ANNUAL REPORT
2021
For personal use only
3 Chairman’s Report
4 Managing Director’s Report
6 FY2021 Summary
8 Financial Summary
11 Health, Safety, Environment
and Quality
12 People
14 Operations
15 Contracting Business
16 Mine Operations
18 Hard Rock
Diversification
20 Order Book and Pipeline
22 Outlook
24 Corporate Overview
26 Mastermyne Group Limited
and its controlled entities
28 Corporate Governance
Statement
34 Directors Report
50 Auditors Independence
Declaration
51 Consolidated statement of
comprehensive income
52 Consolidated balance sheet
53 Consolidated statement
of changes in equity
54 Consolidated statement
of cash flows
55 Notes to the financial
statements
80 Directors’ declaration
86 ASX Additional Information
88 Corporate Directory
C O N T E N T S
1
For personal use only
C H A I R M A N ’ S R E P O R T
Dear Shareholder
Thank you for taking the time to read our annual report
on an unprecedented year marked by the COVID-19
pandemic which extensively disrupted life and business
throughout the period. While, in the main, operations
were able to continue without major disruption, markets
were significantly affected. The pandemic was only part
of this story with Australian coal exports being impacted
by Chinese Government policy on the import of Australian
goods. Prices for metallurgical coal exports were
disproportionately affected, until markets rebalanced,
which put additional pressure on many of our clients.
Major operational interruptions at two of our client mines
added to this pressure.
In this environment, the Mastermyne focus was on
those factors squarely within our control: safely running
efficient operations, working closely with clients to
improve their outcomes, and managing our own costs
to ensure financial strength. The net result of this was a
solid profit result and dividends to our shareholders in
a period of severely depressed metallurgical coal prices.
The result is a great testament to the strong leadership of
Tony Caruso and our outstanding leadership group, plus
the hundreds of committed employees of Mastermyne.
Throughout the period we continued to pursue our
strategic priorities knowing that the market would at
some point return to a position of relative strength. The
Board did not hesitate to invest counter-cyclically when
the opportunity emerged to purchase four second hand
continuous miners. Maintaining a strong balance sheet
has meant we can capture opportunities like these in
leaner times. We continued to invest in the training
and development of our people with well over twenty
five percent of our workforce undertaking personal
development or leadership training. These people
will ultimately fill leadership roles as our workforce
expands in better times. We also maintained a strong
mine feasibility study team helping potential clients
understand their coal leases and progress their feasibility
work.
These initiatives have delivered success with the award of
a six year contract to operate the Crinum Mine on behalf
of Sojitz Blue. This contract marks the culmination of a
multi-year strategy to become a mine operator which
will deliver more visibility and stability to our order book.
After year end we announced that we will also operate
Cook Colliery on behalf of QCoal adding another similar
size mine operation to our order book once contracts are
finalised. These contracts will transform our company
and expand our revenue base.
The Company continues to pursue opportunities in the
adjacent underground hard rock sector where we believe
our operational capability and financial discipline will be
well suited. We made key appointments at a leadership
level with people deeply experienced in the sector.
Subsequently, the company has begun to participate
in tender processes and we are confident that we will
capture work in the not too distant future.
All of these initiatives are designed to deliver a more
diversified and growth orientated order book that
will underpin our financial strength and returns to
shareholders in the years to come. I hope you enjoy
reading our Annual Report and I welcome your feedback
at any time.
COL BLOOMFIELD
3
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
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M A N A G I N G D I R E C T O R ’ S R E P O R T
Dear Shareholder
FY2021 has been a pivotal year for the business as
it marks a turning point to what will be a materially
different business moving forward. This year we have
secured the first Mine Operations Contracts at Crinum
Mine which forwards us a very strong outlook and
increases our order book to a record $1.1 billion. In
addition to the Crinum Contract we have announced
a second Mine Operations Contract where work has
commenced through an early works contract. Whilst we
are still to finalise the long-term mining contract for this
project we are confident this will be successfully executed
and will further increase our record order.
We finished the FY21 year with many highlights despite
some challenges from low coal prices in the earlier stages
of the year along with the temporary closures of the
Grosvenor and Moranbah North underground mines.
Pleasingly we have seen coal prices recover quite strongly
and join the strong performance of commodity prices
more broadly. Also both Grosvenor and Moranbah North
mines are now back in full production.
Of the operational highlights for FY21 I would like to
make particular mention of our safety performance which
has been our best on record. Our ability to work safely is
viewed as our license to operate and we are very pleased
to have delivered this excellent result, the culmination
of many years of good work in this area by the business.
We have worked diligently to develop robust systems to
underpin our safety approach which ensures the high
levels of compliance needed to operate in this industry.
We have also worked on supporting our approach
through strong safety leadership which influences good
safety behaviour, and over the past few years we have
made good progress in the area of psychological safety.
Our performance this year speaks to the continuing
maturity of our business and being confident that we are
managing the changing risk profile in our business as we
move into the Mine Operations Contracts and the Hard
Rock sector.
Our investment in learning and development has also
been a highlight this year and we have seen significant
effort channelled into growing the skills of our people in
preparation for the growth pipeline we have in front of
us. There has been increasing media around the impact
of resources shortages across many industries and the
work Mastermyne has done to develop a pipeline of
skilled people from within the business has set us up
to successfully navigate and mitigate these challenges.
Similarly we have expanded our management capability
and support systems in readiness for the growth we will
deliver in FY22. We recognise the increased requirements
to support our Mine Operations Projects and whilst much
of this support will be provided directly from the site, we
have invested in management capability and systems to
support a larger and more complex order book.
Alongside the people investment has been the strategic
investment in mining equipment for our Mine Operations
Contracts. We have been strategic in acquiring the right
equipment through the low point of the cycle ensuring
we have the equipment needed to successfully execute
our projects. Having located and acquired this equipment
isolates the projects from equipment availability issues
and extended lead times.
In further recognition of our increased order book and
subsequent resourcing requirements we have taken the
opportunity to acquire full ownership and control of the
MyneSight RTO business. This will play a strategic part
in managing workforce compliance on our projects and
enables the Business to use this in-house resource to
on board and train people through a managed pathway
on to our projects. These pathways are underpinned by
our underground simulators which deliver people into
the projects under a nationally accredited framework.
Maintaining this pipeline of people into our projects will
be beneficial in ensuring we have the right resources in
the right place at the right time as we ramp up to fulfil the
growth we have secured in FY22.
Our financial results this year were in line with guidance
and given the headwinds faced through the year we were
pleased with our revenue and margins. Our highlight
was the strong $24 million cash at bank position at the
year end and this was the result of excellent operating
discipline but also reinforces the strong cash generating
business model that the Mastermyne business delivers
year on year. With only a small amount of debt we finish
the year with a net cash position of $19m which will
contribute to the funding of our growth in FY22 but also
allows the Company to maintain its approach to dividends
through the continuation of half and full year dividends to
shareholders.
With FY21 now behind us our key message to
shareholders is that we are in great shape moving into
FY22. We have executed on our strategy to deliver a Mine
Operations revenue stream and we are progressing well
with expansion in to the adjacent underground hard rock
sector. This combined with our Contracting and Other
Services makes us a different business moving forward
and we continue to see opportunities coming through in
all of these areas.
We have used the FY21 year to set up the organisation
to successfully deliver on the strong order book that
we have secured. From investing in our people, to
developing systems and sourcing the right equipment,
we have set ourselves up to deliver our projects on time,
on budget, productively and most importantly safely.
We have built a long term, high quality order book of
$1.1 billion supported by a significant pipeline of further
opportunities including expansion into adjacent sectors.
Our order book is already at a record high and will be
further bolstered with the inclusion of the second Mine
Operations Contract.
Through strong operational discipline we have ended the
year in a strong cash position and we will continue with
strong cash conversion in FY22 which will be used to fund
our growth and to continue to support the payment of
dividends to our shareholders. With 85% of our FY22
revenue guidance locked in we are starting the year in
great shape.
Our FY21 results and our FY22 outlook is the
combination of great work by everyone across
the Mastermyne business. I would like to take this
opportunity to thank all our people and our board for
their valued contribution to this year’s results. I would
also like to thank you, our shareholders, who continue to
support the business and its direction. We look forward
to another excellent year and converting the strong order
book and other opportunities that are ahead of us.
The successful onboarding of the Mine Operations
Contracts creates a material change to our business
make up and revenue streams and will provide long
term, repeatable revenue which can increase the
margins across the business. This augments well with
our traditional Contracting revenue and the revenue
generated from our Other Services in Wilson Mining and
the MyneSight RTO businesses. When rounded out with
our organic expansion into the adjacent underground
Metalliferous sector it creates a strong diverse business
with a strong outlook moving forward.
TONY CARUSO
5
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F Y 2 0 2 1 S U M M A R Y
Learning &
Development
Order Book
4.96
Safety
70/20/10
$1.1b
Mine Operations
2nd Mine Operations
Announcement
Net Cash
Crinum Mine
Contract
Cook Colliery
$19.3m
Excellent Safety Performance
with best TRIFR result since
the company formed
We strongly invested in developing
the capability of our people which
sets us up for growth
$250m of revenue booked
to be delivered in FY22
Contract executed
(6.5 years, $600 - $660m revenue)
Cook Colliery Mine Operation also
announced post year end, with
early works commenced
Maintained strong balance sheet.
Cash position of $24.4m
as at 30 June 2021
DELIVERING
STRONG SAFETY
AND OPERATIONAL
PERFORMANCE
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F I N A N C I A L S U M M A R Y
$4.7m final FY20 and
interim FY21 dividend
paid to investors
Acquisition of minority
investors in Mynesight
(100% ownership $0.4m)
Maintaining a positive
net cash position up to
$20m to ensure strength
through market cycles
Payout 40-60% of
NPAT in dividends to
shareholders
$7.3m net of funding
Pay out of remaining
Sandvik loaders /
acquisition of 4 x second
hand Continuous Miners
Strong working capital
management supported
cash generation from
Operating Activities
Free cashflow – Operating
Cash less sustaining
capex (77% Operating
Cash/EBITDA%)
Working capital and
equipment lines of $20m
and $10m respectively
Leaves the company
extremely well
capitalised to service
further growth
CASH AT BANK AND UNDRAWN
FACILITIES WILL FUND GROWTH
$24.4m
$19.3m
$10.2m
$17.1m
$49.3m
CASH AT BANK
at 30 June
NET CASH
at 30 June
FY2021 CAPEX
OPERATING CASH
at 30 June
Operating Cash (Less
sustaining Capex)
AVAILABLE
FUNDING
at 30 June
STRONG RESULT DESPITE
PRICE CYCLE HEADWINDS
STRATEGIC INVESTMENT
3 Invested in acquiring equipment for mine services
contracts along with investment in key personnel for
hard rock diversification
$233m
$22.3m
9.6%
$9.7m
$5.9m
2.25c
REVENUE
EBITDA
EBITDA MARGIN
EBIT
NPAT
DIVIDEND
Inline with FY21 guidance
Guidance $22-23m
Inline with FY21 on lower revenue
Reflects increased depreciation
from equipment investment
Stronger H2 result at $3.8m
Full year dividend of 3.0 cents
representing 56% of net profit
MET COAL PRICES IMPROVE
3 Coal price H2 95% higher than H1 From ~$US 100/t
to ~$US195 at financial year end (currently at ~$US
220/t)
FY18
FY19
FY20
FY21
OPERATING CASH
(LESS SUSTAINING
CAPEX)
Operating Cash
(less sustaining Capex)
Operating Cash/EBITDA %
$16.1M
$5M
$28.6M
$17.1M
TOTAL CAPITAL FUNDING AVAILABILITY
Net Cash
Invoice Finance
Facility
Equipment
Lease Facility
Total Capital
Funding
$19.3M
$20.0M
$10.0M
$49.3M
31%
76%
100%
77%
9
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
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F I N A N C I A L S U M M A R Y
Year ended 30 June 2021
FY21
FY20
Total Revenue
$233.1m
$292.7m
EBITDA
$22.3m
$28.6m
EBITDA %
9.6%
9.8%
EBIT
$9.8m
$17.6m
Statutory profit/(loss) before tax
$8.7m
$16.8m
Tax benefit/(expense)
($2.8m)
($5.1m)
Statutory profit/(loss) after tax
$5.5m
$11.7m
EPS (cents)
5.5c
11.0c
FY21 PROFIT AND LOSS STATEMENT
FY21 BALANCE SHEET
FY21 CASH FLOW
ASSETS
LIABILITIES
Year ended 30 June 2021
$AUD millions
FY21
FY20
Assets
Cash and cash equivalents
24.4
25.4
Trade and other receivables
40.4
49.1
Contract assets
1.2
-
Inventories
6.4
6.3
Total current assets
72.4
80.7
Deferred tax assets
7.5
7.9
Property, plant and equipment
23.0
22.4
Right-of-use assets
14.0
14.5
Intangible assets
12.3
12.2
Total non-current assets
56.8
57.0
Total assets
129.2
137.7
Year ended 30 June 2021
$AUD millions
FY21
FY20
Liabilities
Trade and other payables
24.4
34.1
Contract liabilities
0.2
-
Lease liabilities
4.7
4.9
Employee benefits
11.9
10.0
Current tax liability
1.0
1.6
Other liabilities
1.9
-
Total current liabilities
44.2
50.6
Lease liabilities
7.9
9.1
Employee benefits
0.1
0.2
Other liabilities
1.9
3.9
Total non-current liabilities
9.9
13.2
Total liabilities
54.0
63.8
Net assets
75.2
73.9
Year ended 30 June 2021
$AUD millions
FY21
FY20
EBITDA (Statutory)
22.3
28.6
Movements in working capital
(0.4)
8.2
Non-cash items
0.5
0.3
Net interest costs
(1.1)
(0.8)
Income tax receipts/ (payments)
(3.0)
(5.5)
Net Operating Cash Flow
18.3
30.8
Net capex (including intangibles)
(7.9)
(8.8)
Net borrowings/ (repayments)
(6.3)
(3.1)
Wilson Mining Acquisition
-
(3.8)
Acquisition of NCI interest
(0.4)
-
Free Cash Flow
3.7
15.1
Distribution to minority ownership
(0.2)
-
Dividends
(4.5)
(6.1)
Net increase/(decrease) in cash and equivalents
(1.0)
9.0
Cash and cash equivalents at beginning of period
25.4
16.4
Cash and cash equivalents at end of period
24.4
25.4
H E A LT H , S A F E T Y,
E N V I R O N M E N T A N D Q U A L I T Y
MASTERMYNE TRIFR
(TOTAL RECORDABLE INJURY FREQUENCY RATE)
4.96
TRIFR AT 4.96
HEALTH & SAFETY APPROACH IS BUILT AROUND
STRONG PSYCHOLOGICAL SAFETY PRINCIPLES WHICH
IS MAKING THE DIFFERENCE
CONTINUING OUR JOURNEY TOWARDS BECOMING A
RECOGNISABLE HIGH RELIABILITY ORGANISATION (HRO)
MANAGING THE CHANGED RISK PROFILE WITH
THE APPOINTMENT TO COAL MINE OPERATOR
MAINTAINED CERTIFICATION (AS14001, AS45001,
AS9001) ACROSS THE MASTERMYNE GROUP
ACCREDITATION REGIME
COMPANY BEST PERFORMANCE
0
5
10
15
Jun - 20
Nov - 20
Mar - 21
Sep - 20
Jan - 21
May - 21
Aug - 20
Dec - 20
Apr - 21
Oct - 20
Feb - 21
Jun - 21
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P E O P L E
3 Expanded management team in place in readiness for Mine
Operations contracts at Crinum and Cook
3 Investment in our people through our 70/20/10 Rule of Thumb for
Development
3 Significant investment in Asset Lifecycle Management to manage
larger more complex fleet of production equipment
3 Additional Management Systems implemented to support mine
operations contract
3 Significant investment on internal people development 70/20/10
3 Large fleet of bespoke equipment acquired through the low point
of the cycle
3 Acquired full ownership of Mynesight RTO business to support
training and onboarding of workforces
TAILORED AND
DELIVERED BY
INTERNAL
RESOURCES
GROUNDED BY
NEUROSCIENCE
APPROACH
COMMITMENT TO
GROW OUR OWN
HUMAN CENTRIC
CULTURE
14
completed Diploma
Project Management
223
completed MasterMe Brain
Science Program
12
completing Mastermyne
Deputy Program
50
completing Cert II and
III Nationally Acrredited
Programs
81
participate in Finance,
HR/IR & Commercial
Masterclass’s
INVESTING IN OUR
PEOPLE DEVELOPMENT
AND SOURCING THE
RIGHT EQUIPMENT
FY21
FY20
HY22
FCAST
FY22
FCAST
881
949
1031
1231
FY21 WORKFORCE NUMBERS
13
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O P E R AT I O N S
MINE OPERATIONS AND HARD ROCK
CHANGE THE OUTLOOK OF THE BUSINESS
HARD ROCK
BRINGS STRONG
COMMODITY
DIVERSIFICATION
Organically diversifying adjacent
hard rock sector
Synergistic with Mastermyne
contracting business
Focusing on East Coast market
Specialising in underground only
Progressing acquisition
opportunities
OTHER SERVICES
WILSON MINING
AND MYNESIGHT
Wilson Mining specialist ground
consolidation business providing
niche services to the underground
sector
Mynesight registered training
organisation which provides
internal services to Mastermyne
and external services to a range of
clients
MINE
OPERATIONS
FY22 $80M
FY23 AND
BEYOND
$150M+
Brings a material shift around
control of projects
Shifts MYE in the value chain to
become a strategic partner for the
mine owner
Our Order Book now provides
longer term visibility and stability in
earnings and profit
Multiple large-scale contracts bring
revenue diversity and de risks
financial outcomes
Contract Mining provides the
opportunity to materially improve
margins through performance
CONTRACTING
HISTORICALLY
RUNS AT
BETWEEN
$200-$300M PA
Operating for 25 years
Long standing tier 1 clients
Average 10+ year relationships
Contracts tied to production
activities making them less likely to
swith off
Commercially low risk contracts
Diversified client base all in the
bottom quartile for production
cost
+95% metallurgical coal projects
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O P E R AT I O N S
MINE OPERATIONS:
CRINUM MINE OPERATIONS CONTRACT
EXECUTED WITH WORK
ALREADY COMMENCED
ON SITE
3 Work on site commenced and tracking to schedule
and budget
3 First production coal to be delivered late HY2022
3 Mastermyne capex requirement $20m-$25m over
FY22 and FY23 funded from cash reserves and
existing facilities
3 Re-establishment works progressing on plan
3 Key personnel engaged and in place with strong
pipeline of candidates to build the workforce
3 All equipment secured and currently undergoing
overhauls in preparation for mining to commence
early in H2
TOTAL CONTRACT
VALUE OF
$600-660 MILLION,
DELIVERING
$80-$100 MILLION
ANNUAL REVENUE
180 FULL TIME
PERSONNEL AT FULL
PRODUCTION
11 MILLION
TONNES OF ROM
CONTRACT
EXECUTED FOR
~ 7 YEAR TERM
TO RE-ESTABLISH
AND OPERATE
UNDERGROUND
MINE AT CRINUM
O P E R AT I O N S
CONTRACTING BUSINESS:
CONTRACTING
BUSINESS PERFORMED
WELL DESPITE SOME
HEADWINDS
3 Challenging year stemming from low coal
prices and temporary mine closures in Qld
3 Anglo’s Aquila Longwall Project has largely
offset contraction on other projects for
MYE
3 First full year of operating Wilson Mining
business with very strong results
3 Acquired remaining shareholding in
Mynesight RTO business and now taking
full control
3 Contracts extended on Integra,
Broadmeadow, Moranbah North
Chemicals and Tahmoor
3 Labour market for underground coal
remains stable with no major resourcing
issues to date
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O P E R AT I O N S
HARD ROCK DIVERSIFICATION:
WE ARE CLEAR
ON OUR DELIVERY
STRATEGY
3 Formed new business division for Mastermyne Hard
Rock division
3 Recruitment of key management roles is complete with
candidates for other key positions now shortlisted
3 Submitted tenders with aggregated value in excess
of $100 million
3 Tendering pipeline has grown to >$250 million
3 Engaging with OEM’s and key plant & equipment
suppliers to form strategies to resource projects when
secured
3 Building a workforce database of suitable hard rock
employees
3 Acquisition strategy is being progressed in parallel
with an organic strategy
SECOND MINE OPERATIONS CONTRACT
ANNOUNCED AT COOK COLLIERY
EARLY WORKS
STARTED AND
MINING CONTRACT
BEING FINALISED
3 Located in Central Queensland producing high quality
metallurgical coal
3 Low risk approach through selective mining method
and locations
3 QCoal is a very experienced and well-regarded mining
organisation currently operating high-quality assets
across the Bowen Basin
3 Stage 1 works have commenced to bring the operation
out of care and maintenance and transitioning back
into production
3 In parallel to the Stage 1 works, the parties will finalise
a Mining Services Contract with a commercial model
commensurate with the risk profile
3 Contract term expected to be similar to Crinum
3 Key personnel engaged for Stage 1 from within MYE
business supported by external recruitment
3 Equipment will come largely from MYE fleet supported
by new equipment purchased through OEM’s
O P E R AT I O N S
MINE OPERATIONS:
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O R D E R B O O K A N D P I P E L I N E
BOOKED REVENUE IS
WELL DIVERSIFIED AND
AT RECORD HIGHS
3 Booked revenue now stands at
$1.1b (excluding Cook which is
being finalised)
3 Contracting projects are all long
mine life large scale longwall
operations
3 Contracting business has a long
history of recurring contracts
3 Contracts with long term Blue
Chip customers with multiple
years to run
DIVERSIFYING PIPELINE OF
NEW WORK
3 Hard rock pipeline continues
to expand with the investment
made by the company
3 Further Bowen Basin mine
operations opportunities
progressing through feasibility
studies
BOOKED REVENUE SPLIT
(CONTRACTING VS MINE OPERATIONS)
TENDER PIPELINE YR ON YR CHANGE
FY21
FY22
FY23
FY24
$232m
$246m
$196m
$204m
$124m
$106m
$107m
$98m
FY25
FY26
FY27
FY28
2014 2015
2016
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
BMA Broadmeadow Conveyors
BHP Training Services (Mynesight)
Sojitz Crinum Mining Services
Anglo American Moranbah Region
Umbrella Contract
Anglo American Aquila
Equipment Hire
Anglo American Aquila Development
Anglo American Grosvenor Umbrella
Anglo American Strata
Consolidation (Wilson)
Peabody Wambo Ventilation
Glencore Integra Ventilation
Glencore Training Services
(Mynesight)
SIMEC Tahmoor Umbrella Contract
2013
2030
Financial Years
QCoal Cook Mining Services
(Contract being finalised)
FY19
FY20
FY21
FY22
FCAST
$0
$1.00
$2.00
$0.50
$1.50
$2.50
(Billions)
$1.8b
$1.5b
$1.75b
$2.3b
BOOKED REVENUE TENURE
Contracting
Past Contract
Mine Operations
Current Contract
Hard Rock
Options
Contracting
WoM
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O U T L O O K
RECOVERY HAS
BEEN SUBSTANTIAL
AND OUTLOOK IS
POSITIVE
3Metallurgical coal prices have
strengthened returning to historical
averages moving from ~$US 100/tonne
to ~$US 220/tonne since December
3Long term fundamentals are very strong
for met coal (95%+ of Mastermyne
revenue exposure)
3Currently no near term viable substitution
for met coal in the steel making process
3 Australia remains one of the lowest cost
coal producers in the world
3 Very few countries have suitable reserves
of high quality met coal
3 Asian steel demand forecasts remain
robust
3 20 of Australia’s 22 closest neighbours
are developing nations and still have
significant steel and power requirements
3MYE contracting revenue is supported
by volumes exported more so than price
3Stronger pricing in key metals (copper,
nickel and gold) driving increase volume
in the pipeline
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BOARD OF DIRECTORS
C O R P O R AT E O V E R V I E W
Colin’s former roles during his 27 years with BHP Billiton include
President Illawarra Coal (8 years), Vice President Health, Safety and
Environment (Global role) and Project Director for the BHP Billiton
merger integration as well as member of the deal team for the
transaction. He was also an Underground Coal Mine Manager both in
New South Wales and Queensland.
