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2022 Financial Report Bisalloy Steel Group Limited | 1
Your Directors submit their report for the year ended 30 June 2022.
Directors
The names and details of the Company’s Directors 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.
Mr David Balkin AM
Skills and Experience:
BSc, Civil engineering
(WITS), MBA (Harvard)
Chairman
Mr Balkin brings extensive knowledge and understanding of global basic materials industries through
25 years as a consultant, senior partner and leader of McKinsey & Company’s global basic materials
practice. He is also an experienced director and chairman of a number of private companies where
he actively advises and supports management to improve shareholder returns and build more
sustainable businesses.
Term of office:
Appointed as Director and Chairman on 27 November 2020. Last re-elected on November 2021 and
subject to re-election by rotation in October 2022.
Board Committees:
• Audit and Risk Committee
• Nominations and Remuneration Committee
Other Directorships:
• RIS Safety Pty Ltd, Chairman
• RP Infrastructure Pty Ltd, Chairman
• Commitworks Pty Ltd, Director
Mr Rowan Melrose
Skills and Experience:
B.E (Hons), M.App.Sc,
MBA
Managing Director and
Chief Executive Officer
Mr Melrose is an experienced executive with an extensive background in mining services, mining
consumables, operations and manufacturing.
Mr Melrose has successfully worked and managed businesses in Australia, SE Asia, China, India,
and New Zealand, including most recently as Executive General Manager of Bradken Limited’s
Mineral Processing and Fixed Plant division.
Mr Melrose holds a Bachelor of Engineering and a Master of Science from the University of NSW as
well as a Master of Business Administration from Wollongong University.
Term of office:
Appointed as CEO and Managing Director 01 March 2022. As the Managing Director he is not
subject to re-election by rotation.
Other Directorships:
Nil
2 | Bisalloy Steel Group Limited 2022 Financial Report
Directors’ ReportFor the year ended 30 June 2022 Mr Ian Greenyer
Skills and Experience:
B Sc (Hons)
Non-executive Director
Mr Greenyer brings significant financial and business analysis and improvement skills, through
27 years as an independent consultant, actively identifying and effecting change in small and
medium sized companies operating in a broad range of business sectors based in Australia. These
activities flowed from a background as an actuary, investment analyst and stockbroker.
Term of office:
Appointed as Director on 27 November 2020. Last re-elected in November 2021.
Board Committees:
• Audit and Risk Committee
• Nominations and Remuneration Committee
Other Directorships:
• Nil
Mr Michael Gundy
Skills and Experience:
MBA, B Bus, Assoc Dip
Metallurgy
Non-executive Director
Mr Gundy is an experienced executive with 34 years of steel industry experience spread across
Australia, S.E. Asia, New Zealand, and the United States. In his career Mr Gundy has been involved
in profitably growing businesses, opening new markets, developing distribution channels and
business restructuring.
Term of office:
Appointed as Director on 27 November 2020. Last re-elected in November 2021 and subject to
re-election by rotation in October 2022.
Board Committees:
• Audit and Risk Committee
• Nominations and Remuneration Committee
Other Directorships:
Nil
Mr Glenn Cooper
Skills and Experience:
Managing Director and
Chief Executive Officer
Mr Cooper has an engineering background and over 25 years’ experience as a senior executive in
the mining, construction, transport and quarrying industries. He is an experienced senior executive
across all business functions including sales, aftermarket, distribution and market development.
Glenn has held previous senior executive roles at regional and global levels for major global OEM’s
and manufacturers. Mr Cooper was a Director of Bisalloy Steel Group’s majority owned businesses
- PT Bima Bisalloy and Bisalloy Thailand. Mr Cooper was also Vice-Chairman of the Group’s
Co-operative Joint Venture, Bisalloy Shangang (Shandong) Steel Plate Co., Limited.
Term of office:
Mr Cooper was appointed CEO Australia in November 2019 before being appointed as
Managing Director and Chief Executive Officer on 6 July 2020. Mr. Cooper left the business on
16 December 2021.
Other Directorships:
Nil
2022 Financial Report Bisalloy Steel Group Limited | 3
Directors’ Report (continued)For the year ended 30 June 2022 Mr Bernard Landy
Skills and Experience:
Non-executive Director
Mr Landy has more than 40 years of experience working as a steel industry executive in Australia,
ASEAN and China; including almost seven years based in Shanghai where he successfully led
BlueScope China’s steel and building products manufacturing businesses. At board level, highlights
include: chair and director of the Australian Steel Institute, chair and director of the Bureau of Steel
Manufacturers of Australia and director of several BHP and BlueScope international subsidiaries. He
is also currently an advisory board member of Swinburne University’s Centre for Smart Infrastructure
and Digital Construction.
Term of office:
Appointed as Director on 01 March 2022 and subject to re-election October 2022.
Board Committees:
• Audit and Risk Committee
• Nominations and Remuneration Committee
Other Directorships:
Nil
Company Secretary
Mr Carl Bowdler
Skills and Experience:
B Bus, FCPA, MAICD
Company Secretary and
Chief Financial Officer
Appointed in November 2021. Mr Bowdler is a Fellow of CPA Australia with over 25 years’ experience
in senior roles with strategic, financial, and operational responsibilities. Those roles include the CFO
roles at Tribe Breweries, Kollaras & Co and Hagemeyer Brands Australia. Mr Bowdler is a Director of
Bisalloy Steel Groups majority owned businesses – PT Bima and Bisalloy Thailand.
Mr Luke Beale
Skills and Experience:
B Comm, MBA, ACA,
GAICD
Company Secretary and
Chief Financial Officer
Appointed in April 2018. Mr Beale is a Chartered Accountant with 21 years professional experience
working in senior financial positions with listed companies in Australia, New Zealand and Asia.
Mr Beale was a Director of Bisalloy Steel Group’s majority owned businesses – PT Bima Bisalloy and
Bisalloy Thailand. Mr Beale was also Financial Supervisor of the Group’s Co-operative Joint Venture,
Bisalloy Shangang (Shandong) Steel Plate Co., Limited. Mr Beale resigned on 21 July 2021 and his
last day with Bisalloy was 12 October 2021.
Interests in shares of the company and related bodies corporate
As at the date of this report, the interests of the Directors in the shares of Bisalloy Steel Group Limited were:
Number of
Ordinary
Shares
7,781,095
100,000
64,157
2,500
Nil
Nil
D Balkin
I Greenyer
M Gundy
B Landy
G Cooper
R Melrose
4 | Bisalloy Steel Group Limited 2022 Financial Report
Directors’ Report (continued)For the year ended 30 June 2022 Dividends
Final dividend for FY22 recommended on ordinary shares
(fully franked)
FY22 Interim Dividend paid in the year
FY21 Final Dividend paid in the year
Principal activities
The principal activity of the Group during the financial year
was the manufacture and sale of quenched and tempered,
high-tensile, and abrasion resistant steel plates (“Q&T plate”).
Operating and financial Review
Operations
Group
Bisalloy Steel Group comprises Bisalloy Steels Pty Ltd in
Australia, the majority owned distribution businesses in
Indonesia (PT Bima Bisalloy) and Thailand (Bisalloy (Thailand)
Co Limited) and the investment in the Chinese Co-operative
Joint Venture (CJV) – Bisalloy Shangang (Shandong) Steel Plate
Co, Ltd.
Bisalloy has delivered a strong performance in FY22,
consolidating the foundations we have put in place to create
a stronger and more resilient business. We’ve continued our
reset of the business, installed new leadership including the
appointment of Mr Rowan Melrose as CEO and Managing
Director. We are accelerating our review of our strategy for
growth to create long term value for our stakeholders over
the cycle.
The Bisalloy Group experienced one Lost Time Injury for the H1
which was an upgrade of a minor injury in the previous financial
year (FY21) and have recorded nil Lost Time Injuries in H2. Our
All-Injury frequency is trending down. The balance of the Group
in Thailand, Indonesia and China experienced no Lost Time
Injuries. Bisalloy Australia performed strongly in our surveillance
Cents
$’000
9.0
4.5
9.0
4,238
2,104
4,147
audit for ISO14001 (Environment Management) and ISO45001
(Safety Management Systems), with zero non-conformances.
Bisalloy Steels is Australia’s only processor of quenched and
tempered high strength, abrasion resistant and armour grade
alloyed steel plates. Bisalloy distributes wear and structural
grade plates through both distributors and directly to select
manufacturers and end users in Australia and internationally.
For armour grade steels, Bisalloy exclusively deals directly with
select companies.
Bisalloy’s unique stand-alone heat treatment facility at
Unanderra, near Wollongong, is a highly automated and
efficient operation providing a relatively low-cost base, allowing
it to compete with a variety of imported products. During
the twelve months ended 30 June 2022 Bisalloy utilised
greenfeed steel supply mainly from neighbouring BlueScope
Steel in Wollongong, complimented with selected supply from
international greenfeed suppliers, including the CJV.
Financial review
Operating results
The Group’s net profit for the year after income tax was
$15,403,000 (2021: $8,954,000).
The profit increase was primarily driven by an increase in
domestic Australian margins along with increased margins in
Indonesia and Thailand. Export sales from Australia were higher
in FY22, as were domestic sales in China. Overhead savings
relative to the previous year were also achieved.
Operating results are summarised as follows:
Operating Segments
Australia
Overseas
Consolidated entity adjustments
Consolidated entity revenue and profit after tax for the year
Shareholder returns
The Board has decided to pay a final dividend of 9.0 cents per share for the year ended 30 June 2022.
2022
Revenue
$’000
Profit
after tax
$’000
102,386
19,769
122,155
(4,328)
117,827
13,201
3,054
16,255
(852)
15,403
2022 Financial Report Bisalloy Steel Group Limited | 5
Directors’ Report (continued)For the year ended 30 June 2022 Basic earnings / (loss) per share (cents)
Net profit / (loss) attributable to members ($’000)
Return on equity (reported PAT/equity) (%)
Gearing (net debt / net debt + equity) (%)
Dividends paid (cents)
Dividends proposed (cents)
Dividend franking
Liquidity and capital resources
The Group has predominately funded the cash paid in dividends
from Operating Activities, whilst delivering slightly lower gearing
compared to 2021.
The consolidated statement of cash flows details a decrease
in cash and cash equivalents before exchange rate differences
for the year ended 30 June 2022 of $564,000 (2021: increase
of $1,845,000).
Operating activities resulted in a net cash inflow of $4,285,000
(2021: inflow of $10,849,000) partially offset by an increase in
working capital.
Investing activities resulting in a net cash outflow of $341,000
(2021: inflow of $155,000). This included cash outflows of
$842,000 (2021: $1,252,000) for investment in operating plant
and equipment and dividends received of $620,000 (2021:
$1,751,000).
Financing activities resulted in a net cash outflow of $4,508,000
(2021: outflow of $9,159,000), including an increase of $727,000
in borrowings (2021: decrease in borrowings of $6,928,000)
and the dividend paid in cash to shareholders in November
2021 and April 2022 totalling $4,630,000 (2021: $1,703,000).
Funding
The Group’s net debt increased to $8.6m at 30 June 2022, up
from $7.4m at 30 June 2021, with a decrease in gearing to 12%,
down from 13% at the end of last year.
Bisalloy Steel Group Limited and Bisalloy Steels Pty Limited
have the following facilities in place with Westpac Banking
Corporation: a trade finance facility of $9 million, an invoice
finance facility of $12 million, a two-year bank bill business
facility of $6 million and a premium finance facility of
$0.49 millon. The total limit of these facilities is $27.4 million.
The Group has IDR 44.5b revolver facilities as well as a USD
$0.5m Letter of Credit facility available to its Indonesian
based subsidiary.
Business strategy and outlook
Strategy
Domestic Australian Sales and Margins
The last twelve months have been characterised by global and
domestic steel prices at or near record levels with continued
strong Australian demand for quench and tempered steel
plate. Combined with proactive pricing and procurement
6 | Bisalloy Steel Group Limited 2022 Financial Report
2022
32.2
14,991
24.0%
12%
13.5c
9.0c
100%
2021
19.3c
8,810
2020
14.9c
6,736
18.5%
16.0%
13%
5.0c
9.0c
27%
4.0c
5.0c
2019
8.3c
3,682
12.6%
21%
4.0c
4.0c
2018
8.2c
3,636
12.6%
16%
2.5c
4.0c
2017
3.4c
1,509
6.6%
15%
2.5c
2.5c
100%
100%
100%
100%
100%
decisions, this has resulted in much higher product margins
for Bisalloy across FY22 relative to FY21. As expected, product
margins declined in H2 relative to H1 as higher greenfeed costs
flowed through.
Co-Operative Joint Venture (CJV) in China
Despite impacts from Covid-19 lock-downs and tightening
market conditions, we continue to see solid performance from
the CJV, in particular a 23.1% increase in Bisplate sales tonnes
compared to FY2021. Unfortunately, these gains in sales have
been offset by higher administration and operating costs along
with lower gross margins, resulting in a relatively flat contribution
to earnings.
Overseas Distribution
The Group’s overseas distribution operations in Indonesia and
Thailand continue to be profitable.
Armour
Our Armour business continues to be of importance both
domestically and internationally. We continue to develop and
support an alternate supply of specialised greenfeed from
targeted partner mills overseas.
Covid-19
Our focus like many other businesses has continued to evolve
with the changing impacts from the COVID-19 pandemic.
We are pleased to report that our NSW based operation
has maintained our ability to produce on schedule from the
Unanderra plant, maintaining our superior delivery performance
metrics. Our employees have been exceptionally cooperative
and adaptable to the additional measures we’ve taken to
maintain our business continuity through these community
health events.
While Covid-19 has not had a material impact on demand
in Australia, during H2 FY22 we have noted impacts across
customers and supply chain as a result of staff absences. We
expect this disruption to normalise over the coming months as
Australia passes the peak of the third wave.
FY23 Outlook
Throughout the recent macroeconomic and geopolitical
volatility, Bisalloy has continued to demonstrate strength
and resilience in its business performance. With this volatility
ongoing, we are anticipating normalisation of product margins
as a result of expected reductions in international steel prices,
along with the impact of higher energy and transportation
Directors’ Report (continued)For the year ended 30 June 2022 costs. We also cannot discount the impact of future disruptions
caused by COVID-19 and ongoing supply chain disruptions,
particularly sea freight. Therefore, Bisalloy is projecting a
reduction in profits in FY23 compared to FY22.
Business risk management
The Group takes a proactive approach to risk management.
The Board is responsible for ensuring that risks, and also
opportunities, are identified on a timely basis and that the
Group’s objectives and activities are aligned with the risks and
opportunities identified by the Board.
The Board has established an Audit and Risk Committee
comprising non-executive Directors, whose meetings are also
attended by the executive Director. In addition, sub-committees
are convened as appropriate in response to issues and
risks identified by the Board, and the sub-committee further
examines the issue and reports back to the Board.
The Board has a number of mechanisms in place to ensure that
management’s objectives and activities are aligned with the
risks identified by the Board. These include the following:
• Board approval of a strategic plan, which encompasses the
Group’s vision, mission and strategy statements, designed
to meet stakeholders’ needs and manage business risk.
