MONADELPHOUS GROUP LIMITED — Annual Report 2011

Oct 18, 2011

Annual Report 2011

==> picture [594 x 447] intentionally omitted <==

Safety and Wellbeing | Integrity | Achievement | Teamwork | Loyalty

==> picture [595 x 296] intentionally omitted <==

Cover and above: Woodside’s Pluto LNG Project, Karratha (WA)

Monadelphous (adj).

The name Monadelphous is derived from a botanical term and signifies the coming together of many to one point for strength and unity of purpose.

Monadelphous provides construction, maintenance and industrial services to the resources, energy and infrastructure sectors.

Annual General Meeting

Shareholders are advised that the Monadelphous Group Limited 2011 Annual General Meeting (AGM) will be held on Tuesday 22 November 2011 at The University Club, University of Western Australia, Crawley, WA, commencing at 10.00am (AWST).

For more investor information, please refer to page 113 of this Report.

==> picture [595 x 296] intentionally omitted <==

Our Purpose

To deliver safe and reliable construction, maintenance and industrial service solutions to industry.

Our Vision

Monadelphous aims to double in size every five years by being recognised as a leader in its chosen markets and a truly great company to work for, work with and invest in.

Our Values

Safety and Wellbeing

We show concern and actively care for others. We always think and act safely.

Integrity

We are open and honest in what we say and what we do. We take responsibility for our work and our actions.

Achievement

We are passionate about achieving success for our customers, our partners and each other. We seek solutions, learn and continually improve.

Teamwork

Our Competitive Advantage

We deliver what we promise.

We work as a team in a cooperative, supportive and friendly environment. We are open-minded and share our knowledge and achievements.

Loyalty

We develop long-term relationships, earning the respect, trust and support of our customers, partners and each other. We are dependable, take ownership and work for the Company as our own.

I 1

Contents

• 1 Our Purpose, Our Vision, Our Competitive Advantage and Our Values

• 2 About this Report

• 3 About Monadelphous

• 5 Our Operations

• 6 Performance at a Glance

• 8 Board Members

• 10 Chairman’s Report

• 12 Managing Director’s Report

• 15 Chief Financial Officer’s Report

• 16 Operations in Focus - Engineering Construction

• 20 Operations in Focus - Maintenance and Industrial Services

• 24 Operations in Focus - Infrastructure

• 28 Our Locations

• 41 Financial Statements

• 42 Corporate Directory

• 43 Company Performance

• 44 Corporate Governance Statement

• 49 Directors’ Report

• 61 Independent Audit Report

• 63 Directors’ Declaration

• 64 Income Statement

• 65 Statement of Comprehensive Income

• 66 Statement of Financial Position

• 67 Statement of Changes in Equity

• 68 Statement of Cash Flows

• 69 Notes to the Financial Statements

• 113 Investor Information

• 30 Health, Safety and Environment

• 34 Our People, Culture and Values

• 36 Our Community

• 38 Strategy and Outlook

About this Report

References in this Report to ‘the year’, ‘the reporting period’ and ‘the period’ relate to the financial year 1 July 2010 to 30 June 2011 unless otherwise stated. All dollar figures are expressed in Australian currency. Monadelphous Group Limited (ABN 28 008 988 547) is the parent company of the Monadelphous group of companies. In this Report, unless otherwise stated, references to ‘Monadelphous’, ‘the Company’, ‘the division’, ‘we’, ‘its’, ‘us’ and ‘our’ refer to Monadelphous Group Limited and its subsidiaries.

In an effort to minimise its impact on the environment, Monadelphous will only post printed copies of this Annual Report to those shareholders who elect to receive one through the share registry. Shareholders may alternatively elect to receive an electronic copy of the Annual Report. This Annual Report is printed using vegetable-based inks and green energy onto paper that is chlorine free and manufactured from pulp sourced from plantation grown timber. Both the paper manufacturer and printer are certified to ISO 14001, the internationally recognised standard for environmental management.

2 I 2011 Annual Report

About Monadelphous

==> picture [595 x 295] intentionally omitted <==

About Monadelphous

Monadelphous is a leading engineering group providing construction, maintenance and industrial services to the resources, energy and infrastructure sectors.

The Company builds, maintains and supports customer operations through safe, reliable, innovative and cost effective service solutions. It aims to be recognised as a leader in its chosen markets and a truly great company to work for, work with and invest in.

Our customer-focused approach

A long-term approach to the management of customer relationships and the delivery of high quality services for more than 35 years has earned Monadelphous a reputation for engineering excellence.

Monadelphous’s highly customer focused approach and ability to provide a diverse range of value-add solutions has been fundamental to the Company’s continuing success.

Our reputation

The Company’s strong service reputation is driven by its people and culture. Monadelphous’s core values of safety and wellbeing, integrity, teamwork, achievement and loyalty differentiate the Company from its peers. These core values are embedded in Monadelphous’s processes and systems and are evident in everything the Company does.

Monadelphous’s shares are listed in the S&P/ASX 200 index.

I 3

About Monadelphous (continued)

==> picture [595 x 296] intentionally omitted <==

Our history

Monadelphous emerged from a business which started in 1972 in Kalgoorlie, Western Australia, providing general mechanical contracting services to the mining industry. The name Monadelphous was adopted in 1978 and by the mid-1980s the Company had expanded into a number of markets both interstate and overseas and its shares were traded on the second board of the Australian Stock Exchange.

In the late 1980s a major restructuring of the Company took place with the business refocused on maintenance and construction services in the resources industry. Monadelphous’s shares were relisted on the main board of the stock exchange in 1991 and the Company set the path for sustained performance with a new management team.

Since the 2001 financial year it has reported 10 successive years of earnings growth as operations have expanded in Australia and beyond through organic growth and selective acquisitions.

Monadelphous’s market value was recognised in 2007 when its shares were included in the S&P/ ASX 200 index. The Company has continued to grow and diversify, and extend its reputation as a supplier of multidisciplinary construction, maintenance and industrial services to some of the biggest and best companies and projects in the resources, energy and infrastructure sectors.

Where we are

Monadelphous operates major offices in Perth and Brisbane, with regional offices in key resources and industrial centres across Australia. Monadelphous also has operations in New Zealand and Papua New Guinea and manages a supply office in Beijing, China. This broad geographical presence positions the Company to maximise its core business and continue diversification into chosen industry sectors throughout Australasia.

4 I 2011 Annual Report

Our Operations

==> picture [595 x 295] intentionally omitted <==

Monadelphous at BHP Billiton Worsley Alumina’s Efficiency and Growth Project, Collie (WA)

Engineering Construction

The Engineering Construction division provides large-scale multidisciplinary project management and construction services. These include fabrication, modularisation, offsite pre-assembly, procurement and installation of structural steel, tanks, mechanical and process equipment, piping, plant commissioning, demolition, remediation works and electrical and instrumentation services. The division’s core markets are resources and energy.

Maintenance and Industrial Services

The Maintenance and Industrial Services division specialises in the planning, management and execution of mechanical and electrical maintenance services, as well as shutdowns, fixed plant maintenance services and sustaining capital works. The division’s core markets are resources and energy.

Infrastructure

The Infrastructure division was established on 1 July 2010, as part of the Company’s diversification strategy to support long-term growth. The division’s initial focus is on water, transmission pipelines, solid waste management, aviation support services and power. Its key markets are energy, public and private sector infrastructure.

I 5

Performance at a Glance

Financial

• Sales revenue up 13.2% to $1,443.9m

• NPAT up 14.2% to $95.1m

• EPS up 12.4% to 108.8 cents DPS up 14.5% to 95 cents fully franked

Operations

• Growth achieved across all divisions

• Strong demand and significant scope growth on engineering construction projects

• Awarded $650m of new contracts and contract extensions

Health, Safety and Environment

• Rolled out The Safe Way is the Only Way policy message

• Launched Safety Leadership Program

• Consolidated HSE processes and systems

People

• In excess of 5,600 people at year end

• Strategies centered on attraction, development and retention

• Focused on leadership identification and enhancement to build talent pipeline

Markets and Growth

• Maintained leadership position in core markets

• Strengthened position in LNG market

• Solid expansion in infrastructure work

Productivity

• Initiated LEAN continuous improvement program

• Established internal group assurance function

• Increased overseas

• sourcing capacity

==> picture [110 x 213] intentionally omitted <==

----- Start of picture text -----

Sales Revenue ($m)
07 08 09 10 11
1443.9
1275.4
1122.5
963.7 954.0
----- End of picture text -----

==> picture [127 x 212] intentionally omitted <==

----- Start of picture text -----

Sales Contribution (%)
27%
11%
62%
Engineering Construction: 62%
Maintenance and Industrial
Services: 27%
Infrastructure: 11%
----- End of picture text -----

6 I 2011 Annual Report

==> picture [109 x 139] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
153.3
129.4
116.1
104.5
94.0
----- End of picture text -----

EBITDA ($m) +18.5% to $153.3 million

==> picture [109 x 162] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
127.3 129.5
116.6
101.6
73.9
----- End of picture text -----

Net Cash Position ($m) +11.1% to $129.5 million

==> picture [109 x 150] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
95.1
83.2
74.2
66.2
60.4
----- End of picture text -----

Net Profit After Tax ($m) +14.2% to $95.1 million

==> picture [109 x 158] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
108.8
96.9
87.5
79.1
73.6
----- End of picture text -----

Earnings Per Share (c) +12.4% to 108.8 cents

==> picture [109 x 173] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
125.2
113.8
96.3 96.0
92.5
----- End of picture text -----

Operating Cash Flow ($m) +30.4% to $125.2 million

==> picture [109 x 147] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
83.0 95.0
74.0
72.0
66.0
----- End of picture text -----

Dividends Per Share (c) +14.5% to 95.0 cents

==> picture [230 x 11] intentionally omitted <==

----- Start of picture text -----

Injury Frequency Rate (per million hours worked)
----- End of picture text -----

Employee Numbers

==> picture [110 x 183] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
5,649
5,424
4,211
4,041
3,848
----- End of picture text -----

==> picture [344 x 214] intentionally omitted <==

----- Start of picture text -----

(TCIFR) (LTIFR)
30 12
25 10
20 8
15 6
Total case injury frequency rate (TCIFR)
10 4
5 2
Lost time injury frequency rate (LTIFR)
0 0
2005 2006 2007 2008 2009 2010 2011
12-month rolling average (per million hours worked)
----- End of picture text -----*

I 7

Board Members

==> picture [595 x 295] intentionally omitted <==

John Rubino Chairman

John was appointed to the Board on 18 January 1991. Initially serving as Managing Director and Chairman, John resigned as Managing Director on 30 May 2003 and continued as Chairman. John has 45 years experience in the construction and engineering services industry.

Rob Velletri Managing Director

Rob was appointed to the Board on 26 August 1992 and commenced as Managing Director on 30 May 2003. He is a Mechanical Engineer with 32 years experience in the construction and engineering services industry. Rob is a Corporate Member of the Institution of Engineers, Australia.

Zoran Bebic

Chief Financial Officer and Company Secretary

Zoran is a Certified Practising Accountant and is a Member of CPA Australia. He has 18 years experience with the Company and in the construction and engineering services industry. Zoran has held a number of financial and general management positions.

8 I 2011 Annual Report

==> picture [595 x 295] intentionally omitted <==

Peter Dempsey Independent Non-Executive Director (Lead)

Peter was appointed to the Board on 30 May 2003. He is a Civil Engineer with 39 years experience in the construction and engineering services industry. Peter is a Fellow of the Institution of Engineers, Australia.

Chris Michelmore Independent Non-Executive Director

Chris was appointed to the Board on 1 October 2007. He has 39 years experience in the construction and engineering services industry throughout Australia, South East Asia and the Middle East. Chris is a Civil and Structural Engineer and a Fellow of the Institution of Engineers, Australia.

Irwin Tollman Non-Executive Director

Irwin was appointed to the Board on 26 August 1992. He has 19 years experience in the construction and engineering services industry. Irwin is a Chartered Accountant and a Member of the Institute of Chartered Accountants in Australia.

I 9

Chairman’s Report John Rubino

Monadelphous Group Limited has achieved another record sales and earnings result for the year

I am delighted to report Monadelphous Group Limited has achieved another record sales and earnings result for the year ended 30 June 2011. This result reflects the dedication of and significant contribution made by our people.

Sales revenue for the year was $1,444 million and net profit after tax increased 14.2 per cent to $95.1 million.

Earnings per share increased by 12.4 per cent to 108.8 cents, representing the Company’s tenth consecutive year of earnings growth.

A strong operational performance has delivered a healthy earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 10.6 per cent.

A continued strong cash conversion rate generated the year-end net cash position of $129.5 million.

Following this result, the Board of Directors declared a final dividend of 55 cents per share fully franked, up 14.6 per cent on the previous corresponding period. This takes the full-year dividend to 95 cents per share fully franked, a 14.5 per cent increase on the previous year.

Strategic initiatives

During the year, excellent progress was made towards the Company’s long-term strategic objective of establishing and maintaining a leadership position in core markets and diversifying into the infrastructure market.

Monadelphous maintained its strong reputation for the safe and reliable delivery of multidisciplinary services on large-scale construction projects and continued long-term relationships with maintenance customers.

The new Infrastructure division was established on 1 July 2010 and successfully completed its first year of operations. Onshore pipeline constructor KT Pty Ltd (trading as KT Pipeline Services), was successfully acquired and integrated into the division. Its formation reflects the successful execution of Monadelphous’s diversification strategy through organic growth and acquisitions in selected infrastructure segments.

10 I 2011 Annual Report

==> picture [595 x 294] intentionally omitted <==

The Monadelphous Integrated Learning Centre at the University of Western Australia (UWA) in Perth was opened officially in April 2011. The world-class facility is part of UWA’s Faculty of Engineering, Computing and Mathematics and is designed to support the development of more job-ready engineers. Monadelphous, along with other industry leaders, is also a sponsorship partner of Curtin University’s new Engineering Pavilion.

On 5 July 2011, subsequent to the reporting period, Monadelphous announced the purchase of asset management company PearlStreet Energy Services Pty Ltd which has been renamed Monadelphous Energy Services Pty Ltd. The business operates two long-term contracts which will strengthen Monadelphous’s operation and maintenance capabilities and expand its infrastructure services into the power sector.

Outlook

With a number of significant projects underway in core markets and new contract awards subsequent to the reporting period, Monadelphous had a solid workload in the early stages of the new financial year.

In the past few months the Company has seen an unprecedented volume of tendering activity, signalling the approach of a large new wave of development in key markets. Construction and maintenance services opportunities in iron ore, coal, and LNG developments in Western Australia and Queensland dominate the Company’s list of prospects.

The Company remains confident of securing significant additional opportunities in the first half of the new financial year to underpin strong ongoing revenue flows.

The timing of projects remains a risk in the short term.

Acquisition opportunities that align with our markets and growth strategy will continue to be considered.

On behalf of the Board, I thank our shareholders for their ongoing support and our people for their valuable contribution.

==> picture [98 x 33] intentionally omitted <==

John Rubino Chairman

I 11

Managing Director’s Report Rob Velletri

Strong revenue growth was achieved across all three Monadelphous operating divisions and in all its markets – resources, energy and infrastructure

Sales revenue for the year was up 13.2 per cent to $1,444 million. The continued strengthening of the resources and energy markets, significant scope growth on a number of major construction projects and a solid expansion into infrastructure markets contributed to the strong sales result.

Strong revenue growth was achieved across all three of Monadelphous’s operating divisions and in all its markets – resources, energy and infrastructure.

Monadelphous continued to win work with approximately $650 million in new contracts and contract extensions secured during the reporting period and a further $500 million awarded early in the new financial year.

The Company maintained an increasing focus on its goal of zero harm with ongoing investment in health and safety management. The implementation of the company-wide Safety Leadership Program continued with the rollout of The Safe Way is the Only Way policy message, a powerful directive that underpins safety culture across the group.

The total case injury frequency rate (TCIFR) was 8.83 incidents per million hours worked and the lost time injury frequency rate (LTIFR) improved to 0.16 incidents per million hours worked.

The total workforce at year end was 5,649, up 4 per cent on 12 months earlier. Employee numbers were supported by active domestic and international recruitment campaigns to attract people who will contribute to the Company’s continued success and meet increasing resource requirements.

Other people initiatives included the redevelopment of the careers website, an increased graduate intake, focus on Indigenous participation and introduction of the Employee Benefits Program. These initiatives are expected to impact positively on employee recruitment and retention.

Engineering Construction

The Engineering Construction division achieved record sales revenue of $929.8 million, an increase of 10.2 per cent on the previous year.

This result reflected a healthy workload entering the financial year combined with strong performance and significant scope growth on a number of major construction contracts.

During the year the division secured more than $260 million in new projects.

In Western Australia (WA), Monadelphous was a key provider of engineering construction services on Woodside’s Pluto LNG Project at Karratha. Other major construction work during the year included Rio Tinto’s Brockman 4 Project, BHP Billiton’s Yandi Hub, BHP Billiton Worsley Alumina’s Efficiency and Growth Project in Collie and work for MCC at CITIC Pacific Mining’s Sino Iron Project at Cape Preston.

Work in Queensland (Qld) included the installation of a new automated alumina delivery system and associated infrastructure for Boyne Smelters at Gladstone.

12 I 2011 Annual Report

==> picture [595 x 295] intentionally omitted <==

The division invested in plant and equipment and in specialist personnel to further develop its heavy-lift capability. This has enhanced its ability to deliver on-site installation of pre-assembled modules on large-scale projects.

In August 2011, subsequent to the reporting period, the division secured four new contracts with customers in the Queensland coal industry.

These included two contracts totalling approximately $100 million for civil, structural, mechanical and electrical work to supply and install ore handling and conveyor facilities associated with the extension project at the Rio Tinto Coal Australia-managed Kestrel Mine in Queensland.

The division was also awarded two contracts with BHP Billiton Mitsubishi Alliance’s (BMA) Project Delivery Group for ongoing construction work on various sites in the northern region of the Bowen Basin over two years.

In September 2011, the division secured a major contract at Hope Downs 4 Iron Ore Project in Western Australia for Rio Tinto and Hancock Prospecting valued at approximately $150 million.

The work involves structural, mechanical and piping for the supply, installation and commissioning of the 15 million tonnes per annum greenfields mine processing plant.

Maintenance and Industrial Services

The Maintenance and Industrial Services division achieved record sales revenue of $401.3 million, an increase of 6.7 per cent on the previous year.

During the year the division was awarded more than $220 million in new contracts and contract extensions.

Major extensions included a three-year contract with Oil Search in Papua New Guinea (PNG) for multidisciplinary maintenance and construction services, involving additional associated gas works for the PNG LNG project, a three-year contract to provide support to BHP Billiton’s Olympic Dam copper-uranium operation in South Australia (SA), and a one-year maintenance services contract with Chevron (WA Oil) at Barrow Island in Western Australia.

In August 2011, subsequent to the reporting period, the division secured a three-year contract valued at approximately $100 million with BMA for dragline and shovel shutdown work across its Bowen Basin coal operations.

Also in August 2011, the division was awarded a new three-year contract to provide minor capital project services for BHP Billiton Worsley Alumina’s refinery at Collie (WA). The contract formally extends a continuous service relationship with Worsley Alumina which commenced in 2004.

The division was named the winner of the Rio Tinto Iron Ore Supplier of the year award for excellence in the category of Construction and Maintenance. This was a highlight of the reporting period and testament to the quality of services provided by Monadelphous.

I 13

(continued) Managing Director’s Report

==> picture [595 x 295] intentionally omitted <==

Monadelphous at Rio Tinto Iron Ore, Paraburdoo (WA)

Infrastructure

The Infrastructure division delivered sales revenue of $157.8 million in its inaugural financial year, resulting in growth on a like-for-like basis of 167 per cent.

The inception of the division on 1 July 2010 consolidated a portfolio of businesses in water, transmission pipelines, solid waste management (through a joint venture with AnaeCo) and aviation support services.

During the year the division was awarded $170 million in new infrastructure contracts.

Major infrastructure projects

substantially completed include the design, supply, commissioning and maintenance of reverse osmosis water treatment systems for Chevron Australia’s Gorgon LNG Project at Barrow Island (WA), construction works for Nambucca Shire Council’s Sewage Treatment Plant at Nambucca Heads (NSW), Unitywater’s Burpengary East Sewage Treatment Plant upgrade at Burpengary (Qld), and Cowra Shire Council’s Sewerage Augmentation Project at Cowra in New South Wales (NSW).

Following the acquisition of KT Pty Ltd, Monadelphous made a significant investment in specialised pipe laying equipment to support future growth.

The development of Monadelphous Energy Services Pty Ltd will expand infrastructure services to the power sector.

Outlook

The long-term market outlook for major engineering construction services remains positive with record levels of forecast capital investment in domestic resources and energy projects over the next few years. Monadelphous’s strong reputation in the iron ore, coal and LNG markets will position it to capitalise on the emerging pipeline of opportunities, particularly in Western Australia and Queensland.

Opportunities for maintenance and industrial services will continue to grow as new resources and energy projects are commissioned and operations commence.

Monadelphous continues to execute its markets and growth strategy, focusing on organic growth in the established markets of water, transmission pipelines, solid waste management and aviation support services and expanding services to the power sector through Monadelphous Energy Services Pty Ltd.

The Company is preparing for escalating demand for skilled labour by investing in attraction and retention strategies that build on Monadelphous’s strong service culture, accelerating training and development programs and boosting recruitment activities in domestic and international markets.

==> picture [104 x 37] intentionally omitted <==

Rob Velletri Managing Director

14 I 2011 Annual Report

Chief Financial Officer’s Report Zoran Bebic

The year realised another record financial performance, characterised by continued growth in sales revenues, earnings and dividends to shareholders

The year ended 30 June 2011 realised another record financial performance, characterised by continued growth in sales revenues, earnings and dividends to shareholders.

Record revenues were achieved in all divisions. Increased demand across core markets, significant scope growth on a number of existing major construction contracts and the successful establishment of the Infrastructure division delivered the strong result.

Strong revenue and margin growth translated into earnings before interest, tax, depreciation and amortisation (EBITDA) of $153.3 million, up 18.5 per cent on the previous year. The EBITDA margin showed healthy improvement to 10.6 per cent, supported by strong operational performance.

Net profit after tax was a record $95.1 million, up 14.2 per cent. The net profit after tax margin remained steady at 6.6 per cent.

Earnings per share increased 12.4 per cent to 108.8 cents. The Board declared a final dividend of 55 cents per share, fully franked. This took the full-year dividend to 95 cents, a 14.5 per cent increase on the previous year.

The depreciation and amortisation charge for the year was $24.4 million. The increase of 45 per cent on the previous corresponding period is in line with the Company’s increased capital expenditure.

During the year, Monadelphous invested $54.5 million in property, plant and equipment. This included a new workshop facility in Mackay (Qld), equipment to support the Oil Search contract in Papua New Guinea, a ramp up of the Monadelphous fleet replacement program, new assets to support contract requirements and growth and specialised equipment for the expansion of KT Pipeline Services.

The Company’s balance sheet at year end remained robust with a net cash position of $129.5 million. A focus on earnings quality and cash management contributed to a strong conversion rate and a record cash flow from operations of $125.2 million.

During the year, there was further development and enhancement of Monadelphous’s risk management framework. This framework provides the processes and tools to manage risks encountered across the business in working towards achieving the Company’s vision.

The Company also formally established an internal group assurance function to provide independent and objective assurance to the Board that Monadelphous is operating within acceptable risk tolerance levels. In addition to providing services designed to add value and improve operations, the function focuses on ensuring the group’s systems of internal control are operating effectively, efficiently and as designed.

With a strong outlook for core markets and a solid forward workload, Monadelphous will continue to place emphasis on its earnings quality and balance sheet strength. Continuous improvement of governance processes and prudent fiscal discipline remain a focus to support long-term sustainable growth.

==> picture [114 x 35] intentionally omitted <==

Zoran Bebic Chief Financial Officer and Company Secretary

I 15

Highlights

■ Record sales of $930 million

■ Significant scope growth on existing contracts ■ Proven LNG services capability

A Monadelphous heavy-lift at BHP Billiton Worsley Alumina’s Efficiency and Growth Project, Collie (WA)

Operations in Focus Engineering Construction

==> picture [595 x 296] intentionally omitted <==

Woodside’s Pluto LNG Plant, Karratha (WA)

The Engineering Construction division delivered record sales revenue of $929.8 million, an increase of 10.2 per cent on the previous year. Sales growth was driven by a healthy workload entering the financial year, combined with strong operating performance, scope growth on a number of major construction contracts and continued strengthening of resources and LNG markets.