Tony has held a number of senior management positions in contracting
services over 30+ years working across major underground mining
projects in QLD and NSW.
Joining Mastermyne in 2005, under Tony’s leadership the company has
hit many milestones including the ASX listing in 2010.
Andrew co-founded Mastermyne in 1996 and has been involved in
contracting within the mining industry since 1994.
From 1996 -2005 Andrew was responsible for all aspects of
Mastermyne’s operations until the appointment of Tony Caruso as CEO.
Gabe is an executive with over 30 years experience in the steel, mining
and stevedoring industry covering operations, maintenance and
engineering. Gabe has held senior operational and management roles
with Bluescope Steel as General Manager Mills and Coating, Bluescope
Steel China as President China Coated and BHP Collieries as General
Manager of a number of coal mines. Gabe’s most recent role was General
Manager Operations with Patrick Terminals.
$0.44
0.0
02 Sept 19
15 Mar 21
08 Jun 20
20 Jan 20
02 Aug 21
26 Oct 20
Price AUD
Volume (m)
$0.84
0.8
$0.64
0.4
$1.04
1.2
$0.54
0.2
$0.94
1.0
$0.74
0.6
$1.14
Julie is currently GM Strategy and Development for CleanCo,
a Government Owned Corporation focused on the development
and supply of firmed renewable energy for Queensland customers.
Prior to her current role, Julie held various leadership roles including
Chief Executive Officer of RDO Australia Group, an industrial and
agricultural equipment dealer, and nine years on the executive team
of Senex Energy, an Australian oil and gas explorer and developer.
Colin Bloomfield Non-Executive Chairman
Anthony Caruso Managing Director
Andrew Watts Non-Executive Director
Gabriel Meena Non-Executive Director
Julie Whitcombe Non-Executive Director
17%
34%
49%
R
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B
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m
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In
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SHAREHOLDER
COMPOSITION
TWO YEAR TRADING HISTORY
Capital Structure
Share price as at 1 September 2021
$0.96
Shares on issue as at 1 September 2021
107.4m
Market capitalisation
$103.1m
Net Cash/(Debt) as at 30 June 2021
$19.3m
Enterprise value
$83.8m
Major Shareholders
Andrew Watts
11.42%
Kenneth Kamon
10.12%
Darren Hamblin
8.97%
Greig & Harrison Pty Ltd
5.84%
Figures in $AUD
Volume
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26 Mastermyne Group Limited
and its controlled entities
28 Corporate Governance
Statement
34 Directors Report
50 Auditors Independence
Declaration
51 Consolidated statement
of comprehensive income
52 Consolidated balance sheet
53 Consolidated statement
of changes in equity
54 Consolidated statement
of cash flows
55 Notes to the financial
statements
80 Directors’ declaration
86 ASX Additional Information
88 Corporate Directory
M A S T E R M Y N E
G R O U P L I M I T E D
A N D I T S
C O N T R O L L E D
E N T I T I E S
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C O R P O R AT E G O V E R N A N C E S TAT E M E N T
The Company and its Board of Directors
are committed to fulfilling their corporate
governance obligations and responsibilities
in the best interests of the Company and
its various stakeholders.
The ASX Listing Rules require listed companies
to provide a statement in their Annual Report
disclosing the extent to which they have followed
the ASX Corporate Governance Principles and
Recommendations adopted by the ASX Corporate
Governance Council (“Recommendations”) in the
reporting period. These Recommendations are
guidelines, designed to improve the efficiency, quality
and integrity of the Company. The Recommendations
are not prescriptive, but if a company considers that
a recommendation should not be followed having
regard to its own circumstances, the company has the
flexibility not to follow it but in its Annual Report it
must identify which Recommendations have not been
followed and give reasons for not following them.
This Corporate Governance Statement (“Statement”)
and the Company’s suite of corporate governance
documents referred to in the Statement, and other
relevant information for stakeholders, are displayed on
the Company’s website www.mastermyne.com.au. The
Company has complied with the Recommendations, to
the extent outlined in this Statement, throughout the
year or as otherwise noted.
1.1 SCOPE OF RESPONSIBILITY
OF BOARD
Responsibility for the Company’s proper corporate
governance rests with the Board. The Board’s guiding
principle in meeting this responsibility is to act honestly,
conscientiously and fairly, in accordance with the law, in
the interests of Mastermyne Group’s Shareholders (with
a view to building sustainable value for the Shareholders)
and those of employees and other stakeholders. The
Board’s broad function is to:
3 chart strategy and set financial targets for the
Company;
3 monitor the implementation and execution of strategy
and performance against financial and non-financial
targets; and
3 appoint and oversee the performance of executive
management and generally to take and fulfil an
effective leadership role.
Power and authority in certain areas is specifically
reserved to the Board – consistent with its function as
outlined above. These areas include:
3 composition of the Board itself including the
appointment and removal of Directors;
3 oversight of the Company including its control and
accountability system;
3 appointment and removal of senior management
including the Managing Director, Chief Financial Officer
and Company Secretary;
3 reviewing and overseeing systems of risk management
and internal compliance and control, codes of ethics
and conduct, and legal and statutory compliances;
3 monitoring senior management’s performance and
implementation of strategy; and
3 approving and monitoring financial and other reporting
and the operation of committees.
The Board has delegated functions, responsibilities
and authorities to the Managing Director and senior
executives to enable them to effectively manage the
Company’s day-to-day activities.
1.2 COMPOSITION OF BOARD
The Board performs its roles and function, consistent
with the above statement of its overall corporate
governance responsibility, in accordance with the
Council’s guidelines
The Board currently comprises five Directors as follows:
3 Colin Bloomfield
– Independent non-executive Chairman
3 Andrew Watts
– Non-executive Director
3 Gabriel Meena
– Independent non-executive Director
3 Julie Whitcombe
– Independent non-executive Director
3 Tony Caruso
– Managing Director
Details of each Director’s qualifications, experience and
expertise, their involvement in Board and committee
meetings, and the period for which they have been in
office, are set out in the Directors’ Report. All Directors,
apart from the CEO, are subject to re-election by rotation
at least every three years at the Company’s annual
general meeting.
The Board’s view is that an independent Director is a
non-executive Director who does not have a relationship
affecting independence on the basis set out in the
Council’s guidelines. During the reporting period the
Company Board composition was 3 independent
directors and 2 non-independent directors, meeting
the council’s recommendation requiring a majority of
independent Directors.
The Board periodically conducts a review of the skills and
experience of Directors to ensure they are appropriate for
the Company’s activities. The results of the most recent
review conducted in the last period are shown below.
Skills
Combined
Governance
Risk Management Systems
High
Health and Safety
High
Financial Risk
High
Operations
Underground Coal Mining
High
Underground Metalliferous Mining
Low
Employee Relations
High
Contract Management
High
Strategic
Strategy and Business Planning
High
Mergers and Acquisitions
Medium
Capital Markets
Low
Where appropriate, external advice is sought to
supplement Board skills and experience. The Board
has strengthened the underground metalliferous
mining expertise within the management team, and
Board members have been actively involved in tender
reviews processes. With respect to the capital markets
experience, the Board does use external advice to
supplement the skill base on the Board.
1.3 BOARD CHARTER
The Board has adopted a Board Charter to give formal
recognition to the matters outlined above. This Charter
sets out various other matters that are important for
effective corporate governance including the following:
3 a detailed definition of “independence” for the purposes
of appointment of Directors;
3 a framework for annual performance review and
evaluation;
3 approval of criteria for monitoring and evaluating the
performance of senior executives;
3 approving and monitoring capital management and
major capital expenditure;
3 frequency of Board meetings;
3 ethical standards and values – ensuring compliance
with the Company’s governing documents and Codes
of Conduct;
3 risk management – identifying risks, reviewing
and ratifying the Company’s systems of internal
compliance and control;
3 establishment of Board committees: Audit & Risk
Management Committee, Remuneration & Nomination
Committee; and
3 communications with Shareholders and the market.
These initiatives, together with other matters provided
for in the Board Charter, are designed to promote good
corporate governance and generally build a culture
of best practice in Mastermyne Group’s own internal
practices and in its dealings with others.
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1.4 AUDIT & RISK MANAGEMENT
COMMITTEE
The Company has established this committee to advise
on the establishment and maintenance of a framework of
internal control and appropriate ethical standards for the
management of the Company. The committee comprises
the following members:
3 Julie Whitcombe (Chair)
3 Gabriel Meena
3 Andrew Watts
3 Colin Bloomfield
The committee performs a variety of functions relevant
to risk management and internal and external reporting
and reports to the Board following each meeting. Among
other matters for which the committee is responsible are
the following:
3 qualifications of committee members;
3 review and approve and update internal audit and
external audit plans;
3 review financial reports or financial information,
including such information as is to be distributed
externally and where appropriate recommend these
for Board approval;
3 review the effectiveness of the compliance function;
3 investigate any matter brought to its attention;
3 obtain outside accounting, legal, compliance, risk
management or other professional advice as it
determines necessary to carry out its duties;
3 review and approve accounting policies;
3 report to the Board and make recommendations to the
Board;
3 periodically meet separately with management,
internal auditors and external auditors to discuss:
§ the adequacy and effectiveness of the accounting
and financial controls, including the Company’s
policies and procedures to assess, monitor, and
manage business risk, and legal and ethical
compliance programs;
§ issues and concerns warranting audit and risk
management committee attention, including
but not limited to their assessments of the
effectiveness of internal controls and the process
for improvement;
3 corporate risk assessment and compliance with
internal controls;
3 assessment of the internal audit function and financial
management processes supporting external reporting;
3 review of the effectiveness of the external audit
function;
3 review of the performance and independence of the
external auditors and make suggestions to the Board;
3 review any significant legal matters and corporate
legal reports;
3 review areas of greatest compliance risk;
3 assess the adequacy of external reporting for the
needs of Shareholders; and
3 monitor compliance with the Company’s Codes of
Conduct, risk management policies and compliance
function.
Meetings are held often enough to undertake the Audit &
Risk Management Committee’s role effectively, being at
least four times each year. The committee may invite such
other persons to its meetings as it deems necessary.
1.5 REMUNERATION & NOMINATION
COMMITTEE
The purpose of this committee is to assist the Board
and make recommendations to it in relation to the
appointment of new Directors (both executive and
non-executive) and senior executives and to oversee
the remuneration framework for Directors and senior
executives. The Board does not consider separate
committees to cover these matters are warranted at
this stage of the Company’s evolution. The committee
comprises the following members:
3 Gabriel Meena (Chair)
3 Andrew Watts
3 Colin Bloomfield
3 Julie Whitcombe
Functions performed by the committee include the
following:
3 obtaining independent advice and making
recommendations in relation to remuneration
packages of senior executives, non-executive Directors
and executive Directors, equity-based incentive plans
and other employee benefit programs;
3 reviewing the Company’s recruitment, retention and
termination policies;
3 reviewing the Company’s superannuation
arrangements;
3 reviewing succession plans of senior executives and
Directors;
3 recommending individuals for nomination as members
of the Board and its committees;
3 considering those aspects of the Company’s
remuneration policies and packages, including
equity-based incentives, which should be subject to
shareholder approval;
3 monitoring the size and composition of the Board;
3 development of suitable criteria (with regard to skills,
qualifications and experience) for Board candidates,
whose personal attributes should encompass relevant
industry experience and/or sound commercial or
financial background;
3 identification and consideration of possible candidates,
and recommendation to the Board accordingly;
3 establishment of procedures, and recommendations
to the Chairman, for the proper oversight of the Board
and management; and
3 ensuring the performance of each Director and of
senior management, is reviewed and assessed each
year in accordance with procedures adopted by the
Board. A review has been carried out for the most
recent reporting period.
The Remuneration & Nomination Committee will meet as
often as necessary, but must meet at least twice a year.
1.6 GOOD CORPORATE GOVERNANCE
COMMITMENT
The Company is committed to achieving and maintaining
the highest standards of conduct and has undertaken
various initiatives, as outlined in this Statement, that are
designed to achieve this objective. Mastermyne Group’s
suite of corporate governance documents is intended
to develop good corporate governance and, generally,
to build a culture of best practice both in Mastermyne
Group’s own internal practices and in its dealings with
others. The following are a tangible demonstration of
Mastermyne Group’s corporate governance commitment.
INDEPENDENT PROFESSIONAL ADVICE
With the prior approval of the Chairman, which may
not be unreasonably withheld or delayed, each Director
has the right to seek independent legal and other
professional advice concerning any aspect of the
Company’s operations or undertakings in order to fulfil
their duties and responsibilities as Directors. Any costs
incurred are borne by Mastermyne Group.
CODE OF CONDUCT
Mastermyne Group has developed and adopted detailed
Codes of Conduct to guide Directors, Senior Executives
and employees in the performance of their duties.
SECURITIES TRADING POLICY
Mastermyne Group has developed and adopted a
formal Securities Trading Policy to regulate dealings in
securities by Directors, key management personnel and
other employees, and their associates. This is designed
to ensure fair and transparent trading in accordance
with both the law and best practice. The policy includes
restrictions and clearance procedures in relation to when
trading can and cannot occur during stated ‘closed’
and ‘prohibited’ periods and whilst in possession of
price sensitive information. Otherwise, those persons
may generally deal in securities during stated ‘trading
windows’. The Board will ensure that restrictions on
dealings in securities are strictly enforced.
1.7 COMPLIANCE WITH THE ASX
CORPORATE GOVERNANCE COUNCIL
RECOMMENDATIONS
The Board has assessed the Company’s current
practices against the Recommendations and outlines its
assessment below:
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT
The role of the Board and delegation to management
have been formalised as described in this Statement
and the Board Charter, and will continue to be refined,
in accordance with the Recommendations, in light of
practical experience gained in operating as a listed
company.
Mastermyne ensures that appropriate checks are
undertaken before it appoints a person, or puts
forward to shareholders a new candidate for election,
as a director. Information about a candidate standing
for election or re-election as a director is provided
to shareholders to enable them to make an informed
decision on whether or not to elect or re-elect the
candidate.
Directors are provided with a letter on appointment
which details the terms and conditions of their
appointment, provides clear guidance on what input is
required by them, and includes materials to assist with
induction into the Company. The Company has a similar
approach for all senior executives whereby they are
provided with a formal letter of appointment setting out
their terms of office, duties, rights and responsibilities
as well as a detailed job description. The Board has
delegated responsibilities and authorities to the CEO and
other executives to enable management to conduct the
Company’s day to day activities. Matters which exceed
defined authority limits require Board approval.
The processes for evaluating the performance of senior
executives, the board and its committees and individual
directors, are set out in the Board Charter, Audit & Risk
Management Committee Charter and Remuneration &
Nomination Committee Charter. All reviews have taken
place in accordance with these charters. Mastermyne
Group complies with the Recommendations in this area.
The Company Secretary is accountable directly to the
Board, through the Chair, on all matters to do with the
proper functioning of the Board.
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1.7 COMPLIANCE WITH THE ASX
CORPORATE GOVERNANCE COUNCIL
RECOMMENDATIONS (CONTINUED)
PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD
VALUE
The Board currently consists of five directors, including
one executive Director. Profiles of each Director outlining
their appointment dates, qualifications, directorships
of other listed companies (including those held at any
time in the 3 years immediately before the end of the
financial year), experience and expertise, are set out in the
Directors’ Report.
Three Directors, Mr Colin Bloomfield, Mr Gabriel Meena
and Julie Whitcombe, are independent (in terms of
the criteria detailed in the Recommendations), giving
the Board the benefit of independent and unfettered
judgment. The other two Directors, comprising one
founder who is a non-executive Director and the
Managing Director, are not independent.
There are procedures in place to allow Directors to
seek, at Mastermyne Group’s expense, independent
advice concerning any aspect of Mastermyne Group’s
operations.
A Remuneration & Nomination Committee has been
established with its own charter, as detailed above.
The Board is committed to a performance evaluation
process, with a self-assessment evaluation being
undertaken during each year.
PRINCIPLE 3 – PROMOTE ETHICAL AND
RESPONSIBLE DECISION MAKING
The Board has adopted detailed Codes of Conduct
to guide Directors, executives and employees in the
performance of their duties.
The codes have been designed with a view to ensuring
the highest ethical and professional standards, as well
as compliance with legal obligations, and therefore
compliance with the Recommendations.
The Company recognises the benefits that can arise
to the organisation from diversity in the workplace
covering gender, age, ethnicity and cultural background
and in various other areas. So, the Board has approved a
Diversity Policy which details the Company’s approach to
promoting a corporate culture that embraces diversity
when selecting and appointing its employees and
Directors.
This policy outlines measurable objectives for achieving
gender diversity throughout the Company over the longer
term, and progress towards achieving them has been
assessed as follows:
3 Female representation on the Board and in Senior
Executive roles
3 3 women on formal and active succession for Senior
Executive roles
3 Australian Government Certification of Compliance
with the Workplace Gender Equality Act
3 Equal pay has been achieved in all positions regardless
of gender
3 Flexible working arrangements to facilitate return to
work arrangements after maternity leave
3 Executive and Senior Leadership participation in
women mentoring programs
3 ‘Baby Benefit’ payment for male and female
employees
3 Flexible working arrangements to support transition
into retirement to extend working-life and retain
capability
PRINCIPLE 4 – SAFEGUARD INTEGRITY
IN FINANCIAL REPORTING
The Audit & Risk Management Committee, with its own
charter, complied with the Recommendations for the
majority of the year. All the members of this committee
are required to be financially literate.
PRINCIPLE 5 – MAKE TIMELY AND BALANCED
DISCLOSURE
Mastermyne Group’s current practice on disclosure
is consistent with the Recommendations. Policies for
compliance with ASX Listing Rule disclosure requirements
are included in the Company’s Board Charter and
Continuous Disclosure Policy.
PRINCIPLE 6 – RESPECT THE RIGHTS
OF SHAREHOLDERS
The Board recognises the importance of this principle
and strives to communicate with Shareholders regularly
and clearly, both by electronic means and using more
traditional communication methods. Shareholders
are encouraged to attend and participate at general
meetings. The Company’s auditors are required to attend
the annual general meeting and are available to answer
Shareholder’s questions relevant to the audit. Security
holders are able to ask questions of the company or the
auditors electronically as detailed in the company’s notice
of meeting. Security holders can also request to receive
communications electronically via the Company’s share
registry Link Market Services.
As part of the Company’s management of investor
relations the Chief Executive Officer and Chief Financial
Officer does, at times, also undertake briefings with
investors and analysts to assist their understanding of
the Company and its operations, and provide explanatory
background and technical information.
The Company has not published a formal communications
policy because it sees no need as its stated practices
generally comply with the Recommendations, and it
has covered a number of aspects of this principle in its
Continuous Disclosure Policy, including in relation to
briefings with investors and analysts.
PRINCIPLE 7 – RECOGNISE AND MANAGE RISKS
The company operates under an enterprise wide
risk management framework summarised in the risk
management policy adopted by the board which can be
found on the Company’s website. The framework in place
ensures the company identifies and keeps an up-to-date
understanding of areas where it may expose itself to risk
and implement effective management of those risks.
Oversight of the risk management framework is
undertaken by the Audit and Risk Management
Committee which assists the board in its oversight role
by:
3 the implementation and review of risk management
and related internal control and compliance systems
3 monitoring the companies policies and procedures,
ensuring compliance with the relevant laws and
company’s code of conduct; and
3 annual review of the risk management framework,
to evaluate and continually look to improve the
effectiveness of the Company’s risk management and
internal control processes. Such a review has been
undertaken during the most recent reporting period
The Board considers that the Company does not currently
have any material exposure to economic, environmental
and social sustainability risks which require active
management.
The Company does not have a separate internal audit
function due to its relatively small size and less complex
financial and organisational structures. The board does
engage a third party annually to conduct forensic testing
on the Company’s internal controls.
The Board has received assurance from the Chief
Executive Officer and the Chief Financial Officer that the
declaration provided in accordance with section 295A of
the Corporations Act is founded on a sound system of risk
management and internal control and that the system is
operating effectively in all material respects in relation to
financial reporting risks.
PRINCIPLE 8 – REMUNERATE FAIRLY
AND RESPONSIBLY
Remuneration of Directors and executives is fully
disclosed in the Remuneration Report (contained in the
Directors’ Report) and any material changes with respect
to key executives will be announced in accordance with
continuous disclosure principles. During the reporting
period the Remuneration & Nomination Committee had
four non-executive Director members of which three
are independent and the Chair is not an independent
Director. Whilst this does not meet the council’s
recommendation requiring a chair to be an independent
director, the company believes the current skills &
experience of the current committee members is more
important than independence at this time.
The aggregate level of non-executive Directors’
remuneration is currently set at $500,000 approved
on 17 November 2020 and any increase must be
approved by shareholders. Non-executive Directors are
not provided with any retirement benefits, other than
statutory superannuation.
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D I R E C T O R S ’ R E P O R T
30 JUNE 2021
The Directors present their report together
with the financial report of Mastermyne
Group Limited (‘the Company’) and of
the Group, being the Company and its
subsidiaries, for the financial year ended 30
June 2021 and the auditor’s reports thereon.
1. DIRECTORS
Colin Bloomfield, Independent Chairman
Qualifications: Bachelor of Engineering (Mining),
Graduate Certificate of Management
Appointed: 6 March 2014 and as Chairman
on 26 February 2015
Experience and other directorships
Colin brings to the Company over 30 years of mining
experience in technical, operations, management and
corporate roles. He is also an experienced Company
Director having been in various Directorships for over
twenty years.
Colin’s former roles during his 27 years with BHP Billiton
include President Illawarra Coal (8 years), Vice President
Health, Safety and Environment (Global role) and Project
Director for the BHP Billiton merger integration as well as
member of the deal team for the transaction. He was also
an Underground Coal Mine Manager both in New South
Wales and Queensland.
Currently, Colin is also Chairman of the Flagstaff Group
and Destination Wollongong. He has previously been a
Director at the Minerals Council of Australia and Chairman
of the NSW Minerals Council and Port Kembla Coal
Terminal.
Special Responsibilities
Chairman of the Board
Member of the Audit and Risk Management Committee
Member of the Remuneration and Nomination
Committee
Andrew Watts, Non-executive Director
Experience and other directorships
Andrew has been involved in contracting within the
mining industry since 1994 and co-founded Mastermyne
in 1996.
Andrew was responsible for all aspects of Mastermyne’s
operations until the appointment of Tony Caruso as CEO
in 2005. Andrew relocated to Sydney in early 2010 to
focus on the New South Wales market.
Special Responsibilities
Member of the Audit and Risk Management Committee
Member of the Remuneration and Nomination
Committee
Gabriel (Gabe) Meena, Non-executive Director
Qualifications: Bachelor of Engineering (Mechanical)
Appointed: 15 September 2015 and as Chair of the
Remuneration and Nomination Committee on 1
November 2018
Experience and other directorships
Gabe is an executive with over 30 years experience in
the steel, mining and stevedoring industry covering
operations, maintenance and engineering. Gabe has held
senior operational and management roles with Bluescope
Steel as General Manager Mills and Coating, Bluescope
Steel China as President China Coated and BHP Collieries
as General Manager of a number of coal mines.
Gabe’s most recent role was General Manager Operations
with Patrick Terminals. Gabe has a Bachelor in Mechanical
Engineering and is a graduate of the Australian Institute
of Company Directors.
Special Responsibilities
Member of the Audit and Risk Management Committee
Chair of the Remuneration and Nomination Committee
Julie Whitcombe, Non-executive Director
Qualifications: Bachelor of Engineering (Mining - First
Class Hons), MBA, CA (Distinction)
Appointed: 7 June 2018 and Chair of the Audit and Risk
Committee on 1 November 2018
Experience and other directorships
Julie brings over 20 years of experience across financial,
strategic and operational roles, with a focus throughout
her career on the resources sector. Julie is currently GM
Strategy and Development for CleanCo, a Government
Owned Corporation focused on the development and
supply of firmed renewable energy for Queensland
customers. Prior to her current role, Julie held various
leadership roles including Chief Executive Officer of RDO
Australia Group, an industrial and agricultural equipment
dealer, and nine years on the executive team of Senex
Energy, an Australian oil and gas explorer and developer.
