DURATEC LIMITED

APPENDIX 4E

ABN 94 141 614 075

RESULTS FOR ANNOUNCEMENT TO THE MARKET

The current reporting period is the year ended 30 June 2022 and the prior reporting period is the year ended 30 June 2021.

	FY22 $'000	FY21 $'000	%

Revenue from ordinaryactivities	310,003	235,709	31.5%
Profit after income tax expense for the year attributable to members		7,131
	7,761		8.8%

Net tangible assets per share

Net tangible assets per share
NTA Backing	30 June 2021	30 June 2022
	cents per share	cents per share
Net tangible asset backing per ordinary share	12.87	10.92

Dividends

During the year, the 2021 final dividend of 1.50 cents per share (fully franked) totalling $3,561,672 was paid on 21 September 2021. $3,367,080 was paid in cash with the remainder reinvested via the Duratec Dividend Reinvestment Plan.

The board resolved to pay a 2022 interim dividend of 0.5 cents per share (fully franked) totalling $1,201,750 with a payment date of 10 May 2022. $1,116,822 of this total was paid in cash whilst the remainder was reinvested via the Duratec Dividend Reinvestment Plan.

Since the end of the reporting period, the Directors have declared an final dividend for 2022 of 1.5 cents per share (fully franked), to be paid on 5 October 2022. The ex-dividend date will be 12 September 2022 and the record date for determining entitlements to the dividend will be 13 September 2022.

Dividend Reinvestment Plan

The DRP is optional and offers ordinary shareholders in Australia the opportunity to acquire fully paid ordinary shares without transactions costs. Shares issued under the DRP will be derived from new issued ordinary shares. The shares will rank equally with other ordinary shares already on issue. The new shares will be issued at a price equal to the average of the daily volume weighted average market price of Duratec Ltd shares sold in the ordinary course of trading on the ASX over a period of 10 trading days beginning on the day after the relevant dividend record date, discounted by 5%, rounded to 4 decimal places. The last date for the receipt of an election notice for participation in the DRP in relation to the final 2022 dividend is 14 September 2022.

To elect to participate in the DRP, visit https://www.computershare.com.au/easyupdate/dur

Explanation of results

This information is contained in the 30 June 2022 Results Announcement and 30 June 2022 Results Presentation.

Control gained or lost over entities during the period

There have been no gains or losses of control over entities in the year ended 30 June 2022.

Details of associates & JV arrangements

Details of associates & JV arrangements
Relationship Name	Reporting entity’s percentage holding		Contribution to profit / (loss) (where material)
	Reporting period %	Previous period %	Reporting period $’000 Previous period $’000
Fortec Australia PtyLtd1 Associate	-	-	- 149
DDR Australia PtyLtd Associate	49	49	1,873 621
Duratec Ertech JV2 Joint Arrangement	50	50	880 1,999

1 On 31 August 2020 Duratec Limited disposed of its 40% interest in Fortec Australia Pty Ltd by way of a dividend in‐specie to its shareholders.

2 The joint arrangement listed above is classified as a joint operation and is not a separate legal entity. Duratec Ertech JV is a contractual arrangement between participants for the sharing of costs and outputs and Duratec Limited's share is proportionately consolidated in its financial accounts.

Audit report

This report is based on the annual financial report which has been independently audited and is not subject to qualifications.

Authorised for release to the ASX by the Board of Directors of Duratec Limited.

Investor Contact

Duratec Limited Dennis Wilkins + 61 417 945 049

About Duratec Limited

Duratec Limited (ASX: DUR) is a leading Australian contractor providing assessment, protection, remediation, and refurbishment services to a broad range of assets and infrastructure. The Company's multi-disciplined capabilities combine engineering experience with project delivery expertise and use a range of in-house assessment technologies, including 3D capture and modelling technology with predictive analysis tools. Headquartered in Wangara, Western Australia, Duratec has fifteen branches around the country in capital cities and regional centres, delivering services across multiple sectors including Defecne, Commerical Buildings & Facades, Infrastructure (Water, Transport & Marine), Mining & Industrial, Power and Energy.

Please visit www.duratec.com.au for further information.

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Duratec Limited

ACN: 141 614 075 ASX: DUR Annual Report for the Financial Year Ending 30 June 2022

Today’s success supports tomorrow’s opportunity

Duratec Limited ACN 141 614 075 ASX: DUR

		Contents Corporate Directory 3
		About Duratec 4
		Chairman’s Report 6
		FY22 Highlights 8
		Managing Director’s Report 10
		Finance Report 14
		Risk Management 17
		Our People 19
		Outlook 23
		Directors’ Report 25
		Remuneration Report (Audited) 30
		Auditor’s Independence Declaration 37
		Financial Statements 39
		Consolidated Statement of Profit & Loss and Other Comprehensive Income 39
		Consolidated Statement of Financial Position 40
		Consolidated Statement of Changes in Equity 41
		Consolidated Statement of Cash Flows 42
		Notes to the Financial Statements 44
		Directors’ Declaration 73
		Independent Auditor’s Report 75
		Shareholder Details 79

Annual Report for the Financial Year ending 30 June 2022Annual Report for the Financial Year ending 30 June 2022

Duratec Limited ACN 141 614 075 ASX: DUR

Corporate Directory

Registered Office & Principal Place of Business

108 Motivation Drive, Wangara Western Australia 6065

Contact Details Directors

Phone: +61 (8) 9206 6900

Martin Brydon: Non-Executive Director, Chairman Robert (Phil) Harcourt: Executive Director, Managing Director Chris Oates: Executive Director, General Manager Gavin Miller: Non-Executive Director

Email: [email protected] Website: www.duratec.com.au

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Company Secretary Dennis Wilkins

Share Registry Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace, Perth WA 6000

Share Trading Facilities

The Company’s ordinary shares are listed on the Australian Securities Exchange (Code: DUR). The Home exchange is Perth.

Auditor

RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade, Perth WA 6000

Annual Report for the Financial Year ending 30 June 2022

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About Duratec

Our Purpose

We are a national market leader in protecting, refurbishing and extending the life of client assets.

Our Vision

Our Business Model

End-to-end specialist Early Contractor Involvement (ECI), condition assessment, technical services, and asset refurbishment. We cater to every stage of the lifecycle of asset maintenance.

Our vision is to sustainably grow our business and become the most respected specialist contractor, providing technological and innovative solutions.

Duratec Limited ACN 141 614 075 ASX: DUR

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About Duratec
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Markets & Industries Serviced

Defence – Maintaining Defence capability.

Buildings and Facades – Delivering client value from better project outcomes through ECI.

Mining and Industrial – Partnering with mining clients to maximise the operational life of their fixed assets. Delivering quality tailored solutions which focus on successful outcomes, remediating and refurbishing critical assets, enabling industry to function optimally.

Other Infrastructure – Remediating critical infrastructure, including ports and wharves, to ensure these marine assets are able to withstand harsh conditions and meet expected lifespans. Refurbishing infrastructure that is critical to our communities, such as road and rail bridges, as well as water and wastewater assets.

Annual Report for the Financial Year ending 30 June 2022

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Chairman’s Report

Fellow shareholders,

techniques. Our specialised technical team continues to be in demand as asset owners seek a greater understanding of the condition of their facilities.

It gives me great pleasure to present the 2022 Annual Report for Duratec Limited (ASX: DUR) as we reflect on our business’ achievements over the past 12 months.

Our commitment to early contractor involvement (ECI) allows clients to benefit from our skills and expertise early in the delivery cycle, enabling a positive impact on cost, quality and deadline delivery.

While COVID-19 restrictions affected our operations heavily in 1HFY22, our ability to bounce back in 2H to post record revenue was incredibly pleasing. This result shows the breadth of our experience and depth of our capabilities, all backed by a hardworking, determined and resilient team.

The performance of Duratec during the recent pandemic is proof of our ability to provide leading technology and expertise, both of which are highly valued even within challenging operating environments. While heavily affected by numerous and protracted shutdowns in various markets and the consequent supply chain challenges, Duratec has emerged from the pandemic with a strong balance sheet and a comprehensive order book. It means our business is remarkably well positioned to accelerate its growth aspirations over the coming years.

Our FY22 full-year revenue of $310 million with normalised EBITDA of $19.3 million – a result achieved when 1HFY22 returned $5 million EBITDA – demonstrates a strong recovery in 2H, which was largely brought about by more stable operating conditions. Encouragingly, our Eastern States operations returned to performing strongly and the Company is confident that this, along with continued momentum in Western Australia, will continue into FY23.

Operational Performance

Our full-year performance in 2022 was impressive given the market conditions. The Company demonstrated its ability to bounce back from unprecedented worldwide events and move forward with greater confidence and a positive outlook.

Business Model

Duratec’s business model has proven successful, as demonstrated by our strong 2HFY22 performance and positive outlook for the year ahead. We operate in several sectors that not only have different business cycles but also are geographically spread across all states and territories in Australia. This diversity provides greater consistency in year-to-year earnings, while also reducing the risk of adverse outcomes.

In terms of operational performance, the business has placed a keen focus on profit margin. In bidding for work, we are of the belief that simply winning work to keep busy is not the objective. We are selective in choosing which projects we tender for, in an effort to improve the Company’s overall operating margins, profitability and cash generation. This discerning approach will remain a key focus throughout 2023.

Partnering is another one of Duratec’s strengths. We operate several joint ventures (JVs), including a 50/50 partnership with civil construction business Ertech (DEJV), as well as our investment entity DDR Australia. DEJV was formed in 2019 and is currently delivering the $53 million Oxley Wharf extension at HMAS Stirling on Garden Island, Western Australia. Due for completion in September 2023, the project demonstrates the continued success of this partnership.

Duratec finished FY22 with a strong balance sheet. We achieved this through our commitment to operating a capital-light business with solid, reliable cash generation, which allows for the consistent delivery of dividends while providing the option for growth from targeted synergistic, bolt-on and complementary acquisitions.

Duratec’s clients receive added value thanks to the Company’s technical capabilities, which include spatial integration – a technology that combines inspection data with progress reporting to form a managed 3D platform. Duratec was the first contractor in Australia to use a variety of new, internationally sourced products and continues to make advances in low-impact remediation

Duratec Limited ACN 141 614 075 ASX: DUR

Outlook and Pipeline

As outlined above, the outlook for Duratec is overwhelmingly positive. This is underlined by our recent award of a $16.5 million contract with the Department of Defence to deliver facilities and infrastructure works, over four stages, for offshore marine vessels at HMAS Coonawarra in Darwin. This project supports our expectation of continued revenue growth in FY23, which already has an order book of $458 million and tender s of $ 701 million within an overall $1. 72 billion pipeline of tangible opportunities.

The year ahead looks to be a period of significant growth for the Company given current work on hand and the pipeline of work to be tendered. On behalf of the Duratec Limited Board, I sincerely thank Managing Director, Phil Harcourt, the leadership team and all employees for their dedication over what has been an unusual and challenging period. The commitment and professionalism shown by our people is a credit to them and a great asset to the Company. I also thank our shareholders, clients and suppliers for their valuable support over the last 12 months and throughout the pandemic.

I am very optimistic about the year ahead as we continue to deliver on a strong pipeline in improved conditions. I look forward to sharing the journey with you in 2023.

Yours faithfully,

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Martin Brydon Non-Executive Chairman - Duratec Limited Date: 19 August 2022

Most respected specialist contractor, providing technological and innovative solutions

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Annual Report for the Financial Year ending 30 June 2022

FY22 Highlights

Financial Highlights

Revenue 1 EBITDA 2 $310m $19.3m Up from $235.7m in FY21 Margin 6.2% Dividend 3 EPS 2.0¢ 3.2¢ Per share, fully franked per share

NPAT $7.8m Up from $7.1m in FY21 Cash $58.3m Net cash position of $43.5m

1 Revenue excludes DDR Australia Pty Ltd (49% share).

2 Normalisation of EBITDA accounts for tax affect from Duratec Limited’s 49% investment in DDR Australia Pty Ltd.

3 Interim dividend of 0.5 cents per share and final dividend of 1.5 cents per share fully franked.

Pipeline of Work

Order Book Tenders 5 Pipeline 4 $458.0m $701.0m $1.72b Up from $236.2m in FY21 Up from $657.2m in FY21 Down from $2.2b in FY21

4 Pipeline includes 49% share of DDR Australia Pty Ltd revenue.

5 Tenders includes submitted and currently being tendered opportunities.

Duratec Limited ACN 141 614 075 ASX: DUR

Our People Highlights

Total Employees 857

Women in Workforce 16.9%

Indigenous Workforce 6%

Up from 725 in FY21

Operational Highlights

Projects 1,664 Undertaken in FY22

Industry Sectors 11

Client Base 235 Offices 20 Nationwide

Repeat Clients 83%

Employee Training 913

Courses delivered in FY22

Annual Report for the Financial Year ending 30 June 2022

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Managing Director’s Report

light of the significant life changes that many people have experienced over the past two years as a result of the pandemic. Duratec participated in the Blue Tree Project as part of National Mental Health Month in October, and encouraged staff to check in on their friends and colleagues.

People and Culture

Duratec’s employees are integral to our success. We aim to provide interesting and varied project opportunities, while cultivating a supportive environment and a workplace culture that acknowledges and appreciates its employees.

As part of our commitment to environmental sustainability, Duratec facilitates the recycling of noncompliant cladding that is removed during facade refurbishment projects. In WA, we have partnered with one of the world’s largest recycling service providers, Remondis, which aims to operate within a circular economy and promote sustainable materials management. Remondis recently commissioned custom-built machinery to recycle material that no longer complies with Australian Building Codes. This means cladding is diverted from landfill and recycled via a process of separating panels into their components and repurposing them into sustainable products that can be used in building and industry. Duratec also ensures the recycling of any materials left behind from demolition projects.

Attracting and retaining a diverse workforce is also important to our productivity, and providing opportunities for women in construction has been a focus in FY22. Duratec supports the theme of this year’s International Women’s Day, “Break the Bias”. We are working to change the perception of women in construction and looking to improve the ways in which we can attract and retain more women in the business. Duratec has a highly skilled and qualified workforce of women who are employed in a variety of different roles. We continue to work on promoting, supporting and increasing the representation of women within the business each year. Duratec recognises that having more women in construction positively affects performance, profitability, productivity, innovation, mental health and inclusivity.

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We are proud to announce the introduction of paid parental and partner leave to all Duratec employees, commencing May 2022. Duratec recognises the importance of parental and family responsibilities, and aims to encourage work-life balance. The introduction of this leave is a major step forward towards improving conditions for working parents.

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The first project on which we partnered with Remondis was the facade refurbishment of the iconic Central Park tower in the Perth CBD. Duratec is removing 26,000sqm of panels, as well as making structural and aesthetic improvements, as part of a project, the scale of which has never before been seen in Australia. The delivery of this project will be a significant achievement for Duratec and the partnership with Remondis one we hope to continue.

Safety remains a key focus in all our operations. Duratec always seeks to ensure the provision of a safe workplace, the use of sound practices and procedures, the employment of experienced frontline supervision and the necessary resources to ensure all Duratec employees – as well as those who operate in the vicinity of our works – return home in the same condition as when they arrived. Our continuous improvement practices are supported by open and honest reporting in relation to incidents and potential incidents. We maintain focus on lead indicator safety observations and task inspections to promote safety awareness and support our project delivery teams..

The wellbeing of our staff is paramount, which is why we have continued to focus on mental health over the past 12 months. We recognise the importance of taking care of ourselves and each other, and have run a variety of training sessions to assist in the prioritisation of the issue. It is particularly relevant in

Duratec Limited ACN 141 614 075 ASX: DUR

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Finance Report
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Operational Overview

Duratec’s FY22 operational and financial results reflect a year of two distinctly contrasting halves. The first half was impacted heavily by east coast COVID-19 outbreaks with state and territory governments shutting down key projects in New South Wales, the ACT and Victoria for up to four months, while we still had to maintain our project operational overheads.