During the year, the division was awarded more than $260 million in new engineering construction contracts across its core markets.

A highlight was the delivery of construction services on Woodside’s Pluto LNG Project in Western Australia which provided the platform for the development of the Company’s capability in LNG construction and commissioning. The award of additional works and a new contract to provide mechanical commissioning support for Woodside at the Pluto LNG Plant further demonstrates this capability. Monadelphous is now established as a major participant in the construction and commissioning of large-scale projects for LNG customers.

The division continued to invest in its fleet of heavy-lift equipment with the commissioning of a number of new cranes including a new 750-tonne capacity crawler and the further development of a specialist heavy-lift team. This has enhanced the Company’s ability to deliver pre-assembled modules onsite for large-scale construction projects through SinoStruct, its wholly-owned subsidiary based in China.

Sales Revenue ($m)

==> picture [109 x 159] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
929.8
843.6
752.8
727.2
638.3
----- End of picture text -----

SinoStruct manages the logistics of prefabricated steel to supplement Australian-based fabrication capacity.

The division has maintained a strong position in its core markets and remains focused on maximising customer value through the safe and reliable delivery of major projects.

Sales Contribution (%)

==> picture [127 x 23] intentionally omitted <==

----- Start of picture text -----

Engineering Construction: 62%
Other: 38%
----- End of picture text -----

I 17

Operations in Focus Engineering Construction (continued)

==> picture [595 x 295] intentionally omitted <==

Monadelphous at Boyne Smelter’s Carbon Bake Furnace 4 Project, Boyne Island (Qld)

Resources

The division continued to deliver major projects for its Western Australian iron ore customers during the year. Significant activity in the Pilbara region of Western Australia included structural, mechanical, electrical and piping works for Rio Tinto’s Brockman 4 mine operation, structural, mechanical and piping works for BHP Billiton’s Yandi Hub and structural and mechanical works for MCC Mining at CITIC Pacific Mining’s Sino Iron Project.

The division was also awarded a number of new contracts during the year including structural and mechanical works for BHP Billiton in Western Australia at the Finucane Island and Nelson Point iron ore port facilities and a train load out facility at the Yandi Hub.

Other awards included structural and mechanical works associated with the autogenous mill for MCC Mining at CITIC Pacific Mining’s Sino Iron Project at Cape Preston (WA) and structural and mechanical work for Rio Tinto at its iron ore port facility at Cape Lambert (WA).

In Queensland, the installation of a new automated alumina delivery system and associated infrastructure for Boyne Smelters at Gladstone was a significant project. The division was awarded a mechanical and electrical instrumentation package for Boyne Smelters at Gladstone.

Another large project for the division was structural, mechanical, electrical and piping works for BHP Billiton Worsley Alumina’s Efficiency and Growth Project at Collie (WA).

The division was awarded this multidisciplinary contract in October 2008 as part of the upgrade of the refinery’s capacity from 3.5 million tonnes per annum to 4.6 million tonnes per annum.

The division was also awarded new contracts for structural, mechanical and piping works at Newcrest Mining’s Cadia East Project at Orange (NSW). These contracts include the upgrade of the existing gold processing plant and fabricated products for the new underground mine.

Energy

Oil and gas is a core market for the Company. During peak activity levels, more than 1,000 Monadelphous employees were involved on Woodside’s Pluto LNG Project where the division was a key provider of structural, mechanical and piping services.

18 I 2011 Annual Report

==> picture [595 x 295] intentionally omitted <==

Technician at the MiE testing and calibration facility, Gladstone (Qld)

Monadelphous secured the initial contract with Woodside for Offsite, Utilities and Acid Gas Removal works in May 2009 and this has grown significantly through the award of additional works. Monadelphous also secured an additional contract to provide commissioning support associated with the plant as the construction works neared completion.

In addition, the division continued the delivery of works associated with the Offshore Hook-Up and Commissioning (HUC) for the Pluto Offshore Platform which was awarded in early 2010.

The division continues to support these important projects through the construction and commissioning phases and ultimately hand-over to customers ready for startup.

Other key activity in oil and gas included design, procurement and construction of the early works scope for Chevron Australia’s Gorgon LNG Project on Barrow Island (offshore WA).

This contract, secured in October 2009, involved the delivery of general utilities associated with water and wastewater processing to support the construction phase of the project. At year end the works had reached mechanical completion and were in the commissioning phase.

Electrical and instrumentation

The integration of specialist instrumentation and electrical provider MiE into the division in 2010 has broadened its capability in the provision of a seamless, multidisciplinary service offering of structural, mechanical, piping and electrical and instrumentation disciplines on large-scale projects.

Multidisciplinary contracts in Western Australia included BHP Billiton Worsley Alumina’s Efficiency and Growth Project, Rio Tinto’s Brockman 4 Project and Woodside’s Pluto HUC.

The division was also awarded a contract for electrical and instrumentation installation for the Million Ounce Plant Upgrade Project at Newcrest’s Lihir Gold Mine in Papua New Guinea.

Outlook

There were numerous major projects underway in core markets at year end and the division had a healthy workload entering the new financial year.

As the Australian resources and energy markets continue to strengthen, the division will continue to explore opportunities for the expansion of capabilities in current and new markets, including overseas with existing customers.

I 19

Highlights

■ Record sales of $401 million

■ Awarded $220 million in new contracts and extensions

■ New workshop facility in Mackay

Monadelphous at Chevron Australia’s Gorgon LNG Project, Barrow Island (WA)

Operations in Focus Maintenance and Industrial Services

==> picture [595 x 296] intentionally omitted <==

Monadelphous at Incitec Pivot Limited, Gibson Island (Qld)

The Maintenance and Industrial Services division delivered record sales revenue of $401.3 million, an increase of 6.7 per cent on the previous year. The division was awarded more than $220 million in new contracts and contract extensions during the year. Major new contract wins included a three-year sustaining capital works contract for Queensland Alumina Limited (QAL) in Queensland and an initial one-year maintenance services contract with Rio Tinto Dampier Salt in Western Australia.

Extensions were secured to the major multidisciplinary maintenance and construction services contract for Oil Search in Papua New Guinea, the provision of services for BHP Billiton’s Olympic Dam operation in South Australia and the maintenance services contract at Barrow Island and Thevenard Island for Chevron’s WA Oil (WA).

A purpose-built workshop and office was opened in Mackay during the year to establish a permanent presence in the Bowen Basin. The new facility will support mine plant upgrades, shutdowns and provide maintenance repair activities for customers in this major coal producing region.

Shutdown contract works for BMA and Macarthur Coal have been secured and will be carried out in early 2012.

Major contract activity undertaken included shutdowns for Rio Tinto’s Coastal and West Pilbara operations (WA), BHP Billiton’s Olympic Dam operation (SA) and BHP Billiton Nickel West (WA). Capital project services were undertaken for BP Refinery Kwinana (WA) and facilities maintenance at the Gorgon LNG Project for Chevron Australia (WA).

Sales Revenue ($m)

==> picture [109 x 142] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
401.3
376.2
351.9
316.7
262.5
----- End of picture text -----

The division also performed multidisciplinary services for ConocoPhillips in the Northern Territory (NT), capital project services for BHP Billiton Worsley Alumina’s refinery (WA), major shutdowns for Incitec Pivot Limited (Qld) and mechanical maintenance for Boyne Smelter (Qld) and Rio Tinto’s Yarwun alumina refinery (Qld).

Maintaining the strength and duration of relationships with key customers continues to be the foundation of the division’s strategy.

Sales Contribution (%)

==> picture [115 x 33] intentionally omitted <==

----- Start of picture text -----

Maintenance and Industrial
Services: 27%
Other: 73%
----- End of picture text -----

I 21

Operations in Focus Maintenance and Industrial Services (continued)

==> picture [595 x 294] intentionally omitted <==

Monadelphous at Rio Tinto Iron Ore, Paraburdoo (WA)

Resources

The division continued to service established customers across core commodity sectors of iron ore, coal, nickel, copper, uranium, gold and alumina.

Shutdown and maintenance services have been provided to Rio Tinto Iron Ore’s Coastal and West Pilbara operations (WA) since 2009. The division successfully executed numerous shutdown works during the year, including major outages at Tom Price and Cape Lambert. A major shutdown was completed at Paraburdoo for Rio Tinto Pilbara Iron in Western Australia as part of the Structural Integrity Project, awarded in 2005 to provide structural refurbishment work.

During the year the division continued to provide services to BHP Billiton Worsley Alumina’s refinery at Collie (WA) and the Rio Tinto Yarwun alumina refinery (Qld), where it provided maintenance, sustaining capital works and shutdown services.

QAL awarded a three-year contract to the division for sustaining capital works at its Gladstone alumina refinery (Qld). This contract builds on close to 20 years of service to QAL.

The division was also awarded an extension to the contract to provide support to BHP Billiton’s Olympic Dam copper-uranium operation in South Australia for a further three years. Monadelphous has been providing services at Olympic Dam for more than 20 years.

A one-year contract for maintenance services with Rio Tinto Dampier Salt (WA) was also awarded during the year.

Energy

The Gorgon LNG and domestic gas development is one of the world’s largest natural gas projects. In February 2010, on-site work commenced on the division’s first facilities management services contract with Chevron Australia for the Gorgon LNG Project at Barrow Island (WA).

The three-year contract involves operating and maintaining water and wastewater treatment plants and power generation and distribution systems. It also includes maintenance of accommodation and facilities such as various buildings, vehicles and equipment.

The division was awarded a one-year extension to its general maintenance, services and projects contract with Chevron’s WA Oil operations at Barrow Island and Thevenard Island (WA). The division has been providing services to support this contract, which involves project management, supervision, planning and execution of mechanical and electrical services, for more than 10 years.

22 I 2011 Annual Report

==> picture [595 x 295] intentionally omitted <==

Monadelphous at Rio Tinto Iron Ore, Tom Price (WA)

Shutdown support and management, maintenance services and sustaining project work continued at the BP Refinery Kwinana (WA) where the division has operated for four years conducting shutdowns and capital project work. The upgrade of the LPG unit during the year, involving approximately 100 Monadelphous personnel, included structural, mechanical, piping and electrical services.

Multidisciplinary services continued for ConocoPhillips at its Darwin LNG plant (NT). The original contract was awarded in 2006 and a three-year extension was secured in 2008.

In October 2010, Monadelphous secured a three-year extension to its contract with Oil Search for field construction services at the oil and gas production and support facilities in the Southern Highlands Province (PNG). This extension followed a three-year contract. The agreement included additional work to upgrade Oil Search’s Kutubu and Gobe facilities in preparation for gas delivery to the PNG LNG project. This work is scheduled to be completed in the third quarter of 2012.

Electrical and instrumentation

An integrated electrical and instrumentation capability has become a strong component of the division’s service offering, with nearly all existing contracts requiring multidisciplinary mechanical and electrical services. The growth of electrical and instrumentation services remains a focus for the division.

Workforce

The division continued to mobilise a significant number of skilled and semi-skilled personnel in various locations across Australia. This enabled Monadelphous to assist key customers meet the high labour demands of shutdowns during the year. The number and size of successful mobilisations demonstrates the division’s ability to plan, schedule and successfully execute in accordance with customer requirements.

Outlook

With its strong reputation, the division is well placed to capitalise on a healthy pipeline of opportunities developing in the resources and energy markets.

Safety leadership continues to be a major focus for the division, with processes being implemented to support the transfer of knowledge from past successes, to develop new and innovative ways of delivering work across the division and to implement productivity improvements for the benefit of customers.

I 23

Highlights

■ Inaugural sales revenue of $158 million

■ More than $170 million of new work

■ Successful integration of KT Pipeline Services

KT Pipeline Services at Chevron Australia’s Gorgon LNG Project, Barrow Island (WA)

Operations in Focus Infrastructure

==> picture [595 x 296] intentionally omitted <==

The Infrastructure division recorded sales revenue of $157.8 million in its inaugural year and was successful in securing $170 million of new contracts.

The division’s formation on 1 July 2010 reflected Monadelphous’s diversification strategy of applying core capability and broadening its service offering through strategic acquisitions and partnerships.

The successful integration of the transmission pipeline business, KT Pipeline Services, along with increased activity in the water sector, provides a solid base for future growth.

The vision of the Infrastructure division is to provide leading, innovative and cost effective asset construction and service solutions primarily for non-commodity and public sector markets.

On 5 July 2011, subsequent to the reporting period, Monadelphous announced the purchase of asset management company PearlStreet Energy Services Pty Ltd for approximately $4 million. It operates two long-term contracts with a combined value of approximately $50 million and has been renamed Monadelphous Energy Services Pty Ltd.

Water

Projects that involve water and wastewater treatment plants make up a substantial portion of the division’s revenue. Monadelphous’s first water contract was in 2006 with the Water Corporation to design and construct a plant to upgrade supplies at Wyndham in the Kimberley region of Western Australia. Since then the Company has completed eight significant turnkey water projects and currently has five underway in private and local government sectors around Australia.

==> picture [108 x 154] intentionally omitted <==

----- Start of picture text -----

Sales Revenue ($m)
07 08 09 10 11
157.8
59.1
28.4 32.7
21.2
----- End of picture text -----

Expansion of the water business shows the Company’s ability to leverage core capabilities and deliver organic growth.

Construction was completed on the sewerage augmentation plant for Cowra Shire Council at Cowra (NSW) and the SEQ fluoridation plants (Qld) while work continued on the Nambucca Heads sewage treatment plant near Coffs Harbour (NSW). Work also continued on the major upgrade of the Burpengary East sewage treatment plant for Unitywater in Brisbane (Qld) which commenced in 2008 to convert and upgrade existing treatment facilities while the plant was still in full operation.

Sales Contribution (%)

==> picture [78 x 23] intentionally omitted <==

----- Start of picture text -----

Infrastructure: 11%
Other: 89%
----- End of picture text -----

I 25

Operations in Focus Infrastructure (continued)

==> picture [595 x 296] intentionally omitted <==

Monadelphous at Unitywater’s Burpengary East Sewage Treatment Plant Upgrade (Qld)

During the year the division supported the Engineering Construction division in the delivery of water treatment facilities for the Gorgon LNG Project on Barrow Island (WA).

New contracts awarded included the construction of a new wastewater treatment plant at Iluka for the Clarence Valley Council (NSW), five fluoridation plants for South Burnett Regional Council (Qld) and the supply and construction of a large water treatment facility for the Water Corporation at Picton near Bunbury (WA).

Transmission Pipelines

In July 2010 Monadelphous announced the conclusion of its acquisition of WAbased onshore pipeline constructor KT Pty Ltd, trading as KT Pipeline Services. KT Pipeline Services specialises in high pressure gas pipeline and facilities construction.

The acquisition has supported the development of capabilities in transmission pipelines and is a strong strategic fit in both the water and energy markets in which the Company operates.

Shortly after acquiring the KT Pipeline Services business, Monadelphous was awarded an $85 million contract with Chevron Australia at Barrow Island (WA) to install onshore pipelines, cables and tubes for the Gorgon LNG Project.

New pipeline construction contracts were secured with CITIC Pacific’s Sino Iron Project at Cape Preston (WA), Alinta’s Dampier to Bunbury Natural Gas Pipeline Fortescue River Project at Fortescue River (WA) and Verve Energy’s Kwinana HEGT Project at Kwinana (WA).

During the year Monadelphous invested considerably in specialised pipeline equipment to support the growth of KT Pipeline Services.

Solid Waste Management

Monadelphous, with joint venture partner AnaeCo, entered into a contract in late December 2010 for construction of the Western Metropolitan Regional Council’s DiCOM Expansion, a waste management project in Shenton Park, Perth (WA). The joint venture uses AnaeCo’s patented DiCOM system to sort waste and break down the organic component to form compost and biogas, which can be used to power the process. Any surplus can be exported to the grid as renewable energy.

The waste management project was well underway at the end of the financial year. When completed the facility will process 55,000 tonnes of municipal solid waste annually.

26 I 2011 Annual Report

==> picture [595 x 296] intentionally omitted <==

Aviation Support Services

Skystar Airport Services (Skystar), a wholly-owned subsidiary of Monadelphous, has offered complete ground handling services to the aviation industry in Australia and New Zealand since 2001. Skystar’s customers include Qantas, QantasLink, Jetstar and Cobham Aviation.

Strong operational results were maintained during the year with exceptional on-time performance of 99.5 per cent. Skystar handled 12,299 flights, an increase of 5.8 per cent on the previous year. This included approximately 3.0 million passengers and 55,000 tonnes of baggage.

During the year Skystar extended its relationship with Qantas, with the award of a new contract at Karratha Airport in the Pilbara of Western Australia.

Outlook

The division aims to strengthen the Company’s business model for the future by broadening services to non-commodity markets that generally operate counter-cyclically to resources and energy.

The water market is predominantly driven by public funding, with projects typically occurring near well populated areas with local labour. The long-term outlook remains positive as lower rainfall predictions, population growth, ageing infrastructure in capital cities and urban centres and continued strong demand from industry place pressure on supplies. The division has the opportunity to capture a larger share of this market by leveraging the reputation it has developed.

Gas pipeline construction activity is expected to surge in the medium term on the back of major development projects in LNG and coal seam gas across Australia.

The outlook for alternative waste treatment systems, such as AnaeCo’s DiCOM, is positive as a result of the diminishing availability of affordable landfill sites and the disadvantages associated with traditional waste disposal methods.

In line with the strengthening of commodity markets, the domestic aviation industry has shown signs of improvement. Skystar is well positioned to build on its strong customer relationships and capitalise on future opportunities.

I 27

==> picture [495 x 708] intentionally omitted <==

----- Start of picture text -----

Our Locations
Darwin
Beijing
Port Hedland
Karratha
Barrow Island Dampier
Thevenard Island Cape Preston Nullagine
Pannawonica
Tom Price Mereenie
Marandoo Newman
Paraburdoo
Lake MacLeod
Mount Keith
Leinster
Kalgoorlie
Perth
Head Office Kambalda
Kwinana
Bunbury Worsley
Key
Monadelphous Major Office Power Uranium
Regional Offices Copper Water
SinoStruct Gold Chemical
Aviation Support Services Lead Salt
Iron Ore Oil and Gas Solid Waste Management
Coal Alumina/Aluminium
Nickel Zinc Map is not to scale
----- End of picture text -----

28 I 2011 Annual Report

==> picture [75 x 10] intentionally omitted <==

----- Start of picture text -----

Papua New Guinea
----- End of picture text -----

==> picture [375 x 432] intentionally omitted <==

----- Start of picture text -----

Townsville
Bowen
Mount Isa Hamilton Island
Proserpine
Mackay
Moranbah
Phosphate Hill
Peak Downs
Blackwater
Gladstone
Moura
Roma
Chinchilla
Burpengary
Brisbane
Gibson Island
Olympic Dam Iluka
Nambucca
Roxby Downs Gunnedah
Muswellbrook
Singleton
Orange Mount Thorley
Cowra
Christchurch
----- End of picture text -----

I 29

Highlights

■ Rollout of The Safe Way is the Only Way policy message

• Continuation of

• the Safety Leadership Program

■ Consolidation of HSE processes and systems

Monadelphous at Incitec Pivot Limited, Gibson Island (Qld)

Health, Safety and Environment

==> picture [595 x 296] intentionally omitted <==

Brisbane office volunteers at Clean-Up Australia Day

Health, safety and environmental management are fundamental to the Company’s business. Monadelphous has a record of strong safety performance and is committed to minimising the impact of its operations on the environment.

Performance

Monadelphous’s goal is for no-one to be harmed in the delivery of the group’s services. Notwithstanding significant business growth over the past five years, Monadelphous’s lost time injury frequency rate (LTIFR) has continued to improve. Over that period, the LTIFR has declined 94 per cent to 0.16 incidents per million hours worked. The total case injury frequency rate (TCIFR) has improved 49 per cent over the same period.

==> picture [308 x 214] intentionally omitted <==

----- Start of picture text -----

Injury Frequency Rate (per million hours worked)
(TCIFR) (LTIFR)
30 12
25 10
20 8
15 6
Total case injury frequency rate (TCIFR)
10 4
5 2
Lost time injury frequency rate (LTIFR)
0 0
2005 2006 2007 2008 2009 2010 2011
12-month rolling average (per million hours worked)
----- End of picture text -----*

I 31

Health, Safety and Environment (continued)

==> picture [595 x 295] intentionally omitted <==

Monadelphous at Woodside’s Pluto LNG Project, Karratha (WA)

The LTIFR improved strongly during the reporting period with a 70.4 per cent reduction to 0.16 incidents per million hours worked. The TCIFR increased to 8.83 over the same period. Monadelphous continues to develop and implement health and safety initiatives that will provide the foundation for sustainable safety performance across the group.

Key activities

The Safe Way is the Only Way policy message was formally launched and communicated to all employees during the reporting period. The Safe Way is the Only Way is a powerful directive from the leadership team that empowers all people to stop work if they deem it to be unsafe. The message underpins Health, Safety and Environment (HSE) policies, principles and the safety management system within the Company.

The long-term Safety Leadership Program customised for Monadelphous by DuPont Safety Resources is expected to provide the momentum for sustainable safety improvement across the Company. Managers have received coaching and training under the program and supervisors continue to receive training.

The Company is refining its leading safety indicators reporting, promoting safety interactions and measuring progress through internal assurance reviews. These activities support the group’s ability to measure, review and monitor safety initiatives to drive improved performance.

Monadelphous has an established wellbeing program. A calendar of health awareness initiatives encompassing a range of topics and information is prepared for employees and made available electronically, on notice boards and at lunch time presentations.

The Company continues to gather and monitor data on its carbon emissions. This involves measuring fuel use, energy consumption and indirect emissions. The data is used for environmental planning and legislative reporting purposes.

Monadelphous moved to a new Perth head office in July 2010. The building in Victoria Park is designed to provide excellent energy performance and has a Green Stars environmental rating of four.

The Company launched an environmental awareness program for its corporate offices in Perth and Brisbane, focusing on a different environmental initiative each month. These initiatives included a MobileMuster promotion, participation in Clean-Up Australia Day and the global Earth Hour event. Other activities included scrap metal recycling and collection of electronic waste for re-use and recovery of production materials.

32 I 2011 Annual Report

==> picture [595 x 296] intentionally omitted <==

Monadelphous head office at 59 Albany Highway, Victoria Park, Perth (WA)

Monadelphous’s joint venture with AnaeCo to deliver, design and construct alternative solid waste management plants with a reduced carbon footprint is a tangible way in which the Company is actively engaged in providing environmentally sustainable solutions.

Outlook

Monadelphous will continue to focus on safety performance and the goal of zero harm. The Safety Leadership Program is being implemented across the Company and is envisaged to have a positive cultural impact on the business.

==> picture [309 x 257] intentionally omitted <==

Perth office volunteers at Clean-Up Australia Day

I 33

Our People, Culture and Values

Highlights

■ In excess of 5,600 people at year end

■ Focus on attraction, development and retention

• Enhancement of Emerging

• Leaders Program

The Monadelphous values of safety and wellbeing, integrity, achievement, teamwork and loyalty underpin corporate culture, and people are the source of the Company’s competitive advantage. Monadelphous’s strategy is to attract, develop and retain the right people who are highly competent, live the Company’s values and actively contribute to its long-term success.

Key activities

During the year Monadelphous brought together more than 500 employees, previously dispersed in various locations across Perth, to the Company’s new head office at 59 Albany Highway, Victoria Park (WA). The move consolidated Perth staff into a fresh and innovative workplace that embraces the Monadelphous values and culture.

As Monadelphous continues to grow, the Company is focused on retaining the values and culture that have driven its success.

A cultural survey was conducted to gain an employee perspective of the Company and to assess the success of the various people-related initiatives implemented in recent years. The survey was closely tied to the Monadelphous values and will be used to enhance existing initiatives for the benefit of employees.

The Employee Benefits Program was introduced to provide access to a wide range of discounts for products and services.