Special Responsibilities
Chair of the Audit and Risk Management Committee
Member of the Remuneration and Nomination
Committee
Anthony (Tony) Caruso, Managing Director
Qualifications: Post Graduate Degree in Business
Management Appointed: 10 March 2010
Experience and other directorships
Tony was appointed CEO of Mastermyne in 2005 and
Managing Director in 2008 and has overall corporate
responsibility for Mastermyne. Tony has over 20 years
experience in underground mine contracting services.
Prior to joining Mastermyne, Tony was the General
Manager of Allied Mining in Queensland and a consultant
to the underground mining sector. He has a trade
background plus a post graduate degree in Business
Management and is a Fellow of the Australian Institute of
Management.
Special Responsibilities
Member of the Audit and Risk Management Committee
Member of the Remuneration and Nomination
Committee
2. COMPANY SECRETARY
Brett Maff was appointed Company Secretary and
Chief Financial Officer on 12 November 2018. Brett has
over 20 years experience in senior financial, executive
and company secretarial roles in the mining resources
and mining services industries. Brett has a Bachelor of
Commerce and is a Certified Practicing Accountant.
3. MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s board of
Directors and of each board committee held during the
year ended 30 June 2021, and the numbers of meetings
attended by each Director were:
Board
meetings
Audit
Committee
Remuneration
& Nomination
Committee
A
B
A
B
A
B
Mr. C Bloomfield
8
8
4
4
3
3
Mr. A Watts
8
8
4
4
3
3
Mr. G Meena
8
8
4
4
3
3
Ms. J Whitcombe
8
8
4
4
3
3
Mr. A Caruso
7
8
3
4
2
3
A= Number of meetings attended
B= Number of meetings held during the time the Director held office or
was a member of the committee during the year
4. OPERATING AND FINANCIAL REVIEW
RESULTS
OVERVIEW
3 Mastermyne Group Limited (ASX Code: MYE)
(“Mastermyne” or “the Company”) is pleased to
announce its results for Full Year 2021 which has seen
the Company position itself with a very strong outlook
while delivering on a number of fronts.
Key highlights of the FY2021 result are:
3 Excellent Safety Performance with lowest TRIFR result
(4.96) since the company formed
3 Strong investment in developing the capability of
people which sets the Company up for the growth
ahead
3 Revenue of $233 million
3 EBITDA Margin of 9.6% in line with the prior
corresponding period and EBITDA of $22.3 million
3 Strong Profit Result of $5.9 million during a low point in
the metallurgical coal price cycle
3 Declared a 2.25 cent dividend bringing the full year
dividend to 3.0 cents representing 56% of Net Profit
3 Maintained a strong Balance Sheet with a year-end
Net Cash position of $19.3 million
3 Executed the Company’s first Mine Operations
Contract with Sojitz Blue at the Crinum Mine totalling
$600-$660 million of Revenue over a 6.5 year term
3 Announced (post year-end) the second Mine
Operations Contract with QCoal Group at the Cook
Colliery Mine in Central Queensland
3 An Order Book that lifts to $1.1 billion (from $600
million at half-year)
In a year that faced significant headwinds from low
metallurgical coal prices and the temporary suspension
of two major underground mines in Queensland, the
Company was very pleased to deliver results in line
with guidance and more notably to have positioned the
business for significant growth in FY2022 and beyond.
The addition of two Mine Operations contracts means
the Company has a material new revenue stream that
provides long term visibility and scale in earnings, gives
the Company greater control of its order book and shifts
the profile of the Company through its appointment as
the coal mine operator. The order book now has a strong
weighting of Mine Operations revenue alongside the
traditional contracting revenue which combined provides
a very strong long-term outlook for the business.
Having achieved a solid financial result and maintained a
strong balance sheet with a net cash position supported
by a record future order book, the Group has continued
its commitment to shareholder returns declaring a final
ordinary dividend of 2.25 cents per share (fully franked).
This takes the full year dividend to 3.0 cents per share
representing 56% of the net profit.
35
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
4. OPERATING AND FINANCIAL REVIEW
(CONTINUED)
RESULTS (CONTINUED)
OPERATIONAL OVERVIEW
The Company has delivered an outstanding safety
performance over the last year with a TRIFR of 4.96,
the lowest that the Company has achieved since its
inception. This result is the outcome of a very targeted
safety approach centred largely around psychological
safety supported by strong compliance and behaviour.
Mastermyne adopts an equally relentless focus on high
potential hazards and learning from zero energy and near
miss events. Adopting the principals of a High Reliability
Organisation is central to our long-term approach to
safety excellence. As the Company shifts to become a
Mine Operator, performance like this demonstrates the
maturity required across the organisation (people and
systems) to safely manage its own operations.
Alongside the relentless investment in the health and
safety of its people, there has been the significant
investment in developing the Company’s workforce. The
internal learning management systems have positioned
it with skilled people grown from within the Mastermyne
business who are now ready to step up into roles to
support the growth ahead. This investment in people de
risks the business from the resourcing pressures being
experienced across the resources sector and additionally,
by growing its own talent, strengthens and protects its
culture.
The internal employee development systems have
delivered some very impressive results with 14
coordinators completing Mastermyne Diploma of Project
Management, 223 employees completing the MasterMe
program, 12 employees (NSW & QLD) completing the
Mastermyne Deputy Program, 9 employees completing
the Frontline Leadership Course and 29 employees
undertaking Cert II Underground Coal Operations
with many other employees undergoing professional
development and upskilling in addition to these
highlights. Having this focus and these results around
internal development has created a tangible point of
difference for its workforce.
During the year the Company continued its commitment
to developing its Hard Rock business with the
appointment of key management roles solely focused
on the underground hard rock sector. The appointments
were experienced and well-respected hard rock
executives who brought with them significant technical
expertise and a strong network of contacts in the
hard rock sector. Through the second half of the year
the Company saw the hard rock tender pipeline grow
significantly and more than $100 million in hard rock
tenders have been submitted. In addition to this organic
approach the company continues to explore acquisition
opportunities to accelerate entry into the sector.
The Company’s second half results were stronger
driven mainly by the strong recovery in coal prices
over the latter half of the year and also assisted by the
restart of two suspended mines in Central Queensland.
The Anglo American Aquila project ramped up to full
run rate during the period and the work scope and
contract have subsequently been expanded. The earlier
investment in the equipment fleet for this project
has delivered improved margins and is providing a
competitive advantage on the project. The Company
was also successful during the period in securing
contract extensions at Glencore’s Integra Mine, BMA’s
Broadmeadow Mine, Anglo American’s Moranbah North
Mine (Chemical installations) and SIMEC’s Tahmoor Mine.
Wilson Mining Services (acquired in 2019) delivered very
strong results during the year. This business continues to
gain market share and has expanded its product offering
through new and improved ground stabilisation products.
The Wilson Mining business was a strategic acquisition
which broadened the range of services Mastermyne
offers to its existing clients with the two businesses
having strong synergies sharing similar customers,
sites, equipment, workforce and general management.
The business provides a nice counter play to the core
Mastermyne business and throughout the year has
demonstrated this when mines were experiencing
major geotechnical issues that had an impact to the
Mastermyne operations. The value created through
this acquisition has been highly accretive for the overall
business and the successful integration of the business
into the Mastermyne Group is a strong endorsement of a
structured and well run integration plan by the Company.
More recently the Company acquired the remaining 33%
shareholding in the Registered Training Organisation
(RTO) MyneSight, gaining full control and operation of this
business. The MyneSight business provides an in-house
training capability to support the resourcing of growth
projects including our entry into the underground hard
rock sector. The Company has maintained a majority
shareholding in this business for several years and saw
this opportunity as a low cost mitigation strategy for any
future potential resourcing challenges.
The Company has not experienced any significant labour
constraints at this point in the cycle but continues to
closely monitor developments in the labour market.
Strong interest has been received in roles for our Mine
Operations contracts with most roles having excess
applicants.
Similarly, the Company has not experienced any
significant equipment shortages or extended lead times
for equipment to resource the upcoming projects. This is
largely due to the Company’s counter cyclic acquisition of
equipment through the low point in the coal price cycle.
Equipment that was acquired and stored in readiness for
Mine Operations contracts is now undergoing overhaul
in preparation for deployment at the Crinum and Cook
projects.
With the commencement of the first Mine Operations
project now under way, the Company has invested in
expanding the capability of the fleet management team.
This has predominately been through the resourcing
of additional Asset Management roles that will be
responsible for life cycle asset management through
an integrated asset management system aligned to ISO
55000.
The Group’s record order book, which is heavily weighted
to Metallurgical coal projects (95%+), currently stands
at $1.1 billion (excluding Cook which is being finalised)
with $246 million to be delivered FY2022, $196 million
in FY2023, and $640 million in FY2024 and beyond. In
addition to the contracted works, the Company forecasts
a further $30-40 million per annum in recurring and
purchase order work. The tendering pipeline now stands
at $2.3 billion with $0.6 billion in the contracting business,
$1.5 billion in the Mine Operations area and $0.2 billion
in underground hard rock projects. In addition to the
pipeline, the Company also finalised a Mining Services
Agreement with Bengal Coal for the Dysart East Project
and is currently moving through conditions precedent
with work scheduled to start in FY2023 subject to the
successful financing of the project. The size and tenure of
this project is very similar to the Crinum project.
BALANCE SHEET AND CASH FLOWS
The overall cash position at 30 June 2021 represented a
net decrease in cash and cash equivalents of $1.0 million
against prior period (30 June 2020), to $24.4 million.
The decrease was a result of lower operating cashflow
generation in proportion to lower revenue and earnings
performance, ongoing returns to shareholders through
dividends and capital investment in equipment fleet.
The net cash position at the end of the period was
$19.3 million after the payment of dividends and capital
expenditure through the period.
The cash flow movements were as follows:
3 net cash inflows from operating activities for the
full year ended 30 June 2021 of $18.3 million (full
year ended 30 June 2020: inflows of $30.8 million),
represented by reduced proportional cashflow
generation from revenue and earnings performance
and working capital movements across the balance
date;
3 net cash outflows from investing activities for the
full year ended 30 June 2021 of $8.3 million (full
year ended 30 June 2020: outflows of $12.7 million),
predominantly represented by capital investment in
existing fleet, and impact of acquisition payments
(Wilson Mining Services Pty Ltd FY2020 $3.8 million
and acquisition of minority interest in MyneSight Pty
Ltd FY2021 $0.4 million); and
3 net cash outflows from financing activities for the
full year ended 30 June 2021 of $11.0 million (full
year ended 30 June 2020: outflows of $9.2 million),
represented the payment of dividends, and repayment
of on-going lease liabilities.
The net assets of the Group have slightly increased from
$73.9 million (30 June 2020) to $75.2 million at 30 June
2021.
In addition to a strong Net Cash position the Group
maintains significant headroom in its current bank
facilities providing additional working capital to support
future growth. Mastermyne has an undrawn invoice
finance facility limit of $20 million for working capital and
an available $10 million for equipment funding.
OUTLOOK
With the execution of the Crinum Mine Operations
contract and the announcement of the Cook Colliery Mine
Operations contract the outlook for the Company looks
exceptionally strong. In the coming year both the Crinum
and Cook projects will be in the ramp up phase delivering
revenue of about 50% of the expected long-term annual
average. These projects are underpinned by the very
stable contracting order book and growth pipeline in
the coal and hard rock sectors. As a result, the Company
is well positioned to deliver strong earnings growth in
FY2022 which will most likely be surpassed in FY2023.
Metallurgical coal prices have recovered substantially
from ~$US100/t (December 2020) to ~$US220/t
currently. Australia remains one of the lowest cost
coal producers in the world, providing high quality
metallurgical coal into Asian steel production markets.
The demand for Australian seaborne metallurgical coal
is expected to remain robust in the medium to long
term. Already the Company is seeing scope increases on
its existing projects along with an increase in tendering
activity which is expected to remain supported through
the cycle. Stronger pricing is also evident in key metals
with Copper, Nickel and Zinc being particularly robust.
Exposure to these and other metals will drive growth and
provide stability in cashflows in future periods.
FY2022 will see the Company deliver substantial
packages of work to restart the Crinum and Cook
mines and the operational focus will be on executing
these works on time and on budget. Crinum works are
progressing well against schedule and budget and these
same project disciplines will be applied to the Cook
Colliery re-start. Labour and equipment resourcing
strategies are well developed and to date the Company
is not experiencing any delays or concerns. The Company
has well developed strategies for large scale recruiting
and on boarding and is confident it can mitigate any
execution risk in the Mine Operations projects. With a
strong balance sheet supported by the current undrawn
funding facilities, the Company is adequately funded to
manage the capital requirements in bringing both the
Crinum and Cook projects on line.
37
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
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5. REMUNERATION REPORT (AUDITED)
The Directors present the Mastermyne Group Limited
2021 remuneration report, outlining key aspects of our
remuneration policy and framework, and remuneration
awarded this year.
The information provided in this remuneration report
has been audited as required by section 308(3C) of the
Corporations Act 2001.
(A) PRINCIPLES OF REMUNERATION
Key management personnel have the authority and
responsibility for planning, directing and controlling
the activities of the Company and the Group, including
directors of the Company and other executives. Key
management personnel comprise the directors and
executives of the Company listed below.
Name
Position
Non-executive and executive Directors
(see pages 1 to 2 for details about each Director)
Mr. C Bloomfield
Independent Chairman
Mr. A Watts
Non-executive Director
Mr. G Meena
Non-executive Director
Ms. J Whitcombe
Non-executive Director
Mr. A Caruso
Managing Director and Chief Executive
Officer
Other executives
Mr. D Sykes
General Manager Strategy and Growth
Ms. V Gayton
General Manager Human Resources
Mr. P Green
General Manager Mining QLD
Mr. W Price
General Manager Mining NSW
Mr. B Maff
Chief Financial Officer
Mr. R Bedggood
General Manager Hardrock (Appointed 12
January 2021)
Compensation levels for Key Management Personnel
(KMP) of the Group are competitively set to attract, retain
and motivate appropriately qualified and experienced
directors and executives. The Remuneration and
Nomination Committee (RNC) obtains independent data
on the appropriateness of remuneration packages of
the Group given trends in comparative companies and
sectors both locally and nationally, and the objectives of
the Company’s compensation strategy.
The remuneration structures of the Group are designed
to attract and reward suitably qualified candidates,
reward the achievement of strategic objectives and
achieve the broader outcome of creation of value for
shareholders. The remuneration structures consist of
both a fixed and variable component designed around
KPI’s aligned with the short and long-term strategic
objectives of the Group. Remuneration structures reflect:
3 the capability and experience of key management
personnel;
3 the key management personnel’s ability to control the
relevant performance; and
3 the recognition of the key management personnel’s
contribution to the Group’s performance.
In addition to their salaries, the Group also provides
non-cash benefits to its KMP and contributes to a post-
employment defined contribution superannuation plan
on their behalf. The reviews are conducted under the
terms of reference set down for the RNC.
FIXED REMUNERATION
Fixed remuneration consists of base compensation
(which is calculated on total cost basis and includes
any fringe benefit tax charges related to employee
benefits including motor vehicles), as well as employer
contributions to superannuation funds. Executives may
receive their fixed remuneration as cash, or cash with
non-monetary benefits such as travel allowances.
Fixed remuneration is reviewed annually, or on
promotion, by the RNC through a process that considers
individual, segment and overall performance of the
Group. In addition, external data is provided for analysis
of KMP’s remuneration to ensure it remains competitive
by benchmarking against the market place. The chairman
of the RNC sources data independently of management
from appropriate independent advisors. For key executive
management other than the CEO/Managing Director, the
CEO/Managing Director will submit recommendations
to the RNC along with relevant supporting data and
externally independent comparative information. A senior
executive’s compensation may also be reviewed upon
promotion or in line with movements in the market place
during the period.
In FY2021 fixed remuneration was increased for 5
executives, with an average increase of 4%. This was done
to align the remuneration with the level for comparative
roles.
PERFORMANCE LINK REMUNERATION
Non-executive Directors are not eligible to participate
in performance linked remuneration of either a short or
long term nature.
Performance linked remuneration includes both short-
term and long-term incentives and is designed to
reward KMP for meeting or exceeding their financial and
personal objectives. The short-term incentive (STI) is an
‘at risk’ bonus provided in the form of cash.
SHORT-TERM INCENTIVE BONUS
The Mastermyne short term incentive plan was introduced as a structured incentive to reward KMP’s performance
against predetermined KPIs.
Feature
Description
Award
opportunity
CEO/Managing Director: 75% of fixed remuneration
Other executives: 50% of fixed remuneration
Performance
metrics
The STI metrics align with our strategic objectives of the Group, with specific financial and non-financial measures
(normally 5 or 6) for individual performance, group performance and underlying performance of the Group.
A summary of the measures and weightings are set out in the table below:
KMP
Financial
Non-financial
CEO/Managing Director
40%
60%
Other executives
40%
60%
The financial performance objectives may vary by individual and are broadly based on profitability compared to
budgeted amounts approved by the Board each year.
The non-financial objectives vary dependent upon position and responsibility and are aligned with the measures
and targets set to achieve the strategic objectives of the Group on an annual basis.
At the commencement of each performance year, the Board approves the corporate performance scorecard and
metrics to be measured for that year. The metrics generally have performance levels set as:
3 Threshold: Being the minimum level of performance deserving of reward. Achievement of the Threshold results
in 50% of the STI Award Opportunity being awarded.
3 Target: Being a challenging but achievable level of performance. Achievement of the Target results in 100% of
the STI Award Opportunity being awarded.
3 Stretch: Being the upper limit of possible outcomes that were planned for and a very challenging goal that
is unlikely to be achieved. Achievement of the Stretch results in 150% of the STI Award Opportunity being
awarded.
At the end of the financial year, the RNC assess the actual performance of the Group, the relevant segment
and individual against the KPI's set at the beginning of the year. Payment of individual bonuses is based on
the assessment of the RNC with recommendations from the Managing Director (for employees other than
the Managing Director) taking into consideration the overall performance of the individual for the period. The
Managing Director's STI bonus is set by the board based on assessment of his/her performance against agreed
KPI's as assessed by the RNC and recommended to the Board.
Delivery of STI
Employees can nominate for up to 50% of their STI award to be settled in shares. When a nomination is made,
performance rights are issued to the employee and vest at the end of the year in line with the achievements of
their relative KPI’s. Any balance not elected to be paid as shares in the Company is paid in cash at the end of the
financial year.
STI payments must be self funding.
Board discretion
The Board has discretion to adjust remuneration outcomes up or down to prevent any inappropriate award
outcomes, including reducing down to zero, if appropriate.
39
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
5. REMUNERATION REPORT (AUDITED) (CONTINUED)
(A) PRINCIPLES OF REMUNERATION (CONTINUED)
LONG-TERM INCENTIVES
Executive KMP participate at the Board’s discretion, in the Employee Performance Rights Plan comprising annual grants
of rights which are subject to various vesting conditions outlined in the table below. The purpose of the Employee
Performance Rights Plan is to attract, motivate and retain executives, encouraging individuals to participate in the
company through ownership of shares. The objective is to improve Mastermyne’s performance by aligning the interests
to those of the shareholders and the Group.
Performance Rights issued in 2020 or thereafter have the following structure:
Feature
Description
Opportunity/
Allocation
CEO/Manging Director: 75% of fixed remuneration
Other executives: 50% of fixed remuneration
The opportunity is divided by the share price face value to determine the number of rights.
Performance
hurdle
Vesting of the rights will be subject to achievement of the vesting conditions set out below:
3 Vesting Condition 1: The main Vesting Condition is that the eligible participant must be employed within the
Group on the Test Date. If employment has ceased with the Group prior to the Test Date, the performance
rights will lapse unless the Board at its absolute discretion determines otherwise.
3 Vesting Condition 2: Vesting is also conditional on the continuation of good conduct and the execution of
duties in the best interests of Mastermyne. If it is deemed the eligible participant has acted fraudulently or
dishonestly,or is in breach of obligations to Mastermyne, the Board at its discretion may determine that some or
all of the perfomance rights will lapse.
3 Vesting Condition 3: If Vesting Conditions 1 and 2 are achieved there are two further Vesting Conditions that
will each be applied independently to 50% of the performance rights. These Vesting Conditions depend on
Mastermyne’s TSR percentile rank during the TSR measurement period and the Earnings per Share(EPS)
performance over the measurement period:
(a) Tranche A: 50% of the performance rights will be conditional on the Company’s TSR rank relative to companies
in the ASX Peer Group index; and
(b) Tranche B: 50% of the performance rights will be conditional on the Company’s EPS performance.
For each tranche, the percentage of performance rights which will vest will be as specified in the table below:
TSR Rank during TSR measurement period
Proportion of Tranche A to vest
Below 50th percentile of the ASX Peer Group
0%
50th percentile to 75th percentile of the ASX Peer Group
50% plus 2% for each percentile above 50th percentile
Above 75th percentile of the ASX Peer Group
100%
EPS Performance during measurement period
Proportion of Tranche B to vest
EPS growth at <6%
0%
EPS growth between 6% and 12%
0% to 100% pro rata
EPS growth >12%
100%
Exercise price
The exercise price is $Nil.
Forfeiture and
termination
Rights will lapse if performance conditions are not met. Rights will be forfeited on cessation of employment
unless the board determines otherwise, e.g. in the case of retirement due to injury, disability, death or redundancy.
Performance Rights issued before 2020 have the following structure:
Feature
Description
Opportunity/
Allocation
CEO/Manging Director: 40% of fixed remuneration
Other executives: 20% of fixed remuneration
The opportunity is divided by the share price face value to determine the number of rights.
Performance
hurdle
Vesting of the rights will be subject to achievement of the vesting conditions set out below:
3 Vesting Condition 1: The main Vesting Condition is that the eligible participant must be employed within the
Group on the Test Date. If employment has ceased with the Group prior to the Test Date, the performance rights
will lapse unless the Board at its absolute discretion determines otherwise.
3 Vesting Condition 2: Vesting is also conditional on the continuation of good conduct and the execution of duties
in the best interests of Mastermyne. If it is deemed the eligible participant has acted fraudulently or dishonestly,
or is in breach of obligations to Mastermyne, the Board at its discretion may determine that some or all of the
performance rights will lapse.
3 Vesting Condition 3: There is an overriding Vesting Condition, requiring a minimum 8% total shareholder return
(TSR) during the TSR measurement period (i.e. from the Time of Grant to the Test Date).
3 Vesting Condition 4: If Vesting Condition 3 is achieved there are two further Vesting Conditions that will each
be applied independently to 50% of the performance rights. Both of these Vesting Conditions depend on
Mastermyne’s TSR percentile rank during the TSR measurement period:
(a) Tranche A: 50% of the performance rights will be conditional on the Company’s TSR rank relative to companies
in the ASX All Ordinaries Accumulation index; and
(b) Tranche B: 50% of the performance rights will be conditional on the Company’s TSR rank relative to companies
in the ASX 200 Resources Accumulation index.
For each tranche, the percentage of performance rights which will vest will be as specified in the table below:
TSR Rank during TSR measurement period
Proportion to vest
Tranche A
Tranche B
Below 50th percentile of the ASX Peer Group or the Resources
Peer Group
0%
0%
50th percentile to 75th percentile of the ASX Peer Group or
Resources Peer Group
50% plus 2% for each
percentile above 50th
percentile
50% plus 2% for each
percentile above 50th
percentile
Above 75th percentile of the ASX Peer Group or the Resources
Peer Group
100%
100%
Exercise price
The exercise price is $Nil.
Forfeiture and
termination
Rights will lapse if performance conditions are not met. Rights will be forfeited on cessation of employment unless
the board determines otherwise, e.g. in the case of retirement due to injury, disability, death or redundancy.