•
Implementation of Board approved operating plans and
budgets and Board monitoring of progress against these
budgets, including the establishment and monitoring of KPIs
of both a financial and non-financial nature.
• Establishment of committees to report on specific business
risks, including for example, such matters as environmental
issues and concerns and occupational health and safety.
• Board review of financial risks such as the Group’s liquidity,
currency, interest rate and credit policies and exposures
and monitors management’s actions to ensure they are in
line with Group policy.
The major high level business risks with the greatest potential
to materially impact on the financial outlook for the Group are
continued upward pressure on energy prices and ongoing
disruption on the east to west coast domestic sea-freight route.
Both electricity, and natural gas in particular, are integral inputs
into the Group’s manufacturing process, and affordable energy
resources are critical if the Group is to maintain its competitive
advantage. With our operations on the east coast, we are
reliant on regular and affordable shipping to the West Australian
market to meet demand. Alternative transportation options
would have a material impact on the financial outlook in the near
term. Furthermore, supply constraints, market dysfunction and
higher gas prices may impact many sectors of the economy
including the mining and agricultural sectors on the demand
side and the Group’s ability to source competitively priced raw
material on the supply side. Bisalloy Australia currently has
retail contracts in place for electricity supply through to the
end of December 2022 and gas supply through to the end of
December 2022.
Significant changes in the state of affairs
Total equity increased from $48,414,000 to $64,286,000 an
increase of $15,872,000 that was driven by the increase in
net profit for the year offset by FY22 interim and FY21 final
dividends totalling $6,251,000 which were paid to shareholders
in November 2021 and April 2022.
Significant events after the balance date
There have been no significant events after the balance date.
Indemnification and insurance of directors
and officers
The Group must, subject to certain exceptions set out in the
constitution, indemnify each of its officers on a full indemnity
basis and to the full extent permitted by law against all losses,
liabilities, costs, charges and expenses incurred by the officer,
as an officer of the Group (including all liabilities incurred where
the officer acts as an officer of any other body corporate at the
request of the Group) including any liability for negligence and
for reasonable legal costs.
During the year or since the end of the year, the Group has
paid premiums in respect of a Directors and officers liability
insurance policy. Details of the nature of the liabilities covered
or the amount of the premium paid in respect of the policy have
not been disclosed, as such disclosure is prohibited under the
terms of the contract.
Environmental regulation
The Group’s activities are governed by a range of environmental
legislation and regulations. The Group utilises both internal and
external environmental assessments to verify its compliance
with applicable environmental legislation and regulations.
The Group is registered under National Greenhouse and Energy
Reporting Act 2007 under which it is required to report energy
consumption and greenhouse gas emissions for its Australian
facilities. The Group has implemented systems and processes
for the collection and calculation of the data to meet its
reporting requirements.
The Board believes that the consolidated entity has
adequate systems in place for the management of its
environmental requirements and is not aware of any breach
of those environmental requirements as they apply to the
consolidated entity.
Rounding
The amounts contained in this report and in the financial report
have been rounded to the nearest $1,000 (where rounding is
applicable) under the option available to the company under
ASIC Corporations Instrument 2016/191. The company is an
entity to which the Class Order applies.
Auditor independence
The Directors received the declaration on page 17 from the
auditor of Bisalloy Steel Group Limited which forms part of
this report.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to
indemnify its auditors, KPMG, as part of the terms of its audit
2022 Financial Report Bisalloy Steel Group Limited | 7
Directors’ Report (continued)For the year ended 30 June 2022 engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been
made to indemnify KPMG during or since the financial year.
Non-audit services
During the year the Company’s auditor, KPMG, has performed certain other services in addition to the audit and review of the
financial statements. The board has considered the non-audit services during the year by the auditor and is satisfied that the provision
of those non-audit services is compatible with, and did not compromise, the auditor independence requirements of the Corporations
Act 2001.
Details of the amounts paid to the Company’s auditor for audit and non-audit services provided during the year are set out below.
In dollars
Tax compliance engagement
Audit and review of financial statements
Total paid to KPMG
2022
12,000
207,000
219,000
Likely developments and expected results
In FY23 Bisalloy is continuing with its growth strategy of focusing on the premium grades of QT steels from its Unanderra plant,
including armour and defence grades while developing the volume growth of other products including those sourced from Bisalloy’s
CJV operation.
This strategy and focus has resulted in market share gains in the second half of FY22 with good momentum going into FY23. Despite
this, Bisalloy is forecasting profitability to be down in FY23 due to increased headwinds compared to FY22 as highlighted earlier in
this document.
Directors’ meetings
The number of Directors meetings and number of meetings attended by each of the Directors of the Company during the financial
year are:
Number of Meetings Held
Number of Meetings Attended
D Balkin
G Cooper
I Greenyer
M Gundy
R Melrose
B Landy
Committee Meetings
Directors’
Meetings
Audit
and Risk
Nominations and
Remuneration
12
12
5
12
12
5
5
3
3
1
3
3
2
2
7
7
3
7
7
3
3
Remuneration report (audited)
This remuneration report for the year ended 30 June 2022 outlines the remuneration arrangements of the Company and the Group
in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as
required by section 308(3C) of the Act
The remuneration report details the remuneration arrangements for key management personnel (KMP) who 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 six executives in
the Group receiving the highest remuneration.
Remuneration policy
The remuneration policy is set in recognition that the performance of the Group depends upon the quality of its Directors and
executives. In order to perform, the Group must be successful in attracting, motivating and retaining Directors and executives of the
highest quality.
8 | Bisalloy Steel Group Limited 2022 Financial Report
Directors’ Report (continued)For the year ended 30 June 2022 To assist in achieving this objective, the remuneration policy
embodies the following principles:
1. Provide competitive remuneration to attract high calibre
Directors and executives.
2. Align executive rewards with creation of shareholder value.
3. Ensure a significant component of executive remuneration
is ‘at risk’ dependent upon meeting pre-determined
performance hurdles.
4. Establish appropriately demanding performance hurdles in
relation to variable executive remuneration.
5. Provide the opportunity for non-executive Directors to
sacrifice a portion of their fees to acquire shares in the
Company at market price.
Nominations and remuneration committee
The Nominations and Remuneration Committee is responsible
for determining and reviewing compensation arrangements
for the Directors, the Managing Director and other senior
executives, and the review and recommendation of general
remuneration principles.
shares up to the equivalent value. The value of the allocated
shares is determined by reference to the market value on the
day they are acquired on market.
The remuneration of non-executive Directors for the period
ended 30 June 2022 is detailed in the table on page 12 of
this report.
Executive director and executive manager remuneration
Objective
The Group aims to reward executives with a level and
mix of remuneration commensurate with their duties and
responsibilities within the Group and to:
•
•
reward executives for Group, business unit and individual
performance measured against targets set by reference to
appropriate benchmarks;
link reward with the achievement of the Group’s
strategic goals;
• align the interests of executives with those of
shareholders; and
• ensure total remuneration is competitive.
Remuneration structure
Structure
The structure of non-executive Director and executive
remuneration is separate and distinct, in accordance with good
corporate governance principles.
Non-executive director remuneration
Objective
The Board sets aggregate remuneration at a level which is
intended to provide the Company with the ability to attract and
retain non-executive Directors of the highest calibre, whilst
incurring a cost which is acceptable to shareholders.
Structure
The Company’s constitution and the ASX listing rules specify
that the non-executive Director fee pool shall be determined
from time to time by a general meeting. The non-executive
Director fee pool is currently set at $500,0001.
The remuneration of non-executive Directors must not include a
commission on, or a percentage of, profits or operating revenue
but non-executive Directors are entitled to be reimbursed
for travelling and other expenses incurred in attending to the
Company’s affairs.
Each non-executive Director receives a fee for being a
non-executive Director of the Company and an additional
fee for each Board Committee on which a non-executive
Director sits. The payment of additional fees for serving on
a committee recognises the additional time commitment
required by non-executive Directors who serve on one or more
sub committees.
Non-executive Directors are encouraged by the Board to hold
shares in the Company and are able to participate in the Non-
executive Director (“NED”) Share Plan. Under the NED Share
Plan a non-executive Director can choose to sacrifice up to
100% of their annual Director’s fee and instead be allocated
Executive Director and executive manager remuneration
consists of the following key components:
1. Fixed Remuneration
2. Variable Remuneration made up of:
– Short Term Incentive (STI); and
– Long Term Incentive (LTI)
The proportion of total remuneration that is fixed or variable
(either short term or long term incentives) is determined
for each individual executive by the Nominations and
Remuneration Committee.
The remuneration of members of management who have
the authority and responsibility for planning, directing and
controlling the activities of the Group for the year ended
30 June 2022 is detailed in the table on page 12 of this report.
Fixed remuneration
Objective
The level of fixed remuneration is set so as to provide a base
level of remuneration which is both commensurate with the
individual’s duties and responsibilities within the Group and
competitive in the market.
Fixed remuneration is reviewed annually by the Nominations
and Remuneration Committee utilising a process of reviewing
group-wide, business unit and individual performance, relevant
comparative remuneration in the market and internal and
external advice on policies and practice.
Structure
Executive Directors and executive managers are provided with
the opportunity to receive their fixed remuneration in a variety of
forms, including cash, additional superannuation contributions
1 The Directors fee pool was incorrectly stated as $383,250 in the 2021 Financial Report.
2022 Financial Report Bisalloy Steel Group Limited | 9
Directors’ Report (continued)For the year ended 30 June 2022 and fringe benefits such as motor vehicles. The aim is to provide
payments in a form that is both optimal for the recipient and
cost efficient for the Group.
The fixed remuneration component of executive Directors
and members of management who have the authority and
responsibility for planning, directing and controlling the activities
of the Group for the year ended 30 June 2022 is detailed in the
table on page 12 of this report.
Variable remuneration – short term incentives (STI)
Objective
The STI program has been designed to align the remuneration
received by executive Directors and executive managers with
the achievement of the Group’s operational and financial
targets. The total potential STI available for payment is
determined so as to provide sufficient incentive to executive
Directors and executive managers to achieve the targets and so
that the cost to the Group is reasonable in the circumstances.
Structure
The actual STI payments granted to each executive Director and
executive manager depends upon the extent to which specific
operational and financial targets set at the beginning of the
financial year are met. The targets consist of a number of both
financial and non-financial Key Performance Indicators (KPIs).
After the end of each financial year, consideration is given to
performance against each of these KPIs to determine the extent
of any payment to an individual executive Director or executive
manager. The aggregate of STI payments and STI payments
to individuals is subject to the approval of the Nominations and
Remuneration Committee. The individual needs to be employed
at the time of payment to be eligible for the payment.
Payments made are normally paid as cash but the recipient is
also able to elect to receive payment in alternative forms.
Variable remuneration – long term incentives (LTI)
Objective
Structure
At the 2019 Annual General Meeting, the LTI plan was renewed
for LTI grants to executives in the form of share rights.
For grants prior to 2022, these rights are granted in two equal
parts. The first part is based on retention and requires the
holder remain an employee for three years from grant date.
The second part is based on delivering superior long-term
performance as measured by Return on Equity (“ROE”), with
each grant of rights divided into three equal tranches. For each
tranche, actual ROE is measured against a budget ROE and
a stretch ROE as determined annually by the Board in respect
of the forthcoming year. The proportion of the rights which
vest depend on where within this range the Group performs,
with 100% vesting on achieving the stretch ROE and no rights
vesting if actual ROE is less than 90% of the budgeted ROE. For
the 2022 year, the stretch ROE was set at 115% of the budget
ROE. Any rights to which the employee may become entitled on
achieving the performance criteria, are still subject to the three
year retention criteria before they can vest.
For grants in 2022, these rights are granted based on delivering
superior long-term performance as measured by Return on
Invested Capital (“ROIC”) over a three year performance period,
determined by the Board in respect of each forthcoming three
year period. The rights which vest depend on achieving this
target ROIC, with 100% vesting on achieving the ROIC and no
rights vesting if actual ROIC is less than the target ROIC. Any
rights to which the employee may become entitled on achieving
the performance criteria, are still subject to being employed by
Bisalloy for the whole performance period.
Any share rights which do not vest, as a result of the relevant
performance condition not being satisfied, lapse. If the holder
leaves the business, the unvested rights lapse on the leaving
date unless the Board determines otherwise. In the event of a
change in control of the Group, the vesting date will generally
be brought forward to the date of change of control and share
rights will vest subject to performance over this shortened
period, subject to ultimate Board discretion.
The LTI program has been designed to align the remuneration
received by executive Directors and executive managers with
the creation of shareholder wealth.
Once vested a holder may exercise their share rights and be
allocated a fully paid ordinary share of Bisalloy at no cost to the
employee or the equivalent in cash at the Board’s discretion.
Consequently, LTI grants are only made to executives who are
in a position to influence shareholder wealth and thus have the
opportunity to influence the company’s performance against the
relevant long term performance hurdles.
A total of 217,905 share rights (2021: 1,050,000) were granted
under this scheme during the year.
Group performance
The Board has determined that 100% of the performance components of the 2022 share rights have vested based on an ROE
achieved that was above stretch ROE.
For further detail of historical performance, refer to the following table.
Return on equity (reported PAT/equity) (%)
2022
24.0%
2021
18.5%
2020
16.0%
2019
12.6%
2018
12.6%
2017
6.6%
10 | Bisalloy Steel Group Limited 2022 Financial Report
Directors’ Report (continued)For the year ended 30 June 2022 Details of key management personnel of the company
and group
C Bowdler – Chief Financial Officer and Company Secretary
(from 29 November 2021)
(i) Directors
D Balkin
Non-executive Chairman (from
27 November 2020)
I Greenyer
Non-executive Director (from
27 November 2020)
M Gundy
Non-executive Director (from
27 November 2020)
• Regular employment contract without fixed term
• Participation in STI and LTI schemes
• 3 months notice required for termination of employment
M Enbom – Chief Operating Officer (from November 2019)
• Regular employment contract without fixed term
• Participation in STI and LTI schemes
R Melrose
Managing Director and Chief Executive
Officer (from 1 March 2022)
B Landy
Non-executive Director (from 1 March 2022)
• 3 months notice required for termination of employment
G Cooper – Managing Director and Chief Executive Officer
(from 6 July 2020 until 16 December 2021)
G Cooper
Managing Director and Chief Executive
Officer (from 6 July 2020 until
16 December 2021)
• Regular employment contract without fixed term
• Participation in STI and LTI schemes
(ii) Executives
M Enbom
Chief Operating Officer (from
November 2019)
L Beale – Chief Financial Officer and Company Secretary (until
12 October 2022)
• 6 months notice required for termination of employment
• Regular employment contract without fixed term
• Participation in STI and LTI schemes
• 3 months notice required for termination of employment
A Egan – Bisalloy Australia Sales and Marketing Manager (until
31 January 2022)
• Regular employment contract without fixed term
• Participation in STI and LTI schemes
• 1 month notice required for termination of employment
C Bowdler
Chief Financial Officer and Company
Secretary (from 29 November 2021)
L Beale
A Egan
Chief Financial Officer and Company
Secretary (until 12 October 2022)
Bisalloy Australia Sales and Marketing
Manager (until 31 January 2022)
Executive contracts
Remuneration arrangements for the key management personnel
are formalised in employment contracts.