The Company increased its search in selected international markets to fill shortfalls in the domestic labour market. Subsequent to the reporting period, Monadelphous was granted approval by the Department of Immigration and Citizenship to establish a labour agreement to permit the recruitment of semi-skilled labour from overseas.

Monadelphous’s Graduate Recruitment Program, developed in 2005, provides the business with fresh ideas and new energy and is an important source of key talent to support future growth. The number of graduates recruited during the year increased by more than 80 per cent to 31 graduates across several disciplines. Work also commenced on the development of a mentor training program to provide graduates with additional support during the early stages of their employment. This enhancement is envisaged to enrich the graduate experience and contribute significantly to their development, to provide the Company with leaders of the future.

Progress has also been made in the development and enhancement of people strategies in the area of diversity and workforce participation.

Significant development of the performance management system occurred with improvements continuing across the group.

34 I 2011 Annual Report

==> picture [595 x 296] intentionally omitted <==

Monadelphous at Rio Tinto Iron Ore, Tom Price (WA)

The system is underpinned by the Monadelphous values and it will provide greater clarity and structure around the performance and development of the Company’s people.

The Company will work closely with customers to focus on the participation of Indigenous employees in the workforce. An Indigenous Strategies Committee has been formed to define strategy and initiatives in this area. Monadelphous has committed to increase Indigenous workforce participation through the Australian Employment Covenant, an industry-driven initiative aimed at securing sustainable jobs for Indigenous people.

The enhanced Emerging Leaders Program was launched during the year. The program is an important component of Monadelphous’s leadership development initiative designed to align with the Company’s values.

It has been customised for Monadelphous and is aimed at developing a pipeline of leadership talent to support sustainable growth.

Outlook

The demand for labour is expected to accelerate as large-scale resources and energy projects enter their next phase of development. The Company’s clear preference is to source labour from the domestic market. In anticipation of domestic labour constraints, Monadelphous has commenced targeted searches of the international market to meet shortfalls in domestic labour, enhanced its careers website (www.jobswithus.com.au) and implemented innovative means of attracting and developing employees. The new labour agreement for overseas recruitment will also supplement sources of semi-skilled people, providing the Company with more employees to meet its workforce requirements.

Monadelphous will continue to invest in its most valuable asset – people. The Company is committed to ensuring alignment of its people strategies with Monadelphous’s values to drive long-term success.

Employee Numbers

==> picture [109 x 163] intentionally omitted <==

----- Start of picture text -----

07 08 09 10 11
5,649
5,424
4,211
4,041
3,848
----- End of picture text -----

I 35

Our Community

Highlights

■ Opening of the Monadelphous Integrated Learning Centre

• Support of charities

• Participation in

• community events

Participants at the Monadelphous Charity Golf Day 2011

Monadelphous builds and maintains relationships with the communities in which it operates and where its employees live and work. With widely dispersed operations and offices it is important to Monadelphous to assist community groups and keep them informed about the Company’s activities.

The Company contributes through donations, sponsorships, help in kind and encouragement of employee participation. Support goes to local sporting clubs, community organisations, education and medical services, charities, events and shows.

Monadelphous Integrated Learning Centre

The Monadelphous Integrated Learning Centre (MILC) at the University of Western Australia was opened officially in April 2011.

The two-level facility is part of the university’s Faculty of Engineering, Computing and Mathematics and combines world-class teaching and practical training in a bright, open, simulated working environment. Monadelphous has naming rights for 10 years as major corporate partner in the project which supports the Company’s engagement in education.

Curtin University Engineering Pavilion

The Curtin University Engineering Pavilion, the first stage of the university’s $32.5 million engineering pavilion complex at its Bentley campus (WA), was opened officially by Prime Minister Julia Gillard in March 2011. Monadelphous is a sponsorship partner for the pavilion which provides a stimulating learning environment, with technologically advanced facilities to help educate engineers of the future.

Queensland disaster relief

Following the devastating Queensland floods and cyclone Yasi in late 2010 and early 2011, Monadelphous, its directors and employees donated more than $100,000 to the Queensland Premier’s Disaster Relief Appeal.

Charity golf day

The annual Monadelphous Charity Golf Day held at the Joondalup Country Club (WA) in March 2011 raised more than $48,000 for the Royal Flying Doctor Service (RFDS). This funded vital medical retrieval equipment for the RFDS Western Operation’s fleet of 14 aircraft which service the needs of people in regional and remote areas. More than 140 Monadelphous employees, customers and suppliers supported the event.

36 I 2011 Annual Report

==> picture [595 x 296] intentionally omitted <==

Students at the new Monadelphous Integrated Learning Centre, University of Western Australia

Informing our community

Monadelphous provides information to the community in many ways to keep stakeholders informed of its activities. Avenues include the Company’s corporate and careers (www.jobswithus.com.au) websites, media releases, annual report, advertising and careers fairs. Following the 2010 Annual General Meeting, shareholders were invited to tour the Company’s new purpose-built head office in Perth and talk with employees.

==> picture [309 x 257] intentionally omitted <==

Curtin University Vice-Chancellor Professor Jeanette Hacket and Monadelphous Managing Director Rob Velletri at the opening of the Curtin University Engineering Pavilion

I 37

Highlights

■ Underlying business growth and strong position in core markets

■ Broadening of LNG construction and commissioning capability

■ Solid market expansion in infrastructure

38

Strategy and Outlook

==> picture [595 x 296] intentionally omitted <==

The addition of Monadelphous Energy Services has diversified services into power

Monadelphous’s vision is to double in size every five years by being a leader in its chosen markets and a truly great company to work for, work with and invest in. This will only be achieved through the successful execution of its markets and growth, people and supporting strategies.

Monadelphous has made excellent progress towards its long-term strategic objective of establishing and maintaining a leadership position in its core markets of resources and energy and diversifying into infrastructure.

The Company continues to strengthen and protect its leadership position in the resources market which includes iron ore, coal and mineral processing.

During the year Monadelphous extended its geographic footprint into Queensland’s Bowen Basin through the opening of its new Mackay workshop. The Mackay facility positions Monadelphous to provide services to coal customers in the region.

The successful establishment of the Infrastructure division has consolidated the provision of services in water, transmission pipelines, solid waste management and aviation support services. Power has now been added to the division through Monadelphous Energy Services Pty Ltd. The ability to deliver larger projects, broaden the service offering and enter new sectors is enhanced.

The successful integration of KT Pipeline Services during the year has positioned Monadelphous in the transmission pipeline construction sector with contracts in oil and gas and iron ore.

As competition for skilled labour continues to accelerate and activity levels increase across core markets, strategies connected to the attraction and retention of the right people remain a priority. The right people are those who will deliver quality work and who exemplify Monadelphous’s values.

The focus on safety initiatives will continue as work volumes and intensity increase, to ensure that the safety and wellbeing of the Company’s people is not compromised.

The outlook for Monadelphous across its core markets remains positive. High levels of committed and planned investment in resources and energy projects will provide a strong pipeline of opportunities. Monadelphous’s reputation for excellent service delivery to customers places the Company in a competitive position to capitalise on these prospects.

The Company is also well positioned to develop its market share in infrastructure through continued organic growth and diversification into new markets such as power. Further growth in infrastructure will potentially occur through carefully selected acquisitions.

Monadelphous is committed to sustainable business operations to ensure long-term success. Intrinsic to this commitment is maintaining a leadership position in core markets, ensuring further growth and diversification, while preserving the strength of relationships with customers, shareholders, employees, suppliers and communities.

I 39

==> picture [595 x 842] intentionally omitted <==

----- Start of picture text -----

40 I 2011 Annual Report Monadelphous at Rio Tinto Iron Ore, Tom Price (WA)
----- End of picture text -----

Financial Statements

==> picture [595 x 298] intentionally omitted <==

Contents	Page
Corporate Directory	42
Company Performance	43
Corporate Governance Statement	44
Directors’ Report	49
Independent Audit Report	61
Directors’ Declaration	63
Income Statement	64
Statement of Comprehensive Income	65
Statement of Financial Position	66
Statement of Changes in Equity	67
Statement of Cash Flows	68
Notes to the Financial Statements	69
Investor Information	113

I 41

Corporate Directory

Directors

Calogero Giovanni Battista Rubino Chairman

Robert Velletri Managing Director

Irwin Tollman Non-Executive Director

Peter John Dempsey Lead Independent Non-Executive Director

Christopher Percival Michelmore Independent Non-Executive Director

company secretaries

Zoran Bebic Philip Trueman

principal registereD office in australia

59 Albany Highway Victoria Park Western Australia 6100 Telephone: +61 8 9316 1255 Facsimile: +61 8 9316 1950 Website: www.monadelphous.com.au

postal aDDress

PO Box 600 Victoria Park Western Australia 6979

share registry

Computershare Investor Services Pty Ltd Level 2, 45 St George’s Terrace Perth Western Australia 6000 Telephone: 1300 364 961 Facsimile: +61 8 9323 2033

auDitors

Ernst & Young The Ernst & Young Building 11 Mounts Bay Road Perth Western Australia 6000

solicitors

Minter Ellison Level 49, Central Park 152 St George’s Terrace Perth Western Australia 6000

Clifford Chance Level 12, London House 216 St George’s Terrace Perth Western Australia 6000

controlleD entities

Monadelphous Engineering Associates Pty Ltd Monadelphous Engineering Pty Ltd Skystar Airport Services Pty Ltd Monadelphous Properties Pty Ltd Monadelphous Workforce Pty Ltd Genco Pty Ltd MBF Workforce Pty Ltd MI & E Holdings Pty Ltd Monadelphous PNG Ltd Skystar Airport Services Holdings Pty Ltd Skystar Airport Services NZ Pty Ltd Ellavale Engineering Pty Ltd Moway International Limited SinoStruct Pty Ltd Moway AustAsia Steel Structures Trading (Beijing) Company Ltd Monadelphous Group Limited Employee Share Trust KT Pty Ltd Monadelphous Energy Services Pty Ltd (acquired 1 July 2011)

australian securities eXchange (asX) coDe

MND – Fully Paid Ordinary Shares

Bankers

National Australia Bank Limited 50 St George’s Terrace Perth Western Australia 6000

Westpac Banking Corporation 109 St George’s Terrace Perth Western Australia 6000

42 I 2011 Annual Report

Company Performance | 2006 - 2011

A review of the Company’s performance over the last six years is as follows:

==> picture [469 x 339] intentionally omitted <==

----- Start of picture text -----

2011 2010 2009 2008 2007 2006
$’000 $’000 $’000 $’000 $’000 $’000
Revenue 1,449,252 1,279,862 1,127,474 958,966 968,419 534,273
Profit before income tax expense 131,576 115,148 104,149 99,749 86,835 42,196
Income tax expense 36,509 31,931 29,908 30,206 26,417 12,800
Profit after income tax expense 95,067 83,217 74,241 69,543 60,418 29,396
Basic earnings per share 108.84c 96.86c 87.48c 83.21c 73.56c 36.48c
Interim dividends per share (fully franked) 40.00c 35.00c 30.00c 29.00c 22.00c 9.00c
Special dividends per share (fully franked) - - - - 15.00c 9.00c
Final dividends per share (fully franked) 55.00c 48.00c 44.00c 43.00c 29.00c 15.00c
Net tangible asset backing per share 214.54c 164.74c 139.84c 117.73c 105.87c 73.34c
Total equity and reserves 193,234 144,286 122,565 101,817 90,481 62,134
Depreciation 23,341 16,789 15,066 12,718 10,390 7,510
Return on equity 49.2% 57.7% 60.6% 68.3% 66.8% 47.3%
EBITDA margin 10.6% 10.1% 10.3% 11.5% 9.8% 9.2%
----- End of picture text -----

I 43

Corporate Governance Statement | 30 June 2011

The Board of Directors of Monadelphous Group Limited (Monadelphous) is responsible for establishing the corporate governance framework of the consolidated entity having regard to the ASX Corporate Governance Council published guidelines as well as its corporate governance principles and relevant recommendations. The Board guides and monitors the business and affairs of Monadelphous on behalf of the shareholders by whom they are elected and to whom they are accountable.

The table below summarises the Group’s compliance with the Corporate Governance Council’s Recommendations.

==> picture [468 x 30] intentionally omitted <==

----- Start of picture text -----

comply reference/
recommenDation
yes/no explanation
----- End of picture text -----

Principle 1 – Lay solid foundations for management and oversight	Principle 1 – Lay solid foundations for management and oversight
1.1	Companies should establish the functions reserved to the Board and those delegated to	Yes	Page 45
	senior executives and disclose those functions.
1.2	Companies should disclose the process for evaluating the performance of senior executives.	Yes	Page 48
1.3	Companies should provide the information indicated in the guide to reporting on Principle 1.	Yes
Principle 2 – Structure the Board to add value
2.1	A majority of the Board should be independent directors.	No	Page 46
2.2	The chairperson should be an independent director.	No	Page 46
2.3	The roles of chairperson and chief executive officer should not be exercised by the	Yes	Page 46
	same individual.
2.4	The Board should establish a nomination committee.	Yes	Page 47
2.5	Companies should disclose the process for evaluating the performance of the Board,	Yes	Page 48
	its committees and individual directors.
2.6	Companies should provide the information indicated in the guide to reporting on Principle 2.	Yes
Principle 3 – Promote ethical and responsible decision-making
3.1	Companies should establish a code of conduct and disclose the code or a summary of the	Yes	Website
	code as to:
	- the practices necessary to maintain confidence in the Company’s integrity;
	- the practices necessary to take into account their legal obligations and the reasonable
	expectations of their stakeholders;
	- the responsibility and accountability of individuals for reporting and investigating reports of
	unethical practices.
3.2	Companies should establish a policy concerning trading in company securities by directors,	Yes	Page 46
	senior executives and employees, and disclose the policy or a summary of that policy.
3.3	Companies should provide the information indicated in the guide to reporting on Principle 3.	Yes
Principle 4 – Safeguard integrity in financial reporting
4.1	The Board should establish an audit committee.	Yes	Page 47
4.2	The audit committee should be structured so that it:	Yes	Page 47
	- consists only of non-executive directors;
	- consists of a majority of independent directors;
	- is chaired by an independent chairperson, who is not chairperson of the Board;
	- has at least three members.
4.3	The audit committee should have a formal charter.	Yes	Website
4.4	Companies should provide the information indicated in the guide to reporting on Principle 4.	Yes

44 I 2011 Annual Report

Corporate Governance Statement (Continued) | 30 June 2011

==> picture [469 x 30] intentionally omitted <==

----- Start of picture text -----

comply reference/
recommenDation (continueD)
yes/no explanation
----- End of picture text -----

Principle 5 – Make timely and balanced disclosure	Principle 5 – Make timely and balanced disclosure
5.1	Companies should establish written policies designed to ensure compliance with ASX Listing	Yes	Website
	Rule disclosure requirements and to ensure accountability at a senior executive level for that
	compliance and disclose those policies or a summary of those policies.
5.2	Companies should provide the information indicated in the guide to reporting on Principle 5.	Yes
Principle 6 – Respect the rights of shareholders
6.1	Companies should design a communication policy for promoting effective communication with	Yes	Website
	shareholders and encouraging their participation at general meetings and disclose their policy
	or a summary of that policy.
6.2	Companies should provide the information indicated in the guide to reporting on Principle 6.	Yes
Principle 7 – Recognise and manage risk
7.1	Companies should establish policies for the oversight and management of material business	Yes	Website
	risks and disclose a summary of those policies.
7.2	The Board should require management to design and implement the risk management and	Yes	Page 47
	internal control system to manage the Company’s material business risks and report to it on
	whether those risks are being managed effectively. The Board should disclose that
	management has reported to it as to the effectiveness of the Company’s management of its
	material business risks.
7.3	The Board should disclose whether it has received assurance from the chief executive officer	Yes	Page 47
	(or equivalent) and the chief financial officer (or equivalent) that the declaration provided in
	accordance with section 295A of the_Corporations Act_is founded on a sound system of risk
	management and internal control and that the system is operating effectively in all material
	respects in relation to financial reporting risks.
7.4	Companies should provide the information indicated in the guide to reporting on Principle 7.	Yes
Principle 8 – Remunerate fairly and responsibly
8.1	The Board should establish a remuneration committee.	Yes	Page 48
8.2	Companies should clearly distinguish the structure of non-executive directors’ remuneration	Yes	Page 48
	from that of executive directors and senior executives.
8.3	Companies should provide the information indicated in the guide to reporting on Principle 8.	Yes

Monadelphous Group Limited’s corporate governance practices were in place throughout the year ended 30 June 2011, unless otherwise stated. Monadelphous Group Limited complies in all material respects with the Council’s best practice recommendations.

Various corporate governance practices are discussed within this statement. For further information on corporate governance policies adopted by Monadelphous Group Limited refer to the Monadelphous website:

www.monadelphous.com.au

Board Functions

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and ethical expectations and obligations. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks.

To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the Board.

The responsibility for the operation and administration of the Company is delegated, by the Board, to the Managing Director and the executive management team. The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the Managing Director and the executive management team.

Whilst at all times the Board retains full responsibility for guiding and monitoring the Company, in discharging its stewardship it makes use of sub-committees. Specialist committees are able to focus on a particular responsibility and provide informed feedback to the Board. To this end the Board has established the following committees:

• Audit

• Nomination

• Remuneration

I 45

Corporate Governance Statement (Continued) | 30 June 2011

Board Functions (continued)

The roles and responsibilities of these committees are discussed throughout this Corporate Governance Statement.

The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and risk identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved including:

• Board approval of a strategic plan designed to meet stakeholders’ needs and manage business risk;

• ongoing development of the strategic plan and approving initiatives and strategies designed to ensure continued growth and success of the entity; and

• implementation of budgets by management and monitoring progress against budgets – via the establishment and reporting of both financial and non-financial key performance indicators.

Other functions reserved to the Board include:

• approval of the annual and half-yearly financial reports;

• approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures;

• ensuring that any significant risks that arise are identified, assessed, appropriately managed and monitored;

• reporting to shareholders.

Structure of the Board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report is included in the Directors’ Report on page 49. Directors of Monadelphous are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the exercise of their unfettered and independent judgement.

In the context of director independence, ‘materiality’ is considered from both the Company and individual director perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors which point to the actual ability of the director in question to shape the direction of the Company’s loyalty.

In accordance with the definition of independence, and the materiality thresholds set, Mr P. J. Dempsey and Mr C. P. Michelmore are considered to be independent directors.

The Board believes that while the Chairman is not independent, the current composition of the Board with its combined skills and capability, best serve the interests of the shareholders.

The role of Chairman and Chief Executive Officer are not exercised by the same individual.

There are procedures in place, agreed by the Board, to enable directors, in furtherance of their duties, to seek independent professional advice at the Company’s expense.

The term in office held by each director in office at the date of this report is as follows:

C. G. B. Rubino	20 years	Executive Director
R. Velletri	19 years	Executive Director
I. Tollman	19 years	Non-Executive Director
P. J. Dempsey	8 years	Lead Independent Non-Executive Director
C. P. Michelmore	4 years	Independent Non-Executive Director

Trading Policy

Under the Company’s Share Trading Policy, Key Management Personnel and other employees may only trade in securities of the Company during specific periods, and then only if they do not possess any unpublished, price-sensitive information in relation to those securities.

The trading periods in which buying and selling of the Company’s securities, either directly or indirectly, by a Key Management Personnel or other employee is allowed, spans the periods between 24 hours and 30 working days after each of the following events:

• release of the annual and half-yearly results to the ASX;

• the close of the Annual General Meeting; or

• any other time as the Board of Directors of Monadelphous permits.

All other periods are “closed periods” during which Key Management Personnel and other employees are prohibited from dealing in Monadelphous securities. From time to time, the Board of Directors of Monadelphous may also declare that Key Management Personnel and other employees are prohibited from dealing in Monadelphous securities during trading periods even though those trading periods are not closed periods.

46 I 2011 Annual Report

Corporate Governance Statement (Continued) | 30 June 2011

Trading Policy (continued)

Before commencing to trade, a Key Management Personnel or other employee must first notify the Company Secretary of their intention to do so. The notification must state that the proposed purchase or sale is not as a result of access to, or being in possession of, price sensitive information that is not currently in the public domain.

As required by the ASX Listing Rules, the Company notifies the ASX of any transaction conducted by the Directors in the securities of the Company.

For a copy of the Share Trading Policy, please refer to the Monadelphous website.

Nomination Committee

The Board has a nomination committee which operates under a charter and meets at least annually. The nomination committee is responsible for ensuring that the Board continues to operate within the established guidelines, including when necessary, selecting candidates for the position of director. The nomination committee comprises of two independent non-executive directors and one executive director. Members of the nomination committee throughout the year were:

• C. G. B. Rubino (Chairman)

• C. P. Michelmore

• P. J. Dempsey

For details of directors’ attendance at meetings of the nomination committee, refer to page 59 of the Directors’ Report.

Audit Committee

The Board has an audit committee which operates under a charter approved by the Board. It is the Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information as well as non-financial considerations such as the benchmarking of operational key performance indicators. The Board has delegated responsibility for establishing and maintaining a framework of internal control and ethical standards to the audit committee.

The committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports. All members of the audit committee are non-executive directors. The members of the audit committee during the year were:

• P. J. Dempsey (Chairman)

• I. Tollman

• C. P. Michelmore

Qualifications of audit committee members

P. J. Dempsey has over 39 years experience in the management of risks associated with the industry in which Monadelphous operates.

I. Tollman has significant experience in the management of Monadelphous having served as the finance director of Monadelphous for 11 years and as a non-executive director for 8 years.

C. P. Michelmore has over 39 years experience in the management of risks associated with the construction industry.

For details on the number of meetings of the audit committee held during the year and the attendees at those meetings, refer to page 59 of the Directors’ Report.

Risk

The Board regularly receives updates from management as to the effectiveness of the Company’s management of its material business risks.

For further information on the Company’s risk management plan, refer to the Monadelphous website.

Managing Director and CFO Certification

In accordance with section 295A of the Corporations Act , the Managing Director and Chief Financial Officer have provided a written statement to the Board that:

• their views provided on the consolidated entity’s financial reports are founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the Board; and

• that the consolidated entity’s risk management and internal compliance and control systems are operating effectively in all material respects.

I 47

Corporate Governance Statement (Continued) | 30 June 2011

Performance

The performance of the Board and key executives is reviewed regularly against both measurable and qualitative indicators. During the reporting period, the nomination committee conducted performance evaluations which involved an assessment of the Board’s and Senior Executives’ performance against qualitative and quantitative performance criteria. The performance criteria against which the Board and executives are assessed are aligned with the financial and non-financial objectives of Monadelphous.

Remuneration Committee

It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. To assist in achieving this objective, the remuneration committee links the nature and amount of executive directors’ and officers’ remuneration to the Company’s financial and operational performance. The expected outcomes of the remuneration structure are:

• retention and motivation of key executives

• attraction of quality management to the Company

• performance incentives which allow executives to share the rewards of the success of Monadelphous.

For full discussion of the Company’s remuneration philosophy and framework and the remuneration received by directors and executives in the current period, please refer to the Remuneration Report, which is contained within the Directors’ Report.

In relation to the issuing of options, discretion is exercised by the Board, having regard to the overall performance of Monadelphous and the performance of the individual during the period. The Monadelphous Group Limited Employee Option Plan rules have been approved by shareholders.

There is no scheme to provide retirement benefits, other than statutory superannuation, to directors. There is no scheme to provide retirement benefits to non-executive directors.

The Board is responsible for determining and reviewing compensation arrangements for the directors themselves and the executive team. The Board has established a remuneration committee, comprising three non-executive directors. Members of the remuneration committee throughout the year were:

• C. P. Michelmore (Chairman)

• I. Tollman

• P.J. Dempsey

For details on the number of meetings of the remuneration committee held during the year and the attendees at those meetings, refer to page 59 of the Directors’ Report.

48 I 2011 Annual Report

Directors’ Report | Year Ended 30 June 2011

Your directors submit their report for the year ended 30 June 2011.