Pleasingly, the second half saw a return to more stable operating conditions for the delivery of projects with minimal COVID-19 impacts other than the short-term absenteeism of some employees. These improved conditions resulted in strong revenue growth, an improvement in overall gross margin achieved and underlying profit contributions relative to H1FY22.

We commenced four major projects in FY22, namely, Central Park cladding replacement ($63 million), RAAF Base Tindal aviation fuel farm ($110 million), Western Sydney International Airport fuel hydrant main ($50 million) and HMAS Stirling Oxley Wharf extension ($27 million). These projects, all set for completion in FY24, are performing well and in line with expectations in terms of safety, program and financial contributions.

Throughout the year, Duratec secured other major projects as a result of soundly considered professional bids, building a historically high, solid, work-on-hand position of $458 million (inclusive of 49% relating to DDR, but excluding master service agreements, which represent $30–$40 million annually) – circumstances, which support an extremely positive outlook for FY23 and beyond.

Duratec closed the year with a total revenue of $310 million (excluding $73 million from DDR), up 31% from the FY21 revenue of $235.7 million.

Earnings before interest, tax depreciation and amortisation (EBITDA) in FY22 were $19.3 million (i.e. 6.2% of revenue), up 2.7% from FY21’s EBITDA of $18.8 million.

Earnings before interest and tax (EBIT) were $10.2 million, up from $10 million.

Consolidated net profit after tax (NPAT) (inclusive of contribution from associates) was $7.8 million compared to $7.1 million in FY21.

Annual Report for the Financial Year ending 30 June 2022

Defence

In FY22, the Defence services sector delivered revenue of $135 million, up from $98.8 million in FY21; and a gross profit of $18.1 million, up from $16.9 million in FY21.

The Defence sector revenue growth was much stronger in 2H than 1H, which was adversely affected by four months of COVID-19 shutdowns in New South Wales, the ACT and Victoria. Encouragingly, by early November 2021, all projects were functioning normally. This continued for the remainder of the financial year, resulting in an overall improved financial performance.

Defence estate is responsible for more than 330 properties and 25,000 existing built assets. Refurbishment, repair and building of important assets, such as accommodation building upgrades, fuel infrastructure supply and installation, electrical asset upgrades and wharf extensions, in all Australian states and territories, continued to be Duratec’s focus, with 100-plus multi-discipline projects delivered via an established presence on 70-plus bases.

Duratec’s Defence team has grown to more than 175 employees and become a market leader thanks to its national coverage, base experience, strong relationships and thorough understanding of client requirements. Accordingly, Duratec has achieved a solid Defence work-on-hand position thanks to multiple contract awards, including the aforementioned $110 million aviation refuelling facility at RAAF Base Tindal and the $53 million design-and-construct wharf project at HMAS Stirling on Garden Island in WA, both of which are due for completion in FY24.

The Federal Government continues to be committed to significant expansion of Australia’s Defence capability and FY23 spend is expected to increase. The volume of tendering has increased significantly and the pipeline of tangible, identified opportunities is very strong, which provides confidence for Duratec’s continued growth in this sector.

Mining & Industrial

In FY22, the Mining & Industrial sector performed strongly, generating revenue of $75 million, up from $52.9 million in FY21, and a gross profit of $18.1 million, up from $10.4 million in FY21. Strong commodity prices and demand for precious and industrial metals, such as iron ore, nickel, lithium, alumina, gold and zinc, have reinforced the need for clients to maintain their infrastructure and avoid disruptions to production output. This has led to multiple contract awards, involving structural integrity upgrades to mining assets both on project sites and at port load-out facilities, in the North West of WA, the Northern Territory, Northern Queensland and Tasmania. Projects have generally been awarded on purchase orders and delivered via master services rates-based agreements.

During the year, we increased our geographical presence by establishing offices in Gladstone, Queensland, and Hobart, Tasmania, to meet the service needs of key clients. Prospects in the Mining & Industrial sector remain strong and we are well positioned with local resources to deliver up-andcoming projects.

Building & Facade

Our Building & Facade services sector delivered revenue of $64.7 million in FY22, up from $39.9 million in FY21, and a gross profit of $10.2 million, up from $9.8 million in FY21.

The revenue from Building & Facade works in New South Wales and Victoria was adversely affected by the previously mentioned four months of COVID-19related shutdowns, during which Duratec carried the cost of project overheads. In November 2021, however, all projects returned to normal operating conditions.

During the year, we worked on six mid-sized projects in the Eastern States, while in WA, there were four larger projects, including the $63 million Central Park tower. Our Central Park team had completed all temporary site establishment works by January 2022 and cladding replacement, using mast climber access systems, is currently underway. This project is due for completion in FY24.

Building facade issues related to combustible cladding continue to become more prevalent as pressure is applied by insurers and building code compliance regulators. This has resulted in an increased demand for Duratec’s paid ECI technical services. As well as conducting due-diligence investigations on existing building facades, we have been actively involved in full-scale fire test modelling for key clients. The focus is very much on important public building infrastructure, such as schools, hospitals and offices, but there is also increasing demand from the private sector.

Our dedicated team is well positioned to secure and deliver more works in this market sector and as part of Duratec’s commitment to environmental sustainability, all recladding projects include the recycling of non-compliant cladding materials, using custom manufactured machinery.

Other (including Energy, Ports, Transport and Water/Wastewater infrastructure)

For FY22, Other projects contributed revenue of $35.5 million, down from $44.1 million in FY21, and a gross profit of $2 million, down from $8.7 million in FY21. This segment includes a diverse range of infrastructure, from fuel infrastructure facilities, power station infrastructure and reinforced concrete-and-steel wharf and jetty structures to road and rail bridges, potable water reservoirs and wastewater facilities.

Since 2018, Duratec has been strategically focusing on Australian fuel infrastructure upgrade opportunities and our dedicated team has successfully delivered 18 projects. Leveraging off this proven capability, it was exciting to be awarded the previously mentioned $50 million Western Sydney International Airport (WSIA) fuel hydrant main project in November 2021. Works are progressing in line with expectations and will continue throughout FY23 with completion expected in FY24. Despite being a new-construction and long-duration project, the WSIA works were rigorously considered during the tender phase and have been designed to mitigate risk. The well-resourced project will contribute strongly to FY23 revenue.

Duratec Limited ACN 141 614 075 ASX: DUR

Technical

Demand for Duratec’s technical services has continued to grow throughout FY22, and the team of engineers now has a diverse range of clients from all market sectors. Increasingly, clients wish to understand the condition of their infrastructure and obtain an appreciation of future operational expenditure. To meet this demand, Duratec has invested in technology to capture and report data in an efficient and reliable manner.

Data capture techniques include the use of drones to take high-resolution images of concrete-and-steel structures. This can then be combined with precise survey data, laser scanning and thermal imaging to accurately reconstruct the asset into a 3D model. These techniques, along with in-house sampling and destructive laboratory testing, allow for the reliable analysis of a structure and an accurate condition assessment. This information is then presented to the client in a detailed report, complete with commercial options, enabling asset owners to make well informed decisions.

This ECI model has enabled Duratec to secure many opportunities in FY22, including our first $13 million managing contractor project to manage the rehabilitation of former Defence and other Commonwealth infrastructure on six Sydney Harbour Federation Trust properties.

Duratec’s technical work-on-hand position and pipeline of opportunities support an outlook of ongoing growth in asset remediation and rehabilitation.

DDR Australia

Duratec’s Aboriginal and Torres Strait Islander associate business, DDR Australia, continued to perform strongly throughout FY22, with revenue of $73 million, up from $45.9 million in FY21. This is primarily a result of delivering Supply Nationcertified works for Defence in regions which have

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largely not been impacted by COVID-19. The DDR business provides genuine long-term opportunities for Aboriginal and Torres Strait Islander peoples in an environment which is welcoming, respectful and embracing of their culture. Since its incorporation in 2017, the business has grown to be one of the most respected in its segment of operation, with solid prospects associated with increased Government spend expected from Indigenous procurement policies. Our outlook for DDR is for a very good performance in FY23.

Outlook

The outlook for FY23 and beyond is overwhelmingly positive, thanks to:

\ A return to more stable operating conditions after two years of COVID-19 disruptions
\ A historically strong order book of $458 million (excluding $30–$40 million in MSAs per annum)
\ Key business demand drivers now active in all market sectors nationally
\ Overall strength in Duratec’s operational capacity

This view is further supported by increased investment in the market sectors which Duratec services, where we are seeing clients upgrading, refurbishing and extending the life of existing infrastructure. Duratec’s geographical footprint, diversity of clients and $1. 72 billion pipeline of opportunities put the Company in an ideal position to secure work, deliver projects and meet the needs of our clients. Our organic growth strategies will continue, as will the disciplined evaluation of potential acquisition opportunities, specifically those that are a good cultural fit and provide complementary service offerings in existing market sectors.

Duratec has budgeted for a very solid performance in FY23, based upon the current volume of work on hand, which includes four major projects, with a total contract value of $222 million, all performing in line with expectations. We have a strong pipeline of opportunities and confidence we can deliver revenue, underlying profit growth and strong cash generation with the improved operating conditions. We expect a return to historical year-on-year growth, with the overall outlook for FY23 and continuing into FY24 very favourable.

Robert (Phil) Harcourt Managing Director Date: 19 August 2022

Annual Report for the Financial Year ending 30 June 2022

Finance Report

Revenue & Profitability

Duratec recorded strong improvement in performance over the second half of FY22, which saw the full year revenue end at $310.0m, a substantial increase of $74.3m (31.5%) compared to FY21. Net profit after tax (NPAT) for the year was down by $0.8m (9.3%) to $7.8m (FY21: $8.6m), which had been normalised to remove the impact of the Company’s Initial Public Offering (IPO) and its disposal of associate business Fortec Australia Pty Ltd, in FY21. FY22’s second half contributed $7.0m (90.6%) of the full-year NPAT, reflecting the significant turnaround in financial performance compared to the first half.

Duratec achieved very strong levels of revenue growth in each of its significant operating segments of Defence (up by 36.6%), Mining & Industrial (41.6%) and Buildings & Facades (62.3%), although this was partly offset by reduced activity in Other operating segments (down by 19.7%). From a regional perspective, Duratec recorded higher revenues in all states and territories compared to FY21.

FY22 total gross profit was $48.4m, which was $2.6m (5.7%) higher than in FY21. Gross profit increased at a much lower rate than revenue due to the overall average gross margin dropping to 15.6% over FY22, down from 19.4% in FY21 and from 15.8% in the first half of the year. This reduction in average gross margins can be attributed to multiple factors, including the higher proportion of historically lower margin Defence sector work performed, increased costs of doing business, greater competition to secure new work and the one-off adverse impact of a

small number of challenging jobs performed in FY22.

Business overheads were higher in FY22, partly due to growth in regional-based administrative support to assist with the delivery of more work in those regional areas. Employee benefits expenses also came under pressure during the year due to increasing labour shortages in most areas.

Other income was similar to the prior period, with Duratec again receiving fully franked dividends of $1.5m from its 49% owned associate business, DDR Australia Pty Ltd (DDR).

Duratec’s effective tax rate was 23.0% for the year (24.0% when including prior year adjustments). This was lower than the statutory corporate tax rate, predominantly due to the nature of equity accounting for associates, which requires recognition of the after-tax movement in Duratec’s investment in DDR for the year in its NPAT, whereas the tax-paid nature of the dividends received from that entity come with imputation credits to be applied to Duratec’s own income tax position.

Overall results for the year reflected the continued impacts of COVID-19 in the first half, with ongoing delays in award of projects, changes in client priorities and operating inefficiencies, before more normal trading conditions returned in the second half. Labour shortage issues increased over the year. With several large projects underway, strong growth in revenues achieved in the second half led to a significant turnaround in profitability.

Duratec Limited ACN 141 614 075 ASX: DUR

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Finance Report
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Balance Sheet & Cash Flow

Shareholder Returns

Duratec’s balance sheet strengthened further over the year and ended FY22 with a very strong cash on hand balance of $58.3m, with net cash position of $43.5m (cash less borrowings and right-of-use liabilities). Net assets ended the year at $31.0m, up $5.0m (19.4%) compared to FY21. Borrowings remained low and Duratec has used these to purchase fixed assets via asset finance facilities, predominantly plant and equipment for use on projects. Trade debtors have continued to be wellmanaged, with Duratec’s clients generally being high quality and predominantly trading within agreed payment terms, with minimal bad debts being experienced since the company’s inception.

The Duratec Board resolved to pay a fully franked final dividend of 1.5 cents per share, bringing the total dividend for the year to 2.0 cents per share. Although this is higher than the Board-approved policy range of between 30% to 50% of after-tax profits, the Board believes that this still strikes a prudent balance between the desire to provide returns directly to shareholders as dividends and the business’ need to retain funds for future growth opportunities.

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Paul Ryan Chief Financial Officer

Net operating cash flow for FY22 was very strong at $26.5m, compared to $10.7m, excluding IPO-related costs, in FY21, driven by significantly increased receipts from clients, particularly in the last few months of the year, largely because of revenue growth in the second half. Capital expenditure during the year was $7.4m, which was $3.5m lower than in FY21, mainly due to some significant one-off costs being incurred in FY21. In contrast, purchases in FY22 were almost exclusively focused on motor vehicles and equipment required to deliver projects. Duratec paid $4.8 million in dividends in FY22.

Date: 19 August 2022

Annual Report for the Financial Year ending 30 June 2022

Figure 1. FY21 Revenue by Operating Segment

Figure 2. Annual Revenue by Operating Segment

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11%
21% $310m 44%
FY22 Total Revenue
24%
Defence Mining & Industrial
Buildings & Facades Other
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350
310.0m
300
247.3m
250 235.7m
200 200.4m
150
126.3m
100
50
0
FY18 FY19 FY20 FY21 FY22
AU$ (millions)
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Figure 3. Annual Revenue by Region Western Region Eastern Region
36% 34%
48% 48%
FY18 21% FY19 21% FY20 21% 52% FY21 21% 52% 51% FY22 21% 49%
64% 66%
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Figure 3. Annual Revenue by Region

Duratec Limited ACN 141 614 075 ASX: DUR

Risk Management

Duratec’s risk management framework, as outlined in the Corporate Governance Statement, incorporates effective risk management. The Audit and Risk Committee, a Board sub-committee, oversees risk. The risks outlined below represent a summary of the more significant risks that the Company is exposed to and is not presented in any particular order.

Safety Incidents

Employee and contractor workplace incidents that could lead to serious injury or death could materially impact the operations and financial results of the Company.

Mitigation Strategies

The safety function reports to the Managing Director and all key activities are risk assessed. The Company has a safety team that supports the business at the operational level. The Company actively monitors lead, lag and other safety related KPI’s. Systems and processes have been updated during FY22 to further streamline and support these objectives. The Company actively monitors employee and contractor qualifications to ensure they meet or exceed requirements.

Safety Regulation

The Company operates in a highly regulated environment and is required to hold relevant certifications and approvals to operate. Failure to maintain these approvals could result in fines and interrupt the business operations.

Mitigation Strategies

The Company maintains registers of its certifications and regularly reviews key policies, procedures and legislation to ensure it remains compliant.

COVID-19

The impact of the COVID-19 pandemic has created uncertainty across supply chains, customers, and the community in general. The Company has seen some delays in the award of projects and operational issues in H1 FY22 due to COVID-19.

Mitigation Strategies

The Company has implemented a COVID-19 management plan. The Company remains agile with respect to potential operational impacts that could arise from a reassessment of risk by the Company and in response to any changes to government policies.

Human Resources

Inability of the Company to retain and attract key personnel whose technical expertise is important in securing projects and effectively delivering against contracted project commitments.

Mitigation Strategies

The Company has many long term and loyal employees. It offers employees rewarding careers and stimulating work in an environment where they have development opportunities. The Company has a Human Resources function that actively manages programs designed to develop talent and embraces a diverse and inclusive culture.

Customers Reliance

Reliance on key clients, specifically the Department of Defence.

