FOR THE YEAR ENDING 30 JUNE 2019
ABN: 81 104 662 259
Contents
Chairman’s Report
Managing Director’s Report
Our Projects
Directors’ Report
Auditor’s Independence Declaration
Directors’ Declaration
Independent Auditor’s Report
Financial Statements
Notes to the Financial Statements
Shareholder Information
Corporate Directory
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SRG GLOBAL 2019 ANNUAL REPORT Making the
complex simple
SRG Global is an engineering-led specialist construction,
maintenance and mining services group built to solve complex
problems across the entire asset lifecycle.
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SRG GLOBAL 2019 ANNUAL REPORT SRG Global Model
WHO WE ARE
We’re an engineering-led
specialist construction,
maintenance and mining
services group
OPERATING
MODEL
End-to-end solutions
across the entire asset
lifecycle.
OUR VISION
The most sought-after
specialist construction,
maintenance and mining
services business.
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SRG GLOBAL 2019 ANNUAL REPORT Operating Segments
Construction
Constructing complex
infrastructure
Targeted Revenue
Asset Services
Sustaining complex
infrastructure
Recurring Revenue
Mining Services
Comprehensive
ground solutions
Recurring Revenue
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SRG GLOBAL 2019 ANNUAL REPORT
Chairman’s Report
Chairman’s
Report
Live for the challenge
We live to solve problems and have the courage to challenge the
status quo and what’s considered possible.
Smarter together
Individually, we’re all pretty smart but when we pool our resources
and work together as one, we’re capable of taking on the world.
Never give up
We’re doers. We are resilient and relentlessly pursue excellence in
everything we do. 100% accountability, zero excuses.
Have each other’s backs
We’re stronger as one team. We look out for each other and keep
each other out of harm’s way.
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SRG GLOBAL 2019 ANNUAL REPORT Chairman’s Report
We are
smarter
together
It is my pleasure to present the 2019 SRG Global Limited Annual
Report, which marks the first full year since we brought together SRG
Limited (‘SRG’) and Global Construction Services Limited (‘GCS’).
This has been a transformational year and we have made significant
progress to establish ourselves as the most sought-after engineering-
led construction, maintenance and mining services business.
It was clear from the first day of coming
together that our success would not
be determined by our capability alone
but more importantly by what we
stood for as one company. To this end
I am delighted at the way our people
came together, created and embraced
what is core to us and our new way
forward, which in the first instance
has underpinned an efficient and well
managed integration process.
In order to forge a sense of
togetherness it was necessary to
establish “What We Stand For”.
Out of this process we identified a
series of commitments that everyone
in the business can relate to and
embody – live for the challenge,
smarter together, never give up and
have each other’s backs. It has been
pleasing for the Board to see that these
commitments have been embraced at
all levels of the Group and applied not
just operationally but also throughout
the integration process.
LIVE FOR THE CHALLENGE
The process of bringing together
two ASX listed groups is not without
its challenges. The SRG Global team
has embraced these challenges and
has largely completed what is, from
both a corporate and operational
perspective, a complex process. With
integration activities now substantially
complete, SRG Global is well positioned
to capitalise on the combined and
integrated offering to the market,
and further build on the numerous
examples of early success in this area
since the merger.
SMARTER TOGETHER
With our combined capability and
expertise, the team has seamlessly
integrated two businesses whilst
ensuring impeccable delivery of service
to our customers was maintained. Our
conviction that the market wanted
service providers to have an integrated
offering has been validated by the
projects we have been able to, and
continue to, deliver.
NEVER GIVE UP
The past 12 months has presented
SRG Global with a variety of business
challenges however the continued
focus has been on building a strong
foundation from which SRG Global can
deliver solid returns to shareholders.
Importantly, the team’s resilience
during difficult times has ensured it
has delivered on initial expectations
through maintaining a disciplined and
targeted approach to the right project
opportunities. Most notably it has been
able to secure a number of substantial
term revenue contracts and also
establish new business units to target
potentially lucrative emerging markets.
HAVE EACH OTHER’S BACKS
A safe business is a good business
and we continue to strive towards
our goal of Zero Harm. It is pleasing
to note that even through a period of
significant change SRG Global’s safety
performance has improved.
BOARD AND GOVERNANCE
The new SRG Global Board has been in
place for ten months and a key priority
during this period has been to ensure
SRG Global’s Corporate Governance
processes are of the highest standards.
To this end we introduced a new board
charter and complete refresh of all
governance, committee and policy
frameworks. This has been no small
task and I thank each Board member
for the experience, expertise and
contribution they bring.
OUR FUTURE
Following a year of transformation
and integration we are now advancing
towards the Growth Phase of our
strategic plan. As we look ahead over
2020 we are encouraged by the level
of activity and potential investment
in sectors where we can apply our
expertise to solve complex problems
across the entire asset lifecycle.
The strength of the business and
our robust opportunity pipeline is
in no small part due to the quality,
professionalism and commitment of
the SRG Global team. On behalf of the
Board I would like to thank each and
every member of the SRG Global family
for their hard work over the past year.
The dedication and resolve of our team
is to be commended. They have met
each challenge with a professional and
relentless approach that will ultimately
deliver significant long-term value for
our shareholders.
I would also like to thank shareholders
for their support and I am pleased that
we have laid a solid foundation for what
is an exciting future for SRG Global.
Peter Wade
Non-Executive Chairman
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SRG GLOBAL 2019 ANNUAL REPORT Managing Director’s Report
Managing
Director’s
Report
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SRG GLOBAL 2019 ANNUAL REPORT Managing Director’s Report
We live
for the
challenge
The 2019 Financial Year (‘FY19’) has been a year of change and
challenge which has ultimately strategically positioned SRG Global
as a business with a balanced portfolio of recurring and project-
based revenue streams occurring across the entire asset life cycle of
engineer, construct and sustain.
ZERO HARM AND OUR PEOPLE
Ensuring that our workforce of
1,900 highly-skilled, motivated team
members return home to their families
safely at the end of every day is a
primary focus. In a year of change, we
intensified the focus on proactively
driving a strong safety culture across
all parts of our business and I am
proud of the way that our people have
each other’s backs.
We have taken some good steps
towards improving our LTIFR during a
period of significant internal change.
I often refer to safety as the glass ball
amongst the many rubber balls that
you juggle in business and we will
continue to relentlessly pursue Zero
Harm each and every day in the SRG
Global working community.
A YEAR OF CHANGE
FY19 saw the coming together of
SRG Limited (‘SRG’) and Global
Construction Services Limited (‘GCS’)
to create an engineering-led specialist
construction, maintenance and mining
services group.
The strategic rationale of the
merger was to leverage the greater
combined offering of both businesses
and to target our common and
complementary customers in the
sectors and geographies that we
operate in. The integration has been
well executed with:
• positive customer feedback
• clear evidence of work won through
cross-selling of complete offering
• systems integration well progressed
• “One Business One Team” structure
and culture embedded
This has positioned the business
well in weathering what has been
a very challenging year on several
fronts including a highly competitive
environment combined with economic
and political uncertainty. This resulted
in a number of delays in the award of
major targeted construction projects
and the subsequent substantial
carrying costs that were required to
maintain our engineering and delivery
capability.
Faced with challenging market
conditions in some sectors, the
decision was made to ensure internal
engineering and delivery capability
was maintained despite delays in
the award and commencement of
large-scale construction projects.
These capability carrying costs
have impacted earnings for the
current financial year however they
ensure SRG Global is well placed
to secure these projects upon their
commencement.
Whilst it can be difficult to balance
short-term market expectations, it
was imperative that we maintained
a long-term focus to ensure the
sustainable success of SRG Global
well into 2020 and beyond. Whilst the
market will continue to be demanding,
we are building clear momentum
with a number of significant contract
wins and record work in hand. This
positions us well in the medium and
longer term, underpinned by having
the capability to successfully deliver
for our shareholders on an ongoing
basis.
“Record work in hand of $708m
with ~70% of recurring revenue”
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SRG GLOBAL 2019 ANNUAL REPORT Managing Director’s Report
Recent major contract awards
Construction
Asset Services
Mining Services
Karratha
Asset Services
o Woodside
o ~$30m
o Access Solutions
Construction
o Main Roads WA
o $20.8m
o Transport Infrastructure
PERTH
Kalgoorlie
Worsley
Mining Services
o KCGM
o ~$18m
o 5 years
o Geotechnical Ground Support
Asset Services
o South32
o ~$60m
o 6 Years
o Access Solutions
MIDDLE EAST
Asset Services
o Ports North
o $4.2m
o Jetty
Remediation
DUBAI
Construction
o Besix
o ~$8m
o Transport
Infrastructure
UNITED STATES
Mt. Carlton
Mining Services
o Evolution
o $115m
o 5 years
o Production Drill & Blast
Asset Services
o Onesteel
o ~$45m
o 6 Years
o Refractory Services
Whyalla
SYDNEY
Cowal
Mt. Rawdon
BRISBANE
Construction
o Multiplex
o ~$30m
o Commercial
Facades
Hutchinson
o $20m
o Commercial
Facades
Construction
o RMS
o $7.9m
o Transport
Infrastructure
MELBOURNE
Asset Services
o VicRoads
o $9m
o Transport Infrastructure Maintenance
Minnesota
Construction
o Early Contractor
Involvement (ECI)
o Dam Strengthening
AUCKLAND
Asset Services
o Transpower
o ~NZ$35m
o 3 Years
o Energy Infrastructure
Maintenance
Source: Selected recent major contract awards since 1 July 2018
(not a complete list of projects)
Construction
o Hutchinson
o $21.4m
o Commercial
Infrastructure
o Watpac
o $24.6m
o Education
Infrastructure
o Technology
Infrastructure
o Lendlease
o $25.8m
o Health
Infrastructure
o Commercial
Facades
TRANSFORMING TO A MORE
BALANCED BUSINESS MIX
One of the primary goals of SRG
Global is to continue to strategically
build the level of recurring revenue
to balance the current weighting
towards project-based revenue. We
are far more progressed in delivering
against this key objective than I
expected to be in the first ten months
since merging. We now have record
work in hand of $708 million and a
step-change in the diversity of SRG
Global’s revenue base such that our
current work in hand is comprised of
~70% of recurring and term revenues.
This change mitigates revenue and
earnings volatility and validates a key
element of the merger rationale.
OPERATIONAL REVIEW
Construction
The Construction Segment has two key
focus areas of civil and building. In the
civil sector our focus is on the specialist
markets of dams, bridges, LNG tanks
and windfarms. In the building sector
our focus is on securing vertically
integrated structure and facade
projects of scale with repeat, tier-one
clients.
For FY19 the Construction Segment
delivered revenue of $268.0m (2018:
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$120.0m) and EBITDA of $8.9m (2018:
$5.2m).
One of the key issues we experienced
during the year was the on-
going delays in the award and
commencement of large-scale
construction projects. This negatively
impacted the financial performance
as the business continued to carry the
engineering and delivery capability
costs without the corresponding
revenue.
There were significant transport
infrastructure projects secured both
domestically and internationally
including the balanced-cantilever
Infinity Bridge in Dubai, the substantial
Ocean Reef Road Interchange project
in Western Australia and several
projects with various Transport
Authorities on the East Coast of
Australia.
Of significance was the first Early
Contractor Involvement (‘ECI’) for a
dam anchoring and strengthening
project in the United States. This
ECI work signals that SRG Global’s
SRG GLOBAL 2019 ANNUAL REPORT Managing Director’s Report
WELL POSITIONED FOR LONG
TERM SUSTAINABLE GROWTH
With a core focus on securing recurring
and term revenues, leveraging site
presence to deliver an expanded
offering to our client base and a
disciplined approach to work winning,
2019 has laid a solid foundation from
which the business can transition from
the Optimisation Phase to the Growth
Phase of our strategic plan (see below).
Our vision is to be the most sought-
after specialist construction,
maintenance and mining services
group. I am proud of how our people
have embraced our Way Forward and
am more confident than ever that we
have great people, great customers
and the right business model to
continue to build the company that I
know we can be.
I would like to thank our people and
shareholders for their ongoing support
and am excited for the future we have
in front of us at SRG Global and what
we stand for - live for the challenge,
smarter together, never give up and
have each other’s backs.
David Macgeorge
Managing Director
significant expertise and capability
in complex civil infrastructure works
continues to be transferable globally
and in particular to our key target
market of North America where 50% of
global large concrete dams are located.
In the building sector, we secured
several significant integrated structure
and facade packages during the year
in markets including health, education
and commercial infrastructure. We
continue to follow key repeat clients
and are agnostic as to market sectors,
which protects our business against the
different industry cycles.
A new business unit was also
established to target the emerging
flammable cladding market. Whilst this
market is in its infancy, SRG Global’s
expertise in the complete supply chain
for engineered facades places the
business in a strong position to secure
works in this market.
Asset Services
During the financial year the Asset
Services Segment has maintained a
disciplined focus on securing recurring
and term revenue contracts with tier-
one clients. This has been possible via
the enhanced and combined offering
of SRG Global such that the business is
able to leverage existing site presence
with a ‘one stop shop’ model.
For FY19 the Asset Services Segment
delivered revenue of $135.8m (2018:
$41.9m) and EBITDA of $15.5m (2018:
$4.7m).
This focus has translated to substantial
term contracts being secured, including
our first term contract in refractory
services in Australia with OneSteel. In
addition the North West Shelf Project
access contract with Woodside was
extended for a further four years.
It was a major achievement when
South32 selected SRG Global to
deliver access services at its Worlsey
Alumina operations for a total of six
years (assuming extension options are
exercised). Furthermore, growth in the
recurring and term revenue work in
hand increased when Transpower New
Zealand extended SRG Global’s energy
infrastructure maintenance contract for
a further three years.
Mining Services
The Mining Services segment delivered
a solid financial performance via strong
asset utilisation across it’s production
drill fleet. Our primary focus is on
partnering with targeted clients in
specific commodities and driving
operational efficiencies and innovation
in asset utilisation.
The Mining Services Segment delivered
revenue of $82.6m (2018: $76.8m) and
EBITDA of $11.2m (2018: $13.7m) in
FY19.
During the financial year two long-
term strategic partnerships with
tier-one customers were renewed.
SRG Global’s operations with Evolution
Mining were extended for five years
via an Umbrella Agreement valued at
$115.0m. In addition, SRG Global’s over
20 year relationship with the ‘super-
pit’ in Kalgoorlie was extended when
Kalgoorlie Consolidated Gold Mines
(KCGM) extended a specialist geotech
contract for a further five years.
Strategic Horizons
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SRG GLOBAL 2019 ANNUAL REPORT Our Projects
CONSTRUCTION
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SRG GLOBAL 2019 ANNUAL REPORTOur Projects Taking the complexity
out of construction
SRG Global’s Civil, Building and Products businesses were awarded,
or worked on, some significant projects in the Construction sector
during the 2019 financial year.
Infinity Bridge, Dubai
In May of this year, SRG Global secured an ~$8m specialist
engineering and construction contract with Belhasa Six
Construct LLC (‘Besix’) to deliver the main crossing
bridge over Dubai Creek as part of the Al Shindagha
Corridor improvement project.
About the Project
The new 12-lane, 295 metre bridge will rise 15.5 metres
above Dubai Creek to allow clearance for various types
of marine vessels. Motorists will be provided six lanes in
each direction in addition to a pedestrian crossing for foot
traffic.
The bridge’s iconic design features a 42 metre high arch
shaped in the form of the mathematical symbol for infinity.
Approximately 2,400 tonnes of steel will be used in the
construction of the bridge.
The Road and Transport Authority appointed Besix as
the Infrastructure Contractor in 2018 and the project is
expected to be complete in 2022.
Project Scope
SRG Global’s scope of works will include post-tensioning
as well as the design, manufacture, supply, delivery
and erection of specialist formwork travellers for the
construction of the main bridge deck using a balanced
cantilever method.
Wanneroo Road and Ocean
Reef Road Interchange
In January this year, SRG Global secured a $41.6m
infrastructure project in joint venture with WBHO
Infrastructure to deliver the Wanneroo Road and Ocean
Reef Road Interchange project in Perth. SRG Global’s
share of the joint venture is $20.8 million.
About the Project
The project is funded by the Commonwealth and State
Government as part of a $2.3 billion investment in road
and rail infrastructure.
Project Scope
The project scope includes specialist engineering and
construction of substantial bridge structures over the
intersection, construction of on and off ramps, service
relocation, drainage enhancements and upgrades to all
related path and pedestrian crossings.
Source: /comingsoon.ae
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SRG GLOBAL 2019 ANNUAL REPORTOur Projects Our Projects
CONSTRUCTION
Margaret River Perimeter
Road Stage 2
During FY19, SRG Global completed the construction of
the Margaret River Perimeter Road Stage 2 project. SRG
Global were contracted by Main Roads Western Australia
(‘MRWA’) for this project in joint venture with WBHO
Infrastructure.
About the Project
Margaret River is one of the prime tourist destinations
in Western Australia. Whilst this small town is full with
visitors for most of the year, it is also positioned on one of
the busiest roads in Western Australia’s south-west, the
Bussell Highway, resulting in heavy traffic along its main
street.
To reduce traffic within the Margaret River town site,
MRWA designed and commissioned the construction of
a perimeter road around the town in two stages. Stage
2 of this project was awarded to the MRPR Joint Venture
between WBHO and SRG Global for $22.8m.
Project Scope
SRG Global’s scope included the construction of two
new bridges – a 100m long road bridge and a smaller
pedestrian bridge on the Darch Trail, both over Warperup
Creek (Margaret River). Construction of both bridges
required complex solutions and planning to achieve
the project scope with minimal impact on the local
environment and town community.
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SRG GLOBAL 2019 ANNUAL REPORT
SRG GLOBAL 2019 ANNUAL REPORT Our Projects
CONSTRUCTION
Stockyard Hill Wind Farm
Al Zour LNG Import Terminal
SRG Global has played a pivotal role in the construction
of the alternative anchored wind turbine foundations,
adopted for one of the largest wind farms in the southern
hemisphere.
About the Project
The Stockyard Hill Wind Farm project consists of 149
wind turbine generators, each over 100m in height, which
will provide substantial environmental, community and
economic benefits, and will have the potential to power
approximately 390,000 homes annually.
Project Scope
SRG Global’s scope on this project includes the installation
of 600 ground anchors to 50 of the 149 footings. The
works form a critical part of the concrete foundations,
ultimately securing the wind turbines to the ground.
SRG Global were successful in securing this complex wind
farm project with WBHO / SNC-Lavalin JV through the
alternative anchored construction method proposed, which
was considered both economical and practical.
SRG Global is now into peak production installing post-
tensioned anchors for one of the world’s largest LNG tank
projects currently underway in Kuwait.
About the Project
The Al-Zour Import Terminal project for Hyundai
Engineering and Construction Co., Ltd is now well
underway and includes the construction of a large scale
liquefied natural gas plant, including eight LNG storage
tanks, located 90 kilometres south of Kuwait City.
Project Scope
SRG Global is responsible for post-tensioning the eight
LNG storage tanks which are a core part of the project.
Each tank has a capacity of 225,500m3 with a height of
47.65m, diameter of 97m and 750mm wall thickness. SRG
Global are utilising BBR VT CONA CMI internal post-
tensioning featuring 27 strands of 15.2mm diameter
prestressing steel per tendon. The installation includes
96m long vertical loop tendons and 150m long horizontal
loop tendons.
We have some of the best technical minds in the
business constructing complex infrastructure.
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SRG GLOBAL 2019 ANNUAL REPORT Our Projects
CONSTRUCTION
Pimlico to Teven, Stage 3
SRG Global, in joint venture with Georgiou Group, recently
completed construction of two bridges over Emigrant and
Duck Creek on the Pacific Highway in Ballina New South
Wales.
About the Project
SRG Global was selected to deliver part of Australia’s
largest regional infrastructure project, the Pimlico to Teven
Stage 3 project, as part of the Pacific Highway upgrade
with Georgiou Group for Roads and Maritime Services.
Project Scope
The project is part of the $4.3 billion Woolgoolga to
Ballina Pacific Highway upgrade between Pimlico and
Teven. It involved construction of the final southbound
carriageway, demolition and reconstruction of two
decommissioned bridges, earthworks and realignment of
a new permanent junction with Pacific Highway just south
of Ballina.
