2020
ANNUAL
REPORT
FOR THE YEAR ENDING 30 JUNE 2020
ABN: 81 104 662 259
Contents
Operating Segments
Chairman’s Report
Managing Director’s Report
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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Making the
complex simple
SRG Global is an engineering-led specialist asset services, mining
services and construction group built to solve complex problems
across the entire asset lifecycle.
SRG Global Model
WHO WE ARE
We’re an engineering-led
specialist asset services,
mining services and
construction group
OPERATING
MODEL
End-to-end solutions
across the entire asset
lifecycle
OUR VISION
Building the most sought-
after specialist asset
services, mining services
and construction business
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SRG GLOBAL 2020 ANNUAL REPORT
Operating Segments
ASSET
SERVICES
Sustaining complex
infrastructure
Annuity Earnings
MINING
SERVICES
Comprehensive
ground solutions
Annuity Earnings
CONSTRUCTION
Constructing complex
infrastructure
Project Based Earnings
SRG GLOBAL 2020 ANNUAL REPORT
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ASSET SERVICES
Sustaining complex infrastructure
SPECIALIST
MAINTENANCE
Highly skilled specialist
maintenance services focusing
on refractory, oil and gas,
industrial assets and transport
and marine infrastructure
ACCESS
SOLUTIONS
Comprehensive structural
and technical access solutions
targeting the mining and
resources, oil and gas, offshore
marine and industrial locations
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SRG GLOBAL 2020 ANNUAL REPORT
Making the maintenance,
restoration & access of
critical assets easier
SRG Global’s Asset Services division had the highest growth and
was the highest earning segment within the Group during FY20,
underpinned by a significant and growing number of term contracts.
What we do
We bring engineering know-how, the skilled
workforce and the access solutions to make
sustaining buildings, structures and industrial
plant easier.
We not only come up with smart solutions to your
asset maintenance and repair challenges, we also
do the work – diagnosing, protecting, cleaning,
repairing, strengthening and monitoring buildings,
structures and industrial plant.
This means asset owners only have to deal with
just one contractor, which significantly reduces
the time and complexity of the task. SRG Global
is a contractor with the diverse technical know-
how, the workforce and all the access equipment
needed to sustain or extend the life of any critical
asset.
Key clients
SPECIALIST MAINTENANCE
Fixed Plant Maintenance
O Mechanical, Electrical, Plumbing, Shutdowns
Industrial Services
O Industrial cleaning, Paint & Blast, Non-
Destructive Testing, Insulation and Lagging
Refractory
O Installation of refractory, gunning and
casting of refractory products, installation of
refractory anchors
Remediation
O Protective coatings, waterproofing, concrete
repair and strengthening
ACCESS SOLUTIONS
Access Solutions
O Scaffold hire, scaffold installation, rope access,
material hoists
Key projects
Multi-disciplinary works
Alcoa Alumina
Kwinana WA
Refractory works
Whyalla Steelworks
Whyalla SA
Jetty remediation works
Green Island, Great Barrier
Reef Cairns QLD
Specialist Infrastructure
Maintenance Transpower
New Zealand
SRG GLOBAL 2020 ANNUAL REPORT
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MINING SERVICES
Comprehensive ground solutions
PRODUCTION
DRILL & BLAST
Integrated range of
complementary production
drill & blast services working
across multiple commodities
including gold, precious metals
and iron ore
SPECIALIST
GEOTECH
Highly technical specialist
ground and slope stabilisation
services for all mining services
applications
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SRG GLOBAL 2020 ANNUAL REPORT
Bringing our full
resources to daily
mining challenges
SRG Global’s Mining Services division focused on innovation and
technology during FY20, offering added value to our tier one client
base. Significant new work was also secured with Saracen at two of
its Western Australian operations.
What we do
PRODUCTION DRILL & BLAST
Drill & Blast
O Production drilling, pre-split drilling, blasting
services, explosives supply & management,
drill and equipment hire
Specialist Drilling
O Reverse circulation grade control, high reach
drilling, geotech specialist drilling, horizontal
depressurisation (dewatering) drilling
SPECIALIST GEOTECH
Geotech Services & Applications
O Rope access services, geotech investigation,
geotech instrument installation, rock
scaling and geotech remediation, rockfall
protection systems, rockfall mesh installation,
shotcreting, rock bolt drilling and installation,
crest pins and soil nails, crusher pocket wall
support, depressurisation, ground support
product manufacture and supply
SRG Global is the only drill and blast contractor
that can also offer an integrated range of
complementary technical services to significantly
improve safety and productivity on a mine site.
Working in the iron ore, gold and precious metals
mining sectors across Australia, SRG Global
brings a uniquely adaptive approach to drilling
and blasting, driven by our engineering heritage.
We are flexible in how we work, execute drilling
programs with precision and respond confidently
to challenges that arise in the open pit each day.
It is part of who we are to continually investigate
safer and more innovative ways of working,
and to re-engineer our machines to optimise
performance for each customer’s mine site and
minimise handling and risks to personnel.
Key clients
Key projects
Drill & Blast works
Saracen Mining
Goldfields WA
Provision of Geotech
services for over 20 Years
at KCGM Superpit WA
Drill & Blast and Geotech
Evolution Mining
Mount Rawdon QLD
Technology & Innovation
Remote Operations Unit
QLD
SRG GLOBAL 2020 ANNUAL REPORT
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CONSTRUCTION
Constructing complex infrastructure
CIVIL &
ENGINEERING
Specialist engineering, post-
tensioning and construction
services for complex structures
in key markets including dams,
bridges, windfarms and tanks
SPECIALIST
BUILDING
Specialist facade and structural
construction and remediation
services with repeat, tier one
clients
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SRG GLOBAL 2020 ANNUAL REPORT
Taking the complexity
out of construction
SRG Global’s Specialist Construction division delivered world-leading
projects globally during FY20, including a number of Government-
backed infrastructure projects.
What we do
SRG Global’s construction team solve problems
around how to construct more efficiently and
cost effectively, providing specialist technical
expertise, innovative technology and equipment
and a highly skilled workforce.
SRG Global’s construction team provide specialist
engineering, post-tensioning and construction
services for complex structures in key markets
including dams, bridges, windfarms and tanks
as well as specialist facade and structural
construction and remediation services with
repeat, tier-one clients.
Decades of experience across all kinds of iconic
infrastructures have allowed us to develop the
innovative techniques and specialised tools
needed to make any infrastructure project less
complex.
Key clients
CIVIL & ENGINEERING
Dam Construction & Strengthening
O Ground anchors, anchor monitoring, temporary
access solutions, slipform construction
Bridge Construction
O Incremental launching, cable stays, segmental,
balanced cantilever, cast insitu post-tensioning
Silo & Tank Construction
O Slipform construction, post-tensioning services
Wind Farm Construction
O Foundation construction, foundation anchors
SPECIALIST BUILDING
Facade Design & Construction
O Curtain wall facade design & certification,
facade installation, cladding replacement
Building Structure Packages
O Post-tensioning engineering,
structural construction
Key projects
Bridge Construction
Bolivia Hill
Bolivia NSW
Dam Strengthening
Fairbairn Dam
Emerald QLD
Structure Package
One The Esplanade
Elizabeth Quay, WA
LNG Tank Construction
Al Zour Import Terminal
Kuwait
SRG GLOBAL 2020 ANNUAL REPORT
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Chairman’s Report
Chairman’s
Report
Delivering on
our strategic
priorities
It is my pleasure to present the 2020 SRG Global Limited Annual Report.
During the 2020 financial year we continued to deliver against our strategic
priorities despite these unprecedented times. We remained focused on
building the most sought-after specialist asset services, mining services
and construction business. The year was not without its challenges, but I
am proud of the way our team responded and the foundation they have
established for business growth well into the future.
UNPRECEDENTED BUSINESS
CONDITIONS
The world has changed significantly
in the last year, with increased
operational uncertainty and greater
market volatility.
Despite these challenges, the SRG
Global business has remained
steadfast in its commitment to deliver
on its strategic priorities.
Continuing to do so, despite the
challenges presented by this
unprecedented global pandemic,
is a testament to the strength and
professionalism of our people.
The Board and I would like to
sincerely thank all our people for their
disciplined approach in navigating
our way through this dynamic
environment and doing so whilst being
true to our core beliefs – live for the
challenge, smarter together, never give
up and have each other’s backs.
ESTABLISHED A SOLID
FOUNDATION FOR GROWTH
The uncertainty caused by COVID-19
led the Board and Executive team to
reflect on what we needed to focus on
in the future.
Through a number of restructuring
initiatives we have now simplified the
business, changed the way that we
operate and reduced the fixed cost
base. David will speak to these in
more detail in his Managing Director’s
Report.
Importantly, it has renewed our focus
on our core business, who we will
partner with and where and how we
will operate. This has ultimately fast
tracked our withdrawal from non-core
businesses.
Pleasingly, the whole SRG Global team
has continued to embrace our core
values throughout these changes.
STRATEGICALLY POSITIONED
During the year SRG Global has taken
significant steps forward in executing
our strategy to transition the business
towards recurring / annuity earning
streams.
This provides a strong foundation and
further growth avenues to leverage our
capability and operational footprint,
enabling us to continue to maximise
our diverse offering with our core and
growing blue-chip client base.
Ultimately this translates to greater
stability and certainty for shareholders
throughout changing economic
conditions. This also provides a
balanced portfolio of recurring /
annuity earnings versus project-based
earnings.
The successful execution of this
strategy ensures that SRG Global will
be disciplined and selective in selecting
the right project-based opportunities
that match our specialist skills and
commercial framework.
The step change growth in recurring
/ annuity earnings during FY20 has
provided an excellent foundation to
successfully target the significant and
imminent infrastructure investment
opportunities, backed by significant
Government stimulus programs.
In the words of our Prime Minster Scott
Morrison, these stimulus programs
are Australia’s way out of the current
economic challenges.
Importantly, through the organisational
changes implemented in FY20, we are
extremely well positioned to secure our
share of these programs.
By the end of FY20 the Federal
Government will have invested more
than $24 billion for infrastructure
across key government portfolios and
looks to invest even more over FY21.
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SRG GLOBAL 2020 ANNUAL REPORT Chairman’s Report
Given our market-leading position in
several areas that will benefit from
Government stimulus programs, SRG
Global is incredibly well positioned for
the years ahead.
We will continue to target these local
stimulus opportunities whilst also
strategically targeting global projects
that match our engineering-led skillset
and capability.
