CORPORATE
REGISTRY
DIRECTORS
Michael Arnett
Chairman and Non-Executive Director
Julian Pemberton
Chief Executive Officer and
Managing Director
Jeff Dowling
Non-Executive Director
Peter Johnston
Non-Executive Director
Fiona Murdoch
Non-Executive Director
COMPANY SECRETARY
Kim Hyman
REGISTERED OFFICE
181 Great Eastern Highway
Belmont WA 6104
Telephone: +61 8 9232 4200
Facsimile: +61 8 9232 4232
AUDITOR
Deloitte Touche Tohmatsu
Tower 2
Brookfield Place
Level 9
123 St Georges Terrace
Perth WA 6000
SHARE REGISTRY
Link Market Services Limited
Level 4 Central Park
152 St Georges Terrace
Perth WA 6000
Telephone: +61 1300 554 474
Facsimile: +61 2 8287 0303
ASX CODE
NWH – NRW Holdings Limited
Fully Paid Ordinary Shares
nrw.com.au
1
NRW HOLDINGS ANNUAL REPORT 2020 | Contents PageNRW HOLDINGS ANNUAL REPORT 2020 | Corporate Registry
CONTENTS PAGE
03
05
07
CEO Review of Operations
Chairman’s Message
About Us
07
09
09
09
09
11
11
Financial Year Highlights
Civil
Mining
Drill and Blast
Mining Technologies
People & Safety
Outlook
13
CFO Financial Report
13
Financial Performance
15
Balance Sheet, Operating Cash
Flow & Capital Expenditure
2
NRW HOLDINGS ANNUAL REPORT 2020 | Contents Page
ABOUT US
NRW Holdings is an Australian owned Group of leading
companies providing diversified contract services to the
resources and infrastructure sectors.
Companies within the Group include NRW Civil & Mining,
Golding, Action Drill & Blast, RCR Mining Technologies, DIAB
Engineering and AES Equipment Solutions.
Listed on the ASX in 2007, NRW’s client list includes global
resource giants Rio Tinto, Fortescue Metals Group and BHP.
Other key clients on whose projects we work include Main Roads
WA, Public Transport Authority of Western Australia, Roads and
Maritime Services, Stockland, Coronado Coal and Mirvac.
With extensive operations in Western Australia, South Australia,
New South Wales, Queensland and Victoria, NRW’s geographical
diversification is complemented by its delivery of a wide
range of capabilities. These encompass civil expertise
including bulk earthworks and concrete installation, contract
mining and drill and blast. NRW also offers a leading original
equipment manufacturing (OEM), specialist maintenance
(shutdown services and onsite maintenance), industrial
engineering and
innovative materials handling design
capability with comprehensive additional experience for
refurbishment and rebuild service for earthmoving equipment
and machinery.
NRW has a workforce of around 7,000 people supporting
more than one hundred projects around Australia, across the
infrastructure, resources, industrial engineering, maintenance
and urban sectors.
3
NRW HOLDINGS ANNUAL REPORT 2020 | About Us
NRW HOLDINGS ANNUAL REPORT 2020 | Contents PageNRW HOLDINGS ANNUAL REPORT 2020 | ContentsNRW HOLDINGS ANNUAL REPORT 2020 | Corporate Registry 2019 (NOV)
ACQUISITION
BGC CONTRACTING &
DIAB ENGINEERING
INCREASED
CAPABILITIES
2019 (FEB)
ACQUISITION
RCR MINING
TECHNOLOGIES
GEOGRAPHIC
EXPANSION
2017 (AUG)
ACQUISITION
GOLDING
FUTURE GROWTH
The acquisition of BGC Contracting significantly enhances
the Company’s ability to participate as a large construction
partner in public works projects and adds further scale and
diversity across the Australian resources sector.
DIAB Engineering adds maintenance, construction and
shutdowns capability in this growing market.
NRW HOLDINGS ANNUAL REPORT 2020 | About Us
NRW HOLDINGS ANNUAL REPORT 2020 | About Us
4
NRW HOLDINGS ANNUAL REPORT 2020 | Contents PageNRW HOLDINGS ANNUAL REPORT 2020 | Contents CHAIRMAN’S MESSAGE
It is with great pleasure I present the NRW Holdings
2020 annual financial report.
The past 12 months have been eventful on many fronts.
The highlights include delivering record revenue, strong
earnings growth and excellent cash conversion; and
the successful acquisition of BGC Contracting. More
information on the successes over the last 12 months is
provided in the CEO’s commentary which follows.
All of this has been achieved despite having to deal with
an entirely new set of challenges due to COVID-19.
I commend our CEO, Jules Pemberton, and his
leadership team for demonstrating decisiveness,
compassion and clear communication in the peak of
the pandemic. I acknowledge all of our managers and
employees who diligently followed the health advice
given by Federal and State governments across all
of our operating regions.
I express my gratitude to all 7,000 members of our
workforce, including the 2,300 BGC Contracting
employees who joined us in December, for the resilience
they have demonstrated and their commitment to
working with our clients to safely deliver our services.
While health and safety remains the highest priority,
it was with great sadness we reported the fatality of
Howard Prosser, an employee of DIAB Engineering
working at the Roy Hill iron ore mine in Western
Australia on January 27, 2020. Our thoughts are with
his family, colleagues and friends.
NRW delivered revenue of $2,062 million up 83% on
last year as a result of continued growth in the Civil and
Mining businesses, a full year’s contribution from RCR
Mining Technologies and seven months contribution
from the newly acquired BGC Contracting business.
The BGC Contracting (now NRW Contracting)
acquisition, significantly enhances the Company’s
ability to participate as a large construction partner in
public works projects. It also adds further scale and
diversity in our Mining business across the Australian
resources sector.
The acquisition is already proving fruitful, with the
award of the $852 million Bunbury Outer Ring Road
project as part of the Southwest Connex Alliance.
As both Chairman of the Company and in my capacity
as Chairman of the Nomination and Remuneration
Committee, I have worked with my fellow committee
members to act on feedback from shareholders
whilst ensuring remuneration polices remain effective
and appropriate.
5
Having received a remuneration strike in late 2018 we
sought specific independent advice as a remuneration
committee from external consultants. The key elements
of that advice which are set out in the remuneration
report were adopted although not without comment
from some shareholders that they would prefer to see
the CEO’s remuneration more closely linked to
shareholder returns. With this in mind we are considering
longer term equity awards for the CEO and senior
management which are intended to ensure further value
from the Company’s assets is maximised.
We have developed the Company’s remuneration
structure to recognise that NRW is a larger and more
complex organisation. This will no doubt raise further
challenges which we will address to ensure the
management team is remunerated recognising these
new challenges and incentivised to maximise value
across the enlarged organisation.
In February we welcomed Ms. Fiona Murdoch to the
Board as a Non-Executive Director. Fiona brings a
broad range of experience to the NRW Board, having
extensive operational experience across the Australian
and international resources and infrastructure sectors.
Over the last 12 months the Board has established a
new committee to provide advice, recommendations
and assistance to the Board of Directors of the
Company with respect to sustainability primarily relating
to environmental, social and corporate governance
matters. The members of the committee are Peter
Johnston (Chair), Fiona Murdoch and Michael Arnett.
This is an area with growing challenges and I look
forward to the contribution the committee can make to
meet its mandate.
I am pleased to advise that the Directors declared a
final dividend for the financial year of four cents per
share. This brings the total dividend for the year to six
and a half cents per share following the interim dividend
paid in June 2020. The dividend will be fully franked and
paid on October 14, 2020. Maintaining and growing a
sustainable dividend has been a goal of the board which
we have now been able to deliver for five consecutive
six month periods.
In closing, and on behalf of the Board, I would like to
thank our hard working team led by Jules Pemberton, our
shareholders, clients and employees for their ongoing
loyalty and support.
Michael Arnett
Chairman, NRW Holdings
NRW HOLDINGS ANNUAL REPORT 2020 | Chairman’s MessageNRW HOLDINGS ANNUAL REPORT 2020 | Chairman’s Message
The BGC Contracting
(now NRW Contracting)
acquisition, significantly
enhances the Company’s
ability to participate as a
large construction partner in
public works projects.
NorthLink W A Central Section, Main Roads W A
6
NRW HOLDINGS ANNUAL REPORT 2020 | Chairman’s Message CEO REVIEW OF OPERATIONS
It is with great pleasure that I present NRW Holdings’
results for the financial year ending June 30 2020.
Before commenting on the results, I would like to thank
all of our valued employees for their contributions this
year. Despite the enormous challenges presented
by the COVID-19 pandemic our amazing people,
responded with courage and determination to not
only help keep themselves, their families and their
colleagues safe from the virus but also continued to
support the changing business requirements and
working incredibly hard to help achieve another year of
very strong growth.
Generating over two billion dollars in revenue is a
fantastic achievement in itself but especially good
given the strong contributions made to that growth
from all parts of the business. Doubling the earnings
from last year also demonstrates that we can deliver
work profitably and through our disciplined approach
produce outstanding cash conversion despite the
magnitude of the challenges faced over the last
12 months.
Most of our activities were classified as essential
services in the early days of Federal and State virus
measures. Whilst we have seen significant cost
impacts to our operations as a consequence of the
virus, revenue has been maintained in line with
guidance provided post the BGC Contracting
acquisition. Cost impacts included dealing with roster
changes, border closures, social distancing and staff
logistics. The Company has not accessed any of the
State or Federal economic support packages for any
part of its operations.
We entered the early phases with a strong balance
sheet and increased liquidity. We took early action to
retain funds by deferring the interim dividend payment
given the uncertainty that we all faced in those early
days. Through the last six months, activity levels and
cash flow remained as planned and consequently in
May we were able to announce that the interim dividend
would be paid in June 2020.
Looking back at FY20, without doubt it has been one
of the most arduous, challenging but ultimately
successful years in the history of NRW. The Company
has delivered record revenue, strong earnings growth
and excellent cash conversion.
7
The successful acquisition of BGC Contracting,
completed in December 2019, has made a significant
contribution to the strategic development of the
Company. All of this success against the unrelenting
challenges brought about to us all as a result of the
COVID-19 pandemic.
The BGC Contracting acquisition provides three clear
growth opportunities:
• Further scale, capability and diversification
in both geography and commodities for our
Mining Business;
• The acquisition doubles the size of our Mining
Technologies business with a key focus on
the Maintenance sector through the acquisition
of DIAB Engineering (DIAB); and
• Provides a demonstrable track record to address
a fast-growing Public Infrastructure sector,
particularly in Western Australia.
The financial results this year are a credit to all
involved across the Group.
FINANCIAL YEAR HIGHLIGHTS
• Record revenue of $2,062 million up 83% on FY19.
• Net earnings after tax normalised for acquisition
intangibles increased 122% to $89.7 million.
• Cash at June 30 totalled $170 million; an increase
of $105 million in the financial year.
• Debt repayments in the year totalled $82.4 million.
• Final dividend declared of 4 cents per share
fully franked.
In addition to the financial highlights our fourth pillar,
Mining Technologies was enhanced following the
addition of DIAB which is now integrated into the
Group and strongly aligned on future growth to $500
millon per annum combined revenues.
We were selected as Preferred Proponent for the $852
million Bunbury Outer Ring Road (BORR) project as
a member of the Southwest Connex Alliance. This
was an outstanding outcome and emphasises the
importance of the BGC Contracting acquisition. On
October 13, 2020 the Alliance was formally awarded
the BORR contract.
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations The successful acquisition
of BGC Contracting completed
in December 2019 has made
a significant contribution to
the strategic development
of the Company.
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations
8
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations CEO REVIEW OF
OPERATIONS CONTINUED
NRW has structured its business reporting into four segments, Civil, Mining, Drill and Blast and Mining
Technologies. I have provided the highlights of each of the business units below. You can read further detail
on the performance of each on pages six to eight of the financial statements.
CIVIL
DRILL AND BLAST
The Civil business reported significant growth in
revenue to $811 million, up from $383.5 million in
FY19. This is attributed to increased iron ore sustaining
tonnes project activity for Rio Tinto, BHP and
Fortescue Metals Group and the inclusion of seven
months revenue from BGC Contracting. Earnings
grew to $24.9 million in the year, in line with the
increase in revenue.
Margins were lower than last year due to reduced
volumes in the Golding Civil business in the first
quarter, impact of COVID-19 related costs and
reduced activity in the Golding Urban business. The
Urban business was directly impacted at a revenue
level due to reduced demand in land sales as a
result of COVID-19 measures.
Activity in the Civil business included mine sustaining
work for Rio Tinto at Koodaideri and for Fortescue
Metals Group at Eliwana, completion of the South
Flank project for BHP, construction of the Forrestfield-
Airport Link (FAL) for the Public Transport Authority
(PTA) in joint venture with Salini Impregilo, upgrades
to the Pacific Highway for Roads and Maritime
Services (RMS) and work on a number of subdivision
stages for a range of clients in the urban business
in South East Queensland.
MINING
The Mining business reported significant growth in
revenue to $969.7 million, and earnings of $100.4
million mostly due to the addition of BGC Contracting’s
mining activities.
Mining projects included work for Stanmore Coal at
Isaac Plains, Coronado Coal at Curragh, Wonbindi
Coal at Baralaba and Idemitsu at Boggabri. Iron
ore mining activities included work for Simec at
Iron Baron, Atlas Iron at Mount Webber and Rio
Tinto at Koodaideri. Gold projects include Ramone
for Northern Star and the continuation of mining
at Gascoyne Resources Dalgaranga project.
The Mining business secured a further five-year
extension with Stanmore Coal for Isaac Plains East
valued at $500 million and the Koodaideri pre-strip
contract for Rio Tinto valued at $95 million.
The Drill and Blast business delivered increased
revenue of $172.7 million. Activity levels have
increased as a result of new contract awards and
higher civil activity for both internal businesses and
external customers. Earnings improved to $11.5 million
as a result of the higher revenues and lower operating
costs mainly related to drill maintenance following
improvement programmes initiated in calendar
year 2018.
The Drill and Blast business secured a number of
new contracts and contract extensions in the year
including work for the Mining business at Koodaideri
pre-strip, and Iron Bridge bulk earthworks. Of the
$96 million of new awards during the year, more
than 60% of this was generated through external
clients and opportunities.
MINING TECHNOLOGIES
Revenue delivery across the business of $187.2
million was ahead of expectations as were earnings
of $15.9 million. The FY20 result includes seven
months of DIAB; FY19 includes four months of
RCRMT activity. RCRMT was acquired
in
February 2019.
Activity in the year in RCRMT included the delivery
of 34 major materials handling machines with a
total mass of over 2,000 tonnes, delivered to all the
major iron ore producers throughout the year and all
the significant Western Australia iron ore projects.
The Service and Spare parts division grew 20% on
the back of a strategic focus to support installed
OEM products post commissioning both locally
and internationally.
A key award for the business was to design,
manufacture and construct a 3,000 tonnes per hour
sizing plant and conveyor for Fortescue Metals Group
Cloudbreak. The EPC project was delivered in less
than 12 months, featured a number of innovations
for this type of equipment and is a continuation of
the evolving development of RCRMT’s in pit
crushing and conveying capability.
9
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations
CIVIL
MINING
NRW Civil
Golding Civil
Golding Urban
NRW Mining
Golding Mining
AES Equipment Solutions
MINING
TECHNOLOGIES
DRILL & BLAST
RCR Mining Technologies
DIAB Engineering
Action Drill & Blast
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations
10
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations CEO REVIEW OF
OPERATIONS CONTINUED
PEOPLE & SAFETY
OUTLOOK
While health and safety remains the highest priority,
it was with great sadness we reported the fatalities of
Jack Gerdes, an employee of Golding at the Baralaba
North Coal Mine on July 7, 2019, and Howard Prosser,
an employee of DIAB working at the Roy Hill iron ore
mine in Western Australia on January 27, 2020. Golding
and DIAB continue to assist with the Inspectorate
organisations both onsite and at a corporate level to
support their ongoing investigations into the incidents.
NRW’s Total Recordable Injury Frequency Rate
(TRIFR) at June 2020 reduced to 5.21 compared to
6.92 at June 2019.
The emergence of COVID-19 has raised significant
challenges across the business. Our actions were
guided by health advice driven by Federal and State
governments in our operating regions. These actions
included social distancing, working from home,
changes to how we managed the logistics for getting
our workforce to sites and the implementation of new
operating procedures. Our workforce responded
incredibly well, and despite numerous requests to
review alternate shift rosters, we have maintained a
healthy workforce while meeting client schedules. We
are incredibly proud of the way over 7,000 members
of our workforce over five states have responded to
this unprecedented challenge.
We recognise that engaging a skilled and dedicated
workforce is essential. We will continue to be an
employer of choice; retaining, recruiting and training
our workforce to meet the strong market demand.
The Company is in the process of establishing a new
training facility linked to a quarry owned by BGC
Australia. NRW will lease part of the facility to provide
training to new recruits to the mining sector and for
upskilling existing employees. The facility can support
training for up to 250 people per year on a range of
mobile mining equipment and simulators. Priority
recruits will be individuals who have lost employment
as a result of COVID-19.
NRW’s current workforce levels have increased
through the year as a result of increased activity and
the successful acquisition and integration of BGC
Contracting. Headcount at June 2020 totaled 7,053
(June 2019 – 3,145).
As a consequence of strong organic growth and the
acquisitions completed over the last three years,
NRW is very well positioned to address a growing set
of opportunities.
The enlarged business is positioned for continued
strong growth. The order book post the announcement
of the Bunbury Outer Ring Road is circa $3.5 billion.
Our objectives going forward remain broadly
unchanged, although with
the strengthened
organisation, we will concentrate more on growth
through proven capability by:
• Addressing growing public civil infrastructure
opportunities through proven delivery, our position
in Bunbury Outer Ring Road and our accreditations
around Australia;
• Leveraging our enlarged maintenance, OEM
products and mechanical construction capabilities
through the combination of RCRMT and DIAB to
accelerate growth in this through cycle market;
• Building on our delivery record in the Pilbara to
address continued investment in iron ore;
• Retaining, recruiting and training our workforce to
meet strong market demand; and
• Continuing to review options to build a broader
delivery platform.
The Order Pipeline remains strong with the potential
for further infrastructure projects to be accelerated as
part of joint Federal and State priorities to address the
economic consequences of COVID-19. The Pipeline of
tenders and prospects expected to be awarded in the
next 12 months has increased to $12.9 billion.
NRW is forecasting revenue of between $2.2 billion to
$2.3 billion in FY21 of which $2.0 billion is from current
contracts, agreed mining schedules or is expected as
repeatable business in Urban, RCRMT and DIAB.
In closing, I would like to thank all of our valued
employees for their contributions this year. I would
also like to acknowledge the Board and the Executive
Leadership Team for their commitment and support
over the last 12 months.
Jules Pemberton
CEO and Managing Director, NRW Holdings
11
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations
As a consequence of strong
organic growth and the
acquisitions completed over
the last three years, NRW is very
well positioned to address a
growing set of opportunities.
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations
12
NRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of OperationsNRW HOLDINGS ANNUAL REPORT 2020 | CEO Review of Operations CFO FINANCIAL REPORT
FINANCIAL PERFORMANCE
NRW reported revenues including associates of
$2,062 million an increase of 83% compared to
$1,126 million in FY19. The increase in revenue
was a result of continued growth in the Civil and
Mining businesses, a full year’s contribution from
RCR Mining Technologies (acquired in February
2019) and seven months contribution from the
newly acquired BGC Contracting business.
Profit before income tax increased to $100.2 million
compared to $45.7 million in FY19, a 119% increase
mostly reflecting the growth in sales. FY19 earnings
were impacted by impairments related to Gascoyne
Resources further details of which can be found in
the FY19 annual report.
The table below provides key financial performance
metrics for the current financial year compared
to the prior comparative period:
FY20
FY19
Revenue
Earnings
Revenue
Earnings
$M
2,062.4
(58.1)
Total Revenue / EBITDA
Revenue from Associates
Depreciation
Gascoyne impairment / RCR
Operating EBIT
Amortisation of Acquisition Intangibles
Transaction costs
EBIT
Interest
Profit before income tax
Tax
Statutory Revenue / Net earnings
2,004.3
NPAT (N)(1)
$M
250.0
(109.1)
-
140.9
(13.0)
(14.9)
113.0
(12.8)
100.2
(26.5)
73.7
89.7
$M
1,126.3
(48.2)
1,078.1
$M
143.9
(51.3)
(28.4)
64.2
(10.8)
(1.2)
52.2
(6.5)
45.7
(13.5)
32.2
40.4
1.
NPAT (N) Net earnings before amortisation of acquisition intangibles at normal tax rate.
Net Earnings increased to $73.7 million compared to
$32.2 million as a result of the revenue increase and
continued margin growth compared to FY19.
Non statutory measures of earnings, including earnings
before interest, tax, depreciation, and amortisation
(EBITDA) increased to $250.0 million compared
to $143.9 million in FY19. The increase of around
74% was due to higher business activity (revenue).
This result also includes the impact of the adoption
of AASB16 which increased EBITDA by $14.0
million compared to FY19. One-off costs associated
with the acquisition of BGC Contracting have been
shown separately in the table above and have
been excluded from EBITDA and operating EBIT.
Net Earnings excluding non-cash costs for acquisition
intangibles at standard tax rates increased to
$89.7 million compared to $40.4 million in FY19.
13
NRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial ReportNRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial Report Profit before income tax
increased to $100.2 million
compared to $45.7 million
in FY19, a 119% increase
mostly reflecting the growth
in sales.
14
NRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial ReportNRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial Report Capital expenditure totalled $82.6 million compared
to $77.3 million in the previous financial year. Spend
included new excavators and trucks mostly to support
contract extensions in the mining business at Curragh
and Isaac Plains. Most new spend was financed
through debt facilities provided by the equipment
manufacturers. The balance of spend was used for
component replacements to maintain the existing
fleet and drill upgrade programmes in Drill & Blast to
improve plant availability.
Intangibles and goodwill increased due to the BGC
Contracting acquisition.
The income tax expense recognised in net earnings
has reduced the deferred tax asset carrying value
as expected. Tax balances are now carried as a net
tax liability but include within that balance further tax
losses. No income tax was paid in the year and is
unlikely to be paid at the current earnings run rate until
calendar year 2021.
NRW continued to maintain strong relationships with
its banking partner, Bankwest and negotiated a new
$55 million facility with Bank of China to support the
acquisition of BGC Contracting. All banking covenants
were in compliance at all times during the year and as
at June 30, 2020.
Gearing at year end including AASB16 lease debt
was 29.6% compared to 12.2% in the prior year.
Excluding the impact of AASB16 gearing was
15.6% only marginally higher than FY19 despite
the increased debt assumed on the acquisition of
BGC Contracting.
Andrew Walsh
CFO, NRW Holdings
CFO FINANCIAL
REPORT CONTINUED
Major balance sheet heading movements in the year
are mostly due to consolidating BGC Contracting
following the acquisition of that business in
December 2019. The acquisition was funded through
new equity and the assumption of asset financing
debt in BGC Contracting. Consequently, overall
financial debt increased in the year to $245 million.
Lease debt which has been reported for the first time
following the adoption of AASB16 totalled $65 million.
The balance sheet also includes Lease assets ($58.3
million) which are also part of the adoption of AASB16.
Cash balances reflected the very strong cash
conversion delivered in the financial year. Cash
increased to $170 million at June 30, 2020 compared
to $65 million at the start of the financial year.
Returns to shareholders included both a final dividend
for FY19 of two cents paid in December 2019 and
an interim dividend for the current financial year of 2.5
cents paid in June 2020. Overall dividend payments
in the year totalled $18.3 million.
BALANCE SHEET, OPERATING CASH FLOW
& CAPITAL EXPENDITURE
A summary of the balance sheet as at the end of the
current financial year and the previous financial year is
provided below.
Cash
FY20
$M
170.2
FY19
$M
65.0
Financial debt
(244.8)
(100.5)
(65.1)
(139.7)
437.8
58.3
7.2
2.6
(9.7)
356.5
115.9
472.4
29.6%
15.6%
-
(35.5)
239.9
-
(1.6)
2.7
22.1
227.6
63.8
291.4
12.2%
Lease debt
Net Debt
PPE
Lease assets (right of use)
Working capital
Investments in associates
Tax (Liabilities)/Assets
Net Tangible Assets
Intangibles and Goodwill
Net Assets
Gearing
Gearing Excl. AASB 16
15
NRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial ReportNRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial Report
Cash increased to $170
million at June 30, 2020
compared to $65 million
at the start of the financial year.
NRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial Report
16
NRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial ReportNRW HOLDINGS ANNUAL REPORT 2020 | CFO Financial Report FINANCIAL REPORT
CONTENTS PAGE
02
29
31
32
Auditor’s Independence Declaration
Directors’ Declaration
Directors’ Report
Corporate Governance & Risk Management
34
35
36
37
38
85
86
91
92
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
38
42
48
57
66
71
74
General Notes
Business Performance
Balance Sheet
Capital Structure
Financing
Taxation
Other Notes
Shareholder Information
Independent Auditor’s Report
Appendix 4E
Appendix A
Looking back at FY20, without
doubt it has been one of the
most arduous, challenging but
ultimately successful years in
the history of NRW.
FINANCIAL REPORT
CONTENTS PAGE
Directors’ Report
Corporate Governance & Risk Management
Auditor’s Independence Declaration
Directors’ Declaration
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
General Notes
Business Performance
Balance Sheet
Capital Structure
Financing
Taxation
Other Notes
Shareholder Information
Independent Auditor’s Report
Appendix 4E
Appendix A
DIRECTORS’
DIRECTORS’
REPORT CONTINUED
REPORT
The Directors present their report together with the financial statements of NRW Holdings Limited (“the
Company”) and of the consolidated group (also referred to as “the Group”), comprising the Company and its
subsidiaries, for the financial year ended 30 June 2020.
DIRECTORS
The following persons held office as Directors of NRW Holdings Limited during the financial year and up to the
date of this report:
MICHAEL ARNETT
Chairman and Non-Executive Director
Mr Arnett was appointed as a Non-Executive Director on 27 July 2007 and appointed Chairman on
9 March 2016.
Mr Arnett is a former consultant to, partner of and member of the Board of Directors and national head of the
Natural Resources Business Unit of the law firm Norton Rose Fulbright (formally Deacons). He has been
involved in significant corporate and commercial legal work for the resource industry for over 20 years.
JULIAN PEMBERTON
Chief Executive Officer and Managing Director
Mr Julian (Jules) Pemberton was appointed as a Director on 1 July 2006 and appointed as Chief Executive
Officer and Managing Director on 7 July 2010.
Mr Pemberton has more than 25 years’ experience in both the resources and infrastructure sectors. He joined
NRW in 1996, and prior to his appointment as Chief Executive Officer and Managing Director he held a number
of senior management and executive positions at NRW including Chief Operating Officer.
JEFF DOWLING
Non-Executive Director
Mr Dowling was appointed as a Non-Executive Director on 21 August 2013.
Mr Dowling has 36 years’ experience in professional services with Ernst & Young. He has held numerous
leadership roles within Ernst & Young which focused on the mining, oil and gas and other industries.
Mr Dowling has a Bachelor of Commerce from the University of Western Australia and is a fellow of the Institute
of Chartered Accountants, the Australian Institute of Company Directors (“AICD”) and the Financial Services
Institute of Australasia.