Deakin University Law
Building
SRG Global’s Structures and Post-Tensioning divisions are
working together to deliver the new Deakin University
Law building in Melbourne for Watpac.
About the Project
The new law school for Deakin University’s Burwood
Campus will comprise a nine-level building that will
provide 20,000m2 of teaching and learning spaces,
student support and wellbeing spaces, staff workspaces
and basement car parking.
Project Scope
SRG Global are undertaking the installation of formwork
systems, post-tensioning, reinforcement, construction
of insitu vertical walls as well as full concrete supply and
install.
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SRG GLOBAL 2019 ANNUAL REPORT Our Projects
CONSTRUCTION
Goulburn Valley Health
Redevelopment
SRG Global secured an ~$11.5m concrete structure
contract with Lendlease for the Goulburn Valley Health
redevelopment in Shepparton, Victoria in October last
year.
Lincoln Square
SRG Global secured an $11.9m contract for the University
of Melbourne’s Lincoln Square project. Utilising both our
Structures and Post-Tensioning divisions, this contract
highlights the benefits of being able to provide the
integrated construction packages our tier-one clients are
increasingly looking for.
About the Project
About the Project
The Goulburn Valley Health Redevelopment project
includes a new four-storey building with 64 inpatient
beds, 10 intensive care unit beds, seven operating theatres
and a new kitchen and morgue. A brand new emergency
department will double the current capacity, featuring 36
treatment spaces and a nine-bed short stay unit.
Project Scope
SRG Global were contracted to undertake the complete
concrete structure works including installation of precast
panels, post-tensioning, reinforcement and all other
related concrete structure installations.
The University of Melbourne’s Lincoln Square project
consists of a 14-level tower which will provide
accommodation for some of the 50,000 students that
attend the University’s Parkville campus in the heart of
Melbourne’s CBD.
Project Scope
SRG Global are undertaking the supply, erection and
reinforcement of the entire structure under one contract
to the principal contractor, J Hutchinson Pty Ltd. Project
works include installation of precast panels, post-
tensioning, structural reinforcement, and the construction
of complex in-situ columns and walls, along with all other
related concrete structure works.
Our unique industry offering is to bring
together all of our core capabilities and
offer a fully integrated structure package
on significant projects.
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SRG GLOBAL 2019 ANNUAL REPORT Our Projects
CONSTRUCTION
300 George Street
Brisbane
SRG Global were awarded a ~$30m curtain wall facade
contract for the development of an 82-level residential
tower at the 300 George Street development in
Brisbane’s CBD in October last year.
About the Project
The 300 George Street project is a mixed-use
development being constructed by tier-one construction
company, Multiplex Constructions Pty Ltd. The residential
tower is the third tower being constructed on the site with
the commercial use tower currently under construction
and the hotel tower already complete. The residential
tower will be the equal tallest building in the Brisbane
CBD.
Project Scope
SRG Global are undertaking the design, fabrication
and construction of the curtain wall facade over an
approximate two year period.
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SRG GLOBAL 2019 ANNUAL REPORT
SRG GLOBAL 2019 ANNUAL REPORT Our Projects
CONSTRUCTION
Wesley Place
Redevelopment
Karrinyup
Shopping Centre
SRG Global undertook facade design, supply and
installation works on the Wesley Place tower at 130
Lonsdale Street in Melbourne’s North East CBD during
the 2019 financial year. As well as the facade works, SRG
Global also supplied products for the construction of this
tower.
About the Project
The Wesley Place tower offers approximately 55,000
square metres of office space and 4,500m2 of retail. The
34 level commercial tower will sit on the eastern portion of
the Wesley Church site with frontages to Lonsdale Street,
Little Lonsdale Street and Jones Lane in Melbourne’s CBD.
Project Scope
SRG Global’s Facades team were responsible for the pre-
award budgets and design advice to Lendlease and post-
award design and construct contract comprising design,
shop drawings, visual mock-up, offshore procurement and
fabrication, performance testing, freight and logistics, site
installation, certification and 10 year warranty.
SRG Global’s Products team also worked on this
project, supplying facade cast-in channel products and
engineered T-bolts which are used to anchor the facade to
the building structure. Over 6,000 cast-in anchor channel
products and over 12,000 engineered T-bolts were
supplied to this project.
Karrinyup Shopping Centre in Perth is currently
undergoing an $800m redevelopment which will see the
centre expand from 59,715 square metres to 109,000
square metres. SRG Global’s Products team has been
engaged to supply our own patented SureLok shear
connector and other engineered products as integral
components for the construction program of the project.
About the Project
The Karrinyup Shopping Centre, located in Perth’s
northern suburbs will double in size with 290 retailers, a
dining precinct and the first Hoyts cinema north of the
river. The first stage of the $800m redevelopment is the
east multi-deck carpark, which will open in late 2019,
followed by the north mall fashion loop, café court and
fresh food precinct.
Project Scope
SRG Global’s Products team have progressively supplied
over 4,500 SureLok units to date. Design on upper levels
is still underway and the team expect the supply of these
units to continue throughout the duration of construction.
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SRG GLOBAL 2019 ANNUAL REPORT Our Projects
18
MINING SERVICES
SRG GLOBAL 2019 ANNUAL REPORTOur Projects Our Projects
Bringing our full
resources to daily
mining challenges
SRG Global secured a number of key term contracts in our Mining
Services business during FY19 including a $115m Umbrella
Agreement with Evolution Mining.
Evolution Mining
Umbrella Agreement
SRG Global announced in April they had secured a $115m
Umbrella Agreement with Evolution Mining to extend the
terms of its drill and blast operations at the Cowal, Mt
Rawdon and Mt Carlton mine sites.
About the Contract
The contract is for an initial three-year term with an
option to extend for a further two years. Works under
this agreement are expected to generate revenues of
approximately $115m over five-years on the basis the
two-year option to extend is exercised (approximate value
over the three-year term is $78m). The new agreement
will utilise assets from SRG Global’s existing fleet and will
require minimal growth capital over the contract term.
Project Scope
Evolution Mining is Australia’s second largest ASX-listed
gold producer. The company operates five wholly-owned
gold mines located in Queensland, New South Wales and
Western Australia.
SRG Global will continue to provide drill and blast services
at Mt Rawdon and Mt Carlton mines in Queensland and
Cowal mine in New South Wales.
19
SRG GLOBAL 2019 ANNUAL REPORTOur Projects Our Projects
MINING
SERVICES
Kalgoorlie Superpit
Drilling works for FMG
SRG Global secured a new ~$18m ground support
term contract with Kalgoorlie Consolidated Gold Mines
(‘KCGM’) at the Super Pit in Kalgoorlie.
During the 2019 financial year, SRG Global has been
supporting Fortescue Metals Group (‘FMG’) on two of
their mine sites in the Pilbara region of Western Australia.
About the Contract
About the Contract
The Super Pit is Australia’s largest open pit gold mine,
producing around 850,000 ounces of the precious metal
annually. SRG Global’s Geotech business has a long and
proud history spanning over 20 years at the Super Pit,
having performed a range of services at the mine since
1997.
Project Scope
Ground support works under this contract includes both
in-phase ground support, rock fall mitigation and rock
face remediation. Over the two decades working at the
mine, SRG Global has developed specialised plant to meet
the demands of the unique Super Pit environment.
SRG Global are undertaking drilling works at Cloudbreak
and Christmas Creek mines for FMG on a monthly support
contract basis providing drill rigs and drillers.
Project Scope
Works at Cloudbreak mine commenced in 2018 and
consist of drilling production blast holes and provision of
operators.
Following the successful works at Cloudbreak, SRG
Global were awarded an additional support contract at
the Christmas Creek mine site where works consisted of
drilling blast holes and provision of operators.
Source: /australiasgoldenoutback.com
SRG Global is the sought after drill and blast
contractor when you need to solve problems across
the entire lifecycle of your mine, from resource
delineation to plant shutdown maintenance.
20
SRG GLOBAL 2019 ANNUAL REPORT Our Projects
21
SRG GLOBAL 2019 ANNUAL REPORT ASSET SERVICES
22
SRG GLOBAL 2019 ANNUAL REPORTOur Projects Making maintaining,
restoring & accessing
critical assets easier
SRG Global made significant progress in our long-term strategy of
securing a greater proportion of recurring contracts in the asset
services sector during FY19.
South32 Worsley
Alumina
SRG Global secured a long-term contract with South32
Worsley Alumina valued at ~$60m in May this year.
Project Scope
SRG Global are providing a complete suite of engineered
access solutions for the Worsley Alumina operation in
Western Australia including scaffold services and highly
skilled rope access technicians.
About the Contract
The contract is for an initial three-year term with extension
options for a further three years. If Worsley Alumina
exercises the extension options the total contract duration
will be six years. Works under this contract commenced
in June 2019 and are expected to generate revenues of
~$60m over the six-year term or ~$32m over the initial
three-year term. The contract requires minimal capital
outlay and has increased SRG Global’s workforce by
approximately 100 full-time positions.
North West Shelf Project
In October last year, SRG Global secured a new four-
year contract for the provision of scaffold and access
equipment to the North West Shelf project, including
Karratha Gas Plant and offshore, operated by Woodside
Energy Ltd.
Project Scope
SRG Global’s scope includes the supply, maintenance,
storage, transport and handling of scaffold and access
equipment for all onshore and offshore assets. SRG
Global will also provide specialist labour resources for
Woodside as required.
About the Contract
The new contract consolidates the existing long-term
relationship with Woodside and follows on from the
conclusion of an existing five-year contract.
Source: /south32.net
23
SRG GLOBAL 2019 ANNUAL REPORTOur Projects Our Projects
ASSET
SERVICES
Refractory Term
Contract Secured
In May this year, SRG Global secured a ~$45m six-year term
contract with OneSteel in Whyalla.
Project Scope
SRG Global are undertaking refractory services throughout
the Whyalla Steelworks site incorporating the pellet plant,
ironmaking, steelmaking and steel products assets. SRG
Global specialise in refractory works in New Zealand,
however this is the first project of its kind awarded to SRG
Global in Australia. Our team in New Zealand were pivotal
in helping us secure this project which was our first major
step in taking our refractory capabilities from New Zealand
across to Australia.
About the Contract
The contract is for an initial four-year term with options
for a further two years. Works under this contract are
expected to generate revenues of ~$45m over the six-
year term or ~$30m over the initial four-year term. The
contract is clear evidence of the benefits that are being
delivered through the creation of SRG Global. The award
of this refractory services contract at Whyalla Steelworks
complements existing works being undertaken by SRG
Global’s Mining Services division, which has been operating
in the Whyalla region since 2012.
Transpower NZ
SRG Global secured a three-year contract renewal with
Transpower New Zealand Limited (‘Transpower’) in June
this year.
Project Scope
SRG Global are providing specialist industrial services
including removal of existing coatings through specialist
blasting, application of industrial protective coatings and
minor steel replacement.
Transpower owns and operates the National Grid, the
high voltage transmission network across New Zealand,
comprising over 12,000km of transmission lines and more
than 170 substations.
SRG Global has a long history working with Transpower,
providing Asset Services to its National Grid for more than
20 years.
About the contract
Estimated revenues under the framework contract are
~NZ$35m (estimate based on historic values). This
contract requires minimal capital outlay and provides
further long-term recurring revenue.
24
SRG GLOBAL 2019 ANNUAL REPORT Our Projects
ASSET
SERVICES
Spencer Street and
St Georges Road Bridges
Melbourne
VicRoads (now part of Department of Transport) awarded
SRG Global’s Asset Services division a ~$9m bridge
strengthening contract in Melbourne in May this year.
About the Project
The Public Transport Victoria funded the project for
bridge strengthening and rehabilitation to the Spencer
Street bridge over the Yarra river in the Melbourne
CBD and the St Georges Road bridge over Merri Creek
in Northcote to accommodate larger load capacity
requirements for E-class trams.
Project Scope
SRG Global’s scope on this bridge strengthening and
rehabilitation project includes river traffic management,
installation of suspended and floating access,
strengthening of bridge beams with additional structural
steel, bridge abutment strengthening with piling and
soil nailing, lead paint removal and the application of
protection coatings.
Matagarup Bridge
SRG Global’s Asset Services business showcased how we
are stronger together undertaking bridge maintenance
works on Perth’s iconic Matagarup pedestrian bridge
utilising their rope access technicians together with their
remediation experience.
About the Project
The new iconic pedestrian bridge located next to Optus
Stadium in Perth required defect repairs from the
original construction. SRG Global proposed a solution
for the painting works to be undertaken via rope
access technicians to maximise productivity rather than
undertaking works via a boom and scissor lifts.
This was the first project undertaken following the Merger
of Equals between GCS and SRG where the teams from
SRG’s Asset Services business and GCS’ Rope Access
business worked together to make the complex simple
for our customer and provide a cost effective and safe
solution to complete the works.
Project Scope
SRG Global’s scope on this bridge maintenance project
included the repair of over 3,000 items which included
preparing the steel for painting by sanding or abrasive
blasting then applying a primer and top coat.
SRG Global has experienced industry
professionals who are multi-disciplined and
can offer innovative maintenance solutions.
25
SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report
The Directors present their report on the consolidated entity consisting of SRG Global Limited (the ‘Company’ or ‘SRG
Global’) and the entities it controlled (the ‘Group’) at the end of, or during the year ended 30 June 2019.
COMPARATIVE INFORMATION
Information contained in this Directors’ Report that relates to comparative periods reflects information relating to Global
Construction Services Ltd, as the acquiring entity.
DIRECTORS
The names and details of the Company’s Directors in office during the financial year and until the date of this report are set
out below. Directors were in office for the entire period unless otherwise stated.
Name
Peter Wade
Peter McMorrow
David Macgeorge
Enzo Gullotti
Peter Brecht
Michael Atkins
John Derwin
George Chiari
Non-Executive Chairman
Non-Executive Deputy Chairman
Managing Director
Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director
Appointed 11 September 2018
Appointed 11 September 2018
Appointed 11 September 2018
Appointed 11 September 2018
Resigned 11 September 2018
EXPERIENCE, QUALIFICATIONS AND
RESPONSIBILITIES
Peter Wade
Non-Executive Chairman
Peter Wade joined the Board of SRG Global as Chairman in
September 2018. Prior to this, Peter served as Chairman of
Global Construction Services Limited (‘GCS’) from November
2011. Peter is also a member of the SRG Global Audit
Committee.
Peter holds a Bachelor of Engineering (Hons) and has over
forty five years’ experience in engineering, construction,
project management, mining, and infrastructure services.
He started his career with the NSW Public Service managing
the construction, building, and operation of significant
infrastructure projects such as the Port Kembla coal loader
and grain terminals in Newcastle and Wollongong.
Peter was also a Deputy Director for the Darling Harbour
Redevelopment construction project. Subsequently, as an
executive of the Transfield Group, Peter was responsible for
a number of significant construction, building, and operation
projects including, the Melbourne City Link, the Airport
Link, the Northside Storage Tunnel, and the Collinsville and
Smithfield Power Plants.
Mr Wade has been the Managing Director of Crushing
Services Pty Ltd and PIHA Pty Ltd since 1999 and Minerals
International Pty Ltd since 2002 (now both wholly owned
subsidiaries of Mineral Resources Limited). In 2006, with the
formation and listing of Mineral Resources Limited, Mr Wade
was appointed as Managing Director and has overseen a
sustained period of successful development and growth.
In 2008 Mr Wade was appointed as the Executive Chairman,
and then in November 2012 the Non-Executive Chairman, of
Mineral Resources Limited.
Peter McMorrow
Non-Executive Deputy Chairman
Peter McMorrow joined the Board of SRG Global as Deputy
Chairman in September 2018. Prior to this, Peter was a
Director of SRG Limited (‘SRG’) from 2010 and moved into the
role of Chairman in July 2014. He is also a member of the SRG
Global Audit Committee and Remuneration & Nomination
Committee.
Peter has over forty years’ project and executive experience
and is a respected leader in the infrastructure and resources
industries. Encompassing a wide variety of large and complex
infrastructure projects both overseas and within Australia,
his industry knowledge extends to all facets of engineering,
project identification, winning and delivery as well as
management of dynamic, profitable and long lasting business
operations.
Prior to joining SRG, Peter was Managing Director of Leighton
Contractors from 2004 to 2010. Under his guidance, Leighton
Contractors expanded considerably with turnover increasing
to over $5 billion and the workforce increasing fourfold to
approximately 10,000 employees.
Peter is an advocate for health and safety and brings a strong
zero harm vision to both SRG Global and the industry in which
it operates.
David Macgeorge
Managing Director
David Macgeorge was appointed Managing Director of SRG
Global in September 2018. Prior to this, David held the role of
Managing Director for SRG Limited since May 2014.
David has extensive senior executive experience in
contracting, logistics, infrastructure and mining service
industries and has a strong record of leading business
transformations, driving value creation and growth through
a unique understanding of strategy, customer focus and
shareholder returns.
Prior to joining SRG, David held senior executive roles with BIS
Industries, Cleanaway and CHEP (a subsidiary of Brambles).
He also provided consultancy to Leighton Contractors.
David holds a Bachelor of Business and has completed the
Senior Executive Management program at INSEAD Business
School in France.
26
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
Enzo Gullotti
Executive Director
John Derwin
Non-Executive Director
Enzo Gullotti was appointed Executive Director of SRG
Global in September 2018. Prior to this, Enzo held the role of
Managing Director for Global Construction Services Limited
(‘GCS’), which he established in 2003.
Enzo is an industry and community leader, with more than
thirty years’ experience in the scaffolding, construction, and
maintenance sectors. Mr Gullotti was a founding member
of the PCH Group, where he was an Executive Director for
approximately eight years and the Managing Director of
the scaffolding subsidiary. Mr Gullotti was instrumental in
growing PCH, including the establishment of operations in
Karratha, Sydney, Darwin, Bunbury, Singapore, Thailand,
Dubai and the Caspian Sea.
During his time as Managing Director of GCS, Mr Gullotti
delivered significant growth, including leading the successful
integration of several key acquisitions and expanding GCS’s
footprint across Australia.
Peter Brecht
Non-Executive Director
Peter Brecht joined the Board of SRG Global in September
2018. Prior to this, he had been a Non-Executive Director for
SRG Limited since September 2014. Peter is a member of the
SRG Global Remuneration & Nomination Committee.
Peter has more than thirty five years’ experience in the
construction industry, previously serving as the Managing
Director - Construction Australia for Lendlease, CEO
of Bilfinger Berger Australia and Managing Director of
Abigroup.
Peter is a Board member of Fulton Hogan Limited. He has
been a Member of the Australian Institute of Company
Directors since 2000.
Michael Atkins
Non-Executive Director
Michael joined the SRG Global Board as a Non-Executive
Director in September 2018 and is Chairman of the SRG
Global Audit Committee. Prior to this, Michael was Non-
Executive Director on the Board of SRG Limited from 2014 to
2018.
Michael was a founding partner of a national Australian
Chartered Accounting practice from 1979 to 1987 and was a
Fellow of the Institute of Chartered Accountants in Australia.
Since 1987 he has been both an executive and non-executive
director of numerous publicly listed companies with
operations in Australia, USA, South East Asia and Africa.
Since February 2009 Michael has been a Director –
Corporate Finance at Paterson Securities Limited and is
currently Non-Executive Chairman of Australian listed
companies Legend Mining Limited, Azumah Resources
Limited and Castle Minerals Ltd.
Michael is a Fellow of the Australian Institute of Company
Directors.
John Derwin was appointed Non-Executive Director of the
SRG Global Board in September 2018. He had previously
been a Non-Executive Director on the Board of Global
Construction Services Limited (‘GCS’) since July 2017.
John is also Chairman of the Remuneration & Nomination
Committee for SRG Global.
John holds a Bachelor of Civil Engineering (Hons) and has
over forty years’ experience in engineering, construction and
project management; predominantly in the infrastructure,
mining, petrochemical and oil & gas sectors. Mr Derwin
started his career with the NSW Public Works Department
and subsequently held senior roles with ABB Engineering,
Transfield Technologies and John Holland.
Since 2006, Mr Derwin has been providing independent
consultancy services, including bid management and
project management services on key infrastructure
projects throughout Australia. Mr Derwin brings a wealth of
knowledge and practical experience to support SRG Global’s
broader construction capabilities.