Mitigation Strategies

The Company has dedicated resources to manage the Department of Defence related projects. Resources manage risks associated with each contract and are overseen by management along with other business support functions. Contract specifications are reviewed and agreed with clients to reduce the risk of incorrectly specified projects. Separate contracts are negotiated for each project engagement and there are no contractual linkages between the separate Department of Defence contracts.

Poor Quality Project Delivery

Project issues, including scope and delivery, compromising the quality of project outcomes.

Mitigation Strategies

The Company has a dedicated tendering and quality team and is led by experienced personnel who invest time in understanding client requirements. Lessons learned on previous projects are documented and shared which assists with a process of continuous improvement. In addition, the Company utilises the Early Contractor Involvement (ECI) client engagement model on many larger projects where the first stage of the project is a discrete activity designed to confirm the project specification and further reduce risk of an incorrectly specified solution.

Competition

Competition in the markets the Company operates could result in reduced margins, lost market share and lower growth.

Mitigation Strategies

The Company maintains a disciplined and risk-based approach to identifying opportunities, tendering and project execution. It also reviews lessons learned from key projects to ensure there is a process of continuous improvement in this cycle.

Contract Termination

Termination for convenience could result in the loss of a contract and impose unplanned costs on the Company

Mitigation Strategies

This risk exists in Department of Defence contracts and in limited examples of other commercial engagements. It would typically arise due to poor performance by the Company. The Company seeks to mitigate this risk through its superior performance, conduct and flexibility to deliver at or above expectations.

Annual Report for the Financial Year ending 30 June 2022

Supply Chain Risk

Supply chain risk associated with over reliance on key suppliers and unexpected cost increases.

Mitigation Strategies

The Company has a procurement function that reviews key supplier exposure with typically more than one supplier for individual items procured. In relation to commodity related items, which the use varies from project to project, costs are influenced by prevailing commodity prices. Current estimates are utilised in tendering processes to minimise risk to the Company. The Company reviewed potential exposure to Modern Slavery under the Modern Slavery Act 2018 with no issues noted.

Subcontractor Risk

Subcontractors are engaged on many projects and as a result they need to be carefully managed to ensure they are effective, that they understand and follow the Company’s policies and procedures in all relevant respects including safety.

Mitigation Strategies

The Company inducts subcontractors so that they understand Duratec expectations, they are supervised and are assessed on a regular basis for suitability for involvement on Duratec projects.

Legal Risk

The Company regularly executes customer, supplier and employment contracts. There is an inherent risk of contractual issues that could result in financial loss.

Mitigation Strategies

The Company has a commercial team that works closely with operational leaders in the review and negotiation of contracts. There is a formal contract review and approval process to help mitigate this exposure. Employment risks are managed by Human Resources policies and procedures. To limit potential losses, the Company maintains various insurance policies.

Reputation

Loss of confidence in the Company because of an event that falls short of community and stakeholder expectations.

Mitigation Strategies

Employees are trained on the requirements of key policies including; Code of Conduct, health and safety, bullying and harassment, anti-bribery and competition.

Increased Competition

Excessive competitive pressure may drive down project margins, take market share and slow business growth.

Mitigation Strategies

The Company welcomes competition but adopts a disciplined approach to tendering and will only participate if the reward is appropriate to the level of risk involved.

Access to Finance

Access to funds for business sustaining and growth activities.

Mitigation Strategies

The Company has in place facilities for project guarantees and asset financing that are appropriate to current and future needs.

Bad Debt

Counterparty risk involving the risk of a customer failing to pay its debts and the consequential adverse financial impact on the Company.

Mitigation Strategies

The Company has thorough credit assessment processes that are applied before a project is accepted, active monitoring and follow up of debtor payments, and, rapid escalation if issues are identified. These strategies have seen low credit losses in recent years. The Company remains vigilant to the risk of credit losses particularly in the context of an uncertain market.

Information Technology and Cyber Risk

Continuity of business systems and risk of financial loss resulting from cyber penetration.

Mitigation Strategies

The Company has in place policies and protocols for managing system access, data storage and data recovery. These processes are tested and reviewed periodically with third party auditors engaged to assist as required.

Duratec Limited ACN 141 614 075 ASX: DUR

Our People

Human Resources

As at 30 June 2022, Duratec had a workforce of 857 employees, with the skills and talent to deliver a wide range of projects nationally.

The labour market in FY22 was particularly challenging. As the constraints of COVID-19 lifted, and project activity increased, competition to attract talent was magnified in a favourable market for candidates. Recruitment activity in November – December 2021 was 50% higher and doubled in January – February 2022 compared to our typical recruitment activity.

Response rates from female candidates improved over the past 12 months, aided by initiatives to promote employee value propositions in advertising campaigns, including flexibility in work arrangements and working from home.

Duratec has an employee referral program that recognises and rewards existing employees who recommend a colleague from their professional network, who aligns with Duratec’s values and is successfully hired. The Company significantly increased this reward, which reinvigorated the referral program to the mutual benefit of employees and the Company.

There has been significant pressure on remuneration in both job offers and in retaining existing staff in the current tight labour market. Duratec recognises this as a factor in employee retention and turnover that has increased recruitment activity. Consequently, retention initiatives became an area of focus in the later part of FY22 as the constraints of COVID-19 eased and more external career opportunities became available.

Figure 4. Employee Breakdown as at 30 June 2022

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By Region By State Location By Employment Status
NSW
15%
NT
38% %
857 857 QLD 857
Employees Employees S Employees
Total 62% Total Total
WA
TA
VIC 80%
[Western Region (62%)] [ACT (3.7%)] [NSW (6.7%) ] [Full Time]
[Eastern Region (38%)] [NT (6.2%) ] [QLD (9.6%) ] [Part Time (1.3%)]
[SA (3.6%) ] [TAS (3.3%) ] [Casual]
[VIC (4.9%) ] [WA (62%)]
SA
TAS
VIC
ACT
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By Role By Gender By ATSI Status
6% 6%
16% 16.9%
6%
857 857 857
Employees Employees Employees
Total Total Total
72% 83.1% 94%
[Corporate & Admin] [Men ] [Women ] [Aboriginal & Torres ]
Strait Islander (ATSI)
[Engineers]
[Project Staff] [Non-ATSI]
[Project Management]
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Annual Report for the Financial Year ending 30 June 2022

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Next:
Outlook
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Graduates and Trainees

Duratec currently has 16 graduates undertaking a formal program, rotating through areas of the business to gain experience in end-to-end project delivery and across industries.

There are currently 37 trainees at Duratec attaining formal qualifications in various disciplines.

Throughout 2021, Duratec successfully developed and implemented a Surface Preparation Certificate to recognise the unique and existing skills of our employees and improve capability. This has proved to be a popular certificate recognised and sought after by clients and a significant addition to our employee value proposition.

People and Culture

Duratec continued to identify new opportunities to enhance our employee value proposition with the introduction of Paid Parental Leave. Significantly, the leave recognises the diversity of family units including same sex couples and paid leave benefits available for both primary and secondary carers.

Mental Health remained a focus with the continued expansion of a network of internal accredited mental health first aiders trained in supporting employees across the business, enabling awareness and open conversations for the mental wellbeing of our employees.

New employee surveys were added to the employee onboarding process, providing a valuable feedback loop for the HR team to coach managers to engage with new employees, setting up for a successful orientation to Duratec.

After an extensive search, Duratec identified new software in 2021 to provide an efficient HR information and administration tool for the efficient management of our employees. Duratec will implement this in the current calendar year.

Learning and Development

The Company’s learning management software continues to play a vital role in delivering inductions and internal training solution. The Company has rapidly expanded the courses available updated many training modules to reflect new content and refreshed expiry dates to ensure employees refresh their learning.

Making inductions accessible prior to mobilisation to client projects has been a significant efficiency that Duratec is now rolling out to subcontractors.

Duratec accessed the additional funding opportunities available due to COVID-19 to offer additional traineeship opportunities to both new and existing employees. Business units have engaged on this with a proactive approach to address skilled labour requirements in the future.

Learning and development opportunities continued to be important for employee retention in FY22, with paid leave and financial assistance accessed by more employees to pursue graduate qualifications or new career pathways.

Duratec has recently purchased a virtual reality (VR) blast and paint system called VirtualPaint for the training and development of new and experienced painters. VR is rapidly changing the way in which inductions and training is completed around the world. Advancements in virtual reality technologies have created exciting opportunities to transform the value of workforce training. VirtualPaint is an educational VR training system developed to engage safe classroom learning, build self-confidence, display immediate feedback, motivate performance improvement and eliminate resource consumption. This is the first VirtualPaint unit to be brought into Australia.

In FY22, Duratec delivered 913 individual courses, workshops and bespoke training solutions to broaden the skills and capability of our teams.

Duratec Limited ACN 141 614 075 ASX: DUR

Safety

Duratec continue to invest in HSEQ resourcing, safety initiatives, training, and technology to provide greater coverage, capability and building of safety culture across the business.

There was significant HSEQ recruitment in the Eastern States corresponding to the growth experienced in those areas of operations.

Duratec instigated and implemented a number of health and safety initiatives, including the engagement of a psychologist specialising in Safety Leadership and Culture development to strengthen our safety culture. The Company is in partnership with a training institute to provide customised leadership training for supervisors which complements the recently reviewed Supervisor Reference Guide.

Systems and Process Improvements

As a business, Duratec constantly looks at ways to improve systems and processes to mitigate risk to the business and create operating efficiencies.

Duratec aims to strengthen risk management processes with a re-focus on task-based hazard identification and risk assessment by reverting to Job Hazard Analysis (JHA) for non-high-risk activities and support Safe Work Method Statements (SWMS) for high-risk activities.

Complementing the JHA and SWMS, Duratec introduced a personal risk assessment called a Safe Start to engage the workforce and provide efficiencies in hazard identification and risk management.

section of the business. Feedback has been gathered from the workforce which has been positive and encouraging that this improvement initiative will bring benefits to the Duratec’s risk management process.

Sustainability

Duratec is committed to sustainable development of work practices to contribute positively on the environment and minimise its environmental impact.

The Company recently completed a project to remove approximately 136 tonnes of toughened glass, of which almost 100% was recycled, with only a small amount of laminate material going to waste. The end-use for the glass was a combination of insulation manufacture, bottle manufacture, blasting aggregate and pool filtration media. In addition, we removed almost 7.8t of aluminium, which was also recycled. With Duratec entering into new markets in the building cladding space, it is forming partnerships with recycling service providers to maximise recycling of ACP panels removed from buildings.

COVID-19 Response

Duratec has remained agile and responsive to ensure prioritisation of the health, safety and welfare of our employees regarding COVID-19 . The Company introduced a Vaccination Policy to reinforce Duratec’s commitment to stopping the spread of the virus and support the implementation of the numerous and varied mandated requirements in each state. Processes remain in place to respond to any changes and accommodate client requests for vaccination records.

These improvements have been trialed across a variety of projects to provide a representative cross

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Annual Report for the Financial Year ending 30 June 2022
Next Remuneration Report
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22 Tangible opportunities of $1.72b on 30 June 2022 provides exciting outlook prospects

Duratec Limited ACN 141 614 075 ASX: DUR

Outlook

During the second half of FY22 Duratec’ s performance has improved significantly, as evidenced by the revenue and operating profit achieved, with more normal operating conditions now the risk of State Government restrictions from COVID-19 have substantially eased. Our business drivers are active in all market segments and geographical areas serviced by Duratec. This has resulted in good quality opportunities to tender and secure. Encouragingly, we have had considerable success in tendering such that the order book is at an historical high level, $458.0m, and tangible opportunities of $1.6b on 30 June 2022 provide exciting outlook prospects.

Duratec is currently delivering 366 projects, including four major projects, (Central Park recladding, $63m, Oxley Wharf Extension, $53m, Western Sydney International Airport aviation fuel infrastructure, $50m, and RAAF Base Tindal aviation refueling facility, $110m), which are well underway and all performing well in line with expectations. Accordingly, Duratec has budgeted for strong growth in FY23 reflective of pre-COVID-19 historical year on year growth. Duratec has very good operational leverage to support the budgeted growth with strong focus upon disciplined growth of revenue, underlying profit, and cash generation.

Growing and Diversified Pipeline

Diversified across industry sector and geographies (54% Eastern Region and 46% Western Region).

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Figure 5. Order Book Figure 6. Tenders Figure 7. Pipeline
17% 18%
24%
$458 47% $701 47% 15% $1.72 50%
million 21% million billion
16%
17%
13% 15%
from $236.2m from $657.2m from $2.2b
at 31 July 2021 at 31 July 2021 at 31 July 2021
[Defence ] [Buildings & Facades ] [Mining & Industrial ] [Other]
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Duratec Listed
Average Annual on ASX
350 Growth Rate
Establish Spatial
Integration Division
300 32%
East Coast Presence
over 12 Years
Expanded
250
Establish
200
Defence Division
150 Acquisition of
MEnD Consulting
Establish East
100 Coast Presence
Duratec
50 Established
0
FY10 FY10 FY11 FY11 FY12 FY12 FY13 FY13 FY14 FY14 FY15 FY15 FY16 FY16 FY17 FY17 FY18 FY18 FY19 FY19 FY20 FY20 FY21 FY21 FY22 FY22
Duratec Revenue DDR Revenue Duratec Trend
Annual Revenue (AUD millions)
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Annual Report for the Financial Year ending 30 June 2022

Duratec Limited ACN 141 614 075 ASX: DUR

Directors’ Report

The Directors of Duratec Limited present their report, together with the consolidated financial statements of Duratec Limited ABN 94 141 614 075 (“the Company” or “Duratec”) and the entities it controlled (together referred to as “the Group” or the “consolidated entity”) at the end of, or during, the year ended 30 June 2022.

Directors and Company Secretary

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Name Position Period of Directorship
Robert (Phil) Harcourt Managing Director Appointed 26 August 2010
Martin Brydon Non-Executive Chairman Appointed 1 September 2020
Christopher Oates Executive Director – General Manager Appointed 26 August 2010
Gavin Miller Non-Executive Director Appointed 14 April 2010
Dennis Wilkins Company Secretary Appointed 1 September 2020
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Information on Directors and Company Secretary

The experience, other directorships or special responsibilities of the directors in office at the date of this report are as follows:

Martin Brydon

Non-Executive Chairman

(Appointed 1 September 2020)

Mr Brydon is currently a Non-Executive Director of the New Zealand and Australian listed company Fletcher Building Limited and resides in Perth. Mr Brydon has more than 30 years’ experience in the Australian construction materials and building product industries commencing as an electrical engineer at Cockburn Cement Limited (CCL) in WA before moving into roles in operations management, sales & marketing and general management before ultimately becoming Chief Executive Officer. When CCL was merged into Adelaide Brighton Limited (ABL) in 1999, Mr Brydon became Executive General Manager - Strategy and Business Development and worked closely with the Managing Director in formulating and executing strategy. This included ABL entering the downstream businesses of concrete and concrete aggregates and masonry products through a series of acquisitions. Mr Brydon was appointed Chief Executive Officer of ABL in May 2014 and was appointed to the ABL Board as Managing Director in November 2015. He retired from ABL in January 2019. During his tenure, ABL grew to have a market capitalisation of over $4 billion and was included in the S&P ASX100 index.

Mr Brydon is an independent Director as in the Board’s view he is free from any business or other relationship that could materially interfere with or reasonably be perceived to materially interfere with the independent exercise of his judgement.

Robert (Phil) Harcourt BEng (Civil), CPEng. Executive Director - Managing Director

Mr Harcourt has over 48 years of experience in the civil and structural engineering industry. During this time Mr Harcourt has held numerous roles including; Senior Project Engineer and CEO of Savcor Finn Pty Ltd, and Chief Operations Officer of the publicly listed company Savcor Group. Mr Harcourt along with two trusted colleagues established Duratec in 2010 and in his role of Managing Director has led the Company through a period of rapid growth to become a highly recognised and reputable specialist civil remediation contracting company. As Managing Director, Mr Harcourt is responsible for the overall management of the Company, Health, Safety, Environment and Quality, strategic planning, new business opportunities and risks and business development.