OTHER BENEFITS
Key Management Personnel can receive additional benefits as non-cash benefits as part of the terms and conditions of
their appointment. Non-cash benefits typically include motor vehicle benefits, and the Group pays fringe benefits tax on
these benefits.
(B) LINK BETWEEN REMUNERATION AND
PERFORMANCE
CURRENT FINANCIAL YEAR PERFORMANCE AND
IMPACT ON REMUNERATION
Performance linked remuneration includes both short-
term and long-term incentives and is designed to
reward KMP for meeting or exceeding their financial and
personal objectives.
The Group’s performance in 2021 remained strong
during a low point in the metallurgical coal price cycle,
with a solid profit result achieved, and healthy balance
sheet position, while continuing to focus on keeping our
people safe and recording its best safety result in the
Company’s history. For more information on 2021 results,
see page 3 of the operating and financial review.
STATUTORY PERFORMANCE INDICATORS
We aim to align our executive remuneration to our
strategic and business objectives and the creation of
shareholder wealth. The table below shows measures of
the Group’s financial performance over the last five years
as required by the Corporations Act 2001
However, these are not necessarily consistent with the
measures used in determining variable amounts of
remuneration to be awarded to KMPs. As a consequence,
there may not always be a direct correlation between
statutory key performance measures and the variable
remuneration.
41
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
5. REMUNERATION REPORT (AUDITED)
(CONTINUED)
(B) LINK BETWEEN REMUNERATION AND
PERFORMANCE (CONTINUED)
Performance
indicator
2021
2020
2019
2018
2017
Profit for
the year
attributable
to owners of
Mastermyne
($'000)
5,864
11,557
10,348
5,435
(2,012)
Dividends
payments
($'000)
5,057
6,346
-
-
-
Increase/
(decrease) in
share price (%)
23.0
(37.0)
(14.0)
+248.0
+182.0
Return
on capital
employed
from
continuing
operations (%)
13.0
24.0
18.0
17.0
(6.0)
(C) CONTRACTUAL ARRANGEMENTS WITH
EXECUTIVE KMPS
The RNC recommends Group remuneration policies for
Key Management Personnel. The RNC focuses mainly on
the CEO’s remuneration but reviews agreements made
with other KMP. In recommending the CEO remuneration
package, the RNC takes advice from independent advisors
in executive and non-executive remuneration as noted
below.
Component
CEO description
Senior executive
description
Fixed
remuneration
$438,343 (i)
Range between
$264,680 and
$358,963 (i)
Contract duration
Ongoing contract
Ongoing contract
Notice by the
individual/
company
9 months
3 months
Termination of
employment
(without a cause)
Entitlement to pro-rata STI for the year
Unvested LTI will remain on foot subject
to achievement of the performance
hurdles at the original date of testing
The Board has discretion to award a
greater or lower amount
Termination of
employment (with
cause) or by the
individual
STI is not awarded, and all unvested LTI
will lapse
(i) The actual remuneration paid to KMP during the year will vary from
the contracted amounts depending on the number of payroll weeks in
the financial year.
Different contractual terms apply to the following
individuals:
3 P Green is employed as a contractor through a
consulting company. As a contractor he does not
receive superannuation benefits and he is not entitled
to STI’s or LTI’s. The current contract in place expired
on 30 June 2021. A new contract is currently under
negotiation. Both parties to the Professional Service
Agreement acknowledge the terms of the original
contract remain ongoing during this period, until the
variations, including new term, are agreed in writing.
3 R Bedggood is employed as a contractor through
a consulting company. As a contractor he does not
receive superannuation benefits and is not entitled
to STI’s or LTI’s. The current contract in place expires
on 10 January 2022.
(D) REMUNERATION EXPENSES FOR EXECUTIVE KMP
The following tables show details of the remuneration expense recognised for the Group’s executive key management
personnel for the current and previous financial year measured in accordance with the requirements of the accounting
standards.
2021
Short-term employee benefits
Post-
employment
benefits
Long-term
benefits
Share
based
payments
Termination
benefits
$
Total
$
Performance
related
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Employee
entitlements
$
Rights
$
Executive Director
Mr. A Caruso
500,209
353,414
15,000
75,884
27,908
126,481
- 1,098,896
43.67%
Other key management personnel
Mr. D Sykes
363,528
183,571
-
50,375
9,866
59,100
-
666,440
36.41%
Ms. V Gayton
262,044
132,340
-
37,923
7,623
43,397
-
483,327
36.36%
Mr. P Green
363,000
-
-
-
-
-
-
363,000
-%
Mr. W Price
299,660
97,622
-
40,740
-
52,252
-
490,274
30.57%
Mr. B Maff
367,793
142,862
-
21,694
-
108,918
-
641,267
39.26%
Mr. R Bedggood
164,103
-
-
-
-
-
-
164,103
-%
Total key
management
personnel
compensation
2,320,337
909,809
15,000
226,616
45,397
390,148
- 3,907,307
33.27%
Notes in relation to the 2021 table of remuneration expenses for executive KMP:
* R Bedggood was appointed as Executive General Manager Hard Rock on 12 January 2021.
* The fair value of the rights is calculated at the date of grant using a Monte Carlo pricing model and allocated to each reporting period evenly over the
period from grant date to vesting date. The value disclosed is the portion of the fair value of the rights recognised in this reporting period.
2020
Short-term employee benefits
Post-
employment
benefits
Long-term
benefits
Share
based
payments
Termination
benefits
$
Total
$
Performance
related
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Employee
entitlements
$
Rights
$
Executive Director
Mr. A Caruso
376,108
138,379
15,000
47,584
34,513
109,231
-
720,815
34.35%
Other key management personnel
Mr. D Sykes
336,981
62,818
-
36,689
24,343
47,401
-
508,232
21.69%
Ms. V Gayton
254,808
63,000
-
29,675
33,047
32,197
-
412,727
23.07%
Mr. P McCoy
177,387
-
19,500
16,797
(24,378)
-
189,306
-%
Mr. P Green
74,250
-
-
-
-
-
-
74,250
-%
Mr. W Price
312,891
76,747
-
37,015
19,969
24,319
-
470,941
21.46%
Mr. B Maff
328,702
97,113
-
21,404
22,043
10,241
-
479,503
22.39%
Total key
management
personnel
compensation
1,861,127
438,057
34,500
189,164
109,537
223,389
-
2,855,774
23.16%
Notes in relation to the 2020 table of remuneration expenses for executive KMP:
* P McCoy transferred to a non-KMP role on 30 March 2020.
* P Green was appointed as Executive General Manager QLD Mining on 30 March 2020.
* The fair value of the rights is calculated at the date of grant using a Monte Carlo pricing model and allocated to each reporting period evenly over the
period from grant date to vesting date. The value disclosed is the portion of the fair value of the rights recognised in this reporting period.
43
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
5. REMUNERATION REPORT (AUDITED) (CONTINUED)
(E) PERFORMANCE BASED REMUNERATION GRANTED & FORFEITED DURING THE YEAR
The table below shows for each KMP how much of their STI cash bonus was awarded and how much was forfeited. It
also shows the value of rights that were granted and exercised during FY 2021. The number of rights and percentages
vested/forfeited for each grant date are disclosed in Section (h) Equity instruments on pages 45 to 46.
2021
Total STI bonus
LTI Rights
Total opportunity
Awarded
Forfeited
Value granted *
Value exercised **
$
%
%
$
$
Mr. A Caruso
328,757
108
-
206,019
194,148
Mr. D Sykes
174,830
105
-
109,559
85,226
Ms. V Gayton
132,340
100
-
82,932
54,701
Mr. P Green
-
-
-
-
-
Mr. W Price
325,407
60
40
101,960
-
Mr. B Maff
176,482
108
-
178,100
-
Mr. R Bedggood
-
-
-
-
-
* The value at grant date calculated in accordance with AASB 2 Share-based Payment of options granted during the year as part of remuneration.
** The value at the exercise date of options that were granted as part of remuneration and were exercised during the year has been determined
as the intrinsic value of the options at that date.
(F) SERVICES FROM REMUNERATION CONSULTANTS
In the current year the RNC was presented with a report comparing KMP salaries across industry peers. The data was
sourced from publicly available sources. No specific recommendations were sought on director or KMP remuneration
due to the Board’s view that market circumstances were too fluid to allow historical information to provide a useful guide
to appropriate remuneration levels.
$7,500 in external fees were paid for remuneration research reports during the 2021 financial year.
(G) NON-EXECUTIVE DIRECTOR ARRANGEMENTS
Non-executive Directors receive a board fee and fees for chairing or participating on board committees, see table below.
They do not receive performance-based pay or retirement allowances. The fees are inclusive of superannuation. The
chairman does not receive additional fees for participating in or chairing committees.
Fees are reviewed annually by the board taking into account comparable roles and market data provided by the board’s
independent remuneration adviser.
Board fees
$
Chair
109,500
Other non-executive directors
65,700
Committee fees
Audit
Chair
5,475
Member
-
Remuneration and nomination
Chair
5,475
Member
-
All non-executive directors enter into a
service agreement with the Company in the
form of a letter of appointment. The letter
summarises the board policies and terms,
including remuneration, relevant to the office
of Director.
The actual remuneration paid to Non-
executive Directors during the year will vary
from the contracted amounts depending on
the number of payroll weeks in the financial
year.
The following table shows details of the remuneration expense recognised for the Group’s non-executive directors for
the current and previous financial year measured in accordance with the requirements of the accounting standards.
2021
Short-term employee benefits
Post-employment
benefits
Total
$
Board fees
$
Audit committee
fees
$
Remuneration
and nomination
committee fees
$
Superannuation
$
Non-executive Directors
Mr. C Bloomfield
100,000
-
-
9,509
109,509
Mr. A Watts
60,000
-
-
5,706
65,706
Mr. G Meena
60,000
-
5,000
6,181
71,181
Ms. J Whitcombe
60,000
5,000
-
6,181
71,181
Total non-executive directors
280,000
5,000
5,000
27,577
317,577
2020
Short-term employee benefits
Post-employment
benefits
Total
$
Board fees
$
Audit committee
fees
$
Remuneration
and nomination
committee fees
$
Superannuation
$
Non-executive Directors
Mr. C Bloomfield
82,923
-
-
7,878
90,801
Mr. A Watts
46,154
-
-
4,385
50,539
Mr. G Meena
46,154
-
5,096
4,869
56,119
Ms. J Whitcombe
46,154
5,096
-
4,869
56,119
Total non-executive directors
221,385
5,096
5,096
22,001
253,578
(H) EQUITY INSTRUMENTS
RIGHTS
The terms and conditions of each grant of rights affecting remuneration in the current or a future reporting period are
as follows:
Grant date
Vesting and
exercise date
Expiry date
Exercise
price
Value per option at
grant date
Performance
achieved
% Vested
Tranche A
24/11/20
1/10/23
1/10/23
-
0.4945
To be determined
-
21/11/19
1/10/22
1/10/22
-
0.7415
To be determined
-
21/11/18
1/10/21
1/10/21
-
0.8077
To be determined
-
21/11/17
1/10/20
1/10/20
-
0.5225
>75th percentile
100
Tranche B
24/11/20
1/10/23
1/10/23
-
0.4784
To be determined
-
21/11/19
1/10/22
1/10/22
-
0.7100
To be determined
-
21/11/18
1/10/21
1/10/21
-
0.7727
To be determined
-
21/11/17
1/10/20
1/10/20
-
0.4695
71st percentile
94
Granted in relation to STI
22/1/21
1/10/21
1/10/21
-
0.7030
To be determined
-
The number of performance rights provided as remuneration to key management personnel is shown in the table below.
All rights refer to rights to acquire one ordinary share of Mastermyne Group Limited for no consideration which upon
exercise are exchangeable on a one for one basis.
45
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
5. REMUNERATION REPORT (AUDITED) (CONTINUED)
(H) EQUITY INSTRUMENTS (CONTINUED)
The following table shows a reconciliation of rights held by each KMP from the beginning through to the end of FY2021.
There were no vested rights as at 1 July 2020.
2021
Grant Date
Balance at
the start
of the year
Granted as
compensation
Vested
Exercised
Forfeited
Balance at the end of the
year
Name
Unvested
Number
%
Number
%
Vested and
exercisable
Unvested
Tranche A
Mr. A Caruso
24/11/20
-
211,758
-
-
-
-
-
-
211,758
Mr. A Caruso
21/11/19
73,947
-
-
-
-
-
-
-
73,947
Mr. A Caruso
21/11/18
58,980
-
-
-
-
-
-
-
58,980
Mr. A Caruso
21/11/17
128,369
-
128,369
100
(128,369)
-
-
-
-
Mr. D Sykes
24/11/20
-
112,611
-
-
-
-
-
-
112,611
Mr. D Sykes
21/11/19
31,924
-
-
-
-
-
-
-
31,924
Mr. D Sykes
21/11/18
25,168
-
-
-
-
-
-
-
25,168
Mr. D Sykes
21/11/17
56,351
-
52,834
100
(56,351)
-
-
-
-
Ms. V Gayton
24/11/20
-
85,243
-
-
-
-
-
-
85,243
Ms. V Gayton
21/11/19
24,181
-
-
-
-
-
-
-
24,181
Ms. V Gayton
21/11/18
17,591
-
-
-
-
-
-
-
17,591
Ms. V Gayton
21/11/17
36,168
-
36,168
100
(36,168)
-
-
-
-
Mr. W Price
24/11/20
-
104,800
-
-
-
-
-
-
104,800
Mr. W Price
21/11/19
31,411
-
-
-
-
-
-
-
31,411
Mr. W Price
21/11/18
24,818
-
-
-
-
-
-
-
24,818
Mr. B Maff
24/11/20
-
111,754
-
-
-
-
-
-
111,754
Mr. B Maff
21/11/19
30,398
-
-
-
-
-
-
-
30,398
Tranche B
Mr. A Caruso
24/11/20
-
211,758
-
-
-
-
-
-
211,758
Mr. A Caruso
21/11/19
73,947
-
-
-
-
-
-
-
73,947
Mr. A Caruso
21/11/18
58,980
-
-
-
-
-
-
-
58,980
Mr. A Caruso
21/11/17
128,369
-
120,357
94
(120,357)
(8,012)
6
-
-
Mr. D Sykes
24/11/20
-
112,611
-
-
-
-
-
-
112,611
Mr. D Sykes
21/11/19
31,294
-
-
-
-
-
-
-
31,294
Mr. D Sykes
21/11/18
25,168
-
-
-
-
-
-
-
25,168
Mr. D Sykes
21/11/17
56,351
-
52,934
94
(52,834)
(3,517)
6
-
-
Ms. V Gayton
24/11/20
-
85,243
-
-
-
-
-
-
85,243
Ms. V Gayton
21/11/19
24,181
-
-
-
-
-
-
-
24,181
Ms. V Gayton
21/11/18
17,591
-
-
-
-
-
-
-
17,591
Ms. V Gayton
21/11/17
36,168
-
33,910
94
(33,910)
(2,258)
6
-
-
Mr. W Price
24/11/20
-
104,800
-
-
-
-
-
-
104,800
Mr. W Price
21/11/19
31,411
-
-
-
-
-
-
-
31,411
Mr. W Price
21/11/18
24,818
-
-
-
-
-
-
-
24,818
Mr. B Maff
24/11/20
-
111,754
-
-
-
-
-
-
111,754
Mr. B Maff
21/11/19
30,398
-
-
-
-
-
-
-
30,398
Granted as part of STI
Mr. B Maff
24/11/20
-
98,684
-
-
-
-
-
-
98,684
(I) INDIVIDUAL DIRECTORS AND EXECUTIVES
COMPENSATION DISCLOSURES
Apart from the details disclosed in this note, no director has
entered into a material contract with the Group since the
end of the previous financial year and there were no material
contracts involving directors’ interests existing at year-end.
LOANS GIVEN TO KEY MANAGEMENT PERSONNEL
No loans were made, guaranteed or secured by the
Company to key management personnel during the year.
OTHER TRANSACTIONS WITH KEY MANAGEMENT
PERSONNEL
A number of key management persons, or their related
parties, hold positions in other entities that result in them
having control or significant influence over the financial or
operating policies of those entities.
A number of these entities transaction with the Group
in the reporting period. The terms and conditions of the
transaction with key management persons and their
related parties were no more favourable then those
available, or which might reasonably be expected to be
available, on similar transactions to non-key management
persons related entities on an arm’s length basis. These
include the following:
3 The Group rents the premises at 45 River Street,
Mackay which is owned by Andrew Watts through his
company, Watty Pty Ltd. Amounts paid for rent are at
arm’s length and are due and payable under normal
payment terms.
3 The Group rents the premises at 56A Grosvenor Drive,
Moranbah which is owned by Andrew Watts through
his company, Watty Pty Ltd. Amounts paid for rent are
at arm’s length and are due and payable under normal
payment terms.
3 The Group paid Treatwater & Plumbing Pty Ltd, which
is owned by Anthony Caruso, fees for general plumbing
services during the year. Fees paid are at arm’s length
and due and payable under normal payments terms.
Aggregate amounts of each of the above types of
other transactions with key management personnel of
Mastermyne Group Limited:
2021
2020
$
$
Amounts recognised as expense
Rent of 45 River Street
194,453
189,739
Rent of 56A GrosvenorDrive
23,808
23,464
General plumbing repairs
2,367
116
220,628
213,319
From time to time key management personnel and
directors of the Group, or their related entities, may
purchase goods or services from the Group. These
purchases are on the same terms and conditions as those
entered into by other Group employees or customers and
are trivial or domestic in nature.
AMOUNTS RECOGNISED AS ASSETS AND LIABILITIES
At the end of the reporting period there were no amounts
recognised as assets or liabilities in relation to the above
transactions.
This concludes the remuneration report, which has been
audited.
6. PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial
year were to provide underground contracting services
and industrial products and services in the coalfields
and supporting industries of Queensland and New South
Wales.
.
7. SIGNIFICANT CHANGES IN THE STATE
OF AFFAIRS
During the financial year the Group acquired the
remaining 33% of the issued shares of MyneSight Pty Ltd
making it a wholly-owned subsidiary.
In addition, the Group was awarded their first Mine
Operations contract.
Other than these items, there were no other significant
changes in the state of affairs.
SHAREHOLDINGS
The movements during the reporting period in the number of ordinary shares in Mastermyne Group Limited held
directly, indirectly or beneficially by each key management person including their related parties, is as follows:
2021
Name
Balance at the start of
year
Received during the year
on exercise of rights
Other changes during the
year
Balance at the end of the
year
Mr. C Bloomfield
1,100,000
-
17,629
1,117,629
Mr. A Watts
12,262,245
-
-
12,262,245
Mr. G Meena
100,000
-
-
100,000
Ms. J Whitcombe
94,000
-
-
94,000
Mr. A Caruso
2,132,979
248,726
9,850
2,391,555
Mr. D Sykes
175,626
109,185
-
284,811
Ms. V Gayton
89,200
70,078
-
159,278
Mr. B Maff
89,024
-
-
89,024
Mr. W Price
-
-
11,173
11,173
47
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
8. ENVIRONMENTAL REGULATION
The Group is subject to various environmental regulations
under both Commonwealth and State legislation in
relation to its involvement in the operations of mines.
The Board believes that the Group has adequate systems
in place for the management of its environmental
requirements and is not aware of any breach of those
environmental requirements as they apply to the Group.
9. DIVIDENDS - MASTERMYNE GROUP
LIMITED
Dividends paid to members during the financial year were
as follows:
ORDINARY SHARES
2021
2020
$’000
$’000
Final dividend for the year ended 30 June
2020 of 4 cents (2019 - 2 cents) per fully paid
share
4,252
2,110
No Special Dividend was paid for the year
ended 30 June 2020 (2019 - 2 cents per fully
paid share
-
2,110
Interim dividend for the year ended 30 June
2021 of 0.75 cents (2020 - 2 cents) per fully
paid share
805
2,126
Total dividends paid
5,057
6,346
Distributions to non-controlling interest
182
-
DIVIDENDS NOT RECOGNISED AT THE END OF THE
REPORTING PERIOD
2021
2020
$’000
$’000
In addition to th above dividends, since year
end the Directors have recommended the
payment of a final dividend of 2.25 cents per
fully paid ordinary share (2020 - 4 cents)
2,417
4,252
10. EVENTS SUBSEQUENT TO
REPORTING DATE
On 28 July 2021, 1,106,600 shares were issued to the
Vendors of Wilson Mining Services Pty Ltd in settlement
of the outstanding purchase consideration for the prior
year business combination discussed in Note 21. An
additional 100,394 shares were issued as compensation
for the dividends paid while the shares remained
unissued.
Other than the matter discussed above and the dividend
declared subsequent to balance date as disclosed in the
previous section, no matter or circumstance has arisen
since 30 June 2021 that has significantly affected the
Group’s operations, results or state of affairs, or may do
so in future years.
11. LIKELY DEVELOPMENTS
Despite the impacts of global COVID restrictions the
outlook for metallurgical coal continues to be supported
by strong fundamentals. The demand for Australian
seaborne metallurgical coal is expected to remain robust
in the medium to long term. The COVID restrictions
globally have weighed on short term coal pricing, but
metallurgical and thermal coal pricing have recovered
substantially over the last 6 months. The Sector continues
to utilise contracting companies for their operational
needs in order to maintain flexible operations and
cost control with their organisations. The Company
has progressed its first whole of mine project and is
progressing with several further opportunities with the
potential to provide a material and resilient additional
revenue stream for the Company.
Further information about likely developments in the
operations of the Group and the expected results
of those operations in future financial years has not
been included in this report because disclosure of the
information would be likely to result in unreasonable
prejudice to the Group.
12. DIRECTORS’ INTERESTS
The relevant interest of each Director in the shares,
debentures, interests in registered schemes and rights or
options over such instruments issued by the companies
within the Group, as notified by the Directors to the
Australian Securities Exchange in accordance with
S205G(1) of the Corporations Act 2001, at the date of this
report is as follows:
Mastermyne Group Limited
Ordinary Shares
Rights over
ordinary shares
Colin Bloomfield
1,100,000
-
Gabe Meena
100,000
-
Julie Whitcombe
94,000
-
Andrew Watts
12,262,245
-
Tony Caruso
2,132,979
522,592
13. SHARES UNDER OPTION
UNISSUED ORDINARY SHARES
At the date of this report there were no unissued ordinary
shares of the Company under option.
14. INSURANCE OF OFFICERS AND
INDEMNITIES
INDEMNITY
The Company has agreed to indemnify the following
current Directors of the Company, Colin Bloomfield,
Tony Caruso, Andrew Watts, Gabe Meena and Julie
Whitcombe for all liabilities to another person (other than
the Company or a related body corporate) that may arise
from their position within the Company and its controlled
entities, except where liability arises out of conduct
involving a lack of good faith. The agreement stipulates
that the Company will meet the full amount of any such
liabilities including costs and expenses.
The Company has not made a relevant agreement, or
indemnified against a liability, for any person who is or
has been an auditor of the Company.
INSURANCE OF OFFICERS
During the financial year, the entity has paid premiums
on behalf of the Company in respect of Directors’ and
Officers’ liability and legal expenses insurance contracts
for the year ended 30 June 2021 and, since the end of
the financial year, the entity has paid or agreed to pay
on behalf of the Company, premiums in respect of such
insurance contracts for the year ended 30 June 2022.
Such insurance contracts insure against certain liability
(subject to specific exclusions) persons who are or have
been Directors or executive officers of the Company.
The Directors have not included details of the nature of
the liabilities covered or the amount of the premiums
paid in respect of the Directors’ and Officers’ liability and
legal expenses insurance contracts, as such disclosure is
prohibited under the terms of the contracts.
15. NON-AUDIT SERVICES
During the year, Pitcher Partners, the Company’s auditor,
has performed certain other services in addition to their
statutory duties.
