelphous Group Limited declared a final dividend on ordinary shares in respect of the 2023 financial
year. The total amount of the dividend is $24,126,200 which represents a fully franked final dividend of 25 cents per share. This dividend has
not been provided for in the 30 June 2023 financial statements. The Monadelphous Group Limited Dividend Reinvestment Plan will apply to
the dividend.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
FINANCIAL REPORT 114
28. PARENT ENTITY INFORMATION
Information relating to Monadelphous Group Limited parent entity
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
Notes
2023
$’000
2022
$’000
118,399
254,506
-
(28,290)
226,216
141,115
54,585
2,856
27,660
226,216
30,063
31,656
121,851
253,369
-
(30,293)
223,076
136,096
41,578
1,264
44,138
223,076
49,714
50,218
26
146,557
140,370
Guarantees entered into by the Group are via the parent entity. Details are contained in note 26.
Capital commitments
The parent entity has capital commitments of $nil at 30 June 2023 (2022: $nil).
115 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
29. SHARE BASED PAYMENT EXPENSE
The share-based payment expense for the year ended 30 June 2023 was $10,724,607 (2022: $5,234,640) for the consolidated entity.
Performance Rights
During the year 501,295 performance rights were granted by Monadelphous Group Limited under the Combined Reward Plan (“CR Plan”)
in respect of the 2022 award. The performance rights vest into shares in equal instalments, one, two and three years subsequent to award,
subject to the employee remaining in the employ of the Company at those particular dates.
The fair value of each performance right issued during the period was estimated on the date of grant using a discounted cash flow calculation.
Specifically, the Monadelphous Group Limited share price has been discounted at the dividend yield in order to account for the dividends that
the rights holder forgoes over the life of the rights.
The weighted average fair value of performance rights granted in the period was $9.96.
The following table illustrates the number and weighted average exercise prices of and movements in performance 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
Retention Rights
2023
2022
Number of
Performance
Rights
Weighted
Average
Exercise Price $
Number of
Performance
Rights
Weighted
Average
Exercise Price $
75,224
501,295
(75,224)
(11,956)
489,339
163,080
nil
nil
nil
nil
nil
nil
236,193
-
(155,556)
(5,413)
75,224
75,224
nil
nil
nil
nil
nil
nil
In November 2022, 43,600 retention rights which had been offered in December 2021 to the Company’s Managing Director at the time,
R. Velletri, were approved to be granted at the Company’s Annual General Meeting.
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.
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 $12.96.
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
2023
2022
Number of
Retention
Rights
Weighted
Average
Exercise Price $
Number of
Retention
Rights
Weighted
Average
Exercise Price $
1,086,800
43,600
(370,402)
(39,002)
720,996
349,503
nil
nil
nil
nil
nil
nil
-
1,115,200
-
(28,400)
1,086,800
362,202
nil
nil
nil
nil
nil
nil
FINANCIAL REPORT 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
29. SHARE BASED PAYMENT EXPENSE (CONTINUED)
Options
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 2023 are:
Number
562,500
562,500
1,125,000
75,000
75,000
150,000
692,500
1,385,000
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
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
$1.84
$2.10
$2.27
$1.84
$2.10
$2.27
$2.04
$2.23
$1.69
$1.96
The following table illustrates the number and weighted average exercise prices of and movements in options granted, exercised and forfeited
during the year.
2023
2022
Number
of Options
Weighted
Average
Exercise Price $
Number
of Options
Weighted
Average
Exercise Price $
Balance at the beginning of the year
5,640,000
11.80
5,590,000
Granted during the year
Exercised during the year
Forfeited during the year
Balance at the end of the year
-
(772,500)
(15,000)
-
9.30
9.30
300,000
-
(250,000)
4,852,500
12.21
5,640,000
Exercisable during the next year
3,317,500
13.55
2,047,500
2,550,000 options in respect of the 2019 award will lapse in September 2023 as a consequence of the performance hurdle not having
been achieved.
11.92
9.30
-
11.29
11.80
11.43
117 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
29. SHARE BASED PAYMENT EXPENSE (CONTINUED)
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 2023
FINANCIAL REPORT 118
30. 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
2023
$
2022
$
336,546
375,282
38,095
28,200
5,200
379,841
-
403,482
8,382
9,174
9,022
17,404
9,510
18,684
397,245
422,166
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.
31. 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 $1,768,321 (2022: $3,413,805).
Mondium
The Group had sales to the joint venture during the year totalling $2,828,390 (2022: $94,357,476).
2023
$
2022
$
4,521,397
4,527,670
183,338
129,611
1,616,132
6,450,478
175,345
134,970
989,875
5,827,860
119 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
32. 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 2023, the Engineering Construction division contributed revenue of $541.9 million (2022: $774.4 million) and the
Maintenance and Industrial Services division contributed revenue of $1,298.4 million (2022: $1,166.0 million). Included in these amounts is
$11.5 million (2022: $10.3 million) of inter-entity revenue and $107.8 million (2022: $120.6 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 Executive Management Committee is the Chief Operating Decision Maker (CODM) and monitors the operating results of its business units
separately for the purpose of making decisions about resource allocation and performance assessment.
The CODM 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 17% (2022: 26%) of the Group’s revenue.