Directors

The names and details of the directors of the Company in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

names, qualifications, experience and special responsibilities

calogero giovanni Battista rubino	Chairman
	Appointed 18 January 1991
	Resigned as Managing Director on 30 May 2003 and continued as Chairman
	45 years experience in the construction and engineering services industry
robert Velletri	Managing Director
	Appointed 26 August 1992
	Mechanical Engineer, Corporate Member of the Institution of Engineers Australia
	Appointed as Managing Director on 30 May 2003
	32 years experience in the construction and engineering services industry
irwin tollman	Non-Executive Director
	Appointed 26 August 1992
	Chartered Accountant, Member Institute of Chartered Accountants in Australia
	19 years experience in the construction and engineering services industry
	Retired as Executive Director on 25 July 2003 and continued as a
	Non-Executive Director
peter John Dempsey	Lead Independent Non-Executive Director
	Appointed 30 May 2003
	Civil Engineer, Fellow of the Institution of Engineers Australia
	39 years experience in the construction industry
	Also a non-executive director of two other publicly listed entities, Becton Property
	Group Limited (ASX: BEC) - appointed 25 July 2008 and Service Stream Limited
	(ASX: SSM) - appointed 1 November 2010
christopher percival michelmore	Independent Non-Executive Director
	Appointed 1 October 2007
	Civil Engineer, Fellow of the Institution of Engineers Australia
	Member Institution of Structural Engineers, UK
	39 years experience in the construction industry
company secretaries
Zoran Bebic	Company Secretary and Chief Financial Officer
	Appointed 24 August 2009
	Certified Practising Accountant, Member of CPA Australia
	18 years experience in the construction and engineering services industry
philip trueman	Company Secretary and General Manager, Human Resources
	Appointed 21 December 2007
	Chartered Accountant, Member Institute of Chartered Accountants in Australia and
	the South African Institute of Chartered Accountants
	11 years experience in the construction and engineering services industry

I 49

Directors’ Report (Continued) | Year Ended 30 June 2011

interests in the shares anD options of the company anD relateD BoDies corporate

As at the date of this report, the interests of the directors in the shares and options of Monadelphous Group Limited were:

	ordinary shares	options over ordinary shares
C. G. B. Rubino	2,004,000	Nil
R. Velletri	2,125,000	375,000
I. Tollman	667,586	Nil
P. J. Dempsey	78,000	Nil
C. P. Michelmore	18,597	Nil
earnings per share
	cents
Basic Earnings Per Share	108.84
Diluted Earnings Per Share	106.87
DiViDenDs
	cents	$’000
Final dividends declared
- on ordinary shares	55.00	48,167
Dividends paid during the year:
Current year interim
- on ordinary shares	40.00	35,031
Final for 2010
- on ordinary shares	48.00	42,010

corporate information

Corporate structure

Monadelphous Group Limited is a company limited by shares that is incorporated and domiciled in Australia. Monadelphous Group Limited has prepared a consolidated financial report incorporating the entities that it controlled during the financial year (refer note 25 in the financial report).

The registered office of Monadelphous Group Limited is located at 59 Albany Highway, Victoria Park, Western Australia, 6100.

Nature of operations and principal activities

Engineering Services

Monadelphous is a diversified services company operating in the resources, energy and infrastructure industry sectors. Services provided:

• Fabrication, modularisation, offsite pre-assembly, procurement and installation of structural steel, tankage, mechanical and process equipment, piping, demolition and remediation works

• Multi-disciplined construction services

• Plant commissioning

• Specialist electrical and instrumentation services

• Fixed plant maintenance services

• Shutdown planning, management and execution

• Construction of transmission pipelines and facilities

Skystar Airport Services

Provides aviation support services.

General

The Monadelphous Group operates from major offices in Perth and Brisbane, with regional offices in Beijing (China) and Adelaide, and a network of workshop facilities in Kalgoorlie, Karratha, Darwin, Roxby Downs, Gladstone, Hunter Valley, Mt Isa, Mackay and Townsville.

The consolidated entity’s revenue is earned predominantly from the resources, energy and infrastructure industry sector. There have been no significant changes in the nature of those activities during the year.

Employees

The consolidated entity employed 5,649 employees as of 30 June 2011 (2010: 5,424 employees).

50 I 2011 Annual Report

Directors’ Report (Continued) | Year Ended 30 June 2011

operating anD financial reVieW

Review

A review of operations of the consolidated entity during the financial year, the results of those operations, the changes in the state of affairs and the likely developments in the operations of the consolidated entity are set out in the Chairman’s Report.

Operating results for the year

Operating results for the year were:

==> picture [469 x 59] intentionally omitted <==

----- Start of picture text -----

2011 2010
$’000 $’000
Revenue from services 1,443,896 1,275,420
Profit after income tax expense 95,067 83,217
----- End of picture text -----

significant changes in the state of affairs

There have been no significant changes in the state of affairs of the parent entity or the consolidated entity during the financial year.

significant eVents after the Balance Date

On 1 July 2011, Monadelphous Group Limited acquired 100% of the voting shares of asset management company, PearlStreet Energy Services Pty Ltd (‘PearlStreet’). PearlStreet manages two long term operations and maintenance contracts in the power sector in Western Australia. The acquisition forms part of Monadelphous’s markets and growth strategy. The consideration comprised an initial cash payment of $4,130,000 and a subsequent cash adjustment to the purchase price on finalisation of the completion accounts at the date of acquisition.

At the date the Financial Statements were authorised for issue, the initial accounting for the business combination was incomplete with the fair value assessments of the identifiable assets and liabilities acquired at acquisition and the calculation of the adjustment to the purchase price to be finalised. As a result it is not possible to disclose the carrying value or fair value of the identifiable assets and liabilities that will be recognised at 1 July 2011, the acquisition date fair value of consideration transferred or to calculate the value of goodwill.

On 14 July 2011, the company name of PearlStreet Energy Services Pty Ltd was changed to Monadelphous Energy Services Pty Ltd. On 19 August 2011, the Company announced that it had secured major maintenance and construction contracts with a combined value of approximately $350 million. The contracts are with key customers in the Queensland coal industry and the Western Australian oil and gas and alumina industries. The contracts include:

• A three-year contract with BHP Billiton Mitsubishi Alliance (BMA) in Queensland, valued at approximately $100 million for dragline and shovel shutdown work across its Bowen Basin coal operations;

• Two contracts totalling approximately $100 million, for civil, structural, mechanical and electrical work to supply and install an overland conveyor and a drift conveyor as part of the extension project at the Rio Tinto Coal Australia–managed Kestrel Mine near Emerald, Queensland;

• Two contracts with BMA’s Project Delivery Group for ongoing construction work on various sites in the northern region of the Bowen Basin in Queensland over two years;

• A new contract with Woodside to provide mechanical commissioning support to its Pluto LNG Plant on the Burrup Peninsula in Western Australia, expected to be completed in the first half of 2012; and

• A new three-year contract to provide minor capital project services for BHP Billiton Worsley Alumina’s Refinery Project at Collie in Western Australia.

On 22 August 2011, the directors of Monadelphous Group Limited declared a final dividend on ordinary shares in respect of the 2011 financial year. The total amount of the dividend is $48,167,255 which represents a fully franked final dividend of 55 cents per share. This dividend has not been provided for in the 30 June 2011 Financial Statements.

Other than the items noted above, there are no matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial years.

I 51

Directors’ Report (Continued) | Year Ended 30 June 2011

likely DeVelopments anD eXpecteD results

Other than as referred to in this report, further information as to likely developments in the operations of the consolidated entity would, in the opinion of the directors, be likely to result in unreasonable prejudice to the consolidated entity.

enVironmental regulation anD performance

Monadelphous Group Limited is subject to a range of environmental regulations.

During the financial year, Monadelphous Group Limited met all reporting requirements under any relevant legislation. There were no incidents which required reporting.

The Company aims to continually improve its environmental performance.

share options

Unissued shares

As at the date of this report, there were 3,928,500 unissued ordinary shares under options as follows:

• 2,857,500 options to take up one ordinary share in Monadelphous Group Limited at an issue price of $10.00. The options expire between 30 September 2011 and 30 September 2012.

• 460,000 options to take up one ordinary share in Monadelphous Group Limited at an issue price of $12.22. The options expire between 30 September 2011 and 30 September 2013.

• 611,000 options to take up one ordinary share in Monadelphous Group Limited at an issue price of $14.84. The options expire between 30 September 2012 and 30 September 2014.

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate or in the interest issue of any other registered scheme.

Shares issued as a result of the exercise of options

During the financial year, employees and directors have exercised the option to acquire 1,117,500 fully paid ordinary shares at a weighted average exercise price of $9.95. All 1,117,500 shares were issued as new fully paid ordinary shares.

No options have been exercised since the end of the financial year.

inDemnification anD insurance of Directors anD officers

During or since the end of the financial year, the Company has paid premiums in respect of a contract insuring all the directors of Monadelphous Group Limited against a liability incurred in their role as directors of the Company, except where:

(a) the liability arises out of conduct involving a wilful breach of duty; or

• (b) there has been a contravention of Sections 182 or 183 of the Corporations Act 2001 .

The total amount of insurance contract premiums paid was $93,641 (2010: $125,274).

interests in contracts or proposeD contracts With the company

During or since the end of the financial year, no director has had any interest in a contract or proposed contract with the Company being an interest the nature of which has been declared by the director in accordance with Section 300(11)(d) of the Corporations Act 2001.

52 I 2011 Annual Report

Directors’ Report (Continued) | Year Ended 30 June 2011

remuneration report (auDiteD)

This Remuneration Report outlines the director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report Key Management Personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent Company, and includes the five executives in the Parent and the Group receiving the highest remuneration.

For the purposes of this report, the term ‘executive’ encompasses the Managing Director and senior General Managers of the Parent and the Group.

Details of Key Management Personnel (including the five highest paid executives of the Company and the Group)

(i) Directors

(i) Directors
C. G. B. Rubino	Chairman
R. Velletri	Managing Director
I. Tollman	Non-Executive Director
P. J. Dempsey	Lead Independent Non-Executive Director
C. P. Michelmore	Independent Non-Executive Director
(ii) Executives
D. Foti	Executive General Manager, Engineering Construction
A. Erdash	General Manager, Maintenance & Industrial Services Western Region
M. Jansen	General Manager, Maintenance & Industrial Services Eastern Region (resigned 1 July 2010)
C. Tabrett	General Manager, Maintenance & Industrial Services Eastern Region (appointed 1 July 2010)
Z. Bebic	Chief Financial Officer and Company Secretary
S. Murray	General Manager, Infrastructure

Remuneration Philosophy

The performance of the Company depends upon the quality of its directors and executives. To prosper, the Company must attract, motivate and retain highly skilled directors and executives.

To this end, the Company embodies the principles of providing competitive rewards to attract high calibre executives, and the linking of executive rewards to shareholder value, in its remuneration framework.

Remuneration Committee

The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the directors and the executive management team.

The Remuneration Committee utilises remuneration survey data compiled by a recognised remuneration research organisation across a range of industries and geographic regions. The salary survey data is updated every 6 months and is used to assess the appropriateness of the nature and amount of remuneration of directors and the executive management team. This assessment is made with reference to relevant employment market conditions, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team.

In determining the levels of remuneration of directors and executives, the Remuneration Committee takes into consideration the performance of the Group and the individual.

Remuneration Structure

In accordance with best practice corporate governance, the structure of non-executive director and executive management remuneration is separate and distinct.

Non-executive Director Remuneration

Objective

The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The most recent determination was at the Annual General Meeting held on 27 November 2007 when shareholders approved an aggregate remuneration of $400,000 in the ‘not to exceed sum’ paid to non-executive directors.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The board considers the fees paid to non-executive directors of comparable companies when undertaking the annual review process.

Non-executive directors have long been encouraged by the board to hold shares in the Company (purchased by the director on-market). It is considered good governance for directors to have a stake in the Company.

The non-executive directors do not receive retirement benefits, nor do they participate in any incentive programs.

The remuneration of non-executive directors for the period ending 30 June 2011 is detailed in Table 1 on page 56 of this report.

I 53

Directors’ Report (Continued) | Year Ended 30 June 2011

remuneration report (auDiteD) (continueD)

Executive Remuneration

Objective

The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company so as to:

• Reward executives for Group, business unit and individual performance;

• Align the interests of executives with those of shareholders; and

• Ensure total remuneration is competitive by market standards.

Structure

In determining the level and make-up of executive remuneration, the Remuneration Committee receives external survey data from a recognised remuneration research organisation and considers market levels for comparable executive roles when making its recommendations to the Board.

Remuneration consists of a fixed remuneration element and variable remuneration elements in the form of Short Term and Long Term Incentives.

The proportion of fixed remuneration and variable remuneration is established for each member of the executive management team by the Remuneration Committee. Tables 1 and 2 on pages 56 and 57 of this report detail the proportion of fixed and variable remuneration for each of the executive directors and the members of the executive management team of the Company.

Fixed Remuneration

Objective

The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and competitive in the market.

Fixed remuneration is reviewed annually by the Remuneration Committee and the process consists of a review of Company-wide, business unit and individual performance, relevant comparative remuneration in the market and internally, and where appropriate, external advice on policies and practices.

Monadelphous has a structured approach aimed at delivering fixed remuneration which is market competitive and rewards performance. The Company participates in a number of respected remuneration surveys from which it receives quarterly or six-monthly market and forecast data, and it’s remuneration system is designed to analyse detailed market and sector information at various levels.

Structure

Executive team members are given the opportunity to receive their fixed remuneration in a variety of forms including cash and fringe benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. The fixed remuneration component of the executive directors and the five most highly remunerated members of the executive management team of the Company is detailed in Tables 1 and 2 on pages 56 and 57 of this report.

Variable Remuneration – Short Term Incentive (STI)

Objective

The objective of the STI program is to link the achievement of the Company’s targets with the performance of the employee charged with meeting those targets. The total STI for executives is set at a level so as to remunerate the executives for achieving the operational targets and such that the cost to the Company is reasonable in the circumstances.

Structure

On an annual basis at the end of the financial year, after consideration of performance against KPIs, an overall performance rating for the Company and each individual business unit is approved by the Remuneration Committee. The individual performance of each executive is also rated and all three are taken into account when determining the amount, if any, of the short-term incentive payment made to each individual.

The KPIs considered in the assessment process adopt a balanced scorecard approach to measuring performance. The following categories of performance measures are considered:

• Financial Measures: including revenue, contribution and financial administration metrics,

• Safety Measures: including lost time and total case injury frequency metrics,

• Customer Satisfaction Measures: including customer performance feedback,

• Employee Retention and Development Metrics and

• Progress being made in terms of specific long-term strategic initiatives.

The KPIs have been selected to underpin the Company’s core values and ensuring performance is aligned to the strategic direction of the business.

The aggregate of annual STI payments available for executives across the Company is subject to the approval of the Remuneration Committee. Payments made are usually delivered as a cash bonus.

54 I 2011 Annual Report

Directors’ Report (Continued) | Year Ended 30 June 2011

remuneration report (auDiteD) (continueD)

Executive Remuneration (continued)

Variable Remuneration – Short Term Incentive (STI) (continued)

In the 2010 financial year, 100% of the cash bonus previously accrued in that period vested and was paid in the 2011 financial year. The amount payable for the 2011 financial year in relation to executives is $590,000 which has been fully accrued at 30 June 2011. This amount was fully paid in July 2011 on approval by the Remuneration Committee.

Variable Remuneration – Long Term Incentive (LTI)

Objective

The objective of the LTI plan is to retain and reward key employees in a manner which aligns this element of remuneration with the creation of shareholder wealth.

Structure

LTI grants to executives are delivered at the discretion of the Remuneration Committee in the form of options. The individual performance rating of each executive and the annual cost to the Company, on an individual basis, of any issue is taken into account when determining the amount, if any, of options granted. During the year ended 30 June 2011, there were 631,000 options granted under the Monadelphous Group Limited Employee Option Plan. No Directors or Key Management Personnel included in Table 1 on page 56 received options during the year ended 30 June 2011. All executives are eligible to participate in the Monadelphous Group Limited Employee Option Plan.

In accordance with the rules of the Monadelphous Group Limited Employee Option Plan, options may only be exercised in specified window periods (or at the discretion of the directors in particular circumstances):

25% 2 years after the options were issued

25% 3 years after the options were issued

50% 4 years after the options were issued

In addition, for options issued under the Monadelphous Group Limited Employee Option Plan during the years ended 30 June 2009, 30 June 2010 and 30 June 2011, the ability to exercise options during each applicable window period is subject to the financial performance of the Company during the option vesting period. The options shall only be capable of exercise during that window period where the Company’s Earnings Per Share (EPS) metric is growing at a rate of at least 10% per year on average. If, however, this hurdle is not achieved for a particular window period, rather than lapsing, the options will be re-tested during all later window periods in respect of that issue and may become exercisable at that later date.

Hedging of Equity Awards

The Company prohibits executives from entering into arrangements to protect the value of unvested LTI awards. The prohibition includes entering into contracts to hedge their exposure to options awarded as part of their remuneration package.

Adherence to the policy is monitored on an annual basis and involves each KMP signing an annual declaration of compliance with the hedging policy.

Employment Contracts

All executives have non-fixed term employment contracts. The Company or executive may terminate the employment contract by providing 1 to 3 months written notice. The Company may terminate the contract at any time without notice if serious misconduct has occurred.

Company Performance

The profit after tax for the Group for the last six years is as follows:

==> picture [469 x 60] intentionally omitted <==

----- Start of picture text -----

||||||||
|---|---|---|---|---|---|---|
|2011|2010|2009|2008|2007|2006|
|$’000|$’000|$’000|$’000|$’000|$’000|
|Profit after income tax expense|95,067|83,217|74,241|69,543|60,418|29,396|

----- End of picture text -----

A review of the Company’s performance over the last six years has been provided on page 43 of this report.

I 55

Directors’ Report (Continued) | Year Ended 30 June 2011

remuneration report (auDiteD) (continueD)

remuneration of key management personnel and the five highest paid executives of the company and the group

Table 1: Remuneration for the year ended 30 June 2011

==> picture [497 x 71] intentionally omitted <==

----- Start of picture text -----

share-
short term Benefits post employment long term Benefits based total total
payments total performance options
salary non super- retirement long service options related related
& fees monetary [cash sti] annuation Benefits leave lti
$ $ $ $ $ $ $ $ % %
----- End of picture text -----

Non-Executive Directors	Non-Executive Directors
I. Tollman	60,000	768	-	-	-	-	-	60,768	-	-
P. J. Dempsey	100,917	1,292	-	9,083	-	-	-	111,292	-	-
C. P. Michelmore	90,000	1,152	-	-	-	-	-	91,152	-	-
Subtotal Non-
Executive Directors	250,917	3,212	-	9,083	-	-	-	263,212	-	-
Executive Directors
C. G. B. Rubino	366,270	4,094	-	14,030	-	8,853	-	393,247	-	-
R. Velletri	747,356	17,205	220,000	15,199	-	43,733	138,966	1,182,459	30.36	11.75
Subtotal Executive
Directors	1,113,626	21,299	220,000	29,229	-	52,586	138,966	1,575,706	22.78	8.82
Other Key Management	Personnel
D. Foti	567,941	11,704	140,000	15,199	-	20,797	77,821	833,462	26.13	9.34
A. Erdash	395,145	11,236	70,000	15,199	-	10,195	38,910	540,685	20.14	7.20
M. Jansen*	-	-	-	-	-	-	-	-	-	-
C. Tabrett #	305,500	8,637	35,000	15,199	-	8,479	38,910	411,725	17.95	9.45
Z. Bebic	378,316	8,219	75,000	15,199	-	14,958	38,910	530,602	21.47	7.33
S. Murray	301,922	6,268	50,000	15,199	-	9,085	26,349	408,823	18.68	6.45
Subtotal Other Key
Management Personnel	1,948,824	46,064	370,000	75,995	-	63,514	220,900	2,725,297	21.68	8.11
Total	3,313,367	70,575	590,000	114,307	-	116,100	359,866	4,564,215	20.81	7.88

C. Tabrett met the definition of Key Management Personnel from the date of his appointment as General Manager, Maintenance & Industrial Services Eastern Region on 1 July 2010. Remuneration received from the date of appointment is disclosed in Table 1.

• M. Jansen resigned as General Manager, Maintenance & Industrial Services Eastern Region, effective from 1 July 2010.

56 I 2011 Annual Report

Directors’ Report (Continued) | Year Ended 30 June 2011

remuneration report (auDiteD) (continueD)

remuneration of key management personnel and the five highest paid executives of the company and the group (continued)

Table 2: Remuneration for the year ended 30 June 2010

==> picture [492 x 62] intentionally omitted <==

----- Start of picture text -----

short term Benefits post employment long term Benefits share-based payments total total
total performance options
& feessalary monetarynon [cash sti] annuationsuper- retirement Benefits vice leavelong ser- optionslti related related
$ $ $ $ $ $ $ $ % %
----- End of picture text -----

Non-Executive Directors	Non-Executive Directors
I. Tollman		40,000	551	-	-	-	-	-	40,551	-	-
P. J. Dempsey		70,000	963	-	-	-	-	-	70,963	-	-
C. P. Michelmore		70,000	963	-	-	-	-	-	70,963	-	-
Subtotal Non-
Executive Directors		180,000	2,477	-	-	-	-	-	182,477	-	-
Executive Directors
C. G. B. Rubino		334,862	8,491	-	14,461	-	10,005	-	367,819	-	-
R. Velletri		649,771	18,318	240,000	14,461	-	12,608	204,144	1,139,302	38.98	17.92
Subtotal Executive
Directors		984,633	26,809	240,000	28,922	-	22,613	204,144	1,507,121	29.47	13.55
Other Key Management	Personnel
D. Foti		550,328	15,005	150,000	14,461	-	27,751	114,321	871,866	30.32	13.11
A. Erdash		393,441	11,061	70,000	14,461	-	10,639	57,160	556,762	22.84	10.27
M. Jansen		374,563	10,354	-	14,461	-	6,826	57,160	463,364	12.34	12.34
Z. Bebic #		344,320	8,932	60,000	12,236	-	21,080	48,704	495,272	21.95	9.83
S. Murray		229,351	7,282	40,000	12,236	-	10,432	46,996	346,297	25.12	13.57
G. Everist *		260,276	1,901	-	3,930	-	(43,218)	(38,107)	184,782	(20.62)	(20.62)
Subtotal Other Key
Management Personnel	2,152,279		54,535	320,000	71,785	-	33,510	286,234	2,918,343	20.77	9.81
Total	3,316,912		83,821	560,000	100,707	-	56,123	490,378	4,607,941	22.79	10.64

Z. Bebic met the definition of Key Management Personnel from the date of his appointment as Chief Financial Officer on 24 August 2009. Remuneration received from the date of appointment is disclosed in Table 2.

• G. Everist resigned as Chief Financial Officer, effective from 24 August 2009 but continued in employment while working out a notice period. Options were forfeited on resignation. Any share based payment expense previously recognised in respect of the options has been reversed. Long service leave previously accrued, not vested on resignation, has been reversed.

I 57

Directors’ Report (Continued) | Year Ended 30 June 2011

remuneration report (auDiteD) (continueD)

remuneration of key management personnel and the five highest paid executives of the company and the group (continued)

During the financial years ended 30 June 2011 and 30 June 2010, no options were granted as equity compensation benefits to Key Management Personnel.

Table 3: Shares issued on exercise of compensation options during the year ended 30 June 2011

==> picture [468 x 30] intentionally omitted <==

----- Start of picture text -----

options Vested options exercised shares issued paid
number number number $ per share
----- End of picture text -----

Directors R. Velletri ^ Executives D. Foti ^ A. Erdash ^ C. Tabrett ^ Z. Bebic ^ S. Murray * S. Murray ^ Total	125,000 125,000 125,000 10.00 70,000 70,000 70,000 10.00 35,000 35,000 35,000 10.00 35,000 35,000 35,000 10.00 35,000 35,000 35,000 10.00 25,000 25,000 25,000 9.06 17,500 17,500 17,500 10.00 342,500 342,500 342,500

^ On 8 September 2010, the date of exercise of the options, the closing share price was $14.70.

• On 6 January 2011, the date of exercise of the options, the closing share price was $18.15.