Details of these contracts are provided below.
R Melrose – Managing Director and Chief Executive Officer
(from 1 March 2022)
• Regular employment contract without fixed term
• Participation in STI and LTI schemes
• 6 months notice required for termination of employment
2022 Financial Report Bisalloy Steel Group Limited | 11
Directors’ Report (continued)For the year ended 30 June 2022 %
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3
12 | Bisalloy Steel Group Limited 2022 Financial Report
Directors’ Report (continued)For the year ended 30 June 2022
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4
2022 Financial Report Bisalloy Steel Group Limited | 13
Directors’ Report (continued)For the year ended 30 June 2022
Share rights
Share rights holders do not have any entitlement, by virtue of the rights, to participate in any share issue of the Company or any
related body corporate or in the interest issue of any other registered scheme.
Performance rights holdings of key management personnel of the company and group
Executives
G Cooper1
L Beale2
A Egan3
M Enbom
C Bowdler
R Melrose
Balance at
1 July 2021
Granted
during the
year
Rights
exercised
during the
year
Forfeited or
Lapsed
Balance at
30 June
2022
Vested and
exercisable
Unvested
942,560
110,357
188,512
–
–
–
–
(942,560)
(110,357)
–
–
(188,512)
–
–
–
390,819
102,697
(155,179)
–
–
62,466
52,742
–
–
–
–
–
338,337
62,466
52,742
1,632,248
217,905
(265,536)
(1,131,072)
453,545
–
–
–
–
–
–
–
–
–
–
338,337
62,466
52,742
453,545
1. Mr Cooper’s unvested rights were forfeited upon his final day of employment on 16 December 2021.
2. Mr Beale resigned on 21 July 2021 and his final day of employment was 12 October 2021. Mr Beale was issued 110,357 shares on 25 August 2021.
3. Mr Egan’s unvested rights were forfeited upon his final day of employment on 31 January 2022.
14 | Bisalloy Steel Group Limited 2022 Financial Report
Directors’ Report (continued)For the year ended 30 June 2022
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a
2022 Financial Report Bisalloy Steel Group Limited | 15
Directors’ Report (continued)For the year ended 30 June 2022
Shareholdings of key management personnel
Shareholdings include shares held personally and through related parties.
Directors
D Balkin
I Greenyer
M Gundy
G Cooper1
B Landy2
R Melrose2
Executives
L Beale3
M Enbom
A Egan4
C Bowdler5
Balance at
30-Jun-21
Performance
Rights
Exercised
Other
Balance at
30-Jun-22
7,781,095
100,000
500
5,813
–
115,000
–
–
–
–
–
–
–
–
–
77,589
–
–
–
–
63,657
(5,813)
2,500
–
(115,000)
–
–
–
7,781,095
100,000
64,157
–
2,500
–
–
77,589
–
–
8,002,408
77,589
(54,656)
8,025,341
1. Mr Cooper resigned on 21 September 2021 and his final day of employment was 16 December 2021
2. Mr Landy and Mr Melrose were appointed on 1 March 2022
3. Mr Beale resigned on 21 July 2021 and his final day of employment was 12 October 2021.
4. Mr Egan resigned on 31 December 2021 and his final day of employment was 31 January 2022
5. Mr Bowdler was appointed on 28 November 2021
Audit
The information contained in the Remuneration Report has been audited.
Signed in accordance with a resolution of the Directors.
The Directors have received the Auditors independence declaration which is included on page 17.
Rowan Melrose
CEO and Managing Director
25 August 2022
16 | Bisalloy Steel Group Limited 2022 Financial Report
Directors’ Report (continued)For the year ended 30 June 2022
2022 Financial Report Bisalloy Steel Group Limited | 17
Auditor’s Independence DeclarationFor the year ended 30 June 2022 In thousands of dollars
Continuing operations
Revenue from contracts with customers
Cost of goods sold
Gross profit
Other income / (expenses)
Distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Gain on sale of fixed assets
Operating profit
Finance costs
Finance income
Share of profit of joint venture, net of tax
Profit before income tax
Income tax expense
Profit after income tax
Attributable to:
Non-controlling interest
Owners of the parent
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Fair value revaluation of land and buildings
Foreign currency translation
Actuarial gains
Income tax effect on items in other comprehensive income
Other comprehensive income for the period, net of tax
Total comprehensive income for the period, net of tax
Attributable to:
Non-controlling interest
Owners of the parent
Consolidated
Notes
Year Ended
30 June 2022
Year Ended
30 June 2021
2
4(a)
4(b)
4(b)
5
6(a)
22(d)
117,827
(86,754)
31,073
127
(2,238)
(2,513)
(765)
(6,121)
1
19,564
(693)
11
2,300
21,182
(5,779)
15,403
412
14,991
15,403
6,366
831
51
(1,905)
5,343
20,746
653
20,093
20,746
104,827
(81,476)
23,351
33
(2,323)
(2,818)
(730)
(6,215)
–
11,298
(1,107)
6
2,355
12,552
(3,598)
8,954
144
8,810
8,954
–
(1,410)
13
92
(1,305)
7,649
(236)
7,885
7,649
Earnings per share for profit attributable to ordinary equity holders of
the parent
– Basic earnings per share (cents)
– Diluted earnings per share (cents)
7
7
32.2
31.6
19.3
18.5
18 | Bisalloy Steel Group Limited 2022 Financial Report
Consolidated Statement of Profit or Loss and other Comprehensive IncomeFor the year ended 30 June 2022 In thousands of dollars
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Contract assets
Income tax receivable
Total current assets
Non-current assets
Investment in joint venture
Other non-current assets
Property, plant and equipment
Intangible assets
Income tax receivable
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Loans and borrowings
Income tax payable
Employee benefit liabilities
Lease liabilities
Contract liabilities
Derivative liabilities
Total current liabilities
Non-current liabilities
Loans and borrowings
Employee benefit liabilities
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Equity attributable to equity holders of the parent
Contributed equity
Accumulated profits
Other reserves
Parent interests
Non-controlling interests
TOTAL EQUITY
Consolidated
Notes
30 June 2022
30 June 2021*
Restated
9(a)
10
11
12
2.2
6(e)
5
12
13
14
6(e)
6(d)
17
18.2
6(e)
19
20
2.2
21
18.2
19
20
6(d)
22(a)
22(e)
22(f)
22(d)
1,834
26,240
39,847
1,505
138
–
2,347
23,532
27,936
1,488
135
78
69,564
55,516
9,299
125
26,738
634
157
69
37,022
106,586
20,888
7,526
2,729
1,790
317
386
95
6,601
122
21,204
514
297
51
28,789
84,305
17,837
9,731
1,708
2,172
262
395
33
33,731
32,138
2,932
1,194
387
4,056
8,569
42,300
64,286
14,507
33,907
11,950
60,364
3,922
64,286
–
1,438
386
1,929
3,753
35,891
48,414
12,886
25,116
6,955
44,957
3,457
48,414
*The Group had previously recorded the net position of premium finance. The gross figures are now reported. This increases Other current assets and Loans
and borrowings equally by $416k.
2022 Financial Report Bisalloy Steel Group Limited | 19
Consolidated Statement of Financial PositionAs at 30 June 2022 In thousands of dollars
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Borrowing costs
Income tax paid
Net cash received from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Payments for property, plant and equipment
Payments for intangible assets
Dividends received from investments
Net cash (used in) / received from investing activities
Cash flows from financing activities
Proceeds / (repayments) from borrowings
Dividends paid to non-controlling interests
Dividends paid to shareholders of the parent
Principal lease payments
Net cash used in financing activities
Net (decrease) / increase in cash held
Net foreign exchange differences
Cash at the beginning of the financial year
Cash at the end of the financial year
Consolidated
Notes
Year Ended
30 June 2022
Year Ended
30 June 2021*
Restated
124,098
(114,812)
11
(694)
(4,318)
4,285
1
(842)
(120)
620
(341)
727
(188)
(4,630)
(417)
(4,508)
(564)
51
2,347
1,834
106,910
(91,587)
6
(1,107)
(3,373)
10,849
–
(1,252)
(344)
1,751
155
(6,928)
(187)
(1,703)
(341)
(9,159)
1,845
(170)
672
2,347
9(b)
9(d)
9(a)
*The Group had previously recorded the net position of premium finance. The gross figures are now reported. This increases payments to suppliers and
employees by $51k and increases drawdown of borrowings by $51k.
20 | Bisalloy Steel Group Limited 2022 Financial Report
Consolidated Statement of Cash FlowsFor the year ended 30 June 2022 –
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2022 Financial Report Bisalloy Steel Group Limited | 21
Consolidated Statement of Changes in EquityFor the year ended 30 June 2022
1. Corporate information
The financial report of Bisalloy Steel Group Limited and its subsidiaries (“the Group”) for the year ended 30 June 2022 was authorised
for issue in accordance with a resolution of the directors on 25 August 2022.
Bisalloy Steel Group Limited is a for profit company limited by shares incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Stock Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
2. Revenue from contracts with customers
2.1 Disaggregated revenue information
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
In thousands of dollars
Performance obligation
Sales of steel plates
Shipping and handling
Total revenue from contracts with customers
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Total revenue from contracts with customers
In thousands of dollars
Performance obligation
Sales of steel plates
Shipping and handling
Total revenue from contracts with customers
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Total revenue from contracts with customers
2.2 Contract balances
In thousands of dollars
Trade receivables (refer to note 10)
Contract assets
Contract liabilities
For the year ended 30 June 2022
Australia
Overseas
Total
92,837
5,221
98,058
92,837
5,221
98,058
19,431
338
19,769
19,431
338
19,769
112,268
5,559
117,827
112,268
5,559
117,827
For the year ended 30 June 2021
Australia
Overseas
Total
82,499
4,408
86,907
82,499
4,408
86,907
17,580
340
17,920
17,580
340
17,920
100,079
4,748
104,827
100,079
4,748
104,827
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
25,898
22,705
138
(386)
135
(395)
Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days end of month.
Contract assets are initially recognised for revenue earned from shipping and handling services as receipt of consideration is
conditional on delivery of the steel plates. Upon delivery of the steel plates, the amounts recognised as contract assets are
reclassified to trade receivables.
22 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2022 2. Revenue from contracts with customers (continued)
2.2 Contract balances
Contract liabilities are recognised for shipping and handling services yet to be provided with respect to the steel plates invoiced and
for any settlement discounts expected to be obtained by customers.
2.3 Performance Obligations
The Group’s contracts with customers are for the sale of steel plates. In completing the sale of the steel plates, there are two
performance obligations identified, being the provision of steel plates and the provision of shipping and handling. The Group has
concluded that revenue from the provision of steel plates is recognised at the point in time when control of the asset is transferred to
the customer and revenue from the services of shipping and handling are recognised over time as the ser-vice is performed.
As at 30 June 2022, the unsatisfied performance obligations per each segment is presented below.
In thousands of dollars
Shipping and handling
Total Revenue from contracts with customers
The remaining performance obligations are expected to be recognised within the next 12 months.
3. Operating Segments
Overseas operations
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
386
386
395
395
The Overseas operations comprise of PT Bima Bisalloy and
Bisalloy (Thailand) Co Limited located in Indonesia and Thailand
respectively. These businesses distribute Bisalloy Q&T plate
as well as other steel plate products. The Overseas operations
also includes the co-operative joint venture Bisalloy Shangang
(Shandong) Steel Plate Co. Limited in the People’s Republic
of China for the marketing, sale and distribution of quench &
tempered steel plate.
Accounting policies and inter-segment transactions
The accounting policies used by the Group in reporting
segments internally are the same as those contained in
note 28 to the accounts and in the prior period except as
detailed below:
Inter-entity sales
Inter-entity sales are recognised based on an internally set
transfer price. This price is set monthly and aims to reflect what
the business operation could achieve if they sold their output to
external parties at arm’s length.
Identification of reportable segments
The Group has identified its operating segments based on the
internal reports that are reviewed and used by the executive
management team (the chief operating decision makers) in
assessing performance and in determining the allocation
of resources.
The operating segments are identified by management based
on country of origin. Discrete financial information about each
of these operating businesses is reported to the executive
management team on at least a monthly basis.
The reportable segments are based on aggregated
operating segments determined by the similarity of
economic characteristics.
Geographical areas
Australian operations
The Australian operations are comprised of Bisalloy Steels Pty
Limited and Bisalloy Steel Group Limited.
Bisalloy Steels Pty Limited manufactures and sells wear-grade
and high tensile plate through distributors and directly to original
equipment manufacturers in both Australia and Overseas.
Bisalloy Steels is located in Unanderra, near Wollongong, NSW.
Bisalloy Steel Group Limited is the corporate entity, also located
in Unanderra NSW, which incurs expenses such as head office
costs and interest. Corporate charges are allocated across the
Australian and Overseas segments.
2022 Financial Report Bisalloy Steel Group Limited | 23
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 3. Operating segments (continued)
Major customers
The group has a number of customers to which it provides products. There are two customers who account for 30% (2021: 32%)
and 14% (2021: 12%) of total external revenue. All these customers are in the Australian operating segment.
For the year ended 30 June 2022
Australia
Overseas
Total
98,058
4,328
102,386
19,769
–
19,769
13,201
3,054
117,827
4,328
122,155
(4,328)
117,827
16,255
11
693
2,230
2,300
5,799
11
186
335
2,300
390
18,844
108,989
89
6,183
1,445
34,594
–
507
1,895
–
5,409
90,145
1,356
28,411
For the year ended 30 June 2021
Australia
Overseas
Total
86,907
5,450
92,357
9,674
1
760
1,880
–
3,415
69,513
1,972
24,759
17,920
–
17,920
2,136
5
347
325
2,355
202
17,001
120
5,353
104,827
5,450
110,277
(5,450)
104,827
11,810
6
1,107
2,205
2,355
3,617
86,514
2,092
30,112
In thousands of dollars
Revenue:
Sales to external customers
Inter-segment sales
Total segment revenue
Inter-segment elimination
Total consolidated revenue
Segment net operating profit after tax
Interest income
Interest expense
Depreciation
Share of profit of joint venture
Income tax expense
Segment assets
Capital expenditure
Segment liabilities
In thousands of dollars
Revenue:
Sales to external customers
Inter-segment sales
Total segment revenue
Inter-segment elimination
Total consolidated revenue
Segment net operating profit after tax
Interest income
Interest expense
Depreciation
Share of profit of joint venture
Income tax expense
Segment assets
Capital expenditure
Segment liabilities
24 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 3. Operating segments (continued)
In thousands of dollars
i)
Segment revenue reconciliation to the statement of comprehensive income
Total segment revenue
Inter-segment sales elimination
Total revenue
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
122,155
(4,328)
110,277
(5,450)
117,827
104,827
Revenue from external customers by geographical location is detailed below. Revenue is attributed to geographic location based on
the location of the customers.