SRG Global is in the strongest position
it has been in my tenure with the
Company. This is due to the successful
transition of the earnings profile of
the business to two thirds recurring /
annuity earnings and one third project-
based.
This is on the back of our key points
of difference in our core markets and
our long-term history and relationships
with our key clients, or as we like to
refer to it – “being the most sought-
after” in what we do.
BOARD AND GOVERNANCE
Consistent with our broader efforts
to simplify the business, we also
streamlined the composition of
the Board during the year, with
directorships being reduced from seven
to four.
We consider the current mix of
experience and skills of the Board to be
appropriate but will continue to review
this on a regular basis moving forward.
OUR FUTURE
The SRG Global business is incredibly
resilient. The changes made during the
year have resulted in a leaner and more
streamlined business that is focused on
capability and operational delivery for
our clients.
Our client portfolio is perhaps stronger
than ever before, with a significant
number of tier-one global businesses
that we continue to act in partnership
with to drive value for their businesses.
In closing, I would like to thank all our
shareholders for their ongoing support
and am confident we will continue to
deliver value for our shareholders well
into the future.
Peter McMorrow
Non-Executive Chairman
WHAT WE
STAND FOR
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.
SRG GLOBAL 2020 ANNUAL REPORT
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Managing Director’s Report
Managing Director’s
Report
Building the most
sought-after specialist
asset services,
mining services and
construction business
The 2020 financial year has been a year like no other. It has tested us as a
Company, the way we operate and what we truly stand for. I could not be
more proud of how our people have responded in a way that is core to SRG
Global – we live for the challenge, are smarter together, never give up and
have each other’s backs. This now has us well positioned for the future.
eight to six
• Reduced the fixed cost base within
both the corporate and business unit
overhead bases
• Exited the fixed cost base in the US
• Scaled back the Building division,
specifically Structures Victoria and
Building Post Tensioning in both
Australia and the Middle East
These actions have also resulted in
a more simplified business with a
reduced fixed cost base and a focus
on core business, core clients and core
geographies. Ultimately, this is intended
to translate to long-term sustainable
growth for shareholders.
Importantly, the Company has
withstood the short-term challenging
market conditions and is now well
positioned for long-term sustainable
growth, with high levels of annuity
earnings, strong exposure to growth
industry sectors and the fast tracking of
Government stimulus in Infrastructure
Construction.
OUR PEOPLE
Navigating through these recent
challenging times has highlighted more
than ever how important our people
are to the success of SRG Global.
I would like to thank each and every
one of the SRG Global team for their
resilience as we have continued to
push forward as a business to become
the most sought-after specialist
asset services, mining services and
construction business.
ZERO HARM
Zero Harm is a journey that never ends.
During the year we continued to invest
in initiatives to drive safety within our
business.
These initiatives include a combination
of leadership programs, training
and education as well as innovative
technology, equipment and process
enhancements.
Pleasingly, our TRIFR improved by 22%
during the year. I will never be satisfied
until it is zero and we will relentlessly
pursue zero harm in everything we do.
DELIVERY OF OUR STRATEGY
SRG Global’s strategy has been to
shift the business towards a greater
proportion of annuity / recurring
earnings versus project-based earnings.
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This strategic priority will ensure that
business earnings are built upon a
stronger foundation underpinned by
a high level of stable and predictable
annuity earnings into the future.
FY20 represented a significant step
change in the execution of our strategy
as we now have more than 20 term
contracts in the group, leveraging our
diverse capability with blue chip clients.
The unfolding COVID-19 pandemic
presented a unique set of challenges
for our business as we were starting to
build real strategic momentum. The
uncertainty it caused made us reflect
on what we needed to focus on in the
future.
To manage these issues SRG Global
implemented a number of actions to
ensure the safety and wellbeing of its
people, continued delivery of services
to customers and cost mitigation
initiatives.
The outcome of these early and
decisive actions is that the Company
remains in a robust financial position
despite softening macro-economic
conditions.
As part of executing on this strategy
a number of restructuring initiatives
were implemented during the year,
including:
• Reduced Board positions from
seven to four
• Reduced Executive positions from
SRG GLOBAL 2020 ANNUAL REPORT Managing Director’s Report
“The Asset Services
Segment experienced
significant growth in
FY20”
OPERATIONAL REVIEW
Asset Services
For FY20 the Asset Services Segment
delivered revenue of $151.9m (2019:
$135.8m) and EBITDA of $18.6m (2019:
$15.5m).
The Asset Service Segment
experienced significant growth in
FY20, underpinned by an expanded
service offering and significant
contract awards.
In January 2020 SRG Global executed
a contract with Alcoa for the provision
of multi-disciplinary maintenance
services over five years at Alcoa’s
Kwinana refinery. Works under the
contract are expected to deliver $90m
of revenue over the contract term.
The delivery of access solutions for
South32 Worsley Alumina continued
during the year. Pleasingly, customer
feedback has been positive which is
critical to our ability to optimise our
site presence through the provision of
additional services.
Operational service delivery at
the North West Shelf Project for
Woodside Petroleum remained strong
during the year, with strong access
equipment utilisation.
During the 2H of FY20 operational
activity levels were impacted by
COVID-19, with clients deferring
non-essential maintenance and major
shut-down work across Australia
and New Zealand. The New Zealand
Asset Services business was further
impacted following a 6-week
Government imposed shut-down for
the majority of industrial operations
Kwinana Alumina Refinery, WA
across the North and South Islands.
The Asset Services business has now
returned to normal levels of operation
in the first quarter of FY21 which is
earlier than anticipated and pleasingly
since the start of this new financial
year we have secured multiple new
term contracts with NZ Transport
Authority (Auckland Harbour Bridge),
Methanex, Meridian Energy and Yara.
We continue to focus on innovation,
technology and data analytics as
a market differentiator across our
service offerings. This is an important
aspect of how we continue to win new
work and as such we will continue to
embrace new technology and insight
to drive improvement and efficiency in
our customers operations.
SRG GLOBAL 2020 ANNUAL REPORT
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Managing Director’s Report
Mining Services
For FY20 the Mining Services Segment delivered revenue of $71.7m
(2019: $82.6m) and EBITDA of $13.9m (2019: $11.2m).
The Mining Services Segment has experienced a very strong
year in FY20. This improvement in EBITDA reflects the additional
value proposition SRG Global offers to its customer base through
innovation and technology solutions including remote operated drill
rigs.
The Specialist Geotech business ceased operating in the civil
infrastructure sector due to the risk profile for this type of service in
this sector. SRG will solely focus on our core expertise and current
work in the mining sector in which SRG Global has operated for
over 30 years. This accounted for the reduction in revenue for this
Segment during the year.
The Segment delivered a consistent operational performance with
strong utilisation across the equipment fleet (>90%).
In the initial stages of COVID-19, SRG Global implemented a number
of early and proactive operational measures to ensure continuity of
service delivery across all operations. These early actions minimised
the impact of COVID-19 on the Production Drill and Blast business.
There was some impact experienced by our Specialist Geotech
business due to site restrictions, but this is expected to normalise in
early FY21.
During FY20 the business secured and commenced a major new
contract with Saracen. The new works are valued at $70m and
includes the provision of specialist drill and blast services, explosives
management and grade control drilling at the Thunderbox and
Carosue Dam operations, both located in Western Australia.
Innovation and technology continued to be a core focus for our
business to deliver value to our clients. We continue to investigate
safer and more innovative ways of working to optimise performance
for each customer’s mine site and minimise handling and risks to our
personnel.
There is a strong pipeline of new opportunities in high quality
commodities such as gold and iron ore, along with targeted
continued growth with key clients / sites.
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SRG GLOBAL 2020 ANNUAL REPORT
Thunderbox Mine Site, WA
Managing Director’s Report
Fairbairn Dam, QLD
Construction
For FY20 the Construction Segment
delivered revenue of $296.4m (2019:
$268.0m) and EBITDA of -$29.9m
(2019: $8.9m).
The Construction Segment delivered a
mixed result for FY20.
The Civil business in Australia had
a very strong year and was largely
unaffected by COVID-19. However,
COVID-19 impacted our International
operations and access to the US,
Middle East and South Africa.
During the year, we restructured the
fixed cost base to manage future
international opportunities from
Australia and scaled back operations in
the Middle East and US. The business
will continue to target specialist
projects in dams, bridges and tanks
globally from Australia
Our specialist capability, particularly
in bridges, tanks and dams means we
are a partner of choice for many of the
projects we secure and we will continue
to be disciplined and selective utilising
our Collaborative Contracting Model
and approach.
Importantly, this particular business has
a positive exposure to an ever-growing
pipeline of opportunities being fast
tracked through Government stimulus
programs.
Structures Victoria and Building Post-
Tensioning were significantly impacted
by COVID-19 due to productivity issues,
along with a challenging operating
environment. Moving forward these
businesses will be scaled back and
focused on key tier-one clients only.
Structures West commenced the $75m
Multiplex project at the end of FY20,
addressing the known carrying cost
issue. There is a strong pipeline of WA
opportunities with Structures West
well positioned as the market leader in
structural construction in the west.
The Specialist Facades business
performed strongly nationally in
FY20 and was largely unaffected
by COVID-19. This is due to its
differentiated business / operating
model which balances operational
delivery risk with our subcontractor
partners. The division has a high level
of secured work, positive pipeline of
opportunities.
The company continues to position
itself to target the flammable cladding
market. However, this is not expected
to have a meaningful impact in the
near term due to uncertainty on the
key issue of who is liable to pay for the
rectification works. This is not a SRG
Global issue or exposure.
SRG GLOBAL 2020 ANNUAL REPORT
15
Managing Director’s Report
FINANCIAL STRENGTH
SRG Global is in a strong liquidity
position with available funds of
$73m, banking facilities not due for
renewal until early FY22 and access to
additional equipment finance facilities.
Operating cashflow in the 2H of FY20
was positive $17.7m. In 1H FY20 a
number of new annuity contracts
and projects commenced (South32,
Liberty OneSteel Whyalla, Facades
and Specialist Civil projects) which
required a significant amount of
working capital investment.
This investment translated to
delivering strong operational cash
flows in the 2H of FY20. In parallel the
Company continued its disciplined
focus on capital management
which contributed to the strong
2H performance despite continued
working capital investment in new
contracts commencing such as
Saracen, Alcoa and Multiplex in WA.
In 2H, SRG Global invested $11m in
both sustaining capital and growth
capital investment for the new
contracts with Saracen and Alcoa
mentioned above.