Table 4: Shares issued on exercise of compensation options during the year ended 30 June 2010

==> picture [468 x 30] intentionally omitted <==

----- Start of picture text -----

options Vested options exercised shares issued paid
number number number $ per share
----- End of picture text -----

Directors R. Velletri Executives D. Foti A. Erdash M. Jansen Z. Bebic S. Murray G. Everist Total	- - - - - - - - - - - - - - - - - - - - 12,500 12,500 12,500 9.06 - - - - 12,500 12,500 12,500

On 29 January 2010, the date of exercise of the above options, the closing share price was $12.85.

enD of remuneration report

58 I 2011 Annual Report

Directors’ Report (Continued) | Year Ended 30 June 2011

Directors’ meetings

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director was as follows:

==> picture [469 x 33] intentionally omitted <==

----- Start of picture text -----

Directors’ meetings of committees
meetings audit remuneration nomination
----- End of picture text -----

Number of meetings held:	12	2	2	1
Number of meetings attended:
C. G. B. Rubino	12	-	-	1
R. Velletri	12	-	-	-
I. Tollman	12	2	2	-
P. J. Dempsey	12	2	2	1
C. P. Michelmore	12	2	2	1

committee memBership

As at the date of this report, the Company had an Audit Committee, a Remuneration Committee and a Nomination Committee. Members acting on the committees of the board during the year were:

audit	remuneration	nomination
P. J. Dempsey (c)	C. P. Michelmore (c)	C. G. B. Rubino (c)
I. Tollman	P. J. Dempsey	C. P. Michelmore
C. P. Michelmore	I. Tollman	P. J. Dempsey

Note: (c) Designates the chairman of the committee.

rounDing

The amounts contained in this report and in the financial report have been rounded to the nearest thousand dollars ($’000) (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the Class Order applies.

corporate goVernance

In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Monadelphous Group Limited support and have adhered to the principles of Corporate Governance.

The Company’s Corporate Governance Statement is detailed on page 44 of this report.

I 59

Directors’ Report (Continued) | Year Ended 30 June 2011

auDitor inDepenDence anD non-auDit serVices

The directors received the following declaration from the auditor of Monadelphous Group Limited.

==> picture [469 x 116] intentionally omitted <==

Auditor’s Independence Declaration to the Directors of Monadelphous Group Limited

In relation to our audit of the financial report of Monadelphous Group Limited for the financial year ended 30 June 2011 reporting date, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

==> picture [122 x 41] intentionally omitted <==

Ernst & Young

==> picture [137 x 47] intentionally omitted <==

G H Meyerowitz Partner 22 August 2011

Liability limited by a scheme approved under Professional Standards Legislation

non-auDit serVices

The following non-audit services were provided by the entity’s auditor, Ernst & Young. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:

==> picture [468 x 18] intentionally omitted <==

----- Start of picture text -----

$
----- End of picture text -----

Tax compliance services Assurance related	21,546 6,074 27,620

Signed in accordance with a resolution of the directors.

==> picture [122 x 45] intentionally omitted <==

C. G. B. Rubino Chairman Perth, 22 August 2011

60 I 2011 Annual Report

Independent Audit Report | Year Ended 30 June 2011

==> picture [469 x 116] intentionally omitted <==

InDePenDent AuDItor’S rePort to the MeMberS of MonADeLPhouS GrouP LIMIteD

report on the financial report

We have audited the accompanying financial report of Monadelphous Group Limited, which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility 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 controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report.

Liability limited by a scheme approved under Professional Standards Legislation

I 61

Independent Audit Report (Continued) | Year Ended 30 June 2011

==> picture [365 x 116] intentionally omitted <==

opinion

In our opinion:

• a. the financial report of Monadelphous Group Limited is in accordance with the Corporations Act 2001 , including:

• i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and

• ii complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and

• b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

report on the remuneration report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2011. 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.

opinion

In our opinion, the Remuneration Report of Monadelphous Group Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001 .

Ernst & Young

==> picture [114 x 40] intentionally omitted <==

G H Meyerowitz Partner Perth

22 August 2011

62 I 2011 Annual Report

Directors’ Declaration | Year Ended 30 June 2011

In accordance with a resolution of the directors of Monadelphous Group Limited, I state that:

• 1) In the opinion of the directors:

• (a) the financial statements, notes and the additional disclosures included in the Directors’ Report designated as audited, of the consolidated entity are in accordance with the Corporations Act 2001 , including:

  • (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance for the year ended on that date; and

  • (ii) complying with Accounting Standards and Corporations Regulations 2001 ; and

• (b) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable; and

• (c) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2.

• 2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the year ended 30 June 2011.

• 3) In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in note 25 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.

On behalf of the Board

==> picture [94 x 34] intentionally omitted <==

C. G. B. Rubino Chairman Perth, 22 August 2011

I 63

Income Statement | For The Year Ended 30 June 2011

==> picture [469 x 339] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
Continuing Operations
REVENUE 3(a) 1,449,252 1,279,862
Cost of services rendered (1,268,048) (1,126,481)
GROSS PROFIT 181,204 153,381
Other income 3(b) 1,855 1,133
Business development and tender expenses (15,278) (11,578)
Occupancy expenses (2,362) (1,624)
Administrative expenses (28,633) (24,164)
Finance costs 3(c) (2,672) (1,932)
Other expenses 3(d) (2,538) (68)
PROFIT BEFORE INCOME TAX 131,576 115,148
Income tax expense 4 (36,509) (31,931)
PROFIT AFTER INCOME TAX 95,067 83,217
PROFIT ATTRIBUTABLE TO MEMBERS OF
MONADELPHOUS GROUP LIMITED 16(a) 95,067 83,217
Basic earnings per share (cents per share) 21 108.84 96.86
Diluted earnings per share (cents per share) 21 106.87 95.46
Dividends per share (cents per share) 5 95.00 83.00
----- End of picture text -----

64 I 2011 Annual Report

Statement of Comprehensive Income | For The Year Ended 30 June 2011

==> picture [469 x 208] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
NET PROFIT FOR THE PERIOD 95,067 83,217
OTHER COMPREHENSIVE INCOME
Net fair value gains on available-for-sale financial assets 8,995 3,627
Foreign currency translation 38 (183)
Income tax on items of other comprehensive income (2,698) (1,088)
OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX 6,335 2,356
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE
TO MEMBERS OF MONADELPHOUS GROUP LIMITED 101,402 85,573
----- End of picture text -----

I 65

Statement of Financial Position | As At 30 June 2011

==> picture [469 x 553] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
ASSETS
Current assets
Cash and cash equivalents 17(b) 172,479 149,192
Trade and other receivables 6 168,028 121,400
Inventories 7 26,134 23,547
Total current assets 366,641 294,139
Non-current assets
Available-for-sale financial assets 8 25,875 16,880
Property, plant and equipment 9 113,442 91,151
Deferred tax assets 4 24,933 15,981
Intangible assets and goodwill 10 5,349 2,551
Total non-current assets 169,599 126,563
TOTAL ASSETS 536,240 420,702
LIABILITIES
Current liabilities
Trade and other payables 12 183,264 167,963
Interest bearing loans and borrowings 13 13,654 11,529
Income tax payable 4 17,920 8,906
Provisions 14 93,637 63,543
Total current liabilities 308,475 251,941
Non-current liabilities
Interest bearing loans and borrowings 13 29,302 21,072
Provisions 14 5,106 3,304
Deferred tax liabilities 4 123 99
Total non-current liabilities 34,531 24,475
TOTAL LIABILITIES 343,006 276,416
NET ASSETS 193,234 144,286
EQUITY
Contributed equity 15 46,612 30,083
Reserves 16 29,326 14,933
Retained earnings 16 117,296 99,270
TOTAL EQUITY 193,234 144,286
----- End of picture text -----

66 I 2011 Annual Report

Statement of Changes In Equity | For The Year Ended 30 June 2011

ATTRIBUTABLE TO EQUITY HOLDERS

==> picture [469 x 67] intentionally omitted <==

----- Start of picture text -----

net share- foreign
issued unrealised Based currency retained total
consoliDateD capital gains payment translation earnings
reserve reserve reserve
$’000 $’000 $’000 $’000 $’000 $’000
----- End of picture text -----

At 1 July 2010 Other comprehensive income Profit for the period Total comprehensive income for the period Transactions with owners in their capacity as owners Share-based payments Exercise of employee options Shares issued on acquisition of subsidiary Deferred tax asset recognised on Employee Share Trust Dividends paid At 30 June 2011	30,083 6,098 9,152 (317) 99,270 144,286 - 6,297 - 38 - 6,335 - - - - 95,067 95,067
	- 6,297 - 38 95,067 101,402
	- - 2,726 - - 2,726 11,123 - - - - 11,123 5,406 - - - - 5,406 - - 5,332 - - 5,332 - - - - (77,041) (77,041)
	46,612 12,395 17,210 (279) 117,296 193,234

ATTRIBUTABLE TO EQUITY HOLDERS

consoliDateD	issued capital net unrealised gains reserve share- Based payment reserve foreign currency translation reserve retained earnings total
	$’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2009 Other comprehensive income Profit for the period Total comprehensive income for the period Transactions with owners in their capacity as owners Share-based payments Exercise of employee options Deferred tax asset recognised on Employee Share Trust Dividends paid At 30 June 2010	28,941 3,559 6,271 (134) 83,928 122,565 - 2,539 - (183) - 2,356 - - - - 83,217 83,217
	- 2,539 - (183) 83,217 85,573
	- - 2,185 - - 2,185 1,142 - - - - 1,142 - - 696 - - 696 - - - - (67,875) (67,875)
	30,083 6,098 9,152 (317) 99,270 144,286

I 67

Statement of Cash Flows | For The Year Ended 30 June 2011

==> picture [469 x 499] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST) 1,560,124 1,416,157
Payments to suppliers and employees (inclusive of GST) (1,403,578) (1,290,491)
Interest received 5,164 4,366
Borrowing costs (2,672) (1,932)
Other income 1,855 635
Income tax paid (35,694) (32,768)
NET CASH FLOWS FROM OPERATING ACTIVITIES 17(a) 125,199 95,967
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment 9(c) 17,018 1,726
Purchase of property, plant and equipment (31,129) (17,081)
Purchase of available-for-sale financial assets - (4,302)
Acquisition of subsidiary 27 (7,218) -
NET CASH FLOWS USED IN INVESTING ACTIVITIES (21,329) (19,657)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (77,041) (67,875)
Proceeds from issue of shares 11,123 1,142
Repayment of borrowings (71) (577)
Payment of finance leases (12,975) (12,483)
NET CASH FLOWS USED IN FINANCING ACTIVITIES (78,964) (79,793)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 24,906 (3,483)
Net foreign exchange differences (1,619) 440
Cash and cash equivalents at beginning of period 149,192 152,235
CASH AND CASH EQUIVALENTS AT END OF PERIOD 17(b) 172,479 149,192
----- End of picture text -----

68 I 2011 Annual Report

Notes to the Financial Statements | 30 June 2011

1. corporate information

The financial report of Monadelphous Group Limited (the Company) for the year ended 30 June 2011 was authorised for issue in accordance with a resolution of directors on 22 August 2011.

Monadelphous Group Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange.

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

2. summary of significant accounting policies

Basis of preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 , Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for derivative financial instruments and available-for-sale investments, which have been measured at fair value.

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the class order applies.

a) Compliance with IFRS

The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

b) Changes in Accounting Policies

Australian Accounting Standards and Interpretations that have recently been issued or amended and are effective 1 July 2010 have resulted in no material changes in accounting policies and therefore no material impact on Monadelphous Group Limited’s financial performance or position for the year ended 30 June 2011.

Monadelphous Group Limited and its subsidiaries (‘the Group’) has adopted all Australian Standards and Interpretations mandatory for reporting periods beginning on or after 1 July 2010, including:

• AASB 2009-5 Amendments to Australian Accounting arising from the Annual Improvements Project

• AASB 2009-8 Amendments to Australian Accounting - Group Cash-settled Share-based Payment Transactions (AASB 2)

• AASB 2010-3 Amendments to Australian Accounting arising from the Annual Improvements Project

I 69

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

• c) New accounting standards and interpretations

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2011. These are outlined below:

==> picture [469 x 42] intentionally omitted <==

----- Start of picture text -----

application application
impact on the group
reference title date of date for
financial report
standard group
----- End of picture text -----

AASB	9	Financial Instruments	1 January 2013	1 July 2013	The Group has not yet determined
					the extent of the impact of the
					amendments, if any, as the
					application date is not yet in effect.
AASB	2009-11	Amendments to Australian	1 January 2013	1 July 2013	The Group has not yet determined
		Accounting Standards arising			the extent of the impact of the
		from AASB 9 [AASB 1, 3,			amendments, if any, as the
		4, 5, 7, 101, 102, 108, 112,			application date is not yet in effect.
		118, 121, 127, 128, 131, 132,
		136, 139, 1023 & 1038 and
		Interpretations 10 & 12]
AASB	124 (Revised)	Related Party Disclosures	1 January 2011	1 July 2011	These amendments simplify and
		(December 2009)			clarify the definition of a related party.
					There will be no affect on the Group
					as a result of these amendments.
AASB	2009-12	Amendments to Australian	1 January 2011	1 July 2011	No material impact on the Group
		Accounting Standards			expected based on analysis to date.
		[AASB 5, 8, 108, 110, 112,
		119, 133, 137, 139, 1023 &
		1031 and Interpretations
		2, 4, 16, 1039 & 1052]
AASB	2009-14	Amendments to	1 January 2011	1 July 2011	These amendments affect
		Australian Interpretation –			defined benefit pension plans.
		Prepayments of a Minimum			As such, these amendments are
		Funding Requirement			not applicable to the Group.
AASB	1054	Australian Additional	1 July 2011	1 July 2011	No material impact on the Group
		Disclosures			expected based on analysis to date.
AASB	2010-4	Amendments to Australian	1 January 2011	1 July 2011	No material impact on the Group
		Accounting Standards			expected based on analysis to date.
		arising from the Annual
		Improvements Project
		[AASB 1, 7, 101, 134
		and Interpretation 13]
AASB	2010-5	Amendments to Australian	1 January 2011	1 July 2011	No material impact on the Group
		Accounting Standards [AASB			expected based on analysis to date.
		1, 3, 4, 5, 101, 107, 112, 118,
		119, 121, 132, 133, 134, 137,
		139, 140, 1023 and 1038
		and Interpretations 112,
		115, 127, 132 and 1042]
AASB	2010-6	Amendments to	1 July 2011	1 July 2011	No material impact on the Group
		Australian Accounting			expected based on analysis to date.
		Standards – Disclosures
		on Transfers of Financial
		Assets [AASB 1 and 7]

70 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

c) New accounting standards and interpretations (continued)

==> picture [469 x 42] intentionally omitted <==

----- Start of picture text -----

application application
impact on the group
reference title date of date for
financial report
standard group
----- End of picture text -----

AASB 2010-7	Amendments to Australian	1 January 2013	1 July 2013	The Group has not yet determined
	Accounting Standards arising			the extent of the impact of the
	from AASB 9 (December			amendments, if any, as the
	2010) [AASB 1, 3, 4, 5, 7,			application date is not yet in effect.
	101, 102, 108, 112, 118,
	120, 121, 127, 128, 131, 132,
	136, 137, 139, 1023 and
	1038 and Interpretations
	2, 5, 10, 12, 19 and 127]
AASB 2010-8	Amendments to Australian	1 January 2012	1 July 2012	No material impact on the Group
	Accounting Standards –			expected based on analysis to date.
	Deferred Tax: Recovery of
	Underlying Assets [AASB 112]
Amendments to	IFRS 10 – Consolidated	1 January 2013	1 July 2013	The Group has not yet determined
International Financial	Financial Statements			the extent of the impact of the
Reporting Standards				amendments, if any, as the
				application date is not yet in effect.
Amendments to	IFRS 11 – Joint Arrangements	1 January 2013	1 July 2013	The Group has not yet determined
International Financial				the extent of the impact of the
Reporting Standards				amendments, if any, as the
				application date is not yet in effect.
Amendments to	IFRS 12 – Disclosure of	1 January 2013	1 July 2013	The Group has not yet determined
International Financial	Interests in other Entities			the extent of the impact of the
Reporting Standards				amendments, if any, as the
				application date is not yet in effect.
Amendments to	IFRS 13 – Fair Value	1 January 2013	1 July 2013	The Group has not yet determined
International Financial	Measurement			the extent of the impact of the
Reporting Standards				amendments, if any, as the
				application date is not yet in effect.

d) Basis of consolidation

The consolidated financial statements comprise the financial statements of Monadelphous Group Limited and its subsidiaries as at 30 June each year (‘the Group’).

The financial statements of subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies.

In preparing the consolidated financial statements, all inter-company balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired and the liabilities assumed. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values (see note 2(e)).

The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition.

I 71

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

e) Business combinations

Subsequent to 1 July 2009

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer. Acquisition-related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or a liability will be recognised in accordance with AASB 139 whether in the profit and loss or in other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured.

Prior to 1 July 2009

The purchase method of accounting was used to account for all business combinations regardless of whether equity instruments or other assets were acquired. Cost was measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the combination. Where equity instruments were issued in a business combination, the fair value of the instruments was their published market price as at the date of exchange. Transaction costs arising on the issue of equity instruments were recognised directly in equity.

Except for non-current assets or disposal groups classified as held for sale (which were measured at fair value less costs to sell), all identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination were measured initially at their fair values at the acquisition date. The excess of the cost of the business combination over the net fair value of the Group’s share of the identifiable net assets acquired was recognised as goodwill. If the cost of acquisition was less than the Group’s share of the net fair value of the identifiable net assets of the subsidiary, the difference was recognised as a gain in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of the consideration was deferred, the amounts payable in the future were discounted to their present value as at the date of exchange. The discount rate used was the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

f) Foreign currency translation

Functional and presentation currency

Both the functional and presentation currencies of Monadelphous Group Limited, its Australian subsidiaries and its Papua New Guinea subsidiary (Monadelphous PNG Ltd) are Australian dollars (A$). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

The functional currency of the New Zealand subsidiary (Skystar Airport Services NZ Pty Ltd) is New Zealand dollars (NZ$), the Hong Kong subsidiary (Moway International Limited) is United States dollars (US$) and the Chinese subsidiary (Moway AustAsia Steel Structures Trading (Beijing) Company Limited) is Chinese Renminbi (RMB).

Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined.

Translation of Group companies’ functional currency to presentation currency

As at the reporting date the assets and liabilities of the New Zealand, Hong Kong and Chinese subsidiaries are translated into the presentation currency of Monadelphous Group Limited at the rate of exchange ruling at the balance sheet date and the income statements are translated at the weighted average exchange rates for the period.

Exchange variations arising from the translation are recognised in the foreign currency translation reserve in equity.

g) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and on hand and short term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the Statement of Cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

72 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

h) Trade and other receivables

Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectable amounts. An allowance for impairment loss is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

Collectability of trade receivables is reviewed on an ongoing basis at a Company and business unit level. Individual debts that are known to be uncollectable are written off when identified. An impairment provision is recognised where there is objective evidence that the Group will not be able to collect the receivables. Financial difficulties of the debtor, default payments, historical bad debt performance or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate.

i) Inventories

Construction work-in-progress is stated at the aggregate of contract costs incurred to date plus profits recognised to date less recognised losses and progress billings. Costs include all costs directly related to specific contracts.

• j) Derivative financial instruments

The Group uses derivative financial instruments (including forward currency contracts) to manage its risks associated with foreign currency fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered and are subsequently remeasured to fair value. These derivatives do not qualify for hedge accounting and changes in fair value are recognised immediately in the profit or loss.

Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the profit or loss for the year.

The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

• k) Investments and other financial assets

Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value through the profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Designation is re-evaluated at each financial year end, but there are restrictions on reclassifying to other categories.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through the profit or loss, directly attributable transaction costs.

Recognition and Derecognition

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or been transferred.

(i) Financial assets at fair value through the profit or loss

Financial assets classified as held for trading are included in the category ‘financial assets at fair value through the profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term with the intention of making a profit. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on financial assets held for trading are recognised in the profit or loss and the related assets are classified as current assets in the balance sheet.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in the profit or loss when the loans and receivables are derecognised or impaired. These are included in current assets, except for those with maturities greater than 12 months after balance date, which are classified as non-current.

(iii) Available-for-sale securities

Available-for-sale securities are those non-derivative financial assets, principally equity securities that are designated as available-for-sale, or are not classified in any of the two preceding categories or held to maturity. After initial recognition, available-for-sale securities are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in the profit or loss.

The fair values of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments with no active market, fair values are determined using valuation techniques. Such techniques include: using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible and keeping judgemental inputs to a minimum.

I 73

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

l) Property, plant and equipment

All classes of property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in the profit or loss as incurred.

Depreciation is calculated on a diminishing balance method on all plant and equipment acquired before 1 July 1996 and a straight line basis for all acquisitions on or after 1 July 1996, and a straight line basis on all property other than freehold land.

Major depreciation periods are:

==> picture [454 x 46] intentionally omitted <==

----- Start of picture text -----

2011 2010
Buildings 40 years 40 years
Plant and equipment 3 to 15 years 3 to 15 years
----- End of picture text -----

The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

Derecognition

An item of property, plant and equipment is de-recognised upon disposal or when no further future economic benefits are expected from its use or disposal.

m) Impairment of non-financial assets other than goodwill

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists or when annual impairment testing for an asset is required, the Group makes a formal estimate of the recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value.

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss 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. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement.

n) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Finance leases

Leases which effectively transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item are classified as finance leases. The financed asset is stated at the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses. An interest bearing liability of equal value is also recognised at inception. Minimum lease payments are apportioned between the finance charge and the reduction of the lease liability.

The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in the profit or loss.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating leases

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. The minimum lease payments of operating leases are recognised as an expense on a straight line basis over the lease term.

74 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

o) Interest in jointly controlled operation

The group has an interest in a joint venture that is a jointly controlled operation. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly controlled operation involves use of assets and other resources of the venturers rather than the establishment of a separate entity. The group recognises its interest in the jointly controlled operation by recognising its interest in the assets and liabilities of the joint venture. The group also recognises the expenses that it incurs and its share of the income that it earns from the sale of goods and services by the jointly controlled operation.

p) Goodwill and intangibles

Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the consideration over the fair value of the Group’s identifiable assets acquired and liabilities assumed.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination, is, from the acquisition date, allocated to each of the Group’s cash-generating units or groups of cash generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. When the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised.

The recoverable amount of each cash-generating unit is determined based on a value in use calculation using cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond the five year period are not used in the calculation.

When goodwill forms part of a cash-generating unit (group of cash-generating units) and an operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Impairment losses recognised for goodwill are not subsequently reversed.

Intangibles

Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

The useful lives of intangible assets are assessed to be finite and amortised over their useful life. They are tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for the intangible assets is reviewed at least each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets are accounted for prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets is recognised in the profit or loss in the expense category consistent with the function of the intangible asset.

q) Trade and other payables

Trade and other payables are carried at amortised cost and are not discounted due to their short term nature. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 to 45 days of recognition.

Monadelphous Group Limited and the controlled entities subject to Class Order 98/1418 (refer to Note 25 for further details), entered into a deed of indemnity on 12 April 1995, 3 July 2001, 30 June 2005, 29 June 2007 and 9 June 2011. The effect of the deed is that Monadelphous Group Limited has guaranteed to pay any deficiency in the event of winding up of these controlled entities. The controlled entities have also given a similar guarantee in the event that Monadelphous Group Limited is wound up.

I 75

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

r) Interest bearing loans and borrowings

Interest bearing loans and borrowings are initially recognised at fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

Gains or losses are recognised in the income statement when the liabilities are derecognised.

Borrowing costs are recognised as an expense when incurred. The Group does not currently hold qualifying assets but, if it did, the borrowing costs directly associated with the asset would be capitalised (including any other associated costs directly attributable to the borrowing and temporary investment income earned on the borrowing).

s) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

Provisions are measured at the present value of management’s best estimate of the expenditure to settle the present obligation at the balance sheet date using a discounted cash flow methodology. The risks specific to the provision are factored into the cash flows and as such a risk-free government bond rate relevant to the expected life of the provision is used as a discount rate. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

A provision for dividends is not recognised as a liability unless the dividends are declared on or before the reporting date.

t) Employee benefits

(i) Wages, salaries, annual leave, rostered days off, sick leave, project incentives and project redundancies

Liabilities for wages and salaries, annual leave, rostered days off, vesting sick leave, project incentives and project redundancies expected to be settled within twelve months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liability is settled. Expenses for non-vesting sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised and measured as the present value of the expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds, which have terms to maturity approximating the estimated future cash outflows.