Two other customers individually contributed 12% 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
Mongolia
Other overseas locations
Total non-current assets
Australia
Chile
Papua New Guinea
Mongolia
Other overseas locations
2023
$’000
2022
$’000
1,548,379
1,624,561
84,233
57,436
23,651
7,257
97,727
83,289
153
3,721
1,720,956
1,809,451
212,788
6,111
4,979
443
720
202,538
14,854
6,647
48
744
225,041
224,831
33. 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.
FINANCIAL REPORT 120
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
DEED OF CROSS GUARANTEE (CONTINUED)
33.
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
Consolidated Statement of Financial Position
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Total current assets
Non-current assets
Contract 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
2023
$’000
50,460
(15,702)
34,758
207,294
(46,919)
34,758
195,133
102,900
295,597
6,533
405,030
23,832
32,348
140,174
12,339
4,203
-
212,896
617,926
96,514
343
21,140
9,895
32,647
160,539
428
57,617
5,654
63,699
224,238
393,688
141,115
57,440
195,133
393,688
2022
$’000
72,234
(20,546)
51,688
198,368
(42,762)
51,688
207,294
118,863
278,894
9,869
407,626
15,779
18,948
140,191
15,629
4,203
3,440
198,190
605,816
67,593
-
21,708
15,154
46,311
150,766
771
64,530
5,056
70,357
221,123
384,693
136,096
41,303
207,294
384,693
121 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
34. 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.
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 2022.
Revised Standards and Interpretations which apply from 1 July 2022 did not have any material effect on the financial position or performance
of the Group.
FINANCIAL REPORT 122
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
34. OTHER ACCOUNTING STANDARDS (CONTINUED)
New Accounting Standards and Interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective (including those below)
have not been adopted by the Group for the annual reporting period ended 30 June 2023.
Reference
Summary
Amendments to
AASB 112 - 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 ever
Application Date
of Standard
Application Date
for Group
1 January 2023
1 July 2023
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.
Amendments to
AASB 101 - Disclosure
of Accounting Policies
The amendments aim to help entities provide accounting policy disclosures
that are more useful by:
• Replacing the requirement for entities to disclose their ‘significant
1 January 2023
1 July 2023
accounting policies’ with a requirement to disclose ‘material accounting
policy information’
• Adding guidance on how entities apply the concept of materiality in
making decisions about accounting policy disclosures.
Replacement of the term ‘significant’ with ‘material’. In assessing the
materiality of accounting policy information, entities need to consider both
the size of the transactions, other events or conditions and their nature.
123 ANNUAL REPORT 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS: OTHER
FOR THE YEAR ENDED 30 JUNE 2023
34. OTHER ACCOUNTING STANDARDS (CONTINUED)
New accounting standards and interpretations issued but not yet effective (continued)
Reference
Summary
Amendments to
AASB 8 - Definition of
Accounting Estimates
The amended standard clarifies that the effects on an accounting estimate
of a change in an input or a change in a measurement technique are
changes in accounting estimates if they do not result from the correction
of prior period errors.
The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer settlement must exist at the end of the reporting
period
• That classification is unaffected by the likelihood that an entity will
exercise its deferral right
• That only if an embedded derivative in a convertible liability is itself
an equity instrument would the terms of a liability not impact its
classification
• Disclosures.
If an entity’s right to defer settlement of a liability is subject to the entity
complying with the required covenants only at a date subsequent to
the reporting period (“future covenants”), the entity has a right to defer
settlement of the liability even if it does not comply with those covenants
at the end of the reporting period.
Existence at the end of the reporting period - The amendments also clarify
that the requirement for the right to exist at the end of the reporting
period applies to covenants which the entity is required to comply with
on or before the reporting date regardless of whether the lender tests for
compliance at that date or at a later date.
Management expectations – paragraph has been added to clarify that the
‘classification of a liability is unaffected by the likelihood that the entity
will exercise its right to defer settlement of the liability for at least twelve
months after the reporting period’. That is, management’s intention to
settle in the short run does not impact the classification. This applies even
if settlement has occurred when the financial statements are authorised for
issuance. However, in these circumstances an entity may need to disclose
information about the timing of settlement to enable users to understand
the impact on its financial position.
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.
Amendments to
AASB 101 –
Classification of
Liabilities as Current
or Non-Current and
Non-Current Liabilities
with Covenants
Amendments to
AASB 10 and AASB
128 - Amendments to
Australian Accounting
Standards – Sale or
Contribution of Assets
between an Investor
and its Associate or
Joint Venture
Application Date
of Standard
Application Date
for Group
1 January 2023
1 July 2023
1 January 2024
1 July 2024
1 January 2025
1 July 2025
FINANCIAL REPORT 124
INVESTOR INFORMATION
FOR THE YEAR ENDED 30 JUNE 2023
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows.
The information is current at 11 September 2023.
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
5,479
3,406
661
522
35
10,103
Number of
Ordinary Shares
% of Issued
Capital
2,396,533
8,086,573
4,925,688
13,131,700
68,260,676
96,801,170
2.48
8.35
5.09
13.57
70.52
100.00
The number of shareholders holding less than marketable parcels is 386.
b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
Rank Name
Number of
Ordinary Shares
% of Issued
Capital
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Total
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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