In thousands of dollars
Australia
Indonesia
Thailand
Other foreign countries
Total revenue
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
86,387
21,083
3,495
6,862
74,508
21,946
2,476
5,897
117,827
104,827
ii)
Segment net operating profit after tax reconciliation to the statement of comprehensive income
The executive management committee meets on a monthly basis to assess the performance of each segment by analysing the
segment’s net operating profit after tax.
In thousands of dollars
Reconciliation of segment net operating profit after tax to net profit before tax
Segment net operating profit after tax
Intercompany eliminations (net of tax)
Income tax expense
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
16,255
(852)
5,779
11,810
(2,856)
3,598
Total net profit before tax per the statement of profit or loss
21,182
12,552
2022 Financial Report Bisalloy Steel Group Limited | 25
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 3. Operating segments (continued)
iii) Segment assets reconciliation to the statement of financial position
In assessing the segment performance on a monthly basis, the executive management committee analyses the segment result as
described above and its relation to segment assets. Segment assets are those operating assets of the entity that the management
committee views as directly attributing to the performance of the segment. These assets include plant and equipment, receivables,
inventory and intangibles and exclude derivative assets, deferred tax assets, and pension assets.
In thousands of dollars
Reconciliation of segment operating assets to total assets
Segment operating assets
Inter-segment eliminations
Deferred tax assets
Income tax receivable
Derivative assets
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
108,989
(2,629)
69
157
–
86,514
(2,635)
51
375
–
Total assets per the statement of financial position
106,586
84,305
The analysis of the location of non-current assets other than financial instruments, deferred tax assets and pension assets is
as follows:
In thousands of dollars
Australia
Overseas
Total non-current assets
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
34,029
2,767
36,796
25,742
2,996
28,738
iv) Segment liabilities reconciliation to the statement of financial position
Segment liabilities include trade and other payables and debt. The Group has a centralised finance function that is responsible for
raising debt and capital for the Group operations. The executive management committee reviews the level of debt for each segment
in the monthly meetings.
In thousands of dollars
Reconciliation of segment operating liabilities to total liabilities
Segment operating liabilities
Inter-segment eliminations
Income tax payable
Employee benefit liabilities
Derivative Liability
Deferred tax liabilities
Total liabilities per the statement of financial position
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
34,594
(2,158)
2,729
2,984
95
4,056
42,300
30,112
(1,468)
1,708
3,610
–
1,929
35,891
26 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 4. Other income and expenses
In thousands of dollars
(a) Other (income) / expenses
Foreign exchange (gain) / loss
Other Income
(b) Finance (income) and costs
Bank interest and borrowing costs
Total finance costs
Bank interest
Total finance income
(c) Depreciation and costs of inventories included in statement of comprehensive income
Depreciation*
Cost of inventories
Provision for inventory
Cost of inventories recognised as an expense
(d) Employee benefits expense*
Wages and salaries
Superannuation costs
Expense of share-based payments
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
(114)
(13)
(127)
693
693
(11)
(11)
2,315
80,794
148
80,942
12,991
840
(154)
13,677
12
(45)
(33)
1,107
1,107
(6)
(6)
2,205
76,1551
(18)
76,137
12,677
1,090
271
14,038
*These costs are apportioned over several functions of the Group.
1. The cost of inventories reported in the 2021 Financial Report was $64,242k. This did not include all conversion costs. This has been updated.
Investment in a joint venture
5.
Interests in the joint venture are accounted for using the
equity method. They are initially recognised at cost, which
includes transaction costs. Subsequent to initial recognition,
the consolidated financial statements include the Group’s
share of the profit or loss and other comprehensive income of
equity-accounted investees, until the date on which significant
influence or joint control ceases.
The financial statements of the joint venture are prepared
on a December balance date, however, as the Group equity
accounts for this, the necessary adjustments are made to
align these to the Group’s reporting period. When necessary,
adjustments are made to bring the accounting policies in line
with those of the Group.
In July 2011, Bisalloy Steel Group Limited signed a Cooperative
Joint Venture Agreement with Ji’nan Iron & Steel Co., Limited
to establish Bisalloy Jigang Steel Plate (Shandong) Co., Limited
(‘the joint venture’) for the marketing, sale and distribution of
quench & tempered steel plate in the People’s Republic of
China and other international markets. The Group has joint
control under the terms of the Joint Venture Agreement.
Under the terms of the JV, Bisalloy initially contributed
US$1 million in capital and licenced its Q&T intellectual property
and brand name to the joint venture to produce quench &
tempered steel plate at Jinan’s production facility in Shandong
Province, PRC for an initial 33% ownership of the equity and a
50% share in the operating result of the joint venture.
In 2018 the JV changed its registered name to Bisalloy
Shangang (Shandong) Steel Plate Co., Limited.
In April 2020, due to the substantial growth in the CJV, both
parties in the joint venture increased their contribution to
registered capital, with Bisalloy’s contribution increasing from
US$1.0m to US$2.5m, representing a 41.67% ownership of
the equity and a 50% share in the operating result of the joint
venture. The increase was funded through distributable profits
from 2017 and 2018 calendar years that would have otherwise
been fully paid to Bisalloy as a dividend in November 2018 and
November 2019.
In June 2021, it was agreed that Bisalloy would increase their
contribution to registered capital to ensure both parties had
a 50% share in equity. Bisalloy’s contribution increased from
US$2.5m to US$3.5m, representing a 50% ownership of the
equity and a continuation of the 50% share in the operating
result of the joint venture. The increase was funded through
distributable profits from 2021 calendar year that would
have otherwise been fully paid to Bisalloy as a dividend in
November 2021.
2022 Financial Report Bisalloy Steel Group Limited | 27
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 5.
Investment in a joint venture (continued)
Dividends of $620,090 (2021:$1,751,417) were received from the JV during the year.
In thousands of dollars
Joint venture’s statement of financial position:
Current assets, including cash of $2,083,978 (2021: $2,650,978)
Non-current assets
Current liabilities
Equity
Joint ventures revenue and profit:
Revenue
Expenses
Finance (expense) / income
Profit before income tax
Income tax
Profit for the year
Group’s share of profit
Carrying amount of the investment
The joint venture has no capital commitments or contingent liabilities at 30 June 2022 (2021: None).
6. Income tax
In thousands of dollars
(a)
Income Tax Expense
The major components of income tax expense are:
Income Statement
Current income tax
Current income tax charge
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to origination and reversal of temporary differences
Adjustments in respect of current income tax of previous years
Income tax expense
The income tax expense for the period is disclosed as follows:
Income tax expense attributable to continuing operations
28 | Bisalloy Steel Group Limited 2022 Financial Report
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
30,674
21
(12,097)
18,598
102,847
(96,790)
(43)
6,014
(1,414)
4,600
2,300
9,299
25,411
33
(12,242)
13,202
81,421
(74,978)
(131)
6,312
(1,602)
4,710
2,355
6,601
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
5,555
–
5,555
224
–
224
3,404
15
3,419
124
55
179
5,779
3,598
5,779
5,779
3,598
3,598
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 6. Income tax (continued)
In thousands of dollars
(b) Amounts charged or credited directly to equity
Deferred income tax related to items charged or credited directly to equity
Actuarial losses and gains
Change in tax rates in foreign jurisdictions
Net gain on revaluation of land and buildings and derivative assets
Income tax expense reported in equity
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
(10)
–
(1,895)
(1,905)
(2)
94
–
92
(c) Numerical reconciliation between aggregate tax expense recognised in the income statement and tax expense calculated per
the statutory income tax rate
In thousands of dollars
Accounting profit before tax
At the Group's statutory income tax rate of 30% (2021: 30%)
Income assessable for tax purposes
Expenditure not allowable for tax purposes
De-recognition of foreign income tax credits
Foreign tax credits allowed
Share of profit of equity-accounted investees reported net of tax
Effect of tax rates in foreign jurisdictions
Adjustments in respect of current income tax of previous years
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
21,182
6,355
225
13
137
(118)
(690)
(143)
–
12,552
3,765
76
204
313
(71)
(707)
(52)
70
Income tax expense on pre-tax net profit
5,779
3,598
2022 Financial Report Bisalloy Steel Group Limited | 29
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 6.
Income tax (continued)
In thousands of dollars
(d) Deferred tax assets (DTA) and liabilities (DTL)
The balance comprises of temporary differences attributable to:
Property, plant and equipment
Employee entitlement provisions
Other provisions and accruals
Inventory
Other
Derivatives
Deferred tax assets and liabilities reflected in the
balance sheet
Movements
Opening balance at 1 July
Charged / (credited) to profit or loss
Charged / (credited) to other comprehensive income
Closing balance at 30 June
Consolidated
Net DTA
Net DTL
Year Ended
30 June 2022
Year Ended
30 June 2021
Year Ended
30 June 2022
Year Ended
30 June 2021
–
45
24
–
–
–
69
51
18
–
69
–
42
9
–
–
–
51
62
(11)
–
51
(5,365)
(3,254)
728
407
262
(116)
28
833
394
240
(142)
–
(4,056)
(1,929)
(1,929)
(222)
(1,905)
(4,056)
(1,855)
(167)
93
(1,929)
Of the DTA and DTL’s recognised for the Group the following amounts are attributed to the Thailand and Indonesian tax jurisdiction at
30 June 2022, the balance relates to the Australian tax jurisdiction:
In thousands of dollars
The balance comprises of temporary differences attributable to:
Property, plant and equipment
Employee entitlement provisions
Other provisions and accruals
Deferred tax assets and liabilities reflected in the balance sheet
Net DTA / (DTL)
Thailand
2022
Indonesia
2022
–
45
24
69
(404)
112
92
(200)
(e) Current income tax at 30 June 2022 relates to the following:
The current tax payable for the Group of $2,730,004 (2021: $1,707,824) represents the amount of income tax payable in respect of
the current and prior periods. The current tax payable of the Group is made up of $2,589,059 payable in the Australian jurisdiction,
$50,393 in the Indonesian tax jurisdiction and $90,552 in the Thailand tax jurisdiction.
The current tax receivable of $0 (2021: $78,255) and the non-current tax receivable of $157,488 (2021: $296,780) for the Group
represents the amount of income tax receivable in respect of the current and prior periods. The amount of tax receivable is entirely
attributed to the Indonesian tax jurisdiction.
The Group liability includes both the income tax payable by all members of the tax consolidated group and those members outside
the tax consolidated group and outside the Australian tax jurisdiction.
(f) Unrecognised temporary differences
At 30 June 2022, 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 (2021: Nil).
30 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 6.
Income tax (continued)
(g) Tax consolidation
(i) Members of the tax consolidation group and the tax sharing arrangement
Effective 1 July 2003, for the purposes of income taxation, the Company and its 100% owned Australian subsidiaries formed a tax
consolidated group. Members of the group have entered into a tax sharing arrangement. This arrangement provides for the allocation
of income tax liabilities between the entities should the head entity default on its tax payment obligations. At the balance date, the
possibility of a default is remote. The head entity of the group is Bisalloy Steel Group Limited.
(ii)
Tax effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The allocation of taxes under the tax funding
agreement is recognised under the separate tax payer within a group approach. Allocations under the tax funding agreement are
made on a semi-annual basis.
The amount that is allocated under the tax funding agreement is done so in accordance with a method permitted by Urgent Issues
Group Interpretation 1052 and is recognised by way of an increase or decrease in the subsidiaries intercompany accounts.
7. Earnings per share (EPS)
In thousands of dollars
The following reflects the income and share data used in the basic and diluted earnings per
share computations:
Net profit for the period
Net profit attributable to non-controlling interest holders
Net profit attributable to equity holders of the parent (used in calculating basic and
diluted EPS)
Weighted average number of ordinary shares for basic earnings per share
Effects of dilution:
Performance rights
Adjusted weighted average number of ordinary shares for diluted earnings per share
Weighted average number of lapsed or cancelled potential ordinary shares included in
diluted earnings per share
*This number was incorrectly presented in 30 June 2021 report.
8. Dividends paid or proposed
In thousands of dollars
(a) Dividends paid during the year
Interim
Final
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
15,403
(412)
8,954
(144)
14,991
8,810
Thousands
Thousands
46,546
45,720
913
47,459
1,894
47,614
597
838*
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
2,104
4,147
6,251
–
2,271
2,271
(b) Proposed dividend (not recognised as a liability as at 30 June)
Final dividend for 2022: 9.0 cents per share (2021: 9.0 cents per share)
4,238
4,137
2022 Financial Report Bisalloy Steel Group Limited | 31
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
8. Dividends paid or proposed (continued)
In thousands of dollars
(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 at 30%
Franking credits that will arise from the payment of tax as at the end of the financial year
Franking debits that will arise from the payment of dividends as at the end of the financial year
9.
Cash and cash equivalents
In thousands of dollars
(a) Reconciliation of cash
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
9,199
2,589
(1,816)
9,972
6,971
1,590
(1,773)
6,788
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
For the purpose of the cash flow statement, cash and cash equivalents comprise the following at 30 June:
Cash at bank
Cash at hand
Total
(b) Reconciliation of net profit after income tax to net cash provided by operations
Net profit after tax
Non-cash items
Depreciation and amortisation
Share-based payments expense
Provision for stock obsolescence
Provision for doubtful debts
Share of profit of a joint venture
Net fair value change on derivatives
Decrease / (increase) in foreign currency translation
Change in operating assets and liabilities
(Increase)/decrease in receivables and other assets
(Increase)/decrease in inventories
Increase/(decrease) in tax assets and liabilities
(Increase)/decrease in prepayments
Increase/(decrease) in trade creditors
(Decrease)/increase in employee benefit liabilities
Net cash from operating activities
(c) Disclosure of financing facilities
Refer note 18.2
(d) Reconciliation of movements of liabilities to cash flows arising from financing activities
Changes from financing cash flows
Proceeds from loans and borrowings
Repayment of borrowings
Net increase/(decrease) in borrowings
32 | Bisalloy Steel Group Limited 2022 Financial Report
1,833
1
1,834
2,345
2
2,347
15,403
8,954
2,315
(154)
148
78
2,205
271
(18)
(41)
(2,300)
(2,355)
61
314
(3,402)
(12,059)
1,463
(18)
2,965
(529)
4,285
41
(904)
(6,392)
10,309
225
(14)
(1,606)
225
10,900
5,817
(5,090)
727
1,558
(8,486)
(6,928)
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 10. Trade and other receivables
In thousands of dollars
Current
Trade receivables
Less: Allowance for expected credit losses
Other
Goods and services tax
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
26,210
(312)
25,898
269
73
342
22,939
(234)
22,705
827
–
827
26,240
23,532
Trade receivables are non-interest bearing and are generally on 30-90 day terms. Refer to note 18.3 for more information of the
allowance for expected credit losses.
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 has a credit insurance policy in place that covers 90% of the sales value to Australian and Indonesian eligible customers.
Fair value and credit risk
Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum
exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s policy to transfer (on-sell)
receivables to special purpose entities.
Foreign exchange and interest rate risk
Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 18.3.
11. Inventories
In thousands of dollars
Current
Raw materials
Finished goods
12. Other current assets
In thousands of dollars
Current
Prepayments
Non-current
Prepayments
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
614
39,233
39,847
2,007
25,929
27,936
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021*
Restated
1,505
1,505
125
125
1,488
1,488
122
122
*The Group had previously recorded the net position of premium finance. The gross figures are now reported. This increases Prepayments by $416k.