(iii) Defined contribution superannuation plans

Obligations for contributions to defined contribution plans are recognised as an expense in the income statement as incurred.

(iv) Workers’ compensation

It is customary for all entities within the Engineering and Construction industry to be covered by workers’ compensation insurance. Payments under these policies are calculated differently depending on which state of Australia the entity is operating in. Premiums are generally calculated based on actual wages paid and claims experience. Wages are estimated at the beginning of each reporting period. Final payments are made when each policy is closed out based on the difference between actual wages and the original estimated amount. The amount of each payment varies depending on the number of incidents recorded during each period and the severity thereof. The policies are closed out within a five year period through negotiation with the relevant insurance company. The provision has been created to cover the expected costs associated with closing out each insurance policy and is adjusted accordingly based on the actual payroll incurred and the severity of incidents that have occurred during each period.

u) Share-based payment transactions

The Group provides benefits to employees (including Key Management Personnel) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

Monadelphous Group Limited provides benefits to employees through the Monadelphous Group Limited Employee Option Plan.

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date on which they are granted. The fair value is determined by an external valuer using a binomial model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Monadelphous Group Limited (market conditions), if applicable.

76 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

u) Share-based payment transactions (continued)

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date).

The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided that all other conditions are satisfied.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of an original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Shares in the Group reacquired on-market and held by Monadelphous Group Limited Employee Share Trust are classified and disclosed as reserved shares and deducted from equity.

• v) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are recognised directly in equity as a deduction, net of tax, from the proceeds.

Reserved shares

The Group’s own equity instruments, which are reacquired for later use in employee share-based payment arrangements (reserved shares) are deducted from equity. No gain or loss is recognised in the profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.

w) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Rendering of Services

Where the contract outcome can be reliably measured:

• revenue is recognised at the time of billing to the customer for maintenance contracts or for construction contracts refer to the accounting policy for construction contracts, for method of revenue recognition.

Where the contract outcome cannot be reliably measured:

• contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised only to the extent that costs have been incurred.

Dividends

Revenue is recognised when the Group’s right to receive the dividend payment is established.

Interest income

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

• x) Construction contracts

When accounting for construction contracts, the contracts are either combined or segmented if this is deemed necessary to reflect the substance of the agreement.

Revenue arising from fixed price contracts is recognised in accordance with the percentage of completion method. Stage of completion is agreed with the customer on a work certified to date basis, as a percentage of the overall contract.

I 77

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

x) Construction contracts (continued)

Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred plus a percentage of fees earned during the financial year. The percentage of fee earned during the financial year is based on the stage of completion of the contract.

Where a loss is expected to occur from a construction contract the excess of the total expected contract costs over expected contract revenue is recognised as an expense immediately.

y) Taxation

Income Tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

• when the taxable temporary difference is associated with investments in subsidiaries, associates and interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet 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 income tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

Tax consolidation legislation

Monadelphous Group Limited and its wholly-owned Australian controlled entities formed a tax consolidated group on 1 July 2003. The head entity, Monadelphous Group Limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the separate taxpayer within group method in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, Monadelphous Group Limited also recognised the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Details of the tax funding agreement are disclosed in note 4.

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

78 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

y) Taxation (continued)

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from

investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

z) Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as net profit attributable to members of the parent, adjusted for:

• costs of servicing equity (other than dividends);

• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

aa) Significant accounting judgements, estimates and assumptions

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods.

Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.

Recovery of deferred taxes

Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences.

Impairment of non-financial assets other than goodwill

The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable amount of the asset is determined.

Impairment of goodwill and intangibles with indefinite useful lives

The group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units to which the goodwill and intangibles with indefinite useful lives are allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill and intangibles with indefinite useful lives are discussed in note 10.

Impairment of available-for-sale assets

After initial recognition available-for-sale securities are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in the profit or loss.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instrument at the date on which they are granted. The fair value is determined by an external valuer using a binomial model, using the assumptions detailed in note 22. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amount of assets and liabilities within the next annual reporting period but may impact expenses and equity.

Taxation

The Group’s accounting policy for taxation requires management’s judgement as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the balance sheet. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits.

Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the balance sheet and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustments, resulting in a corresponding credit or charge to the income statement.

I 79

Notes to the Financial Statements (Continued) | 30 June 2011

2. summary of significant accounting policies (continueD)

aa) Significant accounting judgements, estimates and assumptions (continued)

Construction contracts

When accounting for construction contracts, the contracts are either combined or segmented if this is deemed necessary to reflect the substance of the agreement. Revenue arising from fixed price contracts is recognised in accordance with the percentage of completion method. Stage of completion is agreed with the customer on a work certified to date basis, as a percentage of the overall contract. Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred plus a percentage of fees earned during the financial year. The percentage of fee earned during the financial year is based on the stage of completion of the contract. Where a loss is expected to occur from a construction contract the excess of the total expected contract costs over expected contract revenue is recognised as an expense immediately.

Workers’ compensation

It is customary for all entities within the Engineering and Construction industry to be covered by workers’ compensation insurance. Payments under these policies are calculated differently depending on which state of Australia the entity is operating in. Premiums are generally calculated based on actual wages paid and claims experience. Wages are estimated at the beginning of each reporting period. Final payments are made when each policy is closed out based on the difference between actual wages and the original estimated amount. The amount of each payment varies depending on the number of incidents recorded during each period and the severity thereof. The policies are closed out within a five year period through negotiation with the relevant insurance company. The provision has been created to cover the expected costs associated with closing out each insurance policy and is adjusted accordingly based on the actual payroll incurred and the severity of incidents that have occurred during each period.

ab) Comparatives

Comparative amounts have been reclassified for consistency with current year disclosures.

80 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

==> picture [469 x 553] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
3. reVenues anD eXpenses
(a) Revenue
Rendering of services 1,443,896 1,275,420
Finance revenue 5,356 4,442
1,449,252 1,279,862
(b) Other income
Net gains on disposal of property, plant and equipment - 498
Other income 1,855 635
1,855 1,133
(c) Finance costs
Bank loans and overdrafts 56 90
Finance charges payable under finance leases and hire purchase contracts 2,616 1,842
2,672 1,932
(d) Other Expenses
-
Net foreign exchange differences 1,654
Adjustment to contingent consideration of acquisition 27 694 -
Other 190 68
2,538 68
(e) Depreciation and Amortisation
Depreciation expense 23,341 16,789
-
Amortisation of intangible assets 1,074
24,415 16,789
(f) Employee benefits expense
Employee benefits expense 757,626 591,772
Defined contribution superannuation expense 42,011 28,960
Share-based payment expense 2,726 2,185
802,363 622,917
(g) Lease payments and other expenses
included in the income statement
Minimum lease payments – operating lease 14,582 14,088
Bad and doubtful debts 601 248
-
Net (gain)/loss on held for trading foreign currency derivatives (327)
----- End of picture text -----

I 81

Notes to the Financial Statements (Continued) | 30 June 2011

==> picture [469 x 527] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
4. income taX
(a) Income tax expense
The major components of income tax expense are:
Income statement
Current income tax
Current income tax charge 48,445 37,523
Adjustments in respect of current
income tax of previous years (3,606) (2,456)
Deferred income tax
Relating to origination and reversal
of temporary differences (7,952) (3,978)
Adjustments in respect of deferred
income tax of previous years (378) 842
Income tax expense reported in the income statement 36,509 31,931
(b) Amounts charged or credited directly to equity
Deferred income tax related to items charged
(credited) directly to equity – see note 16
Net unrealised gains reserve 2,698 1,088
Share-based payment reserve (5,332) (696)
Income tax benefit reported in equity (2,634) (392)
(c) Numerical reconciliation between aggregate tax expense recognised
in the income statement and tax expense calculated per the statutory
income tax rate
A reconciliation between tax expense and the product of accounting profit before
income tax multiplied by the Group’s applicable income tax rate is as follows:
Accounting profit before income tax 131,576 115,148
At the Parent Entity’s statutory income tax rate of 30% (2010: 30%) 39,473 34,544
- Adjustments in respect of current and
deferred income tax of previous years (3,984) (1,614)
- General business tax break (36) (1,028)
- Share based payment expense 221 -
- Other 835 29
Aggregate income tax expense 36,509 31,931
----- End of picture text -----

82 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

4. income taX (continueD)

(d) Recognised deferred tax assets and liabilities

==> picture [469 x 241] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2011 2010 2010
$’000 $’000 $’000 $’000
current Deferred current Deferred
income tax income tax income tax income tax
Opening balance (8,906) 15,882 (6,629) 13,138
- -
Acquisition (1,649) (257)
Charged to income (44,839) 8,330 (35,066) 3,136
Charged to equity 1,777 857 - (392)
-
Other / payments 35,697 (2) 32,789
Closing balance (17,920) 24,810 (8,906) 15,882
Tax expense in income statement 36,509 31,931
Amounts recognised in the balance sheet:
Deferred tax asset 24,933 15,981
Deferred tax liability (123) (99)
24,810 15,882
----- End of picture text -----

==> picture [469 x 306] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
Deferred income tax at 30 June relates to the following:
(i) Deferred tax liabilities
Accelerated depreciation 4,531 2,516
Available-for-sale securities 5,312 2,613
Other - 406
Gross deferred tax liabilities 9,843 5,535
Set-off against deferred tax assets 9,720 5,436
Net deferred tax liabilities 123 99
(ii) Deferred tax assets
Provisions 28,203 19,205
Share-based payments 6,298 2,146
Other 152 66
Gross deferred tax assets 34,653 21,417
Set-off of deferred tax liabilities 9,720 5,436
Net deferred tax assets 24,933 15,981
----- End of picture text -----

(e) Unrecognised temporary differences

At 30 June 2011, there are no unrecognised temporary differences associated with the Group’s investments in subsidiaries, as the Group has no liability for additional taxation should unremitted earnings be remitted (2010: $nil).

I 83

Notes to the Financial Statements (Continued) | 30 June 2011

4. income taX (continueD)

(f) Tax consolidation

(i) Members of the tax consolidated group and the tax sharing agreement

Monadelphous Group Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect from 1 July 2003. Monadelphous Group Limited is the head entity of the tax consolidated group. Members of the Group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote.

(ii) Tax effect accounting by members of the tax consolidated group

Measurement method adopted under UIG 1052 Tax Consolidation Accounting

The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the separate taxpayer within group approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the broad principles in AASB 112 Income Taxes . The nature of the tax funding agreement is discussed further below.

Nature of the tax funding agreement

Members of the tax consolidated group have entered into a tax funding agreement. Under the funding agreement the funding of tax within the Group is based on the separate taxpayer within group method of allocation, which is an acceptable method of allocation under UIG 1052. The tax funding agreement requires payments to/from the head entity to be recognised via an inter-company loan account.

==> picture [469 x 401] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
5. DiViDenDs paiD anD proposeD
(a) Recognised amounts
Declared and paid during the year
(i) Current year interim
Interim franked dividend for 2011 (40 cents per share) (2010: 35 cents per share) 35,031 30,113
(ii) Previous year final
Final franked dividend for 2010 (48 cents per share) (2009: 44 cents per share final) 42,010 37,763
(b) Unrecognised amounts
Current year final
Final franked dividend for 2011 (55 cents per share) (2010: 48 cents per share) 48,167 41,500
(c) Franking credit balance
The amount of franking credits available for the subsequent financial year are:
- franking account balance as at the end of the financial year 50,252 45,673
- franking credits that will arise from the payment of income
tax payable as at the end of the financial year 17,410 8,712
67,662 54,385
The amount of franking credits available for future reporting periods:
- impact on the franking account of dividends proposed or declared
before the financial report was authorised for issue but not recognised
as a distribution to equity holders during the period (20,643) (17,785)
47,019 36,600
----- End of picture text -----

(d) Tax rates

The tax rate at which paid dividends have been franked is 30% (2010: 30%). Dividends payable will be franked at the rate of 30% (2010: 30%).

84 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

==> picture [469 x 336] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
6. traDe anD other receiVaBles
CURRENT
Trade receivables 143,458 119,039
Less allowance for impairment loss 6(a) (3,135) (2,534)
140,323 116,505
Other debtors 6(b) 27,705 4,895
168,028 121,400
(a) Allowance for impairment loss
Trade receivables are generally on 30 day terms from end of month.
An allowance for impairment loss is recognised when there is objective evidence
that trade receivables may be impaired. An impairment loss of $601,000
(2010: $248,000) has been recognised by the Group in the current year.
These amounts have been included in the administrative expenses item in
the income statement.
Movements in the allowance for impairment loss were as follows:
Balance at the beginning of the year 2,534 2,264
Charge for the year 601 248
Other - 22
Balance at the end of the year 3,135 2,534
----- End of picture text -----

Impaired Trade Receivables:

At 30 June 2011, the current trade receivables of the Group were $143,458,000 (2010: $119,039,000). The amount of the allowance for impairment loss was $3,135,000 (2010: $2,534,000). An impairment provision is recognised where there is objective evidence that the Group will not be able to collect the receivables. Financial difficulties of the debtor, default payments, historical bad debt performance or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate.

Past Due Not Impaired:

At 30 June 2011, the ageing of receivables past due but not considered impaired is as follows:

==> picture [469 x 99] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
31 – 60 Days 30,449 24,222
61 – 90 Days 5,085 5,896
91+ Days 1,235 3,021
TOTAL 36,769 33,139
----- End of picture text -----

Payment terms on these amounts have not been re-negotiated however credit has been stopped where the credit limit has been exceeded. In this case, payment terms will not be extended. Each business unit has been in direct contact with the relevant debtor and is satisfied that payment will be received.

I 85

Notes to the Financial Statements (Continued) | 30 June 2011

6. traDe anD other receiVaBles (continueD)

(a) Allowance for impairment loss (continued)

Receivables not impaired or past due:

Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due.

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. Publicly available credit information from recognised providers is utilised for this purpose where available. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

(b) Other debtors

Other debtors, which includes accrued sales, are non-interest bearing and have repayment terms between 30 to 60 days.

(c) Fair value, credit risk, foreign exchange risk and interest rate risk

Details regarding fair value and credit, foreign exchange and interest rate risk are disclosed in note 28.

==> picture [469 x 280] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
7. inVentories
Construction work in progress
Cost incurred to date plus profit recognised 1,714,594 1,216,549
Consideration received and receivable as progress billings (1,832,927) (1,317,551)
(118,333) (101,002)
Amounts due to customers 7(a),12 144,467 124,549
Amounts due from customers 26,134 23,547
(a) Advances received for construction work not yet commenced or
for committed subcontractor work not yet received are recognised
as a current liability in trade and other payables. Refer note 12.
8. aVailaBle-for-sale financial assets (non-current)
At fair value
Shares – Australian listed 8(a) 25,875 16,880
----- End of picture text -----

Available-for-sale investments consist of investments in ordinary shares at fair value in Norfolk Group Limited (ASX: NFK).

(a) Listed shares

The fair value of listed available-for-sale investments has been determined directly by reference to published price quotations in an active market.

86 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

9. property, plant anD eQuipment

(a) Reconciliation of carrying amounts at the beginning and end of the period

	Consolidated
	freehold land $’000 Buildings on freehold land $’000 leasehold improve- ments $’000 plant and equipment $’000 plant and equipment under hire purchase $’000 total $’000
Year ended 30 June 2011 At 1 July 2010 net of accumulated depreciation Additions Additions through business combinations (Note 27) Assets transferred Disposals (Note 9(c)) Depreciation charge At 30 June 2011 net of accumulated depreciation At 30 June 2011 Cost Accumulated depreciation Net carrying amount	4,924 5,859 692 43,147 36,529 91,151 - 7,759 29 23,370 23,372 54,530 - 110 - 8,409 - 8,519 - - - 5,173 (5,173) - - (4) - (17,413) - (17,417) - (529) (82) (15,193) (7,537) (23,341)
	4,924 13,195 639 47,493 47,191 113,442
	4,924 17,100 915 118,636 59,264 200,839 - (3,905) (276) (71,143) (12,073) (87,397)
	4,924 13,195 639 47,493 47,191 113,442
	Consolidated
	freehold land $’000 Buildings on freehold land $’000 leasehold improve- ments $’000 plant and equipment $’000 plant and equipment under hire purchase $’000 total $’000
Year ended 30 June 2010 At 1 July 2009 net of accumulated depreciation Additions Assets transferred Disposals Depreciation charge At 30 June 2010 net of accumulated depreciation At 30 June 2010 Cost Accumulated depreciation Net carrying amount	4,976 6,290 910 27,994 29,905 70,075 114 431 - 17,795 20,753 39,093 - 130 (130) 8,302 (8,302) - (166) (627) - (435) - (1,228) - (365) (88) (10,509) (5,827) (16,789)
	4,924 5,859 692 43,147 36,529 91,151
	4,924 9,391 886 97,376 55,116 167,693 - (3,532) (194) (54,229) (18,587) (76,542)
	4,924 5,859 692 43,147 36,529 91,151

I 87

Notes to the Financial Statements (Continued) | 30 June 2011

==> picture [469 x 129] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
9. property, plant anD eQuipment (continueD)
(b) Property, Plant and Equipment pledged as security
Assets under hire purchase are pledged as security for the associated
hire purchase liabilities.
Assets pledged as security 47,191 36,529
----- End of picture text -----

(c) Disposals

Included within plant and equipment disposals for the year ended 30 June 2011 is an amount of $15,306,026 relating to cranes that were sold and immediately leased back under operating leases.

Notes	Consolidated
	intangible assets $’000 goodwill $’000 total $’000
10. intangiBle assets anD gooDWill Year ended 30 June 2011 At 1 July 2010 Acquisition of subsidiary 27 Amortisation At 30 June 2011 Year ended 30 June 2010 At 1 July 2009 At 30 June 2010
	- 2,551 2,551
	3,490 382 3,872
	(1,074) - (1,074)
	2,416 2,933 5,349
	- 2,551 2,551
	- 2,551 2,551

(a) Description of the Group’s Intangible Assets and Goodwill

• (i) Intangible assets

Intangible assets have been acquired through business combinations and are carried at cost less accumulated amortisation. The intangible asset has been assessed as having a finite life and is amortised using the straight line method over a three year period. The amortisation has been recognised in the income statement in the cost of services rendered classification. Intangible assets include the fair value of contracts acquired on acquisition of KT Pty Ltd (Note 27).

(ii) Goodwill

After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there is an indication of impairment (refer to section (b) of this note).

(b) Impairment testing of goodwill

Goodwill acquired through a business combination has been allocated to cash generating units (‘CGU’) for impairment testing purposes. The cash generating units are the entity MI & E Holdings Pty Ltd (goodwill of $2,311,000), the Hunter Valley business unit (Ellavale) (goodwill of $240,000) and the entity KT Pty Ltd (goodwill of $382,000). The recoverable amount of each cash generating unit has been determined based on a value in use calculation using cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond the five year period have not been used in the calculation.

The discount rate applied to the cash flow projections is 15% for the entity MI & E Holdings Pty Ltd (2010: 15%), the Hunter Valley business unit (2010: 15%) and the entity KT Pty Ltd (2010: not applicable). The cash flows are based on the entities’ and business unit’s budgeted cash flows. No reasonable possible changes in key assumptions would result in the carrying amount exceeding the recoverable amount.

88 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

11. interests in a Jointly controlleD operation

(a) Commitments relating to the jointly controlled operation

There were no capital commitments relating to the jointly controlled operation as at 30 June 2011 (2010: nil).

(b) Contingent liabilities relating to the jointly controlled operation

There were no contingent liabilities relating to the jointly controlled operation as at 30 June 2011 (2010: nil).

(c) Impairment

No assets employed in the jointly controlled operation were impaired during the year ended 30 June 2011 (2010: nil).

==> picture [469 x 164] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
12. traDe anD other payaBles
CURRENT
Trade payables 12(a) 24,293 32,956
Advances on construction work in progress
- amounts due to customers 7 144,467 124,549
Sundry creditors and accruals 12(a) 14,504 10,458
183,264 167,963
----- End of picture text -----

(a) Terms and conditions

Terms and conditions relating to the above financial instruments:

(i) Trade payables are non-interest bearing and are normally settled on 30 day terms.

(ii) Sundry creditors and accruals are non-interest bearing and have an average term of 45 days.

(b) Fair value, foreign exchange risk, interest rate risk and liquidity risk

Details regarding fair value and foreign exchange, interest rate and liquidity risk are disclosed in note 28.

I 89

Notes to the Financial Statements (Continued) | 30 June 2011

==> picture [469 x 219] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
13. interest Bearing loans anD BorroWings
CURRENT
Hire purchase liability – secured 13(a),19 13,581 11,462
Bank loan – secured 13(a) 73 67
13,654 11,529
NON-CURRENT
Hire purchase liability – secured 13(a),19 29,273 20,966
Bank loan – secured 13(a) 29 106
29,302 21,072
(a) Terms and conditions
----- End of picture text -----

• (i) The bank loan is repayable monthly. Interest is charged at the bank’s fixed rate. The bank loan is secured by way of a registered first mortgage over land and buildings of a controlled entity, with an interlocking debenture from the parent entity and controlled entities. The average discount rate implicit in the bank loans is 7.00% (2010: 7.00%).

• (ii) Hire purchase agreements have an average term of three years. The average discount rate implicit in the hire purchase liability is 7.68% (2010: 7.73%). The hire purchase liability is secured by a charge over the hire purchase assets.

(b) Fair value and interest rate and liquidity risk

Details regarding fair value and interest rate and liquidity risk are disclosed in note 28.

(c) Defaults and breaches

During the current and prior year, there were no defaults or breaches on any of the loans.

==> picture [469 x 174] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
14. proVisions
CURRENT
Employee benefits 14(a) 75,117 44,695
Workers’ compensation 14(b) 18,520 18,848
93,637 63,543
NON-CURRENT
Employee benefits – long service leave 5,106 3,304
----- End of picture text -----

90 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

14. proVisions (continueD)

(a) Employee benefits

Employee benefits includes liabilities for wages and salaries, annual leave, rostered days off, vesting sick leave, project incentives and project redundancies. It is customary within the Engineering and Construction industry for incentive payments and redundancies to be paid to employees at the completion of a project. The provision has been created to cover the expected costs associated with these statutory and project employee benefits. The increase in the balance of the provision from the prior period is attributable to a number of major projects being in the latter stages of completion at year end.

(b) Workers’ compensation

It is customary for all entities within the Engineering and Construction industry to be covered by workers’ compensation insurance. Payments under these policies are calculated differently depending on which state of Australia the entity is operating in. Premiums are generally calculated based on actual wages paid and claims experience. Wages are estimated at the beginning of each reporting period. Final payments are made when each policy is closed out based on the difference between actual wages and the original estimated amount. The amount of each payment varies depending on the number of incidents recorded during each period and the severity thereof. The policies are closed out within a five year period through negotiation with the relevant insurance company. The provision has been created to cover the expected costs associated with closing out each insurance policy and is adjusted accordingly based on the actual payroll incurred and the severity of incidents that have occurred during each period.

==> picture [469 x 136] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011
$’000
(c) Movements in provisions
Workers’ compensation:
Carrying amount at the beginning of the year 18,848
Additional provision 9,528
Amounts utilised during the year (9,856)
Carrying amount at the end of the financial year 18,520
----- End of picture text -----

==> picture [469 x 140] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
15. contriButeD eQuity
Ordinary shares 15(a) 46,612 30,083
Reserved shares 15(b) - -
46,612 30,083
(a) Ordinary shares
Issued and fully paid 46,612 30,083
----- End of picture text -----

Ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.

I 91

Notes to the Financial Statements (Continued) | 30 June 2011

15. contriButeD eQuity (continueD)

==> picture [469 x 147] intentionally omitted <==

----- Start of picture text -----

Notes
2011 2010
number of number of
shares $’000 shares $’000
(a) Ordinary shares (continued)
Beginning of the financial year 86,036,700 30,083 85,948,449 29,711
Excercise of employee options 1,117,500 11,123 212,500 1,142
Transfer from reserved shares - - (124,249) (770)
Acquisition consideration 27 422,627 5,406 - -
End of the financial year 87,576,827 46,612 86,036,700 30,083
----- End of picture text -----

During the year ended 30 June 2011, under the Monadelphous Group Limited Employee Option Plan, employees and directors have exercised the option to acquire 1,117,500 fully paid ordinary shares at a weighted average exercise price of $9.95. All 1,117,500 shares were issued as new fully paid ordinary shares.