Mr Dowling has held the following directorships of listed companies in the three years immediately before the
end of the financial year:
• Non-Executive Director, S2 Resources Limited (Appointed 29 May 2015)
• Non-Executive Director, Fleetwood Corporation Limited (Appointed 1 July 2017)
• Non-Executive Director, Battery Minerals Limited (Appointed 25 January 2018)
PETER JOHNSTON
Non-Executive Director
Mr Johnston was appointed as a Non-Executive Director on 1 July 2016.
Mr Johnston has served with a number of national and international companies.
Mr Johnston graduated from the University of Western Australia with a Bachelor of Arts majoring in psychology
and industrial relations. He is also a Fellow of the AICD and AusIMM.
Mr Johnston has held the following directorships of listed companies in the three years immediately before the
end of the financial year:
• Non-Executive Director, Tronox Ltd (NYSE) (Appointed 1 August 2012)
• Chairman, Jervois Mining Ltd (Appointed 19 June 2018)
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FIONA MURDOCH
Non-Executive Director
Ms Murdoch was appointed as a Non-Executive Director on 24 February 2020.
Ms Murdoch has 30 years resource and infrastructure experience in Australia and overseas, holding senior
operational roles with AMCI investments, MIM Holdings and Xstrata Qld.
She has extensive domestic and international experience with major projects in Western Australia, Northern
Territory and Queensland, and in South America, Dominican Republic, Papua New Guinea and the Philippines.
Fiona is a Graduate of the AICD Company Director program and holds an MBA as well as an Honours degree
in Law.
Ms Murdoch has held the following directorships of listed companies in the three years immediately before the
end of the financial year:
• Non-Executive Director, Metro Mining Limited (Appointed 11 May 2019)
• Non-Executive Director, KGL Resources Limited (Appointed 12 June 2018)
In addition, Fiona serves on the Board of Building Queensland and the Joint Venture Committee for the West
Pilbara Iron Ore Project. Fiona is also Chair of The Pyjama Foundation, a not-for-profit organisation providing
learning-based activities for children in foster care.
KIM HYMAN
Company Secretary
Mr Hyman was appointed to the position of Company Secretary on 10 July 2007. Mr Hyman has responsibility
for company secretarial services and co-ordination of general legal services, as well as the insurance portfolio.
DIRECTORS’ MEETINGS
The number of Directors’ meetings and number of meetings attended by each of the Directors of the Company
during the financial year were:
Director
Michael Arnett
Jeff Dowling
Peter Johnston
Fiona Murdoch
Julian Pemberton
Directors’
Meetings Held
Directors’
Meetings Attended
15
15
15
6
15
15
15
15
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NOMINATION & REMUNERATION COMMITTEE
The members of the Nomination & Remuneration Committee (“N&RC”) are Michael Arnett (Chairman), Jeff
Dowling and Peter Johnston. Fiona Murdoch replaced Peter Johnston on the Committee effective 1 July 2020.
During the 2020 financial year two meetings of the Committee were held with all members in attendance. Certain
responsibilities of the Committee were also considered at board meetings as required.
AUDIT & RISK COMMITTEE
The members of the Audit & Risk Committee are Jeff Dowling (Chairman), Michael Arnett and Peter Johnston
with Fiona Murdoch replacing Peter Johnston effective 1 July 2020. During the 2020 financial year three
meetings of the Audit & Risk Committee were held with all members in attendance. In addition, some audit and
risk matters were considered in the course of regular board meetings.
SUSTAINABLITY COMMITTEE
The Board established a new committee in the year to provide advice, recommendations and assistance to the
Board of Directors of the Company with respect to sustainability primarily relating to environmental, social and
corporate governance matters. The members of the committee are Peter Johnston (Chair), Fiona Murdoch and
Michael Arnett.
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OPERATING AND FINANCIAL REVIEW
ABOUT NRW (PRINCIPAL ACTIVITIES)
NRW is a leading, diversified provider of contract services to the resources and infrastructure sectors in
Australia. With extensive operations in Western Australia, South Australia, New South Wales and Queensland.
NRW’s geographical diversification is complemented by its delivery of a wide range of operations. These
encompass civil expertise including bulk earthworks and concrete installation; contract mining and drill and
blast. NRW also offers a leading original equipment manufacturing (OEM), specialist maintenance (shutdown
services and onsite maintenance), industrial engineering and innovative materials handling design capability
with comprehensive additional experience for refurbishment and rebuild service for earthmoving equipment and
machinery. NRW has a workforce of around 7,000 people and more than one hundred projects around Australia
supporting clients across the infrastructure, resources, industrial engineering, maintenance and urban sectors.
Further detail on the operations of each business division and the Group is provided below.
SIGNIFICANT CHANGES IN BUSINESS ACTIVITIES
The Company acquired BGC Contracting on the 9 December 2019, the results of which have been incorporated
into this report from that date. BGC Contracting was subsequently renamed as NRW Contracting (“NRWC”).
GROUP RESULTS
OVERVIEW OF OPERATIONS
The current financial year has been eventful on a number of fronts. The Company has delivered record revenue,
strong earnings growth and excellent cash conversion. The successful acquisitions of BGC Contracting and
RCR Mining Technologies (“RCRMT”) both completed in calendar year 2019 have made significant
contributions to the strategic development of the company.
All of this has been achieved despite having to deal with an entirely new set of challenges created by the
responses needed to address COVID-19. Most of our activities were classified as essential services in the early
days of Federal and State virus measures. Whilst we have seen significant cost impacts to our operations as a
consequence of the virus, revenue has been maintained in line with guidance provided post the BGC
Contracting acquisition. Cost impacts included dealing with roster changes, border closures, social distancing
and staff logistics. The Company has not accessed any of the State or Federal support packages for any part
of its operations. We entered the early phases with a strong balance sheet and increased liquidity. We took
early action to retain funds by deferring the interim dividend payment given the uncertainty that we all faced in
those early days. Through the last six months activity levels and cash flow remained as planned and
consequently in May we were able to announce that the interim dividend would be paid in June 2020.
We remain vigilant across all parts of the business and while we haven’t seen any material change to our
activities the ever-changing threat brought about by COVID-19 requires us to be ready to respond at all times.
FINANCIAL PERFORMANCE
A summary of the key financial performance metrics for the current financial year (FY20) is provided below with
comments on significant movements compared to the prior comparative period (pcp), the financial year ending
30 June 2019 (FY19).
Revenue including associates at $2,062 million increased by 83% compared to $1,126 million in FY19. The
increase in revenue was a result of continued growth in the Civil and Mining businesses, a full year’s contribution
from RCRMT (acquired in February 2019) and seven months contribution from the newly acquired BGC
Contracting business.
Profit before income tax increased to $100.2 million compared to $45.7 million in FY19, a 119% increase mostly
reflecting the growth in sales. FY19 earnings were impacted by impairments related to Gascoyne Resources
further details of which can be found in the FY19 annual report.
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The table below provides key financial performance metrics for the current financial year compared to the prior
comparative period:
FY20
FY19
Revenue
Earnings
Revenue
Earnings
$M
2,062.4
(58.1)
Total Revenue / EBITDA
Revenue from Associates
Depreciation
Gascoyne impairment / RCR
Operating EBIT
Amortisation of Acquisition
Intangibles
Transaction costs
EBIT
Interest
Profit before income tax
Tax
Statutory Revenue
earnings
/ Net
2,004.3
NPAT (N)
$M
250.0
(109.1)
-
140.9
(13.0)
(14.9)
113.0
(12.8)
100.2
(26.5)
73.7
89.7
$M
1,126.3
(48.2)
1,078.1
$M
143.9
(51.3)
(28.4)
64.2
(10.8)
(1.2)
52.2
(6.5)
45.7
(13.5)
32.2
40.4
Net Earnings increased to $73.7 million compared to $32.2 million as a result of the revenue increase and
continued margin growth compared to FY19.
Non statutory measures of earnings including earnings before interest, tax, depreciation, and amortisation
(EBITDA) increased to $250.0 million compared to $143.9 million in FY19. The increase of around 74% was
due to higher business activity (revenue). This result also includes the impact of the adoption of AASB16 which
increased EBITDA by $14.0 million compared to FY19. One-off costs associated with the acquisition of BGC
Contracting have been shown separately in the table above and have been excluded from EBITDA and
operating EBIT. Net Earnings excluding non-cash costs for acquisition intangibles at standard tax rates
increased to $89.7 million compared to $40.4 million in FY19.
The Balance Sheet as at 30 June 2020 includes the acquisition of BGC Contracting. The acquisition was funded
through new equity and the assumption of asset financing debt in BGC Contracting. Consequently, overall
financial debt increased in the year to $245 million and by a further $65 million of lease debt recognised through
the adoption of AASB16.
Cash balances reflected the very strong cash conversion delivered in the financial year. Cash increased to $170
million at 30 June 2020 compared to $65 million at the start of the financial year.
Returns to shareholders included both a final dividend for FY19 of 2 cents paid in December 2019 and an interim
dividend for the current financial year of 2.5 cents paid in June 2020. Overall dividend payments in the year
totalled $18.3 million.
NRW continued to maintain strong relationships with its banking partner, Bankwest and negotiated a new $55
million facility with Bank of China to support the acquisition of BGC Contracting. All banking covenants were in
compliance at all times during the year and as at 30 June 2020.
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OPERATING SEGMENTS
NRW has structured its business reporting into four segments, Civil, Mining, Drill & Blast and Mining
Technologies.
• Civil: Delivery of private and public civil infrastructure projects, mine development, bulk earthworks and
commercial and residential subdivisions.
• Mining: Mine management, contract mining, load and haul, dragline operations, coal handling prep
plants, maintenance services and the fabrication of water and service vehicles.
• Drill & Blast: Provision of integrated, end-to-end production drill and blast services to the mining and
civil construction sectors.
• Mining Technologies: provides innovative materials handling services as well as facility maintenance
and shutdown services.
Commentary on the performance of each segment is provided below:
CIVIL
The Civil business specialises in the delivery of private and public civil infrastructure projects, mine
development, bulk earthworks and commercial and residential subdivisions. Civil construction projects include
roads, bridges, tailings storage facilities, rail formation, ports, water infrastructure and concrete installations.
Results summary ($M)
Revenue
EBITDA
Depreciation
EBIT
FY20
811.0
32.1
(7.2)
24.9
FY19
383.5
19.1
(2.3)
16.8
4.0%
3.1%
5.0%
4.4%
The Civil business reported significant growth in revenue due to increased iron ore sustaining tonnes project
activity for Rio Tinto, BHP and Fortescue Metals Group and the inclusion of seven months revenue from BGC
Contracting. Earnings grew in the year in line with the increase in revenue. Margins were slightly lower due to
lower volumes in the Golding Urban business which was directly impacted at a revenue level due to reduced
demand in land sales as a result of COVID-19 measures. Margins were also affected by the Woolgoolga to
Ballina Pacific Highway upgrade project which did not contribute any margin. This project was identified as non
performing through due diligence and has been successfully managed through the Golding business post
acquisition. Golding will deliver the project within the cost assumptions consistent with our acquisition valuation
and have negotiated a number of key variations which were outstanding at the time of the acquisition most of
which were paid in FY20.
Activity in the Civil business included mine sustaining work for Rio Tinto at Koodaideri and for Fortescue Metals
Group at Eliwana, completion of the South Flank project for BHP, construction of the Forrestfield-Airport Link
(“FAL”) for the Public Transport Authority (“PTA”) in joint venture with Salini Impregilo, upgrades to the Pacific
Highway for Roads and Maritime Services (“RMS”) and work on a number of subdivision stages for a range of
clients in the urban business in South East Queensland.
Progress on the FAL project included completion of the twin eight kilometre tunnels, and completion of
construction stages of the three stations to be delivered as part of the contract. No margin has been recognised
on the project, (no margin was recognised in FY19).
In Queensland, the business secured new work for BHP Mitsubishi Alliance (“BMA”) at the Blackwater mine site
and for the same client at Goonyella. In Western Australia, the civil business was awarded a contract by
Fortescue Metals Group to construct 65 kilometres of rail formation for their Eliwana iron ore project and in
South Australia an airport upgrade at BHP’s Olympic Dam site. Post year end NRWC was named as the
preferred proponent on the Bunbury Outer Ring Road project through the Southwest Connex Alliance of which
NRWC is a 40% partner.
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OPERATING SEGMENTS CONTINUED
MINING
The Mining business specialises in mine management, contract mining, load and haul, dragline operations, coal
handling prep plants, maintenance services and the fabrication of water and service vehicles.
Results summary ($M)
Revenue
EBITDA
Depreciation
Gascoyne
EBIT
FY20
969.7
182.7
(82.3)
18.8%
100.4
10.3%
FY19
622.9
113.4
(40.6)
(33.5)
39.3
18.2%
6.3%
The Mining business reported significant growth in both revenue and earnings mostly due to the addition of
BGC Contracting’s mining activities.
Mining projects included work for Stanmore Coal at Isaac Plains, Coronado Coal at Curragh, Wonbindi Coal at
Baralaba and Idemitsu at Boggabri. Iron ore mining activities included work for Simec at Iron Baron, Atlas Iron
at Mount Webber and Rio Tinto at Koodaideri. Gold projects include continuation of mining at Gascoyne
Resources (“Gascoyne”) Dalgaranga project. Gascoyne entered administration in FY19 resulting in an
impairment shown in the table above. We continue to work with both Gascoyne and their administrators FTI
and have agreed full recovery of all amounts owed subject to a capital raising which Gascoyne is progressing.
The Mining business secured a further five-year extension with Stanmore Coal for Isaac Plains East valued at
$500 million and the Koodaideri pre-strip contract for Rio Tinto valued at $95 million.
DRILL & BLAST
Action Drill & Blast (ADB) is a market leader in the provision of integrated, end-to-end production drill and blast
services to the mining and civil construction sectors across Australia.
Results summary ($M)
Revenue
EBITDA
Depreciation
EBIT
FY20
172.7
21.4
(9.9)
11.5
FY19
140.9
12.0
(6.8)
5.2
8.5%
3.7%
12.4%
6.7%
Activity levels have increased across the business as a result of new contract awards and higher civil activity
for both internal businesses and external customers. Earnings continue to improve as a result of the higher
revenues and lower operating costs particularly related to drill maintenance following improvement programmes
initiated in calendar year 2018.
The Drill & Blast business secured a number of new contracts and contract extensions in the year including
work for the Mining business at Koodaideri pre strip, and Iron Bridge bulk earthworks. Of the $96 million of new
awards during the year, more than 60% of this was generated through external clients and opportunities.
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OPERATING SEGMENTS CONTINUED
MINING TECHNOLOGIES
The Mining Technologies business incudes RCRMT which is a leading original equipment manufacturer (OEM)
that offers innovative materials handling design capability, and DIAB Engineering acquired in December 2019
as part of the BGC Contracting transaction. DIAB Engineering has proven capabilities in the metals and mining
industry and provides specialist maintenance (shutdown services and onsite maintenance), industrial
engineering and fabrication services.
Results summary ($M)
Revenue
EBITDA
Depreciation
Gain on acquisition
EBIT
FY20
187.2
22.4
(6.5)
12.0%
15.9
8.5%
FY19
30.9
0.7
(0.3)
5.1
5.5
2.3%
17.8%
Revenue delivery across the business was ahead of expectations and earnings were strong. The FY20 result
includes seven months of DIAB Engineering; FY19 include four months of RCRMT activity. RCRMT was
acquired in February 2019. Depreciation costs increased to include right of use asset (“lease asset”) costs
following the adoption of AASB16 for the workshops leases in Geraldton, Welshpool and Bunbury, ($3.6 million).
Activity in the year in RCRMT included the delivery of 34 major materials handling machines with a total mass
of over 2,000 tonnes, delivered to all the major iron ore producers throughout the year and all the significant
Western Australia iron ore projects. The Service and Spare parts division grew 20% on the back of a strategic
focus to support installed OEM products post commissioning both locally and internationally.
A key award for the business was to design, manufacture and construct a 3,000 tonnes per hour sizing plant
and conveyor for FMG Cloudbreak. The EPC project was delivered in less than 12 months, featured a number
of innovations for this type of equipment and is a continuation of the evolving development of RCRMT’s in pit
crushing and conveying capability.
DIAB Engineering undertook fabrication and construction of a gold processing plant for Northern Star,
fabrication and construction of an ultra fines processing plant and the construction of a 6.5 kilometre conveyor
system for Roy Hill, installation of a crushing circuit for a major lead/zinc producer Golden Grove and the
construction of a screening/stacking plant for Iluka.
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BALANCE SHEET, OPERATING CASH FLOW AND CAPITAL EXPENDITURE
A summary of the balance sheet as at the end of the current financial year and the previous financial year is
provided below.
Cash
Financial debt
Lease debt
Net Debt
PPE
Lease assets (right of use)
Working capital
Investments in associates
Tax (Liabilities)/Assets
Net Tangible Assets
Intangibles and Goodwill
Net Assets
Gearing
Gearing Excl. AASB 16
FY20
$M
170.2
(244.8)
(65.1)
(139.7)
437.8
58.3
7.2
2.6
(9.7)
356.5
115.9
472.4
29.6%
15.6%
FY19
$M
65.0
(100.5)
-
(35.5)
239.9
-
(1.6)
2.7
22.1
227.6
63.8
291.4
12.2%
Cash balances have increased due to the strong cash conversion achieved in the financial year. Lease debt
and lease assets have been included to recognise lease obligations and the corresponding lease assets under
AASB16 reporting. Most other balance sheet headings have increased as a result of the acquisition of BGC
Contracting funded through an equity raise of $125 million after costs.
Capital expenditure totalled $82.6 million compared to $77.3 million in the previous financial year. Spend
included new excavators and trucks mostly to support contract extensions in the mining business at Curragh
and Isaac Plains. Most new spend was financed through debt facilities provided by the equipment
manufacturers. The balance of spend was used for component replacements to maintain the existing fleet and
drill upgrade programmes in Drill & Blast to improve plant availability.
Intangibles and goodwill increased due to the BGC Contracting acquisition.
The income tax expense recognised in net earnings has reduced the deferred tax asset carrying value as
expected. Tax balances are now carried as a net tax liability but include within that balance further tax losses.
No income tax was paid in the year and is unlikely to be paid at the current earnings run rate until calendar
year 2021.
All banking covenants were in compliance at all times during the year and as at 30 June 2020. Gearing at year
end including AASB16 lease debt was 29.6% compared to 12.2% in the prior year. Excluding the impact of
AASB16 gearing was 15.6% only marginally higher than FY19 despite the increased debt assumed on the
acquisition of BGC Contracting.
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PEOPLE AND SAFETY / OCCUPATIONAL HEALTH AND SAFETY
While health and safety remains the highest priority, it was with great sadness we reported the fatalities of Jack
Gerdes, an employee of Golding at the Baralaba North Coal Mine on 7 July 2019, and Howard Prosser an
employee of DIAB Engineering working at the Roy Hill iron ore mine in Western Australia on 27 January 2020.
Golding and DIAB Engineering continue to assist with the Inspectorate organisations both onsite and at a
corporate level to support their ongoing investigations into the incidents.
The emergence of COVID-19 has raised significant challenges across the business. Our actions were guided
by health advice driven by Federal and State governments in our operating regions. These actions included
social distancing, working from home, changes to how we managed the logistics for getting our workforce to
sites and the implementation of new operating procedures. Our workforce responded incredibly well and despite
numerous requests to review alternate shift rosters, we have maintained a healthy workforce while meeting
client schedules. We are incredibly proud of the way over 7,000 members of our workforce over five states have
responded to this unprecedented challenge.
NRW is committed to achieving the highest possible performance in occupational health, safety and
environmental management. Our vision is for every member of our workforce to arrive home safely after each
shift or swing. We focus on continuous improvement and completing our daily tasks in a safe and efficient
manner, looking out for our workmates and ultimately delivering projects to our clients.
Our Occupational Health and Safety Management Systems are accredited to AS4801:2001/ISO18001:2007,
the applicable Australian and International Standards and are subject to continuous auditing by external third
parties.
NRW’s Total Recordable Injury Frequency Rate (TRIFR) at June 2020 reduced to 5.21 compared to 6.92 at
June 2019.
NRW has been able to successfully deliver our projects with no lost time due to industrial disputes, or any form
of work ban or limitation and recognise that our success is the result of our dedicated workforce. We employ a
high performing, skilled, experienced and appropriately qualified team of people across all our companies, who
provide a wealth of knowledge at all levels across our business.
We ensure that we provide competitive remuneration and benefits to the people who choose to work with us
and we are particularly pleased that we have a workforce that consistently returns to NRW as more projects are
secured and positions become available. We consider previous NRW employees as first preference wherever
possible, and transfer people from completed projects to new projects to ensure we retain our skilled workforce
and have the most knowledgeable people on the job. When we look for employees in the wider market, we
attract new highly qualified candidates, even for short term contracts, confirming that NRW is an employer of
choice.
We continue to enhance and upgrade our practices, systems and processes to deliver a better candidate
experience that allows for a fast and efficient mobilisation approach to our people from the point of application,
through to starting work, and continued positive communication and engagement throughout the employee
lifecycle to ensure that we remain an employer of choice and that we maintain our positive relationship with our
workforce.
This financial year we have taken on graduates in the disciplines of Commercial/Administration and Surveying
as well as Civil, Mining and Mechanical Engineering. These new eager and hardworking young people have
great future prospects with NRW and will add to the strength of our technical teams, now and into the future.
We have also partnered with some of our key suppliers to deliver a trade skill upgrade program particularly Light
Vehicle Mechanics who are in the process of upgrading their trade qualifications to a heavy industry
qualification.
Opportunities for new entrants into trade qualifications continues to be of high importance delivered through our
apprentice trade programme.
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PEOPLE AND SAFETY / OCCUPATIONAL HEALTH AND SAFETY CONTINUED
The Company is in the process of establishing a new training facility linked to a quarry owned by BGC Australia.
NRW will lease part of the facility to provide training to new recruits to the mining sector and for upskilling
existing employees. The facility can support training for up to 250 people per year on a range of mobile mining
equipment and simulators. Priority recruits will be individuals who have lost employment as a result of
COVID-19.
NRW’s current workforce levels have increased through the year as a result of increased activity and the
successful acquisition and integration of BGC Contracting. Headcount at June 2020 totalled 7,053 (June 2019
– 3,145).
NRW continues to embrace diversity and inclusiveness across all of its activities. NRW relies on and encourages
its employees to act in accordance with the Company values and contribute a diverse range of skills and
experience. Our objective is to increase participation across a range of demographics, to ensure we recruit and
retain a skilled workforce and endorse a safe and productive working environment which encourages equity,
diversity and inclusion.
NRW is focused on improving the sustainable development of local communities and traditional owners of the
areas in which we work. The Company operates a number of projects in joint venture with various Indigenous
organisations to provide sustainable business opportunities to these groups and the communities they
represent.
The Company has developed a series of initiatives to engage with indigenous communities to provide enduring
progressive opportunities. These initiatives have included entry level training opportunities such as the
“Powerup Program” which offers Indigenous candidates the opportunity to grow a career with NRW and gain
valuable experience within the civil and mining industries. NRW engaged 42 employees in entry level positions
within the last year, with 10 of those employees being indigenous candidates.
NRW is pleased to report an Indigenous participation rate which has ranged between 5% to 11% across our
major projects in Western Australia and an employee retention rate, despite project cycles, of 79%.
ENVIRONMENTAL REGULATIONS
The Group holds various licences and is subject to various environmental regulations. No known environmental
breaches have occurred in relation to the Group’s operations.
NRW operates within the strict environmental obligations defined by our clients which requires the project
“environmental footprint” to be respected at all times.
NRW is currently assessing the practicalities of implementing processes which will allow it to report on the
financial impacts that climate related risks and opportunities have on the organisation as proposed by the Task
Force on Climate-Related Financial Disclosures (“TCFD”).
The TCFD released recommendations for more effective climate-related disclosures which aim to provide a
voluntary, consistent disclosure framework that improves the ease of both producing and using climate-related
financial disclosures.
RISK MANAGEMENT
NRW has risk management policies and procedures in place to provide early identification of business risks and
to monitor the mitigation of those risks across all aspects of the business. These include risk assessment in the
tender and contracting phase, management of specifically identified project risks, treasury management and
credit risks. We also identify and track appropriate mitigation actions for identified risks.
This year the risk management framework has been updated to recognise the challenges which have arisen
from COVID-19. Further commentary on material risks is provided in the Corporate Governance and Risk
Management section of this report.
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OUTLOOK
The markets in which NRW operates continue to provide opportunities for growth as demonstrated in these
results.
A number of areas of focus were identified in the outlook commentary last year:
• Positioning in key traditional civil markets to address continued investment in iron ore;
• RCRMT integration going well – significant opportunity to generate additional value from the acquisition
and through cross selling to key clients. Reviewing options to build a broader delivery platform;
• Key focus on retaining, recruiting and training our workforce to meet strong market demand;
• NRW operating model continues to evolve as a multi-disciplined through cycle capex and opex business;
and
• Further strategic / market consolidation opportunities under review - highly disciplined approach to
assessing value (as demonstrated in other recent transactions).
The acquisition of BGC Contracting was important to the broader delivery of the business strategy. The
acquisition positions NRW in the Civil Infrastructure sector particularly in Western Australia. The importance of
addressing this market has already been demonstrated through the progress made on the Bunbury Outer Ring
Road project where we have been named as the preferred proponent as a member of the Southwest Connex
Alliance. Greater participation in the growing infrastructure sector will provide opportunities for growth and
delivers on the through cycle evolution objective noted last year.
The addition of DIAB Engineering to the Mining Technologies business delivers on the strategy to “build a
broader delivery platform”. The maintenance sector in which DIAB Engineering works is expected to show
continued year on year growth. The two businesses have developed a joint strategy to leverage capability and
add value from the enlarged business unit.
The Group has secured a number of new projects in the year for major iron ore projects, (Eliwana, West
Angeles, Koodaideri and Iron Bridge) maintaining our position to address the continued investment in this
sector.
Finally, the discipline applied to the BGC Contracting acquisition resulted in a transaction with a sub three times
EBITDA multiple fully funded though new equity raised at a premium. Post acquisition we have realised the
forecast synergies from the combined organisations and have maintained gearing below 30% (despite the
inclusion of additional debt on the adoption of AASB16).
Our objectives going forward remain broadly unchanged although with the strengthened organisation we will
concentrate more on growth through proven capability by:
• Addressing growing public civil infrastructure opportunities through proven delivery, our position in
Bunbury Outer Ring Road and our accreditations around Australia;
• Leveraging our enlarged maintenance, OEM products and mechanical construction capabilities through
the combination of RCRMT and DIAB Engineering to accelerate growth in this through cycle market;
• Building on our delivery record in the Pilbara to address continued investment in iron ore;
• Retaining, recruiting and training our workforce to meet strong market demand; and
• Continuing to review options to build a broader delivery platform.
The order book post the announcement of the Bunbury Outer Ring Road is circa $3.5 billion. NRW is forecasting
revenue of between $2.2 billion to $2.3 billion in FY21 of which around $2 billion is either in the order book or is
expected as repeatable business in Urban, RCRMT and DIAB Engineering.
The near term tender pipeline capable of being awarded in the next 12 months has strengthened to $12.9 billion
of which NRW has submitted tenders of circa $1.4 billion.