COMPANY SECRETARIES
Name
Roger Lee
Paul Hegarty
Nigel Land
Appointed 11 September 2018
Resigned 11 September 2018
Roger Lee
Chief Financial Officer & Company Secretary
Roger was appointed CFO & Company Secretary for SRG
Global in September 2018. Prior to this Roger held the role of
CFO & Company Secretary for SRG Limited since July 2014
and brings over twenty five years’ experience in senior and
executive management in Australia. Roger is a qualified CPA
and is a graduate of the University of Western Australia in
Commerce, majoring in Finance and Accounting.
Paul Hegarty
Group Financial Controller & Company Secretary
Paul was appointed Group Financial Controller & Company
Secretary for SRG Global in September 2018. Prior to
this, Paul was Company Secretary of Global Construction
Services Limited (GCS). Paul is a Chartered Accountant and
Chartered Company Secretary. Prior to GCS, Paul was the
Financial Controller for Mineral Resources Limited.
27
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
DIRECTORS’ SHAREHOLDINGS
The following table sets out each Directors’ relevant interest in shares, debentures and rights or options in shares or
debentures of the Company as at the date of this report.
Name
P Wade
P McMorrow
D Macgeorge
E Gullotti
P Brecht
M Atkins
J Derwin
Fully Paid Ordinary Shares
Number
Performance Rights
Number
221,361
11,765,727
9,171,389
5,976,349
1,900,541
800,000
100,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
MEETINGS OF DIRECTORS
The number of meetings of SRG Global’s Board of Directors and each Board Committee held during the year ended 30 June
2019 and the number of meetings attended by each Director was:
Board of Directors
meetings
Meetings of committees
Audit Committee
Remuneration and Nomination
Name
P Wade
P McMorrow(1)
D Macgeorge (1)
E Gullotti
P Brecht (1)
M Atkins (1)
J Derwin
G Chiari (2)
Eligible
10
7
7
10
7
7
10
4
Attended
10
7
7
9
7
7
10
3
Eligible
3
2
-
-
-
2
1
-
Attended
2
2
-
-
-
2
1
-
Eligible
-
6
-
-
6
-
6
-
Attended
-
6
-
-
6
-
6
-
PRINCIPAL ACTIVITIES
During the financial period, the principal continuing activities
of the Group consisted of delivering a suite of engineering-
led specialist construction, maintenance and mining services
across the entire asset lifecycle.
SIGNIFICANT CHANGES IN STATES OF AFFAIRS
Other than the merger of SRG and GCS during the financial
year, there have been no other significant changes in the
state of affairs of the Group.
(1) Appointed director on 11 September 2018
(2) Resigned as executive director on 11 September 2018
MERGER OF SRG LIMITED AND GLOBAL
CONSTRUCTION SERVICES LIMITED
In September 2018, the Merger of Equals between SRG
Limited and Global Construction Services Limited to create
a leading global specialist engineering, construction and
maintenance group was completed. The Merger of Equals
was effective through a scheme of arrangement where
Global Construction Services Limited issued 2.479 shares for
each SRG Limited share.
Under accounting standard AASB3 Business Combinations,
SRG is considered the parent for accounting purposes.
The consolidated financial statements therefore reflect a
continuation of the financial statements of SRG. The impact
of this is:
• the comparative results for the year ended 30 June 2018
reflect SRG only for that period.
• the financial results of SRG Global as reported for the
year ended 30 June 2019 are comprised of a 12 month
contribution from SRG (1 July 2018 to 30 June 2019) and a
10 month contribution from GCS (1 September 2018 to 30
June 2019).
• the financial results of GCS for the non-reporting period
of 1 July 2018 to 31 August 2018 are excluded from the
financial results of SRG Global presented herein.
28
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Directors’ Report (CONTINUED)
Directors’ Report
OVERVIEW AND FINANCIAL RESULTS
PROCEEDINGS ON BEHALF OF THE COMPANY
Information on the operations and financial position of the
Group and its business strategies is set out in the Managing
Directors Report on page 7 to 9.
No proceedings have been brought on behalf of the
Company, nor have any applications been made in respect of
the Company under Section 237 of the Corporations Act 2001.
MATTERS SUBSEQUENT TO THE END OF
FINANCIAL YEAR
No matter or circumstance has arisen since 30 June
2019, other than the dividend referred to below, that
has significantly affected, or may significantly affect the
consolidated entity’s operations, the results of those
operations, or the consolidated entity’s state of affairs in
future financial years.
CORPORATE GOVERNANCE
The Board is committed to achieving the highest standards
of corporate governance. The Board reviews and improves
it policies and procedures to ensure they are effective for
the Group and fulfill the expectations of stakeholders. The
Board’s Corporate Governance Statement can be located on
the Company’s website via the following URL: http://www.
srgglobal.com.au/who-we-are/corporate-governance/.
LIKELY DEVELOPMENTS AND EXPECTED
RESULTS IN OPERATIONS
Information on likely developments in the operations of the
Group and the expected results of operations have not been
included in this report as the directors believe it would likely
result in unreasonable prejudice to the Group.
ENVIRONMENTAL REGULATIONS
The operations of the Group are subject to environmental
regulation under Commonwealth, State, and Territory
legislation.
The directors are not aware of any breaches of
environmental regulations during the year or as at the
date of this report. The Company has met all its reporting
requirements under the relevant legislation during the
year and continually aims to improve its environmental
performance.
The Company does not currently meet the thresholds of the
National Greenhouse and Energy Reporting Act 2007 and is
therefore not currently subject to its reporting requirements.
DIVIDENDS
The Board has declared the following dividends in relation to
the 2019 financial year:
• A final, fully franked $2.202m dividend (0.5 cent per share)
was declared on 27 August 2019. The Record Date for this
dividend is 11 September 2019 with payment to be made
on 23 October 2019.
• An interim, fully franked $4.407m (1.0 cent per share)
dividend was declared on 26 February 2019. This dividend
was paid on 23 April 2019.
The total fully franked dividends declared by the Company in
relation to the 2019 financial year is $6.609m (1.5 cents per
share).
29
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
REMUNERATION REPORT (AUDITED)
1. OVERVIEW
The directors of SRG Global Limited present the Remuneration Report (the ‘Report’) for the Company and its controlled
entities for the year ended 30 June 2019. This Report forms part of the Directors’ Report and has been audited in accordance
with section 300A of the Corporations Act 2001. The Report details the remuneration arrangements for the Company’s key
management personnel (‘KMP’):
• Non-executive directors
• Executive directors and senior executives (collectively the ‘Executives’).
KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the
major activities of the Group and the Company.
The table below outlines the KMP of the Company and their movements during the year ended 30 June 2019.
Name
Non-executive directors
P Wade
P McMorrow
P Brecht
M Atkins
J Derwin
Executive directors
D Macgeorge
E Gullotti
G Chiari
Executives
R Lee
N Combe
J Thomas
D Williamson
G Edmonds
N Land
M Clarke
Position
Chairman
Director
Director
Director
Director
Managing Director
Executive Director
Director
Term as KMP
Full financial year
Commenced 11 September 2018
Commenced 11 September 2018
Commenced 11 September 2018
Full financial year
Commenced 11 September 2018
Full financial year
Resigned 11 September 2018
Commenced 11 September 2018
Chief Financial Officer / Company Secretary
Executive General Manager - Construction
Commenced 11 September 2018
Executive General Manager - Building, Mining and Products Commenced 11 September 2018
Executive General Manager - Asset Services
Executive General Manager - New Zealand
Chief Financial Officer / Company Secretary
Executive General Manager - International
Commenced 20 March 2019
Commenced 20 March 2019
Resigned 11 September 2018
Commenced 11 September 2018
and resigned 20 March 2019
2. EXECUTIVE REMUNERATION FRAMEWORK
2.2 Executive remuneration framework
2.1 Executive remuneration policy
The Company’s remuneration policy ensures that executives
are rewarded fairly and responsibly in accordance with the
market, having regard to the following:
• Remuneration levels are set at a level that ensures the
Company can attract and retain qualified, experienced,
and high-quality executives
• Fixed remuneration is structured at a level that reflects the
executives’ duties and responsibilities
• Remuneration packages are structured to encourage
improved performance and to align the employee’s
interests with the short-term and long-term objectives of
the Company
• The Company benchmarks remuneration packages at
least annually to ensure competitive positioning within the
market
• Short-term incentives are designed to incentivise individual
contributions to achieving results.
The Company rewards executives with a level and mix of
remuneration appropriate to their positions, responsibilities
and performance, in a manner that aligns with the
Company’s strategy. Executives receive fixed remuneration
and variable remuneration (as applicable), consisting of
short and long term incentive opportunities. Executive
remuneration levels are reviewed annually by the Nomination
and Remuneration Committee with reference to the
remuneration framework, guiding principles and market
movements.
2.3 Elements of Remuneration
2.3.1. Fixed remuneration
Executive fixed remuneration is competitively structured
and comprises the fixed component of the remuneration
package. The fixed component may include cash,
superannuation, and non-financial benefits to comprise
the employee’s total employee cost. Non-financial benefits
generally consist of items to enable the effective discharge
of the executive’s duties and may include the provision of
motor vehicles, mobile phones and notebooks.
30
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report (CONTINUED)
Directors’ Report
Fixed remuneration is designed to reward the Executive for:
• The scope of the executive’s role;
• The executive’s skills, experience and qualifications; and
• Individual performance.
2.3.2. Short-term incentives (STI’s)
The Company did not have a formal short-term incentive
scheme for the 2019 financial year. Subsequent to the end
of the financial year, the Company has implemented a short-
term incentive plan. Executives had the opportunity to earn
a discretionary annual incentive award, delivered in the form
of cash.
The objective of a variable STI remuneration is to link the
achievement of the Company’s operational targets with
the remuneration received by the executives charged with
meeting those targets. The Company’s STI objectives are to:
• Motivate senior executives to achieve the short-term
annual objectives linked to Company success and
shareholder value creation
be automatically issued or transferred to the participant
unless the Company is in a “Blackout Period” (as defined in
the Company’s Securities Trading Policy) or the Company
determines in good faith that the issue or transfer of
shares may breach the insider trading provisions of the
Corporations Act or the Securities Trading Policy, in which
case, the Company will issue or transfer the shares as soon
as reasonably practical thereafter.
The LTI scheme is designed to create a strong link between
the Company’s performance and the KMPs’ performance.
3. HOW REMUNERATION IS GOVERNED
3.1 Nomination and Remuneration Committee
The objective of the Nomination and Remuneration
Committee is to make recommendations on policies,
strategies, and structures on compensation arrangements
for directors and Executives. The committee is charged with
the development and review of the Company’s remuneration
framework which:
• Create a strong link between performance and reward
• Recommends remuneration levels for directors and
• Share Company success with the executives that
contribute to it
• Create a component of the employment cost that is
responsive to short and medium term changes in the
circumstances of the Company
Short-term incentives currently take the form of a cash
bonus. The key STI measures for the Company in FY19
consist of a number of targets tied to the performance on
SRG Global’s major contracts - namely safety performance,
financial performance, scheduling performance, and
customer satisfaction. The STI is currently a discretionary
‘bonus’ arrangement and its quantum is determined by the
Nomination and Remuneration Committee.
The Nomination and Remuneration Committee is responsible
for determining the achievement of targets and assessing as
to whether a bonus amount is paid. The committee also has
the discretion to adjust short-term incentives downwards or
make no payments in response to unexpected or unintended
circumstances and where market issues dictate such a
decision. Any STI payments to KMP during the 2019 financial
year were based on achieving strategic and / or business
objectives.
2.3.3. Long-term incentives (LTI’s)
The LTI offered to the Executives forms a key part of their
remuneration and assists to align their interest with the
long-term interest of shareholders. The purpose of the LTI
is to reward the Executives for attaining results over a long
measurable period and for staying with the organisation.
The LTI is a share based plan consisting of Performance
Rights and / or Options (collectively “Rights and Options”)
which have pre-determined vesting conditions. The LTI was
approved by Shareholders at the Annual General Meeting on
27 November 2018.
Under the LTI, Rights and Options may be offered to
eligible persons as determined by the Board and are an
entitlement to receive ordinary shares in the Company.
Subject to satisfaction by eligible persons of specific criteria
set by the Board, the Rights and Options are granted at no
cost. Upon vesting of the Rights and Options, shares will
Executives
• Proposes non-executive director fees
• Establishes incentive plans which apply to executives
• Devises key performance indicators to align remuneration
and incentives to performance and achievement
• Formulates identification of talent, development, retention,
and succession planning strategies for key executives
Fixed remuneration is reviewed annually by the Nomination
and Remuneration Committee and benchmarked against a
number of indicators and market data.
Refer to the Corporate Governance Statement on the
Company’s website for further information on the role of the
Nomination and Remuneration Committee.
3.2 Remuneration consultants
During the year ended 30 June 2019, the Company did not
engage the services of a remuneration consultant in respect
of its remuneration matters. The Company reserves the right
to engage with a remuneration consultant to provide market
analysis and benchmarking guidelines.
3.3 Voting and comments made at the
Company’s last Annual General Meeting
The Company received 82.31% of ‘yes’ votes on its
Remuneration Report for the financial year ended 30 June
2018. The Company received no specific feedback on its
Remuneration Report at the Annual General Meeting.
3.4 Securities trading policy
The Company’s Securities Trading Policy applies to all
non-executive directors and executives. The Securities
Trading Policy prohibits KMP from dealing in the Company’s
securities while in possession of non-publicly available
information relevant to the Company.
The Company’s Securities Trading Policy is available on the
Corporate Governance section of the Company’s website.
31
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
3.5 Executive employment / service agreements
Each KMP has entered into an employment contract with the Company. All KMP are entitled to receive payment in lieu of
notice of any accrued statutory entitlement (i.e. annual and long service leave) on cessation of their employment. In addition,
all KMP are entitled to participate in the STIP and LTIP that has been disclosed in Note 2.3 of the remuneration report.
The following table outlines the contractual terms of the employment contracts:
Component
Managing Director
Executive Director
Fixed Remuneration
$850,000
$595,000
Contract Term
Ongoing
Notice Period
Annual Leave
6 months
20 days per annum
2 year fixed term from 28 August
2018
6 months
20 days per annum
Senior
Executives
Range between $360,000 and
$540,000
Ongoing
3-6 months
20 days per annum
4. OVERVIEW OF NON-EXECUTIVE DIRECTOR REMUNERATION
The Board seeks to set aggregate fees paid to a level which reflects the responsibilities and demands made on non-executive
directors and provides the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is
acceptable to shareholders.
The Nomination and Remuneration Committee reviews non-executive directors’ remuneration annually against comparable
companies. The Nomination and Remuneration Committee may also consider advice from external advisors if deemed
necessary.
Non-executive director fees are determined within an aggregate non-executive director fee pool limit of $900,000 per
annum. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst non-executive directors is evaluated by the Nomination and Remuneration Committee annually.
The remuneration of non-executive directors for the year ended 30 June 2019 is detailed in section 7.2 of this report.
5.
SHARE-BASED COMPENSATION
Performance Rights
Performance Rights may be granted under the Company Performance Rights Plan. The plan is designed to align the interests
of employees to shareholders in the Company and for staff retention purposes.
At the Annual General Meeting held on 27 November 2018, it was resolved by ordinary resolution that 2,100,000
Performance Rights would be issued to Mr D Macgeorge and 900,000 Performance Rights would be issued to Mr E Gullotti.
At the date of this report, these Performance Rights have not been issued as no formal agreement was executed by the
Company with either Mr D Macgeorge or Mr E Gullotti. As a result, the Remuneration Report for the year ended 30 June
2019 does not include any benefit attributable to these performance rights. There are no unissued ordinary shares of the
Company under option at the date of this report.
32
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
6. OVERVIEW OF COMPANY PERFORMANCE
The table below sets out information about the Group’s earnings and movements in shareholder wealth for the past five
years up to and including the current financial year. The following information relates to Global Construction Services
Limited (GCS) for the comparative periods.
Profit / (loss) for the year attributable to owners ($’000)
Share price at end of the year (cents)
Basic EPS (cents)
Total dividends (cents per share)
7. DETAILS OF REMUNERATION
2015
8,741
0.49
4.7
0.00
2016
(76,882)
0.38
(38.4)
1.00
2017
10,874
0.60
5.4
4.00
2018
13,623
0.71
6.4
4.50
2019
9,839
0.50
2.3
0.50
7.1 Executive KMP remuneration for the years ended 30 June 2019 and 30 June 2018
The following information includes the historical information of Global Construction Services Limited for the period and does
not include the information for SRG Limited prior to the merger in September 2018.
Short-term benefits
Post-employment Long-term
Share based
payments
Performance
rights
Total
remuneration
Performance
related
Financial
Year
Cash
salary and
fees
$
Short-term
incentives(1)
$
-
-
-
335,000
125,000
150,000
654,434
-
642,039
698,432
80,662
430,790
Executive Directors
D Macgeorge(4)
E Gullotti(5)
G Chiari(6)
Senior Executives
R Lee(4)
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
N Combe(4)
J Thomas(4)
D Williamson(7)
G Edmonds(7)
N Land(8)
M Clarke(9)
C Genovesi(10)
Total
Executive KMP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
399,639
-
416,131
-
322,391
-
109,975
-
118,086
-
64,167
127,726
286,147
-
-
290,000
2,439,235 125,000
1,546,949 485,000
Non-
monetary
benefits(2)
$
Super-
annuation
Scheme
benefits(3)
$
$
benefits
Long
service
leave
$
-
-
129,518
61,264
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,624
129,518
66,888
-
-
61,128
-
-
-
27,083 1,060,000 (43,763)
-
25,000
-
6,250
-
27,083
2,321
-
-
37,794
-
20,833
-
29,533
-
9,943
-
4,435
-
4,167
8,333
3,743
-
-
16,667
143,781
77,083
-
-
-
-
-
-
-
-
-
-
72,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,132,000 (43,763)
-
2,321
$
$
%
-
-
721,727
1,081,927
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
721,727
1,081,927
715,562
-
2,536,604
2,203,943
211,912
607,874
437,433
-
436,965
-
351,924
-
119,918
-
122,520
-
140,333
136,060
289,890
-
-
312,291
4,647,498
3,260,168
-
-
28
64
59
25
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
48
(1) Short-term incentives relate to discretionary cash bonuses.
(2) Non-monetary benefits relate to the provision of motor vehicles and motor vehicle related expenses.
(3) Scheme benefits relate to payments made to the Group Managing Director of GCS (E Gullotti) in relation to his transition from Group
Managing Director to Executive Director.
(4) Appointed on 11 September 2018.
(5) Includes annual leave cashed out during the year of $55,657 (FY18: $27,829)
(6) Resigned on 11 September 2018. Short-term incentive paid related to performance for FY18.
(7) Commenced on 20 March 2019.
(8) Appointed as Chief Financial Officer as of 2 March 2018 and resigned 11 September 2018.
(9) Appointed on 11 September 2018 and resigned on 20 March 2019.
(10) Retired as Chief Financial Officer on 1 March 2018.
33
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
7.2 Non-executive remuneration for the years ended 30 June 2019 and 30 June 2018
Financial Year
Short-term benefits
Cash salary and fees
Post-employment
Superannuation
Total Remuneration
P Wade
P McMorrow(1)
P Brecht(1)
M Atkins(1)
J Derwin
Total Non-Executive KMP
(1) Appointed on 11 September 2018.
7.3 Shareholdings of KMP
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
$
158,133
109,500
121,421
-
86,509
-
92,500
-
104,269
60,000
562,832
169,500
$
-
-
-
-
8,218
-
8,788
-
9,906
5,700
26,912
5,700
$
158,133
109,500
121,421
-
94,727
-
101,288
-
114,175
65,700
589,744
175,200
The number of shares in the Company held directly or indirectly during the financial year by each director and KMP of
the Group, including their related parties, are set out below. There were no shares granted during the reporting period as
compensation.