==> picture [469 x 107] intentionally omitted <==

----- Start of picture text -----

2011 2010
number of number of
shares $’000 shares $’000
(b) Reserved shares
- -
Beginning of the financial year 124,249 (770)
Transfer to share capital on issue to employees - - (124,249) 770
- - - -
End of the financial year - Reserved shares
----- End of picture text -----

The Group’s own equity instruments are reacquired for later use in employee share-based payment arrangements (reserved shares) and are deducted from equity. During the prior year, 124,249 reserved shares were transferred to ordinary shares and issued upon exercise of options under the Monadelphous Group Limited Employee Option Plan. At 30 June 2010, no reserved shares remained and during the year ended 30 June 2011, no own equity instruments were reacquired.

(c) Share options

Options over ordinary shares

During the financial year, there were 631,000 options issued over ordinary shares.

At the end of the year there were 3,928,500 (2010: 4,860,000) unissued ordinary shares in respect of which options were outstanding (Note 22).

(d) Capital management

Capital is managed by the Group’s Chief Financial Officer in conjunction with the Group’s Finance & Accounting department. Management continually monitor the Group’s net cash/debt position and the gearing levels to ensure efficiency and compliance with the current ratio, interest cover ratio and operating leverage ratio debt covenants. At 30 June 2011, the Group is in a net cash position of $129,523,000 (2010: $116,591,000) and has a debt to equity ratio of 22.2% (2010: 22.6%) which is within the Group’s net cash and debt to equity target levels.

During the year ended 30 June 2011, management paid dividends of $77,041,208. The policy is to payout dividends of 80% to 100% of net profit, subject to ongoing strong trading conditions and the need for significant cash requirements for investment opportunities. The capital of the Company is considered to be contributed equity.

92 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

==> picture [469 x 259] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
16. reserVes anD retaineD earnings
Foreign currency translation reserve 16(b) (279) (317)
Share-based payment reserve 16(b) 17,210 9,152
Net unrealised gains reserve 16(b) 12,395 6,098
29,326 14,933
Retained earnings 16(a) 117,296 99,270
(a) Movements in retained earnings
Balance at the beginning of the year 99,270 83,928
Net profit attributable to members of Monadelphous Group Limited 95,067 83,217
Total available for appropriation 194,337 167,145
Dividends paid (77,041) (67,875)
Balance at the end of the year 117,296 99,270
----- End of picture text -----

(b) Movements in reserves

	Consolidated
	net unrealised gains reserve $’000 foreign currency translation reserve $’000 share-based payment reserve $’000 total $’000
At 1 July 2009 Foreign currency translation Share-based payment Net fair value gains on available-for-sale financial assets Deferred tax asset recognised on Employee Share Trust At 30 June 2010 Foreign currency translation Share-based payment Net fair value gains on available-for-sale financial assets Deferred tax asset recognised on Employee Share Trust At 30 June 2011	3,559 (134) 6,271 9,696 - (183) - (183) - - 2,185 2,185 2,539 - - 2,539 - - 696 696
	6,098 (317) 9,152 14,933 - 38 - 38 - - 2,726 2,726 6,297 - - 6,297 - - 5, 332 5,332
	12,395 (279) 17,210 29,326

(c) Nature and purpose of reserves

Net unrealised gains reserve

This reserve records movements in the fair value of available-for-sale financial assets.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from translation of the financial statements of foreign subsidiaries.

Share-based payment reserve

The share-based payment reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration. Refer to note 22 for further details of these plans.

I 93

Notes to the Financial Statements (Continued) | 30 June 2011

==> picture [469 x 486] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
17. cash floW statement
(a) Reconciliation of net profit after tax to
the net cash flows from operations
Net Profit 95,067 83,217
Adjustments for:
Depreciation of non-current assets 23,341 16,789
-
Amortisation of intangible assets 1,074
Net loss/(profit) on sale of property, plant and equipment 399 (498)
Share-based payment expense 2,726 2,185
Unrealised foreign exchange loss/(gain) 1,659 (616)
Other (2) (7)
Changes in assets and liabilities
(Increase)/decrease in receivables (42,594) (10,796)
(Increase)/decrease in inventories (2,587) (8,187)
(Increase)/decrease in deferred tax assets (3,401) (1,830)
Increase/(decrease) in payables 14,125 (3,618)
Increase/(decrease) in provisions 31,177 18,684
-
Increase/(decrease) in derivative instruments (327)
Increase/(decrease) in income tax payable 7,365 2,277
Increase/(decrease) in deferred tax liabilities (3,150) (1,306)
Net cash flows from operating activities 125,199 95,967
(b) For the purposes of the Cash Flow Statement, cash and
cash equivalents comprise the following at 30 June:
Cash balances comprise:
- Cash at bank 92,479 119,192
- Short term deposits 80,000 30,000
172,479 149,192
----- End of picture text -----

94 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

==> picture [469 x 325] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
17. cash floW statement (continueD)
(c) Financing facilities available
At balance date the following financing facilities
had been negotiated and were available
Total facilities
- Bank guarantees and insurance bonds (i) 195,000 195,000
- Revolving credit (ii) 78,236 55,267
273,236 250,267
Facilities used at balance date:
- Bank guarantees and insurance bonds 129,180 116,000
- Revolving credit 42,956 32,601
172,136 148,601
Facilities unused at balance date:
- Bank guarantees and insurance bonds 65,820 79,000
- Revolving credit 35,280 22,666
101,100 101,666
----- End of picture text -----

(i) Bank guarantees and insurance bonds

The contractual term of the bank guarantees and insurance bonds match the underlying obligation to which it relates.

(ii) Revolving credit

The revolving credit includes bank loans and hire purchase/leasing facilities. Refer to Note 13(a) for terms and conditions.

(d) Non-cash financing and investing activities

Hire purchase transactions:

During the year the consolidated entity acquired plant and equipment by means of hire purchase agreements with an aggregate fair market value of $23,372,201 (2010: $20,752,934).

I 95

Notes to the Financial Statements (Continued) | 30 June 2011

18. change in composition of entity

On 1 July 2010, Monadelphous Group Limited acquired 100% of the voting shares of KT Pty Ltd, a private company based in Australia. Details of the acquisition are contained in note 27.

Subsequent to the year end, Monadelphous Group Limited acquired 100% of the voting shares of PearlStreet Energy Services Pty Ltd, a private company based in Australia. Details of the acquisition are contained in note 26.

==> picture [469 x 213] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
19. commitments anD contingencies
(a) Hire purchase commitments
Payable:
- Within one year 16,350 13,479
- Later than one year but not later than five years 32,170 22,992
Minimum lease payments 48,520 36,471
Less future finance charges (5,666) (4,043)
Present value of minimum lease payments 42,854 32,428
Current liability 13 13,581 11,462
Non-current liability 13 29,273 20,966
42,854 32,428
----- End of picture text -----

Hire purchase agreements have an average term of three years.

==> picture [469 x 162] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2011 2011 2010
properties other total total
$’000 $’000 $’000 $’000
(b) Operating lease commitments
Minimum lease payments
- Within one year 12,597 3,681 16,278 13,538
- Later than one year but not later than five years 37,240 10,673 47,913 34,258
- Later than five years 37,727 - 37,727 41,625
- Aggregate lease expenditure contracted for at balance
date but not provided for 87,564 14,354 101,918 89,421
----- End of picture text -----

Other operating leases includes motor vehicles and cranes. Properties include the Victoria Park office lease, the Brisbane office lease and other rental properties. Other operating leases have an average lease term of three years. Properties under operating leases have an average lease term of three years.

(c) Capital commitments

The consolidated group has capital commitments of $10,953,443 at 30 June 2011 (2010: $8,610,827).

(d) Guarantees

Guarantees given to various clients for satisfactory contract performance 129,180 116,000

Monadelphous Group Limited and all controlled entities marked * in Note 25 have entered into a deed of cross guarantee pursuant to the ASIC Class Order made on 12 April 1995, 3 July 2001, 30 June 2005, 29 June 2007 and 9 June 2011 whereby they covenant with a trustee for the benefit of each creditor, that they guarantee to each creditor payment in full of any debt in the event of any entity, including Monadelphous Group Limited, being wound up. It is anticipated that Ellavale Engineering Pty Ltd and MBF Workforce Pty Ltd will be removed from the deed of cross guarantee with effect from 9 December 2011 as they are no longer operating entities.

96 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

20. operating segments

Revenue is derived by the consolidated entity from the provision of engineering services to the resources, energy and infrastructure industry sector. For the year ended 30 June 2011, the Engineering Construction division contributed revenue of $929.8 million (2010: $843.6 million ), Maintenance and Industrial Services division contributed revenue of $401.3 million (2010: $376.2 million), and the Infrastructure division contributed revenue of $157.8 million (2010: $59.1 million ). Included in these amounts is $45.0 million (2010: $3.5 million) of inter-entity revenue, which is eliminated on consolidation. The operating divisions are exposed to similar risks and rewards from operations, and are only segmented to facilitate appropriate management structures.

The directors believe that the aggregation of the operating divisions is appropriate for segment reporting purposes as they:

• have similar economic characteristics;

• perform similar services for the same industry sector;

• have similar operational business processes;

• provide a diversified range of similar engineering services to a large number of common clients;

• utilise a centralised pool of engineering assets and shared services in their service delivery models, and the services provided to customers allow for the effective migration of employees between divisions; and

• operate predominately in one geographical area, namely Australia.

Skystar Airport Services is not considered material for segment reporting purposes.

Accordingly all services divisions have been aggregated to form one segment.

The Group has a number of customers to which it provides services. The largest customer represented 28% of the Group’s revenue. The other three customers contributing over 10% of revenue represented 20%, 15% and 10% respectively. There are multiple contracts with these customers, across a number of their subsidiaries, divisions within those subsidiaries and locations.

• Note, the 2010 comparative for Infrastructure includes Skystar sales revenue and reclassification of revenues previously reported within Engineering Construction.

==> picture [471 x 221] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
21. earnings per share
The following reflects the income and share data used in the
calculation of basic and diluted earnings per share:
Net profit attributable to ordinary equity holders of the parent 95,067 83,217
Earnings used in calculation of basic and diluted earnings per share 95,067 83,217
2011 2010
number number
Number of Shares
Weighted average number of ordinary shares on issue used in the calculation of basic EPS 87,343,032 85,910,364
Effect of dilutive securities
Share options 1,611,257 1,261,848
Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share 88,954,289 87,172,212
----- End of picture text -----

Conversions, calls, subscriptions or issues after 30 June 2011:

Since the end of the financial year, no holders of employee options have exercised the rights of conversion to acquire ordinary shares.

I 97

Notes to the Financial Statements (Continued) | 30 June 2011

22. employee Benefits anD superannuation commitments

(a) Share-based Payment Plan

The Monadelphous Group Limited Employee Option Plan has been established where eligible directors and employees of the consolidated entity are issued with options over the ordinary shares of Monadelphous Group Limited. The options, issued for nil consideration, are issued in accordance with the guidelines established by the Remuneration Committee of Monadelphous Group Limited. The options issued carry various terms and exercising conditions. There is currently 1 director and 167 employees participating in this scheme.

In accordance with the rules of the Monadelphous Group Limited Employee Option Plan, options may only be exercised in specified window periods (or at the discretion of the directors in particular circumstances):

25% 2 years after the options were issued 25% 3 years after the options were issued 50% 4 years after the options were issued

In addition, for options issued under the Monadelphous Group Limited Employee Option Plan during the years ended 30 June 2009, 30 June 2010 and 30 June 2011, the ability to exercise options during each applicable window period is subject to the financial performance of the Company during the option vesting period. The options shall only be capable of exercise during that window period where the Company’s Earnings Per Share (EPS) metric is growing at a rate of at least 10% per year on average. If, however, this hurdle is not achieved for a particular window period, rather than lapsing, the options will be re-tested during all later window periods in respect of that issue and may become exercisable at that later date.

The following table illustrates the number and weighted average exercise prices of and movements in options granted under the Monadelphous Group Limited Employee Option Plan during the year:

==> picture [468 x 168] intentionally omitted <==

----- Start of picture text -----

2011 2010
Weighted Weighted
average average
exercise exercise
number price number price
of options $ of options $
Balance at the beginning of the year 4,860,000 10.24 4,922,500 9.79
- Granted during the year 631,000 14.84 580,000 12.22
- Forfeited during the year (445,000) 10.67 (430,000) 10.10
- Exercised during the year (1,117,500) 9.95 (212,500) 5.38
Balance at the end of the year 3,928,500 11.01 4,860,000 10.24
Exercisable during the next year 1,092,500 10.26 1,122,500 9.95
----- End of picture text -----

The weighted average share price at the date of exercise of options during the year was $14.90 (2010: $12.85).

A total of 631,000 options were granted by Monadelphous Group Limited during the year ended 30 June 2011. The fair value of each option issued during the year was estimated on the date of grant using a Binomial option-pricing model. The following weighted average assumptions were used for grants during the year:

Dividend yield	5.5%
Expected volatility	35.0% - 45.0%
Historical volatility	35.0% - 45.0%
Risk-free interest rate	4.65% - 4.76%
Expected life of option	25% - 3 years
	25% - 3.5 years
	50% - 4 years

The dividend yield reflects an analysis of past dividends and future dividend expectations. The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which also may not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value.

98 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

22. employee Benefits anD superannuation commitments (continueD)

(a) Share-based Payment Plan (continued)

The resulting weighted average fair values for options outstanding at 30 June 2011 are:

==> picture [469 x 18] intentionally omitted <==

----- Start of picture text -----

number grant Date final Vesting Date fair Value per option at grant Date
----- End of picture text -----

2,857,500	31/10/2008	30/09/2012	$1.15
460,000	28/09/2009	30/09/2013	$3.53
611,000	25/10/2010	30/09/2014	$3.74

The share-based payment expense for the year ended 30 June 2011 was $2,726,332 (2010: $2,184,687) for the consolidated entity.

Options granted during the reporting period

There were 631,000 options granted by Monadelphous Group Limited to employees during the year.

Options held as at the end of the reporting period

The following table summarises information about options held by the employees as at 30 June 2011:

==> picture [469 x 31] intentionally omitted <==

----- Start of picture text -----

Weighted average
number of options grant date Vesting date expiry date exercise price
----- End of picture text -----

962,500	31/10/2008	01/09/2011	30/09/2012	$10.00
1,895,000	31/10/2008	01/09/2012	30/09/2012	$10.00
130,000	28/09/2009	01/09/2011	30/09/2013	$12.22
110,000	28/09/2009	01/09/2012	30/09/2013	$12.22
220,000	28/09/2009	01/09/2013	30/09/2013	$12.22
152,750	25/10/2010	01/09/2012	30/09/2014	$14.84
152,750	25/10/2010	01/09/2013	30/09/2014	$14.84
305,500	25/10/2010	01/09/2014	30/09/2014	$14.84

(b) Superannuation Commitments

Employees and the employer contribute to a number of complying accumulation funds at varying percentages of salaries and wages. The consolidated entity’s contributions are not legally enforceable other than those payable in terms of ratified award obligations required by the Occupational Superannuation Act.

I 99

Notes to the Financial Statements (Continued) | 30 June 2011

23. key management personnel

(a) Compensation for Key Management Personnel

==> picture [469 x 114] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$ $
Short Term Benefits 3,973,942 3,960,733
Post Employment 114,307 100,707
Long Term Benefits 116,100 56,123
Share-Based Payments 359,866 490,378
Total Compensation 4,564,215 4,607,941
----- End of picture text -----

(b) Option holdings of Key Management Personnel

==> picture [469 x 54] intentionally omitted <==

----- Start of picture text -----

Balance at
options held in
Beginning of Balance at end
monadelphous
period granted as options net change of period
group limited
1 July 2010 remuneration exercised other 30 June 2011
----- End of picture text -----

options held in monadelphous group limited	aance a Beginning of period 1 July 2010 granted as remuneration options exercised net change other Balance at end of period 30 June 2011
Directors C. G. B. Rubino R. Velletri I. Tollman P. J. Dempsey C. P. Michelmore Executives D. Foti A. Erdash M. Jansen * C. Tabrett # Z. Bebic S. Murray Total	- - - - - 500,000 - (125,000) - 375,000 - - - - - - - - - - - - - - - 280,000 - (70,000) - 210,000 140,000 - (35,000) - 105,000 140,000 - - (140,000) - - - (35,000) 140,000 105,000 140,000 - (35,000) - 105,000 95,000 - (42,500) - 52,500
	1,295,000 - (342,500) - 952,500

C. Tabrett met the definition of Key Management Personnel from the date of his appointment as General Manager, Maintenance & Industrial Services Eastern Region on 1 July 2010. Net change other represents options held at the date of his appointment.

• M. Jansen resigned as General Manager, Maintenance & Industrial Services Eastern Region, effective from 1 July 2010. Net change other represents options forfeited on resignation.

100 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

23. key management personnel (continueD)

b) Option holdings of Key Management Personnel (continued)

==> picture [469 x 54] intentionally omitted <==

----- Start of picture text -----

Balance at
options held in
Beginning of Balance at end
monadelphous
period granted as options net change of period
group limited
1 July 2009 remuneration exercised other 30 June 2010
----- End of picture text -----

options held in monadelphous group limited	aance a Beginning of period 1 July 2009 granted as remuneration options exercised net change other Balance at end of period 30 June 2010
Directors C. G. B. Rubino R. Velletri I. Tollman P. J. Dempsey C. P. Michelmore Executives D. Foti A. Erdash M. Jansen Z. Bebic # S. Murray G. Everist * Total	- - - - - 500,000 - - - 500,000 - - - - - - - - - - - - - - - 280,000 - - - 280,000 140,000 - - - 140,000 140,000 - - - 140,000 - - - 140,000 140,000 107,500 - (12,500) - 95,000 140,000 - - (140,000) -
	1,307,500 - (12,500) - 1,295,000

Z. Bebic met the definition of Key Management Personnel from the date of his appointment as Chief Financial Officer on 24 August 2009. Net change other represents options held at the date of his appointment.

• G. Everist resigned as Chief Financial Officer, effective from 24 August 2009. Net change other represents options forfeited on resignation.

I 101

Notes to the Financial Statements (Continued) | 30 June 2011

23. key management personnel (continueD)

(c) Shareholdings of Key Management Personnel

==> picture [469 x 54] intentionally omitted <==

----- Start of picture text -----

Balance at
shares held in Beginning of Balance at end
monadelphous period granted as on exercise net change of period
group limited 1 July 2010 remuneration of options other 30 June 2011
----- End of picture text -----

Directors C. G. B. Rubino R. Velletri I. Tollman P. J. Dempsey C. P. Michelmore Executives D. Foti A. Erdash M. Jansen * C. Tabrett # Z. Bebic S. Murray Total	3,004,000 - - (1,000,000) 2,004,000 2,000,000 - 125,000 - 2,125,000 667,586 - - - 667,586 78,000 - - - 78,000 17,597 - - 1,000 18,597 646,816 - 70,000 - 716,816 340,000 - 35,000 (5,000) 370,000 320,244 - - (320,244) - - - 35,000 (25,000) 10,000 50,000 - 35,000 (5,000) 80,000 12,500 - 42,500 (55,000) -
	7,136,743 - 342,500 (1,409,244) 6,069,999

C. Tabrett met the definition of Key Management Personnel from the date of his appointment as General Manager, Maintenance & Industrial Services Eastern Region on 1 July 2010.

• M. Jansen resigned as General Manager, Maintenance & Industrial Services Eastern Region, effective from 1 July 2010. Net change other represents the shares held on resignation.

All other net changes represent the purchase and sale of shares on-market.

==> picture [469 x 54] intentionally omitted <==

----- Start of picture text -----

Balance at
shares held in Beginning of Balance at end
monadelphous period granted as on exercise net change of period
group limited 1 July 2009 remuneration of options other 30 June 2010
----- End of picture text -----

shares held in monadelphous group limited	Balance at Beginning of period 1 July 2009 granted as remuneration on exercise of options net change other Balance at end of period 30 June 2010
Directors C. G. B. Rubino R. Velletri I. Tollman P. J. Dempsey C. P. Michelmore Executives D. Foti A. Erdash M. Jansen Z. Bebic # S. Murray G. Everist * Total	3,004,000 - - - 3,004,000 2,000,000 - - - 2,000,000 667,586 - - - 667,586 78,000 - - - 78,000 12,294 - - 5,303 17,597 646,816 - - - 646,816 345,540 - - (5,540) 340,000 350,244 - - (30,000) 320,244 - - - 50,000 50,000 445,400 - 12,500 (445,400) 12,500 410,000 - - (410,000) -
	7,959,880 - 12,500 (835,637) 7,136,743

Z. Bebic met the definition of Key Management Personnel from the date of his appointment as Chief Financial Officer on 24 August 2009. Net change other represents shares held at the date of appointment. * G. Everist resigned as Chief Financial Officer, effective from 24 August 2009. Net change other represents the shares held on resignation.

All other net changes represent the purchase and sale of shares on-market.

102 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

23. key management personnel (continueD)

(d) Loans to Key Management Personnel

(i) Details of aggregates of loans to Key Management Personnel are as follows:

No directors or executives had any loans during the reporting period.

(e) Other transactions and balances with Key Management Personnel

There were no other transactions and balances with Key Management Personnel.

==> picture [469 x 253] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$ $
24. auDitors’ remuneration
The auditor of Monadelphous Group Limited is Ernst & Young.
Amounts received or due and receivable by Ernst & Young Australia for:
- An audit or review of the financial report of the entity
and any other entity in the consolidated entity 174,650 147,955
- Other services in relation to the entity and any
other entity in the consolidated entity
- tax compliance 21,546 42,255
- assurance related 6,074 6,580
202,270 196,790
Amounts received or due and receivable by other accounting firms for:
- tax compliance 631,653 683,478
- other services 41,108 63,957
672,761 747,435
----- End of picture text -----*

The other services provided by Ernst & Young, as disclosed above, were performed and managed by personnel who were neither directly, nor indirectly, involved in the audit or review of the financial report of the Company and consolidated entity. Ernst & Young has provided an auditor’s independence declaration to the Directors of Monadelphous Group Limited confirming that the provision of the other services has not impaired their independence as auditors.

• Tax compliance fees paid to other accounting firms during the financial year ended 30 June 2011 relate predominantly to the application for Research and Development Tax Concessions and Fuel Tax Credits.

I 103

Notes to the Financial Statements (Continued) | 30 June 2011

25. relateD party Disclosures

The consolidated financial statements include the financial statements of Monadelphous Group Limited and subsidiaries:

==> picture [468 x 378] intentionally omitted <==

----- Start of picture text -----

percentage held by parent entity
consolidated entity investment
country of 2011 2010 2011 2010
name incorporation % % $’000 $’000
Parent:
Monadelphous Group Limited
Controlled entities of Monadelphous Group Limited:
Monadelphous Engineering Associates Pty Ltd Australia 100 100 19,127 17,353
Skystar Airport Services Pty Ltd Australia 100 100 437 431
Monadelphous Properties Pty Ltd Australia 100 100 1,941 1,941
Monadelphous Engineering Pty Ltd Australia 100 100 2,364 2,204
Genco Pty Ltd Australia 100 100 342 342
Monadelphous Workforce Pty Ltd Australia 100 100 370 370
MI & E Holdings Pty Ltd Australia 100 100 4,738 4,688
KT Pty Ltd Australia 100 - 16,629 -
MBF Workforce Pty Ltd Australia 100 100 215 215
Ellavale Engineering Pty Ltd Australia 100 100 9,844 9,844
Monadelphous PNG Ltd Papua New Guinea 100 100 - -
Skystar Airport Services Holdings Pty Ltd Australia 100 100 - -
Skystar Airport Services NZ Pty Ltd New Zealand 100 100 - -
Moway International Ltd Hong Kong 100 100 443 443
SinoStruct Pty Ltd Australia 100 100 - -
Moway AustAsia Steel Structures
Trading (Beijing) Company Ltd China 100 100 - -
Monadelphous Group Ltd Employee Share Trust Australia 100 100 - -
56,450 37,831
----- End of picture text -----*

* Controlled entities subject to the Class Order

Pursuant to Class Order 98/1418, relief has been granted to these controlled entities of Monadelphous Group Limited from the Corporations Act 2001 requirements for preparation, audit and publication of accounts.