Total capital expenditure for the year
is $20m, comprised of approximately
$12m of sustaining capital and $8m of
growth capital. This demonstrates our
continued investment in the business
and growth trajectory.
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SRG GLOBAL 2020 ANNUAL REPORT
During the 2H of FY20, SRG Global
made debt repayments of $8.1m,
reflecting our prudent capital
management with a continued focus
on minimising Group gearing levels.
Despite the significant capital
investment mentioned above, the
Company’s net debt position improved
in the 2H to $8.4m, inclusive of $26m
of equipment finance debt (net debt
of $11.4m at 31 December 2019).
SRG Global has undertaken a review
of its intangible asset base in the
Construction Segment in relation to a
scaled back approach in the Building
division. This review resulted in a one-
off non-cash impairment of goodwill
of $24.8m.
Protecting our strong financial position
was a priority during FY20. In March
we made the prudent decision to defer
the 1H FY20 interim dividend of 0.5
cents per share to 29 October 2020.
Pleasingly, due to a positive outlook
and a strong liquidity position, the
Board resolved to bring forward the
payment of the interim dividend to 30
July 2020.
In addition, the Company has also
resolved to pay a final dividend of 0.5
cents per share fully franked, bringing
the full year dividend to 1.0 cents per
share.
Managing Director’s Report
Kalgoorlie Superpit, WA
WELL POSITIONED FOR LONG TERM SUSTAINABLE GROWTH
SRG Global is very well positioned for sustainable growth in FY21 and beyond.
The Company has work in hand of $707m as at 30 June 2020 and has secured a further $200m of new work since 1 July.
SRG Global has a strong pipeline of further opportunities in excess of $6b, with positive exposure to Government backed
Infrastructure investment, high quality commodities, diverse industries and a tier-one client base.
Importantly, delivery against our strategic priorities is continuing with a future earnings profile of two thirds annuity /
recurring in nature and one third project-based.
Our strong growth plans are not only supported by the above, but they are also possible due to our people. As a result, I
would again like to thank our entire team for the way they have contributed to our success over the last year. I am sure this
will continue in FY21 as we live for the challenge, are smarter together, never give up and have each other’s backs.
Finally, I would like to thank our shareholders for their continued support.
David Macgeorge
Managing Director
Strategic Horizons
(1 - 2 YEARS)
(3 YEARS +)
SRG GLOBAL 2020 ANNUAL REPORT
17
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 2020.
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
Non-Executive Chairman
Non-Executive Chairman
Managing Director
Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Resigned 26 November 2019
Full Financial Year
Full Financial Year
Resigned 2 October 2019
Full Financial Year
Full Financial Year
Resigned 3 April 2020
EXPERIENCE, QUALIFICATIONS AND
RESPONSIBILITIES
Peter McMorrow
Non-Executive Chairman
Peter McMorrow joined the Board of SRG Global as Deputy
Chairman in September 2018 and was appointed Chairman
on 26 November 2019. 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 currently a Board
Member for Valmec Limited.
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.
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David holds a Bachelor of Business and has completed the
Senior Executive Management program at INSEAD Business
School in France.
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 the Chairman 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.
Michael is a Senior Advisor - Corporate Finance at
Canaccord Genuity (Australia) Limited and is currently Non-
Executive Chairman of Australian listed companies Legend
Mining Limited and Castle Minerals Ltd. Michael was non-
executive Chairman of Azumah Resources Limited until his
resignation in December 2019.
Michael is a Fellow of the Australian Institute of Company
Directors.
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
COMPANY SECRETARIES
Name
Roger Lee
Paul Hegarty
Roger Lee
Chief Financial Officer & Company Secretary
Full Financial Year
Resigned 21 August 2020
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.
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 McMorrow
D Macgeorge
P Brecht
M Atkins
MEETINGS OF DIRECTORS
Fully Paid Ordinary Shares
Number
Performance Rights
Number
11,835,727
6,071,389
1,900,541
1,000,000
Nil
1,400,000
Nil
Nil
The number of meetings of SRG Global’s Board of Directors and each Board Committee held during the year ended 30 June
2020 and the number of meetings attended by each Director was:
Board of Directors
meetings
Meetings of committees
Audit Committee
Name
P Wade(1)
P McMorrow
D Macgeorge
E Gullotti(2)
P Brecht
M Atkins
J Derwin(3)
Eligible
4
12
12
3
12
12
10
Attended
2
12
12
3
12
11
8
Eligible
1
3
-
-
-
3
-
Attended
1
3
-
-
-
3
-
(1) Resigned as Non-Executive Chairman 26 November 2019
(2) Resigned as Executive Director on 2 October 2019
(3) Resigned as Non-Executive Director on 3 April 2020
Remuneration & Nomination
Attended
-
4
-
-
4
-
3
Eligible
-
4
-
-
4
-
3
19
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Directors’ Report
Directors’ Report (CONTINUED)
PRINCIPAL ACTIVITIES
During the financial period, the principal continuing activities
of the Group consisted of delivering a suite of engineering-led
specialist asset services, mining services and construction
services across the entire asset lifecycle.
SIGNIFICANT CHANGES IN STATES OF AFFAIRS
There have been no significant changes in the state of affairs
of the Group.
OVERVIEW AND FINANCIAL RESULTS
Information on the operations and financial position of the
Group and its business strategies is set out in the Managing
Director’s Report on pages 12 to 17.
MATTERS SUBSEQUENT TO THE END OF
FINANCIAL YEAR
On 7 July 2020, the Company secured a NZ$25m Transport
Infrastructure Contract with the New Zealand Transport
Authority. The contract is for an eight-year period and will
conclude in 2028.
On 15 July 2020, the Company secured a $25m contract with
John Holland at the new Government backed Victorian Heart
Hospital. SRG Global will design, supply and install specialist
engineered curtain wall facade for the $564m development.
SRG Global’s scope of works are expected to commence in
January 2021 with a duration of nine months.
On 21 July 2020, SRG Global secured a long-term five-year
$25m contract with Yara. SRG Global will provide access and
maintenance services with additional scope opportunities for
various fixed plant maintenance solutions. Works under the
contract have commenced and will continue until mid-2025.
On 23 July 2020, SRG Global secured two contracts
totalling $40m. Both contracts are for the design, supply
and installation of specialist engineered curtain wall facade.
The first contract is for works at 6 Hassall St in Sydney with
Richard Crookes on behalf of Charter Hall and will commence
in September 2020 with a project duration of approximately
nine months. The second contract is with Lendlease, also on
behalf of Charter Hall, at 140 Lonsdale St and will commence
in early 2021 and run for approximately 12 months.
On 28 July 2020, the Company secured two contracts valued
at $30m with Water Corporation. SRG Global will design
and construct two water tanks in Western Australia - a 42ML
tank at Merredin in the Central Wheatbelt and a 32ML tank at
Dedari in the Goldfields. Contract works commenced in July
2020 with a duration of approximately 18 months.
On 5 August 2020, SRG Global announced a number of
new contracts valued at NZ$50m had been secured in New
Zealand, including:
• A five-year term contract for the provision of access and
industrial coating services for Methanex, the world’s largest
producer and supplier of methanol
• A two-year contract for the maintenance of wind turbines
for Meridian, a significant renewable energy generator in NZ
• Additional contract works for building remediation services
for Metlifecare, one of NZ’s largest aged care facility
operators
• Specialist refractory services for OI Glass at Auckland’s
largest glass manufacturing facility
An interim, fully franked $2.230m dividend (0.5 cents per
share) was declared on 25 February 2020. This dividend was
paid on 27 July 2020.
Finally, on 25 August 2020, the Company declared a final
fully franked dividend of 0.5 cents per share. The record date
of the dividend is 9 September 2020 and the payment is
scheduled for 21 October 2020.
Other than the matters described above, no other matter
or circumstance has arisen since 30 June 2020 that has
significantly affected, or may significantly affect the Group’s
operations, the results of those operations, or the Group’s
state of affairs in future financial years.
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.
PROCEEDINGS ON BEHALF OF THE COMPANY
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.
CORPORATE GOVERNANCE
The Board is committed to achieving the highest standards
of corporate governance. The Board reviews and improves
its 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/.
DIVIDENDS
The Company has declared the following dividends in relation
to the 2020 financial year:
• A final, fully franked $2.230m dividend (0.5 cents per share)
was declared on 25 August 2020. The Record Date for this
dividend is 9 September 2020 with payment to be made on
21 October 2020.
• An interim, fully franked $2.230m dividend (0.5 cents per
share) was declared on 25 February 2020. This dividend
was paid on 27 July 2020.
The total fully franked dividends declared by the Company in
relation to the 2020 financial year is $4.460m (1.0 cents per
share).
20
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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 2020. 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 2020.
Name
Non-executive directors
P Wade
P McMorrow
P Brecht
M Atkins
J Derwin
Executive directors
D Macgeorge
E Gullotti
Executives
R Lee
N Combe
J Thomas
D Williamson
G Edmonds
P Dawson
Position
Term as KMP
Non-Executive Chairman
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director
Executive Director
Resigned 26 November 2019
Full financial year
Full financial year
Full financial year
Resigned 3 April 2020
Full financial year
Resigned 2 October 2019
Full financial year
Chief Financial Officer / Company Secretary
Executive General Manager - Construction & Engineering
Full financial year
Executive General Manager - Mining & Chair of Zero Harm Full financial year
Full financial year
Executive General Manager - Asset Services
Resigned 15 April 2020
Executive General Manager - New Zealand
Commenced 11 October 2019
Executive General Manager - Building
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
Remuneration and Nomination 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.
21
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
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 implemented a short-term incentive
plan during the 2020 financial year. 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
• Create a strong link between performance and reward
• 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 the 2020
financial year 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 Remuneration and Nomination
Committee.
The Remuneration and Nomination 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 2020 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
be automatically issued or transferred to the participant
22
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 Remuneration and Nomination Committee
The objective of the Remuneration and Nomination
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:
• Recommends remuneration levels for directors and
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
Remuneration and Nomination 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 2020, 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 95.10% of ‘yes’ votes on its
Remuneration Report for the financial year ended 30 June
2019. 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.
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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
Fixed Remuneration
Contract Term
Notice Period
Annual Leave
$850,000
Ongoing
6 months
20 days per annum
Senior
Executives
Range between $360,000 and $540,000
Ongoing
1-6 months
20-30 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 Remuneration and Nomination Committee reviews non-executive directors’ remuneration annually against comparable
companies. The Remuneration and Nomination 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 $900,000 per
annum. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst non-executive directors is evaluated by the Remuneration and Nomination Committee annually.