Balance as at
30 June 2018
Received on
exercise of rights
Purchased
Net change other
Balance as at
30 June 2019
Non-Executive Directors
P Wade
P McMorrow(1)
P Brecht (1)
M Atkins (1)
J Derwin
Executive Directors
D Macgeorge (1)
E Gullotti
G Chiari (2)(3)
Senior Executives
R Lee (1)
N Combe (1)
J Thomas (1)
D Williamson(4)
G Edmonds(4)
N Land(3)
M Clarke(5)
C Genovesi(6)
221,361
-
-
-
-
-
-
-
-
-
-
4,626,349
3,237,124
-
1,350,000
-
-
-
-
-
-
14,000
-
-
-
-
-
-
-
-
-
-
-
250,000
120,000
56,300
100,000
100,000
-
-
-
-
-
-
-
-
-
-
-
11,515,727
1,780,541
743,700
-
9,071,389
-
(3,237,124)
4,703,451
1,735,300
1,316,851
10,000
-
(14,000)
-
-
221,361
11,765,727
1,900,541
800,000
100,000
9,171,389
5,976,349
-
4,703,451
1,735,300
1,316,851
10,000
-
-
-
-
(1) Appointed on 11 September 2018.
(2) CASC Services Pty Ltd held 6,297,612 (2018: 6,297,612) shares which are held in the Chiari Used Unit Trust in which G Chiari
has an interest.
(3) Resigned on 11 September 2018.
(4) Commenced on 20 March 2019.
(5) Appointed on 11 September 2018 and resigned on 20 March 2019. During M Clarke’s tenure, he held 1,887,609 shares.
(6) Retired as Chief Financial Officer on 1 March 2018.
34
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
7.4 Other transactions and balances with KMP and their related parties
The following transactions occurred and were outstanding at reporting date in relation to transactions with related parties:
Transactions
2019
$
2018
$
Receivables
2019
$
2018
$
Payables
2019
$
2018
$
4,463,358
1,481,594
519,643
84,788
• Services provided to Mineral Resources Limited, a
company related to P Wade
• Consultancy services provided by Wandarra (WA)
Pty Ltd, a company related to P McMorrow
• Recruitment services provided by The GO2
People, a company related to P McMorrow
• Services provided to Fulton Hogan Limited, a
company related to P Brecht(1)
(21,000)
(142,937)
746,491
-
-
-
-
-
32,895
• Services provided by AV Truck Services Pty Ltd, a
company related to G Chiari(2)
(1,095)
(5,077)
• Properties from which the Group’s operations
are performed are rented from Mar Pty Ltd, a
company related to G Chiari(2)
• Properties from which the Group’s operations are
performed are rented from Miromiro Pty Ltd, a
company related to G Chiari(2)
• Services provided to Rangitoto Trust, a trust
related to G Edmonds
(273,711)
(968,871)
(84,803)
(268,681)
3,269
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) The Group also has a 50% share in a joint operation with two other partners, including Fulton Hogan Limited. This has been
disclosed within Note 24(b).
(2) Transactions with G Chiari relate to the period 1 July 2018 to 11 September 2018.
End of Audited Remuneration Report
35
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
INDEMNITY AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of
the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of liability and the amount of the premium.
INDEMNITY AND INSURANCE OF AUDITORS
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company
or any related entity.
NON AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in Note 7 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in Note 7 to the financial statements do not compromise the
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of
the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
During the year ended 30 June 2019 fees amounting to $46,685 were paid to BDO for non-audit services including tax
compliance and services in connection with the Merger of Equals.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations (Rounding in Financials / Directors’ Reports) Instrument 2016/191,
dated 24 March 2016, and in accordance with that Corporations Instrument, amounts in this report have been rounded off to
the nearest thousand dollars, unless otherwise stated.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out on
page 37.
This directors’report is made in accordance with a resolution of directors, pursuant to Section 298(2)(a) of the Corporations
Act 2001.
Peter Wade
Non-Executive Chairman
27 August 2019
36
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Auditor’s Independence Declaration
Auditor’s Independence Declaration
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF SRG GLOBAL LIMITED
As lead auditor of SRG Global Limited for the year ended 30 June 2019, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of SRG Global Limited and the entities it controlled during the period.
Glyn O’Brien
Director
BDO Audit (WA) Pty Ltd
Perth, 27 August 2019
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
37
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Directors’ Declaration
Directors’ Declaration
SRG GLOBAL LIMITED ABN 81 104 662 259
AND CONTROLLED ENTITIES
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
The financial statements, comprising the consolidated statement of profit or loss and other comprehensive
income, consolidated statement of financial position, consolidated statement of cash flows, consolidated
statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001
and:
(a)
(b)
comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
give a true and fair view of the Group’s financial position as at 30 June 2019 and of the performance
for the year ended on that date of the Group.
2.
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.
3.
At the date of this declaration there are reasonable grounds to believe that the members of the extended
closed group identified in note 24 will be able to meet any obligations or liabilities to which they are, or may
become, subject by virtue of the Deed of Cross Guarantee described in note 24.
4. Note 1 to the financial statements confirms that the financial statements also comply with International
Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board.
5.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of
the directors by:
Peter Wade
Non-Executive Chairman
27 August 2019
38
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Independent Auditor’s Report
Independent Auditor’s Report
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of SRG Global Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of SRG Global Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, 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 report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; 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 Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current year. 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.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
39
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Independent Auditor’s Report
Independent Auditor’s Report (CONTINUED)
Merger of GCS Limited and SRG Limited
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 1(a) of the financial report, GCS
Our procedures included, but were not limited to the
Limited announced on 12 June 2018 that they would be
following:
merging with SRG via a recommended scheme of
arrangement in which GCS will acquire 100% of the
shares in SRG. The acquisition was completed on 1
September 2018.
This is a key audit matter due to the size of the
transaction, the complexities inherent in accounting
for business combinations and the significant
judgements made by management, including the
identification and measurement of the fair value of
assets and liabilities acquired.
•
•
•
•
•
•
Reviewing the merger agreements to understand
the terms and conditions of the transaction and
evaluating management’s application of the
relevant Australian Accounting Standards;
Obtaining an understanding of the transaction,
including an assessment of whether the
transaction constituted a reverse takeover;
Comparing the assets and liabilities recognised
as part of the business combination and the
historical financial information of the acquired
business;
Assessing management’s fair value estimation of
the assets and liabilities identified, including an
assessment of independent expert valuation
reports;
Assessing the competency and objectivity of the
experts engaged by management; and
Assessing the appropriateness of the related
disclosures in Note 25 of the financial report.
40
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Independent Auditor’s Report (CONTINUED)
Independent Auditor’s Report
Impairment testing of intangible assets and property, plant and equipment
Key audit matter
How the matter was addressed in our audit
At 30 June 2019, the Group has recognised intangible
Our procedures included, but were not limited to the
assets and property, plant and equipment as disclosed
following:
in Notes 13 and 12 of the financial report. Note 1(m)
and 1(k) of the financial report discloses the
accounting policies for impairment testing of intangible
assets and property, plant and equipment.
As detailed in Note 1, management’s assessment of the
recoverability of intangible assets and property, plant
and equipment requires significant judgement, in
particular estimation of future cash flows, future
growth rates of the business (cash generating
(“CGUs”), discount rates applied to future cash flows
and sensitivities of inputs and assumptions used in the
cash flow models.
•
•
•
•
Assessing the appropriateness of the Group’s
identification of CGUs and management’s
allocation of assets to the carrying value of
CGUs based on our understanding of the Group’s
business and internal reporting;
Evaluating the methodology applied by the
Group in allocating corporate assets and costs
across the CGUs;
Evaluating management’s ability to accurately
forecast cash flows by assessing the accuracy of
the historic forecasts against actual results;
Challenging the key inputs used in the value in
use model including the following:
•
•
•
•
Comparing the discount rate utilised by
management to those calculated by our
internal valuation experts;
Comparing growth rates with economic and
industry forecasts;
Comparing the Group’s forecast cash flows to
the board approved budgets;
Performing sensitivity analyses on the key
assumptions used, including future growth
rates and discount rates; and,
•
Assessing the adequacy of the related
disclosures in Notes 12 and 13.
41
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Independent Auditor’s Report
Independent Auditor’s Report (CONTINUED)
Revenue recognition and the adoption of AASB 15
Key audit matter
How the matter was addressed in our audit
The Group has several material revenue streams in the
Our procedures included, but were not limited to the
form of construction revenue, services revenue,
following:
products revenue and rental revenue - all of which
have different revenue recognition timings and are
subject to different legal and contractual frameworks
given the geographical dispersion.
In the current year, as disclosed in Note 1(u) the group
has also adopted AASB 15, where the core principle is
that an entity should recognise revenue to depict the
transfer of promised goods or services to customers at
an amount that reflects the consideration to which the
entity expects to be entitled for those goods or
services.
As disclosed in Note 1, the principles under AASB 15
involve significant judgment and estimates and thus,
there is a risk that revenue has not been recognised in
accordance with the standard.
•
•
•
•
•
•
•
Assessing the appropriateness of management’s
revenue recognition policy, ensuring that the
policy is in accordance with the five step model
adopted by the relevant Australian Accounting
Standard, AASB 15;
Understanding and documenting the processes
and controls used by the Group in recognising
construction contract costs and for estimating
the costs to complete construction projects;
Evaluating management’s ability to accurately
forecast construction costs and estimate costs
to complete projects by assessing the accuracy
of historic forecast against actual results;
Enquiring with management on the progress of
the Group’s major projects to gain an
understanding of the projects’ stage of
completion, any material contract variations
and the remaining forecast financial
performance of the project against
management’s initial assessment;
Performing analytical procedures on contracting
revenue recorded during the year by setting
expectations based upon each project’s stage of
completion and the respective contract price;
Agreeing a sample of costs incurred to
supporting documentation, including testing the
appropriate allocation to the correct project.
We also evaluated payments made subsequent
to reporting date to assess whether costs were
accrued in the correct period; and
Assessing the adequacy of the related
disclosures in Note 2.
42
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Independent Auditor’s Report (CONTINUED)
Independent Auditor’s Report
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
43
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Independent Auditor’s Report
Independent Auditor’s Report (CONTINUED)
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 30 to 35 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of SRG Global Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Glyn O'Brien
Director
Perth, 27 August 2019
44
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Consolidated Statement of Profit or Loss and other
Comprehensive Income
Financial Statements
Revenue
Other income
Construction, servicing and contract costs
Employee benefits expense
Other expenses
Equity accounted investment results
Depreciation expense
Amortisation expense
Finance costs
Profit before tax
Income tax benefit / (expense)
Profit after tax for the year
Other comprehensive income
Exchange differences arising on translation of foreign operations
Total comprehensive income for the year, net of tax
Earnings per share attributable to members of the parent entity
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Note
2019
$’000
2018
$’000
2
3
4
4
5
9
9
486,391
6,720
239,220
876
(245,578)
(191,388)
(32,459)
522
(9,498)
(6,621)
(1,345)
6,744
2,675
9,419
(92,953)
(119,886)
(19,018)
1,011
(6,928)
(92)
(628)
1,602
(409)
1,193
420
9,839
(446)
747
2019
2018
2.3
2.3
0.7
0.7
Under accounting standard AASB 3 Business Combinations, SRG has been determined as the parent for accounting
purposes. The consolidated financial statements therefore reflect a continuation of the financial statements of SRG. The
impact of this is the comparative results for the year end 30 June 2018 reflect SRG only for that period, the financial results of
SRG Global as reported for the year end 30 June 2019 are comprised of a twelve-month contribution from SRG (1 July 2018
to 30 June 2019) and a ten-month contribution from GCS (1 September 2018 to 30 June 2019). The financial results of GCS
for the non-reporting period of 1 July 2018 to 31 August 2018 are excluded from the financial results of SRG Global presented
herein.
The above statement should be read in conjunction with the notes to the financial statements.
45
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Financial Statements
Consolidated Statement of Financial Position
AS AT YEAR ENDED 30 JUNE 2019
Current Assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Prepayments
Derivative financial instrument asset
Equity accounted investments
Current tax assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Current borrowings
Current tax liabilities
Current provisions
Derivative financial instrument liability
Total current liabilities
Non-current liabilities
Non-current borrowings
Non-current provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total Equity
Note
2019
$’000
2018
$’000
22
10
10
11
24(c)
12
13
16
14
10
15
17
15
17
18
19
58,280
70,583
47,462
13,041
3,987
-
1,099
-
194,452
71,453
137,556
27,177
236,186
29,713
47,780
25,234
11,752
839
529
811
222
116,880
38,323
40,751
4,824
83,898
430,638
200,778
84,113
15,592
21,222
1,746
20,828
54
143,555
24,880
9,475
34,355
40,330
4,435
19,903
-
11,861
-
76,529
9,748
813
10,561
177,910
87,090
252,728
113,688
215,896
8,204
28,628
252,728
66,269
7,004
40,415
113,688
Under accounting standard AASB 3 Business Combinations, SRG has been determined as the parent for accounting
purposes. The consolidated financial statements therefore reflect a continuation of the financial statements of SRG. The
impact of this is the comparative results for the year end 30 June 2018 reflect SRG only for that period, the financial results of
SRG Global as reported for the year end 30 June 2019 are comprised of a twelve-month contribution from SRG (1 July 2018
to 30 June 2019) and a ten-month contribution from GCS (1 September 2018 to 30 June 2019). The financial results of GCS
for the non-reporting period of 1 July 2018 to 31 August 2018 are excluded from the financial results of SRG Global presented
herein.
The above statement should be read in conjunction with the notes to the financial statements.
46
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Consolidated Statement of Financial Changes in Equity
Financial Statements
Share
capital
$’000
Reverse
acquisition
reserve
$’000
Total
issued
capital
$’000
Retained
earnings
$’000
Share
based
payments
reserve
$’000
Asset
revaluation
reserve
$’000
Foreign
currency
translation
reserve
$’000
Total
equity
$’000
Balance at 1 July 2017
147,728
(106,417)
41,311
42,923
2,119
682
(687)
86,348
Profit for the year
Other comprehensive income
Total comprehensive income
-
-
-
-
-
-
-
-
-
1,193
-
1,193
-
-
-
Transactions with owners in
their capacities as owners
Issue of ordinary shares, net
of transaction costs
Share based payments
Dividends paid
Balance at 30 June 2018
155,811
(89,542)
66,269
8,083
16,875
24,958
243
(750)
-
-
-
-
-
-
-
6,086
(3,944)
40,415
-
7,455
-
-
-
-
-
-
-
(446)
(446)
1,193
(446)
747
-
-
-
24,451
6,086
(3,944)
682
(1,133)
113,688
Balance at 1 July 2018
155,811
(89,542)
66,269
40,415
7,455
682
(1,133)
113,688
Opening balance adjustment
on application of AASB 15*
Opening balance adjustment
of AASB 9*
-
-
-
-
-
-
(10,817)
(2,283)
-
-
-
-
-
-
(10,817)
(2,283)
Adjusted balance at 1 July 2018
155,811
(89,542)
66,269
27,315
7,455
682
(1,133)
100,588
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in
their capacities as owners
Issue of ordinary shares, net
of transaction costs
Share based payments
Dividends paid
Fair value of consideration on
acquisition of GCS Ltd
-
-
-
-
-
-
-
-
-
-
-
-
9,419
-
9,419
847
847
-
-
-
-
-
-
(8,106)
148,565
215
148,780
-
-
-
-
-
780
-
-
-
-
-
-
-
-
-
-
420
420
9,419
420
9,839
-
-
-
-
847
780
(8,106)
148,780
Balance at 30 June 2019
304,376
(88,480)
215,896
28,628
8,235
682
(713)
252,728
* Refer to adjustments in Note 1(u).
Under accounting standard AASB 3 Business Combinations, SRG has been determined as the parent for accounting
purposes. The consolidated financial statements therefore reflect a continuation of the financial statements of SRG. The
impact of this is the comparative results for the year end 30 June 2018 reflect SRG only for that period, the financial results of
SRG Global as reported for the year end 30 June 2019 are comprised of a twelve-month contribution from SRG (1 July 2018
to 30 June 2019) and a ten-month contribution from GCS (1 September 2018 to 30 June 2019). The financial results of GCS
for the non-reporting period of 1 July 2018 to 31 August 2018 are excluded from the financial results of SRG Global presented
herein.
The above statement should be read in conjunction with the notes to the financial statements.
47
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Financial Statements
Consolidated Statement of Cash Flows
Receipts from customers
Interest received
Payments to suppliers and employees
Interest paid
Income tax paid
Cash inflow from operating activities
Payments for business combinations
Proceeds from business combination
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments of contingent consideration
Dividends from joint ventures
Cash inflow / (outflow) from investing activities
Proceeds from issuance of shares
Proceeds from borrowings
Repayment of borrowings
Payment of dividends
Cash inflow from financing activities
Net cash increase in cash and cash equivalents
Effect of exchange rates on cash and cash equivalent holdings
Cash and cash equivalents at beginning of financial year
Note
2019
$’000
2018
$’000
522,558
249,793
450
114
(516,511)
(241,837)
22(a)
25
(1,795)
(1,042)
3,660
(1,975)
39,215
(19,396)
3,744
(2,530)
235
19,293
847
21,591
(9,027)
(8,105)
5,306
(628)
(2,820)
4,622
(32,825)
-
(2,616)
136
-
200
(35,105)
24,452
18,950
(3,778)
(3,944)
35,680
28,259
5,197
308
29,713
67
24,449
Cash and cash equivalents at end of financial year
22
58,280
29,713
Under accounting standard AASB 3 Business Combinations, SRG has been determined as the parent for accounting
purposes. The consolidated financial statements therefore reflect a continuation of the financial statements of SRG. The
impact of this is the comparative results for the year end 30 June 2018 reflect SRG only for that period, the financial results of
SRG Global as reported for the year end 30 June 2019 are comprised of a twelve-month contribution from SRG (1 July 2018
to 30 June 2019) and a ten-month contribution from GCS (1 September 2018 to 30 June 2019). The financial results of GCS
for the non-reporting period of 1 July 2018 to 31 August 2018 are excluded from the financial results of SRG Global presented
herein.
The above statement should be read in conjunction with the notes to the financial statements.
48
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
General information
SRG Global Limited (‘the Company’) is a for-profit public company listed on the Australian Securities Exchange (‘ASX’)
and is incorporated in Australia. The Company is primarily involved in engineering, mining, maintenance and construction
contracting.
The consolidated financial statements of the Company comprise the Company and its controlled entities (‘Consolidated
Group’ or ‘Group’) and the Group’s interest in associates and joint arrangements. The separate financial statements of the
parent entity, SRG Global Limited, have not been presented within this financial report as permitted by the Corporations Act
2001.
The consolidated financial statements were authorised for issue by the Board of Directors on the date of signing the
accompanying Directors’ Declaration.
Basis of preparation
These financial statements are general purpose financial statements and have been prepared in accordance with applicable
Australian Accounting Standards, Australian Accounting Interpretations, and other authoritative pronouncements of the
Australian Accounting Standards Board (‘AASB’), and the Corporations Act. The consolidated financial statements also
comply with the International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards
Board (‘IASB’).
The Group has adopted two new accounting standards in the current financial year, being AASB 15 Revenue from Contracts
with Customers and AASB 9 Financial Instruments. Details of the application of these new accounting standards are set out in
Note 1(u).
Any new, revised or amended Accounting Standards and Interpretations that have been issued but not yet mandatory have
not been early adopted. Details of these new, revised or amended Accounting Standards and Interpretations that have been
issued but not yet mandatory are set out in Note 1(v).
Historical Cost Convention
The financial statements have been prepared on an accruals basis with the exception of cash flow information, and are based
on historical costs, modified where applicable, by the measurement at fair value of selected non-current assets, financial
assets and financial liabilities.
Presentation
The consolidated financial statements are presented in Australian dollars, which is the Company’s functional and presentation
currency. All values presented in the financial statements have been rounded to the nearest thousand dollars (‘$000) unless
otherwise stated, in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191.
Foreign currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment
in which that entity operates. As at the reporting date, the assets and liabilities of overseas subsidiaries are translated into
Australian dollars using the exchange rates at reporting date and the income statements are translated at the average
exchange rates for the year. Retained profits are translated at the exchange rates prevailing at the date of the transaction.
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date
of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items
measured at fair value are reported at the exchange rate at the date when the fair values were determined.
Exchange differences arising on the translation of foreign operations are transferred directly to the Group’s foreign currency
translation reserve in the statement of financial position. These differences are recognised in the statement of profit or loss
and other comprehensive income, in the period in which the operation is disposed.
Key accounting estimates and judgements
In applying Australian Accounting Standards, management is required to make judgements, estimates and form assumptions
that affect the application of accounting policies and reported amounts presented herein. On an ongoing basis, management
evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best
available current information. Estimates assume a reasonable expectation of future events and are based on current trends
and economic data, obtained both externally and within the consolidated group.