Other Listed Company Directorships in last 3 years None

Special Responsibilities

\ Member of the Audit and Risk Committee
\ Member of the Nominations and Remuneration Committee

Interests in shares of Duratec Limited

26,653,389

Other Listed Company Directorships in last 3 years

\ Fletcher Building Limited

Special Responsibilities

\ Chair of the Nominations and Remuneration Committee
\ Member of the Audit and Risk Committee

Interests in shares of Duratec Limited

52,758

Annual Report for the Financial Year ending 30 June 2022

Christopher Oates

BAppSc (Construction Management)

Executive Director – General Manager

Mr Oates holds a Bachelor of Science in Construction Management and Economics and has over 25 years’ experience in the construction and remediation industries. As General Manager and Executive Director of Duratec, Mr Oates is responsible for the general management of the Company in Western Australia and the Northern Territory and has been involved in securing and delivering a wide range of projects across numerous sectors, including mining & resources, oil & gas, water & wastewater, transport infrastructure, marine as well as direct engagement with projects on Department of Defence bases across Australia. Mr Oates is a registered builder across the business in several states and territories.

Other Listed Company Directorships in last 3 years None

Special Responsibilities

\ Member of the Audit and Risk Committee
\ Member of the Nominations and Remuneration Committee

Interests in shares of Duratec Limited

26,653,389

Gavin Miller

Non-Executive Director

Mr Miller is a Certified Practising Accountant, Chartered Secretary and graduate of the Australian Institute of Company Directors. He has over 30 years of financial and commercial management experience in various industries, including manufacturing, utilities and civil construction.

Other Listed Company Directorships in last 3 years None

Special Responsibilities

\ Chair of the Audit and Risk Committee
\ Member of the Nominations and Remuneration Committee

Interests in shares of Duratec Limited

20,000

Dennis Wilkins

Company Secretary

Mr Wilkins is the founder and principal of DWCorporate Pty Ltd, a privately held corporate advisory firm providing governance, compliance and capital raising services. Since 1994 he has been a director of, and involved in the executive management of, several publicly listed companies with operations in Australia, PNG, Scandinavia and Africa. Mr Wilkins is currently a Director of Key Petroleum Limited, and an alternate Director of Middle Island Resources Limited.

Directors’ Meetings

The number of Directors’ meetings and the numbers of meetings attended by each Director of the Group during the financial year were:

Bard Meetings Audit & Risk Nomination & Remuneration Attended Held Attended Held Attended Held	Bard Meetings Audit & Risk Nomination & Remuneration Attended Held Attended Held Attended Held	Bard Meetings Audit & Risk Nomination & Remuneration Attended Held Attended Held Attended Held	Bard Meetings Audit & Risk Nomination & Remuneration Attended Held Attended Held Attended Held	Bard Meetings Audit & Risk Nomination & Remuneration Attended Held Attended Held Attended Held	Bard Meetings Audit & Risk Nomination & Remuneration Attended Held Attended Held Attended Held
	Held	Attended	Held	Attended	Held
Martin Brydon 11 11 2 2 1 1
Robert (Phil) Harcourt 11 11 2 2 0 1
Christopher Oates 11 11 2 2 0 1
Gavin Miller 11 11 2 2 1 1

The principal activities of the consolidated entity during the period were the provision of assessment, protection, remediation and refurbishment services to a broad range of assets, in particular steel and concrete infrastructure. No significant change in the nature of these activities occurred during the period.

Duratec Limited ACN 141 614 075 ASX: DUR

Review of Operations

For the year ended 30 June 2022, the consolidated entity generated revenues of $310,002,563, an increase of 31.5% on the previous year. Profit after income tax for the year was $7,760,739, an increase of 8.8% on the previous year.

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Jun-22 Jun-21
$’000 $’000
Revenue from contracts 310,003 235,709
with customers
Profit after income tax 7,761 7,131
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Significant Changes in State of Affairs

There were no significant changes in the consolidated entity’s state of affairs during the financial year.

Matters Subsequent to the End of the Financial Year

The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the potential impact after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Federal and State Governments such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

Dividends

Dividends paid or declared since the start of the financial year were $4,763,000 (2021: $26,843,000).

Since the end of the financial year, the Directors have recommended the payment of a final ordinary dividend for 2022 of 1.5 cents per fully paid share, franked to 100%, to be paid on 5 October 2022.

Likely Developments and Expected Results of Operations

Likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the consolidated entity.

Environmental Regulation

The consolidated entity’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a state or territory.

Options

No options over issued shares or interests in the company or a controlled entity were granted during or since the end of the financial year and there were no options outstanding at the date of this report.

Proceedings on Behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is party for the purposes of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.

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 26” 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 26” 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.

Annual Report for the Financial Year ending 30 June 2022

Indemnity and Insurance of 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 the liability and the amount of the premium.

Indemnity and Insurance of Auditor

Corporate Governance Statement

The board of Duratec Limited is responsible for corporate governance. The Board has prepared the Corporate Governance Statement in accordance with the third edition of the Corporate Governance Council’s Principles and Recommendations, which is available on the Company’s website at www.duratec. com.au under the ‘Investors’ section.

Rounding of Amounts

The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

To the extent permitted by law, the Company has agreed to indemnify it’s auditors, RSM, 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 RSM during the financial year, or since the financial year end.

Duratec Limited ACN 141 614 075 ASX: DUR

Auditor’s Independence Declaration

As required under section 907C of the Corporations Act 2001, please see “Auditor’s Independence Declaration” on page 37

On behalf of the directors,

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Robert (Phil) Harcourt Managing Director Date: 19 August 2022

Annual Report for the Financial Year ending 30 June 2022

The Directors present the Duratec Limited 2022 remuneration report, outlining key aspects of our remuneration policy and framework, and remuneration awarded this year.

Voting and comments made at the Duratec Limited’s 2021 Annual General Meeting (‘AGM’)

At the 2021 AGM, 99.95% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2021. The company did not receive any specific feedback at the AGM regarding its remuneration practices.

The report is structured as follows:

(a) Key management personnel (KMP) covered in this report

(b) Remuneration policy and link to performance

(d) Link between remuneration and performance

(e) Remuneration expenses

(f) Contractual arrangements with executive KMPs

(g) Non-executive director arrangements

(h) Additional statutory information

(a) Key Management Personnel Covered in this Report

Non-executive and executive directors

(for details see “Information on Directors and Company Secretary” on page 25).

\ Martin Brydon \ Deane Diprose Non-Executive Chairman Executive Director (Appointed 1 September 2020) (Resigned as Executive Director

\ Gavin Miller on 31 August 2020, continued Non-Executive Director as KMP from 1 September 2020)

\ Gavin Miller Non-Executive Director

\ Robert (Phil) Harcourt \ Oliver McKeon Executive Director Executive Director

\ Christopher Oates (Resigned as Executive Director on 31 August 2020, continued Executive Director as KMP from 1 September 2020)

\ Paul Ryan Chief Financial Officer

\ James Giumelli Non-Executive Director (Resigned 31 August 2020)

\ Michael Best Non-Executive Director (Resigned 31 August 2020)

Duratec Limited ACN 141 614 075 ASX: DUR

(b) Remuneration Policy and Link to Performance

Any review of remuneration is determined by the Nomination and Remuneration and approved by the Board. In the 2021 year, the Board directly undertook the review and approval function. The Board aims to ensure that remuneration practices are:

\ competitive and reasonable, enabling the Company to attract and retain key talent,

Assessing Performance

The Nomination and Remuneration Committee is responsible for assessing performance against KPIs and determining the STI and LTI to be paid. To assist in this assessment, the committee receives detailed reports on performance from management which are based on independently verifiably data.

\ aligned to the Company’s strategic and business objectives and the creation of shareholder value, transparent and easily understood, and
\ acceptable to shareholders.

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Element Purpose Performance Metrics Potential Value
Provide competitive
Fixed
market salary including Positioned at the
Remuneration Nil
superannuation and non- market rate
(FR)
monetary benefits
Adjusted Net Profit Before Tax CEO: up to maximum
of $150,000
Reward for in-year excluding (DDR), shareholder
STI
performance and retention returns, non financial metrics and Execs: ranges up to
KPI’s including safety performance. maximum of $150,000
Employee Equity Plan (EEP) rules
Alignment of employees
contain two components and
including directors to long- At the discretion
LTI vesting conditions; achievement of
term shareholder value of the Board
Total Shareholder Return (TSR) and
creation
absolute returns.
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Annual Report for the Financial Year ending 30 June 2022

(c) Elements of Remuneration

(i) Fixed Annual Remuneration (FR)

Key management personnel may receive their fixed remuneration as cash, or cash with non-monetary benefits such as motor vehicle allowances. FR is reviewed annually and is benchmarked against market data for comparable roles in companies in a similar industry and with similar market capitalisation.

The Board aims to position executives at or near the median, with flexibility to take into account capability, experience, value to the organisation and performance of the individual.

(ii) Short-Term Incentives (STI)

Certain employees are entitled to participate in a short-term incentive scheme as part of their total remuneration. The STI requires the achievement of certain Key Performance Indicators (KPI’s). KPI’s

are set by the Board and Executives for eligible employees, depending on the role. The STI is payable in cash and is calculated with reference to financial and non financial KPI’s and is capped.

(iii) Long-Term Incentives (LTI)

LTI targets are set by the Board. Achievement of the LTI targets involves the offer of Awards that may comprise Rights, Options or Restricted Shares with vesting conditions subject to the Company’s Total Shareholder Return (TSR) and Earnings Per Share (EPS). The vesting conditions provide employees and directors with close alignment with shareholder interests. The Board has the discretion to cancel or vary LTI’s, including the claw back of remuneration paid in previous financial years.

(d) Link Between Remuneration and Performance

Statutory Performance Indicators

The Company aligns Executive remuneration to its strategic and business objectives and the creation of shareholder wealth. The table below shows the Group’s financial performance over the last two years. The Board and Nomination & Remuneration Committee takes into account financial and non financial issues when making remuneration decisions. As a consequence, there is not a direct correlation between the statutory key performance measures and the variable remuneration awarded.

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2022 2021
$’000 $’000
Sales revenue 310,003 235,709
Profit before income tax 10,202 10,032
Profit after income tax 7,761 7,131
EBITDA 17,769 15,918
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The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:

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2022 2021
Share price at financial
0.4 0.4
year end ($)
Total dividends declared
2.0 1.5
(cents per share)
Diluted earnings per
3.1 3.1
share (cents per share)
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Duratec was admitted to the Official List of ASX Limited on Tuesday, 3 November 2020. As a result, information for the previous five years has not been provided.

Duratec Limited ACN 141 614 075 ASX: DUR

(e) Remuneration Expenses

The following table shows details of the remuneration expense recognised for the Group’s key management personnel for the current and previous financial year measured in accordance with the requirements of the accounting standards.

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Post Long Share-
Short term benefits employment term based
benefits benefits payments
Cash Long Rights to
Cash Annual Superannu-
Year salary service deferred Total
bonus leave ation
and fees leave shares
Non-Executive Directors
2022 113,636 - - 11,364 - - 125,000
Martin Brydon [1] 2021 95,129 - - 9,037 - - 104,166
2022 63,636 - - 6,363 - - 69,999
Gavin Miller [2]
2021 47,945 - - 4,555 - - 52,500
James Patrick 2022 - - - - - - -
Giumelli [3] 2021 - - - - - - -
2022 - - - - - - -
Michael Best [4]
2021 - - - - - - -
Executive Directors
Robert (Phil) 2022 422,502 46,154 29,594 27,500 7,796 - 533,546
Harcourt 2021 413,944 - 43,642 25,721 23,178 - 506,485
2022 372,499 46,154 26,083 27,500 6,822 - 479,058
Christopher Oates 2021 366,711 - 30,473 25,650 20,575 - 443,409
Other KMP
2022 372,499 18,100 3,594 27,500 7,056 - 428,749
Deane Diprose [5] 2021 359,711 - 31,165 25,721 12,639 - 429,236
2022 306,902 18,100 19,430 27,500 5,514 98,845 476,291
Oliver McKeon [6]
2021 289,776 - 32,116 27,427 21,810 56,205 427,334
2022 239,016 18,100 20,242 27,500 5,056 120,556 430,470
Paul Ryan
2021 221,538 9,132 24,422 22,548 3,132 114,670 395,442
Total executive 2022 1,713,418 146,608 98,943 137,500 32,244 219,401 2,348,114
directors & other
KMPs 2021 1,651,680 9,1 32 161,818 127,067 81,334 170,875 2,201,906
2022 177,272 - - 17,727 - - 194,999
Total NED
2021 143,074 - - 13,592 - - 156,666
Total KMP 2022 1,890,690 146,608 98,943 155,227 32,244 219,401 2,543,113
remuneration
2021 1,794,754 9,132 161,818 140,659 81,334 170,875 2,358,572
expensed
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1 Martin Brydon was appointed Non-Executive Chairman on 1 September 2020.
2 Gavin Miller received Non-Executive Director fees from 1 October 2020.
3 James Patrick Giumelli resigned as Non-Executive Director on 31 August 2020 and did not derive Directors Fees from Duratec Limited.
4 Michael Best resigned as Non-Executive Director on 31 August 2020 and did not derive Directors Fees from Duratec Limited.
5 Deane Diprose resigned as Executive Director on 31 August 2020 and transferred to Other KMP on 1 September 2020.
6 Oliver McKeon resigned as Executive Director on 31 August and transferred to Other KMP on 1 September 2020.

Annual Report for the Financial Year ending 30 June 2022

(f) Contractual Arrangements with Executive KMPs

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Contract
Name Position Notice Period Fixed Remuneration
Duration
For the year ended 30 June
Executive Director - 6 months by 2023: $500,000 per annum,
Mr Robert (Phil) Harcourt Unspecified
Managing Director either party inclusive of superannuation
and motor vehicle allowance
For the year ended 30 June
Executive Director – 3 months by 2023: $450,000 per annum,
Mr Christopher Oates Unspecified
General Manager either party inclusive of superannuation
and motor vehicle allowance
For the year ended 30 June
5 weeks by 2023: $425,000 per annum,
Mr Deane Diprose Executive Manager Unspecified
either party inclusive of superannuation
and motor vehicle allowance
For the year ended 30 June
General Manager 3 months by 2023: $350,671 per annum,
Mr Oliver McKeon Unspecified
(Eastern Region) either party inclusive of superannuation
and motor vehicle allowance
For the year ended 30 June
Chief Financial 4 weeks by
Mr Paul Ryan Unspecified 2023: $278,460 per annum,
Officer either party
inclusive of superannuation
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(g) Non-executive Director Arrangements

Non-executive directors receive a Board fee as outlined below. They do not receive performancebased pay or retirement allowances. The fees are inclusive of superannuation. The Board Chair receives a higher base fee compared to the other non-executive director, reflective of the additional demands and responsibilities of this role.

Fees are reviewed annually by the Board taking into account comparable roles and market data provided by the Board’s independent remuneration adviser.

The non-executive directors’ fees approved as part of the initial public offering of Duratec Limited were as follows:

$ Base fees 131,350 Other Non-executive directors 73,500 Fees included discharging responsibilities to: Audit Committee - Chair Audit Committee - Member

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Nomination & Remuneration Committee - Chair Nomination & Remuneration Committee - Member

All non-executive directors enter into a service agreement with the company in the form of a letter of appointment. The letter summarises the board policies and terms, including remuneration, relevant to the office of director.

Duratec Limited ACN 141 614 075 ASX: DUR

(h) Additional Statutory Information

(i) Relative Proportions of Fixed vs Variable Remuneration Expense

The following table shows the relative proportions of remuneration that are linked to performance and those that are fixed, based on the amounts disclosed as statutory remuneration expense as shown in “(e) Remuneration Expenses” on page 57.