The board of Directors has considered the non-audit
services provided during the year by the auditor and, in
accordance with written advice provided by resolution of
the Audit & Risk Committee, is satisfied that the provision
of those non-audit services during the year by the auditor
is compatible with, and did not compromise, the auditor
independence requirements of the Corporations Act
2001 for the following reasons:
3 all non-audit services have been reviewed by the
audit committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
3 none of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants (including
Independence Standards).
Details of the amounts paid or payable to the auditor of
the Company, Pitcher Partners, and its related practices
for audit and non-audit services provided during the year
are set out below.
2021
2020
$
$
Audit services
Pitcher Partners
Audit and review of financial
statements
147,500
110,000
Total remuneration for audit
services
147,500
110,000
Taxation services
Pitcher Partners
Tax compliance services
16,500
-
Total remuneration for taxation
services
16,500
-
16. PROCEEDINGS ON BEHALF OF THE
COMPANY
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in
any proceedings to which the Company is a party, for the
purpose of taking responsibility on behalf of the Group
for all or part of those proceedings. The Group was not a
part to any such proceedings during the year.
17. AUDITOR’S INDEPENDENCE
DECLARATION
The Lead auditor’s independence declaration is set out on
page 50 and forms part of the Directors’ report for the
financial year ended 30 June 2021.
.
18. ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/191, relating to the ‘rounding off’ of
amounts in the financial report and directors’ report.
Amounts in the financial report and the directors’ report
have been rounded off in accordance with the instrument
to the nearest thousand dollars, unless otherwise stated.
This report is made in accordance with a resolution of
Directors.
Mr. C Bloomfield
Director
Brisbane.
17/08/2021
49
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
Level 38, 345 Queen Street
Brisbane, QLD 4000
Postal address
GPO Box 1144
Brisbane, QLD 4001
p. +61 7 3222 8444
Auditor’s Independence Declaration
In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and
belief there have been:
(i)
No contraventions of the auditor independence requirements of the Corporations Act 2001;
and
(ii)
No contraventions of APES 110 Code of Ethics for Professional Accountants (including
Independence Standards).
This declaration is in respect of Mastermyne Group Limited and the entities it controlled during the
year.
PITCHER PARTNERS
J. J. EVANS
Partner
Brisbane, Queensland
17 August 2021
Brisbane Sydney Newcastle Melbourne Adelaide Perth
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
pitcher.com.au
NIGEL FISCHER
PETER CAMENZULI
KYLIE LAMPRECHT
BRETT HEADRICK
COLE WILKINSON
JEREMY JONES
JAMES FIELD
ROBYN COOPER
CHERYL MASON
MURRAY GRAHAM
MARK NICHOLSON
JASON EVANS
NORMAN THURECHT WARWICK FACE
SIMON CHUN
TOM SPLATT
DANIEL COLWELL
FELICITY CRIMSTON KIERAN WALLIS
ANDREW ROBIN
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R AT I O N
C O N S O L I D AT E D S TAT E M E N T
O F C O M P R E H E N S I V E I N C O M E
FOR THE YEAR ENDED 30 JUNE 2021
Notes
2021
2020
$’000
$’000
Revenue from contracts with customers
3
233,067
292,670
Other income
4
798
1,345
Contract disbursements
(30,440)
(37,305)
Personnel expenses
5
(172,231)
(220,030)
Office expenses
(7,134)
(6,495)
Depreciation and amortisation expense
5
(12,547)
(11,086)
Other expenses
5
(1,783)
(1,563)
Results from operating activities
9,730
17,536
Finance income
20
44
Finance expenses
(1,071)
(798)
Net finance expense
6
(1,051)
(754)
Profit before income tax
8,679
16,782
Income tax expense
7
(2,804)
(5,122)
Total comprehensive income for the period
5,875
11,660
Profit is attributable to:
Owners of Mastermyne Group Limited
5,864
11,557
Non-controlling interests
11
103
5,875
11,660
Total comprehensive income for the period
Owners of Mastermyne Group Limited
5,864
11,557
Non-controlling interests
11
103
5,875
11,660
Notes
2021
2020
Cents
Cents
Earnings per share for profit attributable to the ordinary equity holders of the Company:
Basic earnings per share
17
5.5
11.0
Diluted earnings per share
17
5.4
10.9
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
51
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
C O N S O L I D AT E D B A L A N C E S H E E T
C O N S O L I D AT E D S TAT E M E N T
O F C H A N G E S I N E Q U I T Y
AS AT 30 JUNE 2021
FOR THE YEAR ENDED 30 JUNE 2021
Notes
2021
2020
$’000
$’000
Assets
Current assets
Cash and cash equivalents
8
24,389
25,359
Trade and other receivables
9
40,399
49,092
Contract assets
3(b)
1,242
-
Inventories
10
6,415
6,262
Total current assets
72,445
80,713
Property, plant and equipment
11
22,949
22,421
Right-of-use assets
15
14,043
14,462
Intangible assets
12
12,267
12,221
Deferred tax assets
7(d)
7,526
7,879
Total non-current assets
56,785
56,983
Total assets
129,230
137,696
Liabilities
Current Liabilities
Trade and other payables
13
24,405
34,136
Contract liabilities
3(b)
212
-
Lease liabilities
15
4,681
4,918
Current tax liabilities
7(c)
1,039
1,593
Employee benefit obligations
14
11,882
9,987
Other current liabilities
16
1,944
-
Total current liabilities
44,163
50,634
Non-current liabilities
Lease liabilities
15
7,876
9,124
Employee benefit obligations
14
98
169
Other non-current liabilities
16
1,911
3,855
Total non-current liabilities
9,885
13,148
Total liabilities
54,048
63,782
Net assets
75,182
73,914
Equity
Share capital
19
64,295
61,003
Other equity
19
1,153
4,033
Other reserves
19
(23,639)
(23,859)
Retained earnings
33,373
32,212
Equity attributable to owners of Mastermyne Group
Limited
75,182
73,389
Non-controlling interests
-
525
Total equity
75,182
73,914
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Attributable to owners of Mastermyne Group Limited
Notes
Share
capital
$’000
Retained
earnings
$’000
Other
equity
$’000
Share-
based
payments
$’000
Common
Control
Reserve
$’000
Total
$’000
Non-
controlling
interests
$’000
Total
equity
$’000
Balance at 1 July 2019
61,003
26,878
-
277
(24,237)
63,921
422
64,343
Profit for the period
-
11,557
-
-
-
11,557
103
11,660
Other comprehensive
income
-
-
Total comprehensive income
for the period
-
11,557
-
-
-
11,557
103
11,660
Transactions with owners in their capacity as owners:
Issue of ordinary shares as
consideration for Wilson
Mining acquisition
-
-
3,799
-
-
3,799
-
3,799
Payment of Dividends
18
(6,346)
-
-
-
(6,346)
-
(6,346)
Share-based payment
transactions
-
-
-
224
-
224
-
224
Share options exercised
-
123
-
(123)
-
-
-
-
Shares issued or to be issued
on dividends reinvested
-
-
234
-
-
234
-
234
Total contributions by and
distributions to owners
-
(6,223)
4,033
101
-
(2,089)
-
(2,089)
Balance at 30 June 2020
61,003
32,212
4,033
378
(24,237)
73,389
525
73,914
Balance at 1 July 2020
61,003
32,212
4,033
378
(24,237)
73,389
525
73,914
Profit for the period
-
5,864
-
-
-
5,864
11
5,875
Other comprehensive
income
-
-
-
-
-
-
Total comprehensive income
for the period
-
5,864
-
-
-
5,864
11
5,875
Transactions with owners in their capacity as owners:
Issue of ordinary shares as
consideration for Wilson
Mining acquisition
21
2,779
156
(2,935)
-
-
-
-
Transactions with non-
controlling interests
22
-
(23)
-
-
-
(23)
(354)
(377)
Payment of Dividends
18
-
(5,057)
-
-
-
(5,057)
-
(5,057)
Distribution to non-
controlling interest
18
-
-
-
-
-
-
(182)
(182)
Share-based payment
transactions
-
-
-
441
-
441
-
441
Share options exercised
-
221
-
(221)
-
-
-
-
Shares issued or to be issued
on dividends reinvested
513
-
55
-
-
568
-
568
Total contributions by and
distributions to owners
3,292
(4,703)
(2,880)
220
-
(4,071)
(536)
(4,607)
Balance at 30 June 2021
64,295
33,373
1,153
598
(24,237)
75,182
-
75,182
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
53
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
2021
2020
Notes
$'000
$'000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
264,379
315,613
Payments to suppliers and employees (inclusive of GST)
(242,811)
(278,557)
21,568
37,056
Interest received
20
44
Interest paid
(1,071)
(798)
Income taxes paid
(3,005)
(5,471)
Receipts of government grants and subsidies
777
-
Net cash inflow from operating activities
8
18,289
30,831
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired
-
(3,799)
Payments for property, plant and equipment
(7,286)
(8,285)
Initial direct costs on right-of-use assets
(295)
(485)
Payment of software development costs
(421)
(281)
Proceeds from sale of property, plant and equipment
88
129
Payment for purchase of non-controlling interest
(377)
-
Net cash (outflow) from investing activities
(8,291)
(12,721)
Cash flows from financing activities
Principal elements of finance lease payments
(6,297)
(3,062)
Dividends paid to company's shareholders
18
(4,489)
(6,112)
Dividends paid to non-controlling interests in subsidiaries
(182)
-
Net cash (outflow) from financing activities
(10,968)
(9,174)
Net (decrease) increase in cash and cash equivalents
(970)
8,936
Cash and cash equivalents at the beginning of the financial year
25,359
16,423
Cash and cash equivalents at end of year
8
24,389
25,359
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
C O N S O L I D AT E D S TAT E M E N T
O F C A S H F L O W S
FOR THE YEAR ENDED 30 JUNE 2021
N O T E S T O T H E F I N A N C I A L S TAT E M E N T S
30 JUNE 2021
1. BASIS OF PREPARATION
The financial statements are for the Group consisting
of Mastermyne Group Limited (‘the Company’) and its
controlled entities (together referred to as the ‘Group’
and individually as ‘Group entities’). The principal
accounting policies adopted in the preparation of
this annual report are set out in the following notes
to the financial statements. These policies have been
applied consistently to all periods presented in these
consolidated financial statements, and have been applied
consistently by the Group entities.
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board and the Corporations
Act 2001. These financial statements are presented in
Australian dollars, which is the Company’s functional
currency and the functional currency of each entity in the
Group. These financial statements have been prepared
under the historical cost convention. Mastermyne Group
Limited is a for-profit entity for the purpose of preparing
the financial statements. The Group is primarily involved
in providing contracting services to the underground
long wall mining operations and industrial products and
services in the coalfields and supporting industries of
Queensland and New South Wales.
STATEMENT OF COMPLIANCE
The consolidated financial statements of the Mastermyne
Group Limited Group also comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
NEW AND AMENDED STANDARDS ADOPTED BY
THE GROUP
The Group has adopted all of the new and revised
accounting standards and interpretations issued by the
Australian Accounting Standards Board that are relevant
to our operations and effective for an annual reporting
period commencing 1 July 2020.
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not been
early adopted. The following Accounting Standards and
Interpretations are most relevant to the consolidated
entity:
Conceptual Framework for Financial Reporting
(Conceptual Framework)
The consolidated entity has adopted the revised
Conceptual Framework from 1 July 2020. The Conceptual
Framework contains new definition and recognition
criteria as well as new guidance on measurement that
affects several Accounting Standards, but it has not had
a material impact on the consolidated entity’s financial
statements.
SIGNIFICANT ESTIMATES AND JUDGEMENTS
The preparation of the financial statements requires
the use of certain critical accounting estimates which,
by definition, will seldom equal the actual result.
Management also needs to exercise judgement in
applying the Group’s accounting policies. The areas
involving significant estimates, assumptions or
judgements that have a significant risk of causing a
material adjustment to the carrying amounts of assets
and liabilities within the next financial year are:
3 Note 7(d): Recognition of deferred tax asset for carried-
forward tax losses;
3 Note 12: Key assumptions used in value-in-use
calculations;
3 Note 15: Determining the lease term;
3 Note 15: Determining the incremental borrowing rate;
3 Note 16: Contingent consideration; and
3 Note 25: Measurement of share-based payments.
Estimates and judgements are continually evaluated.
They are based on historical experience and other
factors, including expectations of future events that may
have a financial impact on the entity and that are believed
to be reasonable under the circumstances.
GOODS AND SERVICES TAX (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is
recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the taxation
authority is included with other receivables or payables in
the consolidated balance sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities which are recoverable from, or
payable to the taxation authority, are presented as
operating cash flows.
55
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
1. BASIS OF PREPARATION (CONTINUED)
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/191, relating to the ‘rounding off’ of
amounts in the financial statements. Amounts in the
financial statements have been rounded off in accordance
with the instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
CORPORATE INFORMATION
The financial statements were authorised for issue by the
Directors on 17/08/2021. The Directors have the power to
amend and reissue the financial statements.
Mastermyne Group Limited is a Company limited by
shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Riverside Plaza
45 River Street
Mackay QLD 4740
2. SEGMENT INFORMATION
An operating segment is a component of the Group
that engages in business activities from which it may
earn revenues and incur expenses, including revenues
and expenses that relate to transactions with any of the
Group’s other components.
The Group’s operating segments are based on the
internal reports that are reviewed and used by the Board
of Directors (who are identified as the Chief Operating
Decision Makers (‘CODM’) in assessing performance and
in determining the allocation of resources.
During the current reporting period, the Directors
reassessed the reportable segments and are of the
opinion that all operating segments meet the criteria
for aggregation into a single reportable segment as the
CODM reviews results, assesses performance and allocate
resources at a Group level, and the operating segments
have similar economic characteristics and customers.
As the information reported to the CODM is the
consolidated results of the Group, the segment results
for the year ended 30 June 2020 and 30 June 2021 are
shown throughout these financial statements and are not
duplicated here.
For information regarding major customers, refer to Note
20(b). The Group operates in one geographical segment,
namely Australia.
For information regarding product and service sales,
refer to Note 3 Revenue from contracts with customers.
3. REVENUE FROM CONTRACTS WITH
CUSTOMERS
(A) DISAGGREGATION OF REVENUE FROM
CONTRACTS WITH CUSTOMERS
The Group derives revenue from contracts with
customers from the transfer of goods and services over
time and at a point in time as follows:
2021
2020
$'000
$'000
Contracting revenue
213,877
271,233
Sale of goods
4,719
5,498
Machinery hire
14,471
15,939
233,067
292,670
(B) ASSETS AND LIABILITIES RELATED TO
CONTRACTS WITH CUSTOMERS
2021
2020
$'000
$'000
Current contract assets relating to mine
operation contracts
1,242
-
Total contract assets
1,242
-
Contract liability - income received in
advance
(212)
-
(I) SIGNIFICANT CHANGES IN CONTRACT ASSETS AND
LIABILITES
Mastermyne Group Limited was awarded their first mine
operation contract in May 2021. The contract asset at
the end of the year represents capitalised costs to fulfil a
contract.
(II) UNSATISFIED LONG-TERM CONTRACTS
The following table shows unsatisfied performance
obligations resulting from fixed-price long-term Whole-
of-Mine contracts:
2021
2020
$'000
$'000
Aggregate amount of the contract price
allocated to long-term mine operation
contracts that are partially or fully
unsatisfied as at 30 June.
656,978
-
The remaining contract price will be recognised over time
over the remaining term of the underlying contract using
the input or output method depending on the type of
goods or services and relevant performance obligation.
ACCOUNTING POLICY
The company derives revenue from contracting, sale
of goods and machinery hire. Revenue is recognised
as, or when, goods or services are transferred to the
customer, and is measured at an amount that reflects
the consideration to which the company expects to be
entitled in exchange for the goods or services.
CONSIDERATION INCLUDED IN THE MEASUREMENT
OF REVENUE
The consideration to be received from customers may
include fixed amounts, variable amounts, or both. Where
the contract includes a right to variable consideration, the
Group estimates the amount of variable consideration
using the most likely amount approach on a contract-
by-contract basis. Variable consideration is included in
the measurement of revenue only to the extent that it is
highly probable, based on historical experience, that a
significant reversal of the cumulative amount recognised
will not occur when the uncertainty associated with the
variability is subsequently resolved.
Revenue is recognised for the major business activities
as follows:
CONTRACTING
Contracting revenue includes new mine development,
mine operation and all mine support services such as
training, roadway construction, ventilation, conveyors,
longwall relocations and application of polymeric strata
support. Contracting revenue is recognised over time,
and dependent on the type of contract, is measured using
either the input or output method.
For schedule of rates contracts, where a rate is
prescribed for each of the activities performed, revenue
is recognised in the amount to which Mastermyne Group
Limited has a right to invoice.
For fixed-price contracts, either the input or output
method is used to recognise revenue depending the
terms of the underlying contract. Where the output
method is determined to be most appropriate, revenue
is recognised on the basis of direct measurement of the
value of goods or services transferred to the customer.
Where the input method is determined to be most
appropriate, revenue is recognised on the basis of
resources consumed, costs incurred or machines hours.
When the entity’s performance does not create an asset
with an alternative use to the entity, and the entity has an
enforceable right to payment for performance completed
to date, revenue is recognised over-time by reference
to the stage of completion of the contract activity and
measurement is based on the proportion of contract
costs incurred up to the end of the reporting period
relative to the estimated total contract costs.
Contracts can contain multiple performance obligations.
Where the contracts include multiple performance
obligations, the transaction price will be allocated to each
performance obligation based on the stand-alone selling
prices. Where these are not directly observable, they are
estimated based on expected cost plus margin.
Estimates of revenues, costs or extent of progress toward
completion are revised if circumstances change. Any
resulting increases or decreases in estimated revenues or
costs are reflected in profit or loss in the period in which
the circumstances that give rise to the revision become
known by management.
In the case of fixed-price contracts, the customer pays
the fixed amount based on a production schedule. If
the services rendered by Mastermyne Group Limited
exceed the payment, a contract asset is recognised. If
the payments exceed the services rendered, a contract
liability is recognised.
SALE OF GOODS
Revenue from the sale of goods is recognised at a point in
time when the Company transfers control of goods to a
customer for the amount to which the Company expects
to be entitled.
MACHINERY HIRE
Machinery hire revenue is recognised over time using the
input method.
RECEIVABLES FROM CONTRACTS WITH CUSTOMERS
A receivable from a contract with a customer represents
the company’s unconditional right to consideration
arising from the transfer of goods or services to the
customer (i.e., only the passage of time is required
before payment of the consideration is due). Subsequent
to initial recognition, receivables from contracts with
customers are measured at amortised cost and are
tested for impairment. Receivables from contracts with
customers include trade and other receivables and
unbilled revenue at year end.
57
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
4. OTHER INCOME
2021
2020
$'000
$'000
Administration Income
21
795
Contractual settlement
-
550
Government grants and subsidiaries
777
-
798
1,345
ACCOUNTING POLICY
GOVERNMENT GRANTS
Government grants relating to costs are deferred and
recognised in profit or loss over the period necessary
to match them with the costs that they are intended to
compensate.
5. EXPENSES
Notes
2021
2020
$’000
$’000
Personnel expenses
Wages and salaries
151,598
191,670
Other associated personnel
expenses
10,990
16,129
Contributions to defined
contribution superannuation
funds
9,202
12,007
Equity-settled share based
payment transactions
441
224
172,231
220,030
Depreciation and amortisation
Depreciation
11, 15
12,172
10,794
Amortisation
12
375
292
12,547
11,086
Other expenses
Business development costs
139
122
Insurance
1,560
1,375
Impairment losses arising
from contracts with
customers
46
-
Loss on sale of property, plant
and equipment
23
66
Royalty expense
15
-
1,783
1,563
6. FINANCE INCOME AND COSTS
2021
2020
$'000
$'000
Interest income from financial
instruments measured using the
effective interest method
(20)
(44)
Finance income
(20)
(44)
Interest and finance charges paid/
payable for lease liabilities and financial
liabilities not at fair value through
profit or loss
1071
798
Finance Expense
1,071
798
Net finance costs recognised in profit
or loss
1,051
754
ACCOUNTING POLICY
INTEREST INCOME
Interest income is calculated by applying the effective
interest rate to the gross carrying amount of a financial
assets except for financial assets that subsequently
become credit-impaired. For credit-impaired financial
assets the effective interest rate is applied to the net
carrying amount of the financial asset (after deduction of
the loss allowance).
Interest income is presented as finance income where
it is earned from financial assets that are held for cash
management purposes. Any other interest income is
included in other income.
FINANCE EXPENSES
Finance expenses comprise interest expense on
borrowings, interest in respect of lease liabilities and
unwinding of the discount on provisions. Borrowing
costs that are not directly attributable to the acquisition,
construction or production of a qualifying asset are
recognised in profit or loss using the effective interest
method.
7. INCOME TAX
(A) INCOME TAX EXPENSE
The major components of income tax expense follow:
2021
2020
$'000
$'000
Current income tax expense
2,515
4,818
Adjustment for prior period
(2)
(47)
Total current tax expense
2,513
4,771
Deferred income tax relating to the
origination and reversal of temporary
differences
291
351
Income tax expense
2,804
5,122
(B) NUMERICAL RECONCILIATION OF INCOME TAX
EXPENSE TO PRIMA FACIE TAX PAYABLE
A reconciliation between income tax expense and the
product of accounting profit before income tax multiplied
by the Company’s applicable income tax rate is as follows:
2021
2020
$'000
$'000
Profit from operations before
income tax expense
8,679
16,782
Tax at the Australian tax rate of
30.0% (2020 - 30.0%)
2,604
5,035
Tax effect of amounts which
are not deductible (taxable) in
calculating taxable income:
Other non-deductible expenses
202
134
Non-assessable income
202
134
2,806
5,169
Under/(over) provision of
previous year
(2)
(47)
Income tax expense
2,804
5,122
(C) CURRENT TAX ASSETS AND LIABILITIES
The current tax liability for the Group of $1,039,000
(2020: $1,593,000) represents the amount of income
taxes payable, in respect of current and prior periods.
(D) DEFERRED TAX BALANCES
Deferred income tax assets and liabilities are attributable
to the following temporary differences::
2021
2020
$'000
$'000
Tax losses
5,687
6,289
Employee benefits
3,637
3,097
Accruals
489
385
Capital raising and business
acquisition costs
23
44
Lease liabilities
2,289
3,040
Property, Plant and Equipment
-
251
Total deferred tax assets
12,125
13,106
Property, Plant and Equipment
(127)
-
Receivables
-
(87)
Intangible Assets
(395)
(468)
Right-of-use assets
(2,221)
(2,997)
Unbilled Revenue
(1,856)
(1,675)
Total deferred tax liabilities
(4,599)
(5,227)
Net deferred tax assets
7,526
7,879
(D) DEFERRED TAX BALANCES (CONTINUED)
Movements in deferred tax assets and liabilities are as follows:
Movements
Tax losses
$’000
Employee
benefits
$’000
Accruals
$’000
Capital raising
and business
acquisition
costs
$’000
Lease liabilities
$’000
Property, plant
and equipment
$’000
Receivables
$’000
Intangible
assets
$’000
Right-of-use
assets
$’000
Other
$’000
Unbilled
revenue
$’000
Total
$’000
Balance at 1
July 2019
7,065
2,568
332
62
-
(44)
(100)
(10)
-
-
(1,747)
8,126
(Charged)/
credited
- to profit or
loss
(1,308)
92
53
(22)
3,040
493
13
49
(2,997)
148
88
(351)
- to current
tax liability
11
-
-
4
-
-
-
-
-
-
-
15
Acquisition of
subsidiary
521
437
-
-
-
(198)
-
(507)
-
(148)
(16)
89
Balance at 30
June 2020
6,289
3,097
385
44
3,040
251
(87)
(468)
(2,997)
-
(1,675)
7,879
Balance at 1
July 2020
6,289
3,097
385
44
3,040
251
(87)
(468)
(2,997)
-
(1,675)
7,879
(Charged)/
credited
- to profit or
loss
(549)
540
104
(21)
(751)
(381)
99
73
776
-
(181)
(291)
- to current
tax liability
(53)
-
-
-
-
3
(12)
-
-
-
-
(62)
Balance at 30
June 2021
5,687
3,637
489
23
2,289
(127)
-
(395)
(2,221)
-
(1,856)
7,526
59
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
7. INCOME TAX (CONTINUED)
(D) DEFERRED TAX BALANCES (CONTINUED)
ACCOUNTING POLICY
The income tax expense or credit for the period is the tax
payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax
losses.