The following key estimates and judgements were relevant to the Group for the financial year:
- Determination of variable consideration on revenue (Note 1(b))
- Estimation of allowance for expected credit losses on financial assets and liabilities (Note 1(u))
- Assessment and impairment of intangible assets (Note 13)
- Recovery of deferred tax assets and provision for income tax (Note 16)
- Employee long-term entitlements (Note 17)
- Determination of the fair value and deferred consideration arising from business combinations (Note 25)
49
SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounting policies
This note provides all significant accounting policies adopted in the preparation of these consolidated financial statements.
These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Principles of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) controlled by the Company. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power to direct the activities of the entity.
The consolidated financial statements are prepared by consolidating the financial statements of all entities within the
Group as defined in AASB 10 Consolidated Financial Statements. The consolidated financial statements include the
information and results of each subsidiary from the date on which the Company obtains control and until such time
as the Company ceases to control such entity. The acquisition method of accounting is used to account for business
combinations by the Group.
In preparing the consolidated financial statements, all inter-company balances and transactions, income and expenses
and profits and losses resulting from intra-Group transactions have been eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
Reverse Acquisition Accounting
The merger of Global Construction Services Limited (‘GCS’) and SRG Limited (‘SRG’) in September 2018 has been
accounted for as a reverse acquisition business combination. In applying the requirements of AASB 3 Business
Combinations to the Group:
-
-
GCS is the legal parent entity to the Group; and
SRG, which is neither the legal parent nor the legal acquirer, is deemed to be the accounting parent of the Group.
The consolidated financial information incorporates the assets and liabilities of all entities deemed to be acquired by
SRG including GCS and the results of these entities for the period from which those entities are accounted for as being
acquired by SRG.
The assets and liabilities of GCS acquired by SRG were recorded at fair value while the assets and liabilities of SRG were
maintained at their book value. The excess of the consideration transferred over the fair value of SRG’s share of the net
identifiable assets acquired is recorded as goodwill.
Acquisition related costs are expensed as incurred. The impact of all transactions between entities in the Group are
eliminated in full. A reverse acquisition reserve is created as part of the formation of the Group and is discussed in Note
25.
Associates
Associates are entities over which the Group has significant influence but not control or joint control. Significant
influence is presumed to exist when the Group owns between 20% and 50% of the voting power of another entity.
Investments in associates are accounted for using the equity method, after initially being recognised at cost.
Joint arrangements
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint
ventures depending on the contractual rights and obligations each investor has, rather than the legal structure of the
joint arrangement. The Group has assessed the nature of its joint arrangements and determined to have both joint
operations and joint ventures.
-
-
Joint operations - The Group recognises its direct right, and its share of, jointly held assets, liabilities, revenues
and expenses of joint operations. These have been incorporated in the financial statements under the
appropriate headings. Details of joint operations are set out in Note 24(b).
Joint ventures - Interests in joint ventures are accounted for using the equity method, after initially being
recognised at cost. Details of joint ventures are set out in Note 24(c).
Equity method of accounting
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s
share of movements in other comprehensive income of the investee in other comprehensive income. Investments in
associates are carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share
of net assets of the associates. Dividends received or receivable from associates reduce the carrying amount of the
investment.
50
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the associate,
including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of
the Group’s interest in the entity with adjustments made to the ‘Equity accounted investments’ and ‘Equity accounted
investment results’ accounts. Unrealised losses are eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
Accounting policies of the equity-accounted investees have been changed where necessary to ensure consistency with
the policies adopted by the Group. The carrying amount of equity-accounted investments is tested for impairment in
accordance with the policy described in note 1(q).
Changes in ownership interests
When the group ceases to have control, joint control or significant influence, any retained interest in the entity is
remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes
the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of
that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that
amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained,
only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to
profit or loss where appropriate.
(b) Revenue
The Group operates three main revenue streams throughout various geographical locations – Construction, Services
and Products.
Construction Revenue
The Group derives revenue from construction of buildings and civil projects globally. The construction of each project is
generally taken as one performance obligation. Where contracts are entered with several performance obligations, the
total transaction price is allocated to each performance obligation based on stand-alone selling prices.
As per normal practice, the transaction price of a project is fixed at the start containing bonus and penalty elements
based on performance construction criteria known as variable consideration.
The performance obligation is fulfilled over time and as such revenue is recognised over time. As work is performed on
the assets being constructed, they are controlled by the customer and have no alternative use for the Group.
Revenue earned is recognised on the measured input of each process based on resources consumed per appraisals that
are agreed with the customer on a regular basis.
Services Revenue
Maintenance and other services are performed by the Group for a variety of industries. Contracts entered into can
cover services which may involve various different processes or servicing of related assets. Where these processes and
activities are highly interrelated, and the Group provides a significant service of integration for these activities, they are
taken as one performance obligation.
The transaction price is allocated across each performance obligation based on contracted prices. Variable
consideration may be included in the transaction price.
The performance obligation is fulfilled over time as the Group enhances the assets which the customer controls, for
which the Group has no alternative use and has a right to payment for performance to date.
Revenue is recognised in the accounting period in which services are rendered. Customers are in general invoiced for
an amount that is calculated based on agreed contract terms in accordance with stand-alone selling prices for each
performance obligation.
Products revenue
The Group manufactures and supplies advanced construction and ground support products across various industries
and geographical locations. Revenue is recognised when control of the good has transferred, being when the products
are received by the customer.
Variable Consideration
Contracts may include performance bonuses or penalties assessed against the timeliness or cost effectiveness of work
completed or other performance related KPIs. Revenue recognition of variable consideration is only satisfied when
there are no uncertainties to its entitlement, this is known as the “constraint” requirements.
51
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Group assess the constraint requirements on a periodic basis when estimating the variable consideration to be
included in the transaction price. The estimate is based on all available information including historic performance.
Where modifications to contracts are made, the transaction price is updated to reflect these. Where the modification
price is not confirmed, an estimate is made of the amount of revenue to recognise whilst also considering the constraint
requirement.
(c) Finance costs
Finance costs are recognised as expenses in the period in which they are incurred, except where they are directly
attributable to the acquisition, construction or production of an asset. The capitalisation rate used to determine the
amount of finance costs to be capitalized is the weighted average interest rate on the Group’s borrowings outstanding
during the period.
(d)
Income tax
The Group is subject to income taxes in Australia and other jurisdictions around the world in which the entities within
the Group operates.
Income tax expense (income)
The income tax expense (income) on the profit or loss for the year comprises current and deferred tax expense
(income). Current income tax expense (income) is the tax payable (receivable) on the taxable income for the period,
using tax rates enacted at the reporting date, and any adjustments to tax payable in respect of previous years. Deferred
income tax expense (income) reflects movements in deferred tax assets and liabilities attributable to temporary
differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, as well
as unused tax losses.
Current and deferred tax expense (income) are recognised in profit or loss, except when they relate to items that are
recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax expense
(income) are also recognised in other comprehensive income or directly in equity respectively. Where current tax or
deferred tax expense (income) arises from the initial accounting for a business combination, the tax effect is included in
the accounting for the business combination.
Deferred tax assets (liabilities)
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where the
amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised
from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Where temporary differences exist in relation to investments, subsidiaries, branches, associates and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can
be controlled and it is not probable that the reversal will occur in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are
offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Tax Consolidation
In September 2018, the SRG tax consolidated group joined the GCS tax consolidated group, with GCS being the head
entity. The SRG tax consolidated group members obtained a deed of release from SRG and settled the tax liabilities
on exit. The tax attributes of the SRG consolidated group, including transferrable tax losses and franking credits were
transferred to GCS. SRG’s assets were taken to have been acquired by GCS and the tax cost base of these assets was
reset under the Allocable Cost Amount (‘ACA’) tax consolidation rules. The tax benefit arising from the SRG and GCS
tax consolidation was $5.5 million and is disclosed in Note 5.
The head entity and the controlled entities in the tax consolidated group continue to account for their own current and
deferred tax amounts. In addition to its own current and deferred tax amounts, the head entity also recognised current
tax liabilities (assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
Members of the Group have entered into a tax funding agreement. Under the funding agreement, the allocation of tax
within the Group is based on a group allocation. The tax funding agreement requires payments to/from the head entity
to be recognised via an inter-company receivable (payable) which is at call.
52
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Goods and services tax (GST)
Revenue, expenses and assets are recognised net of the amount of 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 the asset, or as an expense; or
for 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 in the statement of financial position.
Cash flows are included in the cash flow statement 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 as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST receivable from, or payable to, the taxation
authority.
(f) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to equity holders of the Group, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the reporting period, adjusted for bonus elements in ordinary shares issued during the period.
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 financial costs associated with dilutive potential ordinary shares and
the weighted average number of shares outstanding plus the weighted average number of ordinary shares that would
be issued on the conversion of all potential ordinary shares into ordinary shares.
(g) Fair value of assets and liabilities
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly (i.e.
unforced) transaction between market participants at the measurement date. It assumes that the transaction will take
place either in the principle market or in the absence of a principle market, in the most advantageous market.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
-
-
-
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market date (unobservable inputs).
(h) Cash and cash equivalents
Cash and cash equivalents are measured and carried at amortised cost. Cash and cash equivalents include cash
on hand, deposits held at call with financial institutions, other short-term highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts with original maturities of three months or less.
(i) Trade and other receivables
Trade and other receivables are initially recognised at transaction price and subsequently measured and carried at
amortised cost. Collectability of trade receivables is made on an ongoing basis and when there is objective evidence
that the Group will not be able to collect the receivable, allowances for credit losses is recognised. These losses are
recognised in profit or loss.
(j)
Inventories
Inventories are measured at the lower of cost and net realisable value.
Cost
Cost includes direct materials, direct labour, other direct variable costs and allocation production overheads necessary
to bring inventories to their present location and condition, based on normal operating capacity of the production
facilities. The cost of manufacturing inventories and work-in-progress are assigned to inventories using the weighted
average cost method. Costs arising from exceptional wastage are expensed as incurred.
53
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net realisable value
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
Allowances are recorded for inventory considered to be excess or obsolete.
(k) Property, plant and equipment
Land is measured at cost. Buildings and all other property, plant and equipment are measured at cost less accumulated
depreciation and impairment losses. Costs include expenditures that are directly attributable to the acquisition of the
asset.
Subsequent costs
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that the future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is
derecognised when replaced. All other repairs and maintenance costs are charged to profit or loss during the reporting
period in which they are incurred.
Depreciation
Land is not depreciated. Depreciation of major mining equipment is calculated on machine hours worked over their
estimated useful life. Leasehold improvements and leased assets are depreciated over the shorter of the lease terms or
their useful lives. Items in the course of construction or not yet in service are not depreciated. Depreciation on the other
assets are recognised in profit or loss on a straight-line basis over the estimated useful life of the asset.
The following useful lives are used in the calculation of depreciation:
-
-
-
-
Buildings and leasehold improvements 3 – 50 years
Office and computer equipment
3 – 10
years
Motor vehicles
Plant and rental equipment
3 – 8
years
3-40
years
The depreciation methods, assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end
of each reporting period.
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.
Derecognition
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. Gains and losses on disposals are calculated as the difference
between the net disposal proceeds and the asset’s carrying amount and are included in the statement of profit or loss
and other comprehensive income in the year that the item is derecognised. Any revaluation reserve relating to sold
assets is transferred to retained earnings.
(l) Leased assets
Leases under which the Group assumes substantially all the risks and benefits of ownership are classified as finance
leases. Other leases are classified as operating leases.
Finance leases
Finance leases are capitalised at inception of the lease by recording an asset and a liability at the lower of the
amounts equal to the fair value of the leased asset or the present value of the minimum lease payments, including any
guaranteed residual values. Finance lease payments are apportioned between finance charges and reductions of the
lease obligations so as to achieve a constant rate of interest on the remaining balance of the liability.
Operating leases
Payments made under operating leases (net of incentives received from the lessor) are charged to the statement of
profit or loss and other comprehensive income on a straight-line basis over the period of the lease.
54
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Intangibles
Goodwill
Goodwill is initially recorded at the amount by which the purchase price for a business combination exceeds the fair
value attributed to the interest in the net fair value of identifiable assets, liabilities and contingent liabilities at the date
of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets.
Goodwill is not amortised but is assessed annually for impairment or more frequently if the facts or circumstances indicate
a potential impairment and is carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating
units for the purpose of impairment assessment. Information about impairment assessment of intangibles is set out in
Note 13. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Customer Relationships
Customer relationships are acquired as part of business combinations. They are recognised at their fair value at the
date of acquisition and are subsequently amortised on a straight-line based on the timing of projected cash flows of the
contracts over their estimated useful lives.
(n) Trade and other payables
Trade creditors and other payables are non-interest bearing and are initially recognised at fair value and subsequently
carried at amortised cost. They represent liabilities for goods and services provided to the Group prior to the end of the
financial year that remained unpaid and arise when the Group becomes obliged to make future payments in respect of
the purchase of these goods and services. Settlement of these liabilities are in line with normal commercial terms.
(o)
Interest bearing liabilities
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. Subsequently,
interest bearing liabilities are then stated at amortised cost with any difference between cost and redemption value
being recognised in the statement of profit and loss over the period of the borrowings on an effective interest basis.
All interest bearing liabilities are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting date.
(p) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation that can be estimated reliably
as a result of past event, for which it is probable that an outflow of economic benefits will be required to settle the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If
the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The
increase in the provision resulting from the passage of time is recognised as a finance cost.
Employee Benefits
The provision for employee entitlements to wages, salaries and annual and long service leave represents the amount
which the Group has a present obligation to pay resulting from employees’ services provided up to the reporting date.
-
-
Short-term Employee Benefits - Employee benefits expected to be settled within 12 months are measured at
their nominal values using the remuneration rate expected to apply at the time of settlement.
Long-term Employee Benefits - Employee benefits which are not expected to settle within 12 months are
measured at the present value of the estimated future cash flows to be made of those benefits. Information
about long-term employee benefits measurement is set out in Note 17(b).
Onerous Contracts
A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are less than
the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of
the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
(q) Financial instruments
Financial instruments are recognised when the Group becomes a party to the contractual provisions to the instrument.
Financial instruments for the Group include cash and cash equivalents, trade and other receivables, trade and other
payables, interest-bearing financial liabilities, contingent considerations and equity investments not held for trading.
The initial recognition and classification of subsequent measurement are set out within the relevant accounting policy.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument
has been impaired. Impairment losses are recognised in the statement of profit or loss. Impairment loss is measured as
the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding
future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.
55
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks
and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either
discharged, cancelled or expired.
The difference between the carrying value of the financial liability extinguished or transferred to another party and the
fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or
loss.
(r) Share capital
Ordinary share capital
Issued and paid up capital is recognised at the fair value of the consideration received by the Group. Incremental costs
directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds.
Dividends
A provision for dividends is not recognised as a liability unless the dividends are declared on or before the reporting
date.
(s) Employee share trust
The Group has formed a trust to administer its employee share schemes. The trust is consolidated as the substance
of the relationship is that the trust is controlled by the Group. Shares held by the share trust are disclosed as treasury
shares and deducted from contributed equity.
(t) Equity-settled compensation
Share-based compensation benefits are provided to employees in the form of options and performance rights in
exchange for the rendering of services under an employee share plan. The cost of equity-settled transactions is
recognised as an expense with a corresponding increase in equity over the vesting period.
(u) New accounting standards and interpretations adopted
The Group has adopted all of the new and amended Accounting Standards and Interpretations issued by the AASB that
are relevant to the Group and effective for the current annual reporting period as follows:
Standard / interpretation
AASB 15 ‘Revenue from Contracts with Customers’
AASB 9 ‘Financial Instruments’
AASB 15 Revenue from Contracts with Customers
Effective for annual reporting
periods beginning on or after
1 January 2018
1 January 2018
Initially applied in the
financial year ending
30 June 2019
30 June 2019
In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as amended in April 2016)
which came into effect for annual period that begins on or after 1 January 2018. The Group has applied AASB 15 via the
modified retrospective transition approach, which requires a restatement of the opening balance of retained earnings
to adjust for any retrospective impact of the new revenue standard instead of restating the comparative information.
AASB 15 establishes a comprehensive framework for determining the timing and quantum of revenue recognised. It
replaces existing guidance, including AASB 118 Revenue and AASB 111 Construction Contracts. The core principle is
that an entity recognises revenue to depict the transfer of promised goods or services to customers at an amount that
reflects the consideration to which the entity expects to be entitled for those goods or services.
The Group has operations across different industry sectors and geographical locations which are subject to different
legal and contractual frameworks. Significant judgements and estimates are used in determining the impact of AASB 15
such as but not limited to:
-
-
-
-
Probability of customer approval of variations
Acceptance of performance
Estimation of project completion date
Where applicable the individual status of legal proceedings, including arbitration and litigation for each contract
Construction of each project represents one performance obligation. Revenue is recognised over time as the works are
performed on assets controlled by the customer. AASB 15 requires variable consideration within the transaction price such
as incentives, penalties and modifications not be recognised as revenue until there is a high probability of entitlement.
Revenue was previously recognised when probable that work performed will result in revenue whereas under the new
standard, revenue is recognised when it is highly probable that a significant reversal of revenue will not occur.
56
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
During the current financial year, there was no material revenue recognised that was previously recognised as contract
assets or liabilities as at 30 June 2018.
Details of the Group’s main revenue streams and revenue recognition are set out in Note 1(b).
Statement of Financial Position Implications
AASB 15 is based on the premise that a contract asset or contract liability is generated when either party to a contract
performs, depending on the relationship between the Group’s performance and the customer’s payment at the
reporting date. Where appropriate the Group has recognised such contract assets and contract liabilities as when
required.
Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group
is yet to establish an unconditional right to consideration. Likewise, contract liabilities are recognised when a customer
pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer.
Incremental costs are those costs incurred to obtain or fulfil a contract. Under AASB 15, these costs are recognised as
an asset and are required to be amortised on a systematic basis that is consistent with the transfer to the customer of
the goods or services to which the asset relates. Judgements are involved in determining the amount of contract costs
to be capitalised and they are subject to impairment assessment annually.
Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained or which are
not otherwise recoverable from a customer are expensed as incurred to profit or loss. Incremental costs of obtaining a
contract where the contract term is less than one year is immediately expensed to profit or loss.
Impact on application of AASB 15
Statement of Financial Position
Current trade and other receivables
Deferred tax assets*
Total asset impact
Retained earnings
Total equity impact
As reported
30 June 2018
$’000
AASB 15 Transition
Adjustments
$’000
Opening Balance
1 July 2018
$’000
73,014
4,824
77,838
40,415
40,415
(12,456)
1,639
(10,817)
(10,817)
(10,817)
60,558
6,463
67,021
29,598
29,598
* Adoption of AASB 15 requires retrospective adjustments resulting in tax effect accounting and deferred tax impacts.
There has been no revenue recognised in the current financial year that arise from performance obligations satisfied in
the previous periods.
AASB 9 Financial Instruments
In the current year, the Group has applied AASB 9 Financial Instruments (as amended) and the related consequential
amendments to other Accounting Standards that are effective for an annual period that begins on or after 1 January
2018.
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 introduces new requirements
which the Group has adopted for:
-
-
-
The classification and measurement of financial assets and financial liabilities
Impairment of financial assets
General hedge accounting
The Group’s accounting policies for financial instruments are disclosed throughout Note 1 and as follows:
Classification and Measurement of Financial Assets and Financial Liabilities
In accordance with the requirements of AASB 9, the Group classifies its financial assets under the following
classification:
-
-
Measured at fair value (either through comprehensive income, or through profit or loss) or
Amortised cost
Classification is dependent on the Group’s business model for managing its financial assets and their contractual cash
flow characteristics of those financial assets.
57
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i)
Cash and Cash Equivalents and Trade and other Receivables
Measurement of cash and cash equivalents and trade and other receivables are at amortised cost consistent with
previous periods. This is in-line with the Group’s business model to hold these assets under contractual terms to
collect contractual cashflows at a specified date.
(ii)
Equity Investments not held for trading
The Group has measured all equity investments at fair value through profit or loss. Where an election to
recognise fair value through other comprehensive income is chosen, there is no option to subsequently reclassify
to fair value through profit and loss following the derecognition of the investment.