2022 Financial Report Bisalloy Steel Group Limited | 33
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 13. Property, plant and equipment
(a) Reconciliation of carrying amounts at the beginning and end of the period
Freehold land
and buildings
Leasehold
improvements
Plant and
equipment
Total
In thousands of dollars
Consolidated
Year ended 30 June 2022
At 1 July 2021, net of accumulated depreciation
and impairment
Additions
Disposals
Revaluation adjustment
Depreciation and amortisation charge for the year
Exchange adjustment
At 30 June 2022, net of accumulated depreciation
and impairment
At 1 July 2021
Cost or fair value
Accumulated depreciation and impairment
Net carrying value
At 30 June 2022
Cost or fair value
Accumulated depreciation and impairment
Net carrying value
In thousands of dollars
Consolidated
Year ended 30 June 2021
At 1 July 2019, net of accumulated depreciation
and impairment
Additions
Disposals
Revaluation adjustment
Depreciation and amortisation charge for the year
Exchange adjustment
At 30 June 2021, net of accumulated depreciation
and impairment
At 1 July 2020
Cost or fair value
Accumulated depreciation and impairment
Net carrying value
At 30 June 2021
Cost or fair value
Accumulated depreciation and impairment
Net carrying value
34 | Bisalloy Steel Group Limited 2022 Financial Report
Freehold land
and buildings
Leasehold
improvements
Plant and
equipment
13,898
261
–
6,366
(448)
136
20,213
14,915
(1,017)
13,898
20,562
(349)
20,213
–
–
–
–
–
–
–
34
(34)
–
34
(34)
–
14,454
112
–
–
(389)
(279)
13,898
15,081
(627)
14,454
14,915
(1,017)
13,898
–
–
–
–
–
–
–
34
934)
–
34
(34)
–
7,306
1,064
–
–
(1,867)
22
21,204
1,325
–
6,366
(2,315)
158
6,525
26,738
26,272
(18,966)
7,306
26,945
(20,420)
6,525
7,548
1,636
–
–
(1,816)
(62)
41,221
(20,017)
21,204
47,541
(20,803)
26,738
Total
22,002
1,748
–
–
(2,205)
(341)
7,306
21,204
24,853
(17,305)
7,548
26,272
(18,966)
7,306
39,968
(17,966)
22,002
41,221
(20,017)
21,204
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 13. Property, plant and equipment (continued)
(b) Revaluation of freehold land and freehold buildings
Freehold land and freehold buildings are required by the Group to be externally revalued every three years at minimum. In addition to
this, Indonesian freehold land and freehold buildings are required to be externally revalued every 12 months in order to meet lending
requirements stipulated by their finance provider.
Fair value is the amount for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable
willing seller in an arm’s length transaction as at the valuation date. Fair value is determined by direct reference to recent market
transactions on arm’s length terms for land and buildings comparable in size and location to those held by the Group, and to market
based yields for comparable properties.
In 2022, the Group engaged KJPP Jimmy Prasetyo & Rekan, accredited independent valuers to determine the fair value of its
Indonesian land and buildings. The effective date of the valuation was 30 June 2022 and fair value was determined as $2,347,391.
In 2022, the Group engaged Herron Todd White, accredited independent valuers to determine the fair value of its Australian land and
buildings respectively. The effective date of the valuation was 30 June 2022 and fair value was determined as $17,800,000.
There has been no change in the valuation technique in current or prior period.
(c) Carrying amounts if land and buildings were measured at cost less accumulated depreciation and impairment
If land and buildings were measured using the cost model the carrying amounts would be as follows:
In thousands of dollars
Cost
Accumulated depreciation and impairment
Net carrying amount
Consolidated
2022
Freehold land
and buildings
2021
Freehold land
and buildings
7,028
(2,524)
4,504
7,048
(2,249)
4,799
(d) Leased assets
‘Property, plant and equipment’ comprise of owned and leased assets that do not meet the definition of investment property.
In thousands of dollars
Property, plant and equipment owned
Right-of-use assets
Right-of-use assets in each category is shown below:
In thousands of dollars
Balance at 1 July 2021
Additions
Depreciation charge for the year
Exchange adjustment
Balance at 30 June 2022
Consolidated
Note
14(a)
2022
26,046
692
26,738
2021
20,577
627
21,204
Consolidated
Freehold land
and buildings
Leasehold
improvements
Plant and
equipment
182
42
(150)
(4)
70
–
–
–
–
–
445
473
(297)
–
622
Total
627
515
(447)
(3)
692
2022 Financial Report Bisalloy Steel Group Limited | 35
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 13. Property, plant and equipment (continued)
In thousands of dollars
Balance at 1 July 2020
Additions
Depreciation charge for the year
Exchange adjustment
Balance at 30 June 2021
14. Intangible Assets
In thousands of dollars
Cost
Accumulated depreciation and impairment
Net carrying amount
Consolidated
Freehold land
and buildings
Leasehold
improvements
Plant and
equipment
182
46
(118)
(26)
182
–
–
–
–
–
445
451
(210)
–
445
Consolidated
2022
634
–
634
Total
627
497
(328)
(26)
627
2021
514
–
514
The Group is currently investing in the further development
of their existing enterprise resource planning system. These
developments were completed in July 2022 and the new
system is currently scheduled to go-live in October 2022.
15. Share-based payment plans
Long Term Incentives (LTI) Plan
The LTI program has been designed to align the remuneration
received by executive directors and senior managers with the
creation of shareholder wealth.
Consequently LTI grants are only made to executives who are
in a position to influence shareholder wealth and thus have the
opportunity to influence the company’s performance against the
relevant long term performance hurdles.
Structure
At the 2019 Annual General Meeting, an LTI plan was renewed
for LTI grants to executives in the form of share rights.
For grants prior to 2022, those rights were granted in two
equal parts. The first part is based on retention and requires
the holder remain an employee for three years from grant date.
The second part is based on delivering superior long-term
performance as measured by Return on Equity (“ROE”), with
each grant of rights divided into three equal tranches. For each
tranche, actual ROE is measured against a budget ROE and
a stretch ROE as determined annually by the Board in respect
of the forthcoming year. The proportion of the rights which
vest depend on where within this range the Group performs,
with 100% vesting on achieving the stretch ROE and no rights
vesting if actual ROE is less than 90% of the budgeted ROE. For
the 2022 year the stretch ROE was set at 115% of the budget
ROE. Any rights to which the employee may become entitled on
achieving the performance criteria, are still subject to the three
year retention criteria before they can vest.
Any share rights which do not vest, as a result of the relevant
performance condition not being satisfied, lapse. If the holder
leaves the business, the unvested rights lapse on the leaving
date unless the Board determines otherwise. In the event of a
change in control of the Group, the vesting date will generally
be brought forward to the date of change of control and share
rights will vest subject to performance over this shortened
period, subject to ultimate Board discretion.
For grants in 2022, these rights are granted are based on
delivering superior long-term performance as measured
by Return on Invested Capital (“ROIC”) over a three year
performance period, determined by the Board in respect of
each forthcoming three year period. The rights which vest
depend on achieving this target ROIC, with 100% vesting on
achieving the ROIC and no rights vesting if actual ROIC is
less than the target ROIC. Any rights to which the employee
may become entitled on achieving the performance criteria,
are still subject to being employed by Bisalloy for the whole
performance period.
Once vested a holder may exercise their share rights and be
allocated a fully paid ordinary share of Bisalloy at no cost to the
employee or the equivalent in cash at the Board’s discretion.
During the 30 June 2022 financial year, 217,905 share rights
were awarded to executives under this scheme.
36 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 15. Share-based payment plans (continued)
The share rights have been valued by Mercer (Australia) Pty Ltd. A fair value expressed as a value per share right has been
determined as at the grant date for each grant of rights. The rights have been valued according to a discounted cash flow (DCF)
methodology. The share price at valuation date and a 3.9% dividend yield for Grant 15 and a 5.0% dividend yield for Grants 17, 18
and 19 (based on historic and future estimates at the time) formed the basis of the valuation. Refer to note 28(n) for further details on
the valuation methodology.
The following table lists the valuation outputs for outstanding grants as at 30 June 2022:
Grant 15
Grant 17
Grant 18
Grant 19
Expiry term of three years
Value of one right
Proportion of rights
that are outstanding
$0.82
$1.52
$1.43
$1.43
94.26%
100.00%
100.00%
100.00%
The fair value of the performance rights granted is brought to account as an expense in the profit and loss over the three year vesting
period. The following table shows the number of rights outstanding during the year and in the previous year. The expense recognised
in the statement of comprehensive income in relation to share based payments is disclosed in note 4(d).
2022 Financial Report Bisalloy Steel Group Limited | 37
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 l
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38 | Bisalloy Steel Group Limited 2022 Financial Report
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Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
17. Trade and other payables
In thousands of dollars
Current
Trade payables
Other payables and accruals
Goods and services tax
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
17,883
3,005
–
20,888
15,153
2,428
256
17,837
Trade payables are non-interest bearing and are normally settled on 30 day terms.
Other payables and accruals are non-interest bearing and have an average term of three months.
Fair value
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
Interest rate, foreign exchange and liquidity risk
Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 18.3.
18. Financial assets and financial liabilities
18.1 Financial assets
In thousands of dollars
Financial assets at amortised cost
Trade receivables (note 10)
Total financial assets
Total current
Total non-current
18.2 Financial liabilities
Interest-bearing loans and borrowings
In thousands of dollars
Current
Borrowings secured by fixed and floating charges
Non-current
Borrowings secured by fixed and floating charges
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
25,898
25,898
25,898
–
22,705
22,705
22,705
–
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021*
Restated
7,526
9,731
2,932
–
*The Group had previously recorded the net position of premium finance. The gross figures are now reported. This increases Loans and borrowings by $416k.
Fair values
Unless disclosed below, the carrying amount of the Group’s current and non-current borrowings approximate their fair value.
Interest rate, foreign exchange and liquidity risk
Details regarding interest rate, foreign exchange and liquidity risk is disclosed in note 18.3.
2022 Financial Report Bisalloy Steel Group Limited | 39
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
18. Financial assets and financial liabilities (continued)
18.2 Financial liabilities (continued)
Assets pledged as security
The fixed and floating charge covers all current and future assets of the Bisalloy Closed Group (note 24).
In thousands of dollars
At reporting date, the following financing facilities had been negotiated and were available:
Total facilities
–
invoice finance facility (incl. bank guarantees) (i)
– bank bill facility (i)
– rade finance facility (i)
– premium finance facility (i)
– Bisalloy Thailand facility (ii)
– PT Bima facility (iii)
Facilities used at reporting date
Current
–
invoice finance facility
– bank bill facility
–
trade finance facility
– premium finance facility
– PT Bima facility
Non–current
– bank bill facility
Total facilities used at reporting date
Facilities unused at reporting date
–
invoice finance facility (incl. bank guarantees)
– bank bill facility
–
trade finance facility
– premium finance facility
– Bisalloy Thailand facility
– PT Bima facility
Total facilities unused at reporting date
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021*
Restated
12,000
5,951
9,000
490
123
4,348
31,912
5,243
–
330
490
1,463
7,526
2,932
2,932
10,458
6,757
3,019
8,670
–
123
2,885
21,454
12,000
6,417
9,000
416
125
4,072
32,030
244
6,417
–
416
2,654
9,731
–
–
9,731
11,756
–
9,000
–
125
1,419
22,299
*The Group had previously recorded the net position of premium finance. The gross figures are now reported. This increases Loans and borrowings by $416k.
(i) Bisalloy Steel Group Limited’s facility with Westpac Banking Corporation is secured by a fixed and floating charge over all assets of the Closed Group. The
facility is subject to usual provisions such as negative covenants and various undertakings, including compliance with an equity ratio covenant, a leverage
ratio covenant and an interest coverage ratio. The bank bill facility has a two-year term, whilst the other facilities are ongoing. The drawn invoice finance
facility balance is limited to the value of the available collateral being eligible receivables and fluctuates daily. The facility is linked to a variable interest rate
plus a fixed margin. The average variable interest rate for the year is 2.84% (2021: 3.53%).
(ii) The bank overdraft facility available to its Thailand based subsidiary is secured by a guarantee from Bisalloy Steel Group Limited.
(iii) The revolver facility and Letter of Credit facility available to its Indonesian based subsidiary are secured by a charge over the assets of the Indonesian
subsidiary and mature on 30 September 2022.
40 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
18. Financial assets and financial liabilities (continued)
18.2 Financial liabilities (continued)
In thousands of dollars
Other financial liabilities at amortised cost, other than interest-bearing loans
and borrowings
Trade and other payables (note 17)
Total financial liabilities
Total current
Total non-current
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
20,888
20,888
20,888
–
17,837
17,837
17,837
–
18.3 Financial risk management
Credit risk
Overview
The Group has exposure to the following risks from their use of
financial instruments:
• Credit risk
• Liquidity risk
• Market risk
The Board is responsible for ensuring that risks, and also
opportunities, are identified on a timely basis and that the
Group’s objectives and activities are aligned with the risks and
opportunities identified by the Board.
The Board has established an Audit and Risk Committee
comprising non-executive directors, whose meetings are also
attended by the executive directors. In addition sub-committees
are convened as appropriate in response to issues and
risks identified by the Board, and the sub-committee further
examines the issue and reports back to the Board.
Credit risk is the risk of financial loss to the Group if a customer
fails to meet its contractual obligations, and arises principally
from the Group’s receivables from customers.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the
individual characteristics of each customer. The Group has a
narrow customer base and has the potential to be exposed to
credit risk on a specific customer.
A credit policy is in place, the objective of which is:
• To ensure all credit worthiness checks are carried out
prior to opening new credit accounts and appropriate
authorisations obtained;
• To ensure the approved credit limit is appropriate to the
inherent risk of trading with any particular customer;
• To ensure all orders are converted into cash within
trading terms;
The Board has a number of mechanisms in place to ensure that
management’s objectives and activities are aligned with the
risks identified by the Board. These include the following:
• To minimise late payments and any potential bad debts
through the constant application of sound commercial
debtor management on a continuing basis;
• Board approval of a strategic plan, which encompasses the
Group’s vision, mission and strategy statements, designed
to meet stakeholders’ needs and manage business risk.
Goods are sold subject to retention of title clauses that permit
the Group to reclaim stock from a customer up to the value of
monies owed in the event:
•
Implementation of Board approved operating plans and
budgets and Board monitoring of progress against these
budgets, including the establishment and monitoring of KPIs
of both a financial and non-financial nature.
• The establishment of committees to report on specific
business risks, including for example, matters such as
environmental issues and concerns and occupational health
and safety.
• The Board reviews financial risks such as the Group’s
liquidity, currency, interest rate and credit policies and
exposures and monitors management’s actions to ensure
they are in line with Group policy.
• Official Manager
• Receiver and Manager
• Administrator
• Liquidator
or similar business administration is appointed to the
customer’s business.
The Group performs an impairment analysis at each reporting
date using a provision matrix to measure expected credit
losses. The provision rates are based on days past due for
groupings of various customer segments with similar loss
patterns (i.e. geographical region and coverage by insurance).