The remuneration of non-executive directors for the year ended 30 June 2020 is detailed in section 7.2 of this report.
5.
SHARE-BASED COMPENSATION
Performance Rights
Performance Rights may be granted under the Company Performance Rights Plan. The plan is designed to align the interest
of employees to shareholders in the Company and for staff retention purposes.
At the Company’s Annual General Meeting held on 27 November 2018, shareholders approved the issue of up to 2,100,000
Performance Rights to David Macgeorge. On 26 November 2019, 1,400,000 Performance Rights were issued to David
Macgeorge. The Board determined that it would not issue the balance of 700,000 Performance Rights. The Performance
Rights issued to Mr D Macgeorge have performance conditions attached relating to EPS, ASR and continued service. The
share based payment value associated with these Performance Rights is included at section 7.1 of this Remuneration Report.
There are no unissued ordinary shares of the Company under option at the date of this report.
6. OVERVIEW OF COMPANY PERFORMANCE
The table below sets out information about the Group’s earnings and movements in shareholder wealth for the past five
years up to and including the current financial year. The following information relates to SRG Global Limited (SRG Global) for
the comparative periods.
Profit / (loss) for the year attributable to owners ($’000)
Share price at end of the year (cents)
Basic EPS (cents)
Total dividends (cents per share)
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
1.5
2020
(29,403)
0.21
(6.7)
1.0
23
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
7. DETAILS OF REMUNERATION
7.1 Executive KMP remuneration for the years ended 30 June 2020 and 30 June 2019
Short-term benefits
Post-employment Long-term
Non-
monetary
benefits(2)
$
Super-
annuation
Scheme
benefits
$
$
benefits
Long
service
leave
$
Share based
payments
Performance
rights
Total
remuneration
Performance
related
$
$
%
Financial
Year
Cash
salary and
fees
$
Executive Directors
D Macgeorge(3) 2020
2019
2020
2019
E Gullotti(4)
812,401
654,434
700,110
642,039
Short-term
incentives(1)
$
-
-
-
-
Senior Executives
R Lee(3)
N Combe(3)
J Thomas(3)
D Williamson(5)
P Dawson(6)
G Edmonds(7)
Total
Executive KMP
493,539
399,639
537,401
416,131
385,623
322,391
392,946
109,975
379,851
-
341,382
118,086
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020 4,043,253 150,000
2019
-
-
-
-
-
-
150,000
-
-
-
-
-
2,662,695
-
-
-
-
129,518
-
-
-
-
-
-
-
-
-
-
-
-
-
129,518
-
21,003
-
61,128
6,250
-
27,083 1,060,000 (43,763)
-
-
6,768
-
25,000
-
37,794
-
25,000
-
20,833
-
35,720
-
29,533
-
25,000
-
9,943
-
17,708
-
-
-
12,917
-
4,435
168,598
-
190,750 1,060,000 (43,763)
-
-
-
-
-
-
-
-
-
-
-
-
6,768
14,463
-
-
721,727
6,198
-
-
-
-
-
5,165
-
38,496
-
-
-
64,322
721,727
847,867
715,562
713,128
2,536,604
524,737
437,433
562,401
436,964
421,343
351,924
573,111
119,918
436,055
-
354,299
122,521
4,432,941
4,720,927
2
-
-
28
1
-
-
-
-
-
27
-
9
-
-
-
5
15
(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) Appointed on 11 September 2018.
(4) Resigned on 2 October 2019. Cash salary and fees includes annual leave cashed out during the year of $49,529 (2019: $55,657)
(5) Appointed on 20 March 2019.
(6) Appointed on 11 October 2019.
(7) Appointed on 20 March 2019 and ceased on 15 April 2020.
7.1.1. Executive KMP that resigned in the 2019 financial year
G Chiari was an executive director for the period 1 July 2018 to 11 September 2018. During this period, he was paid a cash
salary of $80,662, a discretionary cash bonus in relation to performance for FY18 of $125,000 and superannuation of $6,250.
59% of his total remuneration of $211,912 was performance related.
N Land was appointed as the Chief Financial Officer on 2 March 2018 and resigned from his position on 11 September 2018.
During the period 1 July 2018 to 11 September 2018, he was paid a cash salary of $64,167, superannuation of $4,167 and
scheme benefits of $72,000. No part of his total remuneration of $140,333 was performance related.
M Clarke was a senior executive of the Group for the period 11 September 2018 to 20 March 2019. During this period, he was
paid a cash salary of $286,147 and superannuation of $3,743. No part of his total remuneration of $289,890 was performance
related.
24
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Directors’ Report
Directors’ Report (CONTINUED)
7.2 Non-executive remuneration for the years ended 30 June 2020 and 30 June 2019
Financial Year
Short-term benefits
Cash salary and fees
Post-employment
Superannuation
Total Remuneration
P McMorrow(1)
P Brecht(1)
M Atkins(1)
P Wade(2)
J Derwin(3)
Total Non-Executive KMP
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
(1) Appointed on 11 September 2018
(2) Resigned 26 November 2019
(3) Resigned 3 April 2020
7.3 Shareholdings of KMP
$
157,458
121,421
110,089
86,509
113,630
92,500
68,218
158,133
101,308
104,269
550,703
562,832
$
-
-
10,335
8,218
10,795
8,788
-
-
8,323
9,906
29,453
26,912
$
157,458
121,421
120,424
94,727
124,425
101,288
68,218
158,133
109,631
114,715
580,156
589,744
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 2019
Received on
exercise of rights
Purchased
Net change other
Balance as at
30 June 2020
Non-Executive Directors
P Wade (1)
P McMorrow
P Brecht
M Atkins
J Derwin (2)
Executive Directors
D Macgeorge
E Gullotti (3)
Senior Executives
R Lee
N Combe
J Thomas
D Williamson
P Dawson (4)
G Edmonds (5)
(1) Resigned on 26 November 2019
(2) Resigned on 3 April 2020
(3) Resigned on 2 October 2019
(4) Commenced on 11 October 2019
(5) Ceased on 15 April 2020
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
70,000
-
200,000
-
-
-
-
-
-
-
-
-
(221,361)
-
-
-
(100,000)
(3,100,000)
(5,976,349)
(1,200,000)
(635,367)
(577,728)
-
5,691,945
-
-
11,835,727
1,900,541
1,000,000
-
6,071,389
-
3,503,451
1,099,933
739,123
10,000
5,691,945
-
25
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Directors’ Report
Directors’ Report (CONTINUED)
7.3 Shareholdings of KMP (CONTINUED)
The number of performance rights held directly or indirectly during the financial year by each director and KMP of the Group
are set out below.
Balance as at
30 June 2019
Granted in
the year
Lapsed in
the year
Net change
other
Balance as at
30 June 2020
Executive Directors
D Macgeorge
Senior Executives
R Lee
D Williamson
P Dawson (1)
(1) Commenced on 11 October 2019
-
-
-
-
1,400,000
600,000
500,000
1,400,000
-
-
-
-
-
-
-
-
1,400,000
600,000
500,000
1,400,000
No other KMP’s have been granted performance rights in the current financial year except as disclosed above.
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
2020
$
2019
$
Receivables
2020
$
2019
$
Payables
2020
$
2019
$
• 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 Rangitoto Trust, a trust
related to G Edmonds
• Services provided to Fulton Hogan Limited, a
company related to P Brecht(1)
• Services provided to Mineral Resources Limited, a
company related to P Wade
• Properties from which the Group’s operations
are performed are rented from Portovenere
Investments Pty Ltd, a company related to Paul
Dawson
-
-
-
(21,000)
(142,937)
3,269
19,533
746,491
-
-
-
-
-
-
-
32,895
267,587 4,463,358
6,180
519,643
(28,682)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(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 25(b).
End of Audited Remuneration Report
26
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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.
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 28.
This directors’ report is made in accordance with a resolution of directors, pursuant to Section 298(2)(a) of the Corporations
Act 2001.
Peter McMorrow
Non-Executive Chairman
25 August 2020
27
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Auditor’s Independence Declaration
Auditor’s Independence Declaration
28
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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 2020 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 25 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 25.
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 McMorrow
Non-Executive Chairman
25 August 2020
29
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Independent Auditor’s Report
Independent Auditor’s Report
30
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Independent Auditor’s Report (CONTINUED)
Independent Auditor’s Report
31
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Independent Auditor’s Report
Independent Auditor’s Report (CONTINUED)
32
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Independent Auditor’s Report (CONTINUED)
Independent Auditor’s Report
33
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Financial Statements
Consolidated Statement of Profit or Loss and other
Comprehensive Income
Revenue
Other income
Construction, servicing and contract costs
Employee benefits expense
Other expenses
Equity accounted investment results
Depreciation expense
Amortisation expense
Impairment expense
Finance expenses
(Loss) / Profit before income tax
Income tax benefit
Net (loss) / profit for the period
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 (loss) / earnings per share (cents per share)
Diluted (loss) / earnings per share (cents per share)
Note
2020
$’000
2019
$’000
2
3
4
4
13
3
5
9
9
519,957
2,414
486,391
6,720
(265,297)
(207,463)
(35,347)
2,779
(19,119)
(5,082)
(24,761)
(2,962)
(34,881)
5,194
(29,687)
284
(29,403)
(245,578)
(191,388)
(32,459)
522
(9,498)
(6,621)
-
(1,345)
6,744
2,675
9,419
420
9,839
2020
2019
(6.7)
(6.7)
2.3
2.3
The above statement should be read in conjunction with the notes to the financial statements.
34
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Financial Statements
Consolidated Statement of Financial Position
AS AT YEAR ENDED 30 JUNE 2020
Note
2020
$’000
2019
$’000
Current Assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Other current assets
Derivative financial instrument asset
Equity accounted investments
Total current assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Right of use liabilities
Current tax liabilities
Provisions
Derivative financial instrument liability
Total current liabilities
Non-current liabilities
Borrowings
Right of use liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
(Accumulated losses) / retained earnings
Total Equity
23
10
10
11
25(c)
12
15
13
17
14
10
16
15
18
16
15
18
19
20
The above statement should be read in conjunction with the notes to the financial statements.