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the
Company and its subsidiaries and associates operate
and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid
to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill. Deferred
income tax is also not accounted for if it arises from
initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit
or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are
expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is
settled.
Deferred tax assets are recognised only if it is probable
that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax assets and liabilities are offset where there
is a legally enforceable right to offset current tax assets
and liabilities and where the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on
a net basis, or to realise the asset and settle the liability
simultaneously.
Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
RECONCILIATION OF PROFIT AFTER INCOME
TAX TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2021
2020
Notes
$'000
$'000
Profit for the period
5,875
11,660
Adjustments for:
Depreciation
12,172
10,793
Amortisation of intangible
assets
11, 15
375
292
Provision for impairment of
trade debtors
12
46
-
Non-cash employee benefits
expense - share-based
payments
441
224
Net (gain)/loss on sale or loss
of non-current assets
25
23
66
Net finance expense
5
1,051
754
Income tax expense
2,804
5,122
Change in operating assets and
liabilities:
(Increase)/decrease in trade
and other receivables
8,647
(7,738)
(Increase)/decrease in
contract assets
(1,242)
-
(Increase)/decrease in i
nventories
(153)
680
Increase/(decrease) in trade
and other payables
(9,731)
15,022
Increase in contract liabilities
212
-
Increase/(decrease) in
provisions and employee
benefits
1,825
181
Interest paid
(1,071)
(798)
Interest received
20
44
Income taxes paid
(3,005)
(5,471)
Net cash inflow from operating
activities
18,289
30,831
NON-CASH INVESTING AND FINANCING ACTIVITIES
2021
2020
Notes
$'000
$'000
Acquisition of right-of-use assets
15
4,812
16,147
Rights and shares issued to
employees under the Employee
Performance Rights
Plan for no cash consideration
221
123
Shares to be issued in partial
settlement of business
combination
21
-
3,799
Dividends on unissued shares to
be issued as additional ordinary
shares
18, 21
55
234
5,088
20,303
CHANGES IN LIABILITIES ARISING FROM
FINANCING ACTIVITIES
The following section sets out the movements in liabilities
arising from financing activities for the period presented.
Leases
$'000
Recognised on adoption of AASB 16
(957)
Net debt as at 1 July 2019
(957)
Cash flows
3,062
Acquisitions - finance leases and operating
lease incentives
(16,147)
30 June 2020
(14,042)
Cash flows from financing activities
6,297
Acquisition - leases
(4,812)
30 June 2021
(12,557)
9. TRADE AND OTHER RECEIVABLES
2021
2020
$'000
$'000
Current
Trade and other receivables (i)
32,515
42,072
Unbilled revenue (ii)
6,207
5,582
38,722
47,654
Prepayments
1,677
1,438
40,399
49,092
ACCOUNTING POLICY
Loans and receivables are carried at amortised cost
using the effective interest method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition over the period of maturity. We
establish an allowance for expected credit losses for loans
and receivables using the simplified approach permitted
by AASB 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
To measure the expected credit losses, trade receivables
and unbilled revenue have been grouped based on
shared credit risk characteristics and the days past
due. The unbilled revenue represents receivables from
contracts with customers for which the Company has
an unconditional right to consideration arising from the
transfer of goods or services to the customer (i.e. only
the passage of time is required before payment of the
consideration is due) and have substantially the same
risk characteristics as the trade receivables for the same
types of contracts. The Group has therefore concluded
that the expected loss rates for trade receivables are
a reasonable approximation of the loss rates for the
unbilled revenue. The expected loss rates are based on
the historical credit losses experienced over the previous
ten years. We adjust historical loss rates to reflect current
and forward looking information on macroeconomic
factors affecting the ability of the customers to settle the
receivables.
TAX CONSOLIDATION LEGISLATION
Mastermyne Group Limited and its wholly-owned
Australian controlled entities have implemented the
tax consolidation legislation. As a consequence, these
entities are taxed as a single entity and the deferred tax
assets and liabilities of these entities are set off in the
consolidated financial statements.
SIGNIFICANT ESTIMATE: RECOGNITION OF
DEFERRED TAX ASSET FOR CARRIED FORWARD
LOSSES
The deferred tax assets include an amount of $5,687,000,
which relate to revenue losses totalling $18,956,000
(2020: $20,964,000) which are available to be offset
against future taxable income. These losses arose within
Diversified Mining Services Pty Ltd and Wilson Mining
Services Pty Ltd prior to the acquisition by the Group.
The Group has concluded that the deferred assets will be
recoverable using the estimated future taxable income
based on the approved business plans and budgets for
the Group. The losses can be carried forward indefinitely
and have no expiry date.
8. CASH AND CASH EQUIVALENTS
2021
2020
$'000
$'000
Current assets
Cash on hand
-
1
Bank balances
24,389
25,358
Cash and cash equivalents in the
statement of financial position
24,389
25,359
ACCOUNTING POLICY
For the purpose of presentation in the consolidated
statement of cash flows, cash and cash equivalents
includes cash on hand, deposits held at call with financial
institutions, other short-term, highly liquid investments
with original maturities 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, and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities in the consolidated
balance sheet.
61
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
9. TRADE AND OTHER RECEIVABLES
(CONTINUED)
ACCOUNTING POLICY (CONTINUED)
(i) TRADE AND OTHER RECEIVABLES
Trade and other receivables are amounts due from
customers for goods sold or services performed in the
ordinary course of business. They are generally due
for settlement within 30 days and are therefore all
classified as current. Trade and other receivables are
recognised initially at the amount of consideration that
is unconditional unless they contain significant financing
components, when they are recognised at fair value.
The Group holds the trade receivables with the objective
of collecting the contractual cash flows and therefore
measures them subsequently at amortised cost using the
effective interest method, less any loss allowance.
Trade and other receivables include amounts for
insurance reimbursements if the Group is virtually certain
that some or all of a contractual claim will be reimbursed.
The expense and reimbursement are presented on a net
basis in the profit and loss.
(ii) UNBILLED REVENUE
Unbilled revenue represents receivables from contracts
with customers for which the Company has an
unconditional right to consideration arising from the
transfer of goods or services from the customer, but has
not been invoiced at balance date. They are generally
converted to trade receivables within 30 days and then
due for settlement and are therefore all classified as
current. The Group holds unbilled revenue with the
objective of collecting the contractual cash flows and
therefore measures them subsequently at amortised
cost using the effective interest method, less any loss
allowance.
10. INVENTORIES
2021
2020
$'000
$'000
Raw materials
2,567
2,464
Finished goods
3,848
3,798
6,415
6,262
Inventories recognised as expense in cost of goods
sold during the year ended 30 June 2021 amounted to
$4,566,000 (2020: $3,769,000).
ACCOUNTING POLICY
Raw materials and finished goods are stated at the lower
of cost and net realisable value. Cost comprises direct
materials, direct labour and an appropriate proportion of
variable and fixed overhead expenditure, the latter being
allocated on the basis of normal operating capacity. Costs
are assigned to individual items of inventory on the basis
of weighted average costs. Costs of purchased inventory
are determined after deducting rebates and discounts.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make
the sale.
11. PROPERTY, PLANT AND EQUIPMENT
2021
2020
$'000
$'000
Plant and equipment
Gross value
73,318
68,937
Accumulated depreciation
(51,582)
(47,689)
21,736
21,248
Motor vehicles
Gross value
987
1,024
Accumulated depreciation
(657)
(558)
330
466
Leasehold improvements
Gross value
214
214
Accumulated depreciation
(197)
(181)
17
33
Computer equipment
Gross value
2,481
2,051
Accumulated depreciation
(1,615)
(1,377)
866
674
22,949
22,421
RECONCILIATION OF CARRYING AMOUNTS
Plant and
equipment
$’000
Motor vehicles
$’000
Leasehold
improvements
$’000
Computer
equipment
$’000
Total
$’000
Year ended 30 June 2020
Opening net
book amount
17,419
164
65
628
18,276
Acquisition of
subsidiary
3,114
434
-
173
3,721
Additions
7,915
169
-
201
8,285
Disposals
(23)
(171)
-
-
(194)
Transfers
17
-
-
(17)
-
Depreciation
charge
(7,194)
(130)
(32)
(311)
(7,667)
Closing net
book amount
21,248
466
33
674
22,421
Year ended 30 June 2021
Opening net
book amount
21,248
466
33
674
22,421
Additions
6,856
-
-
430
7,286
Disposals
(91)
(20)
-
-
(111)
Depreciation
charge
(6,277)
(116)
(16)
(238)
(6,647)
Closing net
book amount
21,736
330
17
866
22,949
ACCOUNTING POLICY
Property and equipment is stated at cost, less
accumulated depreciation and accumulated impairment
losses. Cost includes expenditure that is directly
attributable to the acquisition of the items. The cost of
self constructed assets includes the costs of materials
and direct labour, any other costs directly attributable to
bringing the asset to a working condition for its intended
use, the costs of dismantling and removing the items
and restoring the site on which they are located and
capitalised borrowing costs.
When parts of an item of property, plant and equipment
have different useful lives, they are accounted for as
separate items (major components) of property, plant
and equipment.
Gains and losses on disposal of an item of property,
plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of
property, plant and equipment and are recognised within
“other income” or “other expenses” in profit or loss. When
revalued assets are sold, the amounts included in the
revaluation reserve are transferred to retained earnings.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate
asset is derecognised when replaced. All other repairs
and maintenance are charged to profit or loss during the
reporting period in which they are incurred.
Depreciation is recognised in profit or loss on a straight-
line or diminishing value basis over the estimated useful
lives of each part of an item of property, plant and
equipment. Leased assets are depreciated over the
shorter of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership
by the end of the lease term.
The depreciation rates which reflect the estimated useful
lives for the current period are as follows:
3 Plant and equipment
7.50 - 50.00%
3 Motor vehicles
12.50 - 30.00%
3 Computer equipment
37.50 - 50.00%
3 Leasehold improvements
7.50 - 15.00%
Depreciation methods, useful lives and residual values
are reviewed at each reporting date and adjusted if
appropriate.
The cost of improvements to, or in, leasehold properties
is amortised over the unexpired period of the lease or the
estimated useful life of the improvements to the Group,
whichever is shorter.
12. INTANGIBLE ASSETS
2021
2020
$'000
$'000
Goodwill
Gross value
10,324
10,324
10,324
10,324
Software
Gross value
432
432
Accumulated amortisation and
impairment
(266)
(93)
166
339
Intellectual property
Gross value
1,870
1,449
Accumulated amortisation
(1,387)
(1,342)
483
107
Customer relationships
Gross value
590
3,536
Accumulated amortisation
(186)
(3,030)
404
506
Exclusive distribution rights
Gross value
991
991
Accumulated amortisation
(101)
(46)
890
945
12,267
12,221
RECONCILIATION OF CARRYING AMOUNTS
Goodwill
$’000
Software
$’000
Intellectual
property
$’000
Customer
relationships
$’000
Exclusive
distribution rights
$’000
Total
$’000
Year ended 30 June 2020
Opening net
book amount
6,429
146
181
-
-
6,756
Additions
-
281
-
-
-
281
Acquisition
of business
3,895
-
-
590
991
5,476
Amortisation
charge
-
(88)
(74)
(84)
(46)
(292)
Total closing
net book
value
10,324
339
107
506
945 12,221
Year ended 30 June 2021
Opening net
book amount
10,324
339
107
506
945 12,221
Additions
- internal
development
-
-
421
-
-
421
Amortisation
charge
-
(173)
(45)
(102)
(55)
(375)
Closing net
book amount
10,324
166
483
404
890 12,267
63
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
12. INTANGIBLE ASSETS (CONTINUED)
ACCOUNTING POLICY
INTANGIBLE ASSETS
Intangible assets acquired as part of a business
combination, other than goodwill, are initially measured
at their fair value at the date of acquisition. Intangible
assets acquired separately are initially recognised at cost.
Indefinite life intangible assets are not amortised and are
subsequently measured at cost less any impairment. Finite
life intangible assets are subsequently measured at cost
less amortisation and any impairment. The gains or losses
recognised in profit or loss arising from the derecognition
of intangible assets are measured as the difference
between net disposal proceeds and the carrying amount
of the intangible asset. The method and useful lives of the
finite life intangible assets are reviewed annually. Changes
in the expected pattern of consumption or useful life are
accounted for prospectively by changing the amortisation
method or period.
GOODWILL
Goodwill on acquisitions of subsidiaries is included in
intangible assets. Goodwill is not amortised but it is
tested for impairment annually, or more frequently if
events or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to
the entity sold.
Goodwill is allocated to cash-generating units for the
purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating
units that are expected to benefit from the business
combination in which the goodwill arose. The units or
groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes,
consistent with managements assessment of operating
segments (note 2).
SOFTWARE
Significant costs associated with software are deferred
and amortised using the diminishing value method
over the estimated useful lives of the respective assets,
generally 2 to 5 years. Development costs are capitalised
when it is probable that the project will be a success
considering its commercial and technical feasibility;
the Group is able to use or sell the asset; the Group
has sufficient resources and intent to complete the
development; and its costs can be measured reliably.
Capitalised development costs are amortised on a straight-
line basis over the period of expected benefit, being their
finite life, generally 2 to 5 years.
INTELLECTUAL PROPERTY
Separately acquired intellectual property is shown at
historical cost. Intellectual property acquired in a business
combination is recognised at fair value at the acquisition
date. Development costs are capitalised when it is
probable that the project will be a success considering
level within the Group at which the goodwill is monitored
for internal management purposes. The aggregate carrying
amount of goodwill allocated to each CGU is as follows:
2021
2020
$’000
$’000
Mastermyne Mining
6,429
6,429
Wilson Mining
3,895
3,895
10,324
10,324
The Group tests whether goodwill has suffered any
impairment on an annual basis. For the 2021 and 2020
reporting periods, the recoverable amount of the cash-
generating units (CGUs) was determined based on value-
in-use calculations which require the use of assumptions.
MASTERMYNE MINING
The Mastermyne Mining calculations use cash flow
projections based on financial budgets approved by
management for 2022, with cash flows beyond the 2022
financial year extrapolated using an average growth rate
of 3.5% (2020: 3.3%) to cover a five-year period. Cash
flows beyond the five-year period are extrapolated using a
terminal growth rate of 2.5% (2020: 2.5%).
A 12.41% before-tax discount rate was applied to cash
flow projections (2020: 12.87%). The discount rate was
estimated based the Group’s weighted average cost of
capital, an industry average beta, risk-free rate consistent
with an Australian government 10-year treasury bond with
a minimum yield used of 2.00%, a market risk premium of
6.00% and a calculated cost of debt based on the Group’s
current debt and interest rates payable on this debt.
IMPACT OF POSSIBLE CHANGES IN KEY ASSUMPTIONS
No reasonable change in any of the key assumptions would
result in an impairment.
WILSON MINING
The Wilson Mining calculations use cash flow projections
based on financial budgets approved by management
for 2022, with cash flows beyond the 2022 financial year
extrapolated using an average growth rate of 4.0% (2020:
4.0%) to cover a five-year period. Cash flows beyond the
five-year period are extrapolated using a terminal growth
rate of 2.5% (2020: 2.5%).
A 13.42% before-tax discount rate was applied to cash
flow projections (2020: 13.96%). The discount rate was
estimated based the Group’s weighted average cost of
capital, an industry average beta, risk-free rate consistent
with an Australian government 10-year treasury bond with
a minimum yield used of 2.00%, a market risk premium of
6.00% and a calculated cost of debt based on the Group’s
current debt and interest rates payable on this debt.
IMPACT OF POSSIBLE CHANGES IN KEY ASSUMPTIONS
No reasonable change in any of the key assumptions would
result in an impairment.
13. TRADE AND OTHER PAYABLES
2021
2020
$'000
$'000
Current liabilities
Trade and other payables
5,509
14,832
Sundry creditors and accruals
18,896
19,304
24,405
34,136
ACCOUNTING POLICY
TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year
and which are unpaid. Due to their short-term nature they
are measured at amortised cost and are not discounted.
The amounts are unsecured and are usually paid within 30
days of recognition.
Payables also include liabilities for contractual claims when
the Group has a present legal obligation as a result of past
events, it is probable that an outflow will be required to
settle the obligation and the amount has been reliably
estimated. In these circumstances the liability is measured
at the present value of management’s best estimate of the
expenditure required to settle the present obligation at the
end of the reporting period.
WAGES AND SALARIES
Liabilities for wages and salaries, including non-monetary
benefits, to be settled wholly within 12 months of the
reporting date are recognised in sundry creditors and
accruals in respect of employees’ services up to the
reporting date and are measured at the amounts expected
to be paid when the liabilities are settled including on-
costs, such as superannuation, workers compensation
insurance and payroll tax.
BONUS PLANS
We recognise a liability for employee benefits in the form
of bonus plans in sundry creditors and accruals when we
have a present legal or constructive obligation to make such
payments as a result of past events and a reliable estimate
of the obligation can be made. We measure liabilities for
bonus plans at the amounts expected to be paid when they
are settled; settlement occurs within 12 months.
TERMINATION BENEFITS
Termination benefits are payable when employment is
terminated by the Group before the normal retirement
date, or when an employee accepts voluntary redundancy
in exchange for these benefits. The Group recognises
termination benefits at the earlier of the following dates:
(a) when the Group can no longer withdraw the offer of
those benefits; and (b) when the entity recognises costs
for a restructuring that is within the scope of AASB 137
Provisions, Contingent, liabilities and Contingent Assets
and involves the payment of terminations benefits. In the
case of an offer made to encourage voluntary redundancy,
the termination benefits are measured based on the
number of employees expected to accept the offer.
Benefits falling due more than 12 months after the end of
the reporting period are discounted to present value.
its commercial and technical feasibility; the Group is able
to use or sell the asset; the Group has sufficient resources
and intent to complete the development; and its costs can
be measured reliably. They have a finite useful life and are
subsequently carried at cost less accumulated amortisation
and impairment losses.
Amortisation is calculated using the straight line method over
the estimated useful lives of the respective assets, generally
8 to 10 years.
CUSTOMER CONTRACTS
The customer relationships were acquired as part of a
business combination (see note 21 for details). They are
recognised at their fair value at the date of acquisition and
are subsequently amortised on a straight-line based on
the timing of projected cash flows of the relationships over
their estimated useful lives. Amortisation is calculated using
the straight line method over the estimated useful lives of
the respective assets, generally three to seven years. We
test customer relationship assets for impairment on an
annual basis, or more frequently if events or changes in
circumstances indicate that it might be impaired, and we
write its value down when impaired.
EXCLUSIVE DISTRIBUTION RIGHTS
The exclusive distribution rights were acquired as part of
a business combination (see note 21 for details). They are
recognised at their fair value at the date of acquisition and
are subsequently amortised on a straight-line based over the
life of the underlying agreement, currently eighteen years.
IMPAIRMENT TESTING
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes
in circumstances indicate that they might be impaired.
Other assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for
the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell or value in use. In
assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For the
purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows
from other assets or groups of assets (cash-generating
units).
Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
No impairment was identified at 30 June 2021 or 30 June
2020.
SIGNIFICANT ESTIMATE: KEY ASSUMPTIONS USED IN
VALUE-IN-USE CALCULATIONS
For the purposes of impairment testing, goodwill is allocated
to the Group’s operating divisions which represent the lowest
65
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
14. EMPLOYEE BENEFIT OBLIGATIONS
2021
2020
Current
$’000
Non-Current
$’000
Total
$’000
Current
$’000
Non-Current
$’000
Total
$’000
Liability for annual leave
7,826
-
7,826
6,488
-
6,488
Liability for vesting sick leave
3,477
-
3,477
3,033
-
3,033
Liability for long service leave
579
98
677
466
169
635
Total employee benefit obligations
11,882
98
11,980
9,987
169
10,156
ACCOUNTING POLICY
ANNUAL LEAVE AND VESTED SICK LEAVE
Liabilities for annual leave and sick leave expected to
be settled wholly within 12 months after the end of the
period in which the employees render the related service
are recognised in respect of employees’ services up to
the end of the reporting period and are measured at
the amounts expected to be paid when the liabilities are
settled. The liabilities are presented as current employee
benefit obligations in the consolidated balance sheet.
LONG SERVICE LEAVE
The Group has liabilities for long service leave that are
not expected to be settled wholly within 12 months after
the end of the period in which the employees render the
related service. These obligations are therefore measured
as the present value of expected future payments to be
made in respect of services provided by employees up
to the end of the reporting period 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
end of the reporting period of high-quality corporate
bonds with terms and currencies that match, as closely
as possible, the estimated future cash outflows.
Remeasurements as a result of experience adjustments
and changes in actuarial assumptions are recognised in
profit or loss.
The obligations are presented as current liabilities in the
balance sheet if the entity does not have an unconditional
right to defer settlement for at least 12 months after
the reporting period, regardless of when the actual
settlement is expected to occur.
ACCOUNTING POLICY
The Group leases various offices, warehouses, equipment
and vehicles. Rental contracts are typically made for fixed
periods of 3 months to 5 years, but may have extension
options as described below.
Contracts may contain both lease and non-lease
components. The Group allocates the consideration in the
contract to the lease and non-lease components based
on their relative stand-alone prices. However, for leases of
real estate for which the Group is a lessee, it has elected
not to separate lease and non-lease components and
instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants other
than the security interests in the leased assets that are
held by the lessor. Leased assets may not be used as
security for borrowing purposes.
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease
payment is allocated between the liability and finance
cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each
period. The right-of-use asset is depreciated over the
shorter of the asset’s useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
3 fixed payments (including in-substance fixed
payments), less any lease incentives receivable
3 variable lease payment that are based on an index or a
rate, initially measured using the index or rate as at the
commencement date
3 amounts expected to be payable by the Group under
residual value guarantees
3 the exercise price of a purchase option if the Group is
reasonably certain to exercise that option, and
3 payments of penalties for terminating the lease, if the
lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement
of the liability.
The lease payments are discounted using the interest
rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the
Group, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to
pay to borrow the funds necessary to obtain an asset
of similar value to the right-of-use asset in a similar
economic environment with similar terms, security and
conditions.
The Group is exposed to potential future increases in
variable lease payments based on an index or rate, which
are not included in the lease liability until they take effect.
When adjustments to lease payments based on an index
or rate take effect, the lease liability is reassessed and
adjusted against the right-of-use asset.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are measured at cost comprising the
following:
3 the amount of the initial measurement of lease liability
3 any lease payments made at or before the
commencement date less any lease incentives received
3 any initial direct costs, and
3 restoration costs.
Right-of-use assets are generally depreciated over the
shorter of the asset’s useful life and the lease term on a
straight-line basis. If the Group is reasonably certain
to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life. While
the Group revalues its land and buildings that are presented
within property, plant and equipment, it has chosen not to
do so for the right-of-use buildings held by the Group.
SHORT-TERM AND LOW VALUE LEASES
The Group has elected not to recognise a right-of-use
asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of
low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
EXTENSION AND TERMINATION OPTIONS
Extension and termination options are included in a
number of property and equipment leases across the
Group. These are used to maximise operational flexibility
in terms of managing the assets used in the Group’s
operations. The majority of extension and termination
options held are exercisable only by the Group and not by
the respective lessor.
CRITICAL JUDGEMENT: DETERMINING THE LEASE
TERM
In determining the lease term, management considers
all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise
a termination option. Extension options (or periods after
termination options) are only included in the lease term
if the lease is reasonably certain to be extended (or not
terminated).
The following factors are normally the most relevant:
3 If there are significant penalties to terminate (or not
extend), the Group is typically reasonably certain to
extend (or not terminate).
3 If any leasehold improvements are expected to have
a significant remaining value, the Group is typically
reasonably certain to extend (or not terminate).