SIGNIFICANT EVENTS AFTER PERIOD END
The Company continues to monitor issues related to COVID-19. Changes have been made to operations across
the Company in order to minimise the spread including following advice on social distancing. As the pandemic
develops we will continue to monitor operations and activities to ensure we remain as vigilant as possible.
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DIRECTORS’
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REPORT CONTINUED
REPORT CONTINUED
DIVIDEND
The Directors have declared a final dividend for the financial year of four cents per share. This brings the total
dividend for the year to six and a half cents per share following the interim dividend paid in June 2020. The
dividend will be fully franked and paid on 14 October 2020.
DIRECTORS’ INTERESTS
The relevant interest of each Director in the ordinary share capital are set out in note 5.7 of Executive KMP
Remuneration Outcomes. There were no transactions between entities within the Group and Director-related
entities as disclosed in note 7.3 to the financial statements.
PERFORMANCE RIGHTS OVER UNISSUED SHARES OR INTERESTS
As at 30 June 2020 there are 4,187,762 Performance Rights outstanding (2019; 8,213,998).
Details of Performance Rights granted to Executives as part of their remuneration are set out in the
Remuneration Report on pages 14 to 27.
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REPORT CONTINUED
REPORT CONTINUED
LETTER FROM CHAIR OF THE NOMINATION & REMUNERATION COMMITTEE
LETTER FROM CHAIR OF THE NOMINATION & REMUNERATION COMMITTEE
Dear Shareholders and readers of this report,
Dear Shareholders and readers of this report,
The Remuneration Report that follows this letter details the principles, structures and outcomes required to be
The Remuneration Report that follows this letter details the principles, structures and outcomes required to be
reported by the Corporations Act and ASX Listing Rules.
reported by the Corporations Act and ASX Listing Rules.
The Company has performed exceedingly well over recent years and the year ended 30 June 2020 has been
The Company has performed exceedingly well over recent years and the year ended 30 June 2020 has been
one of our best. Earnings growth has been unparalleled and yet we have received ‘strikes’ against the
one of our best. Earnings growth has been unparalleled and yet we have received ‘strikes’ against the
Remuneration Report in each of the last two years.
Remuneration Report in each of the last two years.
Having received a remuneration strike in late 2018, primarily due to the remuneration arrangements of the CEO,
Having received a remuneration strike in late 2018, primarily due to the remuneration arrangements of the CEO,
we sought specific independent advice as a remuneration committee from external consultants. The key
we sought specific independent advice as a remuneration committee from external consultants. The key
elements of that advice have been adopted, despite some shareholders expressing concerns that the proposed
elements of that advice have been adopted, despite some shareholders expressing concerns that the proposed
new remuneration structure, particularly of the CEO, was moving away from a more equity (performance) based
new remuneration structure, particularly of the CEO, was moving away from a more equity (performance) based
incentive to a more fixed (TFR) structure.
incentive to a more fixed (TFR) structure.
Specifically, a number of changes to the remuneration structure for 2020 were made:
Specifically, a number of changes to the remuneration structure for 2020 were made:
• Changes to the ratio of fixed and variable remuneration for KMP’s tested against the market by
• Changes to the ratio of fixed and variable remuneration for KMP’s tested against the market by
independent advisors.
independent advisors.
• The inclusion of a set of objectives in the short-term incentive plan (rather than one single metric),
• The inclusion of a set of objectives in the short-term incentive plan (rather than one single metric),
including financial outcomes as before but also objectives related to safety performance, business
including financial outcomes as before but also objectives related to safety performance, business
integration, strategic and business development. (Safety was always a factor but as a modifier to other
integration, strategic and business development. (Safety was always a factor but as a modifier to other
metrics).
metrics).
• The addition of objectives other than TSR to the long-term incentive scheme (forward EBITDA and
• The addition of objectives other than TSR to the long-term incentive scheme (forward EBITDA and
Gearing) and, now that the business recovery schemes implemented in previous years have done their
Gearing) and, now that the business recovery schemes implemented in previous years have done their
job, a change to a minimum three-year vesting period.
job, a change to a minimum three-year vesting period.
Support for the changes, specifically with respect to the long-term incentive scheme appeared evident, in that
Support for the changes, specifically with respect to the long-term incentive scheme appeared evident, in that
the shareholders voted in favour of these changes at the last AGM for the Chief Executive Officer (CEO)
the shareholders voted in favour of these changes at the last AGM for the Chief Executive Officer (CEO)
arrangements.
arrangements.
We have developed the Company’s remuneration structure to recognise that NRW is a larger and more complex
We have developed the Company’s remuneration structure to recognise that NRW is a larger and more complex
organisation. This will no doubt raise further challenges which we will address to ensure the management team
organisation. This will no doubt raise further challenges which we will address to ensure the management team
is remunerated recognising these new challenges and incentivised to maximise value across the enlarged
is remunerated recognising these new challenges and incentivised to maximise value across the enlarged
organisation.
organisation.
With respect to the safety and wellbeing of our workforce, ensuring that all NRW employees work in a safe
With respect to the safety and wellbeing of our workforce, ensuring that all NRW employees work in a safe
environment has always been a fundamental element of the incentive structure. The Board noted the improved
environment has always been a fundamental element of the incentive structure. The Board noted the improved
performance in safety as reported across a range of safety metrics. The Board has been provided with full
performance in safety as reported across a range of safety metrics. The Board has been provided with full
disclosure on both fatalities that occurred in the last 12 months. Notwithstanding the improvement in safety
disclosure on both fatalities that occurred in the last 12 months. Notwithstanding the improvement in safety
performance across the group the safety component of the incentive structure has not been awarded this
performance across the group the safety component of the incentive structure has not been awarded this
financial year.
financial year.
The management team have also had to deal with a whole new set of challenges as a consequence of COVID-
The management team have also had to deal with a whole new set of challenges as a consequence of COVID-
19. This has involved developing safe social distancing practices, changes to rosters, site travel and normal
19. This has involved developing safe social distancing practices, changes to rosters, site travel and normal
day to day activities previously taken for granted. To date we have been incident free across all our site
day to day activities previously taken for granted. To date we have been incident free across all our site
operations. This is a commendable result, particularly given activity levels have been sustained throughout the
operations. This is a commendable result, particularly given activity levels have been sustained throughout the
last five months, but not a cause for complacency.
last five months, but not a cause for complacency.
I do hope that all readers of this report will recognise the exceptional business performance delivered by the
I do hope that all readers of this report will recognise the exceptional business performance delivered by the
management team and support these remuneration outcomes.
management team and support these remuneration outcomes.
In closing I would like to remind shareholders of my message from last year. Our mandate remains unchanged.
In closing I would like to remind shareholders of my message from last year. Our mandate remains unchanged.
We urge shareholders to support us as we continue to develop and implement schemes which we consider to
We urge shareholders to support us as we continue to develop and implement schemes which we consider to
be in their best interest whilst recognising the particular challenges of the market in which we work and the core
be in their best interest whilst recognising the particular challenges of the market in which we work and the core
objectives which have been set for those appointed to manage our business.
objectives which have been set for those appointed to manage our business.
Michael Arnett
Michael Arnett
Chair Nomination and Remuneration Committee
Chair Nomination and Remuneration Committee
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REPORT CONTINUED
1. REMUNERATION GOVERNANCE
NRW has established a Nomination & Remuneration Committee (“N&RC”) consisting of Michael Arnett
(Chairman), Jeff Dowling and Fiona Murdoch. The N&RC is responsible for making recommendations to the
Board on the remuneration arrangements for Non-Executive Directors and Key Management Personnel (KMP)
as set out in the N&RC Charter. The N&RC provides advice, recommendations and assistance to the Board
with respect to the following:
• The remuneration of Non-Executive Directors, including the Chair of the Board;
• The remuneration policies which are designed to attract and retain Executives with the expertise to
enhance the competitive advantage, performance and growth of NRW;
• Ensuring that the level and composition of Executive remuneration packages are fair, reasonable and
adequate and that the remuneration received by the KMP demonstrates a clear relationship between
the performance of the individual and the performance of NRW;
• Termination and redundancy policies and payments made to outgoing Executives; and
• Disclosures to be included in the corporate governance section of NRW’s annual report which relates to
NRW’s remuneration policies and procedures.
The N&RC is mandated to engage external and independent remuneration advisors who do not have a
relationship with or advise NRW management. In June 2019, the Board engaged Egan Associates (Egan) to
review its existing remuneration policies and to provide recommendations on executive short-term and long-
term incentive plan design and non-executive director remuneration. Egan was paid $23,730 as at 30 June
2020 to perform these services.
The following arrangements were made to ensure that the remuneration recommendations were free from
undue influence:
• Egan was engaged by, and reported to, the Chair of the Remuneration Committee. The agreement for
the provision of the remuneration consulting services was executed by the Chair of the Remuneration
Committee under delegated authority on behalf of the Board;
• The report containing the remuneration recommendations was provided by Egan directly to the Chair of
the Remuneration Committee; and
• Egan was permitted to speak to management throughout the engagement to understand company
processes, practices and other business issues and obtain management perspectives, if so required.
However, Egan was not permitted to provide any member of management with a copy of their draft or
final report that contained remuneration recommendations.
As a consequence, the Board is satisfied that the recommendations were made free from undue influence from
any members of the key management personnel.
This advice resulted in changes to fixed remuneration, short term incentives and the structure of the long term
incentive scheme and was duly implemented with effect from 1 July 2019 (including the LTI grants made to the
CEO in November 2019). The advice was based on market analysis of remuneration trends on a comparative
and industry specific basis.
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REPORT CONTINUED
REPORT CONTINUED
2. FIVE YEAR SNAPSHOT
2. FIVE YEAR SNAPSHOT
Measure
Measure
Market Capitalisation
Market Capitalisation
(30 June) - $ million
(30 June) - $ million
Share Price at
Share Price at
End of Year
End of Year
Total Revenue –
Total Revenue –
$ million
$ million
EPS
EPS
EPS Growth
EPS Growth
Comparative EBITDA -
Comparative EBITDA -
$ million1
$ million1
Net Profit / (Loss)
Net Profit / (Loss)
After Tax - $ million
After Tax - $ million
NPATA - $ million2
NPATA - $ million2
Interim Dividend Paid
Interim Dividend Paid
Final Dividend Declared
Final Dividend Declared
in Respect of the Year
in Respect of the Year
Annual Total
Annual Total
Shareholder Return (%)
Shareholder Return (%)
2020
2020
$793.6
$793.6
$1.86
$1.86
$2,004
$2,004
18.2 cents
18.2 cents
109.3%
109.3%
$250.0
$250.0
$73.7
$73.7
$89.7
$89.7
2.5 cents
2.5 cents
4.0 cents
4.0 cents
n/a
n/a
2019
2019
$943.5
$943.5
$2.51
$2.51
$1,078
$1,078
8.6 cents
8.6 cents
n/a
n/a
$143.9
$143.9
$32.2
$32.2
$40.4
$40.4
2.0 cents
2.0 cents
2.0 cents
2.0 cents
49%
49%
2018
2018
$630.1
$630.1
$1.70
$1.70
$685
$685
2017
2017
$205.9
$205.9
$0.64
$0.64
$345
$345
2016
2016
$58.6
$58.6
$0.21
$0.21
$288
$288
11.6 cents
11.6 cents
9.1 cents
9.1 cents
7.7 cents
7.7 cents
27.5%
27.5%
$93.4
$93.4
$42.2
$42.2
$33.9
$33.9
-
-
2.0 cents
2.0 cents
194%
194%
18.2%
18.2%
$58.8
$58.8
$28.5
$28.5
$16.5
$16.5
-
-
-
-
n/a
n/a
$47.2
$47.2
$21.5
$21.5
$9.8
$9.8
-
-
-
-
216%
216%
17%
17%
1.
1.
2.
2.
Comparative EBITDA – Earnings before interest, tax, depreciation, amortisation, transaction costs, Gascoyne impairment and RCRMT
Comparative EBITDA – Earnings before interest, tax, depreciation, amortisation, transaction costs, Gascoyne impairment and RCRMT
gain on acquisition and or impairment losses.
gain on acquisition and or impairment losses.
NPATA – Net profit after Tax adjusted for acquisition amortisation and or impairment losses at normal tax rates.
NPATA – Net profit after Tax adjusted for acquisition amortisation and or impairment losses at normal tax rates.
NWH Share Price - 4 years
NWH Share Price - 4 years
NRW Share Price - 4 years
e
r
a
h
h
h
s
s
s
/
/
$
$
/
A
$
A
A
4.00
4.00
4.00
3.50
3.50
3.50
3.00
3.00
3.00
2.50
2.50
2.50
2.00
2.00
2.00
1.50
1.50
1.50
1.00
1.00
1.00
0.50
0.50
0.50
0.00
0.00
0.00
2016
2016
2016
30.0
30.0
30.0
25.0
25.0
25.0
20.0
20.0
20.0
n
o
i
l
l
i
15.0 m
15.0
15.0
m
m
2017
2017
2017
2018
2018
2018
2019
2019
2019
Volume (m)
Volume (m)
Volume (m)
Last Price
Last Price
Last Price
10.0
10.0
10.0
5.0
5.0
5.0
0.0
0.0
0.0
2020
2020
2020
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3. DETAILS OF KEY MANAGEMENT PERSONNEL
The following persons acted as Non-Executive Directors of the Company during or since the end of the most
recent financial year:
Director
Role
Michael Arnett
Chairman and Non-Executive Director
Jeff Dowling
Non-Executive Director
Peter Johnston
Non-Executive Director
Fiona Murdoch
Non-Executive Director (from February 2020)
The named persons held their current executive position for the whole of the most recent financial year, except
as noted:
Executive
Role
Julian Pemberton
Chief Executive Officer and Managing Director
Andrew Walsh
Chief Financial Officer
Kim Hyman
Company Secretary
Geoff Caton
Executive General Manager - Golding
Ric Buratto
Executive General Manager – NRW Civil & Mining
Jeff Whiteman
Executive General Manager – Action Drill & Blast (to February 2020)
Andrew Broad
Executive General Manager – Action Drill & Blast (from February 2020)
Ian Gibbs
Executive General Manager – RCR Mining Technologies and Heat Treatment
Glen Payne
Executive General Manager – DIAB Engineering (from December 2019)
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REPORT CONTINUED
4. EXECUTIVE KMP REMUNERATION FRAMEWORK
4.1
EXECUTIVE (KMP) REMUNERATION OVERVIEW
The Board has adopted the following over-arching principles which recognise the importance of fair, effective
and appropriate remuneration outcomes:
• Alignment: Alignment of the remuneration strategy with the interests of the Company’s shareholders;
Attract and retain: The remuneration framework across NRW has been established and is regularly
reviewed to ensure that the Company can attract and retain appropriate talent across our workforce;
• Motivate: Remuneration plans are structured to ensure that our top talent are rewarded for achieving
both short and long term business objectives. A high proportion of reward is aligned to performance; and
• Appropriate: Remuneration packages are established and reviewed regularly to ensure that they reflect
contemporary trends in sectors and regions relevant to the operations of NRW.
4.2
STRUCTURE OF EXECUTIVE KMP REMUNERATION
The NRW remuneration program and consequently the remuneration components for each executive KMP
member comprise:
Total Fixed Remuneration (TFR)
• Comprising salary and superannuation capped at the relevant concessional contribution limit.
• The opportunity to salary sacrifice benefits on a tax compliant basis is available upon request.
Fixed remuneration is set with reference to role, market and relevant experience, which is reviewed annually
and upon promotion.
Short Term Incentive Plan (STIP)
• Executives can earn a cash based incentive by achieving specific objectives set by the N&RC.
• The maximum amount of these awards is based on a percentage of the executives TFR (which is set
out in the table 4.3).
• Specific objectives are set for each executive based on their core accountabilities.
• Awards up to the maximum amount payable can be achieved when performance is rated as superior
reflecting the achievement of stretch objectives.
• Awards are made through achieving a set of objectives which include where relevant financial
performance, safety, business development, business integration and strategic.
• Up to 25% of an award can be deferred for up to 12 months at the discretion of the N&RC if the committee
determines that additional time is required to provide more certainty on specific business related
outcomes.
Long Term Incentive Plan (LTIP)
• Executives can participate in an equity based incentive through the award of Performance Rights
(Rights).
• The maximum amount of an award is based on a percentage of the executives TFR (see table 4.3). The
number of rights is determined by the share price at the time the award is approved by the N&RC.
• Awards are generally made annually and may be split into tranches which have specific objectives within
a specified timeframe.
• Rights which vest following the achievement of relevant targets are converted to shares when the vesting
conditions are met.
• A critical requirement of the scheme is that the participant remains in employment with the Group up to
and including the vesting date.
• The normal performance period is a minimum of three years.
• Awards have been made in previous years to address retention objectives for key executives who joined
NRW through the Golding and RCRMT acquisitions, and to establish an equity based plan for the CEO
and CFO where no plan existed for a number of years.
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4.3
AWARD LEVELS RELATIVE TO FIXED REMUNERATION
The table below provides information on the remuneration packages of KMP’s as at 30 June 2020.
KMP
TFR1
STIP
LTIP2
Notice Period
Julian Pemberton
1,200,000
Andrew Walsh
725,000
Kim Hyman
Geoff Caton
Ric Buratto
384,570
650,000
600,000
Andrew Broad
500,000
Ian Gibbs
Glen Payne
436,386
429,003
80%
60%
0%
33%
33%
33%
33%
33%
120%
6 months
100%
6 months
0%
35%
35%
35%
35%
35%
6 months
6 months
6 months
4 weeks
6 months
12 months
1.
2.
Annual Total Fixed Remuneration (TFR) as at 30 June 2020.
LTIP structure approved by N&RC.
A number of changes were made to TFR in the year to recognise the expanded business following the
successful acquisitions of Golding and RCRMT and following external advice from Egan.
As a result of that review, the CEO‘s base remuneration was changed from $950,000 to $1,200,000 and
aggregate STI and LTI was reduced from 255% to 200% of TFR.
Full details of the change were advised in an ASX announcement dated 21 October 2019.
The changes pre dated the acquisition of BGC Contracting. Changes in remuneration to other KMP’s also
recognised changes in responsibility.
4.4
OTHER CONSIDERATIONS APPLICABLE TO LTI AWARDS
If a KMP’s employment with NRW ceases for reasons other than death or permanent disability any unvested
Rights will lapse and expire unless the Board of NRW considers it appropriate in the circumstances to consider
the vesting of any unvested shares. Where a KMP has died or becomes permanently disabled the Board may
determine that the Rights will not lapse and will be tested against the Vesting Conditions on the applicable
vesting dates.
Upon a change of control occurring in respect of NRW, the following rules will apply to determine how
Performance Rights should vest or lapse.
• Performance Rights that have met the vesting hurdle will vest on a date to be determined before the
change of control date.
• Performance Rights which have met the vesting hurdle as a consequence of the change of control (for
example a share price increment) will vest on a date to be determined before the change of control date.
• Performance Rights which have not yet met the vesting hurdle: The N&RC may (in its absolute
discretion) determine that all or a portion of these performance rights will vest, notwithstanding that time
restrictions or performance conditions applicable to the performance rights have not been satisfied.
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4.5
EXECUTIVE SERVICE AGREEMENTS
The Executive Service Agreements in place in respect of NRW’s KMPs contain non-compete provisions
restraining the executives from operating or being associated with an entity that competes with the business of
NRW up to six months after termination.
All KMP as listed in the remuneration table, other than Mr Jeff Whiteman who worked under a service contract,
are employed on standard letters of appointment that normally provide for annual reviews of base salary and
up to six months’ notice of termination by either party. Mr Glen Payne has a 12 month notice period having
joined the business from BGC Contracting. The appointments are not for any fixed term and carry no termination
payments other than statutory entitlements.
The N&RC determines remuneration
remuneration report.
for all KMP
listed under
the guidelines contained
in
this
5. EXECUTIVE KMP REMUNERATION OUTCOMES
5.1
EXECUTIVE PERFORMANCE: STIP
The following table provides information on the outcome of the STIP for each of the KMP for the year ended 30
June 2020. The value of the award is outlined in the remuneration table in section 5.5 with comparable
information for the previous year.
KMP
STIP Earned
STIP Forfeited
STIP Earned
STIP Forfeited
FY20
FY19
Mr J Pemberton
Mr A Walsh
Mr G Caton
Mr E Buratto
Mr J Whiteman
Mr A Broad
Mr I Gibbs
Mr G Payne
80%
80%
65%
50%
80%
80%
80%
0%
20%
20%
35%
50%
20%
20%
20%
100%
50%
50%
100%
33%
95%
N/A
N/A
N/A
50%
50%
0%
67%
5%
N/A
N/A
N/A
Commentary on the 2020 performance
The FY20 STIP objectives are listed below with an overview of performance provided against each objective
• Earnings – The business reported earnings at more than twice that delivered in FY19. Consequently,
group management achieved stretch targets. Most parts of the business contributed to this improvement
although there were some parts of the business which were impacted by specific issues and
consequently did not meet the performance thresholds resulting in a lower or nil award against this part
of the overall incentive plan.
• Safety – Assessment of performance against safety criteria resulted in a number of different outcomes
for each individual KMP operationally. Progress on improving safety metrics was a requirement across
all businesses for this element of the scheme to be achieved. In determining the level of award the two
fatalities were critical to the final assessment. Notwithstanding the improvement in overall safety
performance, the safety component of the incentive structure has been determined not to be awarded
this financial year.
• Business Development – new order wins across the business were ahead of plan growing the order
book from $2.2 billion at the end of FY19 to over $3.0 billion at June 2020.
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5.1
EXECUTIVE PERFORMANCE: STIP CONTINUED
• BGC Integration – Following the acquisition of BGC Contracting those members of the management
team mostly impacted by the challenges of integrating the newly acquired business were given specific
objectives related to the integration plan. In addition, the CEO and CFO were given the objective of
delivering a target EBITDA aligned to the acquisition assumptions. The BGC Contracting business has
been successfully integrated into both the East and West coast activities of NRW and Golding. Although
DIAB Engineering is running as a standalone entity, it has contributed to developing a joint strategy for
the enlarged Mining Technologies sector. Financial metrics were in line with acquisition assumptions.
• Strategic – a range of specific strategic objectives were set by the Board and the CEO. The successful
acquisition of BGC Contracting and a growing presence in the infrastructure sector were very tangible
results aligned to this objective.
The N&RC noted the progress being made to recover funds owed by Gascoyne Resources which were impaired
in FY19. The agreement noted in the FY remuneration report for KMP’s to recover amounts forfeited if funds
are recovered remains on foot.
The CEO’s performance against the objectives set for FY20 is shown below. The boxes represent the ratio of
the STI objectives within his overall plan, (for example delivery of EBITDA had the highest weighting of 30%).
All objectives were met other than safety where 10% was forfeited as noted above.
CEO FY20 Performance
EBITDA (30%)
Order Intake (15%)
Safety (20%)
BGC EBITDA (15%)
BGC Integration (15%)
Strategic Objective (5%)
0%
20%
40%
60%
80%
100%
Achieved
Forfeit
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REPORT CONTINUED
5.2
EXECUTIVE PERFORMANCE: LTIP
The structure of the Company’s long term incentive plan is set out in section 4.2 above. Details of specific
awards and progress on meeting objectives within those awards is provided below.
CEO and CFO
•
• No awards were made or were outstanding in FY14 and FY15.
•
In FY16 a “recovery” scheme was put in place with a relatively short term horizon given the very low
value of the Company’s market capitalisation at that time. The second tranche of awards from this
scheme vested in FY19 and forms part of the comparatives in this report.
In FY17 a plan was approved by shareholders again as part of a medium and longer term objective to
increment shareholder value. Initial awards from that scheme vested in FY19 and further awards
(Tranche 2) have vested in the current financial year. The objectives set at the time of the award required
the market capitalisation (TSR) to be doubled in the performance period adding circa $300 million to the
value of the Company. The objective set for Tranche 3 has also been met and consequently rights will
vest in November 2020 in line with the scheme.
• No awards were made in FY18 as the remuneration committee considered changes to the schemes
following the “normalisation’ of Company value as measured by market capitalisation. The table in note
2 above shows an increase in market capitalisation in the year of $205 million to $630 million.
• A revised scheme was introduced in the current financial year. The scheme has a three and four year
vesting period. Rights were awarded however for two years as the FY17 scheme included value for
FY20. This scheme is included as a share based payment cost for the current financial year. The
objectives have not as yet been met.
It is anticipated that a further scheme will be implemented in FY20 to recognise the next year of the
current rolling three and four year plan.
•
The table below shows the development of the Company’s equity based incentive scheme for the CEO and
CFO over time and the progression towards an annual award grant to accommodate the current rolling 3 and 4
year plan.
LTIP Award Periods CEO & CFO
LTIP Award Periods CEO & CFO
LTIP Award Periods CEO & CFO
No LTIP awards in FY 14 or FY15
No LTIP Awards in FY14 or FY15
No LTIP awards in FY 14 or FY15
2016 Plan (2 Tranches)
2016 Plan (2 Tranches)
2016 Plan (2 Tranches)
s
d
r
a
w
A
s
d
r
a
w
A
2017 Plan (3 Tranches)
2017 Plan (3 Tranches)
s
d
r
a
w
A
FY18 - No Awards
FY18 - No Awards
2017 Plan (3 Tranches)
FY18 - No Awards
2019 Plan (2 Tranches)
2019 Plan (2 Tranches)
2019 Plan (2 Tranches)
2020 Plan (under consideration)
2020 Plan (under consideration)
2020 Plan (under consideration)
13
13
14
14
13
15
15
14
16
16
15
17
17
16
18
18
17
19
19
18
19
20
20
20
21
21
21
22
22
22
23
23
23
24
24
24
Financial Years
Financial Years
Financial Years
Details of the plans which affect the FY20 results and awards made in the financial year are provided below.
The comparative results include an earlier scheme which resulted in rights vesting in November last year details
of which can be found in the FY19 remuneration report.
2017 Incentive Plan
The 2017 scheme was structured as three separate plans which reflect the long term incentive structure
established to meet very specific business challenges relevant at that time. The three plans were; Senior
Executive plan, Golding integration plan, and Executive plan (for other KMP’s). Key terms of each of these plans
is outlined below:
Senior Executive Plan
• The plan participants are the CEO and CFO.
• The structure of the plan and the quantum of rights awarded in these plans to the CEO were approved
by shareholders at the 2017 AGM.
• Rights awarded under the plans were valued based on the 60 day VWAP up to and including the day
the FY17 results and the Golding acquisition were announced (being 80 cents).
• Rights were awarded in three equal tranches with increasing performance hurdles set for each year.
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5.2
EXECUTIVE PERFORMANCE: LTIP CONTINUED
• The performance hurdles for the three years are: increase in TSR of 79% by June 18 ($1.33); increase
in TSR by June 2019 of 111% ($1.52) and increase in TSR by June 2020 of 140% ($1.71).
• As a result of the very strong increase in the share price the performance hurdles for all three tranches
have been met. Tranche 1 rights vested in November 2018, Tranche 2 vested in November 2019 and
Tranche 3 rights will vest in November 2020 subject to the executive remaining in employment with the
Group.
Golding Integration Plan
• The plan participants are the CEO and CFO.