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Fixed At Risk - STI At Risk - LTI
2022 2021 2022 2021 2022 2021
% % % % % %
Non-Executive Directors
Martin Brydon 100 100 - - - -
Gavin Miller 100 100 - - - -
Executive Directors
Robert (Phil) Harcourt 91 100 9 - - -
Christopher Oates 90 100 10 - - -
Other KMP
Deane Diprose 96 100 4 - - -
Oliver McKeon 75 87 4 - 21 13
Paul Ryan 68 69 4 2 28 29
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Reconciliation of Options and Ordinary Shares Held by KMP Shareholdings

The movement during the financial year in the number of ordinary shares in the Company held directly, indirectly or beneficially by each KMP, including their related parties, is as follows:

2022	Balance at start of the year	Received as part of remuneration	Additions	Disposals	Balance at end of the year
Martin Brydon_1_ 70,132 - 2,758 - 72,890
Gavin Miller 20,000 - - - 20,000
Robert (Phil) Harcourt 26,553,389 - 100,000 - 26,653,389
Christopher Oates 26,553,389 - 100,000 - 26,653,389
Deane Diprose_2_ 26,553,389 - 55,133 - 26,608,522
Oliver McKeon_3_ 4,586,120 - - - 4,586,120
Paul Ryan 200,000 200,000 231,536 - 631,536
Total 84,536,419 200,000 489,427 - 85,225,846

1 Restated to include shareholdings of personally related parties

2 Deane Diprose resigned as Executive Director on 31 August 2020 and transferred to Other KMP on 1 September 2020.

3 Oliver McKeon resigned as Executive Director on 31 August and transferred to Other KMP on 1 September 2020.

Rights

This table shows Rights granted, vested and forfeited during the year:

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Balance at start Granted during Balance at end
2022 Vested Forfeited
of the year year of the year
- - - - -
Martin Brydon
- - - - -
Gavin Miller
- - - - -
Robert (Phil) Harcourt
- - - - -
Christopher Oates
Deane Diprose - - - - -
- -
Oliver McKeon 500,000 200,000 700,000
-
Paul Ryan 550,000 200,000 200,000 550,000
Total 1,050,000 400,000 200,000 - 1,250,000
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Annual Report for the Financial Year ending 30 June 2022

Share-based payments: Performance Rights

During the year 400,000 unlisted performance rights, subject to vesting conditions and performance criteria were issued to Key Management Personnel.

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Grant date 26-Nov-21
Expiry Date 28-Sep-26
Number of Performance Rights 400,000
Share Price at Valuation Date $0.31
Expected Volatility 43.50%
Dividend yield 4.10%
Risk Free Interest Rate 0.93%
Fair Value at Valuation Date:
Subject to Total Shareholder Return $0.10
(TSR) performance condition
Subject to Earnings Per Share (EPS) $0.31
performance condition
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No options have been granted over unissued fully paid ordinary shares in the Company.

[This concludes the remuneration report, which has been audited]

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the directors,

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Robert (Phil) Harcourt Managing Director

…the skills and talent to deliver a wide range of projects nationally.

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Then:
Section
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Duratec Limited ACN 141 614 075 ASX: DUR

Auditor’s Independence Declaration

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RSM Australia Partners

Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Duratec Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

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RSM AUSTRALIA PARTNERS

Perth, WA Date: 19 August 2022

==> picture [72 x 62] intentionally omitted <==

J A KOMNINOS Partner

THE POWER OF BEING UNDERSTOOD

AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

Annual Report for the Financial Year ending 30 June 2022

Duratec’s Buildings & Facades division achieved very strong revenue growth (62.3%)

Duratec Limited ACN 141 614 075 ASX: DUR

Consolidated Statement of Profit & Loss and Other Comprehensive Income

For the year ended 30 June 2022

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Consolidated Entity
2022 2021
Note $’000 $’000
Continuing Operations
Revenue from contracts with customers 4 310,003 235,709
Contracting cost of sales 5 (261,598) (189,901)
48,405 45,808
Other income 4 2,332 2,361
Employee benefits expense 5 (27,760) (24,739)
Administration expense (5,940) (4,879)
Occupancy expense (1,141) (1,081)
Depreciation and amortisation expense (6,779) (5,227)
Gain on disposal of associate 7 - 151
Initial Public Offering expense 5 - (2,472)
Finance costs 5 (788) (659)
Equity accounted investment results 6 1,873 769
Profit before income tax expense from continuing operations 10,202 10,032
Income tax expense 8 (2,441) (2,901)
Profit for the year from continuing operations 7,761 7,131
Profit for the year is attributable to:
Owners of Duratec Limited 7,761 7,131
Profit for the year 7,761 7,131
Total comprehensive income for the year, net of tax 7,761 7,131
Earnings per share attributable to the owners of Duratec Limited: cents cents
Basic earnings per share (cents) 9 3.24 3.23
Diluted earnings per share (cents) 9 3.12 3.10
Earnings per share from continuing operations attributable to the owners of Duratec Limited:
Basic earnings per share (cents) 9 3.24 3.23
Diluted earnings per share (cents) 9 3.12 3.10
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The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

Annual Report for the Financial Year ending 30 June 2022

Consolidated Statement of Financial Position

As at 30 June 2022

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Consolidated Entity
2022 2021
Note $’000 $’000
ASSETS
Current Assets
Cash and cash equivalents 10 58,263 41,249
Trade and other receivables 11 29,998 29,139
Contract assets 4 16,661 7,576
Inventories 12 317 376
Current tax receivable 14 208 538
Other current assets 13 1,380 1,139
Total Current Assets 106,827 80,017
Non-Current Assets
Trade and other receivables 11 1,998 146
Property, plant and equipment 15 18,823 16,846
Right-of-use assets 16 2,525 3,105
Investments accounted for using the equity method 17 3,901 2,027
Other non-current assets 13 121 90
Deferred tax assets 14 3,428 2,991
Total Non-Current Assets 30,796 25,205
Total Assets 137,623 105,222
LIABILITIES
Current Liabilities
Trade and other payables 18 39,426 38,992
Borrowings 19 3,571 2,735
Property lease liabilities 16 1,557 1,299
Contract liabilities 4 41,690 19,356
Provisions 20 6,824 4,792
Total Current Liabilities 93,068 67,174
Non-Current Liabilities
Borrowings 19 8,451 7,383
Property lease liabilities 16 1,229 1,998
Deferred tax liabilities 14 3,186 1,936
Provisions 20 732 812
Total Non-Current Liabilities 13,598 12,129
Total Liabilities 106,666 79,303
Net Assets 30,957 25,919
EQUITY
Issued capital 21 25,167 23,703
Reserves 22 1,965 1,389
Retained earnings 23 3,825 827
Total Equity 30,957 25,919
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The above statement of financial position should be read in conjunction with the accompanying notes.

Duratec Limited ACN 141 614 075 ASX: DUR

Consolidated Statement of Changes in Equity

For the year ended 30 June 2022

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Consolidated Entity
Note $’000 $’000 $’000 $’000
Balance at 1 July 2020 500 20,539 (231) 20,808
Comprehensive income
- -
Profit for the year 7,131 7,131
- -
Total comprehensive income for the year 7,131 7,131
Transactions With Owners
Share based payments 30 - - 1,620 1,620
- -
Issue of ordinary shares (net of costs) 23,203 23,203
Dividends paid 24 - (26,843) - (26,843)
Balance at 30 June 2021 23,703 827 1,389 25,919
Balance at 1 July 2021 23,703 827 1,389 25,919
Comprehensive income
- -
Profit for the year 7,761 7,761
- -
Total comprehensive income for the year 7,761 7,761
Transactions With Owners
Share-based payments 30 - - 1,760 1,760
Transfer from share-based payments reserve 21 1,184 - (1,184) -
Dividend Reinvestment Plan 21 280 - - 280
Dividends paid 24 - (4,763) - (4,763)
Balance at 30 June 2022 25,167 3,825 1,965 30,957
Issued Capital Retained Earnings Reserves Total Equity
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The above statement of changes in equity should be read in conjunction with the accompanying notes.

Annual Report for the Financial Year ending 30 June 2022

Consolidated Statement of Cash Flows

For the year ended 30 June 2022

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Consolidated Entity
2022 2021
Note $’000 $’000
Cash flows from operating activities
Receipts from customers 352,512 252,226
Payments to suppliers and employees (324,1 50 ) (238,134)
Income tax paid (1,299) (2,942)
Interest and finance costs paid (637) (513)
Interest received 4 95 109
Cashflows from operating activities (excluding IPO payments) 26,52 1 10,746
-
Payments for IPO (4,079)
Net cashflows from operating activities 34 26,52 1 6,667
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 842 519
Purchase of property, plant and equipment 15 (7,441) (10,539)
Dividends received 4 1,510 1,505
Net cashflows used in investing activities (5,089) (8,515)
Cash flows from financing activities
Dividend paid 24 (4,484) (25,200)
Proceeds from share issue - 24,000
Proceeds from borrowings 5,552 7,516
Repayment of borrowings (3,649) (2,973)
Repayment lease liabilities (1,838) (1,527)
Loans payments from related parties - 5
Net cashflows (used in) / from financing activities (4,419) 1,821
Net increase/ (decrease) in cash and cash equivalents 17,014 (27)
Cash and cash equivalents at beginning of period 41,249 41,276
Cash and cash equivalents at the end of the financial year 10 58,263 41,249
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The above statement of cash flows should be read in conjunction with the accompanying notes.

Duratec Limited ACN 141 614 075 ASX: DUR

The year ahead looks to be a strong period of growth for the Company, given current work-onhand and the pipeline of work to be tendered.

Annual Report for the Financial Year ending 30 June 2022

Notes to the Financial Statements

Contents
Note 1: Significant Accounting Policies 45 Note 2:Critical Accounting Estimates and Judgements 52 Note 3:Segment Reporting 53 Note 4:Revenue 54 Note 5:Expenses 55 Note 6:Equity Accounted Investment Results 55 Note 7:Disposal of Associate 55 Note 8:Income Tax Expense 56 Note 9:Earnings Per Share 57 Note 10:Cash and Cash Equivalents 57 Note 11:Trade and Other Receivables 58 Note 12:Inventories 58 Note 13:Other Assets 58 Note 14:Current and Deferred Taxes 59 Note 15:Plant and Equipment 60 Note 16:Leases 61 Note 17:Investments Accounted for Using the Equity Method 62 Note 18:Trade and Other Payables 62	Note 19:Borrowings 62
	Note 20:Provisions 62
	Note 21:Issued Capital 63
	Note 22:Reserves 63
	Note 23:Retained Earnings 64
	Note 24:Dividends 64
	Note 25:Financial Instruments 65
	Note 26:Remuneration of Auditors 67
	Note 27:Contingent Liabilities 67
	Note 28:Capital Commitments 67
	Note 29:Related Party Transactions 67
	Note 30:Share-based Payments 68
	Note 31:Parent Entity Information 70
	Note 32: Interests in Subsidiaries, Associates and Joint Arrangements 71
	Note 33:Deed of Cross Guarantee 71
	Note 34:Reconciliation of Profit After Income Tax to Net Cash from Operating Activities 72
	Note 35:Events After the Reporting Period 72

Duratec Limited ACN 141 614 075 ASX: DUR

Note 1: Significant Accounting Policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

The following Accounting Standards and Interpretations are most relevant to the consolidated entity: Conceptual Framework for Financial Reporting (Conceptual Framework)

The consolidated entity has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but it has not had a material impact on the consolidated entity’s financial statements.

Basis of Preparation

Duratec Limited is a for-profit company limited by shares, incorporated and domiciled in Australia. The Company’s registered address is 108 Motivation Drive, Wangara, WA 6065. The consolidated financial statements of the Company as at and for the financial year ended 30 June 2022 comprises the Company and its subsidiaries (together referred to as the “Group” or the “consolidated entity”). The Group provides assessment, protection, remediation and refurbishment services to a broad range of assets, in particular steel and concrete infrastructure.

The consolidated financial report is presented in Australian dollars, which is Duratec Limited’s functional and presentation currency. All values are rounded to the nearest thousand, except when otherwise indicated, under the option available to the Company under ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191. The Company is an entity to which this legislative instrument applies.

These general-purpose financial statements for the year ended 30 June 2022 have been prepared in accordance with Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001.

Historical Cost Convention

The financial report has been prepared on a historical cost basis, except for derivative financial instruments, debt and equity financial assets, and contingent consideration that have been measured at fair value.

Compliance with IFRS

The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

A. New or Amended Accounting Standards and Interpretations Adopted by the Group

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

B. Revenue Recognition

The Group is in the business of providing construction and maintenance services. Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for those goods or services. The Group has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods and services before transferring them to the customer.

i. Construction Services

Construction contracts are assessed to identify the performance obligations contained in the contract. The total transaction price is allocated to each individual performance obligation. Typically, the Group’s construction contracts contain a single performance obligation.

Work is performed on assets that are controlled by the customer or on assets that have no alternative use to the Group, with the Group having right to payment for performance to date. As performance obligations are satisfied over time, revenue is recognised over time using an input method based on costs incurred to date relative to forecasts to cost to complete.

Fundamental to this calculation is a reliable estimate of the transaction price (total contract revenue). In determining the transaction price, variable consideration including claims and certain contract variations are only included to the extent it is highly probable that a significant reversal in revenue will not occur in the future. Where a variation in scope has been agreed with the customer but the corresponding change in the transaction price has not been agreed the variation is accounted for as variable consideration. The estimate of variable consideration is determined using the expected value approach taking into account the facts and circumstances of each individual contract and the historical experience of the Group and is reassessed throughout the life of the contract.

Annual Report for the Financial Year ending 30 June 2022

Note 1: Significant Accounting Policies continued…

When it is probable that total contract costs will exceed total contract revenue, the contract is considered onerous and the present obligation under the contract is recognised immediately as a provision. Key assumptions regarding costs to complete contracts include estimation of labour, technical costs, impact of delays and productivity.

Customers are typically invoiced on a monthly basis and invoices are paid on normal commercial terms.

ii. Services Contracts

Contracts for performance of maintenance activities cover servicing of assets and involve various activities. These activities tend to be substantively the same with the same pattern of transfer to the customer. Where this is the case, which is the majority of the services contracts, these services are taken to be one performance obligation and the total transaction price is allocated to the performance obligation identified.

Performance obligations are fulfilled over time as the Group largely enhances assets which the customer controls. For these contracts, the transaction price is determined as an estimate of this variable consideration.

iii. Variable Consideration

If the consideration in the contract includes a variable amount, the Group estimates the amount of the consideration to which it is entitled in exchange for transferring the goods and services to the customer. The Group includes some or all of this variable consideration in the transaction price only to the extent it is highly probable that a significant reversal of the cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

Certain contracts are subject to claims which are enforceable under the contract. If the claim does not result in any additional goods or services, the transaction price is updated, and the claim accounted for as variable consideration.

iv. Significant Financing Component

Using the practical expedient in AASB 15, the Group does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer or the promised good or service to the customer and when the customer pays for that good or service will be one year or less.

All revenue is stated net of the amount of goods and services tax (GST).

v. Interest

Interest Revenue is recognised on a proportional basis taking into account the interest rates applicable to financial assets.

C. Government Rebates

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.

D. Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted at statement of financial position date.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. 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 is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited direct to equity, in which case the deferred tax is adjusted directly against equity.

Deferred tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by law.

Duratec Limited and its wholly-owned Australian subsidiaries have formed an income-tax consolidated group under the tax consolidation regime. Duratec Limited and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has been applied the ‘separate taxpayer within group’ approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

E. Operating Segments

Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Maker (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Duratec Limited ACN 141 614 075 ASX: DUR

Note 1: Significant Accounting Policies continued…

F. Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months of less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

G. Trade and Other Receivables

A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies in “Financial Assets” on page 47.

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses (‘ECL’).

H. Contract Assets and Contract Liabilities

A Contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.

A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is owing) from the customer. If a customer is invoiced before the Group transfers goods or services to the customer, a contract liability is recognised when the invoice is raised. Contract liabilities are recognised as revenue when the Group performs under the contract.