As a condition of the Class Order, Monadelphous Group Limited and the controlled entities subject to the Class Order, entered into a deed of indemnity on 12 April 1995, 3 July 2001, 30 June 2005, 29 June 2007 and 9 June 2011. The effect of the deed is that Monadelphous Group Limited has guaranteed to pay any deficiency in the event of winding up of these controlled entities. The controlled entities have also given a similar guarantee in the event that Monadelphous Group Limited is wound up. It is anticipated that Ellavale Engineering Pty Ltd and MBF Workforce Pty Ltd will be removed from the deed of indemnity with effect from 9 December 2011 as they are no longer operating entities.

The consolidated income statement and balance sheet of the entities that are members of the ‘Closed Group’ are as follows:

==> picture [469 x 149] intentionally omitted <==

----- Start of picture text -----

CLOSED GROUP
2011 2010
$’000 $’000
Consolidated Income Statement
Profit before income tax 123,510 109,755
Income tax expense (33,814) (30,792)
Net profit after tax for the period 89,696 78,963
Retained earnings at the beginning of the period 90,758 79,670
Dividends paid (77,041) (67,875)
Retained earnings at the end of the period 103,413 90,758
----- End of picture text -----

104 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

25. relateD party Disclosures (continueD)

==> picture [469 x 578] intentionally omitted <==

----- Start of picture text -----

CLOSED GROUP
2011 2010
$’000 $’000
Consolidated Statement of Financial Position
ASSETS
Current assets
Cash and cash equivalents 167,567 143,084
Trade and other receivables 151,915 113,174
Inventories 21,369 21,908
Total current assets 340,851 278,166
Non-current assets
Investments in subsidiaries 880 874
Available-for-sale financial assets 25,875 16,880
Property, plant and equipment 104,797 87,710
Deferred tax assets 24,000 15,231
Intangible assets and goodwill 5,349 2,551
Total non-current assets 160,901 123,246
TOTAL ASSETS 501,752 401,412
LIABILITIES
Current liabilities
Trade and other payables 166,008 159,376
Interest bearing loans and borrowings 13,654 11,529
Income tax payable 17,412 8,734
Provisions 90,917 61,482
Total current liabilities 287,991 241,121
Non-current liabilities
Interest bearing loans and borrowings 29,302 21,072
Provisions 4,829 3,128
Total non-current liabilities 34,131 24,200
TOTAL LIABILITIES 322,122 265,321
NET ASSETS 179,630 136,091
EQUITY
Contributed equity 46,612 30,083
Reserves 29,605 15,250
Retained earnings 103,413 90,758
TOTAL EQUITY 179,630 136,091
----- End of picture text -----

I 105

Notes to the Financial Statements (Continued) | 30 June 2011

25. relateD party Disclosures (continueD)

Wholly-owned group transactions

Loans

During the year, funds have been advanced between entities within the consolidated entity for the purposes of working capital requirements only. The aggregate of amounts due from wholly-owned controlled entities at balance date is $406,386,828 (2010: $397,448,607). The loan to Skystar Airport Services NZ Pty Ltd totalling $338,681 (2010: $139,926) is interest bearing and repayable over four years. Other loans to wholly-owned controlled entities totalling $366,713,276 (2010: $397,308,681) are interest free and have no fixed repayment date.

The aggregate amount payable by the parent entity to wholly-owned controlled entities at the balance date is $477,025,569 (2010: $500,763,880). The amounts are interest free and repayable on demand.

Ultimate parent

Monadelphous Group Limited is the ultimate holding company.

26. eVents after the Balance Date

On 1 July 2011, Monadelphous Group Limited acquired 100% of the voting shares of asset management company, PearlStreet Energy Services Pty Ltd (’PearlStreet’). PearlStreet manages two long term operations and maintenance contracts in the power sector in Western Australia. The acquisition forms part of Monadelphous’s markets and growth strategy. The consideration comprised an initial cash payment of $4,130,000 and a subsequent cash adjustment to the purchase price on finalisation of the completion accounts at the date of acquisition.

At the date the Financial Statements were authorised for issue, the initial accounting for the business combination was incomplete with the fair value assessments of the identifiable assets and liabilities acquired at acquisition and the calculation of the adjustment to the purchase price to be finalised. As a result it is not possible to disclose the carrying value or fair value of the identifiable assets and liabilities that will be recognised at 1 July 2011, the acquisition date fair value of consideration transferred or to calculate the value of goodwill.

On 14 July 2011, the company name of PearlStreet Energy Services Pty Ltd was changed to Monadelphous Energy Services Pty Ltd. On 19 August 2011, the Company announced that it had secured major maintenance and construction contracts with a combined value of approximately $350 million. The contracts are with key customers in the Queensland coal industry and the Western Australian oil and gas and alumina industries. The contracts include:

• A three-year contract with BHP Billiton Mitsubishi Alliance (BMA) in Queensland, valued at approximately $100 million for dragline and shovel shutdown work across its Bowen Basin coal operations;

• Two contracts totalling approximately $100 million, for civil, structural, mechanical and electrical work to supply and install an overland conveyor and a drift conveyor as part of the extension project at the Rio Tinto Coal Australia–managed Kestrel Mine near Emerald, Queensland;

• Two contracts with BMA’s Project Delivery Group for ongoing construction work on various sites in the northern region of the Bowen Basin in Queensland over two years;

• A new contract with Woodside to provide mechanical commissioning support to its Pluto LNG Plant on the Burrup Peninsula in Western Australia, expected to be completed in the first half of 2012; and

• A new three-year contract to provide minor capital project services for BHP Billiton Worsley Alumina’s Refinery Project at Collie in Western Australia.

On 22 August 2011, the directors of Monadelphous Group Limited declared a final dividend on ordinary shares in respect of the 2011 financial year. The total amount of the dividend is $48,167,255 which represents a fully franked final dividend of 55 cents per share. This dividend has not been provided for in the 30 June 2011 Financial Statements.

Other than the items noted above, there are no matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial years.

106 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

27. Business comBination

On 1 July 2010, Monadelphous Group Limited acquired 100% of the voting shares of KT Pty Ltd, a private company based in Australia specialising in high pressure gas pipeline and facilities construction throughout Australia and overseas. The acquisition will expand the capabilities and range of services offered by the Group.

The upfront consideration comprised a cash payment of $10,000,000 and 422,627 ordinary shares. The ordinary shares were issued at a fair value of $12.79 each, based on the quoted price of the shares of Monadelphous Group Limited at the date of acquisition. A further contingent component is payable subject to KT Pty Ltd achieving certain financial targets over the period to 31 December 2011. The total consideration payable will not exceed $30,000,000.

The fair values of the identifiable assets and liabilities of KT Pty Ltd as of the date of acquisition were:

==> picture [469 x 41] intentionally omitted <==

----- Start of picture text -----

fair Value at
acquisition date
$’000
----- End of picture text -----

Cash Trade and other receivables Plant and equipment Intangible assets Deferred tax assets Trade and other payables Income tax payable Provisions Deferred tax liabilities Fair value of identifiable net assets Goodwill arising on acquisition Acquisition-date fair value of consideration transferred Shares issued, at fair value Cash paid Contingent consideration liability Consideration transferred The cash outflow on acquisition is as follows: Net cash acquired with the subsidiary Cash paid Net consolidated cash outflow	2,782 4,034 8,519 3,490 219
	19,044
	689 1,649 719 476
	3,533
	15,511 382
	15,893
	5,406 10,000 487
	15,893
	2,782 (10,000)
	7,218

At 30 June 2011, the contingent consideration has been recalculated to a total payment of $1,181,000. The increase to the estimate has been charged to the Income Statement and is included within the other expenses classification.

The consolidated Income Statement includes sales revenue for the period ended 30 June 2011 of $52,004,000. Net profit for the period was not material.

Key factors contributing to the $382,000 of goodwill are the synergies existing within the acquired business, and synergies expected to be achieved as a result of combining KT Pty Ltd with the rest of the Group.

I 107

Notes to the Financial Statements (Continued) | 30 June 2011

28. financial risk management oBJectiVes anD policies

The Group’s principal financial instruments comprise receivables, payables, bank loans, finance leases and hire purchase contracts, available-for-sale investments, cash, short-term deposits and derivatives.

The Group is exposed to financial risks which arise directly from its operations. The Group has policies and measures in place to manage financial risks encountered by the business.

Primary responsibility for the identification of financial risks rests with the Board. The Board determines policies for the management of financial risks. It is the responsibility of the Chief Financial Officer and senior management to implement the policies set by the Board and for the constant day to day management of the Group’s financial risks. The Board reviews these policies on a regular basis to ensure that they continue to address the risks faced by the Group.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, price risk, credit risk and liquidity risk. The Group’s policy to minimise risk from fluctuations in interest rates is to utilise fixed interest rates in its bank loans, finance leases and hire purchase contracts. Cash and short term deposits are exposed to floating interest rate risks. The Group manages its foreign currency risk arising from significant supplier contracts in foreign currencies by purchasing foreign currency or taking out forward exchange contracts. Analysis is performed on customers’ credit rating prior to signing contracts and analysis is performed regularly of credit exposures and aged debt to manage credit and liquidity risk.

The policies in place for managing the financial risks encountered by the Group are summarised below.

(a) Risk exposures and responses

Interest rate risk

The Group’s exposure to variable interest rates is as follows:

==> picture [469 x 80] intentionally omitted <==

----- Start of picture text -----

Notes Consolidated
2011 2010
$’000 $’000
Financial Assets
Cash and cash equivalents 17(b) 172,479 149,192
----- End of picture text -----

The Group’s policy is to manage its exposure to movements in interest rates by fixing the interest rate on financial instruments, including bank loans, finance leases and hire purchase liabilities, where possible. In addition, the Group utilises a number of financial institutions to obtain the best interest rate possible and to manage its risk. The Group does not enter into interest rate hedges.

The following sensitivity analysis is based on the variable interest rate risk exposures in existence at the balance sheet date:

At 30 June 2011, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and other comprehensive income would have been affected as follows:

Judgements of reasonably possible movements relating	Post Tax Proft	Other Comprehensive Income	Other Comprehensive Income
to financial assets and liabilities at floating rates:	Higher/(Lower)	Higher/(Lower)
	2011 $’000 2010 $’000	2011 $’000	2010 $’000
Consolidated
+0.5% (2010: +0.5%)	604 522	-	-
-0.5% (2010: -0.5%)	(604) (522)	-	-

The reasonably possible movements have been based on a review of historical movements and forward rate curves for forward rates.

The periodic effects are determined by relating the hypothetical changes in the floating interest rates to the balance of financial instruments at reporting date. It is assumed that the balance at the reporting date is representative for the year as a whole.

Foreign currency risk

As a result of operations in New Zealand, Papua New Guinea and China, the Group’s balance sheet can be affected by movements in the US$/A$, NZ$/A$, PNGK/A$ and RMB/A$ exchange rates.

The Group also has transactional currency exposures. Such exposure arises from sales or purchases by an operating entity in currencies other than the functional currency. The Group’s policy is to hedge foreign exchange exposure by purchasing foreign currency or taking out forward contracts for the amount of foreign currency required. Where possible, Monadelphous does not take on foreign exchange risk. At 30 June 2011 the Group had no forward contracts.

The Group also mitigates its exposure to foreign currency risk by minimising excess foreign currency balances in overseas jurisdictions not required for working capital.

108 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

28. financial risk management oBJectiVes anD policies (continueD)

(a) Risk exposures and responses (continued)

At 30 June 2011, the Group had the following exposure to US$ foreign currency:

==> picture [469 x 79] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
Financial Assets
Cash and cash equivalents 15,162 12,658
----- End of picture text -----

At 30 June 2011, if the US$ foreign exchange rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:

Judgements of reasonably possible movements relating	Post Tax Proft	Other Comprehensive Income
to financial assets and liabilities denominated in US$:	Higher/(Lower)	Higher/(Lower)
Consolidated	2011 $’000 2010 $’000	2011 $’000 2010 $’000
+5% (2010: +5%)	(531) (443)	- -
-5% (2010: -5%)	531 443	- -

The reasonably possible movements have been based on a review of historical movements.

Price risk

Equity securities price risk arises from investments in equity securities. The Group has a single equity investment which is publicly traded on the ASX.

At 30 June 2011, if the share price of the single equity investment had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:

Judgements of reasonably possible movements relating	Post Tax Proft	Other Comprehensive Income
to share price of equity investment:	Higher/(Lower)	Higher/(Lower)
	2011 $’000 2010 $’000 2011 $’000 2010 $’000
Consolidated
+15% (2010: +15%)	-	- 2,717 1,772
-15% (2010: -15%)	-	- (2,717) (1,772)

The reasonably possible movements have been based on a review of historical movements.

Credit risk

The Group trades only with recognised, creditworthy third parties.

It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. Publicly available credit information from recognised providers is utilised for this purpose where available.

In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

There are no significant concentrations of credit risk within the Group. The Group minimises concentrations of credit risk in relation to accounts receivable by undertaking transactions with a large number of customers within the resources, energy and infrastructure industry sector.

For transactions that are not denominated in the functional currency of the relevant operating unit, the Group does not offer credit terms without the specific approval of the Chairman, Managing Director or Chief Financial Officer.

With respect to credit risk arising from the other financial assets of the Group, which comprises cash and cash equivalents, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. The Group’s maximum exposure to credit risk is its trade receivables which have a balance at 30 June 2011 of $140,323,000 (2010: $116,505,000).

Since the Group only trades with recognised third parties, there is no requirement for collateral.

I 109

Notes to the Financial Statements (Continued) | 30 June 2011

28. financial risk management oBJectiVes anD policies (continueD)

(a) Risk exposures and responses (continued)

Liquidity risk

The Group’s objective is to manage the liquidity of the business by monitoring project cash flows and through the use of financing facilities. The Group currently utilises financing facilities in the form of bank loans and hire purchase liabilities. The liquidity of the group is managed by the Group’s Finance & Accounting department.

The table below reflects all contractually fixed pay-offs, repayments and interest resulting from financial liabilities as of 30 June 2011.

The remaining contractual maturities of the Group’s financial liabilities are:

==> picture [469 x 108] intentionally omitted <==

----- Start of picture text -----

Consolidated
2011 2010
$’000 $’000
6 months or less 192,378 175,010
6 - 12 months 7,323 6,525
1 - 5 years 32,210 23,120
231,911 204,655
----- End of picture text -----

Maturity analysis of financial liabilities:

Consolidated

	6 months or less $’000 6 months to 1 year $’000 1 year to 5 years $’000 total contractual cash flows $’000 total carrying amount $’000
Year ended 30 June 2011 Financial Liabilities Trade and other payables Bank loan Hire purchase liability Net maturity Year ended 30 June 2010 Financial Liabilities Trade and other payables Bank loan Hire purchase liability Net maturity
	183,264 - - 183,264 183,264
	44 43 40 127 102
	9,070 7,280 32,170 48,520 42,854
	192,378 7,323 32,210 231,911 226,220
	167,963 - - 167,963 167,963 47 46 128 221 173 7,000 6,479 22,992 36,471 32,428
	175,010 6,525 23,120 204,655 200,564

• Note, trade and other payables includes advances on construction work in progress of $144,467,000 (2010: $124,549,000). This amount is expected to be settled by the performance of work rather than via contractual cash flows.

110 I 2011 Annual Report

Notes to the Financial Statements (Continued) | 30 June 2011

28. financial risk management oBJectiVes anD policies (continueD)

(b) Net fair values of financial assets and liabilities

The aggregate net fair values of financial assets and financial liabilities at balance date are as follows:

Consolidated

==> picture [469 x 223] intentionally omitted <==

----- Start of picture text -----

carrying amount aggregate net fair Value
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Financial Assets
Cash 172,479 149,192 172,479 149,192
Other debtors 27,705 4,895 27,705 4,895
Receivables – trade 140,323 116,505 140,323 116,505
Available-for-sale assets 25,875 16,880 25,875 16,880
Total Financial Assets 366,382 287,472 366,382 287,472
Financial Liabilities
Payables 183,264 167,963 183,264 167,963
Bank loan 102 173 117 194
Hire purchase liability 42,854 32,428 41,853 31,416
Total Financial Liabilities 226,220 200,564 225,234 199,573
----- End of picture text -----

Interest bearing liabilities with fixed interest rates: The fair value includes the value of contracted interest cash flows, discounted at market rates.

Cash and cash equivalents: The carrying amount approximates fair value because of their short-term maturity.

Receivables and payables: The carrying amount approximates fair value due to short term maturity.

The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:

Level 1: The fair value is calculated using quoted prices in active markets. Level 2: The fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

Level 3: The fair value is estimated using inputs for the asset or liability that are not based on observable market data.

Recognised financial instruments valuation method

Available-for-sale assets: Level 1 - Calculated using quoted prices in active markets.

I 111

Notes to the Financial Statements (Continued) | 30 June 2011

Notes

==> picture [469 x 306] intentionally omitted <==

----- Start of picture text -----

2011 2010
$’000 $’000
29. parent entity information
Information relating to Monadelphous Group Limited parent entity
Current assets 177,365 143,083
Total assets 672,469 597,419
Current liabilities (508,016) (503,339)
Total liabilities (542,602) (506,307)
Net Assets 129,867 91,112
Contributed equity 46,612 30,083
Share-based payment reserve 17,210 9,152
Net unrealised gains reserve 12,395 6,098
Retained earnings 53,650 45,779
Total Equity 129,867 91,112
Profit after tax 84,912 63,747
Total comprehensive income of the parent entity 91,209 66,286
Contingent liabilities
Guarantees 19(d) 129,180 116,000
----- End of picture text -----

All guarantees entered into by the Group are via the parent entity. Details are contained in Note 19(d).

Capital commitments

The parent entity had no capital commitments at 30 June 2011 (2010: $nil).

112 I 2011 Annual Report

Investor Information | 30 June 2011

Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report is as follows. The information is current at 14 September 2011.

a) Distribution of equity securities

The number of shareholders, by size of holding, in each class of share is:

==> picture [469 x 34] intentionally omitted <==

----- Start of picture text -----

category number of ordinary number of % of
(size of holdings) shareholders ordinary shares issued capital
----- End of picture text -----

1 – 1000	7,422	3,803,668	4.29
1,001 – 5,000	4,799	11,258,473	12.70
5,001 – 10,000	797	5,951,717	6.71
10,001 – 100,000	782	21,193,458	23.91
100,001 – 99,999,999	57	46,444,511	52.39
Total	13,857	88,651,827	100.00

The number of shareholders holding less than marketable parcels is 159.

b) Twenty largest shareholders

The names of the twenty largest holders of quoted shares are:

rank name	units % of issued capital
1 HSBC Custody Nominees (Australia) Limited 2 J P Morgan Nominees Australia Limited 3 National Nominees Limited 4 J P Morgan Nominees Australia Limited (Cash Income Account) 5 Citicorp Nominees Pty Limited 6 Velham Nominees Pty Ltd (The Velletri Family Account) 7 Rubi Holdings Pty Ltd (John Rubino Super Fund Account) 8 Wilmar Enterprises Pty Ltd 9 Cogent Nominees Pty Limited 10 Irtol Investments Pty Ltd (Tollman Super Fund Account) 11 UBS Nominees Pty Ltd 12 Mrs Mabs Melville 13 Tiga Trading Pty Ltd 14 Pacific Custodians Pty Ltd (Employee Share Trust Account) 15 Mrs Mary Teresa Erdash 16 AMP Life Limited 17 Mr Dino Foti 18 Perpetual Trustee Company Limited 19 Queensland Investment Corporation 20 Langfield Investments Pty Ltd Total	9,451,588 10.66 9,175,186 10.35 5,396,681 6.09 3,786,491 4.27 2,381,954 2.69 2,250,000 2.54 2,004,000 2.26 1,320,000 1.49 978,816 1.10 479,950 0.54 466,143 0.53 430,000 0.49 400,000 0.45 364,850 0.41 335,000 0.38 330,586 0.37 326,816 0.37 325,906 0.37 280,833 0.32 280,000 0.32
	40,764,800 46.00

I 113

Investor Information (Continued) | 30 June 2011

c) Substantial shareholders

No shareholders have declared a relevant interest in the number of voting shares at the date of giving notice under Part 6C.1 of the Corporations Act 2001 .

d) Voting rights

On a show of hands every member or proxy present may be entitled to one vote unless a poll is called in which case every share may have one vote, subject to any voting restrictions that may apply (refer Corporations Amendments Bill 2011 - Improving Accountability on Director and Executive Remuneration).

e) Securities exchange listing

Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Securities Exchange Limited.

114 I 2011 Annual Report

Investor Information (Continued) | 30 June 2011

annual general meeting

The Annual General Meeting will be held at The University Club, University of Western Australia, Crawley, WA on Tuesday 22 November 2011 at 10.00am (AWST). Full details of the meeting are contained in the Notice of Annual General Meeting sent with this report.

Dividends

The following options are available regarding payment of dividends:

i) By cheque payable to the shareholder; or

ii) By direct deposit to a bank, building society or credit union account.

Lost or stolen cheques should be reported immediately to the Share Registry, in writing.

Electronic payments are credited on the dividend payment date and confirmed by a payment advice sent to the shareholder. Request forms for this service are available from the Company’s Share Registry at the address shown below.

Shareholder Enquiries

All enquiries should be directed to the Company’s Share Registry at: Computershare Investor Services Pty Ltd Telephone: 1300 364 961 (Free call within Australia) Level 2, 45 St George’s Terrace + 61 3 9946 4415 Perth Facsimile: + 61 8 9323 2033 Western Australia 6000 Email: web.queries@computershare.com.au Website: www.computershare.com

All written enquiries should include your Holder Identification Number as it appears on your Holding Statement along with your current address.

Change of address

It is very important that shareholders notify the Share Registry immediately, in writing, if there is any change to their registered address.

Lost holding statements

Shareholders should inform the Share Registry immediately, in writing, so that a replacement statement can be arranged.

Change of name

Shareholders who change their name should notify the Share Registry, in writing, and attach a copy of a relevant marriage certificate or deed poll.

Tax file numbers (TFN)

Although it is not compulsory for each shareholder to provide a TFN or exemption details, for those shareholders who do not provide the necessary details, the Company will be obliged to deduct tax from any unfranked portion of their dividends at the top marginal rate. TFN application forms can be obtained from the Share Registry, any Australian Post Office or the Australian Tax Office.

Monadelphous publications

In an effort to reduce its impact on the environment Monadelphous will only post printed copies of this Annual Report to those shareholders who elect to receive one through the share registry. Shareholders may alternatively elect to receive an electronic copy of the Annual Report. Monadelphous Group Limited financial reports are also available on its website (refer below).

Information about Monadelphous

Requests for specific information on the Company can be directed to the Company Secretary at the following address: Monadelphous Group Limited

PO Box 600 Victoria Park, WA 6979

Telephone: +61 8 9316 1255 Facsimile: +61 8 9316 1950

Monadelphous website

Information about Monadelphous Group Limited is available on the internet at: www.monadelphous.com.au

I 115

monadelphous (adj).

Mon`a*del”phous

A botanical term describing the stamens of some plants and flowers that have all the filaments united to form a single bundle. The name signifies the coming together of many to one point for strength and unity of purpose.

www.monadelphous.com.au

116 I 2011 Annual Report

Perth Office (Head Office) 59 Albany Highway Victoria Park Western Australia 6100 PO Box 600 Victoria Park Western Australia 6979 Tel: +61 8 9316 1255 Fax: +61 8 9316 1950

Brisbane Office Level 6, 19 Lang Parade Milton Queensland 4064 PO Box 1872 Milton Queensland 4064 Tel: +61 7 3368 6700 Fax: +61 7 3368 6777 Email: monadel@monadel.com.au ABN: 28 008 988 547

www.monadelphous.com.au

==> picture [39 x 21] intentionally omitted <==