• The structure of the plan and the quantum of rights awarded to the CEO were approved by shareholders
at the 2017 AGM.
• Rights awarded under the plan were valued based on the 60 day VWAP up to and including the day the
FY17 results and the Golding acquisition were announced (being 80 cents).
• Rights were awarded in two equal tranches with assessment dates of June 2018 and June 2019.
• Rights vest subject to the delivery of key integration objectives and the Golding business meeting agreed
financial performance targets, as assessed by the NRW Board.
• Performance in the Golding business post acquisition has been extremely strong. Tranche 1 rights
vested in August 2018 and Tranche 2 rights vested in August 2019.
Other KMP’s
The table below shows the development of the Company’s equity based incentive scheme over time for the
senior management team other than the CEO and CFO.
LTIP Award Periods Other KMP’s
LTIP Award Periods Other KMP's
LTIP Award Periods Other KMP's
No LTIP awards in FY 14 to FY17
No LTIP Awards in FY14 to FY17
No LTIP awards in FY 14 to FY17
s
d
r
a
w
A
s
d
r
a
w
A
s
d
r
a
w
A
2017 Plan
2017 Plan
2017 Plan
FY18 - No Awards
FY18 - No Awards
FY18 - No Awards
2019 Plan (2 Tranches)
2019 Plan (2 Tranches)
2019 Plan (2 Tranches)
2020 Plan (under consideration)
2020 Plan (under consideration)
2020 Plan (under consideration)
13
13
13
14
14
14
15
15
15
16
17
17
16
17
16
Financial Years
Financial Years
Financial Years
18
18
18
19
19
19
20
20
20
21
21
21
22
22
22
23
23
23
24
24
24
• There were no active long term incentive schemes from FY14 to FY17.
• An initial long term plan was implemented in FY17 to both support business growth as measured by TSR
and to act as a retention incentive for the senior management team of the then newly acquired Golding
business.
• The plan participants are the key executives within the business.
• Rights were awarded in a single tranche.
• The performance objective was aligned with the senior executive plan (as above) being an increase in
TSR by June 2019 of 111% ($1.52).
• The plan was extended in 2019 following the acquisition of RCRMT. The EGM of the business was
awarded rights in two tranches vesting in November 2020 and 2021. The relatively short performance
period reflects the agreed business recovery objectives consistent with the acquisition valuation
assumptions.
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5.2
EXECUTIVE PERFORMANCE: LTIP CONTINUED
The table below shows performance of the Company compared to the plan objectives over the four years of the
scheme.
FY17 LTIP Outcome
Above target growth
delivered every year
Real growth
in TSR
$M
1000
800
600
400
200
0
Base was 60 day
VWAP up to release
of FY17 results
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Mkt Cap (LHS)
Share Price
Target Share Price
Award Base
2019 Incentive Plan
Following the success of the 2017 scheme and input from external advisors a revised structure was approved
by the N&RC for new long term awards which was approved by shareholders at the November 2019 AGM as
part of the award of Rights to the CEO. The key features of the scheme are outlined below, further details of
the scheme can be found in the Notice of Meeting released on 21 October 2019. The scheme was structured
to:
• Grant performance rights on an annual basis equal to a percentage of the KMP’s TFR as shown in table
4.3 above “LTIP annual value” multiplied by the relevant award period. In the case of the CEO and CFO
the award period was two years (as the 2017 scheme recognised an award of long term incentives for
FY20). All other KMP’s have an award period of three years.
• The number of rights granted are based on the aggregate award value divided by the 30 day VWAP to
30 June 2019 ($2.47).
• The scheme is structured into two Tranches with performance periods of three and four years
respectively.
• Each Tranche has a set of performance hurdles which specify expected share price growth (TSR);
earnings growth (EBITDA) and minimum gearing levels.
• The targets which have now been adjusted for AASB16 are set out in the table below:
Tranche 1
Tranche 2
Total Shareholder Return (Share Price)
EBITDA ($M’s)
Gearing (%)
Min
Max
Min
Max
Below
2022
$3.22
$3.36
$224
$237
40%
2023
$3.46
$3.66
$245
$263
40%
No rights have vested under this scheme. Scheme costs are included in share based payment costs in the
remuneration report aligned to the grant of rights for each individual.
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5.3
LTI AWARDS AND VESTING STATUS
Name
Allocation
Date
Balance of
Unvested
Equity
Awards as
at 1 July
2019
Granted
Vested in
FY20
Balance of
Unvested
Equity
Awards as
at 30 June
2020
Fair Value
Per Security
Fair
Value at
Grant
Date
Share
Based
Payments
Expense
FY20
Number
Number
Number
Number
Cents
$
$
Mr J Pemberton
4/12/17 to
26/11/19
4,900,000
1,164,492
(2,762,500)
3,301,992
30.10 to 182
3,390,949
818,939
Mr A Walsh
4/12/2017
1,681,250
Mr G Caton
4/12/2017
357,798
Mr E Buratto
4/12/2017
288,000
Mr I Gibbs
15/02/2019
155,770
-
-
-
-
(981,250)
700,000
34 to 38.5
614,094
118,100
(357,798)
(288,000)
-
-
41.2
147,413
11,339
41.2
118,656
-
-
155,770
79.7 to 123.9
158,574
71,924
Details in relation to the KMP long term incentive awards are set out in note 4.7 to the financial statements.
5.4
VALUATION ASSUMPTIONS
The estimation of the fair value of share-based payment awards requires judgement concerning the appropriate
valuation methodology. The choice of valuation methodology is determined by the structure of the awards,
particularly the vesting conditions:
• Market based valuations – a Monte-Carlo simulation valuation methodology is used to determine the
share based payment cost relative to TSR growth. The valuation methodology used is chosen from those
available to incorporate an appropriate amount of flexibility with respect to the particular performance
and vesting conditions of the award.
• Non-market based valuations – EBITDA and Gearing targets are based on a 60 day VWAP up to and
including the grant date, risk-weighted for the likelihood of achievement of the vesting conditions. The
valuation methodology assumes between 90% and 100% achievement of vesting conditions.
Further details on the valuation assumptions and individual scheme awards are provided in note 4.7 of the
financial statements.
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5.5
EXECUTIVE DIRECTORS’ AND OTHER KMP REMUNERATION
The table below sets out the remuneration outcomes for each of NRW’s Executive KMP for the financial year
ended 30 June 2020 and 30 June 2019.
Key
Management
Personnel
Year
Salary &
fees
Cash based
incentive
(STI)
Annual Leave (1)
Post
Employment
Benefits
(Super)
Other Long
Term Benefits
(2)
Equity
Based
Payments
(LTI)
Total
EXECUTIVE DIRECTORS
Mr J Pemberton
EXECUTIVES
Mr A Walsh
Mr K Hyman
Mr G Caton
Mr E Buratto
Mr A Broad (3)
Mr J Whiteman (4)
Mr I Gibbs (5)
Mr G Payne(6)
2020
1,178,997
768,000
150,473
2019
929,951
356,250
57,205
2020
703,997
348,000
2019
679,951
210,000
2020
363,568
2019
356,500
-
-
2020
625,000
139,425
2019
625,000
195,000
2020
557,645
99,000
2019
557,645
60,000
2020
156,595
43,759
2019
-
-
2020
356,400
42,433
2019
513,300
114,000
37,215
18,290
14,459
18,929
26,509
11,187
17,031
(2,137)
12,042
-
-
-
2020
415,383
120,079
(23,975)
2019
140,143
2020
298,154
2019
-
-
-
-
6,264
(52,460)
-
21,003
20,531
21,003
20,531
21,003
20,531
25,000
25,000
21,003
20,531
7,876
-
-
-
19,485
9,686
11,309
-
39,207
15,502
-
-
9,755
10,669
10,433
12,423
-
-
-
-
-
-
(41,139)
2,397
7,237
-
818,939
2,976,619
900,291
2,279,730
118,100
1,228,315
316,563
1,245,335
-
-
11,339
68,037
-
59,328
-
-
-
-
71,924
27,062
-
-
408,785
406,629
837,706
936,647
694,679
695,367
220,272
-
398,833
627,300
561,757
185,552
264,240
-
Total 2020
2020
4,655,739
1,560,696
181,294
147,682
25,493
1,020,302
7,591,206
Total 2019
2019
3,802,490
935,250
109,738
116,810
40,991
1,371,281
6,376,560
1. Represents the movement in accrued annual leave.
2. Represents the movement in accrued long service leave.
3. Mr A Broad joined on 1 March 2020 as Executive General Manager of Action Drill & Blast.
4. Mr J Whiteman ceased his role as Executive General Manager of Action Drill & Blast on 28 February 2020.
5. Mr I Gibbs joined on the 15 February 2019 as Executive General Manager of RCR Mining Technologies.
6. Mr G Payne joined on 9 December 2019 as Executive General Manager of DIAB Engineering.
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REPORT CONTINUED
REPORT CONTINUED
5.6
NON-EXECUTIVE DIRECTORS’ REMUNERATION
Non-Executive Directors received a fixed fee for Board and Committee duties and are not entitled to any
performance related remuneration. The NRW constitution provides that Non-Executive Directors’ remuneration
must not exceed the maximum aggregate sum determined by the Company in a general meeting. At present,
the maximum sum is fixed at $750,000, in aggregate, per annum. This maximum sum cannot be increased
without member’s approval by ordinary resolution at a general meeting.
The table below sets out the remuneration outcomes for each of NRW’s Non-Executive Directors:
NON-EXECUTIVE DIRECTORS
Salary & fees
Non cash
benefit
Superannuation
Remuneration
Post-
Employment
Benefits
Total
Mr M Arnett
Mr J Dowling
Mr P Johnston
Ms F Murdoch
NON-EXECUTIVE
DIRECTORS’ TOTAL
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
FY20
FY19
150,000
145,000
125,000
125,000
100,000
100,000
38,387
-
413,387
370,000
-
-
-
-
-
-
-
-
-
-
14,250
14,250
11,875
11,875
9,500
9,500
3,330
-
38,955
35,625
164,250
159,250
136,875
136,875
109,500
109,500
41,717
-
452,342
405,625
Non-Executive Director fees (excluding superannuation and non-cash benefits) to be paid by the Company to
the Chairman is $150,000 (2019: $145,000) and to Non-Executive Directors is $100,000 (2019: $100,000). In
addition, the chair of the Audit & Risk committee receives an additional fee of $25,000 (2019: $25,000).
Non-Executive Directors are also entitled to receive reimbursement for travelling and other expenses that they
properly incur in attending Board meetings, attending any general meetings of the Company or in connection
with the Company’s business.
5.7
SHARE OWNERSHIP
The table below sets out the current shareholding and movement for the last two financial years for each of the
KMP who hold shares in the Company.
Director / KMP
Held at 30
June 18
Rights
vested to
Shares
Share
Sales
Held at 30
June 19
Purchases
Rights
vested to
Shares
Share
Sales
Held at 30
June 20
Mr M Arnett
1,009,179
Mr J Dowling
364,705
Mr P Johnston
109,416
-
-
-
Mr J Pemberton
6,470,387
3,738,110
-
-
-
-
1,009,179
3,355
364,705
-
109,416
3,355
-
-
-
-
-
-
1,012,534
364,705
112,771
10,208,497
-
2,762,500
(3,650,000)
9,320,997
Mr A Walsh
2,325,547
1,524,543
(954,592)
2,895,498
3,355
981,250
(570,000)
3,310,103
Ms F Murdoch
Mr G Caton
Mr E Buratto
-
-
-
-
-
-
-
-
-
-
-
-
13,700
-
-
13,700
-
-
357,798
(357,798)
-
288,000
(200,000)
88,000
TOTAL
10,279,234
5,262,653
(954,592)
14,587,295
23,765
4,389,548
(4,777,798)
14,222,810
End of Remuneration Report (Audited)
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REPORT CONTINUED
ROUNDING OF AMOUNTS
NRW Holdings Limited is a Company of the kind referred to in ASIC Corporations (Rounding in
Financial/Directors Reports) Instruments, dated 24 March 2016, and in accordance with that Corporations
Instruments amounts in the financial report are rounded off to the nearest thousand Australian dollars, unless
otherwise indicated.
This report has been made in accordance with a resolution of the Directors of the Company.
Julian Pemberton
Michael Arnett
Chief Executive Officer and Managing Director
Chairman and Non-Executive Director
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NRW HOLDINGS ANNUAL REPORT 2020 | Directors’ Report
CORPORATE GOVERNANCE &
CORPORATE GOVERNANCE &
RISK MANAGEMENT
RISK MANAGEMENT
Good corporate governance and risk management is fundamental to all aspects of NRW’s activities. Set out
below are the Company’s response to the corporate governance principles followed by a review of the key risks.
CORPORATE GOVERNANCE PRINCIPLES AND RECOMMENDATIONS
The Australian Securities Exchange Corporate Governance Council sets out best practice recommendations,
including corporate governance practices and suggested disclosures. ASX Listing Rule 4.10.3 requires
companies to disclose the extent to which they have complied with the ASX recommendations and to give
reasons for not following them.
Unless otherwise indicated the best practice recommendations of the ASX Corporate Governance Council,
including corporate governance practices and suggested disclosures, have been adopted by the Company for
the year ended 30 June 2020.
In addition, the Company has a Corporate Governance section on its website: www.nrw.com.au which includes
the relevant documentation suggested by the ASX Recommendations.
RISK MANAGEMENT
Risk is an inherent part of NRW’s business and management of those risks is therefore critical to the Company’s
performance and financial strength.
Material risks that could adversely affect the Company have been identified below along with commentary on
the risk and mitigating actions. The risks are not listed in order of significance nor are they all encompassing,
rather they reflect the most significant risks identified at a whole-of-entity or consolidated level.
Market Risk
NRW’s financial performance is influenced by the level of activity in the resources and mining industry, which is
impacted by a number of factors outside the control of NRW. These factors include:
• Demand for mining production, which may be influenced by factors including (but not limited to) prices
of commodities, exchange rates, the competitiveness of Australian mining operations and government
policy on infrastructure spend;
• The policies of mine owners including their decisions to undertake their own mining operations or to
outsource these functions; and
• The availability and cost of key resources including people, earth moving equipment, and critical
consumables.
Further, NRW operates in a competitive market and it is difficult to predict whether new contracts will be awarded
due to multiple factors influencing how clients evaluate potential service providers.
Mitigation actions include the development of a diversified service offering with contractual counterparties in
infrastructure and across a range of commodities in the resources sector.
Loss of Contracts / Reduction in Contract Scope
NRW’s revenues are subject to underlying contracts with varying terms.
• There is a risk that NRW’s contracts may be cancelled or may not be renewed if NRW’s clients
decide to reduce their levels of spending, potentially reducing revenue generated on those projects.
• Contract operations are vulnerable to the risk of interruption as a result of a variety of factors, which
may be beyond NRW’s control, including prolonged heavy rainfall or cyclones, geological instability,
accidents or unsafe conditions, equipment breakdowns, industrial relations issues, and scarcity of
materials and equipment.
Interruptions to existing operations or delays in commencing operations experienced by NRW’s clients
may result in lost revenue and, in some circumstances, result in NRW incurring additional costs, which
may have a material adverse effect on NRW’s business, results of operations and financial condition.
• NRW is also dependant on client assessments of the financial viability of their projects which includes
ensuring they have access to sufficient funding to meet project working capital and debt covenant
requirements.
•
Mitigation actions include working closely with our clients to ensure we understand issues faced by them and
to identify options where we can assist in ensuring the impact of the types of issues identified above are
minimised.
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CORPORATE GOVERNANCE &
CORPORATE GOVERNANCE &
RISK MANAGEMENT CONTINUED
RISK MANAGEMENT CONTINUED
Delivery Performance
NRW’s execution and delivery of projects involves judgement regarding the planning, development and
management of complex operating facilities and equipment. As a result, NRW’s operations, cash flows and
liquidity could be affected if the resources or time needed to complete a project are miscalculated, if it fails to
meet contractual obligations, or if it encounters delays or unspecified conditions.
NRW is also exposed to input costs through its operations, such as the cost of fuel and energy sources,
equipment and personnel. To the extent that these costs cannot be passed on to customers in a timely manner,
or at all, NRW’s financial performance could be adversely affected. If NRW materially underestimates the cost
of providing services, equipment or plant, there is a risk of a negative impact on NRW’s financial performance.
Mitigation actions include the development of robust tender and contract review processes which have been
structured to identify risk and develop specific mitigation plans to address issues as they arise. A number of
contracts include a rise and fall clause which mitigate changes in input costs to NRW.
Access to Resources
NRW’s growth and profitability may be limited by loss of key management or operational personnel or due to
being unable to recruit and retain skilled and experienced staff. Further NRW is reliant on third party equipment
to perform contract obligations which may not be available or may be subject to pricing premiums in order to
secure appropriate equipment.
Mitigation actions include the maintenance of a database of staff who have worked for the Company on all of
its projects and pricing of contracts includes estimates of the likely costs required to attract the right people to
perform the contract. NRW has developed strong working relationships with a number of equipment suppliers
in order to ensure equipment requirements are understood ahead of time in order to minimise any potential risk
around availability.
Pandemic
The ongoing challenges related to the COVID-19 pandemic require constant monitoring. To date, the impact of
the virus has not materially impacted operations, however, there is no certainty that this position will be
maintained in the future. Our clients depend on open access to international markets without which they may
need to reduce or temporarily suspend operations currently performed by NRW. We employ over 7,000 people
across the Group and rely on them to apply social distancing both at work and when not at work. We cannot
assume that we are immune to a local infection which may require operations to be temporarily suspended. Our
supply chain is not heavily reliant on overseas sourcing but none the less remains dependant on the few
overseas suppliers to remain in normal operations and local (Australian) suppliers being able to meet delivery
obligations which in turn could be impacted by the need for State or Federal responses to the ongoing pandemic.
There is a risk that a material impact related to the virus may impact operations which could result in the carrying
values of certain assets being overstated. NRW has carried out additional impairment testing to ensure the
carrying value of assets can continue to be supported.
Mitigation actions include alignment with State and Federal advice, regular reviews of processes adopted as a
result of the pandemic to ensure they are as effective as they can be in preventing the spread of the virus.
Climate Related Risks
NRW recognises the potential challenges posed by a number of factors which can be grouped under the
heading “Climate risk”. These risks mainly relate to the operations of our clients which NRW currently works for
but could nonetheless impact operations over the medium to long term. Risks include reduction to current
activity levels, and potential disruption to operations from activists. NRW operates within the strict environmental
obligations defined by our clients which requires the project “environmental footprint” to be respected at all
times. NRW will continue to monitor the effect that climate related risks have on its operations and take
appropriate action to ensure there is a balanced approach to capital allocation and the sustainable growth
objectives of the Company.
30
30
NRW HOLDINGS ANNUAL REPORT 2020 | Corporate Governance & Risk Management
AUDITOR’S INDEPENDENCE
DECLARATION
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
NRW Holdings Limited
181 Great Eastern Highway
Belmont WA 6104
18 August 2020
Dear Board Members
NRW Holdings Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of NRW Holdings Limited.
As lead audit partner for the audit of the financial statements of NRW Holdings Limited for the
financial year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
D K Andrews
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
31
NRW HOLDINGS ANNUAL REPORT 2020 | Auditor’s Independence Declaration DIRECTORS’
DIRECTORS’
DECLARATION
DECLARATION
THE DIRECTORS DECLARE THAT:
(a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable;
(b) in the Directors’ opinion, the attached financial statements are in compliance with International Financial
Reporting Standards, as stated in Note 1.2 to the financial statements;
(c) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the
financial position and performance of the consolidated entity; and
(d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001.
At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order
98/1418. The nature of the deed of cross guarantee is such that each company which is party to the deed
guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which
the ASIC Class Order applies, as detailed in note 7.1 to the financial statements will, as a group, be able to
meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of
cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations
Act 2001.
ON BEHALF OF THE DIRECTORS
Julian Pemberton
Chief Executive Officer and Managing Director
Michael Arnett
Chairman and Non-Executive Director
Perth, 18 August 2020
32
NRW HOLDINGS ANNUAL REPORT 2020 | Directors’ Declaration
32
CONTENTS
CONTENTS
PAGE
PAGE
Consolidated Statement of Profit or Loss and Other Comprehensive Income ................................................. 34
Consolidated Statement of Financial Position .................................................................................................. 35
Consolidated Statement of Changes in Equity ................................................................................................. 36
Consolidated Statement of Cash Flows ............................................................................................................ 37
Notes to the Financial Statements .................................................................................................................... 38
1. General Notes ................................................................................................................................. 38
2. Business Performance .................................................................................................................... 42
3. Balance Sheet ................................................................................................................................ 48
4. Capital Structure ............................................................................................................................. 57
5. Financing ........................................................................................................................................ 66
6. Taxation .......................................................................................................................................... 71
7. Other Notes .................................................................................................................................... 74
Shareholder Information .................................................................................................................................... 85
Independent Auditor’s Report ........................................................................................................................... 86
Appendix 4E ...................................................................................................................................................... 91
Appendix A ........................................................................................................................................................ 92
33
33
NRW HOLDINGS ANNUAL REPORT 2020 | Contents Page CONSOLIDATED STATEMENT OF PROFIT OR
CONSOLIDATED STATEMENT OF
LOSS AND OTHER COMPREHENSIVE INCOME
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the Year Ended 30 June 2020
REVENUE
Lease income
Gain on acquisition
Finance income
Finance costs
Share of profit / (loss) from associates
Materials and consumables
Employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
Plant and equipment costs
Impairment of financial assets (Gascoyne Resources)
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Profit and Other Comprehensive Income Attributable to:
Equity holders of the Company
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
Consolidated
Notes
2020
$’000
2019
$’000
2.2
2,004,362
1,078,124
7.5
2.3
2.3
3.4
2.4
2.4
2.4
4.1
2.4
6.1
4.6
311
-
506
(13,310)
(42)
(390,599)
(570,183)
(441,929)
(122,081)
(343,961)
-
(22,856)
100,218
(26,469)
73,749
-
5,120
739
(7,236)
(2,084)
(237,099)
(295,353)
(246,304)
(62,053)
(145,651)
(33,522)
(8,944)
45,737
(13,467)
32,270
73,749
32,270
Cents
Cents
18.2
18.0
8.6
8.4
The consolidated statement of profit and loss and other comprehensive income should be read in conjunction with the accompanying notes.
34
34
NRW HOLDINGS ANNUAL REPORT 2020 | Consolidated Statement of Profit or Loss and Other Comprehensive Income
CONSOLIDATED STATEMENT OF
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
FINANCIAL POSITION
As at 30 June 2020
ASSETS
Current assets
Cash and cash equivalents
Receivables
Lease receivable
Inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Lease assets (right of use)
Lease receivable
Investments in associates
Intangibles
Goodwill
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Financial debt
Lease debt
Provisions
Total current liabilities
Non-current liabilities
Financial debt
Lease debt
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
Notes
Consolidated
2020
$’000
2019
$’000
170,229
65,031
3.1
369,906
158,039
3.2
3.3
3.3
3.4
3.5
3.6
6.3
3.7
5.3
5.4
3.8
5.3
5.4
3.8
6.3
4.2
4.3
4.4
2,546
51,358
8,771
-
30,581
6,445
602,810
260,096
437,825
239,927
58,276
2,545
2,610
33,961
81,913
-
-
-
2,652
23,741
40,103
22,057
617,130
328,480
1,219,940
588,576
331,642
157,756
81,799
14,757
78,442
45,434
-
31,664
506,640
234,854
162,996
55,025
50,301
17,871
9,743
240,911
747,551
472,389
-
7,249
-
62,274
297,128
291,448
332,863
206,126
8,453
131,073
472,389
6,824
78,498
291,448
35
35
NRW HOLDINGS ANNUAL REPORT 2020 | Consolidated Statement of Financial Position CONSOLIDATED STATEMENT OF
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
CHANGES IN EQUITY
For the Year Ended 30 June 2020
Notes
Contributed
equity
$’000
206,126
-
-
-
4.4
4.3
Foreign
currency
translation
reserve
$’000
(208)
Share
based
payment
reserve
$’000
5,549
Total
Reserves
Retained
earnings
Total
Equity
$’000
5,341
$’000
$’000
61,176
272,643
-
-
-
-
-
-
-
32,270
32,270
(14,948)
(14,948)
1,483
1,483
-
1,483
206,126
(208)
7,032
6,824
78,498
291,448
-
-
-
-
(2,885)
(2,885)
206,126
(208)
7,032
6,824
75,613
288,563
4.4
-
4.2
120,000
4.2
4.2
4.2
4.5
4.3
10,000
(3,287)
24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(24)
(24)
73,749
73,749
-
-
-
-
120,000
10,000
(3,287)
-
-
-
(18,289)
(18,289)
1,653
1,653
-
1,653
332,863
(208)
8,661
8,453
131,073
472,389
Balance at 30
June 2018
Total profit and
other
comprehensive
income for the year
Dividends paid
Share-based
payments
Balance at 30
June 2019
Adjustment on
adoption of AASB
16 Leases
Balance at 1 July
2019 – As
restated
Total profit and
other
comprehensive
income for the year
Issue of ordinary
shares under
institutional share
placement
Share purchase
plan
Share issue costs
(net of tax benefit)
Treasury shares
transferred to
contributed equity
Dividends paid
Share-based
payments
Balance at 30
June 2020
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
36
36
NRW HOLDINGS ANNUAL REPORT 2020 | Consolidated Statement of Changes in Equity
CONSOLIDATED STATEMENT OF
CONSOLIDATED STATEMENT OF
CASH FLOWS
CONSOLIDATED STATEMENT OF
CASH FLOWS
CASH FLOWS
For the Year Ended 30 June 2020
For the Year Ended 30 June 2020
Consolidated
Notes
2020
2019
$’000
Consolidated
$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Notes
2020
Receipts from customers
Payments to suppliers and employees
CASH FLOWS FROM OPERATING ACTIVITIES
Interest paid1
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid1
Income tax paid
Interest received
Net cash flow from operating activities
Income tax paid
Net cash flow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant and equipment
Acquisition of property, plant and equipment
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant and equipment
Payment for subsidiary
Acquisition of property, plant and equipment
Net cash used in investing activities
Payment for subsidiary
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of equity instruments of the Company
Payment for share issue costs
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of equity instruments of the Company
Proceeds from borrowings
Payment for share issue costs
Repayment of borrowings
Repayment of lease debt1
Proceeds from borrowings
Repayment of borrowings
Payment of dividends to shareholders
Repayment of lease debt1
Net cash from / (used in) financing activities
Payment of dividends to shareholders
Net cash from / (used in) financing activities
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of the year
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the end of the year
2.3
2.3
2.3
2.3
5.1
5.1
3.3
7.5
3.3
7.5
4.2
4.2
4.2
5.3
4.2
5.3
5.3
5.4
5.3
4.5
5.4
4.5
Cash and cash equivalents at beginning of the year
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Cash and cash equivalents at the end of the year
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
$’000
2,120,573
(1,892,067)
2,120,573
(13,310)
2019
$’000
1,111,610
(1,004,508)
1,111,610
(7,236)
(1,892,067)
506
(1,004,508)
739
(13,310)
-
215,702
506
-
215,702
1,377
(82,622)
1,377
(111,759)
(82,622)
(193,004)
(111,759)
(193,004)
130,000
(4,694)
130,000
68,469
(4,694)
(82,434)
68,469
(10,552)
(82,434)
(18,289)
(10,552)
82,500
(18,289)
82,500
105,198
65,031
105,198
170,229
65,031
170,229
(7,236)
(789)
739
99,816
(789)
99,816
1,333
(77,263)
1,333
(10,000)
(77,263)
(85,930)
(10,000)
(85,930)
-
-
-
88,602
-
(81,355)
88,602
-
(81,355)
(14,948)
-
(7,701)
(14,948)
(7,701)
6,185
58,846
6,185
65,031
58,846
65,031
1 In accordance with the new accounting standard AASB 16 Leases, adopted from 1July 2019, the Group has classified:
-
-
-
Cash payments for the principal portion of lease payments as financing activities;
Cash payments for the interest portion of lease payments as operating activities; and
Short term lease payments and payments for leases of low-value assets as operating activities.