I. Inventories

Inventories are measured at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for at purchase cost on a first-in/ first out basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

J. Financial Assets

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding.

i. Subsequent Measurement - Financial Assets at Amortised Cost

This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:

\ The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
\ The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Group’s financial assets at amortised cost includes trade receivables.

ii. Impairment of Financial Assets

Further disclosures relating to impairment of financial assets are also provided in the following notes:

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Annual Report for the Financial Year ending 30 June 2022

Note 1: Significant Accounting Policies continued…

K. Plant and Equipment

Plant & equipment are measured on the cost basis less, where applicable, any accumulated depreciation and impairment losses. Assets previously measured at valuation are now carried at deemed cost less, where applicable, any accumulated depreciation.

i. Depreciation

The depreciable amount of all plant and equipment including capitalised lease assets, is depreciated over the asset’s useful life commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

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Class of Plant and Equipment Depreciation Rate
Capital Work in Progress 0%
Plant & Machinery 4 – 50%
Leasehold Improvements 10 – 50%
Land & Buildings 0 – 8%
Motor Vehicles 16 – 50%
Computers & Office Equipment 20 – 100%
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The assets’ residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater that its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income.

ii. Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash- generating unit to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of comprehensive income.

iii. Derecognition and Disposal

An item of plant and equipment is derecognised upon disposal or when no further economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss in the year the asset is derecognised.

L. Right-of-use Assets

The Group’s right-of-use asset policy is described in “Note 16: Leases” on page 61.

M. Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months.

N. Borrowings – Lease Liabilities

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Group is classified as a finance lease.

Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit or loss. A leased fixed asset is depreciated over the useful life of the asset.

Borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.

O. Provisions - Employee Benefits

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result, and that outflow can be reliably measured. Provisions are measured at the best estimate of the amounts required to settle the obligation at the end of the reporting period.

The amounts expected to be paid to employees for their pro-rata entitlement to annual leave and long service leave is accrued annually at current pay rates, having regard to experience of employees’ departures and period of service. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted

Duratec Limited ACN 141 614 075 ASX: DUR

Note 1: Significant Accounting Policies continued…

using market yields at the reporting date on corporate bond rates with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Contributions are made by the Company to an employee superannuation fund and are charged as expenses when incurred. The Company has no legal obligation to provide benefits to employees on retirement.

P. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position. Cash Flows are stated with the amount of GST included.

Q. Comparatives

Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

R. Investment in Associates and Joint Arrangements

An associate is an entity, including an unincorporated entity, in which the reporting entity has significant influence and that is neither a subsidiary, nor a joint arrangement. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

An investment in an associate includes goodwill on acquisition, which is accounted for in accordance with the financial reporting standard on business combinations. However the entire carrying amount of the investment is tested under the impairment financial reporting standard by comparing the carrying amount of the investment with its recoverable amount (higher of value in use and fair value) whenever application of the financial instruments reporting standard indicates the investment may be impaired.

In the consolidated financial statements, the Group’s investment in associates is accounted for using the equity method. Under the equity method, the investment in an associate is initially recognised at cost and adjusted thereafter for the post-acquisition change in the Group’s share of the associates’ net assets. The carrying value and the net book value of the investment in the associate are not necessarily indicative of the amounts that would be realised in

a current market exchange. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately.

The consolidated statement of profit or loss includes its share of the associate’s profit or loss. Any change in other comprehensive income of those investees is presented as part of the Group’s other comprehensive income. Losses of an associate in excess of the Group’s interest in the associate are not recognised except to the extent that the reporting entity has an obligation. Profits and losses resulting from transactions between the Group and the associate are recognised in the financial statements only to the extent of unrelated reporting entity’s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

When necessary, accounting policies of associates are changed to ensure consistency with the policies adopted by the Group.

The Group discontinues the use of the equity method from the date the investment ceases to be an associate and from that date then accounts for the investment in accordance with the financial instruments financial reporting standard with any gain or loss recognised in the profit or loss statement. Any former investment retained in the former associate is measured at fair value at the date that is ceases to be an associate.

In the company’s separate financial statements, an investment in an associate is accounted for at cost less any allowance for impairment in value. Impairment loss recognised in profit or loss for an associate is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying value and the net book value of an investment in the associate are not necessarily indicative of the amounts that would be realised in a current market exchange.

A joint arrangement (that is either a joint operation or a joint venture, depending on the rights and obligations of the jointly controlling parties to the arrangement) is one in with the Group is party to an arrangement of which two or more parties have control. A joint arrangement exists when the parties have contractually agreed to share control of the arrangement whereby decisions about the relevant activities (that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control. In a joint operation, the parties with joint control have rights to the assets, and obligations of the liabilities, relating to the arrangement. The Group recognises its share of the operation’s assets, liabilities and income and expenses that are combined line by line with similar items in the reporting entity’s financial statements and accounts for the assets, liabilities, revenues and expenses relating to its interest in the joint operation in accordance with the relevant financial reporting standards for each particular asset, liability, revenue and expense. When the Group enters into a

Annual Report for the Financial Year ending 30 June 2022

Note 1: Significant Accounting Policies continued…

transaction with a joint operation, such as a sale or contribution of asset, the reporting entity recognises gains and losses resulting from such a transaction only to the extent of the other parties’ interests in the joint operation.

S. Share-based Payments

Equity-settled share-based compensation benefits are provided to employees. These transactions are awards of shares, or options, that are provided to employees in exchange for the rendering of services.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using a valuation model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with nonvesting conditions that do not determine whether the Group receives the service that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in the profit of loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

T. Principles of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 30 June 2022 – refer to “Note 32” on page 71. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

\ Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) Exposure, or rights, to variable returns from its involvement with the investee;
\ The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

\ The contractual arrangement(s) with the other vote holders of the investee;
\ Rights arising from other contractual arrangements;
\ The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non- controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss.

Any investment retained is recognised at fair value.

All inter-company balances and transactions between entities in the consolidated entity, including any

Duratec Limited ACN 141 614 075 ASX: DUR

Note 1: Significant Accounting Policies continued…

unrealised profits or losses have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where controlled entities have entered or left the consolidated entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non- controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

U. Current and Non-current Classification

The Group presents assets and liabilities in the statement of financial position based on current/noncurrent classification. An asset is current when it is:

\ Expected to be realised or intended to be sold or consumed in the normal operating cycle; Held primarily for the purpose of trading;
\ Expected to be realised within twelve months after the reporting period; or

The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

V. Fair Value Measurement

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 transaction between market participants at the measurement date; and 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.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

W. Issued capital

Ordinary shares are classified as equity. 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.

X. Dividends

Dividends are recognised when declared during the financial year and are no longer at the discretion of the Company.

\ Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the All other assets are classified as non-current. A liability is current when:
\ It is expected to be settled in the normal operating cycle; It is held primarily for the purpose of trading;
\ It is due to be settled within twelve months after the reporting period; or
\ There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

Annual Report for the Financial Year ending 30 June 2022

Note 2: Critical Accounting Estimates and Judgements continued…

Note 2: Critical Accounting Estimates and Judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the group’s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong. Detailed information about each of these estimates and judgements is included in other notes together with information about the basis of calculation for each affected line item in the financial statements.

A. Key Estimates

i. Revenue from Contracts with Customers

Where performance obligations are satisfied over time, revenue is recognised in the consolidated income statement by reference to the progress towards complete satisfaction of each performance obligation.

For construction contracts, revenue is recognised using an input method based on project to date cost over total expected contract cost of the contract.

ii. Coronavirus (COVID-19) Pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated entity based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.

iii. Allowance for Expected Credit Losses The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the Coronavirus (COVID-19) pandemic and forwardlooking information that is available. The allowance for expected credit losses, as disclosed in “Note 11” on page 58 is calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher or lower.

Duratec Limited ACN 141 614 075 ASX: DUR

Note 3: Segment Reporting

The Group is organised into three operating segments based on difference in services provided; Defence, Mining & Industrial and Buildings & Facades. Other segments relate to Energy, Ports, Transport and Water. These operating segments are based on the internal reports that are reviewed and used by the Managing Director (who is identified as the Chief Operating Decision Maker, ‘CODM’) in assessing performance and in determining the allocation of resources.

The principal services of each of the operating segments are as follows:

\ Defence: dedicated to the delivery of capital facilities, infrastructure and estate works program projects
\ Mining & Industrial: provision of tailored preventative maintenance programmes
\ Buildings & Facades: completion of facade condition assessments and facade restorations

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Mining & Buildings & Other
Consolidated - June 2022 Defence Total
Industrial Facades Segments
$’000 $’000 $’000 $’000 $’000
Sales to external customers 134,929 74,929 64,673 35,472 310,003
Total revenue 134,929 74,929 64,673 35,472 310,003
Gross profit for reportable segments 18,114 18,105 10,186 2,000 48,405
Unallocated amounts
(including corporate overheads) (30,636)
EBITDA 17,769
Depreciation and amortisation (6,779)
Finance costs (788)
Profit before income tax expense 10,202
Income tax expense (2,441)
Profit after income tax expense 7,761
Mining & Buildings & Other
Consolidated - June 2021 Defence Total
Industrial Facades Segments
$’000 $’000 $’000 $’000 $’000
Sales to external customers 98,768 52,923 39,852 44,166 235,709
Total revenue 98,768 52,923 39,852 44,166 235,709
Gross profit for reportable segments 16,890 10,401 9,847 8,670 45,808
Unallocated amounts
(including corporate overheads) (29,890)
EBITDA 15,918
Depreciation and amortisation (5,227)
Finance costs (659)
Profit before income tax expense 10,032
Income tax expense (2,901)
Profit after income tax expense 7,131
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Annual Report for the Financial Year ending 30 June 2022

Note 4: Revenue

A. Disaggregation of Revenue from Contracts with Customers

The Group derives revenue from the transfer of goods and services over time in the following major geographical regions.

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2022 2021
$’000 $’000
Revenues from contracts with customers 310,003 235,709
Disaggregation of revenue from contracts with customers by location
Western Australia 133,243 111,528
New South Wales 58,250 43,399
Victoria 21,493 21,368
Northern Territory 20,300 11,405
South Australia 14,669 14,403
Queensland 32,151 18,237
Tasmania 3,706 2,256
Australian Capital Territory 26,191 13,113
310,003 235,709
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B. Other Income

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2022 2021
$’000 $’000
Dividends received from associate 1,510 1,505
Rental income 349 312
Interest received 95 109
Sundry income 90 217
Gain on disposal of plant and equipment 288 218
2,332 2,361
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C. Assets & Liabilities Related to Contracts with Customers

The Group has recognised the following assets and liabilities related to contracts with customers

2022	2022	2021
	$’000	$’000
Total current contract assets 16,661 7,576
Total current contract liabilities 41,690 19,356

D. Significant Changes in Contract Assets & Liabilities

Changes in contract assets and liabilities are due to the stage of the projects in progress and the timing of invoicing.

Duratec Limited ACN 141 614 075 ASX: DUR

Note 5: Expenses

Profit before income tax from continuing operations includes the following specific expenses:

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2022 2021
$’000 $’000
Expenses
Cost of sales 261,598 189,901
Interest expense for financial liabilities not at fair value through profit or loss
External – Interest on loans and borrowings 537 477
Interest on lease liabilities 251 182
Total finance costs 788 659
Initial Public Offering (IPO) costs
-
Expensed 2,472
In equity:
-
Before tax 1,138
-
Tax effect (341)
Recognised in equity (net of tax) - 797
-
Total IPO costs for the period 3,269
Employee Expenses
Salaries & Wages 25,496 22,425
Share based payments 1,761 1,620
Other 503 694
27,760 24,739
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Note 6: Equity Accounted Investment Results

2022	2022	2021
	$’000	$’000
Equity accounted investment results associate DDR Australia Pty Ltd 1,873 620
Equity accounted investment results associate Fortec Australia Pty Ltd - 149
1,873 769

Note 7: Disposal of Associate

On 31 August 2020 Duratec disposed of its 40% interest in Fortec Australia Pty Ltd by way of a dividend in specie to the Company’s shareholders.

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2022 2021
$’000 $’000
-
Opening balance – Investment in Fortec Australia Pty Ltd 1,342
Share or profits for the period - 149
-
Investment in Fortec Australia Pty Ltd 1,491
-
In specie dividend distribution 1,642
Gain on disposal of associate - 151
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Annual Report for the Financial Year ending 30 June 2022

Note 8: Income Tax Expense

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2022 2021
$’000 $’000
Current Income Tax
Current tax expense 2,152 2,768
Adjustments in respect of previous years 90 (22)
Tax offsets (647) (603)
Deferred Income Tax
(Originating) / reversing temporary differences 846 758
- -
Adjustments in respect of previous years
Aggregate income tax expense 2,441 2,901
Numerical reconciliation of income tax expense to prima facie tax payable 2022 2021
$’000 $’000
Profit from continuing operations before income tax expense 10,202 10,032
Tax at the Australian tax rate of 30% (2021 – 30%) 3,061 3,010
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Adjustments recognised for prior periods 90 (22)
Other non-allowable items 305 528
Notional profits on associates not subject to tax (562) (231)
Franking credits for dividends (453) (422)
Disposal of investment in Fortec Australia Pty Ltd - 38
Income tax expense 2,441 2,901
Amounts recognised directly in equity 2022 2021
$’000 $’000
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss
or other comprehensive income but directly debited or credited to equity:
Deferred tax: share issue cost - 341
- 341
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Duratec Limited ACN 141 614 075 ASX: DUR

Note 9: Earnings Per Share

A. Basic and Diluted Earnings Per Share

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2022 2021
cents cents
From continuing operations attributable to the ordinary equity holders of
3.24 3.23
the company
Total basic earnings per share attributable to the ordinary equity holders of
3.24 3.23
the company
Total diluted earnings per share attributable to the ordinary equity holders
3.12 3.10
of the company
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B. Reconciliations of Earnings Used in Calculating Earnings Per Share

2022	2022	2021
	$’000	$’000
Profit from continuing operations attributable to the ordinary equity holders of the company used in calculating basic earnings per share 7,761 7,131
Profit from continuing operations attributable to the ordinary equity holders of the company used in calculating diluted earnings per share 7,761 7,131

C. Weighted Average Number of Shares Used as the Denominator

2022	2022	2021
	Number	Number
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 239,397,623 220,743,430
Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share 249,015,123 229,718,430

Note 10: Cash and Cash Equivalents

Note 10: Cash and Cash Equivalents	Note 10: Cash and Cash Equivalents
2022		2021
	$’000	$’000
Cash at bank and on hand 43,263 32,249
Short-term deposits 15,000 9,000
Total cash and cash equivalents 58,263 41,249

Annual Report for the Financial Year ending 30 June 2022

Note 11: Trade and Other Receivables

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2022 2021
$’000 $’000
Current
Trade receivables 29,583 28,692
Less: allowance for expected credit losses (17) (45)
29,566 28,647
Other receivables 432 492
Total current trade and other receivables 29,998 29,139
Non-Current
Trade receivables 1,998 146
- -
Amounts receivable from related parties
Total non-current trade and other receivables 1,998 146
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i. Allowance for Expected Credit Losses

These trade receivables shown above are subject to the expected credit loss model under the financial reporting standard on financial instruments. The trade receivables are considered to have low credit risk individually. At the end of the reporting year a loss allowance is recognised at an amount equal to 12 month expected credit losses because there has not been a significant increase in credit risk since initial recognition. A loss allowance balance of $16,585 (2021: $45,455) is recognised in respect of the expected credit losses for the year ended 30 June 2022. Movements in the allowance for expected credit losses are as follows:

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2022 2021
$’000 $’000
Opening balance 45 172
Additional provisions recognised 17 29
Receivables written off during the year as uncollectable (45) (120)
-
Unused amounts reversed (36)
Closing balance 17 45
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Note 12: Inventories

Note 12: Inventories	Note 12: Inventories
2022		2021
	$’000	$’000
Current
Consumable stock 317 376
Total inventories 317 376

Note 13: Other Assets

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2022 2021
$’000 $’000
Current
Prepayments 1,380 1,139
1,380 1,139
Non-current
Security deposits 121 90
121 90
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Duratec Limited ACN 141 614 075 ASX: DUR