Impairment losses and impairment reversals on equity investments measured at fair value through other
comprehensive income are not reported separately from other changes in fair value. Changes in the fair value of
financial assets at fair value through profit or loss are recognised in other expenses in the statement of profit or
loss as applicable.
(iii)
Trade and other payables
Trade payables are the amounts outstanding for goods and services received. Settlement of these liabilities are
in line with normal commercial terms Measurement of trade and other payables are at amortised cost.
(iv)
Interest bearing liabilities
In accordance with AASB 9 all loans and borrowings are initially recognised at fair value less transaction costs.
Subsequently, interest bearing liabilities are then 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.
Impairment of financial assets
In relation to impairment of financial assets, AASB 9 requires an expected credit loss model as opposed to an incurred
credit loss model under the former standard AASB 139.
For trade receivables and contract assets the Group has elected to apply the simplified approach permitted by AASB
9. This requires that the Group provides for a loss allowance equivalent to the lifetime expected credit losses from initial
recognition of those receivables.
The Group applies the appropriate impairment methodologies available under AASB 9 to determine the expected
credit losses associated with other financial assets.
Impact on application of AASB 9
Statement of Financial Position
Trade and other receivables and contract assets
Deferred tax assets
Total asset impact
Retained earnings
Total equity impact
As reported
30 June 2018
$’000
AASB 9 Transition
Adjustments
$’000
Opening Balance
1 July 2018
$’000
73,014
4,824
77,838
40,415
40,415
(2,283)
-
(2,283)
(2,283)
(2,283)
70,731
4,824
75,555
38,132
38,132
(v) New accounting standards and interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2019. The
Group’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant
to the Group, are set out below.
AASB 16 Leases: effective for annual reporting periods beginning on or after 1 January 2019
AASB 16 replaces AASB 117 Leases and the related interpretations. It introduces a new lease accounting model for
lessees that requires lessees to recognise all leases on the statement of financial position (except for short-term leases
and low value assets) and recognise the amortisation of lease assets and interest on lease liabilities in profit or loss.
Lessees will also be required to remeasure the lease liability upon the occurrence of certain events (such as change in
the lease term or lease payments). The accounting for lessors will not significantly change.
58
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Group is in the process of assessing the impact of the application of AASB 16.
The following new or amended Accounting Standards and Interpretations are not expected to have a significant impact
on the Group’s consolidated financial statements:
-
-
-
AASB 2017-7 Amendments to Australian Accounting Standards – Long term interests in joint ventures and
associates; and
AASB Interpretation 23 Uncertainty Over Income Tax Treatments, AASB 2017-4 Amendments to Australian
Accounting Standards – Uncertainty over Income Tax Treatments; and
Annual Improvements to IFRS Standards 2015-2017 Cycle - Amendments to IFRS 3 Business Combinations, IFRS
11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs.
59
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 2. REVENUE
The effect of initially applying AASB 15 on the Group’s revenue from contracts with customers is described in Note 1(u). Due
to the transition method chosen in applying AASB 15, comparative information has not been restated to reflect the new
requirements.
Revenue from contracts with customers is disaggregated by major service lines and is in line with the Group’s reportable
segments (see Note 28).
2019
$’000
2018
$’000
268,003
218,388
486,391
120,090
119,130
239,220
2019
$’000
2018
$’000
444
-
-
180
300
380
5,416
6,720
55
292
529
-
-
-
-
876
2019
$’000
2018
$’000
215
659
1,388
7,236
9,498
6,621
120
472
829
5,507
6,928
92
Construction revenue
Services revenue
NOTE 3. OTHER INCOME
Gain on disposal of property, plant and equipment
Gain on contingent consideration
Gain on derivatives
Property rental income
Research and development income
Freight income
Other
NOTE 4. DEPRECIATION AND AMORTISATION
Depreciation
Buildings and leasehold improvements
Office and computer equipment
Motor vehicles
Plant and rental equipment
Amortisation
Customer relationships
Depreciation and amortisation rates are set out in Note 1(k) and 1(m).
60
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 5.
INCOME TAX EXPENSE
This note provides all analysis of the Group’s income tax expense:
(a)
Income tax expense
Current tax expense
Deferred tax expense (see Note 16)
(Over) / under provision in respect to prior year
Income tax expense
(b) Reconciliation of income tax expense to prima facie tax payable
Profit for the year
Tax at the Australian rate of 30% (2018 - 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
-
-
-
-
-
-
-
Non-tax deductible items
Non-deductible losses on overseas entities
Difference in overseas tax rate
Tax benefit arising from tax consolidation of SRG Group
Sundry items
Share-based payments
Research and development
Amount (over) / under provided in prior year
Income tax expense attributable to entity
(c) Amounts recognised directly in equity
2019
$’000
2018
$’000
2,140
(4,710)
(105)
(2,675)
6,744
2,023
(48)
976
(50)
(5,471)
-
-
-
(105)
(2,675)
2,056
(1,036)
(611)
409
1,602
481
91
1,149
(504)
-
(88)
(20)
(89)
(611)
409
Aggregate current and deferred tax arising in the financial year and not recognised in the net profit or loss but directly
credited (debited) to equity is as follows:
Share based payments
2019
$’000
-
2018
$’000
929
61
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 6. KEY MANAGEMENT PERSONNEL COMPENSATION
The remuneration disclosures of directors and other members of KMP during the year are provided in Section 7 of the
Remuneration Report designated as audited and forming part of the Directors’ Report.
The below remuneration disclosures for 2019 are for SRG Global’s KMP as presented in the Remuneration Report while the
2018 disclosures are for SRG’s KMP only.
Short-term employee benefits
Long service leave
Post-employment benefits
Share-based payments
2019
$
2018
$
2,693,753
3,474,434
(43,763)
1,275,781
10,499
126,919
721,727
4,500,963
4,647,498
8,112,815
NOTE 7. AUDITORS’ REMUNERATION
During the year, the following fees were paid or payable for services provided by the auditors of the parent entity, its related
practices and non-related audit firms:
Remuneration of the auditor of the parent entity(1)
Audit or review of the financial statements
Non-assurance related services
- tax compliance
- services in connection with reverse acquisition
Remuneration of parent entity auditor’s network firms(1)
Audit or review of the financial statements
Remuneration of other auditors of subsidiaries
Audit or review of the financial statements
Non-assurance related services
- tax compliance
- services in connection with reverse acquisition
- other advisory services
(1) The auditor of the parent entity is BDO Audit (WA) Pty Ltd (2018: William Buck).
2019
$
2018
$
329,204
185,725
3,341
43,344
375,889
80,446
80,446
-
-
185,725
-
-
36,881
36,294
3,883
1,663
6,084
48,511
-
-
-
36,294
62
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 8. CAPITAL MANAGEMENT
(a) Risk Management
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-
term shareholder value and ensure that the Group can fund its operations and continue as a going concern. The Group’s
debt and capital include ordinary share capital and financial liabilities, supported by financial assets. The Group is not
subject to any externally imposed capital requirements, except for Corporations Act 2001 Chapter 6 in relation to take
over provisions and ASX listing rules Chapter 7 on 15% placement cap on new equity raising.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of debt
levels, distributions to shareholders and share issues.
Net debt
Net debt is calculated as the total borrowings less cash and cash equivalents.
(b) Dividends
Distributions paid
The amounts paid, provided or recommended by way of dividend by the parent entity
are:
-
-
Final fully franked ordinary dividend for the year ended 30/06/2018 of 4.5 cents
(2017: 4.0 cents) per share paid on 27/08/2018 franked at the tax rate of 30%
Interim fully franked ordinary dividend for the year ended 30/06/2019 of 1.0 cent
(2018: 2.0 cents) per share paid on 23/04/2019 franked at the tax rate of 30%
Dividends declared after 30 June 2019
(i)
The Directors have resolved to declare a final fully franked ordinary dividend of
0.5 cent (2018: 4.5 cents) per share payable on 23/10/2019, franked at the tax rate
of 30% (2018: 30%)
Franking account balance
(ii)
Balance of franking account at year end adjusted for franking credits arriving
from payment of provision for income tax, dividends recognised as receivables
and franking debits arising from payment of dividends and franking credits that
may be prevented from distribution in subsequent financial years.
Subsequent to year end, the franking account would be reduced by the proposed
dividend as follows:
2019
$’000
(12,178)
2018
$’000
(62)
2019
$’000
2018
$’000
3,698
4,407
2,615
1,329
8,105
3,944
2,202
3,670
2,202
3,670
19,787
7,738
(944)
(1,573)
18,843
6,165
63
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 9. EARNINGS PER SHARE
Profit attributable to members of the parent entity ($’000)
2019
9,419
2018
1,193
Weighted average number of shares used in the calculation of basic EPS (shares)
402,445,380
169,023,570
Weighted average number of shares used in the calculation of diluted EPS (shares)
402,445,380
181,846,064
Earnings per share
Basic (cents per share)
Diluted (cents per share)
2.3
2.3
0.7
0.7
AASB 3 Business Combinations provides specific guidance on the calculation of the weighted average number of shares as
follows:
The number of ordinary shares issued by:
- SRG outstanding shares from 1 July 2018 to 31 August 2018
The number of SRG shares on issue of 81,573,611 multiplied by the exchange ratio established in the Scheme of
Arrangement of 2.479 multiplied by ratio of days (62/365); plus
- SRG Global from 1 September 2018 to 30 June 2019
The number of the Group shares on issue (440,415,099) multiplied by the ratio of days outstanding (303/365)
NOTE 10. TRADE AND OTHER RECEIVABLES
The effect of initial applying AASB 9 and AASB 15 is described in Note 1(u).
Trade receivables(a)
Other receivables(b)
Allowance for expected credit losses (contracts with customers) (see Note 30(e))
Net balance sheet position for ongoing construction contracts:
Contract assets(c)
Contract liabilities(c)
(a) Trade receivables
2019
$’000
73,196
911
(3,524)
70,583
47,462
(15,592)
31,870
2018
$’000
47,603
924
(747)
47,780
25,234
(4,435)
20,799
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. Collection of the amounts is expected within one year or less and therefore have been classified as current
assets.
(b) Other receivables
These amounts generally arise from transactions outside the usual operating activities of the Group. Collateral is not
normally obtained.
(c) Contract assets and contract liabilities
Contract assets are balances due from customers as work is performed and therefore a contract asset is recognised
over the period in which the performance obligation is fulfilled. This represents the Group’s right to consideration
for the goods and services transferred to date. Amounts are generally reclassified to trade receivables when these
have been certified or invoiced to a customer. Contract liabilities arise when payment is received prior to work being
performed.
(d) Risk exposure
Information about the Group’s exposure to credit risk, foreign currency risk and interest rate risk can be found in Note
30.
64
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
NOTE 11. INVENTORIES
Raw materials and stores at cost
Finished goods
Work in progress and materials on site
Notes to the Financial Statements
2019
$’000
5,963
3,378
3,700
13,041
2018
$’000
5,783
2,429
3,540
11,752
Provision for obsolete stock was included in this amount of $209,265 (2018: Nil).
NOTE 12. PROPERTY, PLANT AND EQUIPMENT
Year Ended 30 June 2019
Opening net book amount
Additions
Disposals
Depreciation charge
Foreign exchange differences
Additional amounts recognised from
business combinations occurring in the
current period (see Note 25)
Closing net book amount
As at 30 June 2019
Cost
Accumulated depreciation
Accumulated impairment
Net book amount
Year Ended 30 June 2018
Opening net book amount
Additions
Disposals
Depreciation charge
Foreign exchange differences
Additional amounts recognised from
business combinations occurring in the
current period
Closing net book amount
As at 30 June 2018
Cost
Accumulated depreciation
Accumulated impairment
Net book amount
Land
$’000
501
-
(784)
-
-
3,071
2,788
2,788
-
-
2,788
Land
$’000
501
-
-
-
-
-
501
501
-
-
501
Building &
Leasehold
Improvements
Office &
Computer
Equipment
Motor
Vehicles
Plant &
Rental
Equipment
Capital
Work in
Progress
Total
$’000
$’000
$’000
$’000
$’000
$’000
273
617
(90)
(215)
5
1,275
1,069
406
(34)
5,446
2,001
(46)
(659)
(1,388)
21
90
31,034
16,360
(2,734)
(7,236)
280
-
38,323
1,427
20,811
-
-
-
(3,688)
(9,498)
396
326
1,536
17,889
1,012
25,109
1,865
1,129
7,639
55,593
2,439
71,453
3,403
(1,538)
-
1,865
9,365
19,315
117,957
2,439
155,267
(8,236)
(11,676)
(62,364)
-
-
-
-
-
(83,814)
-
1,129
7,639
55,593
2,439
71,453
Building &
Leasehold
Improvements
Office &
Computer
Equipment
Motor
Vehicles
Plant &
Rental
Equipment
Capital
Work in
Progress
Total
$’000
$’000
$’000
$’000
$’000
$’000
214
113
-
(120)
(2)
68
273
867
(594)
-
273
814
297
(47)
(472)
(15)
2,204
1,776
(1)
(829)
(98)
25,231
6,098
(62)
(5,507)
(177)
492
2,394
5,451
1,069
5,446
31,034
7,680
15,964
88,140
(6,611)
(10,518)
(57,106)
-
-
-
1,069
5,446
31,034
-
-
-
-
-
-
-
-
-
-
-
28,964
8,284
(110)
(6,928)
(292)
8,405
38,323
113,152
(74,829)
-
38,323
65
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 13. INTANGIBLES
As at 1 July 2017
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2018
Opening net book amount
Amortisation change
Foreign exchange differences
Additional amounts recognised from business combinations occurring in the
current period
Closing net book amount
As at 30 June 2018
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2019
Opening net book amount
Additions
Amortisation charge
Foreign exchange differences
Additional amounts recognised from business combinations occurring in the
current period (see Note 25)
Goodwill
$’000
Customer
Relationships
$’000
22,974
(8)
22,966
22,966
-
(591)
15,670
38,045
38,053
(8)
38,045
38,045
2,441
-
453
74,051
-
-
-
-
(92)
(110)
2,908
2,706
2,798
(92)
2,706
2,706
-
(6,621)
206
26,275
Total
$’000
22,974
(8)
22,966
22,966
(92)
(701)
18,578
40,751
40,851
(100)
40,751
40,751
2,441
(6,621)
659
100,326
Closing net book amount
114,990
22,566
137,556
As at 30 June 2019
Cost
Accumulated amortisation and impairment
Net book amount
114,998
(8)
114,990
29,279
(6,713)
22,566
144,277
(6,721)
137,556
66
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 13. INTANGIBLES (CONTINUED)
Impairment disclosures of non-financial assets
At the end of each reporting period, the group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount
of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying
value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of profit or loss.
Where 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.
Goodwill is allocated to cash-generating units which are based on the Group’s reporting segments:
Allocation of Intangible Assets to Cash-Generating Unit (CGU) groups
30 June 2019
30 June 2018
Construction
$’000
Asset Services
$’000
Mining Services
$’000
86,437
18,261
49,941
21,312
1,178
1,178
Total
$’000
137,556
40,751
The recoverable amount of a CGU is determined based on value-in-use calculations which require the use of assumptions.
These calculations use discounted cash flow projections based on financial budgets approved by management covering a
three year period.
The discount rate used is the Group’s weighted average cost of capital.
The same growth rate is applied across all CGU’s and reflect the long-term average growth rate and management’s outlook
on growth.
Significant estimate: Key assumptions used for value-in-use calculations
Construction
Asset Services
Mining Services
Long-term growth rate
Pre-tax discount rate
2019
%
2.50%
2.50%
2.50%
2018
%
2.50%
2.50%
2.50%
2019
%
12.00%
12.00%
12.00%
2018
%
11.75%
11.75%
9.53%
Sensitivity
Management believe that any reasonably possible change in the key assumptions on which the recoverable amount based in
all the CGU’s would not cause the carrying amount to exceed its recoverable amount.
Impairment expense
The Group performs its impairment test on an annual basis. The Group considers the relationship between its market
capitalisation and its book value, among other factors when reviewing indicators of impairment. As a result of the
impairment testing process, no impairment charge has been brought to account for the year ended 30 June 2019 (2018: Nil).
67
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 14. TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables and accrued expenses
Information about the Group’s exposure to currency and liquidity risks is included in Note 30.
NOTE 15. BORROWINGS
Current
Secured borrowings - Term facility
Secured borrowings - Hire purchase finance
Non-current
Secured borrowings - Term facility
Secured borrowings - Hire purchase finance
The carrying amount of non-current assets pledged as first security are:
Plant, motor vehicles and equipment over which hire purchase contracts apply
2019
$’000
2018
$’000
45,334
38,779
84,113
18,620
21,710
40,330
2019
$’000
13,489
7,733
21,222
11,250
13,630
24,880
2018
$’000
15,000
4,903
19,903
-
9,748
9,748
22,730
22,730
16,891
16,891
(a) Hire purchase finance
Hire purchase liabilities are effectively secured as the rights to the leased assets recognised in the financial statements
revert to the lessor in the event of default.
(b) Fair value
The fair value of borrowings is not materially different from the carrying value since interest payable on these
borrowings are either close to current market rates or the borrowings are of a short term nature.
68
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
NOTE 16. DEFERRED TAX BALANCES
(a) Deferred tax assets
The balance comprises temporary differences attributed to:
Property, plant and equipment
Provisions
Share based payments
Payables
Tax losses
Other
Total deferred tax assets
(b) Deferred tax liabilities
The balance comprises temporary differences attributed to:
Debtors retention
Intangible assets
Accrued revenue
Prepayments
Other
Property, plant and equipment
Total deferred tax liabilities
Net deferred tax assets / liabilities
(c) Reconciliations
Notes to the Financial Statements
2019
$’000
2018
$’000
8,006
5,796
-
804
19,461
1,842
35,909
1,108
6,786
799
39
-
-
8,732
27,177
-
3,655
2,746
-
1,045
708
8,154
434
786
799
-
159
1,152
3,330
4,824
Opening
Balance
$’000
Recognised
in Profit or
Loss
$’000
Recognised
Directly in
Equity
$’000
Acquisitions
/ Disposals
$’000
(Over) / Under
Previous Years
$’000
Closing
Balance
$’000
2019
Deferred tax assets / (liabilities) in
relation to:
Property, plant and equipment
Provisions
Share based payments
Intangibles
Debt retention
Prepayments
Payables
Tax losses
Accrued Revenue
Other
2018
Deferred tax assets / (liabilities) in
relation to:
Property, plant and equipment
Provisions
Share based payments
Intangibles
Debtors retention
Tax losses
Accrued revenue
Other
(1,152)
3,655
2,746
(786)
(434)
-
-
1,045
(799)
549
4,824
277
2,339
976
-
(520)
-
-
184
3,256
188
(4,611)
(2,746)
980
(93)
493
(26)
9,429
-
1,096
4,710
(1,114)
612
841
-
86
1,045
(799)
365
1,036
-
-
-
-
-
-
-
-
-
-
-
-
-
929
-
-
-
-
-
929
8,970
6,752
-
(6,980)
(581)
(532)
830
8,987
-
197
17,643
-
704
-
(786)
-
-
-
-
(82)
-
-
-
-
-
-
-
-
-
-
-
(315)
-
-
-
-
-
-
-
(315)
8,006
5,796
-
(6,786)
(1,108)
(39)
804
19,461
(799)
1,842
27,177
(1,152)
3,655
2,746
(786)
(434)
1,045
(799)
549
4,824
69
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 17. PROVISIONS
Current
Employee benefit provisions(a)
Lease provisions(c)
Other
Non-current
Employee benefit provisions(b)
Lease provisions(c)
Other
(a) Employee benefit provisions
2019
$’000
2018
$’000
13,599
2,074
5,155
20,828
2,371
5,191
1,913
9,475
10,954
-
907
11,861
813
-
-
813
The employee benefit provisions cover the group’s liability for long service leave and annual leave.
The current portion of this liability includes all of the accrued annual leave, the unconditional entitlements to long
service where employees have completed the required period of service and also those where employees are entitled
to pro-rata payments in certain circumstances. The entire amount of the current provision of $13,599,000 (2018:
$10,954,000) is presented as current, since the group does not have an unconditional right to defer settlement for
any of these obligations. However, based on past experience, the group does not expect all employees to take the full
amount of accrued leave or require payment within the next 12 months.