1 In accordance with the new accounting standard AASB 16 Leases, adopted from 1July 2019, the Group has classified:
-
-
-
Cash payments for the principal portion of lease payments as financing activities;
Cash payments for the interest portion of lease payments as operating activities; and
Short term lease payments and payments for leases of low-value assets as operating activities.
NRW HOLDINGS ANNUAL REPORT 2020 | Consolidated Statement of Cash Flows
37
37
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENT
FINANCIAL STATEMENTS
1. GENERAL NOTES
1.1
GENERAL INFORMATION
NRW Holdings Limited is a public company listed on the Australian Securities Exchange which is incorporated
and domiciled in Australia. The address of the Company’s registered office is 181 Great Eastern Highway,
Belmont, Western Australia. The consolidated financial statements of the Company for the year ended 30 June
2020 comprises the Company and its subsidiaries (together referred to as ‘Consolidated’, the ‘Consolidated
Group’ or the ‘Group’). The Group is primarily involved in civil and mining contracting, urban development,
provision of drilling and blasting services and supply of innovative mining technologies.
1.2
BASIS OF PREPARATION
This section sets out the basis of preparation and the Group accounting policies that relate to the consolidated
financial statements as a whole. Significant and other accounting policies that summarise the measurement
basis used and are relevant to an understanding of the financial statements are provided throughout the notes
to the financial statements to which it relates.
The financial report is a general purpose financial report which:
• has been prepared in accordance with Australian Accounting Standards (AASBs), including Australian
Accounting Interpretations adopted by the Australian Accounting Standards Board, and the Corporations
Act 2001. The financial report of the Group also complies with International Financial Reporting
Standards (IFRSs) and Interpretations as issued by the International Accounting Standards Board
(IASB);
• has been prepared on the basis of historical cost except for the revaluation of financial instruments.
Historical cost is based on the fair values of the consideration given in exchange for goods and services;
is presented in Australian dollars (AUD);
is rounded to the nearest thousand ($000), unless otherwise stated, in accordance with ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191;
•
•
• adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are
relevant to the operations of the Group and effective for reporting periods beginning on or after
1 July 2019. Refer to note 1.4 for further details;
• does not early adopt any Accounting Standards and Interpretations that have been issued or amended
but are not yet effective. Refer to note 1.4 for further details; and
• has applied the Group accounting policies consistently to all periods presented.
The financial statements were authorised for issue by the Directors on 18 August 2020.
1.3
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the Company and entities
(including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the
Company:
• has power over the investee;
•
• has the ability to use its power to affect its returns.
is exposed, or has rights, to variable returns from its involvement with the investee; and
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above.
38
38
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
1.3
BASIS OF CONSOLIDATION CONTINUED
When the Company has less than a majority of the voting rights of an investee, it has power over the investee
when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee
unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the
Company’s voting rights in an investee are sufficient to give it power, including:
• The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the
other vote holders;
• Potential voting rights held by the Company, other vote holders or other parties;
• Rights arising from other contractual arrangements; and
• Any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns
at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when
the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or
disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive
income from the date the Company gains control until the date when the Company ceases to control the
subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company
and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of
the Company and to the non-controlling interests even if this results in the non-controlling interests having a
deficit balance.
1.4
NEW ACCOUNTING STANDARDS
New Standards effective for the current financial year that are relevant to the Group include:
Standard/Interpretation
AASB 16
Leases
In the current year, the Group has applied AASB 16 Leases (as issued by the IASB in January 2016) that is
effective for annual periods that begin on or after 1 January 2019.
AASB 16 introduces new or amended requirements with respect to lease accounting. It introduces significant
changes to lessee accounting by removing the distinction between operating and finance leases and requiring
the recognition of a right-of-use asset (“lease asset”) and a lease liability (“lease debt”) at commencement for
all leases, except for short-term leases and leases of low value assets when such recognition exemptions are
adopted. In contrast to lessee accounting, the requirements for lessor accounting have remained largely
unchanged. The impact of the adoption of AASB 16 on the Group’s consolidated financial statements is
described below.
The date of initial application of AASB 16 for the Group is 1 July 2019.
The Group has applied AASB 16 using the modified retrospective approach which:
• Requires the Group to recognise the cumulative effect of initially applying AASB 16 as an adjustment to
the opening balance of retained earnings at the date of initial application.
• Does not permit restatement of comparatives, which continue to be presented under AASB 117.
39
39
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
1.4
NEW ACCOUNTING STANDARDS CONTINUED
Lease definition
The Group has made use of the practical expedient available on transition to AASB 16 not to reassess whether
a contract is or contains a lease. Accordingly, the definition of a lease in accordance with AASB 117 will continue
to be applied to those leases entered or changed before 1 July 2019. The change in definition of a lease mainly
relates to the concept of control. AASB 16 determines whether a contract contains a lease on the basis of
whether the customer has the right to control the use of an identified asset for a period of time in exchange for
consideration. This is in contrast to the focus on ‘risks and rewards’ in AASB 117.
The Group applies the definition of a lease and related guidance set out in AASB 16 to all lease contracts
entered into or changed on or after 1 July 2019 (whether it is a lessor or a lessee in the lease contract). In
preparation for the first-time application of AASB 16, the Group carried out an implementation project. The
project has showed that the new definition in AASB 16 will not significantly change the scope of contracts that
meet the definition of a lease for the Group.
Explanatory note on application (Lessee Accounting)
i)
Former operating leases
AASB 16 changes how the Group accounts for leases previously classified as operating leases under AASB
117, which were off balance sheet.
Applying AASB 16, for all leases (except as noted below), the Group:
• Recognises lease asset and lease debt in the consolidated statement of financial position, initially
measured at the present value of the future lease payments, with the lease asset adjusted by the amount
of any prepaid or accrued lease payments in accordance with AASB 16;
• Recognises depreciation of lease assets and interest on lease debt in the consolidated statement of
profit or loss; and
• Separates the total amount of cash paid into a principal portion (presented within financing activities)
and interest (presented within operating activities) in the consolidated statement of cash flows.
Lease incentives (e.g. rent free period) are recognised as part of the measurement of the lease assets and
lease debt whereas under AASB 117 they resulted in the recognition of a lease incentive, amortised as a
reduction of rental expenses on a straight line basis.
Under AASB 16, lease assets are tested for impairment in accordance with AASB 136.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (which includes tablets
and personal computers, small items of office furniture and telephones), the Group has opted to recognise a
lease expense on a straight-line basis as permitted by AASB 16. This expense is presented within ‘Other
expenses’ in profit or loss.
The Group has used the following practical expedients when applying the modified retrospective approach to
leases previously classified as operating leases applying AASB 117.
• The Group has applied a single discount rate to a portfolio of leases with reasonably similar
characteristics.
• The Group has elected not to recognise lease assets and lease debt to leases for which the lease term
ends within 12 months of the date of initial application.
• The Group has excluded initial direct costs from the measurement of the lease asset at the date of initial
application.
• The Group has used hindsight when determining the lease term when the contract contains options to
extend or terminate the lease.
ii)
Former finance leases
There were no changes to leases that were classified as finance leases applying AASB 117. The carrying
amount of the leased assets and obligations under finance leases measured applying AASB 117 immediately
before the date of initial application are disclosed within property, plant and equipment and financial debt
respectively without any adjustments, except in cases where the Group has elected to apply the low-value lease
recognition exemption.
40
40
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
1.4
NEW ACCOUNTING STANDARDS CONTINUED
When assessing the nature of a contract, the Group considers whether the contract transfers control of the
underlying asset itself (as opposed to conveying the right to control the use of the underlying asset for a period
of time). If so, the transaction is a sale or purchase within the scope of other Standards.
The lease asset and the lease debt are accounted for applying AASB 16 from 1 July 2019. The weighted
average lessees incremental borrowing rate applied to lease debt recognised in the statement of financial
position on 30 June 2020 is 6.1%.
The Group has applied a modified retrospective approach and therefore, the comparative figures have not been
restated within accompanying financial statements.
Explanatory note on application (Lessor Accounting)
AASB 16 does not change substantially how a lessor accounts for leases. Under AASB 16, a lessor continues
to classify leases as either finance leases or operating leases and accounts for those two types of leases
differently.
However, AASB 16 has changed and expanded the disclosures required, in particular regarding how a lessor
manages the risks arising from its residual interest in leased assets.
Under AASB 16, an intermediate lessor accounts for the head lease and the sublease as two separate contracts.
The intermediate lessor is required to classify the sublease as a finance or operating lease by reference to the
lease asset arising from the head lease (and not by reference to the underlying asset as was the case under
AASB 117).
The Group did not reclassify any of its operating sublease agreements.
Reconciliation on application of AASB 16
Refer to Appendix A for financial statement analyses of AASB 16 impact.
Standards in issue but not yet effective
Standard/Interpretation and Amendments
Definition of a Business
AASB 2018-6 Amendments to Australian Accounting Standards (AASB 3)
Definition of Material
AASB 2018-7 Amendment to Australian Accounting Standards (AASB 1 and AASB 8)
Interest Rate Benchmark Reform
AASB 2019-3 Amendment to Australian Accounting Standards (AASB 9 and AASB 7)
Conceptual Framework for Financial Reporting
AASB 2019 -1 Amendments to References to the Conceptual Framework in AASB
Standard
The directors do not expect that the adoption of the Standards listed above will have an impact on the financial
statements of the Group in future periods.
1.5
OTHER ACCOUNTING POLICIES
Significant and other accounting policies that summarise the measurement basis used and are relevant to an
understanding of the financial statements are provided throughout the notes to the financial statements.
1.6
ACCOUNTING JUDGMENTS AND ESTIMATES
In applying the Group’s accounting policies, which are described throughout the notes to the financial
statements, the Directors are required to make judgements (other than those involving estimations) that have a
significant impact on the amounts recognised and to make estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and various other factors that are considered to be reasonable
under the circumstances. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised:
•
•
if the revision affects only that period; or
in the period of the revision and future periods if the revision affects both current and future periods.
Throughout the notes to the financial statements further information is provided about key judgements and
estimates that we consider material to the financial statements.
41
41
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
2. BUSINESS PERFORMANCE
2.1
SEGMENT REPORTING
NRW is comprised of four businesses, constituting four reportable segments, Civil, Mining, Drill and Blast and
Mining Technologies. All revenues and activities are conducted in Australia.
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 relating to transactions with other components
of the Group), whose operating results are regularly reviewed by the Group’s Chief Operating Decision Maker
to make decisions about resources to be allocated to the segment and assess its performance, and for which
discrete financial information is available. Management will also consider other factors in determining operating
segments such as the management organisational structure and the level of segment information presented to
the Board of Directors.
Significant business acquisition
On 9 December 2019, the Company completed the acquisition of BGC Contracting Pty Ltd subsequently
renamed as NRW Contracting Pty Ltd (“NRWC”). Total consideration for NRWC was $140.4 million for 100%
of the shares. The Civil and Mining NRWC businesses have been integrated into the Civil and Mining segments,
DIAB Engineering has been incorporated into the Mining Technologies segment. For further details on the
acquisition of NRWC refer to note 7.5.
Reportable segments
NRW has structured its business reporting into four segments, Civil, Mining, Drill & Blast and Mining
Technologies.
• Civil: Delivery of private and public civil infrastructure projects, mine development, bulk earthworks and
commercial and residential subdivisions.
• Mining: Mine management, contract mining, load and haul, dragline operations, coal handling prep
plants, maintenance services and the fabrication of water and service vehicles.
• Drill & Blast: Provision of integrated, end-to-end production drill and blast services to the mining and
civil construction sectors.
• Mining Technologies: Provides innovative materials handling services as well as facility maintenance
and shutdown services.
Segment results include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise predominantly corporate expenses. Inter-segment pricing is
determined on an arm’s length basis.
Reportable Segment Revenues and Results
2020
$’000
Revenue (1)
Civil
Mining
Drill &
Blast
Mining
Technologies
Eliminations
/ Corporate
Total
810,998
969,677
172,724
187,167
(78,120)
2,062,446
Revenue from Associates
(58,084)
-
-
-
-
(58,084)
Statutory revenue
752,914
969,677
172,724
187,167
(78,120)
2,004,362
EBITDA (2)
32,121
182,664
21,410
22,384
(8,555)
250,024
EBITDA margin (%)
4.0%
18.8%
12.4%
12.0%
-
12.1%
Depreciation and amortisation
(7,212)
(82,323)
(9,890)
(6,532)
(3,124)
(109,081)
EBIT
24,909
100,341
11,520
15,852
(11,679)
140,943
Amortisation of acquisition intangibles (3)
Transaction costs (4)
Interest
Profit before income tax
Income tax expense
Profit for the year
(1)
(2)
(3)
(4)
Revenue including associates and joint ventures.
EBITDA is earnings before interest, tax, depreciation, amortisation of acquisition intangibles and transaction costs.
Amortisation of RCRMT and NRW Contracting acquisition intangibles.
Transaction costs include costs associated with the acquisition of NRW Contracting.
42
(13,000)
(14,921)
(12,804)
100,218
(26,469)
73,749
42
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
2.1
SEGMENT REPORTING CONTINUED
2019
$’000
Revenue (1)
Civil
Mining
Drill &
Blast
Mining
Technologies
Eliminations
/ Corporate
383,507
622,924
140,942
30,882
(51,919)
Revenue from Associates
(48,212)
-
-
-
-
Statutory revenue
335,295
622,924
140,942
30,882
(51,919)
Interest
add
back(5)
-
-
-
Total
1,126,336
(48,212)
1,078,124
EBITDA (2)
19,050
113,436
12,032
EBITDA margin (%)
5.0%
18.2%
8.5%
Depreciation and amortisation
(2,325)
(40,614)
(6,826)
Gascoyne impairment
RCRMT gain on acquisition
(33,522)
EBIT
16,725
39,300
5,206
Amortisation of acquisition intangibles (3)
688
2.2%
(325)
-
363
Transaction costs (4)
Interest
Profit before income tax
Income tax expense
Profit for the year
(6,420)
5,152
143,938
12.8%
(1,186)
-
(51,276)
5,120
(33,522)
5,120
(2,486)
5,152
64,260
(10,777)
(1,249)
(6,497)
45,737
(13,467)
32,270
(1)
(2)
(3)
(4)
(5)
Revenue including associates.
EBITDA is earnings before interest, tax, depreciation, amortisation of acquisition intangibles and transaction costs.
Amortisation of Golding and RCRMT acquisition intangibles.
Transaction costs include legal costs associated with the acquisition of RCRMT (FY19) and costs associated with the Corporate note refinance, and early
termination costs of bank debt (FY19).
Interest add back is interest included in the cost base of the business segment and recovered over client contracts.
Segment Assets and Liabilities
Segment Assets
Segment Liabilities
Civil
Mining
Drill and Blast
Mining Technologies
Unallocated assets
2020
$’000
202,757
647,177
63,426
106,066
200,514
Consolidated
1,219,940
Information About Major Customers
2019
$’000
92,307
273,421
74,388
44,246
104,214
588,576
2020
$’000
194,959
369,097
37,923
63,041
82,531
747,551
2019
$’000
63,579
153,160
39,975
15,380
25,034
297,128
Included in the revenues arising from sales of the reportable segments are approximate revenues to arise from
the sales to the Group’s largest customers.
These are summarised by segment below for the year end 30 June 2020:
Major customer 1
Major customer 2
Major customer 3
Civil
$’000
239,871
169,178
-
Total for continuing operations
409,049
Mining
Drill and Blast
Mining
Technologies
$’000
26,632
-
183,195
209,827
$’000
9,877
14,310
31,472
55,659
$’000
13,819
32,346
-
46,165
Total
$’000
290,199
215,834
214,667
720,700
43
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
2.1
SEGMENT REPORTING CONTINUED
These are summarised by segment below for the comparative year end 30 June 2019:
Civil
$’000
-
-
-
Mining
Drill and Blast
$’000
150,304
115,267
265,571
$’000
-
8,410
8,410
Mining
Technologies
$’000
-
-
-
Total
$’000
150,304
123,677
273,981
Major customer 1
Major customer 2
Total for continuing operations
2.2
REVENUE
Revenue - group and equity accounted joint ventures (1)
Equity accounted joint ventures
Revenue from contracts with customers
Consolidated
2020
$’000
2,062,446
(58,084)
2,004,362
2019
$’000
1,126,336
(48,212)
1,078,124
1)
The Group defines aggregated revenue as revenue and income calculated in accordance with relevant accounting standards plus our share of revenue earned
by our associates and Joint Ventures.
Revenue from contracts with customers is recognised in the income statement when the performance
obligations are considered met, which can be at a point in time, or over time, depending on the various service
offerings. Major activities of the Group are: Construction Contracts, Mining, Drill and Blast Service and Mining
Technologies.
(i) Construction Contracts
Revenues from construction contracts are recognised by reference to the stage of completion of the contract
activity. Measurement is based on the proportion of contract costs incurred for work performed to date relative
to the estimate total contract costs, except where this would not be representative of the stage of completion.
The directors consider that this input method is an appropriate measure of the progress towards complete
satisfaction of performance obligations under AASB 15.
The Group becomes entitled to invoice customers for construction contracts based on achieving a series of
performance-related milestones. When a particular milestone is reached the customer is sent a relevant
statement of work signed by a third party assessor and an invoice for the related milestone payment. The Group
will previously have recognised a contract asset for any work performed. Any amount previously recognised as
a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer. If the
milestone payment exceeds the revenue recognised to date under the cost-to-cost method then the Group
recognises a contract liability for the difference.
(ii) Service Contracts
Revenue from service contracts is predominantly recognised on the basis of the value of work completed.
Customer contracts are generally based on schedule of rates for each of the activities performed which identify
value for the work performed and hence the value of revenue to be recognised.
Revenue for preventative maintenance contracts is recognised progressively over the contract term.
(iii) Lease income
Includes income from sub-leasing plant and machinery. Under AASB 16, the Group classifies particular sub-
leases as a finance lease because the sub-lease contracts are for the whole of the remaining term of the
underlying life of the plant. The Group has recognised a lease receivable, showing the undiscounted lease
payments to be received after the reporting date.
44
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
2.2
REVENUE CONTINUED
Further information about the Group’s revenue recognition policies for both construction contracts and services
under the current accounting standards is provided below.
Transaction Price and Contract Modifications
The transaction price is the amount of consideration to which the Company expects to be entitled to under the
customer contract and which is used to value total revenue and is allocated to each performance obligation.
The determination of this amount includes both “fixed consideration”, (for example the agreed lump sum,
aggregated schedule of rates or pricing for services) and “variable consideration”.
The main variable consideration elements are claims (contract modifications) and consideration for optional
works and provisional sums, each of which need to be assessed. Contract modifications are changes to the
contract approved by the parties to the contract. When determining whether approval has been granted by the
parties to the contract, the Group takes into consideration factors including, but not limited to, contract terms,
customary business practices, the status of the negotiation process, the ability to enforce the other party and
expert legal opinion.
A contract modification may exist even though the parties to the contract may not have finalised the scope or
price (or both) of the modification. Contract modifications may include a claim, which is an amount that the
contractor seeks to collect as reimbursement for costs incurred (and/or to be incurred) due to reasons or events
that could not be foreseen and are not attributable to the contractor, for more work performed (and/or to be
performed) or variations that were not formalised in the contract scope.
The right to variable consideration shall be provided to the extent the agreement with the customer creates
enforceable rights and obligations. Once the enforceable right has been identified, the Group applies the
guidance given in AASB 15 in relation to variable consideration. This requires an assessment that it is highly
probable that there will not be a significant reversal of this revenue in the future.
Costs to Obtain and Fulfil a Contract
Costs incurred during the tender / bid process are expensed, unless they are incremental to obtaining the
contract and the Group expects to recover those costs or where they are explicitly chargeable to the customer
regardless of whether the contract is obtained. The incremental costs of obtaining a contract are those costs
that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not
been obtained.
Financing Components
The Group does not expect to have any contracts where the period between the transfer of the promised goods
or services to the customer represents a financing component. As a consequence, the Group does not adjust
any of the transaction prices for the time value of money.
Warranties
Generally, construction and services contracts include defect and warranty periods following completion of the
project. These obligations are not deemed to be separate performance obligations and therefore estimated and
included in the total costs of the contracts. Where required, amounts are recognised accordingly in line with
AASB 137: Provisions, Contingent Liabilities and Contingent Assets. Refer to note 3.8 for further details.
Loss Making Contracts
A provision is made for the difference between the expected cost of fulfilling a contract and the expected
unearned portion of the transaction price where the forecast costs are greater than the forecast revenue. The
provision is recognised in full in the period in which loss making contracts are identified under AASB 137.
Equity-Accounted Joint Ventures
The Salini Impregilo NRW Joint Venture (“SI-NRW JV”) is accounted for as an equity method joint venture. The
book carrying value of the Group’s investment in SI-NRW JV reflects the Group’s share of SI-NRW JV’s net
profit, including SI-NRW JV’s recognition of revenue. NRW’s share of profits from SI-NRW JV represents NRW
management’s best measurement of profit recognised post adoption of AASB15. In determining the level of
profit to recognise on the project NRW also refers to an agreement with Salini Impregilo which caps the total
amount of profit that NRW can recognise on the project (being $19 million) and the maximum loss which NRW
can sustain on the project (being $8 million). NRW does not expect either cap to apply.
45
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
2.2
REVENUE CONTINUED
Key judgements and estimates
Stage of completion
Determining the stage of completion requires an estimate of expenses incurred to date as a percentage of
total estimated costs. Key assumptions regarding costs to complete include estimations of labour, technical
costs, impact of delays and productivity. These estimates are performed by qualified professionals within the
project teams.
Variable consideration
The measurement of the additional consideration arising from claims is subject to a high level of uncertainty,
both in terms of the amounts that the customer will pay and the collection times, which usually depend on the
outcome of negotiations between the parties or decisions taken by judicial/arbitration bodies. The Group
considers all the relevant aspects and circumstances such as the contract terms, business and negotiating
practices of the sector, the Group’s historical experiences with similar contracts and consideration of those
factors that affect the variable consideration that are out of the control of the Group or other supporting
evidence when making the above decision.
The estimate of variable consideration can only be recognised to the extent it is highly probable that a
significant revenue reversal will not occur in future. As at 30 June 2020, the Group has recognised revenue
of $39.5 million (2019: $21.4 million) from unapproved claims based on the relative stage of completion.
Remaining Performance Obligations (Work in Hand)
The transaction price allocated to remaining performance obligations (unsatisfied or partially satisfied) at 30
June 2020 are set out below.
Civil
Mining
Drill and Blast
Mining Technologies
Total
Within one year
More than one year
Total
Consolidated
Consolidated
2020
$’000
476,706
2,193,527
289,496
79,880
3,039,609
2020
$’000
1,752,699
1,286,910
3,039,609
2019
$’000
506,485
1,371,713
281,407
49,164
2,208,769
2019
$’000
1,173,099
1,035,670
2,208,769
NRW’s contracts in its operating sectors have varying lengths. The average duration of contracts is given below.
Revenue is typically earned over these varying timeframes.
• Construction
• Contract mining
• Mineral processing equipment
• Maintenance services
1-2 years
1-6 years
1-2 years
1-5 years
46
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
2.3
NET FINANCE EXPENSE
Interest income
Total finance income
Interest expense on financial debt
Interest expense on lease debt
Total finance expenses
NET FINANCE EXPENSE
Interest Income
Consolidated
2020
$’000
506
506
(9,889)
(3,421)
(13,310)
(12,804)
2019
$’000
739
739
(7,236)
-
(7,236)
(6,497)
Interest income is accrued on a time basis, by reference to the principal amount outstanding and at the effective
interest rate applicable, which is the rate that discounts estimated future cash receipts through the expected life
of the financial asset of that asset’s net carrying amount.
Interest Expense
Interest expense is recognised using the effective interest method. The effective interest method is a method of
calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.
The effective interest rate is the rate that discounts estimated future cash payments through the expected life
of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
2.4
OTHER EXPENSES
Consolidated
EMPLOYEE BENEFITS EXPENSE
Wages and salaries
Superannuation contributions
Share based payments (note 4.7)
Total
DEPRECIATION & AMORTISATION
Depreciation of non-current assets
Amortisation
Total
PLANT & EQUIPMENT COSTS
Rental expense for plant and equipment
Plant maintenance and operating costs
Total
OTHER EXPENSES
Insurance
Professional services
Profit / (loss) on sale of property, plant and equipment
All other expenses
Total
2020
$’000
(527,207)
(41,323)
(1,653)
(570,183)
(108,802)
(13,279)
(122,081)
(152,292)
(191,669)
(343,961)
(9,862)
(2,826)
(1,477)
(8,691)
(22,856)
2019
$’000
(273,951)
(19,919)
(1,483)
(295,353)
(49,963)
(12,090)
(62,053)
(80,707)
(64,944)
(145,651)
(3,128)
(707)
(472)
(4,637)
(8,944)
47
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3. BALANCE SHEET
3.1
TRADE AND OTHER RECEIVABLES
Trade receivables
Contract assets
Total contract debtors
Other receivables
Retentions
Loans to associates
Total trade and other receivables
Trade receivables
2020
$’000
153,571
210,060
363,631
5,863
-
412
369,906
Consolidated
2019
$’000
76,172
76,674
152,846
4,254
196
743
158,039
Trade receivables represent receivables in respect of which the Group’s right to consideration is unconditional
subject only to the passage of time. Trade receivables and other receivables are initially recognised at fair value
and subsequently at amortised cost using the effective interest rate method, less an allowance for impairment.
The average credit period on trade receivables ranges from 30 to 75 days in most cases. In determining the
recoverability of a trade receivable, the Group used the expected credit loss model as per AASB 9. The expected
credit loss model requires the Group to account for expected credit losses at each reporting date to reflect
changes in credit risk since initial recognition of the financial assets. In other words, it is no longer necessary
for a credit default to have occurred before credit losses are recognised.
Contract assets
AASB 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what might more commonly be known
as ‘accrued revenue’ and ‘deferred revenue’. Contract assets represent the Group’s right to consideration for
services provided to customers for which the Group’s right remains conditional on something other than the
passage of time. Amounts are generally reclassified to trade receivables when contract performance obligations
have been certified or invoiced to the customer. Contract liabilities arise where payment is received prior to work
being performed.
Age of trade receivables that are past due
60-90 days
90-120 days
Total
2020
$’000
361
870
1,231
Consolidated
2019
$’000
157
250
407
Past due is defined under AASB 7 Financial Instruments: Disclosures to mean any amount outstanding for one
or more days after the contractual due date. Past due amounts relate to a number of trade receivable balances
where for various reasons the payment terms may not have been met. These receivables have been assessed
to be fully recoverable. Refer to note 4.1 for further details.