Note 14: Current and Deferred Taxes

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2022 2021
$’000 $’000
Current
Provision for income tax (refundable) (208) (538)
Total current (receivable) (208) (538)
Non-current
Deferred tax assets 3,428 2,991
Deferred tax liabilities (3,186) (1,936)
Net 242 1,055
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A. Deferred Tax Asset

Non-current

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Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Provisions and accruals 2,447 1,852
Right-of-use assets 78 76
Initial Public Offering costs 720 982
Provision for expected credit loss 5 14
Work in progress 150 46
Borrowing costs 28 21
Deferred tax asset 3,428 2,991
Movements:
Opening balance 2,991 2,142
Charged to profit or loss 437 849
Closing balance 3,428 2,991
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B. Deferred Tax Liability

Non-current

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Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Consumable stock 95 113
Plant & equipment 3,091 1,823
Deferred tax liability 3,186 1,936
Movements:
Opening balance 1,936 432
Charged to profit of loss 1,250 1,504
Closing balance 3,186 1,936
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Annual Report for the Financial Year ending 30 June 2022

Note 15: Plant and Equipment

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2022 2021
$’000 $’000
Land and buildings
At cost 624 624
Accumulated depreciation (7) (1)
617 623
Plant and machinery
At cost 13,848 12,342
Accumulated depreciation (6,129) (5,377)
7,719 6,965
Motor vehicles
At cost 12,373 9,971
Accumulated depreciation (5,042) (4,048)
7,331 5,923
Office and computer equipment
At cost 3,568 3,069
Accumulated depreciation (1,932) (1,260)
1,636 1,809
Leasehold improvements
At cost 2,516 2,178
Accumulated depreciation (1,178) (787)
1,338 1,391
Capital work in progress
At cost 182 135
Total plant and equipment 18,823 16,846
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Reconciliation of written down values at the beginning and end of the current financial year are set out below:

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Consolidated
$’000 $’000 $’000 $’000 $’000 $’000 $’000
Balance at 30 June 2020 - 4,356 3,680 1,215 547 461 10,259
Additions 624 4,139 3,721 1,273 1,108 (326) 10,539
- - -
Disposals (147) (132) (23) (302)
-
Depreciation expense (1) (1,383) (1,346) (656) (264) (3,650)
Balance at 30 June 2021 623 6,965 5,923 1,809 1,391 135 16,846
Additions - 2,585 3,806 665 338 47 7,441
- - -
Disposals (132) (368) (54) (554)
-
Depreciation (6) (1,699) (2,030) (784) (391) (4,910)
Balance at 30 June 2022 617 7,719 7,331 1,636 1,338 182 18,823
Land and Buildings Plant and Machinery Motor Vehicles Office and IT Equipment Leasehold Improvements Capital WIP Total
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Duratec Limited ACN 141 614 075 ASX: DUR

Note 16: Leases

Amounts recognised in the balance sheet

The balance sheet shows the following amounts relating to leases

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2022 2021
$’000 $’000
Land and buildings
Right-of-use 5,224 4,950
Accumulated depreciation (2,699) (1,845)
2,525 3,105
Property lease liabilities
Current 1,557 1,299
Non-current 1,229 1,998
Total non-current property lease liabilities 2,786 3,297
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Refer to “Note 25: Financial Instruments” on page 65 for further information on financial instruments.

Reconciliation of written down values at the beginning and end of the current financial year are set out below:

Cost	Accumulated Depreciation	Carrying Value
Balance at 1 July 2021 4,950 (1,845) 3,105
Additions during the year 1,457 - 1,457
Leases expired during the year (1,183) 1,015 (168)
Depreciation expense - (1,869) (1,869)
Balance at 30 June 2022 5,224 (2,699) 2,525

Amounts recognised in the statement of profit or loss

The statement of profit or loss shows the following amounts relating to leases

Depreciation charge of right-of-use assets

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2022 2021
Buildings 1,869 1,577
1,869 1,577
Interest expense (included in finance cost) 251 182
Expense relating to short term leases 221 262
Expense relating to leases of low value assets not shown as short term leases 46 49
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The total cash outflow for leases for 2022 was $1,838,127 (2021: $1,526,603).

The Group leases buildings for its offices under agreements of between 1 and 5 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straightline basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

Annual Report for the Financial Year ending 30 June 2022

Note 17: Investments Accounted for Using the Equity Method

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2022 2021
$’000 $’000
Non-current
DDR Australia Pty Ltd 3,901 2,027
3,901 2,027
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Refer to “Note 32” on page 71 for further information on interests in associates and joint ventures.

Note 18: Trade and Other Payables

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2022 2021
$’000 $’000
Current
Trade payables 18,056 21,554
Sundry payables and accrued expenses 16,208 12,956
Other payables 2,492 2,388
Employee entitlements 2,670 2,094
39,426 38,992
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Note 19: Borrowings

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2022 2021
$’000 $’000
Current
Equipment finance 3,571 2,735
Total current borrowings 3,571 2,735
Non-current
Equipment finance 8,451 7,383
Total non-current borrowings 8,451 7,383
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Note 20: Provisions

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2022 2021
$’000 $’000
Current
Employee benefits
Carrying amount at the start of the year 4,792 4,934
Additional provisions recognised 5,281 2,485
Amounts used (3,249) (2,627)
Current carrying amount at the end of the year 6,824 4,792
Non-current
Employee benefits
Carrying amount at the start of the year 812 612
Additional provisions recognised - 200
-
Amounts used (80)
Non-current carrying amount at the end of the year 732 812
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Duratec Limited ACN 141 614 075 ASX: DUR

Note 21: Issued Capital

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2022 2021 2022 2021
Shares Shares $’000 $’000
Ordinary shares – fully paid 240,573,404 237,444,801 25,167 23,703
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Movement in Ordinary Share Capital:

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Cumulative Issue price
Details Date Shares $’000
Shares ($)
Balance 1 Jul 2021 237,444,801 237,444,801 - 23,703
Dividend Reinvestment Plan 13 Oct 2021 537,459 237,982,260 0.36 195
IPO Rights issue 5 Nov 2021 2,367,500 240,349,760 - 1,184
Dividend Reinvestment Plan 10 May 2022 223,644 240,573,404 0.38 85
Balance 30 Jun 2022 240,573,404 25,167
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A. Ordinary Shares

Ordinary shareholders participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

Note 22: Reserves

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2022 2021
$’000 $’000
Acquisition Reserve
Balance at the beginning of the financial period (231) (231)
Balance at end of the financial period (231) (231)
Share Based Payment Reserve
-
Balance at the beginning of the financial period 1,620
Share-based payments 1,760 1,620
-
Transfer from share-based payments reserve (1,184)
Balance at end of the financial period 2,196 1,620
Total Reserves 1,965 1,389
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The acquisition reserve is used to recognise the acquisition of non-controlling interests.

Annual Report for the Financial Year ending 30 June 2022

Note 23: Retained Earnings

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2022 2021
$’000 $’000
Retained profits at beginning of the financial year 827 20,539
Profit after income tax expense for the year 7,761 7,131
Dividends paid (4,763) (26,843)
Retained profits at end of the financial year 3,825 827
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Note 24: Dividends

Dividends paid during the financial year were as follows:

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2022 2021
$’000 $’000
-
Disposal of Fortec Australia Pty Ltd by way of a dividend in specie to the 1,643
Company’s shareholders
Other dividends (cash) 4,483 25,200
Dividend Reinvestment Plan 280 -
Declared fully franked ordinary dividends franked at 30% (2021: 30%) 4,763 26,843
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Since the end of the financial year, the Directors have recommended the payment of a final ordinary dividend for 2022 of 1.5 cents per fully paid share, franked to 100%, to be paid on 5 October 2022.

Duratec Limited ACN 141 614 075 ASX: DUR

Note 25: Financial Instruments

The Group’s overall risk management program focuses on identifying risks and seeking to minimise any potential adverse effects on the financial performance of the Group. The Board of Directors is responsible for risk management and the approval of relevant policies, such as identification and analysis of risk exposure of the Group, and appropriate procedures, controls and risk limits.

A. Market Risk

Market risk is the risk that changes in market prices will affect the Group’s income.

The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the consolidated entity based on recent sales experience, historical collection rates and forward-looking information that is available.

Generally, trade receivables are written off when there is no reasonable expectation of recovery.

D. Liquidity Risk

B. Interest Rate Risk

The consolidated entity’s main interest rate risk arises from long-term borrowings.

C. Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. To mitigate the risk, the Group has a strict credit policy, including setting appropriate credit limits. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral.

Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

The following table details the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. The amounts are based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

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Weighted
Carrying Contractual 1 year or Over 5
average 1-2 years 2-5 years
amount cashflow less years
interest
% $’000 $’000 $’000 $’000 $’000 $’000
2022
Non-derivate financial liabilities
- - -
Trade and other payables 39,426 39,426 39,426
Borrowings 3.76 12,022 12,890 3,958 3,613 5,319 -
Property lease liabilities 6.82 2,786 2,991 1,692 910 389 -
-
54,234 55,307 45,076 4,523 5,708
2021
Non-derivate financial liabilities
- - - -
Trade and other payables 38,992 38,992 38,992
Borrowings 3.44 10,118 10,793 3,032 2,776 4,985 -
Property lease liabilities 6.07 3,297 3,612 1,460 1,030 1,122 -
-
52,407 53,397 43,484 3,806 6,107
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Annual Report for the Financial Year ending 30 June 2022

Note 25: Financial instruments continued…

E. Capital Management

The Board’s policy is to maintain a strong capital base to ensure the Group can operate on favourable terms and conditions with suppliers and customers and attract various stakeholders to the Group. The Group’s approach to capital management has not changed during the year.

The Group’s main funding agreement with Bankwest was negotiated in September 2020. As part of this agreement the Group is subject to terms and conditions which include financial covenants relating to; earnings and debt (leverage ratio) and current assets to current liabilities (current ratio). All covenants were complied with during the reporting period.

In relation to the Group’s main funding agreement, Duratec Limited, Duratec Australia (ES) Pty Ltd and MEnD Consulting Pty Ltd each provide a guarantee and indemnity and a General Security Deed in favour of Bankwest.

The Group also has an asset finance facility with NAB and security interests are granted in favour of NAB and Bankwest in respect of goods acquired using each respective Asset Finance Facility.

The Group issues surety bonds during the course of business via its facilities with AssetInsure and Vero.

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Expiry Date 2022 2021
$’000 $’000
Total facilities
Bankwest
Multi option facility No fixed term, 25,000 25,000
payable on
Asset finance facility demand 10,000 7,000
Corporate MasterCard facility 300 300
NAB
Asset finance facility 31 Oct 2022 7,000 7,000
AssetInsure
Bond facility 30 Sept 2022 10,000 10,000
Vero
Bond facility 31 Oct 2022 10,000 10,000
62,300 59,300
Used at reporting date:
Bankwest
Multi option facility 21,289 22,638
Asset finance facility 8,127 5,508
Corporate MasterCard facility 107 96
NAB
Asset finance facility 3,895 4,610
AssetInsure
Bond facility 9,390 2,887
Vero
Bond facility 9,266 2,623
52,074 38,362
Unused at reporting date:
Bankwest
Multi option facility 3,711 2,362
Asset finance facility 1,873 1,492
Corporate MasterCard facility 193 204
NAB
Asset finance facility 3,105 2,390
AssetInsure
Bond facility 610 7,113
Vero
Bond facility 734 7,377
10,226 20,938
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Duratec Limited ACN 141 614 075 ASX: DUR

Note 25: Financial instruments continued…

F. Currency Risk

The Group’s receivables are all denominated in Australian dollars and accordingly no currency risk exists.

G. Fair Value of Financial Instruments

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

Note 26: Remuneration of Auditors

During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the auditor of the Group:

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2022 2021
$’000 $’000
Audit services – RSM Australia Partners
Audit and review of the financial statements 225 214
Other services – RSM Australia Pty Ltd
Tax services 28 46
Other consulting services - 5
253 265
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Note 27: Contingent Liabilities

The Company uses both Bank Guarantee and Insurance Bond facilities to guarantee contract completion obligations and maintain period liabilities in respect of contracts undertaken. These guarantees and insurance bonds can be activated only in the event of a failure by the Company to meet its obligations under the contract.

2022	2022	2021
	$’000	$’000
Bonds & Guarantees on issue at end of financial year 39,945 28,148

The consolidated entity has given bank guarantees as at 30 June 2022 of $272,704 (2021: $251,829) to various landlords.

Note 28: Capital Commitments

Note 28: Capital Commitments	Note 28: Capital Commitments
2022		2021
	$’000	$’000
Committed at the reporting date but not recognised as liabilities, payable:
Plant and equipment 436 581

Note 29: Related Party Transactions

The Group’s main related parties are as follows:

Key Management Personnel (KMP)

All directors (whether executive or otherwise) of the entities in the Group are considered KMP.

Entities Subject to Significant Influence by the Group

An entity that has the power to participate in the financial and operating policy decisions of an entity, but does not have control over those policies, is an entity that holds significant influence. Significant influence may be gained by share ownership, statute or agreement. For further details of interests held in associates and joint ventures, refer to “Note 32” on page 71.

Entities, or Any Member of the Group that it is Part of, Provides Key Management Personnel Services

An entity with a director, who is also considered as Key Management Personnel of the Group.

Transactions with Related Parties

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Annual Report for the Financial Year ending 30 June 2022

Note 29: Related Party Transactions continued…

The following transactions occurred with related parties during the year:

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Year $’000 $’000 $’000 $’000 $’000 $’000
Associates
2022 - - - - - - -
Ertech Holdings Pty Ltd
2021 - 560 - - - - -
DDR Australia Pty Ltd 20212022 14,06613,452 1,304076 1,498428 655 1,5051,510 -- --
2022 - 283 - - - - -
Jimann Pty Ltd
2021 - 262 - - - - -
Entity providing KMP services
2022 96 67 15 - - - -
Fortec Australia Pty Ltd 2021 57 454 7 348 - - -
2022 - 125 - - - - -
Bold Drainage Pty Ltd 2021 1 126 - - - - -
Total 2022 13,548 1,551 1,443 65 1,510 - -
Total 2021 14,124 1 ,706 505 353 1,505 - -
Sales to related parties Purchases from related parties Related party balances in Trade Receivables Related party balances in Trade Payables Dividends received Loan balances payable to related parties Loan balances receivable from related parties
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Compensation of Key Management Personnel of the Group 2022 2021
$’000 $’000
Short-term employee benefits 2,136,241 1,965,704
Post-employment benefits 155,227 140,659
Long-term benefits 32,244 81,334
Share-based payments 219,401 170,875
Total compensation paid to Key Management Personnel 2,543,113 2,358,572
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Note 30: Share-based Payments

As at 30 June 2022, the Company had the following share-based payment arrangements:

A. IPO Rights Offer

On 4 November 2020, as part of the Company’s IPO, an offer of 4,815,000 Rights was made to certain employees. Each Right is a right to receive one share subject to continued employment vesting conditions. On vesting, Rights will automatically convert to ordinary shares on a one for one basis. Rights that do not vest will lapse. Shares allocated to employees following vesting and automatic exercise of those Rights are subject to a Disposal Restriction which lifts on the 36-month anniversary of the Grant Date.

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Number
Vesting Vesting Hurdles
of Rights Lapsed Vested Balance
Date
granted 50% 50%
2,407,500 4 Nov 2021 40,000 2,367,500 - Continued Continued
2,407,500 4 Nov 2022 40,000 - 2,367,500 employment for employment for
12 months to 4 24 months to 4
4,815,000 80,000 2,367,500 2,367,500 Nov 2021 Nov 2022
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Duratec Limited ACN 141 614 075 ASX: DUR

Note30: Share-based Payments continued…

B. Hurdled Performance Rights

On 24 November 2020, an offer of 3,710,000 Rights was made to senior executives and key managers, as determined by the Board of Directors. On 26 November 2021, a new offer of 3,995,000 Rights was made to senior executives and key managers, as determined by the Board of Directors.