The calculation reflects the probability-weighted outcome,
the time value of money and reasonable and supportable
information that is available at the reporting date about past
events, current conditions and forecasts of future economic
2022 Financial Report Bisalloy Steel Group Limited | 41
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
conditions. The maximum exposure to credit risk for these financial assets is limited to their carrying amounts as disclosed in note 10.
The Group does not hold collateral as security.
The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several
jurisdictions and industries and operate in largely independent markets.
The Group has for a number of years had credit insurance in place for Australian sales, and Indonesian local sales.
Set out below is the information about the credit risk exposure on the Group’s trade receivables and contract assets using a
provision matrix:
30 June 2022
In thousands of dollars
Expected credit loss rate
Estimated total gross carrying amount
at default
Expected Credit Loss
30 June 2021
In thousands of dollars
Expected credit loss rate
Estimated total gross carrying amount
at default
Expected Credit Loss
Trade Receivables
Current
<=30
days
30-60
days
61-90
days >91 days >91 days*
0.02%
0.23%
0.17%
0.38%
2.94%
78.04%
Total
1.19%
21,043
3,044
1,189
5
7
2
522
2
34
1
378
295
26,210
312
Trade Receivables
Current
<=30
days
30-60
days
61-90
days >91 days >91 days*
0.03%
0.21%
0.59%
1.54%
1.12%
45.12%
Total
1.02%
20,688
1,436
6
3
169
1
65
1
89
1
492
222
22,939
234
Due to the nature of the facility, cashflow is managed on a daily
basis, comparing actual against forecast collateral, receipts and
payments. Each month a complete review is undertaken of the
projected daily cashflow.
Contractual maturity of financial liabilities
The table below reflects all contractually fixed payments for
settlement, repayments and interest resulting from recognised
financial liabilities, including derivative financial instruments as at
30 June 2022.
For derivative financial instruments the market value is
presented, whereas for the other obligations the respective
undiscounted cash flows for the respective upcoming fiscal
years are presented. Cash flows for financial assets and
liabilities without fixed amount or timing are based on the
conditions existing at 30 June 2022.
*Indonesian and Thai receivables with no insurance coverage.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet
its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities as and when
they fall due without incurring unacceptable losses or risking
damaging the Group’s reputation.
On 17 December 2021 the Group entered into a new facility
agreement with Westpac Banking Corporation. The facility
comprises a $6.2m bank bill facility (decreased from $7.0m),
a $12m invoice finance facility and a $9m trade finance facility.
The drawn invoice finance facility balance is limited to the
value of the available collateral being eligible receivables and
fluctuates daily. Eligible trade receivables, eligible inventory,
plant and equipment and real property constitute available
collateral. At reporting date, the carrying amount of assets
pledged as collateral was $86.2m (2021: $65.0m).
In addition to the eligible collateral, the Group has several
general and financial undertakings which it must comply with
including an Equity Ratio covenant, a Leverage Ratio covenant
and an Interest Cover Ratio covenant.
42 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
In thousands of dollars
6 months or less
6-12 months
1-5 years
Over 5 years
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
29,191
289
3,330
–
28,349
171
404
–
32,810
28,924
Management analysis of financial assets and liabilities
The table below is based on management expectations of the timing of cash inflows and outflows from its financial assets and
liabilities which reflect a balanced view of cash inflows and outflows. Net settled derivatives comprise forward exchange contracts
that are used to hedge future sales and purchase commitments.
Leasing obligations, trade payables and other financial liabilities mainly originate from the financing of assets used in our ongoing
operations such as property, plant, equipment and investments in working capital (e.g., inventories and trade receivables). These
assets are considered in the Group’s overall liquidity risk.
To monitor existing financial assets and liabilities as well as to enable an effective controlling of future risks, the Group has established
comprehensive risk reporting covering its operation that reflects expectations of management of expected settlement of financial
assets and liabilities.
In thousands of dollars
Year ended 30 June 2022
Consolidated
Financial assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Derivatives – gross settled
Inflows
Outflows
Financial liabilities
Trade and other payables
Interest bearing loans and borrowings
Contract liabilities
Lease liabilities
Derivatives – gross settled
Inflows
Outflows
Net outflow
<=6 months
6-12 months
1-5 years
>5 years
Total
1,834
26,240
138
–
–
28,212
20,888
7,660
386
162
95
–
29,191
(979)
–
–
–
–
–
–
–
114
–
175
–
–
289
(289)
–
–
–
–
–
–
–
2,932
–
398
–
–
3,330
(3,330)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,834
26,240
138
–
–
28,212
20,888
10,706
386
735
95
–
32,810
(4,598)
2022 Financial Report Bisalloy Steel Group Limited | 43
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
In thousands of dollars
Year ended 30 June 2021
Consolidated
Financial assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Derivatives – gross settled
Inflows
Outflows
Financial liabilities
Trade and other payables
Interest bearing loans and borrowings
Contract liabilities
Lease liabilities
Derivatives – gross settled
Inflows
Outflows
Net outflow
<=6 months
6-12 months
1-5 years
>5 years
Total
2,347
23,532
135
–
–
26,014
17,837
9,921
395
163
33
–
28,349
(2,335)
–
–
–
–
–
–
–
50
–
121
–
–
171
(171)
–
–
–
–
–
–
–
–
–
404
–
–
404
(404)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,347
23,532
135
–
–
26,014
17,837
9,971
395
688
33
–
28,924
(2,910)
Risk assessments take into account macroeconomic lead
indicators such as interest rate differentials, inflation rate
differentials and externally published market analytical data to
determine the likelihood of movement in exchange rates. The
likelihood is applied to the Group’s foreign currency exposure to
determine financial impact on a sensitivity basis.
Sensitivity analysis
The following table summarises the sensitivity of financial
instruments held at balance date to possible movements in the
exchange rate of the Australian dollar to foreign currencies, with
all other variables held constant. The +10%/-10% sensitivity
is based on reasonably possible changes, over a financial
year, using the observed range of actual historical rates for the
preceding 5 year period, along with consideration for current
market trends.
Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and commodity prices will
affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable
parameters, while optimising return.
Foreign exchange risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The Group’s exposure to
the risk of changes in foreign exchange rates relates primarily
to the Group’s operating activities (when revenue or expense is
denominated in different currency from the Group’s functional
currency) and the Group’s net investment in foreign subsidiaries.
The Group manages its foreign currency risk by hedging
transactions that are expected to occur within a maximum
twelve-month period. The Group generally adopts a policy of
covering exchange exposures related to purchases and sales of
product at the time they are incurred or committed.
Throughout the year the foreign exchange risk has been actively
managed through periodic risk assessments. The objective
of these assessments is to stratify foreign exchange exposure
into risk categories and enable available hedge facilities to be
applied to those assessed as higher risk.
44 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
In thousands of dollars
2022
2021
2022
2021
Post tax profit
Higher / (Lower)
Effect on equity
Higher / (Lower)
Sensitivity to USD
Consolidated
AUD/USD +10%
AUD/USD -10%
(77)
194
(144)
177
–
–
–
–
Interest rate risk
The Group’s borrowing facility has a variable interest rate attached to it. The Group monitors the underlying interest rate outlook and
considers the use of interest rate derivatives (principally swaps) to manage the exposure to interest rate fluctuations.
The Group’s exposure to market interest rates relates primarily to the Group’s interest bearing borrowings. At 30 June 2022, the
Group had the following mix of financial assets and liabilities exposed to variable interest rates that are not designated in cash
flow hedges.
In thousands of dollars
Financial Assets
Cash and cash equivalents less cash on hand
Financial Liabilities
Bank loans
Net exposure
Interest rate sensitivity analysis
Consolidated
2022
2021
1,833
2,345
(10,458)
(8,625)
(9,731)
(7,386)
The following table summarises the sensitivity of the fair value of financial instruments held at the balance date following a movement
in interest rates, with all other variables held constant. The +100/-100 basis points sensitivity is based on reasonably possible
changes over a financial year, using the observed range of actual historical rates for the preceding 5 year period.
In thousands of dollars
Consolidated
+1% (100 basis points)
- 1% (100 basis points)
Commodity risk
The Group does not hedge for movements in the underlying
price of product but manages commodity risk within the
parameters of the markets within which it trades.
Assets/Liabilities Measured at Fair value
The Group uses various methods in estimating the fair value of
assets and liabilities. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in
active markets.
Level 2 – the fair value is calculated using inputs other than
quoted prices included in Level 1 that are observable for the
Post tax profit
Higher / (Lower)
Other Comprehensive income
Higher / (Lower)
2022
2021
2022
2021
(60)
60
(49)
49
–
–
–
–
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.
The fair value of the assets and liabilities as well as the methods
used to estimate the fair value are summarised in the table
below. For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy
by re-assessing categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at
the end of each reporting period.
2022 Financial Report Bisalloy Steel Group Limited | 45
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
At 30 June 2022 the fair values of land, buildings and improvements were determined by reference to valuations performed in June
2022 (Note 13 (b)). For properties not subject to independent valuations, fair value was determined by Directors’ valuation.
Year ended 30 June 2022
Year ended 30 June 2021
Valuation
technique-
market
observable
inputs
(Level 2)
Valuation
technique-
non
market
inuts
(Level 3)
Quoted
market
price
(Level 1)
–
–
–
–
–
20,147
–
20,147
95
95
–
–
–
–
–
Total
14,176
–
14,176
95
95
Valuation
technique-
market
observable
inputs
(Level 2)
Valuation
technique-
non
market
inuts
(Level 3)
Quoted
market
price
(Level 1)
–
–
–
–
–
14,176
–
14,176
33
33
–
–
–
–
–
Total
14,176
–
14,176
33
33
In thousands of dollars
Consolidated
Assets
Land & Buildings
Foreign exchange contracts
Liabilities
Foreign exchange contracts
The fair value of forward currency contracts is calculated by reference to the current exchange rate at balance date.
Transfer between categories
There were no transfers between levels during the year. The fair value of loans and borrowings approximates the carrying value.
19. Employee benefit liabilities
In thousands of dollars
Current
Employee entitlements
Share based payment
Defined benefit plan
Non-current
Employee entitlements
Share based payment
Defined benefit plan
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
1,790
–
–
1,790
260
146
788
1,883
152
137
2,172
358
232
848
1,194
1,438
The Group has an unfunded defined benefit plan in Indonesia and a defined benefit plan in Thailand. The Indonesian plan provides
severance and service benefits pursuant to Indonesian Labor Law No. 13/2003 and Company Regulation.
46 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 19. Employee benefit liabilities (continued)
The principal assumptions used in determining the obligation under the defined benefit plan are shown below:
In percentages
Discount Rate
Future Salary Increases
20. Lease liabilities
a) Maturity analysis of contractual cash flows
In thousands of dollars
Less than one year
Between one and five years
More than five years
In thousands of dollars
Less than one year
Between one and five years
More than five years
b)
Amounts recognised in profit or loss
In thousands of dollars
Interest on lease liabilities
Expenses relating to short-term leases or low-value assets
2022
2021
Indonesia
Thailand
Indonesia
Thailand
7.25
8.00
1.04
3.00
7.00
8.00
1.04
3.00
Consolidated
For the year ended 30 June 2022
Future minimum
lease payments
Present value of
minimum lease
payments
Interest
337
398
–
735
(20)
(11)
–
(31)
317
387
–
704
Consolidated
For the year ended 30 June 2021
Future minimum
lease payments
Present value of
minimum lease
payments
Interest
284
404
–
688
(22)
(18)
–
(40)
262
386
–
648
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
25
85
110
33
106
139
2022 Financial Report Bisalloy Steel Group Limited | 47
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 21. Derivative financial instruments
In thousands of dollars
Current Assets
Forward currency contracts – Fair value hedges
Current Liabilities
Forward currency contracts – Fair value hedges
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
–
–
95
95
–
–
33
33
Instruments used by the Group
Derivative financial instruments are used by the Group in the normal course of business in order to hedge exposure to fluctuations in
foreign exchange rates.
Forward currency contracts
Inventory purchases
During the year ended 30 June 2022, in order to protect against exchange rate movements and to manage the inventory costing
process, the Group had entered into forward exchange contracts to purchase $EUR 345k (2021: $EUR 0k) and $AUD 4.2m (2021:
$AUD 4.7m). These contracts hedged highly probable forecasted purchases and they were timed to mature when payments are
scheduled to be made.
Fair value hedges
As at balance date, the details of outstanding contracts in respect of fair value hedges were:
In thousands of dollars
Buy EUR $ Sell AUD $
Buy AUD $ Sell IDR $
Buy AUD $ Sell THB $
Average exchange rate
30 June 2022
30 June 2021
30 June 2022
30 June 2021
–
(6)
–
–
–
–
(35)
10,209.0000
11,297.0000
2
–
24.3000
Sales invoices
During the year ended 30 June 2022, in order to protect against exchange rate movements and to manage the receivables process,
the Group had entered into forward exchange contracts to sell $USD 4.8m (2021: $USD 1.4m). These contracts hedged highly
probable forecasted receipts and they were timed to mature when payments are scheduled to be received.
Fair value hedges
As at balance date, the details of outstanding contracts in respect of fair value hedges were:
In thousands of dollars
Buy AUD $ Sell USD $
30 June 2022
30 June 2021
30 June 2022
30 June 2021
(89)
–
0.6889
–
Average exchange rate
48 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 22. Contributed equity and reserves
In thousands of dollars
(a) Ordinary shares, issued and fully paid
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
14,507
12,886
Fully paid ordinary shares carry one vote per share and carry the right to dividends. Shares have no par value.
(b) Movements in shares on issue
Balance at 1 July
New shares issued under Dividend Reinvestment Plan
Exercise of performance rights
Balance at 30 June
Number of
Shares
2022
$’000
Number of
Shares
2021
$’000
45,967,851
12,886
45,418,007
12,318
932,880
187,946
1,621
–
449,844
100,000
568
–
47,088,677
14,507
45,967,851
12,886
(c) Capital management
When managing capital, the Group’s objective is to maintain optimal returns to shareholders and benefits for other stakeholders. The
Group also aims to maintain a capital structure that delivers the lowest cost of capital available to its operations.
The Group adjusts the capital structure to take advantage of favourable costs of capital or high returns on assets. As the economic
conditions change, the Group may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt.
No changes were made in the objectives, policies or processes for managing capital during the years ended 30 June 2022 and 2021.
The Group monitors capital through the gearing ratio (net debt/ total equity plus net debt) and currently targets a gearing ratio of
between 0% and 35%. The Group includes within net debt interest bearing loans and borrowings less cash and cash equivalents.
The gearing ratios based on continuing operations at 30 June 2022 and 2021 were as follows:
In thousands of dollars
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021*
Restated
10,458
(1,834)
8,624
64,286
72,910
12%
9 ,731
(2,347)
7,384
48,414
55,798
13%
*The Group had previously recorded the net position of premium finance. The gross figures are now reported. This increases Total borrowings by $416k.
The Group is not subject to any externally imposed capital requirements.