Key judgements and estimates
Estimation of contract revenue (contract assets)
Where performance obligations are satisfied over time, revenue is recognised in the consolidated income
statement by reference to the progress towards complete satisfaction of each performance obligation.
Fundamental to this calculation is a reliable estimate of the transaction price, refer to note 2.2 for judgements
applied in determining the amount of unbilled revenue to recognise.
48
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3.2
INVENTORIES
Raw materials and consumables
Work in progress
Total inventories
Consolidated
2019
$’000
27,675
2,906
30,581
2020
$’000
44,629
6,729
51,358
Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated
selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
3.3
PROPERTY, PLANT AND EQUIPMENT
Land
Buildings
Leasehold
improvements
Plant and
equipment
PPE
Total
RoU
buildings
RoU
plant and
equipment
$’000
$’000
$’000
$’000
$’000
$’000
$’000
3,218
6,732
1,680
555,096
566,726
-
-
-
-
-
-
-
-
-
4,925
4,925
77,263
77,263
(32,354)
(32,354)
3,218
6,732
1,680
604,930
616,560
-
-
-
-
-
-
-
-
-
-
Lease
assets
(RoU)
Total
$’000
-
-
-
-
-
-
-
-
-
-
-
-
63
-
-
-
-
-
36,301
9,601
45,902
912
213,633
214,545
4,154
1,348
5,502
-
-
-
82,559
82,622
8,067
11,672
19,739
(31,816)
(31,816)
-
-
-
(482)
(18)
-
(18)
(482)
3,218
6,795
2,592
869,306
881,911
48,040
22,603
70,643
1,000
5,253
1,487
349,483
357,223
-
-
242
-
21
-
49,700
49,963
(30,553)
(30,553)
1,000
5,495
1,508
368,630
376,633
-
-
-
-
-
-
-
-
-
-
-
-
COST
Balance as at
30 June 2018
Acquisitions
through business
combinations
(note 7.5)
Additions
Disposals
Balance as at
30 June 2019
Adoption of
AASB16
Acquisitions
through business
combinations
(note 7.5)
Additions
Disposals
Impairment
Balance as at
30 June 2020
DEPRECIATION
Balance as at
30 June 2018
Depreciation and
amortisation
expense
Disposals
Balance as at
30 June 2019
Depreciation and
amortisation
expense
Disposals
-
-
-
190
27
-
96,202
96,419
6,469
5,914
12,383
(28,966)
(28,966)
-
(16)
(16)
Balance as at
30 June 2020
CARRYING
VALUES
1,000
5,685
1,535
435,866
444,086
6,469
5,898
12,367
At 30 June 2019
2,218
At 30 June 2020
2,218
1,237
1,110
172
1,057
236,300
239,927
-
-
-
433,440
437,825
41,571
16,705
58,276
49
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3.3
PROPERTY, PLANT AND EQUIPMENT CONTINUED
Recognition and Measurement
The value of property, plant and equipment is measured as the cost of the asset less accumulated depreciation
and impairment. All property, plant and equipment, other than freehold land, is depreciated or amortised at rates
appropriate to the estimated useful life of the assets or in the case of certain leased plant and equipment, the
shorter lease term or hours (usage) reflecting the effective lives. The normal expected useful lives bands are:
Buildings
Leasehold improvements
Major plant and equipment
Minor plant and equipment
Office equipment
Furniture and fittings
Motor vehicles
4 to 40 years
2 to 7 years
5 to 10 years (normally based on machine hours)
1.5 to 10 years
2 to 8 years
2 to 5 years
3 to 7 years
The bands provide a range of effective lives regardless of methodology used in the depreciation process (either
machine hours, diminishing balance or straight line).
Depreciation rates and methods are normally reviewed at least annually. Where depreciation rates or methods
are changed, the net written down value of the asset is depreciated from the date of the change in accordance
with the new depreciation rate or method. Depreciation recognised in prior financial years shall not be changed,
that is, the change in depreciation rate or method shall be accounted for on a ‘prospective’ basis. An asset’s
carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement
of an item of property, plant and equipment is determined as the difference between the sales proceeds and
the carrying amount of the asset and is recognised in profit or loss.
Lease Assets (Right of Use Assets)
The lease assets comprise the initial measurement of the corresponding lease debt, lease payments made at
or before the commencement day, less any lease incentives received and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment losses.
Lease assets are depreciated over the shorter period of lease term and useful life of the underlying asset (refer
to normal expected useful lives bands for details). If a lease transfers ownership of the underlying asset or the
cost of the lease asset reflects that the Group expects to exercise a purchase option, the related lease asset is
depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of
the lease.
Key judgements and estimates
Estimates of useful economic lives
A technical assessment of the operating life of an asset requires significant judgement. Useful lives are
amended prospectively when a change in the operating life is determined.
Lease vs ‘in substance’ sale or purchase
When assessing the nature of a lease contract under AASB 16 Leases, the Group considers whether the
contract transfers control of the underlying asset as opposed to conveying the right to control the use of the
underlying asset for a period of time.
If the lease contract is assessed to transfer control of the asset, the asset is treated as PPE and is not
considered a lease asset under AASB 16.
If the lease contract is assessed not to transfer control of the asset, the contract is assessed against relevant
criteria set out in AASB 16 and if it meets those criteria the asset is recognised as a lease asset.
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3.4
INVESTMENT IN ASSOCIATES
Salini Impregilo NRW Joint Venture (SI-NRW JV)
NewGen Drilling Pty Ltd
Total investment in associates
Consolidated
2020
$’000
-
2,610
2,610
Reconciliation and movement in the Group’s carrying value of its investments:
Opening balance of investment in associates
(Loss)/gain recognised in Salini Impregilo NRW Joint Venture
Share of loss for the period – NewGen Drilling Pty Ltd
Total Share of profit / (loss) from associates
Closing balance of investment in associates
2020
$’000
2,652
-
(42)
(42)
2,610
2019
$’000
-
2,652
2,652
2019
$’000
4,736
(1,773)
(311)
(2,084)
2,652
Investments in entities over which the Group has the ability to exercise significant influence, but not control, are
accounted for using the equity method of accounting. The investment in associates is carried at cost plus post-
acquisition changes in the Group’s share of the associates’ net assets, less any impairment in value.
The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment
loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the
investment (including goodwill) is tested for impairment in accordance with AASB 136 ‘Impairment of Assets’
as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of
disposal) with its carrying amount, any impairment loss recognised forms part of the carrying amount of the
investment. Any reversal of that impairment loss is recognised in accordance with AASB 136 to the extent that
the recoverable amount of the investment subsequently increases.
Salini Impregilo NRW Joint Venture (SI-NRW JV)
The Group formed a Joint Venture Company with Salini Impregilo of Italy which was subsequently awarded the
Forrestfield-Airport Link (“FAL”) contract for the Public Transport Authority of Western Australia. The contract is
worth $1.3 billion to be delivered over four years. The Group’s share of the joint venture is 20%.
As at 30 June 2020, NRW’s share of revenue is $58.1 million (2019: $48.2 million). No margin has been
recognised on the project (2019: nil).
NewGen Drilling Pty Ltd
The Group invested in a 20% share purchase in NewGen Drilling Pty Ltd (“NewGen”) which owns a drill rig to
service the oil and gas market. CalEnergy Resources Limited, a subsidiary of Berkshire Hathaway Energy,
holds the balance of the shares. The acquisition took place on 24 November 2014.
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3.5
INTANGIBLE ASSETS
Software and
System
Development
Patent
Technology
Brand Names
Customer
Relationships
Total
$’000
$’000
$’000
$’000
$’000
COST
Balance as at 30 June 2018
21,142
Assets recognised on business
combinations (note 7.5)
-
Balance as at 30 June 2019
21,142
Assets recognised on business
combinations (note 7.5)
-
Balance as at 30 June 2020
21,142
AMORTISATION
Balance as at 30 June 2018
Amortisation expense (note 2.4)
Balance as at 30 June 2019
Amortisation expense (note 2.4)
Balance as at 30 June 2020
CARRYING VALUES
At 30 June 2019
At 30 June 2020
19,554
1,309
20,863
279
21,142
279
-
1,453
8,007
9,460
-
9,460
1,450
903
2,353
3,601
5,954
7,107
3,506
8,916
2,722
11,638
2,291
13,929
-
-
-
-
-
18,892
50,403
5,318
16,047
24,210
66,450
21,208
23,499
45,418
89,949
9,615
9,878
19,493
9,399
28,892
30,619
12,090
42,709
13,279
55,988
11,638
13,929
4,717
16,526
23,741
33,961
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are recognised
initially at their fair value at the acquisition date (which is regarded as their deemed cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less
accumulated amortisation and accumulated impairment losses.
Software and System Development
Software is recognised at cost of acquisition. Software has a finite life and is carried at cost less any
accumulated amortisation and any impairment losses. Software is amortised over its useful life ranging from
two to five years.
Patent Technology
Patents are initially recognised at their fair value at the acquisition date (which is regarded as their deemed
cost). Patents have a finite life and are carried at cost less any accumulated amortisation and any impairment
losses. They are amortised over their useful life of up to five years.
Brand Names
Brand names recognised by the Group have an indefinite useful life and are not amortised. Each period, the
useful life of this asset is reviewed to determine whether events and circumstances continue to support an
indefinite useful life assessment for the asset. Such assets are tested for impairment at least annually or more
frequently whenever there is the presence of other indicators of impairment.
Customer Relationships
Customer relationships are initially recognised at their fair value at the acquisition date (which is regarded as
their deemed cost). Customer relationships have a finite life and are carried at cost less any accumulated
amortisation and any impairment losses. They are amortised over their useful life of up to five years.
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3.6
GOODWILL
Balance at beginning of the period
Amounts recognised from business combinations occurring
during the period (note 7.5)
Balance at end of the period
2020
$’000
40,103
41,810
81,913
2019
$’000
40,103
-
40,103
Goodwill arising on an acquisition of a business is carried at cost established at the date of the acquisition of
the business less accumulated impairment losses, if any. Goodwill is not amortised, but it is tested for
impairment annually or more frequently if there is an indication that it might be impaired.
Goodwill is attributable to cash generating units (CGU) aggregated in the following reporting segments whose
results are regularly reviewed by the Groups chief operating decision maker:
Civil
Mining
Drill & Blast
Mining Technologies
Balance at end of the period
2020
$’000
17,798
57,450
-
6,665
81,913
2019
$’000
10,716
29,387
-
-
40,103
If the recoverable amount of the cash-generating unit to which goodwill is allocated is less than its carrying
amount, the impairment loss is allocated first to goodwill and then to the identifiable assets on a pro rata basis.
Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for
goodwill cannot be reversed in subsequent periods. On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Impairment of Assets
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those assets may have suffered an impairment loss.
The determination of the existence of impairment indicators requires a degree of management judgement. If
any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset,
the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which
a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives, intangible assets not yet available for use, and goodwill are tested
for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and 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 which estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.
As at 30 June 2020, the Company performed the assessment of any prevailing indicators of impairment across
each CGU.
The Company undertook formal impairment testing for those obligatory CGU’s to which Goodwill and indefinite-
life Intangibles are allocated, and those where the Company determined the existence of impairment indicators.
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3.6
GOODWILL CONTINUED
The Group has prepared five year discounted cash flow forecasts, and extrapolated the cash flows beyond the
terminal year using a terminal growth-rate.
The Group has paid particular attention to those indicators impacted by the global COVID-19 pandemic. We
have considered the effect of the pandemic on our clients activities which may include long-term commodity
prices, awards of new contracts, deferrals of existing contracts, disruptions to supply chain and disruptions to
existing operations. To date, most of the Groups operations were classified as essential services and have
continued materially unaffected. The management team continue to monitor and manage the impacts and risks
arising from the global pandemic, and at the time of compiling future cash flows there were no known detrimental
changes.
Key areas of management judgement required in this assessment include:
Value in use assumptions and key estimates
Sales and earnings growth
The five year cash flow estimates used in assessments for all CGU’s were based on Board approved budgets
for the year ending 30 June 2021. Growth assumptions thereafter are 3% (2019: 3%) per annum for each
future year. The terminal value assumes perpetual growth of 0% (2019: 3%). Growth rates do not exceed
historical averages.
Discount rate
A pre-tax discount rate of 13.6% (2019: 13.6%) which includes a risk margin was applied to the cash flows
within each of the CGU’s.
Working capital and capital expenditure
Working capital has been adjusted to return to, and continue to reflect, what management estimate to be
normal operating levels in order to continue to support the underlying businesses.
Capital expenditure forecasts were based on the various strategic business plans and those levels considered
appropriate to sustain current growth projections above current level of operating activities.
The Company was satisfied that the recoverable values were sufficiently in excess of their carrying values at
reporting date. This conclusion was supported having applied a sensitivity analysis on the key assumptions
used in determining the recoverable values.
Sensitivity analysis
Short-term assumptions
The Company simulated several scenarios to sensitise future cash flows for different outcomes associated
with the short-term COVID-19 risks identified in assessing indicators of potential impairment, highlighted
above. These included the net future cash flow impacts of:
• an absolute, or timing delay, for disruptions at a current clients operations; or
• a non-award, or delay to an award, of future contracts
Long-term assumptions
In addition, the Company undertook sensitivity analysis with regard to the longer term drivers of future cash
flow relating to:
• Future years’ growth rate assumption adjusted from 3% (CAGR) growth per annum to a range of
1-2% (CAGR) growth per annum.
• Pre-tax discount rate assumption increased from 13.6% to 16.7%, representing the higher degree of
risk and returns required by equity holders through an extended period of higher global uncertainty
surrounding COVID-19, (or the higher risk inherent in the underlying forecasts).
Each of these sensitivities were performed in isolation of each other and did not result in recoverable values
to be lower than the carrying values of the CGUs as at 30 June 2020.
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3.7
TRADE AND OTHER PAYABLES
CURRENT PAYABLES
Trade payables
Goods and service tax
Other payables
Accruals
Total trade and other payables
2020
$’000
142,944
6,360
23,495
158,843
331,642
Consolidated
2019
$’000
99,037
2,325
6,184
50,210
157,756
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial
year which are unpaid. The amounts are unsecured and are usually paid within 30 to 75 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months from
the reporting date.
The Group has financial risk management policies in place to ensure that all payables are paid within
pre-agreed credit terms. All payables are expected to be settled within the next 12 months.
3.8
PROVISIONS
Consolidated
Onerous
contracts
Warranty
& other
Employee
benefits
$’000
1,205
24,394
4,006
$’000
462
3,998
3,344
$’000
37,246
24,100
71,729
Total
$’000
38,913
52,492
79,079
(18,230)
(4,533)
(51,408)
(74,171)
11,375
10,564
811
11,375
3,271
3,049
222
3,271
81,667
64,829
16,838
81,667
96,313
78,442
17,871
96,313
Balance at 1 July 2019
Provisions in BGC opening balance sheet (note 7.5)
Provisions made during the year
Provisions applied
Balance at 30 June 2020
Short-term provisions
Long-term provisions
Total balance at 30 June 2020
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows (where the effect of the time value of money is material).
(i) Onerous contracts
Provisions primarily include amounts recognised in relation to onerous customer contracts.
(ii) Warranties and other
Provisions for warranties and contract claims are made for the estimated liability on all products still under
warranty at balance sheet date and known claims arising under service and construction contracts.
(iii) Employee Benefits
The employee benefits liability represents accrued wages and salaries, leave entitlements and other incentives
recognised in respect of employees’ services up to the end of the reporting period. These liabilities are
measured at the amounts expected to be paid when they are settled and include related on-costs, such as
workers compensation insurance, superannuation and payroll tax.
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
3.8
PROVISIONS CONTINUED
Key judgements and estimates
Onerous contracts
These provisions have been calculated based on management’s best estimate of discounted net cash
outflows required to fulfil the contracts (where the effect of the time value of money is material). The status
of these contracts and the adequacy of provisions are assessed at each reporting date.
Warranties
The provision is estimated having regard to previous claims experience.
Long service leave
Management judgement is applied in determining employee entitlements for long service leave. This
determination considers future increases in wages and salaries, future on cost rates, employee departures
and period of service. Expected future payments are discounted using the market yield at the reporting date
on Australian corporate bonds with terms to maturity and currencies to match, as close as possible, the
estimate future cash outflows.
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.
CAPITAL STRUCTURE
The Group manages its capital structure to ensure that entities in the Group will be able to continue as a going
concern while maximising returns to shareholders.
Gearing Ratio
The Board meets regularly to determine the level of borrowings and shareholder funding required to
appropriately support business operations. The gearing ratio is a function of the capital structure, dividends and
movements in debt. The gearing ratio was calculated at 30 June 2020 as:
Cash
Financial debt
Lease debt
Net Debt
Total equity
Net Debt to Equity Ratio
2020
$’000
170,229
(244,795)
(65,058)
(139,624)
472,389
29.6%
Consolidated
2019
$’000
65,031
(100,459)
-
(35,428)
291,448
12.2%
4.1
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Capital Risk Management
The capital structure of the Group comprises of debt and equity. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or increase or decrease debt.
The Group’s objectives when managing capital are to safeguard its ability to operate as a going concern so that
it can meet all its financial obligations when they fall due, provide adequate returns to shareholders, maintain
an appropriate capital structure to optimise its cost of capital and maintain an Investment Grade credit rating to
ensure ongoing access to funding. The Consolidated Entity is subject to certain financing arrangement
covenants and meeting these is given priority in all capital risk management decisions. There have been no
events of default on the financing arrangements during the financial year.
Financial Risk Management
The Group’s overall financial risk strategy seeks to ensure appropriate funding levels, approved treasury
directives to meet ongoing project needs and to allow flexibility for growth. The Board has ultimate responsibility
for the Group’s policy of risk management. The risk policies and procedures are reviewed periodically. In
addition, the going concern basis is reviewed throughout the year, ensuring adequate working capital
is available.
The financial instruments in the Group primarily consist of interest bearing debt, cash, trade receivables and
payables. The Group has minimal foreign currency risks, although its presence in Guinea West Africa remains,
including some assets that are strategically held there for new opportunities. No cash is held other than to meet
the day to day running costs.
Interest Rate Risk Management
Interest rate risk is the risk that the value of a financial instrument or cash flow associated with the instrument
will fluctuate due to changes in the market interest rates. Sources of financial exposure include variable-rate
borrowings (cash flow risk) and fixed-rate borrowings (fair value risk). Interest rate exposures are kept within an
acceptable range as determined by the Board.
The Board considers the exposure to market rate volatility as low. If the Group were to consider a movement of
100 basis points in interest rates or cost of funds, there would be no material impact to the cost of capital. Refer
to Consolidated Interest and Liquidity table on the following page for further details around interest rate profiles.
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NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.1
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
Foreign Exchange and Currency Exposure
The Group reports its functional currency in Australian dollars (AUD). The Board considers that movements in
foreign currency will have virtually no impact on operating profits, given that most projects are agreed and billed
in Australian dollars and cash holdings in other currencies other than AUD are negligible. Should foreign
operations expand then suitable risk measures would be put in place accordingly. Any new developments which
the Group considers or bids for are considered as part of the risk management reviews held by the Board. Other
than specific transactions or purchases negotiated with the supplier, transactions dealing in foreign currency
are dealt with at spot rates.
Liquidity Risk Management
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Ultimate
responsibility for liquidity risk management rests with the Board, which has established an appropriate liquidity
risk management framework for the management of the Company’s short, medium and long-term funding and
liquidity management requirements. The Company manages liquidity risk by maintaining appropriate banking
facilities, ensuring a suitable credit control program, continuously monitoring forecast and actual cash flows,
and considering the level of capital commitment commensurate with project demands and other market forces.
The estimated contractual maturity for its financial liabilities and financial assets is set out in the following tables.
The tables show the effective interest rates and average interest rates as relevant to each class.
Consolidated interest and liquidity analysis 2020
Effective
interest
rate
Total
0 to 30
days
31 days to
< 1 year
1 to 5 yrs
> 5yrs
$’000
$’000
$’000
$’000
$’000
FINANCIAL ASSETS
Cash and cash equivalents
0.3%
170,229
170,229
-
-
Trade and other receivables (1)
369,906
191,962
177,944
Lease receivable
9.4%
5,091
203
2,343
Subtotal
545,226
362,394
180,287
2,545
2,545
FINANCIAL LIABILITIES
Bankwest
Bank of China
Equipment finance
Lease debt
4.9%
3.9%
4.6%
6.1%
24,435
24,282
196,078
65,058
-
282
5,524
1,150
24,435
-
-
51,558
13,607
24,000
138,996
35,501
14,800
Trade and other payables (2)
331,642
174,043
157,599
-
-
Subtotal
641,495
180,999
247,199
198,497
14,800
(1) Normal trade receivable terms. See note 3.1.
(2) Normal trade payable terms. See note 3.7.
58
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-
-
-
-
-
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.1
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
Consolidated interest and liquidity analysis 2019
Effective
interest rate
Total
0 to 30 days
31 days to
< 1 year
1 to 5 yrs
> 5yrs
$’000
$’000
$’000
$’000
$’000
FINANCIAL ASSETS
Cash and cash equivalents
1.0%
65,031
Trade and other receivables (1)
158,039
65,031
65,551
-
92,488(1)
Subtotal
223,070
130,582
92,488
-
-
-
FINANCIAL LIABILITIES
Bankwest loan
Golding acquisition loan
Equipment finance
Trade and other payables (2)
Subtotal
5.3%
5.2%
6.3%
27,750
28,116
44,593
157,756
258,215
-
-
1,298
97,679
98,977
18,500
16,116
9,520
9,250
12,000
33,775
60,077(2)
-
104,213
55,025
-
-
-
-
-
-
-
-
(1) Normal trade receivable terms. See note 3.1.
(2) Normal trade payable terms. See note 3.7.
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.
The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its
financing activities, including deposits with banks and financial institutions and other financial instruments. The
carrying amount of financial assets recorded in the financial statements net of any allowance for losses,
represents the Group’s maximum exposure to credit risk without taking into account the value of any collateral.
Trade and other receivables payment terms are primarily 30 to 75 days. Cash retentions are low as clients
require bonds and bank guarantees. The Group’s exposure and the credit ratings of these counterparties are
regularly monitored and transactions are diversified among approved counterparties.
Following the adoption of AASB 9, the Group considers the probability of default upon initial recognition of a
financial asset and whether there has been a significant increase in credit risk on an ongoing basis throughout
the reporting period.
Impairment of financial assets
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model. The expected
credit loss model requires the Group to account for expected credit losses at each reporting date to reflect
changes in credit risk since initial recognition of the financial assets. In particular, AASB 9 requires the Group
to measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses (ECL) if the credit risk of that financial instrument has increased significantly since initial recognition, or
if the financial instrument is a purchased or originated credit-impaired financial asset. However, if the credit risk
on a financial instrument has not increased significantly since initial recognition (except for a purchased or
originated credit-impaired financial asset), the Group is required to measure the loss allowance for that financial
instrument at an amount equal to 12-months ECL. AASB 9 also requires a simplified approach for measuring
the loss allowance at an amount equal to lifetime ECL for trade receivables, contract assets and lease
receivables in certain circumstances. The Group has elected to apply this simplified approach.
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are
measured at amortised cost, lease receivables, amounts due from customers, as well as on loan commitments
and financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to
reflect changes in credit risk since initial recognition of the respective financial instrument.
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NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.1
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
Measuring movements in credit risk
The Company considers the probability of default upon initial recognition of the asset and whether there has
been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess
whether there is a significant increase in credit risk the Company compares the risk of a default occurring on
the asset as at the reporting date with the risk of default as at the date of initial recognition. In making this
assessment, the Group considers both quantitative and qualitative information that is reasonable and
supportable, including historical experience and forward-looking information that is available without undue cost
or effort. Forward
looking information considered includes the future prospects of the industries in which the
Group’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies,
relevant think
tanks and other similar organisations, as well as consideration of various external sources of
actual and forecast economic information that relate to the Group’s core operations.
-
-
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly since initial recognition:
• An actual or expected significant deterioration in the financial instrument’s external (if available) or
internal credit rating;
• Significant deterioration in external market indicators of credit risk for a particular financial instrument,
e.g. a significant increase in the credit spread, the credit default swap prices for the debtor, or the length
of time or the extent to which the fair value of a financial asset has been less than its amortised cost;
• Existing or forecast adverse changes in business, financial or economic conditions that are expected to
cause a significant decrease in the debtor’s ability to meet its debt obligations;
• An actual or expected significant deterioration in the operating results of the debtor;
• Significant increases in credit risk on other financial instruments of the same debtor; and
• An actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt
obligations.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial
asset has increased significantly since initial recognition when contractual payments are more than 30 days
past due, unless the Group has reasonable and supportable information that demonstrates otherwise.
Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low credit risk at the
reporting date. A financial instrument is determined to have low credit risk if:
• The financial instrument has a low risk of default;
• The debtor has a strong capacity to meet its contractual cash flow obligations in the near term; and
•
Adverse changes in economic and business conditions in the longer term may, but will not necessarily,
reduce the ability of the borrower to fulfil its contractual cash flow obligations.
The Group considers a financial asset to have low credit risk when the asset has external credit rating of
‘investment grade’ in accordance with the globally understood definition or if an external rating is not available,
the asset has an internal rating of ‘performing’. Performing means that the counterparty has a strong financial
position and there is no past due amounts.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a
significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of
identifying significant increase in credit risk before the amount becomes past due.
Definition of default
The Group considers the following as constituting an event of default for internal credit risk management
purposes as historical experience indicates that receivables that meet either of the following criteria are
generally not recoverable:
•
If there is a material breach of financial covenants by the counterparty and this is not expected to be
remedied in the foreseeable future; or
60
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.1
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED
•
Information developed internally or obtained from external sources indicates that the debtor is unlikely
to pay its creditors, including the Group, in full (without taking into account any collaterals held by the
Group).
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is
significantly past due unless the Group has reasonable and supportable information to demonstrate that a more
lagging default criterion is more appropriate.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated
future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes
observable data about the following events:
• Significant financial difficulty of the issuer or the borrower;
• A breach of contract, such as a default or past due event;
• The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial
difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
•
• The disappearance of an active market for that financial asset because of financial difficulties.
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe
financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed
under liquidation or entered into bankruptcy proceedings. Financial assets written off may still be subject to
enforcement activities under the Group’s recovery procedures, taking into account legal advice where
appropriate. Any recoveries made are recognised in profit or loss.
Measurement and recognition of expected credit losses
The Group believes that the amounts that are past due are still collectible. In making this determination the
management team has taken into account the historical default experience, the financial position of the
counterparties, as well as the future prospects of the markets in which they operate.
In the prior period the Group recognised a loss allowance of $29.2 million which was comprised entirely of
Gascoyne Resources related balances including: trade receivables $19.2 million and secured loans $10.0
million. The Group is still entitled to the gross value of the financial assets.
Investments in financial assets
In the prior period the Group acquired listed equity shares of Gascoyne Resources Limited for the consideration
of $4.3 million. Following their entry into voluntary administration in June 2019, the Company has impaired the
shares held by $4.3 million to a fair value of nil in FY19.