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Number
Vesting
of Rights Lapsed Vested Balance Vesting Hurdles
Date
granted
1,855,000 31 Aug 2023 295,000 - 1,560,000 [1] 1 Continued employment to vesting
date & meeting an earnings per
-
1,997,500 6 Sep 2024 132,500 1,865,000 [2] share (EPS) target
1,855,000 31 Aug 2023 295,000 2 Continued employment to vesting
date & meeting a total shareholder
-
1,997,500 6 Sep 2024 132,500 1,865,000 [2] return (TSR) target
1
- 1,560,000
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C. Non-Hurdled Performance Rights

On 24 November 2020, an offer of 450,000 Rights was made to certain employees deemed to have key roles as determined by the Board of Directors

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Number
Vesting
of Rights Lapsed Vested Balance Vesting Hurdles
Date
granted
450,000 31 Aug 2023 50,000 - 400,000 Continued employment to
- 31 August 2023
450,000 50,000 400,000
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The cost of equity-settled transactions is measured at fair value on their respective grant dates. Where market vesting conditions apply, fair value has been determined using a Monte Carlo simulation model. The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to the profit or loss is calculated based on the grant date fair value, the best estimate of the number of awards that are likely to vest and any expired portion of the vesting period. The amount recognised in the profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

D. Valuation Model Inputs

For the performance rights issued during the current financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows:

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Grant date 26-Nov-21
Fair Value at Valuation Date:
Expiry Date 28-Sep-26
Subject to Total Shareholder Return (TSR)
Number of Performance Rights 3,995,000
performance condition $0.10
Share Price at Valuation Date $0.31
Subject to Earnings Per Share (EPS)
$0.31
Expected Volatility 43.50% performance condition
Dividend yield 4.10%
Risk Free Interest Rate 0.93%
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E. Expenses Arising from Share-based Payment Transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows

employee benefit expense were as follows	employee benefit expense were as follows
2022		2021
	$’000	$’000
Deferred shares issued under the long-term incentive scheme 1,760 1,620
1,760 1,620

Annual Report for the Financial Year ending 30 June 2022

Note 31: Parent Entity Information

Set out below is the supplementary information about the parent entity.

Statement of Profit or Loss and Other Comprehensive Income

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2022 2021
$’000 $’000
Profit after income tax 5,077 6,222
Total comprehensive income 5,077 6,222
Statement of Financial Position
Assets
Current assets 106,866 80,490
Non-currentassets 26,689 22,495
Total assets 133,555 102,985
Liabilities
Current liabilities 94,258 68,266
Non-current liabilities 13,598 12,066
Total liabilities 107,856 80,332
Equity
Issued capital 25,167 23,703
Reserves 2,197 1,620
Retained earnings (1,665) (2,670)
Total equity 25,699 22,653
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A. Contingent Liabilities

Other than disclosed in Note 27, the parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.

B. Capital Commitments - Property, Plant and Pquipment

Other than disclosed in Note 28, the parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021.

C. Significant Accounting Policies

The accounting policies of the parent entity are consistent with those of the Group, as disclosed in “Note 1” on page 45, except for the following:

\ Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
\ Investments in associates are accounted for at cost, less any impairment, in the parent entity.
\ Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment.

Duratec Limited ACN 141 614 075 ASX: DUR

Note 32: Interests in Subsidiaries, Associates and Joint Arrangements

A. Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in “Note 1” on page 45. The proportion of ownership interests held equals the voting rights held by the Group. Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting date as the Group’s financial statements.

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Ownership interest held by the Group
Principal place
of business 2022 2021
Name of entity
and country of % %
incorporation
Duratec Australia (ES) Pty Ltd Australia 100 100
MEnD Consulting Pty Ltd Australia 100 100
Duratec New Zealand Ltd New Zealand 100 100
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Duratec New Zealand Limited was incorporated in November 2020 but is not yet trading.

B. Associates and Joint Arrangements

Interests in associates are accounted for using the equity method of accounting while Duratec Limited’s share of the joint arrangement is proportionately consolidated in the financial accounts.

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Proportion of ordinary share interests/ participating share
Principal place
of business 2022 2021
Name of entity Classification
and country of % %
incorporation
DDR Australia Pty Ltd Australia Associate 49 49
Duratec Ertech JV Australia Joint Arrangement 50 50
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C. Information About Associates

DDR Australia Pty Ltd (‘DDR’) is registered as an incorporated company. 51% of DDR’s issued shares are owned by Hutcheson & Co Holdings Pty Ltd and 49% is owned by Duratec Limited. The purpose of the business is to carry out Commonwealth and State Government works, whether directly or via Government contractors, where there is an indigenous procurement policy.

D. Information about Joint Arrangement

Duratec Ertech JV is an unincorporated entity and is classified as a joint operation whereby Duratec and Ertech each have a 50% interest. Duratec Ertech JV is a contractual arrangement between participants for the sharing of costs and outputs and Duratec Limited’s share is proportionately consolidated in the financial accounts.

Note 33: Deed of Cross Guarantee

Duratec Limited, MEnD Consulting Pty Ltd and Duratec Australia (ES) Pty Ltd are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly owned entities have been relieved from the requirements to prepare a financial report and directors’ report under ASIC Corporations (Wholly Owned Companies) Instrument 2016/785.

Annual Report for the Financial Year ending 30 June 2022

Note 34: Reconciliation of Profit After Income Tax to Net Cash from Operating Activities

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2022 2021
$’000 $’000
Profit after income tax expense for the year 7,761 7,131
Adjustments for:
Depreciation 6,779 5,227
Share of profits of associates (1,873) (769)
-
Gain on disposal of investment (151)
Dividends received (1,510) (1,505)
Gain on sale of fixed assets (288) (218)
Share based payment expense 1,760 1,620
-
IPO costs reallocated to equity (before tax) (1,138)
-
Other (9)
Change in operating assets and liabilities:
Increase in trade and other receivables (2,712) (9,408)
Increase in contract assets (9,085) (1,327)
Decrease/ (increase) in inventories 59 (103)
Increase in other assets (271) (185)
Increase in trade and other payables 474 3,810
Increase in contract liabilities 22,333 3,675
Increase in provisions 1,952 58
Decrease / (Increase) in tax balances 1,142 (41)
Net cash from / (used in) operating activities 26,521 6,667
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Note 35: Events After the Reporting Period

The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Group’s operations, the result of those operations, or the Group’s state of affairs in future financial years.

Duratec Limited ACN 141 614 075 ASX: DUR

Directors’ Declaration

For the Year Ended 30 June 2022

The Directors declare that the consolidated financial statements and notes are in accordance with the Corporations Act 2001 and:

a. Comply with Australian Accounting Standards, the Corporations Regulations 2001; and
b. Give a true and fair view of the financial position of the consolidated entity as at 30 June 2022 and of its performance as represented by the results of their operations and its cash flows, for the year ended on that date, and
c. Comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
d. At the date of this declaration, there are reasonable grounds to believe that the members of Duratec Limited will be able to meet any obligations or liabilities to which they are, or may become, subject to by virtue of the deed of cross guarantee described in Note 33 to the financial statements.

In the opinion of the Directors, there are reasonable grounds to believe the Group will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors and in accordance with section 295A of the Corporations Ace 2001 for the year ended 30 June 2022.

On behalf of the Directors,

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Robert (Phil) Harcourt Director Date: 19 August 2022

Annual Report for the Financial Year ending 30 June 2022

Duratec’s employees are integral to our success.

Duratec Limited ACN 141 614 075 ASX: DUR

Independent Auditor’s Report

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RSM Australia Partners

Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111

www.rsm.com.au

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DURATEC LIMITED

Opinion

We have audited the financial report of Duratec Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

(i) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year then ended; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

THE POWER OF BEING UNDERSTOOD

AUDIT | TAX | CONSULTING

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

Annual Report for the Financial Year ending 30 June 2022

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Key Audit Matter How our audit addressed this matter
Recognition of Revenue
Refer to Note 4 in the financial statements
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Key Audit Matter	How our audit addressed this matter
Recognition of Revenue Refer toNote 4in the financial statements

The Group’s largest source of revenue is derived from construction services and services contracts. Construction services and services contracts revenue is recognised by management after assessing all factors relevant to each contract, including specifically assessing the following as applicable: \ Estimation of total contract revenue and costs, including the estimation of cost contingencies; \ Determination of contractual entitlement and assessment of the probability of customer approval of variations and acceptance of claims; \ Determination of the stage of completion and measurement of progress towards performance obligations; and \ Estimation of project completion dates. The above determinations will also impact on account balances such as contract assets and liabilities . We determined this area to be a key audit matter due to the number and type of estimation events over the course of the contract life, the unique nature of individual contract conditions, leading to complex and judgemental revenue recognition from contracts.	Our audit procedures included: \ Assessing contractual terms with customers and substantiating project revenues and costs incurred against underlying supporting documents; \ Assessing management’s assumptions in determining the stage of completion, total contract revenue and total estimated costs; \ Checking the mathematical accuracy of revenue recognised during the year based on the stage of completion; \ Reading customers and subcontractor correspondence and discussing the progress of projects with project managers for any potential disputes, variation order claims, known technical issues or significant events that could impact the estimated contract costs; \ Discussing the rationale for revisions made to estimated costs with project personnel and management and checking explanations to supporting documentation; \ Challenging management’s assessment and testing the reasonableness of the provision for foreseeable losses; and \ Challenging the judgements made by management in estimating the expected credit loss relating to contract assets.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and the auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Duratec Limited ACN 141 614 075 ASX: DUR

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Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2022.

In our opinion, the Remuneration Report of Duratec Limited, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards

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J A KOMNINOS Partner

RSM AUSTRALIA PARTNERS

Perth, WA Date: 19 August 2022

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Annual Report for the Financial Year ending 30 June 2022

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78
We continue to
make advances
in low-impact
remediation
techniques.
Duratec Limited ACN 141 614 075 ASX: DUR
Independent Auditor’s Report
Next:
Shareholder Information
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Shareholder Details

Class of Shares and Voting Rights

As at 9 August 2022 there were 1,134 shareholders of the ordinary shares of the Company. The voting rights attaching to the ordinary shares, subject to any rights or restrictions for the time being attached to any class or classes of shares, are:

a) at meetings of members or class of members, each member entitled to vote may vote in person or by proxy or representative; and
b) on a show of hands every person present who is a member has one vote, and on a poll every person present in person or by proxy or representative has one vote for each ordinary share held.

Substantial Shareholders and Holdings as at 9 August 2022

The names of the substantial shareholders who have notified the Company in accordance with section 671B of the corporations Act 2001 are:

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Shareholder Name Nº of Shares % of Total
JAMES ROBERT GIUMELLI 57,181,365 23.79%
DENCORT PTY LTD 26,553,389 11.18%
MR CHRIS OATES + MRS PAMELA OATES 26,553,389 11.18%
KENT COLONY VENTURES PTY LTD 26,553,389 11.18%
REGAL FUNDS MANAGEMENT PTY LIMITED 13,101,481 5.45%
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Distribution of Shareholdings as at 9 August 2021

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Size of Share Holding Nº of Shareholders
1-1,000 40
1,001-5,000 233
5,001-10,000 167
10,001-100,000 575
100,001 and over 119
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Number of shareholders Total Shares on Issue Nº of unmarketable parcels
1,134 240,573,404 57
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Annual Report for the Financial Year ending 30 June 2022

Top 20 Shareholders

as at 9 August 2021

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Nº of % of
Shares Held
Shares Total
1 Ertech Holdings Pty Ltd 47,348,514 19.68
2 Dencort Pty Ltd 26,553,389 11.04
2 Kent Colony Ventures Pty Ltd 26,553,389 11.04
2 Mr Chris Oates + Mrs Pamela Oates 26,553,389 11.04
5 National Nominees Limited 17,423,430 7.24
6 CS Third Nominees Pty Limited 13,474,896 5.60
7 Invia Custodian Pty Limited 5,417,514 2.25
8 J P Morgan Nominees Australia Pty Limited 5,402,676 2.25
9 JAWP Investments Pty Ltd 4,800,000 2.00
10 Mr Oliver Mckeon 4,586,120 1.91
11 Invia Custodian Pty Limited 3,965,000 1.65
12 BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd 3,308,266 1.38
13 Citicorp Nominees Pty Limited 2,506,481 1.04
14 Engineered Process Systems Pty Ltd 2,191,162 0.91
15 Fort Baramba Pty Ltd 1,939,975 0.81
16 BNP Paribas Noms Pty Ltd 1,545,843 0.64
17 Mrs Lynette Timmins 806,708 0.34
18 Pindan Investments Pty Ltd 750,000 0.31
19 Mr Kenneth John Beer + Mr Alexander Charles Beer 661,477 0.27
19 HSBC Custody Nominees (AUSTRALIA) LIMITED - A/C 2 613,943 0.26
Top 20 Shareholders 196,402,172 81.64
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Restricted Securities

On-market Share Buy-back

A total of 21,061,574 ordinary shares in the capital of the Company are subject to the following voluntary escrow arrangements.

There is no current on-market buy-back.

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% of Escrow Period
Number of
Shareholders shares on Released after FY22
shares
issue audited accounts
Dencort Pty Ltd as trustee for the
Harcourt Family Trust 6,638,348 2.76% 6,638,348
(Entity associated with Robert (Phil) Harcourt)
Kent Colony Ventures Pty Ltd as trustee for the Diprose
Richards Family Trust 6,638,348 2.76% 6,638,348
(Entity associated with Deane Diprose)
Chris John Oates and Pamela Michelle Oates as trustee for
the Oates Family Trust 6,638,348 2.76% 6,638,348
(Entity associated with Chris Oates)
Oliver McKeon as trustee for the MT Pockets Business Trust
1,146,530 0.48% 1,146,530
(Entity associated with Oliver McKeon)
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Unquoted Securities

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Class Number of securities Number of holders
Performance Rights 9,517,500 56
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Duratec Limited ACN 141 614 075 ASX: DUR

Duratec enjoys a historically high solid work-on-hand position.

Annual Report for the Financial Year ending 30 June 2022

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www.duratec.com.au

108 Motivation Drive, Wangara WA 6065 Tel: +61 8 6206 6900 | Email: [email protected]

AI assistant

DURATEC LIMITED — Annual Report 2022

64799_rns_2022-08-21_27b57692-f770-4a0b-83fa-4a9ba5f6b268.pdf

APPENDIX 4E

DURATEC LIMITED

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Net tangible assets per share

Dividends

Dividend Reinvestment Plan

Explanation of results

Control gained or lost over entities during the period

Details of associates & JV arrangements

Audit report

About Duratec Limited

Duratec Limited

Today’s success supports tomorrow’s opportunity

Corporate Directory

Registered Office & Principal Place of Business

Contact Details Directors

About Duratec

Our Purpose

Our Vision

Our Business Model

Markets & Industries Serviced

Chairman’s Report

Fellow shareholders,

Operational Performance

Business Model

Outlook and Pipeline

FY22 Highlights

Financial Highlights

Pipeline of Work

Our People Highlights

Managing Director’s Report

People and Culture

Operational Overview

Defence

Mining & Industrial

Building & Facade

Other (including Energy, Ports, Transport and Water/Wastewater infrastructure)

Technical

DDR Australia

Outlook

Finance Report

Revenue & Profitability

Balance Sheet & Cash Flow

Shareholder Returns

Risk Management

Safety Incidents

Mitigation Strategies

Safety Regulation

Mitigation Strategies

COVID-19

Mitigation Strategies

Human Resources

Mitigation Strategies

Customers Reliance

Mitigation Strategies

Poor Quality Project Delivery

Mitigation Strategies

Competition

Mitigation Strategies

Contract Termination

Mitigation Strategies

Supply Chain Risk

Mitigation Strategies

Subcontractor Risk

Mitigation Strategies

Legal Risk

Mitigation Strategies

Reputation

Mitigation Strategies

Increased Competition

Mitigation Strategies

Access to Finance

Mitigation Strategies

Bad Debt

Mitigation Strategies

Information Technology and Cyber Risk

Mitigation Strategies

DURATEC LIMITED Annual Report 2022