28,106
82,972
41,275
15,568
4,092
86
4,617
176,716
79,255
25,972
107,250
33,668
246,145
58,280
70,583
47,462
13,041
3,987
-
1,099
194,452
71,453
-
137,556
27,177
236,186
422,861
430,638
88,609
15,886
12,714
8,412
2,477
24,516
-
152,614
23,857
18,324
6,638
48,819
84,113
15,592
21,222
-
1,746
20,828
54
143,555
24,880
-
9,475
34,355
201,433
177,910
221,428
252,728
218,096
8,141
(4,809)
221,428
215,896
8,204
28,628
252,728
35
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Financial Statements
Consolidated Statement of Financial Changes in Equity
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 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
Balance at 1 July 2019
304,376
(88,480)
215,896
28,628
8,235
682
(713)
252,728
Loss 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
Transfer to retained earnings
2,200
-
-
-
-
-
-
-
-
-
-
-
-
-
(29,687)
-
(29,687)
2,200
-
-
-
-
-
(4,432)
682
-
-
-
-
335
-
-
-
-
-
-
-
-
(682)
-
(29,687)
284
284
284 (29,403)
-
-
-
-
2,200
335
(4,432)
-
Balance at 30 June 2020
306,576
(88,480)
218,096
(4,809)
8,570
-
(429)
221,428
The above statement should be read in conjunction with the notes to the financial statements.
36
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
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
23(a)
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
(Investments in) / dividends from joint ventures
Cash (outflow) / inflow from investing activities
Proceeds from issuance of shares
Proceeds from borrowings
Repayment of borrowings
Payment of dividends
Cash (outflow) / inflow from financing activities
Financial Statements
Note
2020
$’000
2019
$’000
557,473
92
522,558
450
(546,485)
(516,511)
(3,055)
(566)
7,459
-
-
(20,561)
4,029
-
(1,681)
(18,213)
-
28,028
(45,286)
(2,202)
(19,460)
(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
Net cash (decrease) / increase in cash and cash equivalents held
(30,214)
28,259
Effect of exchange rates on cash and cash equivalent holdings
Cash and cash equivalents at beginning of financial year
40
58,280
308
29,713
Cash and cash equivalents at end of financial year
23
28,106
58,280
The above statement should be read in conjunction with the notes to the financial statements.
37
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2020
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 Limited (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 Consolidated Entity’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 2001. The consolidated financial statements also
comply with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB).
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(u).
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 the 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 when 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:
- Estimation of allowance for expected credit losses on financial assets and liabilities (Note 31(e))
- Assessment and impairment of intangible assets (Note 13)
- Employee long-term entitlements (Note 18)
- Recovery of deferred tax asses and provision for income tax (Note 17)
- Determination of variable consideration on revenue (Note 1(b))
- Determination of lease term and incremental borrowing rate (Note 1(t))
38
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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.
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 25(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 25(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.
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 ‘Investments accounted for using the equity method’
and ‘Share of profit of equity accounted investees’ 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(p).
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.
39
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 two main revenue streams throughout various geographical locations – Construction and Services.
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.
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.
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 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
40
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(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.
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.
(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 principal market or in the absence of a principal market, in the most advantageous market.
41
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 are recognised. These losses are
recognised in the income statement. The simplified approach is used.
(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.
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 and may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign
currency purchases of property, plant and equipment.
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.
42
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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)
Intangibles
Goodwill
Goodwill and goodwill on consolidation are 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 the business combination. 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.
(m) 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.
(n)
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.
(o) 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 result and 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.
43
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 18(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.
(p) 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 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.
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.
(q) 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.
(r) 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.
(s) Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match
them with the costs that they are intended to compensate.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the
period in which they become receivable.
44
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t) 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 16 ‘Leases’
Application of AASB 16 Leases
Effective for annual reporting
periods beginning on or after
1 January 2019
Initially applied in the
financial year ending
30 June 2020
The Group has adopted AASB 16 from 1 July 2019 and has not restated comparatives for the 2019 reporting period as
permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognised in the opening statement of financial position sheet on 1 July 2019.
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified
as ‘operating leases’ under the principles of AASB 117 Leases.
These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 July 2019. The weighted average lessee’s incremental borrowing rate applied to
the lease liabilities on 1 July 2019 was between 3.13% and 3.51%. To calculate the rate, a base reference rate and the
associated credit margin was taken from the debt facilities that the Group are currently a party to as it was determined
that this approach was the best match to satisfy the prescription within the standard.
For leases previously classified as finance leases the entity recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date
of initial application. The measurement principles of AASB 16 are only applied after that date.
The Group’s leasing activities and how these are accounted for:
The Group leases various offices, warehouses, equipment and cars. Lease contracts are typically made for fixed periods
of 3 to 10 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide
range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not
be used as security for borrowing purposes.
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance or operating
leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit
or loss on a straight-line basis over the period of the lease.
From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the
leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost.
The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period. The right of use asset is depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
-
-
-
-
-
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate
amounts expected to be payable by the lessee under residual value guarantees
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the
lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right of use assets are measured at cost comprising the following:
-
-
-
-
-
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs
restoration costs
less any incentives received
45
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise
IT-equipment and small items of office furniture.
Impact on application of AASB 16
Operating lease commitments disclosed as at 30 June 2019
Discounted using the lessee’s incremental borrowing rate of at the date of initial application
(Less): Exempt leases recognised on a straight-line basis as expense
Right of use liability recognised as at 1 July 2019
The impact on the Group consolidated income is:
Decrease in operating lease expense
Less:
Increase in borrowing cost
Increase in right of use asset depreciation
(Decrease) in profit
Opening Balance
1 July 2019
$’000
33,807
32,523
(731)
31,792
30 June 2020
$’000
8,713
(987)
(8,490)
(764)
Earnings per share decreased by 0.17c per share for the year ending 30 June 2020 as a result of the adoption of AASB
16.
EBITDA, segment assets and segment liabilities for June 2020 all increased as a result of the change in accounting
policy. Lease liabilities are now included in segment liabilities, whereas finance lease liabilities were previously excluded
from segment liabilities.
The following segments were affected by the change in policy:
Asset Services
$’000
Mining Services
$’000
Construction
$’000
Corporate
$’000
Total
$’000
EBITDA
Segment Assets
Segment Liabilities
3,125
8,962
(9,255)
452
1,082
(1,115)
4,161
8,274
(8,426)
975
7,654
(7,940)
8,713
25,972
(26,736)
Practical expedients applied:
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
-
-
-
-
-
-
the use of a single discount rate on each portfolio of leases with reasonably similar characteristics
reliance on previous assessments on whether leases are onerous
the accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-
term leases
the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application
the use of hindsight in determining the lease term where the contract contains options to extend or terminate
the lease
the accounting for lease and non-lease components as a single lease component
The group has also elected not to reassess whether a contract is or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the group relied on its assessment made applying AASB
117 and Interpretation 4 Determining Whether an Arrangement Contains a Lease.
46
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u) 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 2020.
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 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework
AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform AASB 2019-
5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet
Issued in Australia
AASB 2014-10 Amendments to Australian Accounting Standards –Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture.
NOTE 2. REVENUE
Revenue from contracts with customers is disaggregated by major service lines and is in line with the Group’s reportable
segments (see Note 28).
Construction revenue
Services revenue
NOTE 3. PROFIT / (LOSS) FROM CONTINUING OPERATIONS
Other income
Property rental income
Research and development income
Freight and other income
Finance Expenses
Interest on right of use liabilities
Other finance expenses
2020
$’000
2019
$’000
296,374
223,583
519,957
268,003
218,388
486,391
2020
$’000
2019
$’000
68
-
2,346
2,414
986
1,976
2,962
180
300
6,239
6,720
-
1,345
1,345
47
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 4. DEPRECIATION AND AMORTISATION
Depreciation
Buildings and leasehold improvements
Office and computer equipment
Motor vehicles
Plant and rental equipment
Right of use assets
Total depreciation expense
Amortisation
Customer relationships
Depreciation and amortisation rates are set out in Note 1(k) and 1(l).
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 benefit (see Note 17)
(Over) / under provision in respect to prior year
Income tax benefit
(b) Numerical reconciliation of income tax benefit to prima facie tax payable
(Loss) / profit for the year
Tax at the Australian rate of 30% (2019 - 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
-
-
-
-
-
-
Increase in income tax expense due to non-tax deductible items
Non-deductible losses on overseas entities
Derecognition of capital tax losses
Difference in overseas tax rate
Tax effect of amounts arising from business combination
Sundry items
Amount (over) / under provided in prior year
Income tax benefit attributable to entity
(c) Amounts recognised directly in equity
2020
$’000
2019
$’000
280
629
2,045
7,675
10,629
8,490
19,119
215
659
1,388
7,236
9,498
-
9,498
5,082
6,621
2020
$’000
2019
$’000
2,182
(5,509)
(1,867)
(5,194)
(34,881)
(10,464)
6,526
241
366
12
-
(8)
(1,867)
(5,194)
2,140
(4,710)
(105)
(2,675)
6,744
2,023
(48)
976
-
(50)
(5,471)
-
(105)
(2,675)
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
48
2020
$’000
-
2019
$’000
-
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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.
Short-term employee benefits
Long service leave
Post-employment benefits
Share-based payments
2020
$
2019
$
4,743,957
6,768
198,051
64,322
3,911,019
(43,763)
1,363,821
721,727
5,013,098
5,952,803
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 (2019: BDO Audit (WA) Pty Ltd).
2020
$
2019
$
290,000
329,204
10,270
-
300,270
3,341
43,344
375,889
76,522
76,522
80,446
80,446
28,017
36,881
4,759
-
2,350
35,126
3,883
1,663
6,084
48,511
49
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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 secured 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
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 per share paid on 23/04/2019 franked at the tax rate of 30%
Final fully franked ordinary dividend for the year ended 30/06/2019 of 0.5 cents
per share paid on 21/10/2019 franked at the tax rate of 30%
Interim fully franked ordinary dividend for the year ended 30/06/2020 of 0.5 cents
per share paid on 30/07/2020 franked at the tax rate of 30%
Dividends declared after 30 June 2020
(i)
The Company has resolved to declare a final fully franked ordinary dividend of 0.5
cents per share payable on 21/10/2020, franked at the tax rate of 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:
-
-
Dividend declared post year end
Dividend paid post year end
2020
$’000
(8,465)
2019
$’000
(12,178)
2020
$’000
2019
$’000
-
-
2,202
2,230
3,698
4,407
-
-
4,432
8,105
2,230
2,230
-
-
18,456
19,787
(955)
(955)
16,546
(944)
-
18,843
50
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 9. EARNINGS PER SHARE
(Loss) / profit attributable to members of the parent entity ($’000)
2020
(29,687)
2019
9,419
Weighted average number of shares used in the calculation of basic EPS (shares)
444,399,625
402,445,380
Weighted average number of shares used in the calculation of diluted EPS (shares)
450,099,625
402,445,380
Earnings per share
Basic (cents per share)
Diluted (cents per share)
(6.7)
(6.7)
2.3
2.3
AASB 3 Business Combinations provides specific guidance on the calculation of the weighted number of shares for the 2019
financial year as follows:
The number of ordinary shares issues by:
- SRG Limited 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
Trade receivables(a)
Other receivables(b)
Provision for doubtful debts
Net balance sheet position for ongoing construction contracts:
Contract assets(c)
Contract liabilities(c)
(a) Trade receivables
2020
$’000
90,375
1,792
(9,195)
82,972
41,275
(15,886)
25,389
108,361
2019
$’000
73,196
911
(3,524)
70,583
47,462
(15,592)
31,870
102,452
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 entity’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 31.