61
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.2
ISSUED CAPITAL
Fully Paid Ordinary Shares
ORDINARY SHARES
426,685,384 fully paid ordinary shares
(2019: 375,880,733)
Consolidated
2020
$’000
2019
$’000
332,863
206,126
All issued shares are fully paid and rank equally. Fully paid ordinary shares carry one vote per share and carry
a right to dividends.
FULLY PAID ORDINARY SHARES
Balance at the beginning of the financial year
Capital raising at $2.85 share
Share purchase plan at $2.85 share
Share issue costs net of tax
Issue of shares to executives
Treasury shares transferred to contributed equity
Consolidated
2020
# No. ‘000
2020
$‘000
2019
# No. ‘000
2019
$‘000
375,880
42,106
3,509
5,180
11
206,126
120,000
10,000
(3,287)
-
24
370,617
206,126
-
-
-
5,263
-
-
-
-
-
-
Balance at the end of the period
426,686
332,863
375,880
206,126
4.3
RESERVES
Share based payment reserve
Foreign currency reserve
Total reserves
Share Based Payment Reserve
Balance at the beginning of the financial year
Share based payments
Treasury shares issued for vested rights
Balance at the end of the financial year
Consolidated
Consolidated
2019
$’000
7,032
(208)
6,824
2019
$’000
5,549
1,483
-
7,032
2020
$’000
8,661
(208)
8,453
2020
$’000
7,032
1,653
(24)
8,661
Information relating to performance rights, including details of issued, exercised and lapsed during the financial
year and outstanding at the end of the financial year, is set out in the Remuneration Report and at note 4.7.
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.4
RETAINED EARNINGS
Balance at the beginning of the financial year
Adjustment on adoption of AASB 16 Leases
Net profit attributable to members of the parent entity
Dividends paid
Balance at the end of the financial year
4.5
DIVIDENDS
Consolidated
2019
$’000
61,176
-
32,270
(14,948)
78,498
2020
$’000
78,498
(2,885)
73,749
(18,289)
131,073
During the period, NRW Holdings Limited made the following dividend payments:
Fully paid ordinary shares
Consolidated year ended
Consolidated year ended
30 June 2020
30 June 2019
Cents per share
$’000
Cents per share
Final dividend (FY19 / FY18)
Interim dividend (FY20 / FY19)
Total dividend payments
2.0
2.5
7,621
10,668
18,289
2.0
2.0
$’000
7,431
7,517
14,948
The Directors have declared a dividend for the current financial year of 4 cents per share. The dividend will be
fully franked and paid on 14 October 2020.
Franking Account
Consolidated
Franking account balance at 1 July
Australian income tax paid
Franking credits attached to dividends paid:
As final dividend
As interim dividend
Franking account balance at 30 June
Franking credits that will attach to the payment of fully franked dividends
declared but not paid as at reporting date
Net franking credits available
4.6
EARNINGS PER SHARE
Profit for the year
Weighted average number of shares for the
purposes of basic earnings per share (000’s)
2020
$’000
51,098
-
(3,266)
(4,572)
43,260
(7,315)
35,945
2020
$’000
73,749
405,024
2019
$’000
56,712
793
(3,185)
(3,222)
51,098
(3,222)
47,876
2019
$’000
32,270
373,918
Consolidated
Basic earnings per share
18.2 cents per share
8.6 cents per share
Shares deemed to be issued for no consideration in respect of:
– Performance rights (000’s)
Weighted average number of shares used for the
purposes of diluted earnings per share (000’s)
5,671
410,695
9,945
383,863
Diluted earnings per share
18.0 cents per share
8.4 cents per share
63
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.6
EARNINGS PER SHARE CONTINUED
Basic Earnings Per Share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares on issue during the financial 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 the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.
4.7
SHARE BASED PAYMENTS
Share based compensation payments are provided to employees in accordance with the NRW Holdings Limited
Performance Rights Plan (PRP) detailed in the remuneration report.
Share based compensation payments are measured at the fair value of the equity instruments at the grant date.
The choice of valuation methodology is determined by the structure of the awards, particularly the vesting
conditions:
• Market based valuations – a Monte-Carlo simulation valuation methodology is used to determine the
share based payment cost relative to TSR growth. The valuation methodology used is chosen from those
available to incorporate an appropriate amount of flexibility with respect to the particular performance
and vesting conditions of the award.
• Non-market based valuations – EBITDA and Gearing targets are based on a 60 day VWAP up to and
including the grant date, risk-weighted for the likelihood of achievement of the vesting conditions. The
valuation methodology assumes between 90% and 100% achievement of vesting conditions.
The variables in the valuation model are the share price on the date of the award, the duration of the award, the
risk free interest rate, share price volatility and dividend yield. The inputs used for each of the current schemes
is provided below.
Scheme ID
Risk Free Interest Rate
Share Price Volatility
Dividend Yield
F
G
I
J
K
L
M
N
O
1.80%
1.96%
1.80%
1.80%
1.44%
1.35%
1.44%
1.35%
0.29%
114.9%
103.2%
110.6%
112.8%
55.14%
64.05%
47.26%
53.62%
62.74%
10.2%
10.2%
10.2%
10.2%
1.20%
1.20%
1.20%
1.20%
1.34%
Value (cents
per share)
38.5
34.0
37.9
41.2
79.7
123.9
75.3
101.1
30.1 to 182.0
For all awards, the volatility assumption is representative of the level of uncertainty expected in the movements
of the Company’s share price over the life of the award. The assessment of the volatility includes the historic
volatility of the market price of the Company’s share and the mean reversion tendency of volatilities.
64
64
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
J Pemberton
2018 Tranche 2
2018 Tranche 3
2018 Golding
Tranche 1 Y2
2020 Tranche 1
2020 Tranche 2
Total
A Walsh
2018 Tranche 2
2018 Tranche 3
2018 Golding
Tranche 1 Y2
Total
E Buratto
F
G
I
O
O
F
G
I
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
4.7
SHARE BASED PAYMENTS CONTINUED
Details of the awards for each scheme, the status of those awards and share based payment expense for KMP’s
and non KMP’s is provided in the table below.
Name /
Scheme
Scheme
ID
Allocation
Date
Vesting
Date
Balance of
Unvested
Equity
Awards as
at 1 July
2019
Granted
Vested in
FY20
Balance
of
Unvested
Equity
Awards
as at 30
June 2020
Fair Value
Per Security
Fair Value
at Grant
Date
Fair Value
at Vesting
Date
Share
Based
Payments
Expense
FY20
Number of
Rights
Number
of Rights
Number of
Rights
Number
of Rights
Cents
$
$
$
4/12/2017
30/11/2019
2,137,500
4/12/2017
30/11/2020
2,137,500
4/12/2017
30/08/2019
625,000
-
-
-
(2,137,500)
-
38.5
822,938
6,562,125
117,563
-
2,137,500
34.0
726,750
-
218,025
(625,000)
-
37.9
237,065
1,512,500
18,236
26/11/2019
30/11/2022
26/11/2019
30/11/2023
-
-
582,246
582,246
-
-
582,246
30.1 to 182.0
768,785
582,246
30.1 to 182.0
835,411
-
-
256,262
208,853
4,900,000
1,164,492
(2,762,500)
3,301,992
3,390,949
8,074,625
818,939
4/12/2017
30/11/2019
700,000
4/12/2017
30/11/2020
700,000
4/12/2017
30/08/2019
281,250
1,681,250
2018 Scheme
J
4/12/2017
30/11/2019
288,000
Total
G Caton
288,000
2018 Scheme
J
4/12/2017
30/11/2019
357,798
Total
I Gibbs
2019 Scheme 1
Tranche 1
2019 Scheme 1
Tranche 2
Total
Non KMP
2018 Scheme
2019 Scheme 2
Tranche 1
2019 Scheme 2
Tranche 2
TOTAL
357,798
K
L
J
M
N
15/2/2019
30/11/2020
77,885
15/2/2019
30/11/2021
77,885
155,770
4/12/2017
30/11/2019
801,180
18/04/2019
30/11/2020
15,000
18/04/2019
30/11/2021
15,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(700,000)
-
-
700,000
(281,250)
-
38.5
34.0
37.9
269,500
2,149,000
38,500
238,000
-
71,400
106,594
680,625
8,200
(981,250)
700,000
614,094
2,829,625
118,100
(288,000)
(288,000)
(357,798)
(357,798)
-
-
-
-
41.2
118,656
884,160
118,656
884,160
-
-
41.2
147,413
1,098,440
11,339
147,413
1,098,440
11,339
-
-
-
77,885
79.7
62,074
77,885
123.9
96,500
155,770
158,574
-
-
-
36,310
35,614
71,924
(801,180)
-
330,086
2,459,623
25,391
-
-
15,000
11,295
15,000
101.1
15,165
-
-
7,336
5,971
41.2
75.3
8,213,998
1,164,492
(5,190,728)
4,187,762
4,786,232
15,346,473
1,059,000
65
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
5.
5.1
FINANCING
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less. Bank overdrafts are shown within short-term
borrowings in current liabilities on the statement of financial position.
Reconciliation of profit for the period to net cash flows from operating activities
Consolidated
PROFIT FOR THE PERIOD
Adjustments for:
Loss on sale of property, plant and equipment
Depreciation and amortisation
Lease asset (RoU) impairment
Share of loss from associates
Share based payment expense
Gain on acquisition
Net cash generated before movement in working capital
Change in trade and other receivables
Change in inventories
Change in other assets
Change in trade and other payables
Change in provisions
Change in provision for income tax
Change in deferred tax balances (1)
Net cash from operating activities
2020
$’000
73,749
1,477
122,081
482
42
1,653
-
199,484
(84,066)
(1,755)
169
66,280
9,122
-
26,468
215,702
(1) Includes tax effect of share issue costs of $1.4 million and the adoption of AASB 16 of $1.2 million, both recognised directly in equity.
5.2
GUARANTEES
Bank guarantees
Insurance bonds
Balance at the end of the financial year
Consolidated
2020
$’000
16,464
178,563
195,027
2019
$’000
32,270
472
62,053
-
2,084
1,483
(5,120)
93,242
(37,340)
(6,062)
(1,855)
30,025
9,128
(1,218)
13,896
99,816
2019
$’000
5,988
69,006
74,994
The Group has contract performance bank guarantees and insurance bonds issued in the normal course of
business in respect to its contracts.
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
5.3
FINANCIAL DEBT
Consolidated
SECURED AT AMORTISED COST
Current
Bankwest
Bank of China
Equipment finance
Total current financial debt
Non-current
Bankwest
Bank of China
Equipment finance
Total non-current financial debt
GROUP TOTAL FINANCIAL DEBT
2020
$’000
24,435
282
57,082
81,799
-
24,000
138,996
162,996
244,795
2019
$’000
34,616
-
10,818
45,434
21,250
-
33,775
55,025
100,459
All loans and financial debt are initially recognised at fair value, being the amount received less attributable
transaction costs. After initial recognition, interest bearing liabilities are stated at amortised cost with any
difference between cost and redemption value being recognised in the statement of profit or loss over the period
of the borrowings on an effective interest basis.
Various financial institutions provide the Group with fixed interest rate finance leases, secured by the underlying
assets financed.
As at the date of signing the annual accounts, the Company is in compliance with its obligations under its
facilities. The Company expects to be in compliance with agreed covenants throughout the year ending 30 June
2021.
The Company currently has in place a multi-option general banking facility with Bankwest and Bank of China.
The agreement provides NRW with facilities to be used for contract guarantees, and facilities which can be used
for either contract guarantees or as working capital (an overdraft facility).
Significant funding transactions
During the period the Company agreed a $55 million multi option and debt facility with Bank of China. As at 30
June 2020, $24 million has been drawn down.
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
5.3
FINANCIAL DEBT CONTINUED
Financial debt movement reconciliation for the year ended 30 June 2020:
Consolidated
2020
$’000
100,459
158,301
37,679
(41,144)
30,790
(41,290)
244,795
2019
$’000
93,212
-
39,102
(4,793)
49,500
(76,562)
100,459
Opening balance
Equipment finance assumed (through business acquisition)
New equipment finance
Repayment of equipment finance
New financial debt
Repayment of financial debt
GROUP TOTAL FINANCIAL DEBT
Interest Bearing Finance Facilities
Consolidated finance facilities as at 30 June 2020
Finance Description
Face Value (limit)
Carrying Amount
(utilised)
Unutilised Amount
Bankwest
Bank of China(1)
Equipment finance (2)
Guarantees and insurance bonds (3)
$’000
24,435
55,000
223,548
352,055
$’000
24,435
24,282
196,078
195,027
$’000
-
30,718
27,470
157,028
(1) Includes: reducing loan facility, bank guarantee facility and credit risk facility.
(2) Terms range from one to five years.
(3) $10.0 million of the overall limit is interchangeable as an overdraft facility.
Consolidated finance facilities as at 30 June 2019
Finance Description
Face Value (limit)
Carrying Amount
(utilised)
Unutilised Amount
Bankwest loan
Equipment finance (1)
Guarantees and insurance bonds (2)
$’000
55,866
44,593
155,000
$’000
55,866
44,593
74,994
$’000
-
-
80,006
(1) Terms range from one to three years.
(2) $10.0 million of the overall limit is interchangeable as an overdraft facility.
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
5.4
LEASE DEBT
Opening balance
Adjustment on adoption of AASB 16 Leases
Balance at 1 July 2019
New leases through a business combination (see note 7.5)
New leases
Interest expense
Payments
Balance at 30 June 2020
Current
Non-current
GROUP TOTAL LEASE DEBT
Consolidated
2020
$’000
-
50,369
50,369
5,502
19,739
3,421
(13,973)
65,058
14,757
50,301
65,058
Group lease debt relates mainly to properties, the balance comprised of plant and equipment, various types of
vehicles and IT equipment.
With the adoption of AASB 16 Leases, the Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a lease asset and a corresponding lease debt with respect to
all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease
term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items
of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating
expense on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease debt is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined,
the lessee uses its incremental borrowing rate.
Lease payments included in the measurement of the lease debt comprise:
• Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate at
the commencement date;
• The amount expected to be payable by the lessee under residual value guarantees;
• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease debt is subsequently measured by increasing the carrying amount to reflect interest on the lease debt
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease debt (and makes a corresponding adjustment to the related lease asset)
whenever:
• The lease term has changed or there is a significant event or change in circumstances resulting in a
change in the assessment of exercise of a purchase option, in which case the lease debt is remeasured
by discounting the revised lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a change in expected payment under
a guaranteed residual value, in which cases the lease debt is remeasured by discounting the revised
lease payments using an unchanged discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised discount rate is used).
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
5.4
LEASE DEBT CONTINUED
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which
case the lease debt is remeasured based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods presented.
Variable rents that do not depend on an index or rate are not included in the measurement of the lease debt
and the right-of-use asset. The related payments are recognised as an expense in the period in which the event
or condition that triggers those payments occurs.
As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead account
for any lease and associated non-lease components as a single arrangement. The Group has elected to use
this practical expedient. For contracts that contain a lease component and one or more additional lease or non-
lease components, the Group does not allocate the consideration in the contract to each lease component on
the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the
non-lease components.
Key Judgements and Estimates
Determination of the existence of leases
Identifying a lease will sometimes require a significant amount of judgement based on the elements of the
definition of a lease, including identification of the leased asset, whether the contract passes the right to
obtain substantially all of the economic benefits from the use of an identified assets within the defined scope
of the contract and whether the supplier has a substantive right to substitute the identified assets throughout
the period of use.
Lease extension periods
In determining the lease term, the Group 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). After the commencement date, the Group reassesses the lease term if there is a
significant event or change in circumstances that is within its control and affects its ability to exercise (or not
to exercise) the option to renew.
Incremental borrowing rate
In determining the present value of the future lease payments, the Group discounts the lease payments using
an incremental borrowing rate (IBR). The IBR reflects the financing characteristics and duration of the
underlying lease. Once a discount rate has been set for a leased asset (or portfolio of assets with similar
characteristics), this rate will remain unchanged for the term of that lease. When a lease modification occurs,
and it is not accounted for as a separate lease, a new IBR will be assigned to reflect the new characteristics
of the lease.
5.5
CAPITAL AND OTHER COMMITMENTS
As at 30 June 2020 the Group has capital and other commitments totalling $6.8 million (2019: $24.2 million).
70
70
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
6. TAXATION
6.1
INCOME TAX RECOGNISED IN PROFIT OR LOSS
CURRENT TAX EXPENSE
Current year income tax
Adjustments for prior years income tax
Subtotal
DEFERRED TAX EXPENSE
Origination and reversal of temporary differences
Deferred tax assets brought to account
Total income tax expense / (benefit)
6.2
RECONCILIATION OF EFFECTIVE TAX RATE
Profit before tax for the period
INCOME TAX USING THE COMPANY’S DOMESTIC TAX RATE OF 30%
Changes in income tax expense due to:
Share based payments
Effect of impairment of financial assets relating to the Gascoyne Resources loan
and equity instruments (note 4.1)
Adjustments recognised in the current year in relation to the current tax of prior
years (effect of expenses that are not deductible in determining taxable profit)
Effect of gain on acquisition related to RCRMT acquisition (note 7.5)
Transfer duties on acquisitions of RCRMT and BGC Contracting
Deferred tax assets brought to account
Effect of expenses that are not deductible in determining taxable profit
Total income tax expense / (benefit)
Consolidated
Consolidated
2019
$’000
-
(422)
(422)
16,639
(2,750)
13,467
2019
$’000
45,737
13,721
(2,287)
4,295
1,801
(1,536)
-
(2,750)
223
13,467
2020
$’000
-
-
-
26,469
-
26,469
2020
$’000
100,218
30,065
(4,235)
-
(670)
-
891
(33)
451
26,469
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in
the consolidated statement of comprehensive income because of items of income or expense that are taxable
or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax
is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Relevance of Tax Consolidation to the Group
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group under
Australian taxation law with effect from 1 July 2014 and are therefore taxed as a single entity from that date.
The head entity within the tax-consolidated group is NRW Holdings Limited. The members of the
tax-consolidated group are identified in note 7.1.
Tax expense / income, deferred tax liabilities and deferred tax assets arising from temporary differences of the
members of the tax-consolidated group are recognised in the separate financial statements of the members of
the tax-consolidated group using the ‘stand-alone taxpayer’ approach by reference to the carrying amounts in
the separate financial statements of each entity and the tax values applying under tax consolidation. Current
tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members
of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group).
Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts
are recognised as payable to or receivable by the Company and each member of the Group in relation to the
71
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
6.2
RECONCILIATION OF EFFECTIVE TAX RATE CONTINUED
tax contribution amounts paid or payable between the parent entity and the other members of the tax-
consolidated group in accordance with the arrangement.
Nature of Tax Funding Arrangements and Tax Sharing Agreements
Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing
agreement with the head entity. Under the terms of the tax funding arrangement, NRW Holdings Limited and
each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the
head entity, based on the current tax liability or current tax asset of the entity. The tax sharing agreement
entered into between members of the tax-consolidated group provides for the determination of the allocation of
income tax liabilities between the entities should the head entity default on its tax payment obligations or if an
entity should leave the tax consolidated group. The effect of the tax sharing agreement is that each member’s
liability for tax payable by the tax-consolidated group is limited to the amount payable to the head entity under
the tax funding arrangement.
Goods and Services
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
• Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part
of the cost of acquisition of an asset or as part of an item of expense; or
• Receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables.
Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows
arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is
classified within operating cash flows.
Income taxes are paid in the jurisdictions where the Group operates, predominantly Australia. Significant
judgement is involved in applying the tax rules and regulations relevant in deriving the final provision for income
tax. If in subsequent periods matters arise that causes the final tax outcome to vary to the reported carrying
amounts, such differences will alter the deferred tax balances in the period the change is identified.
6.3
CURRENT AND DEFERRED TAX BALANCES
Current Tax Liabilities
Tax losses have been applied to offset any taxable income. Accordingly, there is no current tax liabilities at
30 June 2020 (2019: Nil).
Deferred Tax Balances
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from
goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such
investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and is adjusted to
recognise the estimated value of future tax liabilities likely to arise based on risk assessed forecasts.
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
6.3
CURRENT AND DEFERRED TAX BALANCES CONTINUED
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Deferred Tax Balances
Receivables (contract assets)
Inventories
Other current assets
Property, plant and equipment
Investment in associates
Intangibles
Lease debt
Provisions
Payables
Costs of equity raising
Share based payments
Assets
Liabilities
Net
2020
$’000
-
290
2,829
1,922
4,133
-
26,215
28,034
7,337
1,305
295
2019
$’000
-
-
960
1,071
714
-
-
11,136
971
300
727
2020
$’000
2019
$’000
2020
$’000
2019
$’000
(41,893)
(17,703)
(41,893)
(17,703)
-
(5,024)
(3,684)
(323)
290
(3,684)
(2,195)
637
(38,828)
(23,571)
(36,906)
(22,500)
-
-
(9,360)
(7,039)
(24,180)
-
-
-
-
-
-
-
-
-
-
-
4,133
(9,360)
2,035
28,034
7,337
1,305
295
37,182
714
(7,039)
-
11,136
971
300
727
58,498
22,057
Losses
37,183
58,498
Deferred tax assets / (liabilities)
109,542
74,377
(119,285)
(52,320)
(9,743)
Movement of Deferred Tax Balances
DEFERRED TAX EXPENSE
Recognised in profit or loss (note 6.1)
Deferred tax assets brought to account (note 6.1)
Recognised directly in equity
Balance acquired through business combinations (note 7.5)
Total
2020
$’000
(26,469)
-
2,637
(7,975)
(31,807)
Consolidated
2019
$’000
(16,639)
2,750
-
(3,494)
(17,383)
Unrecognised Deferred Tax Balances
During the year there were no deductible temporary differences, unused tax losses and unused tax credits for
which no deferred tax assets have been recognised.
73
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7. OTHER NOTES
7.1
SUBSIDIARIES
Information about the composition of the Group at the end of the reporting period is as follows:
Parent Entity
Principal Activities
Country of
Incorporation
Ownership Interest
2020
2019
NRW Holdings Limited
(ACN 118 300 217) <
Actionblast Pty Ltd
(ACN 058 473 331) <
Action Drill & Blast Pty Ltd
(ACN 144 682 413) <
Hughes Drilling 1 Pty Ltd
(ACN 011 007 702) <
NRW Pty Ltd
(ACN 067 272 119) <
The trustee for NRW Unit Trust
(ABN 69 828 799 317)
NRW Contracting Pty Ltd
(ACN 008 766 407) <
NRW Contracting (NO.2) Pty Ltd
(ACN 621 008 473) <
DIAB Engineering Pty Ltd
(ACN 611 036 689) <
NRW Intermediate Holdings Pty Ltd
(ACN 120 448 179) <
Holding Company
Australia
-
-
Mining Equipment
Solutions
Australia
100%
100%
Drill & Blast
Australia
100%
100%
Drill & Blast
Australia
100%
100%
Civil & Mining
Australia
100%
100%
Civil & Mining
Australia
100%
100%
Civil, Mining & Urban
Australia
100%
Mining
Australia
100%
Mining Technologies
Australia
100%
-
-
-
Intermediary
Australia
100%
100%
Indigenous Mining & Exploration Company Pty Ltd
(ACN 114 493 579) <
Investment Shell
Australia
100%
100%
NRW International Holdings Pty Ltd
(ACN 138 827 451) <
RCR Heat Treatment Pty Ltd
(ACN 631 155 032)
RCR Mining Technologies Pty Ltd
(ACN 107 724 274) <
NRW Mining Pty Ltd
(ACN 117 524 277) <
Golding Group Pty Ltd
(ACN 129 247 025) <
Golding Employee Equity Pty Ltd
(ACN 134 623 680) <
Golding Finance Pty Ltd
(ACN 128 839 056) <
Golding Contractors Pty Ltd
(ACN 009 734 794) <
Golding Civil Pty Ltd
(ACN 628 709 777)
Golding Mining Pty Ltd
(ACN 628 709 740)
Investment Shell
Australia
100%
100%
Heat Treatment
Australia
100%
100%
Mining Technologies
Australia
100%
100%
Investment Shell
Australia
100%
100%
Holding Company
Australia
100%
100%
Dormant
Australia
100%
100%
Holding Company
Australia
100%
100%
Civil, Mining & Urban
Australia
100%
100%
Civil
Australia
100%
100%
Mining
Australia
100%
100%
74
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.1
SUBSIDIARIES (CONTINUED)
Parent Entity
Principal Activities
Country of
Incorporation
Ownership Interest
2020
2019
Golding Services Pty Ltd
(ACN 628 709 768)
Golding Urban Pty Ltd
(ACN 628 709 759)
Golding PNG Limited
NRW Guinea SARL
Civil, Mining & Urban
Australia
100%
100%
Urban
Australia
100%
100%
Mining
Papua New Guinea
100%
100%
Dormant
Guinea
100%
100%
The Trustee for NRW Holdings Employee Share Trust
(ABN 85 324 493 658)
Dormant
Australia
100%
100%
< Entered into ASIC Corporations instrument 98/1418 Deed of Cross Guarantee with NRW Holdings Limited.
the wholly-owned subsidiaries and Parent entity,
All of
Consolidation Group.
incorporated
in Australia,
form
the Tax
Deed of Cross Guarantees
Pursuant to ASIC Class Order 98/1418 (as amended) dated 22 June 2011, the wholly-owned subsidiaries listed
in note 7.1 as parties to the Deed of Cross Guarantee are relieved from the Corporations Act 2001 requirements
for preparation, audit and lodgement of Financial Reports and Directors’ Reports.
The consolidated statement of comprehensive income of the entities party to the deed of cross guarantees is
as follows:
STATEMENT OF COMPREHENSIVE INCOME
Revenue
Other income
Finance income
Finance costs
Share of profit/(loss) in associate
Materials and consumables used
Employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
Plant and equipment costs
Other expenses
Profit before income tax
Income tax expense
Profit for the year
OTHER COMPREHENSIVE INCOME
Consolidated
2020
$’000
2019
$’000
1,997,152
1,075,681
311
498
(13,310)
(42)
(389,712)
(566,902)
(441,912)
(120,920)
(343,296)
(22,099)
99,768
(26,334)
73,434
5,120
738
(7,236)
(2,084)
(236,803)
(294,163)
(279,822)
(62,022)
(145,538)
(8,662)
45,209
(13,311)
31,898
Total comprehensive income for the year
73,434
31,898
75
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.1
SUBSIDIARIES CONTINUED
The consolidated statement of financial position of the entities party to the deed of cross guarantees is:
Consolidated
ASSETS
Current assets
Cash and cash equivalents
Receivables
Lease receivable
Inventories
Other current assets
Total current assets
Non-current assets
Investment in associates
Financial assets
Property, plant and equipment
Lease assets (right of use)
Lease receivable
Intangibles
Goodwill
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Financial debt
Lease debt
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Financial debt
Lease debt
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Retained earnings / (Accumulated losses)
Total equity
2020
$’000
168,336
368,687
2,546
51,355
8,762
599,686
2,610
3,951
437,244
58,276
2,545
31,710
81,913
-
618,249
1,217,935
331,146
81,799
14,757
-
77,942
505,644
162,996
50,301
17,804
9,301
240,402
746,046
471,889
332,863
8,453
130,573
471,889
2019
$’000
64,445
156,529
-
30,570
6,439
257,983
2,653
3,738
239,343
-
-
20,161
40,103
22,938
328,936
586,919
157,183
45,434
-
(156)
31,226
233,687
55,025
-
7,162
-
62,187
295,874
291,045
206,126
6,824
78,095
291,045
76
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.1
SUBSIDIARIES CONTINUED
Changes in the Group’s Ownership Interests in Existing Subsidiaries
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over
the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and
the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as
the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income
in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or
liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as
specified/permitted by applicable AASBs). The fair value of any investment retained in the former subsidiary at
the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under
AASB 139, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.