(b) Significant estimate: Provision for non-current employee benefits
In determining the employee entitlements relating to long service leave, consideration is given to employee wage
increases and the probability that the employee may satisfy any vesting requirements. Those cash flows are discounted
using market yields on corporate bonds with terms to maturity that match the expected timing of cash flows
attributable to employee benefits.
(c) Lease provisions
$6,760,000 of the liability is assumed as part of the business combination in Note 25 for the fair valuation of GCS’ lease
agreements due to the leases’ terms being unfavourable relative to market terms. The market value of rentals for these
properties are lower than the rental terms agreed by GCS to lease the properties and therefore a liability is recognised.
$504,000 of onerous lease provisions assumed as part of the business combination in Note 25 for discount provided
for a sub-lease, as the unavoidable costs of meeting the obligations under the contract exceed the economic benefits
expected to be received under it.
NOTE 18. ISSUED CAPITAL
Share capital
Ordinary shares fully paid
2019
2018
Shares
440,415,099
$’000
215,896
Shares
222,181,412
$’000
66,269
70
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 18. ISSUED CAPITAL (CONTINUED)
Number of
shares
Total
$‘000
Balance as at 1 July 2018
Share based payments
Shares issued as partial consideration for acquisition of the 49% remaining interest in Gallery Facades
Share issue cost
Tax effect on share issue costs
Reverse acquisition reserve (see Note 19(d))
Balance as at 30 June 2018
210,525,072
500,000
11,156,340
-
-
-
222,181,412
Share based payments
Shares issued in accordance with Scheme of Arrangement on acquisition of SRG Global Limited
Reverse acquisition reserve (see Note 19(d))
Balance as at 30 June 2019
1,350,000
216,883,687
-
440,415,099
147,727
-
8,085
(3)
2
(89,542)
66,269
-
148,565
1,062
215,896
In accordance with AASB 3 Business Combinations, SRG has been determined as the parent for accounting purposes. The
consolidated financial statements therefore reflect a continuation of the financial statements of SRG. However, the equity
structure must reflect the equity structure of GCS (the legal parent), including the equity interest issued by GCS to effect the
business combination. As such the value of the shares issued in accordance with the Scheme of Arrangement on acquisition
reflects the shares issued by GCS to acquire SRG at a legal consideration price of $0.69 per share.
(a) Ordinary shares
Fully paid ordinary shares carry one vote per share and entitle the holder to participate in dividends and the proceeds
on winding up of the Company in proportion to the number of shares held. Ordinary shares have no par value and the
Company does not have a limit on the amount of authorised capital.
(b) Options
No new options were issued in the current financial year. Following the approval of the Scheme of Arrangement during
the financial year, all previously issued SRG Options were vested and converted into SRG shares prior to the Merger of
Equals being completed in September 2018.
(c) Performance rights
No new options were issued in the current financial year. Following the approval of the Scheme of Arrangement during
the financial year, all previously issued SRG Performance Rights were vested and converted into SRG shares prior to
the Merger of Equals being completed in September 2018. In addition, 1,350,000 performance rights were converted
into GCS shares as part of the Scheme Benefits paid to KMP during the non-reporting period of 1 July 2018 to 31 August
2018.
NOTE 19. RESERVES
Nature and purpose of reserves
(a) Share-based payment reserve
The share-based payment reserve is used to recognise the value of the vesting of equity-settled share-based payments
provided to employees, including key management personnel, as part of their remuneration. Following the approval of
the Scheme of Arrangement during the financial year, all previously issued SRG Options and Performance Rights vested
and were exercised before the scheme record date. No other new options or performance rights have been issued.
(b) Asset revaluation surplus
The asset revaluation surplus includes the net revaluation increments and decrements arising from the revaluation of
non-current assets in accordance with Australian Accounting Standards.
(c) Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on the translation of foreign operations
with functional currencies other than those of the presentation currency of these financial statements. Refer to
accounting policy Note 1.
(d) Reverse acquisition reserve
As a result of reverse acquisition accounting, a new equity account is created as a component of equity. This account
called ‘Reverse acquisition reserve’ is similar in nature to share capital. The Reverse acquisition reserve is not available
for distribution. This equity account represents a net adjustment for the replacement of the legal parent’s (GCS) equity
with that of the deemed acquirer (SRG).
71
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 20. COMMITMENTS
(a) Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Plant and equipment
801
-
2019
$’000
2018
$’000
(b) Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One year but not later than five years
Greater than five years
Total lease commitments
Consists of:
Cancellable operating lease
Non-cancellable operating lease
Total lease commitments
(c) Lease commitments - finance
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One year but not later than five years
Greater than five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing
Current
Non-current
Total lease liability
8,714
24,659
434
33,807
-
33,807
33,807
8,482
14,349
-
22,831
(1,468)
21,363
7,733
13,630
21,363
2,402
3,948
18
6,368
-
6,368
6,368
5,443
10,287
-
15,730
(1,079)
14,651
4,903
9,748
14,651
Operating Leases
The group leases various offices, warehouses and yards under non-cancellable operating leases expiring within one to
ten years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are
renegotiated.
The group also leases various plant and vehicles under cancellable operating leases. Varying periods of notice are required
to terminate these leases.
NOTE 21. CONTINGENT ASSETS AND LIABILITIES
Certain claims arising out of construction and services contracts have been made by controlled entities in the ordinary course
of business. These claims are confidential in nature and may involve adjudication, arbitration or litigation. In accordance
with Australian Accounting Standards, due to the uncertainty in relation to the quantum and timing of the resolution of these
claims, no amounts have been recognised in the financial statements in relation to these matters.
The Group’s bank guarantees and bond facilities’ limits and drawdowns are disclosed in Note 29.
72
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
NOTE 22. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
(a) Reconciliation of profit for the year to net cash flows from operating activities
Profit for the year
Depreciation and amortisation
Share-based payments
Earnings from equity accounted investment
Gain on disposal of property, plant and equipment
Movement in doubtful debts provision
Fair value adjustments to derivatives
Unrealised foreign exchange
Gain on contingent consideration
Changes in assets
-
-
-
-
-
-
(Increase) / decrease in trade and other receivables
(Increase) / decrease in contract assets
(Increase) in inventories
(Increase) / decrease in other assets
Decrease in current tax assets
(Increase) in deferred tax assets
Changes in liabilities
-
-
-
-
-
Increase in trade and other payables
Increase in contract liabilities
Increase in provisions
(Decrease) / increase in tax liability
(Increase) / decrease in deferred tax liability
Notes to the Financial Statements
2019
$’000
58,280
58,280
2018
$’000
29,713
29,713
2019
$’000
2018
$’000
9,419
16,119
780
(522)
(444)
-
-
308
-
(25,086)
(33,044)
(1,287)
(3,150)
1,968
(29,685)
42,028
11,157
15,099
-
-
1,193
7,020
5,163
(1,011)
(55)
228
(529)
565
(292)
(9,325)
-
(1,399)
870
-
(797)
3,133
-
1,472
(1,686)
72
Cash inflow from operating activities
3,660
4,622
(b) Non-cash financing and investing activities
Property, plant and equipment acquired under finance leases, lease purchase or vendor
finance
6,204
5,650
73
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 23. PARENT ENTITY FINANCIAL INFORMATION
The table represents the legal parent entity, which is GCS and not the accounting parent, which is SRG. The information
presented in respect of the parent entity is prepared using consistent accounting policies per Note 1.
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
2019
$’000
2018
$’000
15,208
117,821
28,758
79,325
133,029
108,083
17,820
17,204
35,024
5,257
2,265
7,522
98,005
100,561
155,811
17,293
(75,099)
98,005
155,811
758
(56,008)
100,561
13,566
-
13,566
15,689
-
15,689
With the exception of matters noted in Notes 20 and 21, there were no contingent liabilities, guarantees or capital
commitments of the parent entity not otherwise disclosed in these financial statements.
74
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
NOTE 24. PARTICULARS RELATING TO CONTROLLED ENTITIES
(a) Group accounts include a consolidation of the following:
Entity
SRG Global Limited(1)
Controlled companies
CASC Contracting Pty Ltd
Gallery Facades (SA) Pty Ltd
GCS Hire Pty Ltd
GCS Personnel Services Pty Ltd
GCS Secured Pty Ltd
GCS Summit Pty Ltd
Paragon Glass (VIC) Pty Ltd
Paragon Glass Pty Ltd
SRG Global Assets Pty Ltd(1)
SRG Global CASC Pty Ltd(1)
SRG Global Contracting Pty Ltd(1)
SRG Global Facades (NSW) Pty Ltd(1)
SRG Global Facades (QLD) Pty Ltd(1)
SRG Global Facades (VIC) Pty Ltd(1)
SRG Global Facades (WA) Pty Ltd(1)
SRG Global Facades (Western) Pty Ltd(1)
SRG Global Facades Pty Ltd(1)
SRG Global Industrial Services Pty Ltd(1)
SRG Global Integrated Services Pty Ltd(1)
SRG Global Investments Pty Ltd(1)
SRG Global Structures (VIC) Pty Ltd(1)
SRG Global Structures (WA) Pty Ltd(1)
Acquired as part of reverse acquisition on 28/08/2018
Crow Refractory Limited
Meridian Concrete Australia Pty Ltd
Red Ore Drill and Blast Pty Ltd
Rock Engineering (Aust) Pty Ltd
Rock International Mining & Civil Pty Ltd
SRG Contractors Abu Dhabi LLC(2)
SRG Contractors DB LLC(2)
SRG Contractors Doha LLC(2)
SRG Contractors Muscat LLC(2)
SRG Contractors NZ Limited
SRG Contractors US, Inc.
SRG Employee Share Trust
SRG Global (Australia) Limited(1)
SRG Global Building (Northern) Pty Ltd(1)
SRG Global Building (Southern) Pty Ltd(1)
SRG Global Building (Western) Pty Ltd(1)
SRG Global Civil Pty Ltd(1)
SRG Global Corporate (Australia) Pty Ltd(1)
SRG Global International Holdings Pty Ltd(1)
SRG Global IP Pty Ltd(1)
SRG Global Mining (Australia) Pty Ltd(1)
SRG Global Products Pty Ltd(1)
SRG Global Services (Australia) Pty Ltd(1)
SRG Global Services (Western) Pty Ltd(1)
SRG Hong Kong Limited
SRG International Holdings Pte. Ltd.
SRG South Africa (Pty) Ltd
Structural Rock Group Canada
Structural Systems (Bridge Maintenance) Pty Ltd
Structural Systems (Construction) Pty Ltd
T.B.S. Coatings Limited
TBS Farnsworth Limited
TBS Group Limited
TBS Remcon Limited
Total Bridge Services Limited
Total Fire Protection Pty Ltd
Country of
Incorporation
Australia
Principal Activity
Corporate Services
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Construction
Construction
Asset Services
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Asset Services
Construction
Construction
Construction
New Zealand
Australia
Australia
Australia
Australia
United Arab Emirates
United Arab Emirates
Qatar
Oman
New Zealand
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Singapore
South Africa
Canada
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Asset Services
Dormant
Dormant
Dormant
Dormant
Construction
Construction
Construction
Construction
Construction
Construction
Trust
Corporate Services
Construction
Construction
Construction
Construction
Corporate Services
Dormant
Corporate Services
Mining Services
Construction
Asset Services
Asset Services
Construction
Construction
Construction
Construction
Dormant
Construction
Asset Services
Asset Services
Asset Services
Asset Services
Asset Services
Dormant
Notes to the Financial Statements
Ownership Interest Held by
the Group
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
(1) Controlled entities subject to ASIC Corporation (Wholly-owned Companies) Instrument 2016/785
(2) In accordance with current foreign ownership restrictions in the United Arab Emirates (UAE), these entities have a 51% participation
by UAE Nationals. This participation incurs a fixed fee and has no right to the profits or liability for the debts of the entity.
75
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 24. PARTICULARS RELATING TO CONTROLLED ENTITIES (CONTINUED)
Pursuant to ASIC Corporation (Wholly-owned Companies) Instrument 2016/785, relief has been granted to these controlled entities of
SRG Global Limited from the Corporations Act 2001 requirements for preparation, audit and publication of accounts. As a condition
of the ASIC Corporation (Wholly-owned Companies) Instrument 2016/785, SRG Global Limited and the controlled entities should
become parties to a Deed of Cross Guarantee, also known as “The Closed Group”. The effect of the deed is that SRG Global Limited
has guaranteed to pay any deficiency in the event of winding up of these controlled entities. The controlled entities have also given a
similar guarantee in the event that SRG Global Limited is wound up. The deed was made on 21 June 2019. A revocation deed was also
made on 21 June 2019 for parties that were in the previous Deed of Cross Guarantee prior to the GCS and SRG merger.
The following are the consolidated totals for the Closed Group relieved under the deed:
2019
$’000
2018
$’000
Financial information in relation to:
Statement of profit or loss and other comprehensive income:
Profit before income tax
Income tax benefit / (expense)
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Statement of financial position:
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Contract assets
Prepayments
Equity accounted investments
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Related party loan receivables
Investments
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current borrowings
Current provisions
Contract liabilities
Derivative financial instrument liability
Current tax liabilities
Total current liabilities
Non-current liabilities
Non-current borrowings
Non-current provisions
Related party loan payables
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
76
4,228
(2,020)
2,208
-
2,208
50,532
55,941
11,942
36,801
3,023
957
159,196
62,414
110,266
92,453
26,912
27,572
319,617
478,813
74,778
21,222
18,274
12,534
54
598
127,460
24,880
9,475
25,692
60,047
187,507
291,306
209,395
8,914
72,997
291,306
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 24. PARTICULARS RELATING TO CONTROLLED ENTITIES (CONTINUED)
(b) Joint operations
The Company’s subsidiary, TBS Farnsworth, has a 50% share of Total Bridge Services, a joint operation with Opus
International Consultants Ltd and Fulton Hogan Ltd. The principal activity of which is maintaining the Auckland
Harbour Bridge.
(c) Joint ventures
Set out below are the joint ventures of the Group as at 30 June 2019 which, in the opinion of the Directors, are material
to the Group.
Margaret River Perimeter Road Project (a)
Bolivia Hill Project (a)
Traylor SRG, LLC (b)
(a) Unincorporated Joint Ventures in Australia
(b) Incorporated Joint Venture in United States.
Place of
business
Australia
Australia
United States
% of ownership
interest
Measurement
method
Carrying amount
$’000
50%
50%
50%
Equity Method
Equity Method
Equity Method
-
957
142
77
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 25. BUSINESS COMBINATION
(a) Merger of GCS and SRG
On 28 August 2018, GCS completed the legal acquisition of SRG and its controlled subsidiaries by acquiring 100% of
the share capital of SRG through a scrip for scrip arrangement, 2.479 GCS shares for each SRG share. The proportional
shareholdings between GCS and SRG on completion of the transaction was GCS 50.8% and SRG 49.2% of the
combined entity. Control was deemed to have been obtained on 1 September 2018:
-
-
-
-
The Scheme of Arrangement (Scheme) was approved by all relevant parties;
All conditions precedent detailed in the Scheme were satisfied or waived;
Even though the merged group Board was not appointed until 11 September 2018, SRG had the right to appoint
four of the seven board members as of 28 August 2018; and
Administration time required to implement the Scheme was finalised 1 September 2018.
Accordingly, under the terms of the merger:
-
-
-
-
GCS became the legal parent of SRG;
The assets and liabilities of the legal subsidiary, SRG, are recognised and measured at their pre-combination
carrying amounts;
The retained earnings and other equity balances recognised in the consolidated financial statements are the
retained earnings and other equity balances of the legal subsidiary (SRG) immediately before the business
combination;
The amount recognised as issued equity is determined by adding the issued equity of the legal subsidiary
immediately before the business combination at the fair value of the legal parent. However, the equity structure
reflects the equity structure of the legal parent including the equity instruments issued by the legal parent to
effect the combination; and
-
SRG became the legal subsidiary of GCS.
(b) Accounting and disclosure implications of the merger
Under accounting standard AASB 3 Business Combinations, the merger of GCS and SRG has been accounted for as a
reverse acquisition.
Where two or more entities combine through an exchange of equity interest for the purposes of business combination,
AASB 3 requires one of the entities to be deemed as the acquirer. SRG is deemed as the acquirer for accounting
purposes given relative voting rights, equity exchange terms, composition of Board and Management.
The implications of the reverse acquisition of GCS by SRG are:
-
-
-
-
SRG for accounting purposes is deemed to be the parent company;
The 30 June 2019 full year information reflects the newly combined group of SRG and GCS;
Comparative financial information reflects the financial performance and financial position of SRG only; and
In accordance with accounting guidance, the consideration that SRG is deemed to have paid for GCS is the
market value of GCS equity at the date of merger, which was $148,780,000. This consideration has been
allocated to the fair values of GCS intangible and tangible assets, liabilities and contingent liabilities.
A new equity account is created as a component of equity. This account is called “Reverse acquisition reserve” and
is similar to the nature of the share capital and is not available for distribution. The equity account represents a net
adjustment of the legal parent’s equity (GCS) with that of the deemed acquirer (SRG). Comparative information
presented in those financial statements also is retroactively adjusted to reflect the legal capital of the legal parent.
78
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 25. BUSINESS COMBINATION (CONTINUED)
(c) Summary of acquisition
The assets and liabilities provisionally recognised as a result of the acquisition are as follows:
Assets
Cash and cash equivalents
Inventories
Trade and other receivables
Contract assets
Other current assets
Current tax assets
Property, plant & equipment
Intangible assets
Deferred tax assets
Total assets
Liabilities
Trade and other payables
Borrowings
Provisions
Contract liabilities
Total liabilities
Net assets acquired
Goodwill arising on acquisition(1)
Total purchase consideration(2)
Fair Value
$’000
39,215
735
37,222
1,753
3,344
442
25,109
26,275
16,226
150,321
30,734
3,634
36,677
4,547
75,592
74,729
74,051
148,780
From the date of acquisition, GCS has contributed $190,888,149 of revenue and $1,031,144 of net profit before tax of the
Group.
(1) Goodwill arising on acquisition
The goodwill is not deductible for tax purposes and is attributable to the established workforce and future profitability
of GCS. Subsequent to the business combination accounting, goodwill becomes subject to impairment testing at least
annually, or if and when there are indicators that goodwill may be impaired. Goodwill has been subject to impairment
test for the period ended 30 June 2019. The accounting standards allows for a restatement window of up to 12 months
following the acquisition date. This allows time to gain access to and consolidate information for both entities to make
certain valuations as at the acquisition date.
(2) Purchase consideration
No contingent consideration arrangements or indemnification assets have been recognised as a result of the
transaction.
79
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 26. RELATED PARTY INFORMATION
(a) Subsidiaries
Interest in subsidiaries are set out in Note 24.
(b) Key Management Personnel compensation
Key Management Personnel compensation is disclosed in Note 6.
In addition during the financial year, the following type of transactions have also been entered into with key
management personnel of the Group.
(c) Transactions with related parties
Sales of goods and services to entities controlled by key management personnel
Purchase of goods and services from entities controlled by key management personnel
2019
$
5,213,118
523,546
2018
$
-
126,000
(d) Outstanding balances arising from sales / purchases of goods and services with related parties as at reporting date
Current receivables (sales of goods and services)
Current payables (purchases of goods and services)
2019
$
552,538
-
2018
$
-
-
No provisions have been raised in relation to any outstanding balances, and no expense has been recognised in respect
of bad or doubtful debts due from related parties.
NOTE 27. EVENTS SUBSEQUENT TO REPORTING DATE
No other matters or circumstances have arisen since the end of this financial year other than the final fully franked dividend
declared on 27 August 2019, which have significantly affected or may significantly affect the operations, the results of those
operations, or the state of affairs of the consolidated group in future financial years.
NOTE 28. SEGMENT RESULTS
Description of segments
Management has determined that strategic decision making is facilitated and enhanced by evaluation of operations on the
customer segments of Construction, Asset Services and Mining Services. For each of the strategic operating segments, the
Managing Director reviews internal management reports on a regular basis.
The Group is managed primarily on the basis of product category and service offerings as the diversification of the Group’s
operations have inherently different risk profiles and performance assessment criteria. Operating segments are therefore
determined on the same basis.
The following summary describes the operation in each of the Group’s reportable segments:
Construction segment
Our operations in the Construction segment consist of supplying integrated products and services to customers
involved in the construction of complex infrastructure. These typically include bridges, dams, office towers, high rise
apartments, shopping centres, hotels, car parks, recreational buildings, and hospitals. Contracts are typically medium to
long term.