51
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 11. INVENTORIES
Raw materials and stores at cost
Finished goods
Work in progress and materials on site
2020
$’000
5,250
5,915
4,403
15,568
2019
$’000
5,963
3,378
3,700
13,041
Provision for obsolete stock was included in this amount of $53,202 (2019: $209,265).
NOTE 12. PROPERTY, PLANT AND EQUIPMENT
Year Ended 30 June 2020
Opening net book amount
Additions
Disposals
Depreciation charge
Foreign exchange differences
Closing net book amount
As at 30 June 2020
Cost
Accumulated depreciation
Accumulated impairment
Net book amount
Building &
Leasehold
Improvements
Office &
Computer
Equipment
Motor
Vehicles
Plant &
Rental
Equipment
Capital
Work in
Progress
Total
$’000
$’000
$’000
$’000
$’000
$’000
1,865
1,185
(197)
(280)
3
2,576
1,129
1,882
(42)
7,639
4,941
51
(630)
(2,045)
8
(27)
2,347
10,559
55,593
14,892
(1,923)
(7,674)
(172)
60,716
2,439
(295)
(972)
71,453
22,605
(3,986)
-
-
(10,629)
(188)
1,172
79,255
4,415
(1,839)
-
6,918
21,447
127,975
1,172
163,812
(4,570)
(10,888)
(67,260)
-
-
-
-
-
(84,557)
-
Land
$’000
2,788
-
(903)
-
-
1,885
1,885
-
-
1,885
2,576
2,348
10,559
60,715
1,172
79,255
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
Closing net book amount
As at 30 June 2019
Cost
Accumulated depreciation
Accumulated impairment
Net book amount
Land
$’000
501
-
(784)
-
-
3,071
2,788
2,788
-
-
2,788
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
52
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 13. INTANGIBLES
As at 1 July 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
Closing net book amount
As at 30 June 2019
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2020
Opening net book amount
Impairment charge
Amortisation charge
Foreign exchange differences
Closing net book amount
As at 30 June 2020
Cost
Accumulated amortisation and impairment
Net book amount
Goodwill
$’000
Customer
Relationships
$’000
38,053
(8)
38,045
38,045
2,441
-
453
74,051
114,990
114,998
(8)
114,990
114,990
(24,761)
-
(343)
89,886
114,655
(24,769)
89,886
2,798
(92)
2,706
2,706
-
(6,621)
206
26,275
22,566
29,279
(6,713)
22,566
22,566
-
(5,082)
(120)
17,364
29,160
(11,796)
17,364
Total
$’000
40,851
(100)
40,751
40,751
2,441
(6,621)
659
100,326
137,556
144,277
(6,721)
137,556
137,556
(24,761)
(5,082)
(463)
107,250
143,815
(36,565)
107,250
53
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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 2020
30 June 2019
Asset Services
$’000
Mining Services
$’000
Construction
$’000
47,195
49,941
1,178
1,178
58,877
86,437
Total
$’000
107,250
137,556
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
Asset Services
Mining Services
Construction
Long-term growth rate
Pre-tax discount rate
2020
%
2.00%
2.00%
2.00%
2019
%
2.50%
2.50%
2.50%
2020
%
13.89%
13.89%
13.89%
2019
%
12.00%
12.00%
12.00%
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 remaining 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, impairment in the Construction Segment of $24,761,000 has been brought to account for the
year ended 30 June 2020 (2019: Nil).
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 31.
2020
$’000
2019
$’000
54,558
34,051
88,609
45,334
38,779
84,113
54
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Notes to the Financial Statements
NOTE 15. LEASES
The recognised right of use liabilities is as follows:
Current right of use liability
Non-current right of use liability
Total right of use liabilities
The recognised right of use assets relates to the following types of assets:
Properties
Equipment and vehicles
Total right of use assets
Notes to the Financial Statements
30 Jun 2020
$’000
1 Jul 2019
$’000
8,412
18,324
26,736
7,776
24,016
31,792
24,955
1,017
25,972
30,456
1,336
31,792
The associated right of use assets for property leases were measured on a retrospective basis with the cumulative effect
of initially applying the standard recognised at the date of initial application. The right of use assets were measured at the
amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease
recognised in the statement of financial position as at 30 June 2020.
Extension Options
Certain leases contain extension options exercisable by the Group. These extension options are exercisable only by the
Group and not by the lessors. The Group assesses, at lease commencement, whether it is reasonably certain to exercise
the extension options, and where it is reasonably certain, the extension period has been included in the lease liability. The
Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in
circumstances within its control.
NOTE 16. BORROWINGS
Current
Secured borrowings - Term facility
Secured borrowings - Asset financing
Other borrowings - Insurance premium funding
Non-current
Secured borrowings - Term facility
Secured borrowings - Asset Financing
The carrying amount of non-current assets pledged as first security are:
Plant, motor vehicles and equipment over which hire purchase contracts apply
2020
$’000
2019
$’000
500
10,461
1,753
12,714
8,250
15,607
23,857
13,489
7,733
-
21,222
11,250
13,630
24,880
31,134
31,134
22,730
22,730
(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.
55
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 17. DEFERRED TAX BALANCES
(a) Deferred tax assets
The balance comprises temporary differences attributed to:
Property, plant and equipment
Provisions
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
Total deferred tax liabilities
Net deferred tax assets
(c) Reconciliations
2020
$’000
2019
$’000
3,798
8,915
1,414
24,380
1,598
40,105
1,179
4,387
799
37
35
6,437
33,668
8,006
5,796
804
19,461
1,842
35,909
1,108
6,786
799
39
-
8,732
27,177
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
2020
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
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
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
(4,735)
1,891
-
2,018
(71)
2
610
5,866
-
(72)
5,509
188
(4,611)
(2,746)
980
(93)
493
(26)
9,429
-
1,096
4,710
56
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,970
6,752
-
(6,980)
(581)
(532)
830
8,987
-
197
17,646
527
1,228
-
381
-
-
-
(947)
-
(207)
982
-
-
-
-
-
-
-
-
-
-
-
3,798
8,915
-
(4,387)
(1,179)
(37)
1,414
24,380
(799)
1,563
33,668
8,006
5,796
-
(6,786)
(1,108)
(39)
804
19,461
(799)
1,842
27,177
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
NOTE 18. PROVISIONS
Current
Employee benefit provisions(a)
Lease provisions(c)
Other
Non-current
Employee benefit provisions(b)
Lease provisions(c)
Other
(a) Employee benefit provisions
Notes to the Financial Statements
2020
$’000
2019
$’000
17,388
1,982
5,146
24,516
1,769
3,519
1,350
6,638
13,599
2,074
5,155
20,828
2,371
5,191
1,913
9,475
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 $17,388,000 (2019:
$13,599,000) 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 long-term 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 Government bonds with terms to maturity that match the expected timing of cash flows
attributable to employee benefits.
(c) Lease provisions
$5,113,000 of the liability is assumed as part of the business combination in the prior period for the fair valuation of SRG
Global’s 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 SRG Global to lease the properties and therefore
a liability is recognised.
$388,000 of onerous lease provisions assumed as part of the business combination in the prior period 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.
57
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 19. ISSUED CAPITAL
Share capital
Ordinary shares fully paid
2020
2019
Shares
445,796,415
$’000
Shares
218,096 440,415,099
$’000
215,896
Balance as at 1 July 2019
Share based payments
Shares issued in accordance with Scheme of Arrangement on acquisition on SRG Global Limited
Reverse acquisition reserve (see Note 20(d))
Balance as at 30 June 2019
Shares issued in relation to payments of contingent consideration
Balance as at 30 June 2020
(a) Ordinary shares
Number of
shares
Total
$‘000
222,181,412
1,350,000
216,883,687
-
440,415,099
66,269
-
148,565
1,062
215,896
5,381,316
445,796,415
2,200
218,096
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.
(c) Performance rights
1,350,000 performance rights were converted into SRG Global shares as part of the Scheme Benefits paid to KMP
during the non-reporting period of 1 July 2018 to 31 August 2018. In the current year, 5,700,000 performance rights
were issued. See Note 29 for further details on share based payments.
NOTE 20. 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.
(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 (SRG Global)
equity with that of the deemed acquirer (SRG Limited).
58
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 21. COMMITMENTS
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
- Plant and equipment
755
801
2020
$’000
2019
$’000
NOTE 22. 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 30.
NOTE 23. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
(a) Reconciliation of (loss) / profit for the year to net cash from operating activities
(Loss) / profit for the year
Depreciation and amortisation
Share based payments
Earnings from equity accounted investment
Gain on disposal of property, plant and equipment
Unrealised foreign exchange
Impairment expense
Changes in assets
-
-
-
-
-
-
(Increase) / decrease in trade and other receivables
(Increase) / decrease in contract assets
(Increase) / decrease in inventories
(Increase) / decrease in other assets
(Increase) / decrease in current tax assets
(Increase) / decrease in deferred tax assets
Changes in liabilities
-
-
-
(Decrease) / increase in trade and other payables
(Decrease) / increase in contract liabilities
(Decrease) / increase in provisions
Cash inflow from operating activities
2020
$’000
28,106
28,106
2020
$’000
(29,687)
24,201
335
(2,779)
(1,700)
566
24,761
(12,389)
6,187
(2,727)
(103)
731
2019
$’000
58,280
58,280
2019
$’000
9,419
16,119
780
(522)
(444)
308
-
(25,086)
(33,044)
(1,287)
(3,150)
1,968
(6,491)
(29,685)
3,210
294
3,050
42,028
11,157
15,099
7,459
3,660
59
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
CASH AND CASH EQUIVALENTS (CONTINUED)
(b) Non-cash financing and investing activities
Property, plant and equipment acquired under asset financing arrangements
Right of use assets recognised under AASB 16
Dividends converted to share capital
(c) Reconciliation of liabilities arising from financing activities
2020
$’000
17,105
31,792
2,200
2019
$’000
6,204
-
-
2020
Borrowings
Asset financing liabilities
Lease liabilities (brought in
at 1 July)
2019
Borrowings
Asset financing Liabilities
Opening
Balance
$’000
Financing
Cash Flows
$’000
Non-Cash Charges
Business
Combinations
$’000
Foreign
Exchange
$’000
New / Extended
Leases
$’000
Closing
Balance
$’000
24,739
21,363
31,792
(14,241)
4,710
(7,727)
77,894
(17,258)
-
-
-
-
15,000
14,651
29,651
7,008
5,556
12,564
2,646
1,156
3,802
-
-
-
-
84
-
84
-
-
2,671
2,671
-
-
-
10,498
26,073
26,736
63,307
24,738
21,363
46,101
NOTE 24. PARENT ENTITY FINANCIAL INFORMATION
The table represents the legal parent entity, which is SRG Global Limited.