7.2
UNINCORPORATED JOINT OPERATIONS
The Group has significant balances in the following jointly controlled operations:
Name of Operation
Principal Activity
Country of
Operation
Group Interest
BGC Contracting Pty Ltd & Laing O’Rourke
Australia Construction Pty Ltd
NorthLink WA roads
Australia
50%
-
2020
2019
The following amounts are included in the Group’s consolidated financial statements as a result of the
proportionate consolidation of the above interests in joint operations.
Financial Information
Consolidated
STATEMENT OF FINANCIAL PERFORMANCE
Revenue
Expenses
STATEMENT OF FINANCIAL POSITION
Cash
Other Current assets
Current liabilities
2020
$’000
1,046
(2,869)
777
7,950
(969)
2019
$’000
-
-
-
-
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require unanimous consent of the parties sharing control.
77
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.2
UNINCORPORATED JOINT OPERATIONS CONTINUED
When a group entity undertakes its activities under joint operations, the Group as a joint operator recognises in
relation to its interest in a joint operation:
•
•
•
•
•
Its assets, including its share of any assets held jointly;
Its liabilities, including its share of any liabilities incurred jointly;
Its revenue from the sale of its share of the output arising from the joint operation;
Its share of the revenue from the sale of the output by the joint operation; and
Its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation
in accordance with the AASBs applicable to the particular assets, liabilities, revenues and expenses.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or
contribution of assets), the Group is considered to be conducting the transaction with the other parties to the
joint operation, and gains and losses resulting from the transactions are recognised in the Group’s consolidated
financial statements only to the extent of other parties’ interests in the joint operation.
When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a
purchase of assets), the Group does not recognise its share of the gains and losses until it resells those assets
to a third party.
7.3
RELATED PARTIES
The ultimate parent entity within the Group is NRW Holdings Limited. The interests in subsidiaries are set out
in note 7.1.
Key management personnel transactions
During the financial year (since 9 December 2019), rental of commercial properties to the value of $256,141
(2019: $nil) were provided to the NRW Group on normal commercial terms and conditions from Belle Creed Pty
Ltd and Payne Property Unit Trust, both related parties of Mr G Payne (Executive General Manager of DIAB
Engineering Pty Ltd).
There are no other transactions and balances with key management personnel and their related parties.
78
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.4
PARENT ENTITY INFORMATION
As at, and throughout, the financial year ended 30 June 2020 the parent company of the Group was NRW
Holdings Limited.
The accounting policies of the parent entity, which have been applied in determining the financial information
shown below, are the same as those applied in the consolidated financial statements.
Financial Position
ASSETS
Current assets
Non-current assets
Total assets
LIABILITIES
Current liabilities
Non-current liabilities
Total liabilities
EQUITY
Contributed equity
Retained earnings
Share based payment reserve
Total equity
Financial Performance
Profit for the year
Total comprehensive income
Parent
Parent
2020
$’000
210,912
200,156
411,068
22,002
37,463
59,465
332,863
10,132
8,608
351,603
2020
$’000
17,216
17,216
Guarantees Entered into by the Parent in Relation to the Debts of its Subsidiaries
Asset finance
Total
Parent
2020
$’000
199,573
199,573
2019
$’000
169,609
81,481
251,090
17,731
9,250
26,981
206,149
11,205
6,755
224,109
2019
$’000
7,508
7,508
2019
$’000
54,726
54,726
NRW Holdings Limited has entered into a Deed of Cross Guarantee as disclosed in note 7.1.
7.5
BUSINESS COMBINATIONS
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values
of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the
acquiree and the equity interests issued by the Company in exchange for control of the acquiree. Acquisition-
related costs are recognised in profit or loss as incurred.
79
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NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.5
BUSINESS COMBINATIONS CONTINUED
At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognised at their fair
value, except that:
• Deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are
recognised and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee
Benefits’ respectively;
• Liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-
based payment arrangements of the Company entered into to replace share-based payment
arrangements of the acquiree are measured in accordance with AASB 2 ‘Share Based Payment’ at the
acquisition date; and
• Assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Noncurrent
Assets Held for Sale and Discontinued Operations’ are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-
controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the
acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities
assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and
liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests
in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a gain on acquisition.
When the consideration transferred by the Company in a business combination includes assets or liabilities
resulting from a contingent consideration arrangement, the contingent consideration is measured at its
acquisition-date fair value and included as part of the consideration transferred in a business combination.
Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments
are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot
exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is
remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 ‘Provisions, Contingent
Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit
or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or
liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the
acquisition date that, if known, would have affected the amounts recognised at that date.
2020 Acquisitions
BGC Contracting Pty Ltd Acquisition
On 9 December 2019, the Company completed the acquisition of BGC Contracting Pty Ltd. BGC Contracting
was subsequently renamed to NRW Contracting (“NRWC”). Total consideration for NRWC was $140.4 million
for 100% of the shares.
NRWC provides services to the resources, energy and infrastructure sectors across three core businesses:
• Mining – open cut contract mining business, contract crushing and processing;
• Construction – civil construction business with capability across the public infrastructure, energy and
resources sectors; and
• DIAB Engineering – key capabilities include maintenance (shutdown services and onsite maintenance),
construction and fabrication in the resources sector across Australia.
Costs of a one-off nature relating to the acquisition amounting to $14.9 million have been excluded from the
consideration transferred and have been recognised as an expense in the consolidated statement of profit or
loss for the year ended 30 June 2020.
80
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
BUSINESS COMBINATIONS CONTINUED
7.5
BUSINESS COMBINATIONS CONTINUED
7.5
BUSINESS COMBINATIONS CONTINUED
7.5
Acquisition cost of funding
7.5
BUSINESS COMBINATIONS CONTINUED
Acquisition cost of funding
Acquisition cost of funding
Acquisition cost of funding
Consideration paid in cash to vendor (from equity raising)
Consideration paid in cash to vendor (from equity raising)
Consideration paid from new banking facility (to repay exiting asset financier)
Consideration paid in cash to vendor (from equity raising)
Consideration paid from new banking facility (to repay exiting asset financier)
Consideration paid in cash to vendor (from equity raising)
Total cash consideration
Consideration paid from new banking facility (to repay exiting asset financier)
Total cash consideration
Consideration paid from new banking facility (to repay exiting asset financier)
Less cash and cash equivalents acquired
Total cash consideration
Less cash and cash equivalents acquired
Total cash consideration
Net cash outflow on acquisition (refer to consolidated statement of cash flows)
Less cash and cash equivalents acquired
Net cash outflow on acquisition (refer to consolidated statement of cash flows)
Less cash and cash equivalents acquired
Add asset finance debt assumed
Net cash outflow on acquisition (refer to consolidated statement of cash flows)
Add asset finance debt assumed
Net cash outflow on acquisition (refer to consolidated statement of cash flows)
Net purchase consideration (Excl. AASB16)
Add asset finance debt assumed
Net purchase consideration (Excl. AASB16)
Add asset finance debt assumed
Recognition of lease debt
Net purchase consideration (Excl. AASB16)
Recognition of lease debt
Net purchase consideration (Excl. AASB16)
Net purchase consideration
Recognition of lease debt
Net purchase consideration
Recognition of lease debt
Net purchase consideration
Net purchase consideration
Fair value of assets acquired and liabilities assumed at the date of the acquisition
Fair value of assets acquired and liabilities assumed at the date of the acquisition
Fair value of assets acquired and liabilities assumed at the date of the acquisition
Fair value of assets acquired and liabilities assumed at the date of the acquisition
ASSETS
ASSETS
CURRENT ASSETS
ASSETS
CURRENT ASSETS
ASSETS
Cash and cash equivalents
CURRENT ASSETS
Cash and cash equivalents
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
Trade and other receivables
Cash and cash equivalents
Inventories
Trade and other receivables
Inventories
Trade and other receivables
Lease receivable
Inventories
Lease receivable
Inventories
Other current assets
Lease receivable
Other current assets
Lease receivable
Total current assets
Other current assets
Total current assets
Other current assets
Total current assets
Total current assets
NON-CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
NON-CURRENT ASSETS
Property, plant and equipment
NON-CURRENT ASSETS
Lease assets (right of use)
Property, plant and equipment
Lease assets (right of use)
Property, plant and equipment
Lease receivable
Lease assets (right of use)
Lease receivable
Lease assets (right of use)
Intangibles
Lease receivable
Intangibles
Lease receivable
Total non-current assets
Intangibles
Total non-current assets
Intangibles
Total assets
Total non-current assets
Total assets
Total non-current assets
Total assets
Total assets
LIABILITIES
LIABILITIES
CURRENT LIABILITIES
LIABILITIES
CURRENT LIABILITIES
LIABILITIES
Trade and other payables
CURRENT LIABILITIES
Trade and other payables
CURRENT LIABILITIES
Financial debt
Trade and other payables
Financial debt
Trade and other payables
Lease debt
Financial debt
Lease debt
Financial debt
Provisions
Lease debt
Provisions
Lease debt
Total current liabilities
Provisions
Total current liabilities
Provisions
Total current liabilities
Total current liabilities
NON-CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Financial debt
NON-CURRENT LIABILITIES
Financial debt
NON-CURRENT LIABILITIES
Lease debt
Financial debt
Lease debt
Financial debt
Provisions
Lease debt
Provisions
Lease debt
Deferred tax liabilities
Provisions
Deferred tax liabilities
Provisions
Total non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Deferred tax liabilities
Total liabilities
Total non-current liabilities
Total liabilities
Total non-current liabilities
NET ASSETS ACQUIRED
Total liabilities
NET ASSETS ACQUIRED
Total liabilities
NET ASSETS ACQUIRED
NET ASSETS ACQUIRED
$’000
$’000
116,388
$’000
116,388
$’000
24,003
116,388
24,003
116,388
140,391
24,003
140,391
24,003
(28,632)
140,391
(28,632)
140,391
111,759
(28,632)
111,759
(28,632)
158,301
111,759
158,301
111,759
270,060
158,301
270,060
158,301
5,502
270,060
5,502
270,060
275,562
5,502
275,562
5,502
275,562
275,562
$’000
$’000
$’000
$’000
28,632
28,632
130,286
28,632
130,286
28,632
19,021
130,286
19,021
130,286
2,415
19,021
2,415
19,021
2,498
2,415
2,498
2,415
182,852
2,498
182,852
2,498
182,852
182,852
214,545
214,545
5,502
214,545
5,502
214,545
4,059
5,502
4,059
5,502
23,499
4,059
23,499
4,059
247,605
23,499
247,605
23,499
430,457
247,605
430,457
247,605
430,457
430,457
107,606
107,606
62,528
107,606
62,528
107,606
1,444
62,528
1,444
62,528
49,773
1,444
49,773
1,444
221,351
49,773
221,351
49,773
221,351
221,351
95,773
95,773
4,058
95,773
4,058
95,773
2,719
4,058
2,719
4,058
7,975
2,719
7,975
2,719
110,525
7,975
110,525
7,975
331,876
110,525
331,876
110,525
98,581
331,876
98,581
331,876
98,581
98,581
81
81
81
81
81
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.5
BUSINESS COMBINATIONS CONTINUED
Goodwill arising on acquisition
Consideration paid in cash to vendor (from equity raising)
Consideration paid from new banking facility (to repay existing asset financier)
Total cash consideration
Less fair value of identifiable net assets acquired
Goodwill
2020
$’000
116,388
24,003
140,391
98,581
41,810
NRWC business combination resulted in Goodwill purchase transaction as consideration paid for the
combination included amounts in relation to the benefit of expected synergies, future market development, and
the assembled workforce of NRWC. These benefits are not recognised separately from goodwill as they do not
meet the recognition criteria for identifiable intangible assets.
An independent assessment has determined the carrying value of the intangibles relating to “customer contracts
and relationships” and the DIAB Engineering brand as part of the acquisition. Customer contracts and
relationships are being amortised in line with the valuation assessment. Brand name has an indefinite useful
life and is therefore not amortised but is tested for impairment at least annually.
Impact of Acquisition on the Results of the Group
The activities of NRWC were progressively integrated into the operations of NRWs group structure over the
seven months following completion of the acquisition. Integration impacted where projects were managed and
how costs were allocated between NRWC and NRW. Consequently, the estimates of revenue and earnings
which follow represent our best assessment of contributions from NRWC in the seven months. It is estimated
that NRWC generated a profit before tax of circa $24 million (excluding the effects of onerous contracts) for the
seven months from 9 December 2019 to the reporting Date. Revenue for the seven months to 30 June 2020
was circa $500 million.
82
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NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.5
BUSINESS COMBINATIONS CONTINUED
2019 Acquisitions
RCR Mining Technologies
On 31 January 2019, the Company entered into an agreement with the Administrators’ of RCR Tomlinson
Limited to acquire the assets of RCRMT. The business acquisition was completed on 15 February 2019 for a
total purchase consideration of $10 million, which was funded from the Group’s existing cash reserves.
The Group assumed various property leases, together with the requisite property, plant and equipment,
inventories, and intangible assets in order to continue to run the RCRMT businesses. Intangible assets include
intellectual property across a range of products and processes, patents, customer contracts, licences and the
RCR brand. The Group also assumed the relevant RCRMT workforce and their current employment
entitlements.
a) Fair value of Assets Acquired and Liabilities Assumed at the Date of Acquisition
CURRENT ASSETS
Inventories
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
CURRENT LIABILITIES
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Provisions
Deferred tax liability
Total non-current liabilities
Total liabilities
NET ASSETS ACQUIRED
b) Gain on Acquisition
Consideration paid in cash
Less fair value of identifiable net assets acquired
Gain on acquisition
2019
$’000
2,042
2,042
4,925
16,047
20,972
23,014
3,563
3,563
837
3,494
4,331
7,894
15,120
$000's
10,000
(15,120)
(5,120)
RCRMT business combination resulted in a gain on acquisition transaction because the fair value of assets
acquired, and liabilities assumed exceeded the total of the fair value of consideration paid.
The gain on acquisition amount has been recorded within “Other revenue” in the consolidated statement of
income for the year ended 30 June 2019.
An independent assessment has determined the carrying value of the intangibles relating to “customer contracts
and relationships”, brand and intellectual property as part of the acquisition. Customer contracts and
relationships and intellectual property are being amortised in line with the valuation assessment. Brand name
has an indefinite useful life and is therefore not amortised but is tested for impairment at least annually.
83
83
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial StatementsNRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
NOTES TO THE
NOTES TO THE
FINANCIAL STATEMENTS CONTINUED
FINANCIAL STATEMENTS CONTINUED
7.6
AUDITORS REMUNERATION
AUDIT SERVICES
Auditors of the Company
Deloitte Touche Tohmatsu
OTHER SERVICES
Coal levy audits
Accounting services related to BGC Contracting acquisition
Total
Consolidated
2020
$
2019
$
581,000
374,000
18,500
30,000
629,500
18,000
-
392,000
7.7
EVENTS AFTER THE REPORTING PERIOD
Other than the events noted below, there has not arisen in the interval between the end of the financial year
and the date of this report any transaction or event of a material nature likely in the opinion of the Directors, to
affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs
of the consolidated entity in subsequent years.
The Directors have declared a fully franked dividend for the current financial year of four cents per share,
payable on 14 October 2020.
84
84
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements
SHAREHOLDER
SHAREHOLDER
INFORMATION
INFORMATION
The shareholder information set out below was applicable as at 28 July 2020. NRW's contributed equity
comprises 426,685,384 fully paid ordinary shares.
%
86.69%
9.62%
1.97%
1.48%
0.24%
100.00%
0.01%
No of Holders
193
1,483
1,109
2,322
2,119
7,226
532
%
2.67%
20.52%
15.35%
32.13%
29.33%
100.00%
7.36%
Distribution of Shareholdings
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Fully paid ordinary
shares
369,899,245
41,035,691
8,409,776
6,331,352
1,009,320
426,685,384
Unmarketable parcels
47,136
NRW’s 20 Largest Shareholders
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
MR DAVID RONALDSON
ZERO NOMINEES PTY LTD
JULIAN ALEXANDER PEMBERTON
BNP PARIBAS NOMS PTY LTD
MR ANDREW JOHN WALSH
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR JULIAN ALEXANDER PEMBERTON
JEFFRESS NOMINEES PTY LTD
MR PETER HOWELLS
BOND STREET CUSTODIANS LIMITED
GABRIELLA NOMINEES PTY LTD
MR STEVEN SCHALIT & MS CANDICE SCHALIT
SCHALIT SUPER PTY LTD
CITICORP NOMINEES PTY LIMITED
MR STEVEN SCHALIT
Shares
% Interest
117,751,327
27.60%
69,750,544
16.35%
48,192,687
11.29%
17,901,267
17,894,059
7,690,855
7,500,000
5,836,202
5,212,857
3,310,103
3,200,712
3,000,000
2,193,920
2,053,355
2,000,000
1,680,702
1,540,500
1,462,068
1,329,053
1,324,927
4.20%
4.19%
1.80%
1.76%
1.37%
1.22%
0.78%
0.75%
0.70%
0.51%
0.48%
0.47%
0.39%
0.36%
0.34%
0.31%
0.31%
Substantial holders of 5% or more of fully paid ordinary shares
As at the date of this report, the names of the substantial holders in the Company who have notified the
Company in accordance with Section 671B of the Corporations Act 2001 are set out below:
Name
VANGUARD GROUP
BLACKROCK GROUP
Voting Rights
No. of shares
Ownership %
22,704,233
21,488,733
5.32
5.04
Every shareholder present in person or represented by a proxy or other representative, shall have one vote for
each share held by them.
NRW HOLDINGS ANNUAL REPORT 2020 | Shareholder Information
85
85
NRW HOLDINGS ANNUAL REPORT 2020 | Notes to the Financial Statements INDEPENDENT AUDITOR’S
REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of
NRW Holdings Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of NRW Holdings Limited (the “Company”) and its subsidiaries
(the “Group”) which comprises the consolidated statement of financial position as at 30 June 2020,
the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting
policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year then ended; and
(ii)
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 & 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 for 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
86
NRW HOLDINGS ANNUAL REPORT 2020 | Independent Auditor’s Report
INDEPENDENT AUDITOR’S
REPORT CONTINUED
Key Audit Matter
Revenue recognition
How the scope of our audit responded to the
Key Audit Matter
Our procedures included, but were not limited to:
As disclosed in Note 2.2, the Group’s Civil
revenues are recognised over time as
performance obligations are fulfilled over
time.
Revenue is recognised by management
after assessing all factors relevant to each
contract, including:
Determination of stage of completion
and measurement of progress towards
satisfaction of performance obligations;
Estimation of total contract revenue
and costs including the estimation of
cost contingencies;
Determination of contractual
entitlement and assessment of the
probability of customer approval of
changes in scope and/or price; and
Estimation of project completion date.
The Group recognises in contract asset and
contract receivables progressive
measurement of the value to customers of
goods and services transferred and
valuation of work completed as well as
amounts invoiced to customers. The
recognition of these amounts is based on
management’s assessment of the expected
amounts recoverable.
NRW have submitted Change Order
Requests (“CORs”) on some projects. NRW
remain in negotiations in relation to the
validity and valuation of some of the CORs.
Evaluating management’s processes and
controls in respect of the recognition of
construction contract revenue. As part of this
process we tested key controls including:
o The review process conducted at the
tendering phase; and
o The preparation, review and authorisation
of monthly valuation reports for contracts.
Obtaining an understanding of the contract
terms and conditions to evaluate whether
these were reflected in management’s
estimate of forecast costs and revenue;
Testing a sample of costs incurred to date and
agreeing these to supporting documentation;
Assessing the forecast costs to complete
through discussion and challenging of project
managers and finance personnel;
Testing contractual entitlement for changes,
variations and claims recognised within
contract revenue to supporting documentation
and by reference to the underlying contract;
Evaluating significant exposures to liquidated
damages for late delivery of contract works;
Evaluating contract performance in the period
subsequent to year end to audit opinion date
to confirm management’s year end revenue
recognition judgements; and
Evaluating the probability of recovery of
outstanding amounts by reference to the
status of contract negotiations, historical
recoveries and other supporting
documentation.
We also assessed the appropriateness of the
disclosures in Note 2.2 to the financial
statements.
Acquisition of BGC Contracting
(subsequently renamed NRW
Contracting (‘NRWC’))
As disclosed in Note 7.5 the Group
completed the acquisition of NRWC on 9
December 2019 for net purchase
consideration of $140.4 million.
Our procedures included, but were not limited to:
Reading the relevant agreements to
understand the key terms and conditions, and
confirming our understanding of the
transaction;
Management has completed the process to
allocate the purchase price to identifiable
assets, liabilities and separately identifiable
intangible assets as relevant.
Evaluating management’s process for the
identification of the assets and liabilities
acquired;
NRW HOLDINGS ANNUAL REPORT 2020 | Independent Auditor’s Report
87
INDEPENDENT AUDITOR’S
REPORT CONTINUED
This process involved estimation and
judgement in determining the equipment
values, inventory, provisions, customer
relationships, brand value and discount rate
applied to future cash flow forecasts.
Evaluating management’s process for the
determination of the fair value of the
identifiable assets and liabilities acquired;
In conjunction with our valuation specialists,
assessing the competence and objectivity of
management’s specialist who valued the
intangible assets; and
Challenging the values attributable to
equipment, inventory, provisions, customer
relationships and brand value recognised in
respect of the acquisition, including the
appropriateness of the resulting goodwill.
We also assessed the appropriateness of the
disclosures in Note 7.5 to 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 2020 but does not
include the financial report and our auditor’s report thereon. The annual report is expected to be
made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we will 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.
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.
88
NRW HOLDINGS ANNUAL REPORT 2020 | Independent Auditor’s Report
INDEPENDENT AUDITOR’S
REPORT CONTINUED
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
intentional omissions,
involve collusion,
fraud may
from error, as
misrepresentations, or the override of internal control.
forgery,
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’s audit. We
remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated 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.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in on pages 14 to 27 of the Directors’ Report for
the year ended 30 June 2020.
In our opinion, the Remuneration Report of NRW Holdings Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
NRW HOLDINGS ANNUAL REPORT 2020 | Independent Auditor’s Report
89
INDEPENDENT AUDITOR’S
REPORT CONTINUED
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.
DELOITTE TOUCHE TOHMATSU
D K Andrews
Partner
Chartered Accountants
Perth, 18 August 2020
90
NRW HOLDINGS ANNUAL REPORT 2020 | Independent Auditor’s Report
APPENDIX
APPENDIX
4E
4E
RESULTS FOR ANNOUNCEMENT TO THE MARKET
For the Year Ended 30 June 2020
Revenues from ordinary activities
Profit from ordinary activities after tax attributable to members
Total Comprehensive Income
INTERIM DIVIDEND
Date dividend is payable
Record date to determine entitlements to dividend
Interim dividend payable per security (cents)
Franked amount of dividend per security (cents)
FINAL DIVIDEND
Date dividend is payable
Record date to determine entitlements to dividend
Final dividend payable per security (cents)
Franked amount of dividend per security (cents)
RATIOS AND OTHER MEASURES
% Change
up / (down)
Year ended
30 June 2020
Year ended
30 June 2019
85.9
128.5
128.5
$’000
2,004,362
73,749
73,749
$’000
1,078,124
32,270
32,270
9 June 2020
8 May 2019
30 March 2020
24 April 2019
2.5
2.5
2.0
2.0
14 October 2020
16 December 2019
29 September 2020
2 December 2019
4.0
4.0
2.0
2.0
Net tangible asset backing per ordinary security
$0.84
$0.61
Commentary on the Results for the Year
A commentary for the results for the year is contained in the statutory financial report dated 18 August 2020.
Status of Accounts
This statutory financial report is based on audited accounts.
NRW Holdings Limited - ACN 118 300 217
NRW HOLDINGS ANNUAL REPORT 2020 | Appendix 4E
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APPENDIX
APPENDIX
A
A
For comparative purposes, the adjustments due to the application of the new standard are
analysed by financial statement line items below.
Profit or Loss and other Comprehensive Income
As reported
30 June 2020
As reported
30 June 2019
Incl. AASB16
AASB16
Excl. AASB16
$'000
$'000
$'000
$'000
Revenue
Other income
Finance income
Finance costs
Share of profit / loss in associates
Materials and consumables used
Employee benefits expense
Subcontractor costs
Depreciation and amortisation expenses
Plant and equipment costs
Impairment of financial assets (Gascoyne Resources)
-
Other expenses
Profit before income tax
(22,856)
100,218
2,004,362
311
506
(13,310)
(3,421)
(42)
(390,599)
(570,183)
(441,928)
(122,081)
(343,961)
(12,383)
5,937
-
8,036
(1,831)
2,004,362
1,078,124
311
506
(9,889)
(42)
(390,599)
(570,183)
(441,928)
(109,698)
(349,898)
-
(30,892)
102,049
5,120
739
(7,236)
(2,084)
(237,099)
(295,353)
(246,304)
(62,053)
(145,651)
(33,522)
(8,944)
45,737
Income tax (expense) / benefit
(26,469)
550
(27,019)
(13,467)
Total comprehensive income
73,749
(1,281)
75,030
32,270
EBITDA reconciliation
Profit before income tax (pre AASB16)
Add back: interest
Add back: depreciation
Add back: Gascoyne impairment / RCRMT
EBITDA (pre AASB16)
Transaction costs
EBITDA(1) (pre AASB16)
EBITDA(1) (post AASB16)
AASB16 EBITDA impact
102,049
9,383
109,698
-
221,130
14,921
236,051
250,024
13,973
45,737
6,497
62,053
28,402
142,689
1,249
143,938
143,938
-
(1)
EBITDA is earnings before interest, tax, depreciation, amortisation of acquisition intangibles and transaction costs.
92
NRW HOLDINGS ANNUAL REPORT 2020 | Appendix A
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APPENDIX
APPENDIX
A CONTINUED
A CONTINUED
Statement of Financial Position
Only those balances impacted by adoption of AASB 16 are presented below.
Lease assets (RoU)
Deferred tax assets
Total assets Impact
Lease debt - current
Provisions - non current
Lease debt - non current
Total liabilities Impact
Net asset Impact
Current period profit
Retained earnings
Total equity Impact
As reported
30 June 2020
As reported
30 June 2019
Incl. AASB16
AASB16
Excl. AASB16
$'000
58,275
(9,743)
(14,757)
(78,442)
(50,301)
(73,749)
(57,324)
$'000
58,275
1,848
60,123
(14,757)
828
(50,301)
(64,230)
(4,107)
1,281
2,826
4,107
$'000
-
(11,591)
$'000
-
22,057
-
-
(79,270)
(31,664)
-
-
(75,033)
(60,150)
32,270
46,228
NRW HOLDINGS ANNUAL REPORT 2020 | Appendix A
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