15. LEASES
This note provides information for leases where the
Group is a lessee. The Group does not have any leases
where it is a lessor.
(I) AMOUNTS RECOGNISED IN THE BALANCE SHEET
The balance sheet shows the following amounts relating
to leases:
2021
2020
$’000
$’000
Right-of-use assets
Buildings
3,539
4,052
Equipment
9,774
9,849
Vehicles
730
561
14,043
14,462
Lease liabilities
Current
4,681
4,918
Non-current
7,876
9,124
12,557
14,042
Additions the right-of-use assets during the 2021
financial year were $5,107,000.
(II) AMOUNTS RECOGNISED IN THE STATEMENT OF
PROFIT OR LOSS
Notes
2021
2020
$’000
$’000
Depreciation charge of right-of-use assets
Buildings
1,014
522
Equipment
3,998
2,259
Vehicles
513
346
5,525
3,127
Interest expense (included in
finance cost)
6
684
366
Expense relating to short-
term leases (included in
contract disbursements and
office expenses)
6,645
12,321
Expense relating to leases
of low-value assets that are
not shown above as short-
term leases (included in
administrative expenses)
41
28
Expense relating to variable
lease payments not included
in lease liabilities (included in
administrative expenses)
89
85
Total cash outflow for leases in 2021 was $13,756,000
(2020: $15,862,000)
67
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
15. LEASES (CONTINUED)
CRITICAL JUDGEMENT: DETERMINING THE LEASE
TERM (CONTINUED)
3 Otherwise, the Group considers other factors including
historical lease durations and the costs and business
disruption required to replace the leased asset.
.SIGNIFICANT ESTIMATE: DETERMINING THE
INCREMENTAL BORROWING RATE
Where the interest rate implicit in a lease cannot be
readily determined, an incremental borrowing rate
is estimated to discount future lease payments to
measure the present value of the lease liability at the
lease commencement date. Such a rate is based on what
the Group estimates it would have to pay a third party
to borrow the funds necessary to obtain an asset of a
similar value to the right-of-use asset, with similar terms,
security and economic environment.
16. OTHER LIABILITIES
2021
2020
$’000
$’000
Current
Contingent consideration
1,944
-
Non-current
Contingent consideration
1,911
3,855
SIGNIFICANT ESTIMATE:
CONTINGENT CONSIDERATION
The contingent consideration arrangement requires
the Group to pay the former owners of WM 50% of the
EBITDA of WM for three years from 2020 to 2022, up to
a maximum undiscounted amount of $10,000,000 plus
25% of the EBITDA for the three years from 2020 to
2022 in excess of $20,000,000 with no maximum amount
payable. There is no minimum amount payable.
The fair value of the current contingent consideration is
based on the actual EBITDA in WM for FY2021. The fair
value of the non-current contingent consideration of
$1,911,000 was estimated calculating the present value
of the future expected cash flows. The estimates are
based on a discount rate of 4% and assumed probability-
adjusted annual EBITDA in WM. The discount rate has
been calculated with regard to the projection and credit
risks associated with the liability.
No material changes have occurred to the liability as a
result of differences arising from settlement, or changes
in the range of outcomes during the year.
ACCOUNTING POLICY
Contingent consideration is payable as part of the
consideration for the Wilson Mining acquisition (refer to
Note 21). Obligations falling due more than 12 months
after the end of the reporting period are recognised as
non-current liabilities and discounted to present value.
17. EARNINGS PER SHARE
BASIC EARNINGS PER SHARE
2021
2020
Cents
Cents
Basic earnings per share attributable to the
ordinary equity holders of the Company
5.5
11.0
DILUTED EARNINGS PER SHARE
2021
2020
Cents
Cents
Diluted earnings per share attributable to
the ordinary equity holders of the Company
5.4
10.9
RECONCILIATIONS OF EARNINGS USED IN
CALCULATING EARNINGS PER SHARE
2021
2020
$’000
$’000
Eanings used in the calculation of basic
and diluted earnings per share
5,864
11,557
WEIGHTED AVERAGE NUMBER OF SHARES USED
AS THE DENOMINATOR
2021
2020
Number
Number
Weighted average number of
ordinary shares used as the
denominator in calculating
basic earnings per share
107,023,819
105,351,520
Adjustments for calculation of
diluted earnings per share:
Performance rights
outstanding
1,631,128
1,211,803
Weighted average number
of ordinary and potential
ordinary shares used as the
denominator in calculating
diluted earnings per share
108,654,947
106,563,323
ACCOUNTING POLICY
The Group presents basic and diluted earnings per share
data for its ordinary shares.
BASIC EARNINGS PER SHARE
Basic earnings per share is calculated by dividing:
3 the profit attributable to owners of the Company,
excluding any costs of servicing equity other than
ordinary shares
3 by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the
year.
DILUTED EARNINGS PER SHARE
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account:
3 the after-income tax effect of interest and other
financing costs associated with dilutive potential
ordinary shares, and
3 the weighted average number of additional ordinary
shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
18. DIVIDENDS
ORDINARY SHARES
2021
2020
$’000
$’000
Final dividend for the year ended
30 June 2020 of 4 cents (2019 - 2
cents) per fully paid share
4,252
2,110
No Special Dividend was paid
for the year ended 30 June 2020
(2019 - 2 cents) per fully paid
share
-
2,110
Interim dividend for the year
ended 30 June 2021 of 0.75 cents
(2020 - 2 cents) per fully paid
share
805
2,126
Total dividends paid
5,057
6,346
Total distributions to
non-controlling interest
182
-
Dividends include amounts on shares to be issued as
consideration for the Wilson Mining Services Pty Ltd
acquisition during the year. These dividends are payable
and will be issued as additional ordinary shares. Refer to
Note 19 and 21 for more information.
DIVIDENDS NOT RECOGNISED AT THE END OF THE
REPORTING PERIOD
2021
2020
$’000
$’000
In addition to the above dividends, since year
end the Directors have recommended the
payment of a final dividend of 2.25 cents per
fully paid ordinary share (2020 - 4 cents).
2,417
4,252
FRANKED DIVIDENDS
The final dividends recommended after 30 June 2021 will
be fully franked out of existing franking credits, or out of
franking credits arising from the payment of income tax
in the year ending 30 June 2022.
2021
2020
$’000
$’000
Franking credits available for subsequent
reporting periods based on a tax rate of
30.0% (2020 - 30.0%)
20,153
18,602
The above amounts are calculated from the balance
of the franking account as at the end of the reporting
period, adjusted for:
a. franking credits that will arise from the payment of
the amount of the provision for income tax
b. franking debits that will arise from the payment of
dividends recognised as a liability at the reporting
date, and
c. franking credits that will arise from the receipt of
dividends recognised as receivables at the reporting
date.
The consolidated amounts include franking credits that
would be available to the parent entity, Mastermyne
Group Limited, if distributable profits of subsidiaries were
paid as dividends.
19. EQUITY
SHARE CAPITAL
Notes
2021
2020
2021
2020
Shares
Shares
$’000
$’000
Ordinary shares
Fully
paid
106,207,161
102,282,985
64,295
61,003
Total
share
capital
106,207,161
102,282,985
64,295
61,003
MOVEMENTS IN ORDINARY SHARES:
Details
Notes
Number
of shares
(thousands)
Total
$’000
Opening balance 1 July 2019
101,665
61,003
Employee share scheme
issues
25
618
-
Balance 30 June 2020
102,283
61,003
Employee share scheme
issues
428
-
Dividend reinvesment plan
issues
610
513
Acquisition of subsidary
21
2,887
2,779
106,208
64,295
Balance 30 June 2021
106,208
64,295
ORDINARY SHARES
The Company does not have authorised capital or par
value in respect of issued shares. All issued shares
are fully paid. Ordinary shares entitle the holder to
participate in dividends, and to share in the proceeds of
winding up the Company in proportion to the number
and amounts paid on the shares held. Every holder of
ordinary shares present at a meeting in person or by
proxy, is entitled to one vote, and on a poll each share is
entitled to one vote.
69
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
19. EQUITY (CONTINUED)
PERFORMANCE RIGHTS
Information relating to the Employee Performance Rights
Plan, including details of rights issued, exercised and
lapsed during the financial year and options outstanding
at the end of the reporting period, is set out in Note 25.
CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so
as to maintain investor, creditor and market confidence
and to sustain future development of the business. The
Board of Directors monitors the return on capital, which
the Group defines as net operating income divided
by total capital. The Board also monitors the level of
dividends to ordinary shareholders.
There were no changes in the Group’s approach to capital
management during the year.
Neither the Company nor any of its subsidiaries are
subject to externally imposed capital requirements.
RESERVES
(I) OTHER EQUITY
The other equity reserve represents the shares to be
issued to the vendors of Wilson Mining Services Pty Ltd
as part of the consideration paid for the acquisition of the
business.
(II) SHARE-BASED PAYMENTS RESERVE
The share-based payments reserve represents the grant
date fair value of equity instruments granted to senior
managers or key management personnel of the Company
(note 25).
(III) COMMON CONTROL RESERVE
As a result of combinations of entities under common
control, an equity account was created called the
common control reserve. The balance of this account
represents the excess of the fair value of Mastermyne
Group Limited securities as at 7 May 2010 over the initial
carrying value of Mastermyne Pty Ltd as at the date
of Mastermyne Group Limited became the new parent
entity of the Group.
20. FINANCIAL RISK MANAGEMENT
The Group’s business activities can expose us to a variety
of financial risks: market risk (including foreign exchange
risk, price risk, and cash flow and fair value interest rate
risk), credit risk, and liquidity risk. The Board, together
with management, seeks to identify, monitor and mitigate
risk. Internal controls are monitored on a continuous basis
and, wherever possible, improved. Risk management is
identified in the Group’s various corporate governance
policies and will continue to be kept under regular review.
Review takes place at both the Audit and Risk Management
Committee level, with meetings at least four times a year,
and at the Board level.
All of the Group’s financial assets except cash and cash
equivalents are within the loans and receivables category,
and our financial liabilities are all within the financial
liabilities recorded at amortised cost category.
(A) MARKET RISK
(I) FOREIGN EXCHANGE RISK
Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities are
denominated in a currency other than the Australian dollar.
From time to time we make purchases from suppliers
who require the currency of settlement to be a foreign
currency. At 30 June 2021 and 2020 our exposure to
foreign currency risk was immaterial.
(II) PRICE RISK
The Group is not exposed to equity securities or
commodity price risks.
(III) CASH FLOW AND FAIR VALUE INTEREST RATE RISK
The Group’s main interest rate risk arises from lease
liabilities. These are obtained at fixed rates and expose the
Group to fair value risk.
(B) CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer
or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s
receivables from customers and cash and cash equivalents.
The Group’s exposure to credit risk is influenced by the
individual characteristics of each customer. The majority
of the Group’s customers are large multinational mining
companies with strong payment track records and
credit history. There is no formal credit policy in place,
however, each customer is assessed individually for
creditworthiness before the Group’s standard payment
and delivery terms and conditions (30 days) are offered.
Collateral is not normally obtained. The Group operates
under signed contracts, purchase orders and forward
purchase agreements which all have agreed payment
terms included.
The aged receivables are reviewed on a weekly basis by
senior management and overdue amounts followed up
with customers for payment. The Group does not require
collateral in respect of trade and other receivables.
The Group has one (2020: two) significant customer
representing more than 10% of the carrying amount
of trade receivables at 30 June 2021. The total of the
receivables from this customer is $23,173,000 (2020:
$24,609,000). The breakdown of each customer is as
follows:
2021
2020
$’000
$’000
Customer 1
23,173
20,267
Customer 2
-
4,342
Total
23,173
24,609
In the current and comparative period, the Group’s cash
and cash equivalents are held with AA-Rated Australian
Banks.
TRADE RECEIVABLES AND UNBILLED REVENUE
The Group applies the AASB 9 simplified approach to
measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and
unbilled revenue.
To measure the expected credit losses, trade receivables
and unbilled revenue have been grouped based on shared
credit risk characteristics and the days past due. The
unbilled revenue represents the Company’s unconditional
right to consideration arising from the transfer of goods
and services to the customer (i.e. only the passage of
time is required before payment of the consideration is
due), and has substantially the same risk characteristics
as the trade receivables for the same types of contracts.
The Group has therefore concluded that the expected
loss rates for trade receivables are a reasonable
approximation of the loss rates for the unbilled revenue.
The expected loss rates are based on the payment
profiles of sales over a period of 36 months before
30 June 2021 or 1 July 2020 respectively and the
corresponding historical credit losses experienced
within this period. The historical loss rates are adjusted
to reflect current and forward-looking information
on macroeconomic factors affecting the ability of the
customers to settle the receivables.
On that basis, no loss allowance has been recognised as
at 30 June 2021 and 30 June 2020.
(C) LIQUIDITY RISK
Prudent liquidity risk management implies maintaining
sufficient cash and the availability of funding through
an adequate amount of committed credit facilities. The
Group aims to maintain flexibility in funding by keeping
committed credit lines available. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it
will maintain sufficient liquidity levels to meet its liabilities
when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage
to the Group’s reputation.
(I) FINANCING ARRANGEMENTS
The Group had access to the following undrawn
borrowing facilities at the end of the reporting period:
Facility
Limit
Undrawn
Amount
$’000
$’000
30 June 2021
Invoice facility
20,000
20,000
Bank guarantee facility
500
443
Corporate credit card facility
500
481
Equipment facility
10,000
10,000
Total Multi Option Facility
31,000
30,924
30 June 2020
Invoice facility
20,000
20,000
Bank guarantee facility
500
443
Corporate credit card facility
500
498
Equipment facility
10,000
10,000
Total Multi Option Facility
31,000
30,941
(II) MATURITIES OF FINANCIAL LIABILITIES
The tables below analyse the Group’s financial liabilities
into relevant maturity groupings based on their
contractual maturities.
The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12
months equal their carrying balances as the impact of
discounting is not significant. For interest rate swaps the
cash flows have been estimated using forward interest
rates applicable at the end of the reporting period.
71
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
20. FINANCIAL RISK MANAGEMENT (CONTINUED)
(C) LIQUIDITY RISK (CONTINUED)
Contractual
maturities of
financial liabilities
Notes
Less than 6
months
6 - 12
months
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Total
contractual
cash flows
Carrying
Amount
$’000
$’000
$’000
$’000
$’000
$’000
$’000
30 June 2021
Trade payables
13
24,405
-
-
-
-
24,405
24,405
Lease liabilities
2,589
2,576
4,237
2,984
1,267
13,653
12,557
Total non-
derivatives
26,994
2,576
4,237
2,984
1,267
38,058
36,962
26,994
2,576
4,237
2,984
1,267
38,058
36,962
30 June 2020
Trade payables
13
34,135
34,135
34,135
Finance lease
liabilities
2,799
2,636
3,750
4,536
1,667
15,388
14,042
Total non-
derivatives
36,934
2,636
3,750
4,536
1,667
49,523
48,177
36,934
2,636
3,750
4,536
1,667
49,523
48,177
FAIR VALUE OF FINANCIAL INSTRUMENTS
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
21. BUSINESS COMBINATION
PRIOR PERIOD
On 30 August 2019, Mastermyne Group Limited acquired
100% of the ordinary shares of Wilson Mining Services
Pty Ltd (‘WM’). Details of the business combination were
disclosed in Note 23 of the Group’s annual financial report
for the year ended 30 June 2020.
During the half year period ended 31 December 2020,
accounting for the business combination was completed.
A measurement period adjustment of $33,000 was made
increasing goodwill acquired to $3,895,000 (30 June
2020 - $3,862,000). The adjustment represents the final
deferred tax asset acquired after the tax calculations
for the stub period were completed. The comparative
information has been revised in line with AASB 3 Business
Combinations.
UNISSUED SHARES TO VENDOR
During the year 2,886,557 shares were issued to the
Vendors of WM in partial settlement of the $3,799,000
outstanding purchase consideration to be settled
with the issue of shares. At 30 June 2021, 1,106,600
($1,077,000) shares remain to be issued and are included
in other equity. While unissued, the shares retain their
dividend rights and any dividend paid will be settled as
additional shares to the vendors calculated on a 5 day
volume weighted average price prior to record date.
ACCOUNTING POLICY
The acquisition method of accounting is used to account
for all business combinations, regardless of whether
equity instruments or other assets are acquired.
Consideration for an acquisition comprises the fair value
of the assets transferred, the liabilities incurred and the
equity interests issued by the company. Consideration
also includes the fair value of any contingent
consideration arrangement and the fair value of any pre-
existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values
at the acquisition date. The Group recognises any
non-controlling interest in the acquired entity on an
acquisition-by-acquisition basis either at fair value or at
the non-controlling interest’s proportionate share of the
acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred and the
amount of any non-controlling interest in the acquiree
over the fair value of the net identifiable assets acquired
is recorded as goodwill. If those amounts are less
than the fair value of the net identifiable assets of the
subsidiary acquired and the measurement of all amounts
has been reviewed, the difference is recognised directly in
profit or loss as a bargain purchase.
Where settlement of any part of cash consideration
is deferred, the amounts payable in the future are
discounted to their present value as at the date
of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent
financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value with changes
in fair value recognised in profit or loss.
22. RELATED PARTIES
WHOLLY-OWNED GROUP
The consolidated financial statements include the
financial statements of Mastermyne Group Limited (being
the ultimate parent entity) and the subsidiaries listed in
the following table:
Name of entity
Country of
incorporation
Equity holding
(ordinary shares)
2021
2020
%
%
Mastermyne Pty Ltd
Australia
100
100
Mastermyne
Engineering Pty Ltd
Australia
100
100
Mastermyne
Underground Pty Ltd
Australia
100
100
Mastermyne
Underground NNSW
Pty Ltd
Australia
100
100
Myne Start Pty Ltd
Australia
100
100
MyneSight Pty Ltd
Australia
100
67
Mastermyne
Contracting Services
Pty Ltd
Australia
100
100
Ausscaffold Pty Ltd
Australia
100
100
Diversified Mining
Services Pty Ltd
Australia
100
100
Falcon Mining Pty Ltd
Australia
100
100
Wilson Mining Services
Australia
100
100
Mastermyne Crinum
Operations Pty Ltd
Australia
100
-
Metarock Pty Ltd
Australia
100
-
TRANSACTIONS WITH NON-CONTROLLING
INTERESTS
On 28 May 2021, the Group acquired the remaining
33% of the issued shares of MyneSight Pty Ltd for
$377,000. Immediately prior to the purchase, the carrying
amount of non-controlling interest in MyneSight Pty
Ltd was $354,000. The Group recognised a decrease in
non-controlling interests of $354,000 and a decrease
in equity attributable to the owners of the parent of
$23,000. The effect on the equity attributable to the
owners of Mastermyne Group Limited during the year is
summarised as follows:
2021
2020
$’000
$’000
Carrying amount of non-controlling
interests acquired
354
-
Consideration paid to non-controlling
interests
(377)
-
Excess of consideration paid
recognised in the transactions with
non-controlling interests reserve
within equity
(23)
-
There were no transactions with non-controlling interests
in 2020.
PRINCIPLES OF CONSOLIDATION AND EQUITY
ACCOUNTING
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls
an entity where the Group is exposed to, or has rights
to, variable returns from its involvement with the entity
and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from
the date that control ceases.
Intercompany transactions, balances and unrealised
gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated
statement of profit or loss, statement of comprehensive
income, statement of changes in equity and balance
sheet respectively.
PARENT ENTITY FINANCIAL INFORMATION
Summarised financial information for the parent entity,
Mastermyne Group Limited is as follows:
2021
2020
$’000
$’000
Results of parent entity
Loss for the year
(3,668)
(1,013)
Total comprehensive loss for the year
(3,668)
(1,013)
Financial position of parent entity at year-end
Current assets
1,823
34,875
Total assets
67,866
97,898
Current liabilities
7,701
15,295
Total liabilities
16,299
43,818
Total equity of the parent entity at year-end
Share capital
64,295
61,003
Other equity
1,153
4,033
Retained earnings
(14,479)
(11,334)
Reserves
598
378
Total equity
51,567
54,080
73
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For personal use only
22. RELATED PARTIES (CONTINUED)
PARENT ENTITY FINANCIAL INFORMATION
(CONTINUED)
GUARANTEES ENTERED INTO BY THE PARENT ENTITY
The parent entity has entered into a Deed of Cross
guarantee with the effect that the Company guarantees
debts in respect of its subsidiaries. Further details of the
Deed of Cross Guarantee and the subsidiaries subject to
the deed, are disclosed in note 23.
CONTINGENT LIABILITIES OF THE PARENT ENTITY
The parent entity did not have any contingent liabilities as
at 30 June 2021 or 30 June 2020. For information about
guarantees given by the parent entity, please see above.
CONTRACTUAL COMMITMENTS FOR THE ACQUISITION
OF PROPERTY, PLANT OR EQUIPMENT
There were no parent entity capital commitments as at
30 June 2021 or 30 June 2020.
23. DEED OF CROSS GUARANTEE
Mastermyne Group Limited and the wholly-owned
subsidiaries listed below are parties to a deed of cross
guarantee under which each Company guarantees the
debts of the others. By entering into the deed, the wholly-
owned entities have been relieved from the requirement
to prepare a financial report and directors’ report
under ASIC Corporations (Wholly-owned Companies)
Instrumnet 2016/785.
It is a condition of the Class Order that the Company
and each of the subsidiaries enter into a Deed of Cross
Guarantee. The effect of the Deed is that the Company
guarantees to each creditor payment in full of any debt
in the event of winding up of any of the subsidiaries
under certain provisions of the Coporations Act 2001. If
a winding up occurs under other provisions of the Act,
the Company will only be liable in the event that after six
months any creditor has not been paid in full.
The subsidiaries subject to the deed are as follows:
3 Mastermyne Pty Ltd
3 Mastermyne Engineering Pty Ltd
3 Mastermyne Underground Pty Ltd
3 Mastermyne Underground NNSW Pty Ltd
3 Myne Start Pty Ltd
3 MyneSight Pty Ltd
3 Mastermyne Contracting Services Pty Ltd
3 Ausscaffold Pty Ltd
3 Diversified Mining Services Pty Ltd
3 Falcon Mining Pty Ltd
3 Wilson Mining Services Pty Ltd
3 Mastermyne Crinum Operations Pty Ltd
3 Metarock Pty Ltd
CONSOLIDATED BALANCE SHEET
Set out below is a consolidated balance sheet as at 30
June 2021 of the closed group consisting of Mastermyne
Group Limited.
2021
2020
$’000
$’000
Current assets
Cash and cash equivalents
24,389
24,284
Trade receivables
40,399
48,302
Contract assets
1,242
-
Inventories
6,415
6,262
Total current assets
72,445
78,848
Non-current assets
Property, plant and
equipment
22,949
22,074
Right-of-use assets
14,043
13,923
Intangible assets
12,267
11,414
Deferred tax assets
7,526
7,819
Investments in
subsidiaries
-
733
Total-non-current assets
56,785
55,963
Total assets
129,230
134,811
Current liabilities
Trade and other payables
24,617
33,775
Lease liabilities
4,681
4,533
Current tax liabilities
1,039
1,502
Employee benefits
11,882
9,793
Other current liabilities
1,944
3,799
Total current liabilities
44,163
53,402
Non-current liabilities
Lease liabilities
7,876
8,962
Employee benefits
98
84
Other non-current
liabilities
1,911
3,855
Total non-current
liabilities
9,885
12,901
Total liabilities
54,048
66,303
Net assets
75,182
68,508
Equity
Contributed equity
64,295
61,003
Reserves
(22,486)
(19,826)
Retained earnings
33,373
31,364
Total equity
75,182
72,541
CONSOLIDATED STATEMENT OF PROFIT OR LOSS,
STATEMENT OF COMPREHENSIVE INCOME AND
SUMMARY OF MOVEMENTS IN CONSOLIDATED
RETAINED EARNINGS
The above companies represent a ‘closed group’ for the
purposes of the instrument, and as there are no other
parties to the deed of cross guarantee that are controlled
by Mastermyne Group Limited, they also represent the
‘extended closed group’.