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Profit reserve
Accumulated losses
Total equity
Financial Performance
Profit / (loss) for the year
Other comprehensive income
Total comprehensive loss for the year
2020
$’000
2019
$’000
6,600
125,857
132,457
30,903
11,692
42,595
15,208
117,821
133,029
17,820
17,204
35,024
89,862
98,005
158,010
17,162
46,794
(132,104)
89,862
155,811
17,293
-
(75,099)
98,005
46,794
-
46,794
(13,566)
-
(13,566)
With the exception of matters noted in Notes 21 and 22, there were no contingent liabilities, guarantees or capital
commitments of the parent entity not otherwise disclosed in these financial statements.
60
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Ownership Interest Held by
the Group
Notes to the Financial Statements
NOTE 25. PARTICULARS RELATING TO CONTROLLED ENTITIES
(a) Group accounts include a consolidation of the following:
Entity
SRG Global Limited(1)
Controlled companies
Burgarrba PJV Pty Ltd
CASC Contracting Pty Ltd
Crow Refractory Limited
Red Ore Drill and Blast Pty Ltd
SRG Contractors Abu Dhabi LLC(2)
SRG Contractors DB LLC(2)
SRG Contractors NZ Limited
SRG Contractors US, Inc.
SRG Employee Share Trust
SRG Global (Australia) Limited(1)
SRG Global Assets Pty Ltd(1)
SRG Global Building (Northern) Pty Ltd(1)
SRG Global Building (Southern) Pty Ltd(1)
SRG Global Building (Western) Pty Ltd(1)
SRG Global CASC Pty Ltd(1)
SRG Global Civil Pty Ltd(1)
SRG Global Corporate (Australia) 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 International Holdings Pty Ltd(1)
SRG Global Investments 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 Global Structures (VIC) Pty Ltd(1)
SRG Global Structures (WA) Pty Ltd(1)
SRG Hong Kong Limited
SRG International Holdings Pte. Ltd.
T.B.S. Coatings Limited
TBS Farnsworth Limited
TBS Group Limited
TBS Remcon Limited
Total Bridge Services Limited
The following entities are in the process of deregistration
Gallery Facades (SA) Pty Ltd
GCS Hire Pty Ltd
GCS Personnel Services Pty Ltd
GCS Secured Pty Ltd
GCS Summit Pty Ltd
Meridian Concrete Australia
Paragon Glass (VIC) Pty Ltd
Paragon Glass Pty Ltd
Rock Engineering (Aust) Pty Ltd
Rock International Mining & Civil Pty Ltd
SRG Contractors Doha LLC(2)
SRG Global Contracting Pty Ltd(1)
SRG South Africa (Pty) Ltd
Structural Rock Group Canada Limited
Structural Systems (Bridge Maintenance) Pty Ltd
Structural Systems (Construction) Pty Ltd
Total Fire Protection Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
New Zealand
Australia
United Arab Emirates
United Arab Emirates
New Zealand
United States
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Singapore
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Qatar
Australia
South Africa
Canada
Australia
Australia
Australia
Principal Activity
Corporate Services
2020
100%
Asset Services
Dormant
Asset Services
Dormant
Construction
Construction
Construction
Construction
Trust
Corporate Services
Construction
Construction
Construction
Construction
Construction
Construction
Corporate Services
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Asset Services
Dormant
Construction
Corporate Services
Mining Services
Construction
Asset Services
Asset Services
Construction
Construction
Construction
Construction
Asset Services
Asset Services
Asset Services
Asset Services
Asset Services
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Construction
Dormant
Dormant
Dormant
49%
100%
100%
50%
49%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
2019
100%
-
100%
100%
50%
49%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
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.
61
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 25. 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:
2020
$’000
2019
$’000
Financial information in relation to:
Statement of profit or loss and other comprehensive income:
Loss before income tax
Income tax 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
Contract assets
Inventories
Other current assets
Derivative financial instrument asset
Equity accounted investments
Total current assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
Related party loan receivables
Investments
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Right of use liabilities
Current tax liabilities
Provisions
Derivative financial instrument liability
Total current liabilities
Non-current liabilities
Borrowings
Right of use liabilities
Provisions
Related party loan payables
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
62
28,425
(5,948)
22,477
-
22,477
20,210
68,109
36,411
14,583
3,432
86
4,478
147,309
70,605
23,891
99,047
33,475
19,938
36,657
283,613
430,922
80,694
14,702
12,563
7,448
1,265
22,308
-
138,980
23,405
17,153
6,638
-
47,196
186,176
244,746
218,096
8,581
18,069
244,746
4,228
(2,020)
2,208
-
2,208
50,532
55,941
36,801
11,942
3,023
-
957
159,196
62,414
-
20,072
27,572
92,453
26,912
319,617
478,813
74,778
12,534
21,222
-
598
18,274
54
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 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 25. 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 WSP New
Zealand Limited 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 2020 which, in the opinion of the Directors, are material
to the Group.
Wanneroo Road Ocean Reef
Road Project (a)
Place of
business
Australia
% of ownership
interest
Measurement
method
50% Equity Method
50% Equity Method
50% Equity Method
Bolivia Hill Project (a)
Traylor SRG, LLC (b)
Australia
United States
(a) Unincorporated Joint Ventures in Australia
(b) Incorporated Joint Venture in United States.
NOTE 26. RELATED PARTY INFORMATION
(a) Subsidiaries
Interest in subsidiaries are set out in Note 25.
(b) Key Management Personnel compensation
Carrying
amount
2020
$’000
1,912
2,796
139
Carrying
amount
2019
$’000
416
957
142
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
2020
$
287,120
28,682
2019
$
5,213,118
523,546
(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)
2020
$
6,180
-
2019
$
552,538
-
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.
63
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 27. EVENTS SUBSEQUENT TO REPORTING DATE
On 7 July 2020 the Company secured a NZ$25m Transport Infrastructure Contract with the New Zealand Transport
Authority. The contract is for an eight-year period and will conclude in 2028.
On 15 July 2020 the Company secured a $25m contract with John Holland at the new Government backed Victorian Heart
Hospital. SRG Global will design, supply and install specialist engineered curtain wall facade for the $564m development.
SRG Global’s scope of works are expected to commence in January 2021 with a duration of nine months.
On 21 July 2020 SRG Global secured a long-term five-year $25m contract with Yara. SRG Global will provide access and
maintenance services with additional scope opportunities for various fixed plant maintenance solutions. Works under the
contract have commenced and will continue until mid-2025.
On 23 July 2020 SRG Global secured two contracts totalling $40m. Both contracts are for the design, supply and installation
of specialist engineered curtain wall facade. The first contract is for works at 6 Hassall St in Sydney with Richard Crookes
on behalf of Charter Hall and will commence in September 2020 with a project duration of approximately nine months. The
second contract is with Lendlease, also on behalf of Charter Hall, at 140 Lonsdale St and will commence in early 2021 and run
for approximately 12 months.
On 28 July 2020 the Company secured two contracts valued at $30m with Water Corporation. SRG Global will design and
construct two water tanks in Western Australia - a 42ML tank at Merredin in the Central Wheatbelt and a 32ML tank at Dedari
in the Goldfields. Contract works are expected to commence in July 2020 with a duration of approximately 18 months.
On 5 August 2020 SRG Global announced a number of new contracts valued at NZ$50m had been secured in New Zealand,
including:
• A five-year term contract for the provision of access and industrial coating services for Methanex, the world’s largest
producer and supplier of methanol
• A two-year contract for the maintenance of wind turbines for Meridian, a significant renewable energy generator in NZ
• Additional contract works for building remediation services for Metlifecare, one of NZ’s largest aged care facility operators
• Specialist refractory services for OI Glass at Auckland’s largest glass manufacturing facility
An interim, fully franked $2.230m dividend (0.5 cents per share) was declared on 25 February 2020. This dividend was paid
on 27 July 2020.
Finally, on 25 August 2020 the Company declared a final fully franked dividend of 0.5 cents per share. The record date of the
dividend is 9 September 2020 and the payment is scheduled for 21 October 2020.
Other than the matters described above, no other matter or circumstance has arisen since 30 June 2020 that has significantly
affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs 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 Asset Services, Mining Services and Construction. 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:
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 Services segment
The Mining Services 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.
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.