2022 Financial Report Bisalloy Steel Group Limited | 49
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
3,457
3,880
176
65
412
(188)
3,922
(418)
38
144
(187)
3,457
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
25,116
14,991
51
(6,251)
33,907
18,527
8,810
50
(2,271)
25,116
Total
7,855
(991)
75
–
(50)
9
57
22. Contributed equity and reserves (continued)
In thousands of dollars
(d) Non-controlling interests
Balance at 1 July
Gain / (loss) on translation of overseas controlled entities
Revaluation of land and buildings
Share of net profit for the year
Dividends paid
Balance at 30 June
In thousands of dollars
(e) Retained earnings
Balance at 1 July
Net profit for the year
Depreciation transfer for revaluation of buildings
Dividends paid
Balance at 30 June
In thousands of dollars
(f) Reserves
At 30 June 2020
Currency translation differences
Share-based payments
Settlement of performance rights
Depreciation transfer for revaluation
of buildings
Actuarial gains/(losses)
Revaluation of land and buildings
At 30 June 2021
Currency translation differences
Share-based payments
Settlement of performance rights
Depreciation transfer for revaluation
of buildings
Actuarial gains/(losses)
Revaluation of land and buildings
At 30 June 2022
Employee
equity
benefits
reserve
Foreign
currency
translation
reserve
Cash flow
hedge
reserve
Asset
revaluation
reserve
Equity
settlement
reserve
Other
reserves
302
–
75
(82)
–
–
–
295
–
(56)
(152)
–
–
–
87
1,150
(991)
–
–
–
–
–
159
655
–
–
–
–
–
814
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,180
–
–
–
(50)
–
57
316
–
–
82
–
–
–
(93)
–
–
–
–
9
–
6,187
398
(84)
6,955
–
–
–
(51)
–
4,406
10,542
–
–
152
–
–
–
–
–
–
–
41
–
655
(56)
–
(51)
41
4,406
550
(43)
11,950
50 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
22. Contributed equity and reserves (continued)
Nature and purpose of reserves
Employee equity benefits reserve
This reserve is used to record the value of share-based
payments provided to employees and directors as part of their
remuneration. Refer to note 15 for further details of these plans.
Foreign currency translation reserve
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
Cash flow hedge reserve
This reserve records the portion of the gain or loss on a hedging
instrument in a cash flow hedge that is determined to be an
effective hedge.
Asset Revaluation Reserve
The asset revaluation reserve is used to record increases and
decreases in the fair value of land and buildings (net of tax) to
the extent that they offset one another. The reserve can only be
used to pay dividends in limited circumstances.
Equity Settlement Reserve
The equity settlement reserve records the net difference
between payment for shares upon the exercise of performance
rights under the LTIP and the amount expensed in the profit and
loss and recorded in the employee equity benefits reserve over
the three year vesting period.
Other Reserve
Relates to actuarial losses from defined benefit pensions.
23. Commitments and contingencies
In thousands of dollars
(a) Capital expenditure commitments
Estimated capital expenditure contracted for at balance date, but not provided for payable:
Not later than one year
Later than one year, but not later than five years
These capital expenditure commitments relate to office refurbishment and plant upgrade works.
(b) Operating lease expenditure commitments
Not later than one year
Later than one year, but not later than five years
Later than five years
Consolidated
30 June 2022
30 June 2021
299
–
299
–
–
–
–
208
–
208
13
–
–
13
These operating lease commitments relate to motor vehicle leases and rent.
(c) Contingent liabilities
The directors draw the following contingent liabilities to the attention of users of the financial statements:
Note 24 regarding the class order between certain subsidiaries and the Company.
2022 Financial Report Bisalloy Steel Group Limited | 51
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 24. Related parties
A former Director of the Company, Mr P Cave, has an interest in and is a Director of Anchorage Capital Partners Pty Ltd.
The terms and conditions of any transactions with Directors and their Director related entities are no more favourable than those
available, or which might reasonably be expected to be available, on similar transactions to non Director related entities on arm’s
length basis.
The total value of the transactions during the year with Director related entities were as follows:
In thousands of dollars
Director
P Cave
Director – related entity
Anchorage Capital Partners Pty Ltd
Consolidated
2022
2021
–
25,000
The above amounts were paid in relation to P J Cave’s services in his capacity as a director and are included in Directors’
remuneration in the Directors’ Report. The outstanding balance owing at 30 June 2022 is $0 (2021: $0).
Investments
Name of parent
Bisalloy Steel Group Limited
Controlled entities
Bisalloy Steels Pty Limited
PT Bima Bisalloy
Bisalloy Holdings (Thailand) Co Ltd
Bisalloy (Thailand) Co Limited
Bisalloy North America LLC^
Joint venture
Percentage of equity
interest held by the
Consolidated entity
30 June 2022
%
Percentage of equity
interest held by the
Consolidated entity
30 June 2021
%
100.00
60.00
85.00
85.00
100.00
100.00
60.00
85.00
85.00
100.00
Country of
Incorporation
Australia
Australia
Indonesia
Thailand
Thailand
United States
of America
Bisalloy Shangang (Shandong) Steel Plate
Co.,Limited*
People’s Republic
of China
50.00
50.00
* Refer Note 5 for details regarding equity interest, share of interest and joint control.
^This entity continues to be dormant.
Entities subject to class order relief
Pursuant to Class Order 2016/785, relief has been granted to Bisalloy Steels Pty Limited from the Corporations Act 2001
requirements for preparation, audit and lodgement of their financial reports. As a condition of the Class Order, Bisalloy Steel Group
Limited and Bisalloy Steels Pty Limited (the “closed” Group) entered into a Deed of Cross Guarantee on the 18th April 2002.
The effect of the deed is that Bisalloy Steel Group Limited has guaranteed to pay any deficiency in the event of winding up of the
controlled entity. The controlled entity has also given a similar guarantee in the event that Bisalloy Steel Group Limited is wound up.
The consolidated statement of profit or loss and statement of financial position of the entities which are members of the “Closed
Group” are as follows:
52 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 24. Related parties (continued)
In thousands of dollars
i.
Consolidated Income Statement
Profit from continuing operations before income tax
Income tax expense
Profit after income tax
Accumulated profits at the beginning of the year
Depreciation transfer for revaluation of buildings
Dividends provided for or paid
Accumulated profits at the end of the year
ii.
Consolidated Balance Sheet
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Contract assets
Other current assets
Total current assets
Non-current assets
Investments
Property, plant and equipment
Intangible assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Income tax payable
Loans and borrowings
Employee benefit liabilities
Lease liabilities
Derivative Liability
Contract liabilities
Total current liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Employee benefit liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Closed Group
30 June 2022
30 June
2021*
Restated
18,004
(5,409)
12,595
19,501
44
(6,251)
25,889
63
23,671
31,262
138
1,248
56,382
5,125
23,972
634
125
29,856
86,238
14,413
(3,415)
10,998
10,730
44
(2,271)
19,501
124
21,161
20,630
135
1,314
43,364
5,118
18,504
514
122
24,258
67,622
18,352
16,793
2,589
6,063
1,791
256
89
386
1,590
7,077
2,035
137
–
395
29,526
28,027
2,932
387
406
4,118
7,843
37,369
–
324
590
2,070
2,984
31,011
2022 Financial Report Bisalloy Steel Group Limited | 53
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 24. Related parties (continued)
In thousands of dollars
NET ASSETS
Shareholders’ equity
Contributed equity
Reserves
Accumulated profits
TOTAL SHAREHOLDERS’ EQUITY
Closed Group
30 June 2022
30 June
2021*
Restated
48,869
36,611
14,508
8,472
25,889
48,869
12,886
4,224
19,501
36,611
*The 2021 Financial Report incorrectly excluded a dividend received from the Joint Venture of $1,943k. This impacted the Profit from continuing operations
before income tax and Investments. Also the Group had previously recorded the net position of premium finance. The gross figures are now reported. This
increases Other current assets and Loans and borrowings equally by $416k.
The following table provides the total amount of transactions, other than amounts disclosed above, that have been entered into
between the Group and related parties for the relevant financial year:
Related Party
Bisalloy Shangang Steel Plate (Shandong)
Co.,Limited
Interest and
management
fees to related
parties
Sales to &
purchases
from
Amounts owed
by related
parties
Amounts owed
to related
parties
2022
2021
–
–
655
172
86
679
305
–
Terms and conditions of transactions with related parties
Sales to and purchase from related parties are made in arm’s length transactions both at normal market price and on normal
commercial terms. Sale and purchases with related parties during 2022 were $655,118 (2021: $171,562).
Outstanding balances at year-end are unsecured.
Compensation of key management personnel of the Group
In thousands of dollars
Short-term employee benefits
Post employment benefits
Other long-term benefits
Termination benefits
Other
Share-based payments
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
1,807,529
2,536,006
135,400
49,663
–
107,834
(153,546)
144,985
61,473
–
200,000
271,285
Total compensation paid to key management personnel
1,946,880
3,213,749
25. Events after the balance date
No significant events after the balance sheet date.
54 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 26. Auditors’ remuneration
The auditor of Bisalloy Steel Group Limited is KPMG.
In thousands of dollars
Amounts received or due and receivable by KPMG for:
– an audit or review of the financial report of the entity and any other entity in the
consolidated Group
–
tax compliance and advice
Amounts received or due and receivable by related practices of KPMG for:
– an audit or review of the financial report of any other entity in the consolidated Group
–
tax compliance and advice
Consolidated
Year Ended
30 June 2022
Year Ended
30 June 2021
144
12
63
219
137
11
60
208
27. Parent entity information
In thousands of dollars
30 June 2022
30 June 2021
Information relating to Bisalloy Steel Group Limited:
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated losses
Reserves
Total shareholder’s equity
Profit of the parent entity
Total comprehensive income of the parent entity
–
3,153
2,589
2,589
14,508
(13,980)
36
564
207
207
613
6,576
1,590
1,590
12,886
(7,936)
36
4,986
4,107
4,107
Guarantees have been entered into by the Parent entity on behalf of Bisalloy Steels Pty Limited and Bisalloy (Thailand) Co Limited.
The guarantees in place cover Bisalloy Steels Pty Limited’s $27M Westpac facility and 85% of Bisalloy Thailand’s THB 3M bank
overdraft facility.
There are no contingent liabilities or contractual commitments as at the reporting date.
28. Summary of significant accounting policies
Table of Contents
a) Basis of preparation
j)
Intangible assets
b) Basis of consolidation and investments in joint venture
k) Trade and other payables
c) Significant accounting judgements, estimates
l) Contributed equity
and assumptions
d) Operating segments
e) Taxation
f) Cash and cash equivalents
g) Trade and other receivables
h)
Inventories
i) Property, plant and equipment
m) Employee benefits
n) Share-based payment transactions
o) Provisions
p) Financial Instruments
q) Goods and services tax
r) Revenue from contracts with customers
2022 Financial Report Bisalloy Steel Group Limited | 55
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
s) Other income
t) Borrowing costs
u) Leases
v) Foreign currency translation
w) Earnings per share (EPS)
x) Derivative financial instruments and hedging
y) Fair value measurement
z) Changes in accounting standards
aa) Standards issued but not yet effective
Basis of preparation
a)
The financial report is a general purpose financial report,
which has been prepared in accordance with the Australian
Accounting Standards (AASBs) adopted by the Australian
Accounting Standards Board (AASB) and the Corporations Act
2001. The financial report complies with International Financial
Reporting Standards (IFRS) adopted by the International
Accounting Standards Board (IASB). The financial report has
also been prepared on a historical cost basis, except for land
and buildings classified as property, plant and equipment
and derivative financial instruments, which are measured at
fair value.
The Company is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191
and in accordance with that Instrument, all financial information
presented in Australian Dollars has been rounded to the nearest
thousand unless otherwise stated.
The consolidated financial statements provide comparative
information in respect of the previous period.
Comparative information
Comparative information is consistent with the current
years presentation.
Basis of consolidation and investments in
b)
joint venture
The consolidated financial statements comprise the financial
statements of the Company, being Bisalloy Steel Group Limited,
and its subsidiaries (“the Group”) as at the reporting date.
Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over
the investee.
The Group re-assesses whether or not it controls an investee
if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation
of a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control of
the subsidiary.
The financial statements of the subsidiaries are prepared for the
same reporting period as the parent company, using consistent
accounting policies. Adjustments are made to bring into line any
56 | Bisalloy Steel Group Limited 2022 Financial Report
dissimilar accounting policies that may exist. All intercompany
balances and transactions, including unrealised profits
arising from intra-group transactions, have been eliminated
in full. Unrealised losses are eliminated unless costs cannot
be recovered.
Non-controlling interests represent the portion of profit or
loss and net assets in subsidiaries not held by the Group, and
are presented separately in the consolidated statement of
comprehensive income and within equity in the consolidated
statement of financial position, separately from the equity of the
owners of the parent.
The Group has an interest in a joint venture, which is a jointly
controlled entity, whereby the venturers have a contractual
arrangement that establishes joint control over the economic
activities of the entity. The Group’s investment in the joint
venture is accounted for using the equity method and is not part
of the consolidated Group.
Under the equity method, the investment in the joint venture
is initially recognised at cost. The carrying amount of the
investment is adjusted to recognise changes in the Group’s
share of net assets of the joint venture since the acquisition
date. Goodwill relating to the joint venture is included in the
carrying amount of the investment and is neither amortised nor
individually tested for impairment.
The statement of profit or loss and other comprehensive income
reflects the Group’s share of the results of operations of the joint
venture. When there has been a change recognised directly in
the equity of the joint venture, the Group recognises its share of
any changes, when applicable, in the statement of changes in
equity. Unrealised gains and losses resulting from transactions
between the Group and the joint venture are eliminated to the
extent of the interest in the joint venture.
The Group’s share of profit of the joint venture is shown
on the face of the statement of profit or loss and other
comprehensive income.
In the application of the Group’s accounting policies as
described below, management is required to make judgements,
estimates and assumptions about carrying values of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances. These estimates and
underlying assumptions are reviewed on an ongoing basis.
Significant accounting judgements, estimates
c)
and assumptions
In applying the Group’s accounting policies, management have
not made any significant accounting judgements which affect
the amounts recognised in the financial statements.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are
often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have a
significant risk of causing material adjustment to the carrying
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
c)
Significant accounting judgements, estimates and assumptions (continued)
amounts of certain assets and liabilities within the next annual
reporting period are:
is still reported separately where information about the segment
would be useful to users of the financial statements.
Property, plant and equipment
The Group measures the fair value of land buildings by
reference to valuations performed at reporting date. The fair
value is determined by an external valuer every three years,
unless determined by Directors’ valuation that the fair value has
moved significantly or at the request of a finance provider. The
valuation method is detailed in note 18.3.
Share-based payment transactions
e)
Taxation
Current income tax
Current income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by
the reporting date in the countries where the Group operates
and generates taxable income.
The Group measures the cost of equity-settled transactions
with employees (including directors and other senior executives)
by reference to the fair value at the date on which they are
granted. The fair value is determined by an external valuer using
discounted cash flow models using the assumptions dealt with
in note 28(n).