2021
2020
$’000
$’000
Consolidated statement of comprehensive income
Revenue
228,189
286,726
Other income
524
1,330
Contract disbursements
(30,621)
(37,399)
Personnel Expenses
(167,849)
(215,239)
Office expenses
(6,647)
(6,010)
Depreciation and amortisation
expense
(12,163)
(10,813)
Other expenses
(1,771)
(1,530)
Results from operating activities
9,662
17,065
Finance income
19
39
Finance expense
(1,049)
(773)
Net finance expense
(1,030)
(734)
Profit before income tax
8,632
16,331
Income tax expense
(2,790)
(4,985)
Profit for the period
5,842
11,346
Total comprehensive income for
the period
5,842
11,346
24. KEY MANAGEMENT PERSONNEL
Key management personnel compensation is set out
below.
2021
2020
$
$
Short-term employee benefits
3,485,408
2,565,261
Post-employment benefits
254,194
211,165
Long-term benefits
95,136
109,537
Share-based payments
390,147
223,389
4,224,885
3,109,532
INDIVIDUAL DIRECTORS AND EXECUTIVES
COMPENSATION
Information regarding individual directors and executives
compensation and some equity instruments disclosures,
as required by Corporations Regulations 2M.3.03, is
provided in the remuneration report section of the
directors’ report. Apart from the details disclosed in this
note, no director has entered into a material contract with
the Group since the end of the previous financial year
and there were no material contracts involving directors’
interests existing at year-end.
KEY MANAGEMENT PERSONNEL AND DIRECTOR
TRANSACTIONS
A number of key management persons, or their related
parties, hold positions in other entities that result in them
having control or significant influence over the financial or
operating policies of those entities.
A number of these entities transacted with the Group
in the reporting period. The terms and conditions of the
transactions with key management persons and their
related parties were no more favourable than those
available, or which might reasonably be expected to be
available, on similar transactions to non-key management
persons and their related entities on an arm’s length
basis.
The following transactions occurred with related parties:
Transaction value
Year ended 30 June
2021
2020
$
$
Transaction
Andrew Watts - Watty Pty Ltd (i)
194,453
189,739
Andrew Watts - Watty Pty Ltd (ii)
23,808
23,464
Tony Caruso - Treatwater & Plumbing
Pty Ltd (iii)
2,367
116
220,628
213,319
i. The Group rents the premises at 45 River Street,
Mackay which is owned by Andrew Watts through
his company, Watty Pty Ltd. Amounts paid for rent
are at arm’s length and are due and payable under
normal payment terms.
ii. The Group rents the premises at 56A Grosvenor Drive,
Moranbah which is owned by Andrew Watts through
his company, Watty Pty Ltd. Amounts paid for rent
are at arm’s length and are due and payable under
normal payment terms.
iii. The Group paid Treatwater & Plumbing Pty Ltd,
which is owned by Anthony Caruso, fees for general
plumbing services during the year. Fees paid are at
arm’s length and due and payable under normal
payment terms.
75
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24. KEY MANAGEMENT PERSONNEL (CONTINUED)
SHAREHOLDINGS
The movements during the reporting period in the number of ordinary shares in Mastermyne Group Limited held
directly, indirectly or beneficially by each key management person including their related parties, is as follows:
2021
Name
Balance at the start of
year
Received during the
year on exercise of
rights
Other changes during
the year
Balance at the end of
the year
Mr. C Bloomfield
1,100,000
-
17,629
1,117,629
Mr. A Watts
12,262,245
-
-
12,262,245
Mr. G Meena
100,000
-
-
100,000
Ms. J Whitcombe
94,000
-
-
94,000
Mr. A Caruso
2,132,979
248,726
9,850
2,391,555
Mr. D Sykes
175,626
109,185
-
284,811
Ms. V Gayton
89,200
70,078
-
159,278
Mr. B Maff
89,024
-
-
89,024
Mr. W Price
-
-
11,173
11,173
25. SHARE-BASED PAYMENTS
EMPLOYEE PERFORMANCE RIGHTS PLAN
The establishment of the Employee Performance Right Plan was approved by shareholders at the 2015 annual general
meeting. The plan is designed to provide long-term incentives for senior managers and above (including executive
Directors) to deliver long-term shareholder returns. Under the plan, participants are granted options which only vest
if certain performance standards are met. Participation in the plan is at the board’s discretion and no individual has a
contractual right to participate in the plan or to receive any guaranteed benefits. Rights or options are granted under
the plan for no consideration and carry no dividend or voting right.
In accordance with the plan, employees holding vested options are entitled to purchase shares in the Company at a set
exercise price based on volume weighted average price in the two months preceding the offer.
Set out below are summaries of rights granted under the plan:
2021
2020
Average exercise price
per right
Number of rights
Average exercise price
per right
Number of rights
As at 1 July
-
1,078,612
-
1,312,390
Granted during the year
-
1,439,850
-
383,722
Exercised during the year *
-
(427,989)
-
(617,500)
Forfeited during the year
-
(13,787)
-
-
As at 30 June
-
2,076,686
-
1,078,612
* The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2021 was ($0.78) (2020: $0.95).
No rights expired during the periods covered by the above tables.
Performance rights outstanding at the end of the year have the following expiry dates and exercise prices:
Grant date
Expiry date
Exercise price
Vesting
conditions
Performance
Rights
30 June 2021
Performance
Rights
30 June 2020
22 January 2021
1/10/21
0.00
STI conditions
187,519
-
24 November 2020
1/10/23
0.00
1, 2, 3(a)
626,166
-
24 November 2020
1/10/23
0.00
1, 2, 3(b)
626,166
-
21 November 2019
1/10/22
0.00
1, 2, 3, 4(a)
191,861
191,861
21 November 2019
1/10/22
0.00
1, 2, 3, 4(b)
191,861
191,861
21 November 2018
1/10/21
0.00
1, 2, 3, 4(a)
126,557
126,557
21 November 2018
1/10/21
0.00
1, 2, 3, 4(b)
126,557
126,557
21 November 2017
1/10/20
0.00
1, 2, 3, 4(a)
-
220,888
21 November 2017
1/10/20
0.00
1, 2, 3, 4(b)
-
220,888
Total
2,076,687
1,078,612
* Weighted average remaining contractual life of rights outstanding at end of period
1.65
1.20
(years)
Vesting of the rights will be subject to achievement of the vesting conditions set out below and the eligible participant
being employed at the vesting date:
Performance rights issued in 2020 or thereafter as long-term incentives
3 Vesting Condition 1: The main vesting condition is that the eligible participant must be employed within the Group on
the Test Date. If employment is ceased with the Group prior to the Test Date, the performance rights will lapse unless
the Board, at its absolute discretion, determines otherwise.
3 Vesting Condition 2: Vesting is also conditional on the continuation of good conduct and the execution of duties in
the best interests of Mastermyne. If it is deemed the eligible participant has acted fraudulently or dishonestly, or is
in breach of obligations to Mastermyne, the Board, at its absolute discretion, may determine that some or all of the
performance rights will lapse.
3 Vesting Condition 3: If Vesting Conditions 1 and 2 are achieved there are two further Vesting Conditions that will
each be applied independently to 50% of the performance rights. These Vesting Conditions depend on Mastermyne’s
TSR percentile rank during the TSR measurement period and the Earnings per Share (EPS) performance over the
measurement period:
a. Tranche A: 50% of the performance rights will be conditional on the Company’s TSR rank relative to companies in
the ASX Peer Group index; and
b. Tranche B: 50% of the performance rights will be conditional on the Company’s EPS performance.
For each tranche, the percentage of performance rights which will vest will be as specified in the table below:
Tranche A
Tranche B
TSR Rank during the
measurement period
Proportion to vest
EPS Performance during
measurement period
Proportion to vest
Below 50th percentile of the
ASX Peer Group
0%
EPS growth at <6%
0%
50th percentile to 75th
percentile of the ASX Peer
Group
50% plus 2% for each percentile
above 50th percentile
EPS growth between 6% and
12%
0% to 100% pro rata
Above 75th percentile of the
ASX Peer Group
100%
EPS growth between >12%
100%
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PERFORMANCE RIGHTS ISSUED AS SHORT-TERM INCENTIVES
Employees can nominate for up to 50% of their STI award to be settled in shares annually. When a nomination is made,
performance rights are issued to the employee and vest at the end of the year in line with the achievements of their
relative KPI’s. The STI metrics align with the strategic objectives of the Group, with specific financial and non-financial
measures (normally 5 or 6) for individual performance, Group performance and underlying performance of the Group.
SIGNIFICANT ESTIMATE: MEASUREMENT OF SHARE BASED PAYMENTS
PERFORMANCE RIGHTS ISSUED AS LONG-TERM INCENTIVES
The assessed fair value at grant date of rights granted during the year ended 30 June 2021 as long-term incentives was
$0.49 per right for Tranche A and $0.48 per right for Tranche B (2020: $0.74 and $0.71 respectively). The fair value at
grant date is independently determined using an adjusted form of the Black-Scholes Model which includes a Monte Carlo
simulation model that takes into account the exercise price, volatility of the underlying share, the expected dividend
yield, the risk-free interest for the term of the right and the correlations and volatilities of the peer group companies.
The model inputs for rights outstanding at year end are set out below:
2021
2020
2019
2018
Fair value at grant date Tranche A
$0.4945
$0.7415
$0.8077
$0.5225
Fair value at grant date Tranche B
$0.4784
$0.7100
$0.7727
$0.4695
Share price
$0.77
$1.14
$1.19
$0.88
Exercise price
$nil
$nil
$nil
$nil
Expected volatility (weighted average volatility)
60.0%
60.0%
75.0%
78.4%
Option life (expected weighted average life)
2.9 years
2.9 years
2.9 years
2.9 years
Expected dividends
5.20%
1.90%
5.81%
5.81%
Risk-free interest rate (based on government bonds)
0.11%
0.66%
2.12%
1.86%
PERFORMANCE RIGHTS ISSUED AS SHORT-TERM
INCENTIVES
The assessed fair value at grant date of rights granted
during the year ended 30 June 2021 as short-term
incentives ranged from $0.46 to $0.70 (2020: No STI
performance rights issued). Given the rights are issued
with a $nil exercise price, and the vesting conditions are
non-market, the fair value at grant date is determined
using the share price on the day the rights were issued
($0.7600) and applying a probability factor representative
of the relevant employee’s likelihood of achieving their
KPI’s during the year.
ACCOUNTING POLICY
The grant-date fair value of share-based payment awards
granted to employees is recognised within “personnel
expense” within the statement of comprehensive income,
with a corresponding increase in equity, over the period
that the employees unconditionally become entitled to
the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the
related service and non-market performance conditions
at the vesting date. For share-based payment awards
with non-vesting conditions, the grant date fair value
of the share-based payment is measured to reflect
such conditions and there is no true-up for differences
between expected and actual outcomes.
EXPENSES ARISING FROM SHARE-BASED
PAYMENT TRANSACTIONS
Total expenses arising from share-based payment
transactions recognised during the period as part of
employee benefit expense were as follows:
2021
2020
$
$
Equity-settled share based
payment transactions
441
224
25. SHARE-BASED PAYMENTS (CONTINUED)
EMPLOYEE PERFORMANCE RIGHTS PLAN (CONTINUED)
Performance rights issued before 2020 as long-term incentives
3 Vesting Condition 1: The main vesting condition is that the eligible participant must be employed within the Group on
the Test Date. If employment is ceased with the Group prior to the Test Date, the performance rights will lapse unless
the Board, at its absolute discretion, determines otherwise.
3 Vesting Condition 2: Vesting is also conditional on the continuation of good conduct and the execution of duties in
the best interests of Mastermyne. If it is deemed the eligible participant has acted fraudulently or dishonestly, or is
in breach of obligations to Mastermyne, the Board, at its absolute discretion, may determine that some or all of the
performance rights will lapse.
3 Vesting Condition 3: There is an overriding vesting condition requiring a minimum 8% total shareholder return (TSR)
during the TSR measurement period (i.e. from the Time of Grant to the Test Date).
3 Vesting Condition 4: If vesting condition 3 is achieved, there are two further vesting conditions that will each be
applied independently to 50% of the performance rights. Both of these vesting conditions depend on Mastermyne’s
TSR percentile rank during the TSR measurement period:
a. Tranche A: 50% of the performance rights will be conditional on the Company’s TSR rank relative to companies in
the ASX All Ordinaries Accumulation index.
b. Tranche B: 50% of the performance rights will be conditional on the Company’s TSR rank relative to companies in
the ASX 200 Resource Accumulation index.
For each tranche, the percentage of performance rights which will vest will be as specified in the table below:
Tranche A
Tranche B
TSR Rank during the
measurement period
Proportion to vest
TSR Rank during the
measurement period
Proportion to vest
Below 50th percentile of the
ASX Peer Group
0%
Below 50th percentile of the
Resource Peer Group
0%
50th percentile to 75th
percentile of the ASX Peer
Group
50% plus 2% for each percentile
above 50th percentile
50th percentile to 75th
percentile of the Resource Peer
Group
50% plus 2% for each percentile
above 50th percentile
Above 75th percentile of the
ASX Peer Group
100%
Above 75th percentile of the
Resource Peer Group
100%
26. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable
for services provided by the auditor of the parent entity,
Mastermyne Group Limited, its related practices and non-
related audit firms:
PITCHER PARTNERS AUSTRALIA
(I) AUDIT AND OTHER ASSURANCE SERVICES
2021
2020
$
$
Audit and review of financial statements
147,500
110,000
Total remuneration for audit and other
assurance services
147,500
110,000
(II) TAXATION SERVICES
2021
2020
$
$
Tax compliance services
16,500
-
Total remuneration for taxation services
16,500
-
Total auditors’ remuneration
164,000
110,000
27. CONTINGENT LIABILITIES
CONTINGENT LIABILITIES
CLAIMS
A claim for unspecified damages was lodged against
Falcon Mining Pty Ltd in 2021 in relation to an event that
occurred at a customer site in May 2020. It is not practical
to estimate the potential effect of this claim but legal
advice indicates that it is not probable that a significant
liability will arise.
28. EVENTS OCCURRING AFTER THE
REPORTING PERIOD
On 28 July 2021, 1,106,600 shares were issued to the
Vendors of Wilson Mining Services Pty Ltd in settlement of
the outstanding purchase consideration for the prior year
business combination discussed in Note 21. An additional
100,394 shares were issued as compensation for the
dividends paid while the shares remained unissued.
Apart from the matter discussed above and the
dividend declared as disclosed in Note 18, no matter or
circumstance has occurred subsequent to period end that
has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations
or the state of affairs of the Group or economic entity in
subsequent financial years.
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In the opinion of the directors of Mastermyne Group Limited (the ‘Company’):
(a) the consolidated financial statements and notes set out on pages 55 to 79 are in accordance with the Corporations
Act 2001, including:
i. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
ii. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its
performance for the financial year ended on that date, and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable, and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed
Group identified in note 23 will be able to meet any obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee described in note 23.
The Directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the Directors.
Mr. C Bloomfield
Director
Brisbane
17/08/2021
D I R E C T O R S ’ D E C L A R AT I O N
30 JUNE 2021
Level 38, 345 Queen Street
Brisbane, QLD 4000
Independent Auditor’s Report to the Members of
MASTERMYNE GROUP LIMITED
Report on the Audit of the Financial Report
Opinion
Postal address
GPO Box 1144
Brisbane, QLD 4001
p. +61 7 3222 8444
We have audited the financial report of Mastermyne Group Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June
2021, the consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, notes to the financial
statements including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a)
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year then ended; and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) “the Code” that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Brisbane Sydney Newcastle Melbourne Adelaide Perth
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
pitcher.com.au
NIGEL FISCHER
PETER CAMENZULI
KYLIE LAMPRECHT
BRETT HEADRICK
COLE WILKINSON
JEREMY JONES
JAMES FIELD
ROBYN COOPER
CHERYL MASON
MURRAY GRAHAM
81
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
Key Audit Matter
How our audit addressed the key audit matter
Impairment assessment of goodwill ($10.324 million)
(Refer to note 12)
The consolidated statement of financial
position as at 30 June 2021 includes goodwill
of $10.324 million which relates to the
consolidation of subsidiaries acquired in the
current and previous years.
The carrying amount of goodwill is supported
by the value-in-use calculations prepared by
management which are based on budgeted
future cash flows and key assumptions such
as growth and discount rates.
Goodwill is deemed to be a key audit matter
due to the use of key assumptions and
judgements in the value-in-use calculation.
Our procedures included amongst others:
•
Assessing management’s determination of
the Group’s CGU’s based on our
understanding of the nature of the Group’s
business and internal reporting in order to
assess how results were monitored and
reported;
•
Assessing the reasonableness of
Management’s key assumptions and
judgements by considering supporting
management prepared documentation or
historical performance, where available;
•
Comparing the prior year forecast to assess
the accuracy of the forecasting process;
•
Reviewing management’s value-in-use
calculations for accuracy;
•
Performing a sensitivity analysis of
management’s value-in-use calculation; and
•
Reviewing the adequacy of the disclosures
in the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2021, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
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For personal use only
Pitcher Partners is an association of independent firms.
An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 6 to 19 of the directors’ report for the
year ended 30 June 2021. In our opinion, the Remuneration Report of Mastermyne Group Limited, for
the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
PITCHER PARTNERS
J. J. EVANS
Partner
Brisbane, Queensland
18 August 2021
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For personal use only
Additional information required by the Australian Stock Exchange (ASX) and not shown
elsewhere in the Annual Report, current as at 1 September 2021.
STOCK EXCHANGE QUOTATION
Ordinary shares in Mastermyne Group Limited are quoted on the ASX under the code “MYE”.
CLASS OF SECURITIES
The Company has the following securities on issue:
ASX QUOTED: 107,414,155
Ordinary shares, each fully paid, held by 1,800 shareholders.
UNQUOTED: 2,076,691
Performance rights, having differing exercise prices, hurdles, vesting periods and terms, with latest expiry 1 October
2023, held by 5 employees.
VOTING RIGHTS
The voting rights attaching to ordinary shares are set out in rule 37 of the Company’s constitution and are summarised
as follows:
3 A holder of ordinary shares in the company shall be entitled to be present at any shareholder’s meeting, and to vote in
respect of those shares held.
3 Shareholders entitled to attend and vote at shareholder meetings may appoint a proxy in accordance with the
Corporations Act.
3 At any shareholder meeting, every shareholder present in person or by proxy or by attorney or, in the case of a body
corporate, a representative appointed pursuant to the Corporations Act, shall be entitled:
a. on a show of hands, one vote only; and
b. on a poll, one vote for each ordinary share held.
RESTRICTED SECURITIES
There are no current restricted securities.
ON-MARKET BUY-BACKS
There is no current on-market buy-back of any securities.
DISTRIBUTION OF SECURITY HOLDERS
Distribution of shares and the number of holders by size of holding are:
1 Sep 2021
Range
Securities
%
No. of holders
%
100,001 and Over
85,176,520
79.30
139
7.72
10,001 to 100,000
18,277,564
17.02
559
31.06
5,001 to 10,000
2,346,765
2.18
302
16.78
1,001 to 5,000
1,464,028
1.36
528
29.33
1 to 1,000
149,278
0.14
272
15.11
Total
107,414,155
100.00
1,800
100.00
Unmarketable Parcels
15,737
0.01
104
5.78
There are 104 shareholders holding a total of 15,737 shares with less than a marketable parcel.
TWENTY LARGEST SECURITY HOLDERS
Security: MYE.ASX (Mastermyne Group Limited) as at 1 September 2021
Rank
Name
1 Sep 2021
%IC
1
MR KENNETH RUDY KAMON
10,874,887
10.12
2
WATTY PTY LTD
8,178,396
7.61
3
DARREN WILLIAM HAMBLIN
7,631,898
7.11
4
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
6,053,192
5.64
5
CARM NQ PTY LTD
3,327,032
3.10
6
MOAT INVESTMENTS PTY LTD
2,356,827
2.19
7
ANTHONY SALVATORE CARUSO
2,135,013
1.99
8
MAY DOWNS PTY LTD
2,000,000
1.86
9
HORRIE PTY LTD
1,340,005
1.25
10
INVIA CUSTODIAN PTY LIMITED
1,206,994
1.12
11
ANTHONY CHARLES ZAHRA
1,159,810
1.08
12
C & D BLOOMFIELD PTY LTD
1,100,000
1.02
13
MR ALAN JAMES LAWRENCE & MS JANINE EVELYN LAWRENCE
1,067,633
0.99
14
PAKASOLUTO PTY LIMITED
1,013,739
0.94
15
HELEN WILSON
939,810
0.87
16
MR VICTOR MCCULLOUGH & MRS ELIZABETH MCCULLOUGH
922,892
0.86
17
JT MANAGEMENT CO PTY LTD
919,084
0.86
18
MICHAEL ALAN COOMBS
900,000
0.84
19
HILLMORTON CUSTODIANS PTY LTD
857,229
0.80
20
MAST FINANCIAL PTY LTD
834,556
0.78
Total
54,818,997
51.04
Balance of register
52,595,158
48.96
Grand total
107,414,155
100.00
SUBSTANTIAL HOLDERS
The following substantial shareholders have been disclosed in substantial holding notices given to the company as at
1 September 2021:
Substantial Shareholders
(>5%)
Number of Shares
Andrew Watts
12,262,245
Kenneth Kamon
10,874,887
Darren Hamblin
9,631,898
Greig and Harrison Pty Ltd
6,275,050
A S X A D D I T I O N A L I N F O R M AT I O N
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MASTERMYNE GROUP LIMITED
ABN 96 142 490 579
Mastermyne Group Limited,
incorporated and domiciled
in Australia, is a publicly listed
company limited by shares.
DIRECTORS
Colin Bloomfield
Non-executive Chairman
Tony Caruso
Managing Director
Andrew Watts
Non-executive Director
Gabriel (Gabe) Meena
Non-executive Director
Julie Whitcombe
Non-executive Director
COMPANY SECRETARY
Brett Maff
REGISTERED AND HEAD OFFICE
Level 1, Riverside Plaza
45 River Street
Mackay QLD 4740
AUSTRALIA
P: +61 (7) 4963 0400
F: +61 (7) 4944 0822
E-CONTACTS
master@mastermyne.com.au
www.mastermyne.com.au
POSTAL ADDRESS
PO Box 1671
Mackay QLD 4740
AUSTRALIA
SHARE REGISTRY
LINK Market Services Limited
Level 15, 324 Queen Street
Brisbane QLD 4000
AUSTRALIA
P: +61 (2) 8280 7457
INDEPENDENT AUDITORS
Pitcher Partners
Level 38, 345 Queen Street
Brisbane QLD 4000
AUSTRALIA
STOCK EXCHANGE LISTING
Mastermyne Group Limited is
listed on the Australian Securities
Exchange.
ASX CODE MYE
MASTERMYNE OFFICES
MASTERMYNE HEAD OFFICES
Level 1, Riverside Plaza
45 River Street
Mackay QLD 4740
AUSTRALIA
P: +61 (7) 4963 0400
F: +61 (7) 4944 0822
ROCKHAMPTON QLD
(CONSUMABLES)
42 Monier Road
Parkhurst QLD 4702
AUSTRALIA
P: +61 (7) 4920 0800
F: +61 (7) 4920 0899
BRISBANE, QLD
Level 11, 145 Eagle Street
Brisbane QLD 4000
AUSTRALIA
P: 61 (7) 4963 0400
F: +61 (7) 4944 0822
WILSON MINING
16 Metro Court
Gateshead NSW 2290
AUSTRALIA
P: +61 (2) 4904 8222
F: +61 (7) 4904 8200
C O M P A N Y
M A S T E R M Y N E A N N U A L R E P O R T 2 0 2 1
For personal use only
Mastermyne Group Limited:
Level 1 Riverside Plaza,
45 River Street, Mackay QLD 4740
Phone: (07) 4963 0400 Fax: (07) 4944 0822
www.mastermyne.com.au
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