Asset Services segment
Our operations in the Asset Services segment consist of supplying integrated services to customers across the entire
asset life cycle. Services provided span multiple sectors including oil and gas, energy, major infrastructure, offshore,
mining, power generation, water treatment plants, commissioning, decommissioning, shutdowns, and civil works.
Contracts vary in length from short to long term.
Mining segment
The mining segment services mining clients and provides comprehensive ground solutions including production drilling,
ground and slope stabilisation, design engineering and monitoring services. Contracts vary in length from short to long
term.
80
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 28. SEGMENT RESULTS (CONTINUED)
The Managing Director assesses the performance of the operating segments based on a measure of adjusted EBITDA. This
measurement excludes certain non-recurring expenditures which are of an isolated nature such as equity settled share based
payments and corporate activities pertaining to the overall Group including the treasury function which manages the cash
and funding arrangements of the Group. During the financial year, no customer has contributed more than 10% of the total
revenue for the Group.
Segment information provided to the Managing Director for the year ended 30 June 2019 is as follows:
Segment revenues and results
30 June 2019
Construction revenue
Services revenue
Revenue from external customers
EBITDA
Depreciation
Amortisation
Finance costs
Equity accounted investment
results
Profit before income tax
Income tax benefit / (expense)
Profit after income tax
30 June 2018
Construction revenue
Services revenue
Revenue from external customers
EBITDA
Depreciation
Amortisation
Finance costs
Equity accounted investment
results
Profit before income tax
Income tax benefit / (expense)
Profit after income tax
Construction
$’000
Asset
Services
$’000
Mining
Services
$’000
Corporate
$’000
268,003
-
268,003
8,905
(1,846)
(3,573)
(51)
522
-
135,820
135,820
15,514
(2,208)
(3,048)
109
-
-
82,568
82,568
11,179
(4,341)
-
(554)
-
-
-
-
(11,912)
(1,103)
-
(849)
-
3,957
10,367
6,284
(13,864)
120,090
-
120,090
5,225
(2,034)
-
-
1,011
4,202
-
41,899
41,899
4,735
(552)
(92)
-
-
-
76,801
76,801
13,676
(4,151)
-
-
-
-
430
430
(15,397)
(191)
-
(628)
-
4,091
9,525
(16,216)
Total
$’000
268,003
218,388
486,391
23,686
(9,498)
(6,621)
(1,345)
522
6,744
2,675
9,419
120,090
119,130
239,220
8,239
(6,928)
(92)
(628)
1,011
1,602
(409)
1,193
81
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 28. SEGMENT RESULTS (CONTINUED)
Segment assets and liabilities
Construction
$’000
Asset Services Mining Services
$’000
$’000
Corporate
$’000
30 June 2019
Segment assets
Segment liabilities
30 June 2018
Segment assets
Segment liabilities
214,032
89,173
73,490
37,660
119,917
38,436
54,394
15,583
44,711
24,738
42,245
24,804
Total
$’000
430,638
177,910
51,978
25,563
30,649
9,043
200,778
87,090
Revenue from external customers
Australia
International
Group
2019
$’000
401,233
2018
$’000
184,880
2019
$’000
85,158
2018
$’000
54,340
2019
$’000
486,391
2018
$’000
239,220
NOTE 29. FINANCING ARRANGEMENTS
The consolidated Group has access to the following lines of credit:
Total facilities available
Bank overdraft (1)
Hire purchase facility (1)
Other facilities (1)
Bank guarantee facility (1)
Surety bond facility(2)
Facilities used at the end of the reporting period:
Bank overdrafts (1)
Hire purchase facility (1)
Other facilities (1)
Bank guarantee facility (1)
Surety bond facility (2)
Facilities not used at the end of the reporting period:
Bank overdrafts (1)
Hire purchase facility (1)
Other facilities (1)
Bank guarantee facilities (1)
Surety bond facility(2)
2019
$’000
2018
$’000
1,500
69,852
29,900
20,550
176,415
298,217
-
22,226
28,743
16,630
55,696
123,295
1,500
47,626
1,157
3,920
120,719
174,922
1,500
20,860
5,900
9,240
119,710
157,210
-
15,809
4,066
7,770
16,745
44,390
1,500
5,051
1,834
1,470
102,965
112,820
(1) Multi-option facility
The multi-option facility is a comprehensive borrowing facility which includes bank overdraft, hire purchase, letter of credit,
corporate credit card and bank guarantees.
(2) Surety bonds
The Group has an insurance bond facility with various parties. This facility has been utilised to provide security in connection
with certain projects.
The carrying amount of assets pledged as first security against these facilities are disclosed in Note 15.
82
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 30. FINANCIAL INSTRUMENTS
Significant accounting and risk management policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset and
financial liability are disclosed in Note 1 to the financial statements.
Treasury risk management
The Group’s activities expose it to a variety of financial risk, market risk (including currency risk, interest rate risk and other
price risk), credit risk and liquidity risk. Management, consisting of senior executives of the Group meet on a regular basis
to analyse risk exposure, and to evaluate treasury management strategies in the context of the most recent economic
conditions and forecasts. Risk management is carried out by the Board of Directors, who evaluate and agree upon risk
management policies and objectives.
The Group uses different methods to measure different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate and aging analysis for credit risk.
(a) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group
manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast
and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group’s financial
arrangements are disclosed in Note 29. Maturity of the Group’s financial liabilities are as follows:
2019
Borrowings
Hire purchase liabilities
Trade and other payables
2018
Borrowings
Hire purchase liabilities
Trade and other payables
(b) Price risk
1 year or less
1 - 2 years
2 - 5 years
$’000
$’000
$’000
More than
5 years
$’000
Total cash
flow
$’000
Carrying
amount
$’000
14,014
8,063
84,113
3,117
7,329
-
106,190
10,446
15,629
5,114
40,330
61,073
-
4,687
-
4,687
8,571
6,883
-
15,454
-
5,481
-
5,481
-
-
-
-
-
-
-
-
25,702
22,275
84,113
132,090
15,629
15,282
40,330
71,241
24,739
21,363
84,113
130,215
15,000
14,611
40,330
69,941
The Group is exposed to commodity price risk through its consumption of steel its operations use for post-tensioning,
and to a lesser degree in the mining services business. The Group monitors forward steel prices and endeavors to lock
in agreed prices on a project by project basis prior to formalising bid prices wherever possible. As at 30 June 2019, the
Group held no financial instruments that could vary according to changes in the price of steel (2018: Nil).
83
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 30. FINANCIAL INSTRUMENTS (CONTINUED)
(c) Foreign exchange risk
Foreign currency risk is the risk that the value of a financial commitment, a recognised asset or liability will fluctuate
due to changes in foreign currency rates. The Group is exposed to foreign exchange risk in abroad projects executed
by local subsidiaries. The Group does not hedge this risk however continues to monitor exchange rates so that
currency exposure is maintained at an acceptable level. There is a natural hedge in place to the extent project costs are
materially of the same foreign currency.
The major exchange rates relevant to the Group are as follows:
Average year ended
30/06/2019
As at
30/06/2019
Average year ended
30/06/2018
As at
30/06/2018
AUD$ / USD$
AUD$ / ZAR$
AUD$ / AED$
AUD$ / HKD$
AUD$ / NZD$
0.72
10.14
2.63
5.61
1.07
0.70
9.85
2.58
5.48
1.05
0.77
9.96
2.85
6.06
1.08
The Group’s exposure to foreign exchange risk at reporting date was as follows, based on carrying amounts in
AUD$’000:
2019
Cash and cash equivalents
Trade and other receivables
Trade and other payables
2018
Cash and cash equivalents
Trade and other receivables
Trade and other payables
AUD$
$’000
50,529
54,576
(74,783)
30,322
AUD$
$’000
21,964
27,354
(26,940)
22,378
USD$
$’000
7
1,666
(1,752)
(79)
USD$
$’000
18
693
(2,478)
(1,767)
ZAR$
$’000
3
1,365
-
1,368
ZAR$
$’000
1,213
3,833
-
5,046
AED$
$’000
2,344
5,488
(2,531)
5,301
AED$
$’000
307
6,056
(2,839)
3,524
HKD$
$’000
-
12
(317)
(305)
HKD$
$’000
349
10
-
359
NZD$
$’000
5,397
7,476
(4,730)
8,143
NZD$
$’000
5,862
9,834
(8,073)
(40,330)
7,623
37,163
Based on the carrying amounts exposed to foreign currencies, had the Australian dollar weakened by 5% /
strengthened by 5% (2018: weakened by 5% / strengthened by 5%) against these foreign currencies with all other
variables held constant, the Group’s profit or loss would have been $759,350 lower / $687,031 higher (2018: $1,241,579
lower / $1,123,333 higher). The percentage change is the expected overall volatility of the significant currencies, which is
based on management’s assessment of reasonable possible fluctuations taking into consideration movements over the
last financial year and the spot rate at each reporting date.
84
0.74
10.14
2.71
5.80
1.09
Total
$’000
58,280
70,583
(84,113)
44,750
Total
$’000
29,713
47,780
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 30. FINANCIAL INSTRUMENTS (CONTINUED)
(d)
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long term debt
obligations that have floating interest rates. The Group has a mixture of variable and fixed interest rate financial
instruments to manage its interest cost.
The Group’s exposure to interest rate risk, effective weighted average interest rate, contractual settlement terms of a
fixed period of maturity as well as management’s expectation of settlement period for financial instruments are set out
below.
2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Derivative
2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative
Financial liabilities
Trade and other payables
Borrowings
Weighted
Average
Interest
Rate
Floating
Interest
Rate
Fixed Interest Rate Maturing Within
1 year
or less
Over 1 year
to 5 years
More than
5 years
Non-interest
bearing
%
$’000
$’000
$’000
$’000
$’000
Total
$’000
1.15
-
58,280
-
58,280
-
-
-
-
-
-
-
-
-
-
3.89
(24,250)
(8,193)
(13,659)
-
-
-
-
(24,250)
(8,193)
(13,659)
-
-
-
-
-
-
-
-
70,583
70,583
58,280
70,583
128,863
(84,113)
(84,113)
-
(46,102)
(54)
(54)
(84,167)
(130,269)
Weighted
Average
Interest
Rate
Floating
Interest
Rate
Fixed Interest Rate Maturing Within
1 year
or less
Over 1 year
to 5 years
More than
5 years
Non-interest
bearing
%
$’000
$’000
$’000
$’000
$’000
Total
$’000
1.16
26,214
-
-
-
-
-
26,214
-
-
-
-
-
-
-
-
-
-
-
4.19
(15,000)
(15,000)
(4,903)
(4,903)
(9,748)
(9,748)
-
-
-
-
-
-
-
3,499
29,713
47,780
47,780
529
529
51,808
78,022
(40,330)
(40,330)
-
(29,651)
(40,330)
(69,981)
As at 30 June 2019, a sensitivity analysis has not been disclosed in relation to the floating interest deposits for the Group as
the net results of a reasonable possible change in interest rates have been determined to be immaterial to the statement of
profit or loss and other comprehensive income.
85
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 30. FINANCIAL INSTRUMENTS (CONTINUED)
(e) 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, foreign exchange transactions
and other financial instruments. The maximum credit risk exposed by the Group is in relation to cash, trade receivables
and contract assets amounting to $176,325,000 as at the end of the reporting period (2018: $102,727,000).
As a result of the diverse range of services and geographical spread covered by the Group, the Group does not have
a concentration of credit risk to any one customer. Whilst the Group does have a broad risk to lead contractors in the
construction industry generally, this is managed on a ‘customer by customer’ basis, taking into account ratings from
credit agencies, trade references and payment history where there is a pre-existing relationship with that entity. The
compliance with credit limits by customers is regularly monitored by management. The credit risk on liquid funds and
derivative financial instruments is limited because majority of the counterparties are banks with high credit ratings (A+
or higher) assigned by international credit-rating agencies.
The Group has established a loss allowance of trade receivables at an amount equal to lifetime expected credit losses
(ECL). The ECLs on trade receivables are estimated using a provision matrix based on historical credit loss experience
and any available forward-looking estimates available as at reporting date.
Set out below is the information about the credit risk exposure at 30 June 2019 on the Group’s trade receivables for
which lifetime expected credit losses are recognised:
30 June 2019
Expected credit loss rate
Current
0.02%
<31 Days
0.23%
31-60 Days
61-90 Days
1.00%
2.43%
Days Past Due
Based on the above credit loss rates and applying the rates against the total gross carrying amount of the trade
receivables, the total estimated gross carrying amount at default does not have a material impact to the profit or loss of
the Group. Other balances within trade and other receivables at 30 June 2019 did not contain impaired assets and were
not past due. It is expected that these other balances would be received when due.
The aging of trade receivables past due but not considered impaired and a reconciliation in ECL allowance is as follows:
Ageing of past due but no ECL allowance provided for
60-90 days
90+ days
An ECL allowance has not been provided for as the Group expects these trade
receivables to be collectible.
Movement in ECL allowance provided for receivables
At 1 July 2018 - calculated under AASB 139
Amounts restated through opening retained earnings
Opening loss allowance as at 1 July 2018 - calculated under AASB 9
Increase in loss allowance recognised in profit or loss during the period
Receivables written off during the period as uncollectable
Unused amount reversed
Acquisition of subsidiary
Closing balance as at 30 June 2019
2019
$’000
2018
$’000
4,429
3,184
7,613
(747)
(2,283)
(3,030)
(114)
329
228
(937)
(3,524)
1,183
2,761
3,944
(287)
-
(287)
(368)
24
116
(232)
(747)
The ECLs on other short-term receivables are recognised in two stages. For those with credit exposures for which there
has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result
from default events that are possible within the next 12 months (a 12-month ECL). For those with credit exposures for
which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit
losses expected over the remaining life of exposure, irrespective of the timing of the default (a lifetime ECL).
To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on
the asset as at the reporting date with the risk of default as at the date of initial recognition. In making this assessment,
the Group considers the best available current information, including historical knowledge and forward-looking
information.
86
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 30. FINANCIAL INSTRUMENTS (CONTINUED)
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial
difficulty and there is no realistic prospect of recovery. 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.
(f) Fair value
Net fair values of financial assets and liabilities are determined by the consolidated group on the following basis:
Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined
by valuing them at the present value of contractual future cash flows or amounts due from customers (reduced for
expected credit losses) or due to suppliers. Cash flows are discounted using standard valuation techniques at the
applicable market yield having regard to the timing of cash flows. With the exception of the fair value differences
arising on the Group’s fixed interest rate, as discussed in the analysis of interest rate risk above, the carrying amounts of
all financial instruments disclosed above are at their approximate net fair values.
AASB 13 Fair Value Measurements: Disclosures requires disclosure of fair value measurements by level of the following
fair value measurement hierarchy:
(i)
(ii)
quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices) (Level 2)
(iii)
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3)
The following table presents the Group’s financial assets and liabilities measured and recognised at fair value.
2019
Financial assets
Derivative
Financial liabilities
Derivative
Provisions
2018
Financial assets
Derivative
Financial liabilities
Other payables
Level 1
$’000
Level 2
$’000
-
-
-
-
-
(54)
-
(54)
Level 3
$’000
-
-
(5,620)
(5,620)
Total
$’000
-
(54)
(5,620)
(5,674)
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
529
-
529
-
-
-
529
-
529
There were no transfers between levels during the period. The Group’s policy is to recognise transfers into and out of
fair value hierarchy levels as at the end of the reporting period.
87
FOR THE YEAR ENDED 30 JUNE 2019SRG GLOBAL 2019 ANNUAL REPORT Shareholder Information
Shareholder Information
Additional ASX Information
This additional ASX information is required to be included in this Annual Report by ASX under Listing Rule 4.10. This information is
not provided elsewhere in this report and is applicable as at 20 August 2019.
Ordinary share capital
SRG Global Limited’s issued share capital is comprised of 440,415,099 fully paid ordinary shares, held by 4,081 individual
shareholders. At any meeting of shareholders fully paid ordinary shares carry one vote per share and the rights to dividends.
Distribution of shareholders and their holdings
Number of holders
Ordinary shares
Size of holding
1 to
1,000
340
121,186
1,000, to
5,000
956
5,001 to
10,000
633
10,001 to
100,000
1,809
100,001 to
(MAX)
343
Total
4,081
2,727,484
5,004,788
62,158,137
370,403,504
440,415,099
There were 340 holders with less than a marketable parcel of fully paid ordinary shares.
Substantial holders
The number of shares held by substantial holders, as disclosed in substantial shareholding notices provided to the Company are set
out below:
Shareholder
Perennial Value Management Limited
Mitsubishi UFG Financial Group, Inc(1)
Number of ordinary shares
65,426,019
38,352,278
103,778,297
(1) On 6 August 2019 Carol Australia Holdings Pty Ltd provided a Notice of Initial Substantial Shareholder (Form 603) to the Company. The ordinary
shares held by Carol Australia Holdings Pty Ltd are included within the holding of Mitsubishi UFG Financial Group, Inc as set out above.
Twenty largest shareholders
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ZERO NOMINEES PTY LTD
SANDHURST TRUSTEES LTD
BNP PARIBAS NOMS PTY LTD
PRIMETOWN PTY LTD
MR DAVID MACGEORGE
BNP PARIBAS NOMINEES PTY LTD
CASC SERVICES PTY LTD
BNP PARIBAS NOMS (NZ) LTD
CUTTERS 1 PTY LTD
DEAKIN PLACE PTY LTD
GULRIDJE PTY LTD
EQUITAS NOMINEES PTY LIMITED
MR ROGER LEE
EQUITAS NOMINEES PTY LIMITED
LUFORM PTY LTD
AUST EXECUTOR TRUSTEES LTD
Unlisted Equity Securites
There are no unlisted equity securities on issue.
Percentage of issued capital
Number of ordinary shares
11.7%
7.0%
5.9%
4.2%
3.5%
2.7%
2.4%
2.3%
1.9%
1.5%
1.4%
1.2%
1.1%
1.1%
1.1%
0.9%
0.9%
0.9%
0.9%
0.9%
51,652,549
30,826,170
26,128,091
18,504,249
15,289,816
11,951,826
10,564,518
10,042,086
8,164,075
6,585,489
6,297,612
5,130,626
5,020,353
5,020,353
4,898,633
4,017,518
3,959,751
3,543,874
3,486,444
3,469,195
Voting rights
Shareholders are encouraged to attend the Annual General Meeting. However, when this is not possible, they are encouraged to use
the form of Proxy by which they can express their views on matters being brought forward at the meeting. Every shareholder, proxy
or shareholder’s representative has one vote on a show of hands. In the case of a poll, each share held by every shareholder, proxy
or representative is entitled to one vote for each fully paid share.
Dividend reinvestment plan
The company does not have a dividend reinvestment plan.
88
SRG GLOBAL 2019 ANNUAL REPORT Corporate Directory
Corporate Directory
Directors
Peter Wade
Peter McMorrow
David Macgeorge
Enzo Gullotti
Peter Brecht
Michael Atkins
John Derwin
Non-Executive Chairman
Non-Executive Deputy Chairman
Managing Director
Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company secretary
The company secretaries are Roger Lee and Paul Hegarty.
Registered office
The registered office of the Company is:
Level 1, 338 Barker Road, Subiaco, Western Australia 6008
Telephone:
Facsimile:
Website:
+61 8 9267 5400
+61 8 9267 5499
www.srgglobal.com.au
Stock exchange listing
SRG Global shares are listed on the Australian Securities Exchange. Home exchange is Perth.
Share register
If you have any questions in relation to your shareholding, please contact our share registry:
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace, Perth, Western Australia 6000
Telephone:
Facsimile:
Please include your Shareholder Reference Number (SRN) or Holder Identification Number (HIN) in all correspondence to
the share registry.
+61 3 9415 4631
+61 3 9473 2500
Incorporation
SRG Global is incorporated in the state of Western Australia
Auditors
BDO Audit (WA) Pty Ltd
Bankers
National Australia Bank
Commonwealth Bank of Australia
89
SRG GLOBAL 2019 ANNUAL REPORT
srgglobal.com.au
CORPORATE HEAD OFFICE
Level 1, 338 Barker Rd
Subiaco WA 6008
+61 8 9267 5400
info@srgglobal.com.au