64
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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 2020 is as follows:
Segment revenues and results
30 June 2020
Construction revenue
Services revenue
Revenue from external customers
EBITDA
Depreciation
Amortisation
Finance costs
Equity accounted investment results
Profit before income tax
Income tax benefit
Profit after income tax
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
Profit after income tax
Asset
Services
$’000
Mining
Services
$’000
Construction
Corporate
$’000
$’000
-
151,870
151,870
18,638
(5,623)
(3,593)
(482)
-
8,940
-
135,820
135,820
15,514
(2,208)
(3,048)
109
-
10,367
-
71,713
71,713
13,898
(5,420)
-
(591)
-
7,887
-
82,568
82,568
11,179
(4,341)
-
(554)
-
6,284
296,374
-
296,374
(29,902)
(6,533)
(1,489)
(578)
2,779
-
-
-
(13,131)
(1,543)
-
(1,311)
-
(35,723)
(15,985)
268,003
-
268,003
8,905
(1,846)
(3,573)
(51)
522
-
-
-
(11,912)
(1,103)
-
(849)
-
3,957
(13,864)
Total
$’000
296,374
223,583
519,957
(10,497)
(19,119)
(5,082)
(2,962)
2,779
(34,881)
5,194
(29,687)
268,003
218,388
486,391
23,686
(9,498)
(6,621)
(1,345)
522
6,744
2,675
9,419
65
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 28. SEGMENT RESULTS (CONTINUED)
Segment assets and liabilities
30 June 2020
Segment assets
Segment liabilities
30 June 2019
Segment assets
Segment liabilities
Asset Services Mining Services
$’000
$’000
Construction
$’000
Corporate
$’000
127,594
50,653
119,917
38,436
48,920
29,544
44,711
24,738
189,748
93,125
214,032
89,173
56,598
28,111
51,978
25,563
Total
$’000
422,860
201,433
430,638
177,910
Revenue from external customers
Australia
International
Group
2020
$’000
448,202
2019
$’000
401,233
2020
$’000
71,755
2019
$’000
85,158
2020
$’000
519,957
2019
$’000
486,391
NOTE 29. SHARE BASED PAYMENTS
The SRG Global Performance Rights Plan (the “Plan)”) was approved by shareholders at the AGM held on 27 November 2018
and provides for the issue of performance rights to assist in the recruitment, retention and motivation of eligible persons of
the Company. Under the Plan, the Board may issue eligible persons with performance rights to acquire shares in the future.
The vesting of all performance rights is subject to performance hurdles and service conditions being met. A 24-month
escrow period restricting the conversion of the performance rights to fully paid ordinary shares has been imposed at the
discretion of the board of directors. Vested performance rights expire on 30 June 2025.
On 26 November 2019, a total of 5,700,000 performance rights (convertible into one ordinary share per right) were
approved to be issued subject to the terms of the Plan. Of the approved amount, only 4,250,000 were granted with the
remainder 1,450,000 yet to be granted and 200,000 have lapsed. The performance rights are subject to the satisfaction
of performance hurdles which are based on achieving agreed profit targets and an increase in the earnings per share and
shareholder return targets. The performance rights are also subject to a continuous service requirement.
The following share-based payment arrangements were in existence during the current year:
Performance rights series
Tranche 1a
Tranche 1b
Tranche 1c
Tranche 1d
Tranche 2a
Tranche 2b
Tranche 2c
Tranche 2d
Number Grant date Expiry date
30-Jun-25
26-Nov-19
725,000
Black-Scholes
30-Jun-25 Monte Carlo Simulation
26-Nov-19
725,000
N/A
30-Jun-25
26-Nov-19
725,000
N/A
30-Jun-25
26-Nov-19
725,000
Black-Scholes
30-Jun-25
26-Nov-19
700,000
Black-Scholes
30-Jun-25
26-Nov-19
700,000
Black-Scholes
30-Jun-25
26-Nov-19
700,000
Black-Scholes
30-Jun-25
26-Nov-19
700,000
Method of valuation Fair value at grant date (AUD)
0.325
0.041
N/A
N/A
0.359
0.342
0.325
0.309
The valuation was performed using the Black-Scholes model for Rights that are subject to non-market conditions and
for Rights that are subject to an Absolute Shareholder Return (ASR), the Monte Carlo Simulation model was utilised. The
following assumptions were utilised:
Input
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Expected life of performance rights (years)
Rights exercise price (A$)
Discount for lack of marketability (%)
Value
5%
45%
0.74% - 0.88%
0.59 - 3.59 years
-
0% - 10%
No performance rights were exercised during the year.
66
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
NOTE 30. 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)
Notes to the Financial Statements
2020
$’000
2019
$’000
1,500
40,000
53,003
20,000
178,402
292,905
-
26,067
10,503
14,550
70,543
121,663
1,500
13,933
42,500
5,450
107,859
171,242
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) Multi-option facility
As at reporting date, the Group has used $51,121,000 of its multi-option facility limit of $114,503,000. 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 a $178,402,000 insurance bond facility with various parties (30 June 2019: $176,415,000). This facility has been
utilised to provide security in connection with certain projects. The amount of insurance bonds issued under this facility as at 30
June 2020 is $70,543,000 (30 June 2019: $55,696,000).
67
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 31. 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 30. Maturity of the Group’s financial liabilities are as follows:
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
2020
Borrowings
Hire purchase liabilities
Lease liabilities
Trade and other payables
2019
Borrowings
Hire purchase liabilities
Trade and other payables
2,253
10,461
8,412
88,609
109,735
14,014
8,063
84,113
8,537
7,738
7,046
-
-
8,412
11,864
-
23,321
20,276
3,117
7,329
-
8,571
6,883
-
15,454
-
-
-
-
-
-
-
-
-
10,790
26,611
27,322
88,609
153,332
25,702
22,275
84,113
132,090
10,503
26,068
26,736
88,609
151,915
24,739
21,363
84,113
130,215
(b) Price risk
106,190
10,446
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 2020, the
Group held no financial instruments that could vary according to changes in the price of steel (2019: Nil).
68
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 31. 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 projects abroad executed
by local subsidiaries. In managing exposure to foreign exchange risk, the group has entered into a number of forward
foreign exchange contracts. At 30 June 2020, the fair value of these contracts was $86,000 with $140,000 increase in
profit. There is a natural hedge in place to the extent project costs are materially of the same foreign currency.
The major exchange rates relevant to the Group are as follows:
Average year ended
30/06/2020
As at
30/06/2020
Average year ended
30/06/2019
As at
30/06/2019
AUD$ / USD$
AUD$ / ZAR$
AUD$ / AED$
AUD$ / HKD$
AUD$ / KWD$
AUD$ / OMR$
AUD$ / CNH$
AUD$ / NZD$
0.67
10.48
2.46
5.23
0.20
0.26
4.72
1.05
0.69
11.91
2.53
5.33
0.21
0.26
4.86
1.07
0.72
10.14
2.63
5.61
-
-
-
1.07
0.70
9.85
2.58
5.48
-
-
-
1.05
The Group’s exposure to foreign exchange risk at reporting date was as follows, based on carrying amounts in
AUD$’000:
2020
AUD$
$’000
USD$
$’000
ZAR$
$’000
AED$
$’000
HKD$
$’000
KWD$
$’000
OMR$
$’000
CNH$
$’000
NZD$
$’000
Total
$’000
Cash and cash equivalents
19,479
496
390
Trade and other receivables
68,108
1,800
Trade and other payables
(78,360)
(1,056)
-
-
2,192
5,299
(1,909)
9,227
1,240
390
5,582
-
-
-
-
33
-
-
33
-
21
-
-
5,516
28,106
7,743
82,971
(24)
(2,143)
(5,117) (88,609)
(3)
(2,143)
8,142
22,468
2019
AUD$
$’000
USD$
$’000
ZAR$
$’000
AED$
$’000
HKD$
$’000
KWD$
$’000
OMR$
$’000
CNH$
$’000
NZD$
$’000
Total
$’000
Cash and cash equivalents
50,529
7
3
Trade and other receivables
54,576
1,666
1,365
2,344
5,488
-
12
Trade and other payables
(74,783)
(1,752)
-
(2,531)
(317)
30,322
(79)
1,368
5,301
(305)
-
-
-
-
-
-
-
-
-
-
5,397
58,280
7,476
70,583
- (4,730)
(84,113)
-
8,143 44,750
Based on the carrying amounts exposed to foreign currencies, had the Australian dollar 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
$630,489 lower/$696,856 higher (2019: $759,350 lower/$687,031 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.
69
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 31. 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.
2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative
Financial liabilities
Trade and other payables
Borrowings
Lease liabilities
2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Derivative
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
0.25%
28,106
-
-
-
-
-
28,106
-
-
-
-
-
-
-
-
-
-
3.47%
3.20%
(8,750)
(12,214)
(15,606)
-
(8,412)
(18,324)
(8,750)
(20,626)
(33,930)
-
-
-
-
-
-
-
-
-
82,971
86
28,106
82,971
86
83,057
111,163
(88,609)
(88,609)
-
-
(36,570)
(26,736)
(88,609)
(151,915)
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)
As at 30 June 2020, 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.
70
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT Notes to the Financial Statements
Notes to the Financial Statements
NOTE 31. 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.
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 the counterparties are banks with high credit ratings 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 ECL’s on trade receivables are estimated using a provision matrix based on historical credit loss experience
and any available forward-looking estimates as at reporting date.
Set out below is the information about the credit risk exposure at 30 June 2020 on the Group’s trade receivables for
which lifetime expected credit losses are recognised:
30 June 2020
Trade and other receivables and
contract assets ($’000)
Expected credit loss rate
30 June 2019
Days Past Due
Current
113,692
0.09%
<31 Days
31-60 Days
61-90 Days
8,869
0.16%
3,251
1.13%
7,629
3.08%
Total
133,441
Expected credit loss rate
0.02%
0.23%
1.00%
2.43%
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 and loss
of the Group. Other balances within trade and other receivables at 30 June 2020 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
Movement in ECL allowance provided for receivables
Opening loss allowance - 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 2020
2020
$’000
2019
$’000
2,979
-
2,979
(3,524)
(7,969)
600
1,698
-
(9,195)
4,429
3,184
7,613
(3,030)
(114)
329
228
(937)
(3,524)
71
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 ANNUAL REPORT
Notes to the Financial Statements
Notes to the Financial Statements
NOTE 31. FINANCIAL INSTRUMENTS (CONTINUED)
(f) Fair value
Net fair values of financial assets and liabilities are determined by the 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 financial liabilities, 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 9 Financial Instruments: 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.
2020
Financial assets
Derivative
Financial liabilities
Provisions
2019
Financial liabilities
Derivative
Provisions
Level 1
$’000
Level 2
$’000
86
-
86
-
-
-
Level 1
$’000
Level 2
$’000
-
-
-
(54)
-
(54)
Level 3
$’000
-
(3,217)
(3,217)
Level 3
$’000
-
(5,620)
(5,620)
Total
$’000
86
(3,217)
(3,131)
Total
$’000
(54)
(5,620)
(5,674)
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.
72
FOR THE YEAR ENDED 30 JUNE 2020SRG GLOBAL 2020 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 17 August 2020.
Ordinary share capital
SRG Global Limited’s issued share capital is comprised of 445,796,415 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
330
1,001, to
5,000
1,016
5,001 to
10,000
640
10,001 to
100,000
1,843
100,001 to
(MAX)
360
Total
4,189
98,239
2,974,315
5,028,693
65,210,599
372,484,569
445,796,415
There were 519 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
Wentworth Williamson
Twenty largest shareholders
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
SANDHURST TRUSTEES LTD
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