McConnell Dowell 2020 Annual Review

48 McConnell Dowell Group The Directors present their report on the consolidated entity consisting of McConnell Dowell Corporation Limited (the Company) and its controlled entities for the year ended 30 June 2020. Directors and Company Secretary The following persons were Directors of McConnell Dowell Corporation Limited during the financial year and up to the date of this report: Directors S.J. Flanagan (Chair), S.V. Cummins, D.J. Morrison, I Luck, A.H. Macartney, C.D. Lock. Resignations: E.K. Diack Company Secretary D.J. Morrison Principal activities The principal activity of the consolidated entity is infrastructure construction. There were no significant changes in the principal activities of the consolidated entity during the year. Consolidated result McConnell Dowell had a solid year of operational performance however COVID-19 impacts significantly reduced the expected revenue in H2. Despite this, McConnell Dowell’s diversity both geographically and in the nature of work undertaken helped mitigate the impact of the pandemic on the business and overall FY20 revenue grew 4% to AUD $979 million. NewWork Won performance has improved to $1.65 billion, notwithstanding the impact in Q4 caused by delays in some projects coming to market and awards for some key tenders. The improved performance in winning work increasedWork in Hand by 60% to $1.85 billion, with more than 90% of the portfolio represented by Government clients across the operating footprint of the business and 40% in collaborative alliances. A proactive approach to the management of both upstream and downstream COVID-19 impacts was taken to ensure liquidity resilience through this period. This included the settlement of some legacy commercial issues at a discount to our book position to release cash, resulting in a $19.17 million non-cash impairment. As a result, the balance sheet has been significantly de-risked and the operating group ended FY20 in a strong liquidity position with cash reserves of approximately $140million, minimal debt and undrawn credit lines available. The consolidated result for the year attributable to the members of McConnell Dowell Corporation Limited after taking the $19.17 million non-cash impairment was a loss after tax of $16.49 million. The underlying performance of the group was profitable. Year Ended 30 June 20 Year Ended 30 June 19 Reported (loss) / profit after tax (16,494) 7,785 Add back: Non-cash impairment 19,169 - Underlying profit after tax 2,675 7,785 Dividends No dividend (2019 – nil) was declared or paid during the year ended 30 June 2020 to the parent company shareholder. Significant changes in the state of affairs There were no significant changes in the state of affairs of the consolidated entity other than that referred to in the financial statements and notes following. Indemnification and insurance of directors and officers McConnell Dowell Corporation Limited, to the extent permitted by law, indemnify each Director and Company Secretary of the entity and its subsidiaries against liability incurred in the performance of their roles as directors and officers. The directors listed above, individuals who act as Director or Company Secretary of the Company’s subsidiaries and certain individuals who formerly held any of these roles also have the benefit of the indemnity. During the financial year the company paid an insurance premium insuring directors and officers of the consolidated entity for costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the company or a related body corporate. The directors and officers of the consolidated entity covered by the insurance policy included the directors listed in this report and all other executive officers and other officers of the consolidated entity. The contract of insurance prohibits disclosure of the amount of the premium. Indemnification of auditors To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young Australia during or since the financial year. Safety and environmental regulations The consolidated entity is committed to the highest standard of environmental and workplace safety performance. The Executive Committee (Exco) has the specific charter to monitor the consolidated entity’s performance in respect to its policies and procedures to ensure its obligations are met. Directors’ Report