Current income tax relating to items recognised directly in
equity is recognised in equity and not in the statement of profit
or loss. Management periodically evaluates positions taken in
the tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes
provisions where appropriate.
The Group measures the cost of cash-settled transactions with
employees (including directors and other senior executives) by
reference to the fair value at the reporting date. The fair value is
determined by reference to the price of shares of the issuer.
d) Operating segments
An operating segment is a component of an entity that engages
in business activities from which it may earn revenues and
incur expenses (including revenues and expenses relating to
transactions with other components of the same entity), whose
operating results are regularly reviewed by the entity’s chief
operating decision maker to make decisions about resources
to be allocated to the segment and assess its performance
and for which discrete financial information is available. This
includes start-up operations which are yet to earn revenues.
Management will also consider other factors in determining
operating segments such as the existence of a line manager
and the level of segment information presented to the Board
of directors.
Operating segments have been identified and based on the
information provided to the chief operating decision makers –
being the executive management team.
The Group aggregates two or more operating segments when
they have similar economic characteristics, and the segments
are similar in each of the following respects:
• nature of the products and services,
Deferred tax
Deferred tax is provided using the liability method on temporary
differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the
reporting date.
Deferred tax liabilities are recognised for all taxable temporary
differences except:
• when the deferred income tax liability arises from the initial
recognition of goodwill or 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
•
in respect of taxable temporary differences associated
with investments in subsidiaries, associates or interests
in joint ventures, when 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 tax assets are recognised for all deductible temporary
differences, the carry-forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognised 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:
• nature of production processes,
• when the deferred tax asset relating to the deductible
•
type or class of customer for their products and services,
• methods use to distribute their products or provide their
services, and if applicable
• nature of the regulatory environment.
Operating segments that meet the quantitative criteria as
prescribed by AASB 8 are reported separately. However, an
operating segment that does not meet the quantitative criteria
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
•
in respect of deductible temporary differences associated
with investments in subsidiaries, associates or interests in
joint ventures, deferred tax assets are recognised only to
the extent that it is probable that the temporary difference
will reverse in the foreseeable future and taxable profit will
2022 Financial Report Bisalloy Steel Group Limited | 57
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
e)
Taxation (continued)
be available against which the temporary difference can
be utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting 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 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
reporting date.
Deferred tax relating to items recognised outside profit or loss
is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in
other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset 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.
Bisalloy Steel Group Limited and its wholly-owned Australian
controlled entities implemented the tax consolidation legislation
as of 1 July 2003.
The head entity, Bisalloy Steel 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 Group allocation approach 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, Bisalloy
Steel Group Limited also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused losses.
Assets or liabilities under tax funding arrangements with the tax
consolidation entities are recognised as amounts receivable
from or payable to other entities in the Group. 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.
Cash and cash equivalents
f)
Cash and short term deposits in the statement of financial
position and the cash flow statement is comprised of cash at
bank and on hand and short-term deposits with a maturity of
three months or less, which are subject to an insignificant risk of
changes in value.
Trade and other receivables
g)
A receivable represents the Group’s right to an amount of
consideration that is unconditional (i.e., only the passage of
58 | Bisalloy Steel Group Limited 2022 Financial Report
time is required before payment of the consideration is due).
Refer to accounting policies of financial assets in note 28(p)
Financial instruments.
Inventories
h)
Raw materials, work in progress and finished goods are valued
at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location
and condition are accounted for as follows:
Raw materials
•
Purchase cost is on a weighted
average cost basis.
Work in progress
and finished goods
• Cost of direct materials, labour and
an appropriate proportion of
manufacturing overheads is based
on normal operating capacity, but
excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Property, plant and equipment
i)
Plant and equipment is stated at historical cost, net of
accumulated depreciation and accumulated impairment losses,
if any. 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 the recognition criteria are
satisfied. All other repairs and maintenance are recognised in
the profit or loss as incurred.
Land and buildings are measured at fair value using the
revaluation model, less accumulated depreciation on buildings
and any impairment losses recognised after the date of the
revaluation. Valuations are performed every three years,
or sooner should there be a significant change in market
conditions or other market requirements such as in Indonesia
where land and buildings are revalued every 12 months
as a result of lending requirements, to ensure that the fair
value of a revalued asset does not differ materially from its
carrying amount.
Depreciation is calculated on a straight-line basis over the
estimated useful life of the specific assets as follows:
• Land
• Buildings
not depreciated
50 years
• Plant and equipment
1 – 20 years
• Leasehold improvements
5 – 10 years or lease life
if shorter
The assets’ residual values, useful lives and amortisation
methods are reviewed, and adjusted prospectively if
appropriate, at each financial year end.
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
28. Summary of significant accounting policies (continued)
i)
Property, plant and equipment (continued)
Revaluations of land and buildings
Any revaluation increment is credited to the asset revaluation
reserve in equity, except to the extent that it reverses a
revaluation decrement for the same asset previously recognised
in profit or loss, in which case the increment is recognised in
profit or loss.
Any revaluation decrement is recognised in profit or loss, except
to the extent that it offsets a previous revaluation increment for
the same asset, in which case the decrement is debited directly
to the asset revaluation reserve to the extent of the credit
balance existing in the revaluation reserve for that asset.
Any accumulated depreciation as at the revaluation date is
eliminated against the gross carrying amounts of the assets
and the net amounts are restated to the revalued amounts of
the assets.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These are included in the
profit or loss.
Upon disposal or derecognition, any revaluation reserve
relating to the particular asset being sold is transferred to
retained earnings.
Derecognition
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the
asset) is included in the profit and loss in the period the item
is derecognised.
j)
Intangible assets
Recognition and measurement
Expenditure on research activities is recognised in profit or loss
as incurred.
Development expenditure is capitalized only if the expenditure
can be measured reliably, the product or process is technically
and commercially feasible, future economic benefits are
probable and the Group intends to and has sufficient
resources to complete development and to use or sell the
asset. Otherwise, it is recognised in profit or loss as incurred.
Subsequent to initial recognition, development expenditure
is measured at cost less accumulated amortization and any
accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases
the future economic benefits embodied in the specific asset to
which it relates. All other expenditure is recognised in profit or
loss as incurred.
Amortisation
Amortisation is calculated to write off the cost of intangible
assets less their estimated residual values using the straight-
line method over their estimated useful lives and is generally
recognised in profit or loss.
The estimated useful life for current periods for development
costs is 3 years.
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Trade and other payables
k)
Trade and other payables are carried at amortised cost
and 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.
Contributed equity
l)
Ordinary share capital is recognised at the fair value of the
consideration received by the Company. Any transaction
costs arising on the issue of ordinary shares are recognised
directly in equity, net of tax, as a reduction of the share
proceeds received.
m) Employee benefits
Liabilities arising in respect of short-term employee benefits
such as wages, salaries, annual leave and sick leave represent
the amount which the entity has a present obligation to pay
resulting from employees’ services provided up to the balance
date. Liabilities in respect of short-term employee benefits are
measured at their nominal amounts.
Long-term employee benefit liabilities such as long service
leave represent the present value of the estimated future cash
outflows to be made by the employer resulting from employees’
services provided up to the balance date. Long-term employee
benefit liabilities are measured at their present values using
corporate bond rates which most closely match the terms of
maturity of the related liabilities.
In determining the employee benefit liabilities, consideration has
been given to future increases in wage and salary rates, and
the Group’s experience with staff departures. Related on-costs
have also been included in the liability.
The Group contributes to defined contribution superannuation
plans, as well as an unfunded defined benefit plan in Indonesia
and a defined benefit plan in Thailand.
Share-based payment transactions
n)
Employees (including directors and other senior executives) of
the Group receive remuneration in the form of a grant of Rights,
whereby employees render services as consideration for equity
instruments (‘equity-settled transactions’). There is currently
a Share Rights Plan in place to provide these benefits. If the
issue of shares in the Board’s opinion does not achieve the
desired outcome, then the Board may determine to satisfy the
entitlement to Shares under a Vested Right in the form of cash
rather than Shares. In recent years, there have been a number
2022 Financial Report Bisalloy Steel Group Limited | 59
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
n)
Share-based payment transactions (continued)
of instances in which settlement has taken the form of 50%
equity and 50% cash (‘cash-settled transactions’).
Equity-settled transactions
The cost of equity-settled transactions with employees
is measured by reference to the fair value at the date on
which they are granted. The fair value is determined by an
external valuer using a discounted cash flow methodology.
In valuing equity-settled transactions, no account is taken
of any performance conditions, other than conditions linked
to the price of the shares of the issuer (‘market conditions’),
if applicable.
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,
ending on the date on which the relevant employees become
fully entitled to the award (‘vesting date’).
Cash-settled transactions
The cost of cash-settled transactions with employees is
measured by reference to the fair value at the reporting date
and ultimately at settlement. The fair value is determined
by reference to the price of the shares of the issuer
(‘market conditions’).
The cost of cash-settled transactions is recognised, together
with a corresponding increase in liability, over the period in
which the performance and/or service conditions are fulfilled,
ending on the date on which the relevant employees become
fully entitled to the award (‘vesting date’).
The cumulative expense recognised for both equity-settled
and cash-settled transactions at each reporting date until
vesting date reflects the extent to which the vesting period has
expired and the Group’s best estimate of the number of equity
instruments that will ultimately vest. This estimate is formed
based on the best available information at balance date. The
statement of profit or loss and other comprehensive income
charge or credit for a period represents the movement in
cumulative expense recognised as at the beginning and end of
that period.
No expense is recognised for Rights that do not ultimately vest.
Any Rights that do not become vested Rights, lapse.
The dilutive effect, if any, of outstanding Rights is reflected as
additional share dilution in the computation of diluted earnings
per share.
Provisions
o)
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.
Where 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 related to
60 | Bisalloy Steel Group Limited 2022 Financial Report
any provision is presented in the statement of comprehensive
income net of any reimbursement. If the effect of the time
value of money is material, provisions are discounted using a
current pre-tax rate that reflects, where appropriate, the risks
specific to the liability. Where discounting is used, the increase
in the provision due to the passage of time is recognised as a
borrowing cost.
Financial instruments
p)
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value through
other comprehensive income (OCI), and fair value through profit
or loss.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing
them. With the exception of trade receivables that do not
contain a significant financing component, the Group initially
measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction
costs. Trade receivables that do not contain a significant
financing component or for which the Group has applied the
practical expedient are measured at the transaction price
determined under IFRS 15. Refer to the accounting policies in
note 28(r) Revenue from contracts with customers.
In order for a financial asset to be classified and measured
at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal and
interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at
an instrument level.
The Group’s business model for managing financial assets
refers to how it manages its financial assets in order to generate
cash flows. The business model determines whether cash flows
will result from collecting contractual cash flows, selling the
financial assets, or both.
Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the Group
commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
p)
Financial instruments (continued)
• Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition
(equity instruments)
• Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
• The financial asset is held within a business model with
the objective to hold financial assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured
using the effective interest rate (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss
when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost include
trade receivables.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
derivative assets which are mandatorily required to be
measured at fair value. Derivatives are classified as
held for trading unless they are designated as effective
hedging instruments.
Financial assets at fair value through profit or loss are carried in
the statement of financial position at fair value with net changes
in fair value recognised in the statement of profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Group’s consolidated
statement of financial position) when the rights to receive cash
flows from the asset have expired.
Impairment
Further disclosures relating to impairment of financial assets are
also provided in the following notes:
• Significant accounting judgements, estimates and
assumptions
Note 28(c)
• Trade and other receivables
Note 28(g)
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive, discounted
at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of
collateral held or other credit enhancements that are integral to
the contractual terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses
that result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for
which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group applies a
simplified approach in calculating ECLs. Therefore, the Group
does not track changes in credit risk, but instead recognises a
loss allowance based on lifetime ECLs at each reporting date.
The Group has established a provision matrix that is based on
its historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
The Group considers a financial asset in default when internal
or external information indicates that the Group is unlikely to
receive the outstanding contractual amounts in. A financial
asset is written off when there is no reasonable expectation of
recovering the contractual cash flows.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in
the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The Group’s financial liabilities include trade and other payables,
loans and borrowings including bank overdrafts, and derivative
financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit
or loss.
Financial liabilities are classified as held for trading if they are
incurred for the purpose of repurchasing in the near term.
This category also includes derivative financial instruments
entered into by the Group that are not designated as
hedging instruments in hedge relationships as defined by
IFRS 9. Separated embedded derivatives are also classified
as held for trading unless they are designated as effective
hedging instruments.
2022 Financial Report Bisalloy Steel Group Limited | 61
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022
28. Summary of significant accounting policies (continued)
p)
Financial instruments (continued)
Gains or losses on liabilities held for trading are recognised in
the statement of profit or loss.
•
receivables and payables are stated with the amount of
GST included.
Financial liabilities designated upon initial recognition at fair
value through profit or loss are designated at the initial date of
recognition, and only if the criteria in IFRS 9 are satisfied. The
Group has not designated any financial liability as at fair value
through profit or loss.
Financial liabilities at amortised cost
This is the category most relevant to the Group. After initial
recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in profit or loss
when the liabilities are derecognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is included as
finance costs in the statement of profit or loss.
All loans and borrowings are classified as current liabilities
unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting date.
This category generally applies to interest-bearing loans and
borrowings. For more information, refer to Note 18.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the statement
of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount is reported in the consolidated statement of
financial position if there is a currently enforceable legal right
to offset the recognised amounts and there is an intention
to settle on a net basis, to realise the assets and settle the
liabilities simultaneously.
Goods and services tax
q)
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), or GST equivalents,
such as Value Added Tax, except:
• where the amount of GST incurred is not recoverable
from the Australian Tax Office (ATO), or equivalent
foreign organisations. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or
as part of an item of the expenses;
62 | Bisalloy Steel Group Limited 2022 Financial Report
The net amount of GST recoverable from, or payable to, the
ATO is included as part of receivables or payables in the
statement of financial position.
Cash flows are included in the statement of cash flows on a
gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or
payable to, the ATO 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.
Revenue from contracts with customers
r)
The Group is in the business of manufacturing and selling
quench and tempered steel plates. Revenue from contracts
with customers is recognised when control of the goods or
services are transferred to the customer at an amount that
reflects the consideration to which the Group expects to be
entitled in exchange for those goods or services. The Group has
concluded that it is the principal in its revenue arrangements,
as it controls the goods or services before transferring them to
the customer.
Sale of goods
Revenue from the sale of steel plates is recognised at the
point in time when control of the asset is transferred to the
customer, which is on delivery of the goods for domestic sales,
on invoice for Bill and Hold sales and on bill of lading for export
sales. Revenue from the services of shipping and handling is
recognised over time as the service is performed. The normal
credit terms are 30 to 90 days upon end of month invoiced.
The Group considers whether there are other promises
in the contract that are separate performance obligations
to which a portion of the transaction price needs to be
allocated (e.g., shipping). In determining the transaction price
for the sale of goods, the Group considers the effects of
variable consideration, the existence of significant financing
components, non-cash consideration, and consideration
payable to the customer (if any).
(i)
Variable consideration
If the consideration in a contract includes a variable amount,
the Group estimates the amount of consideration to which it
will be entitled in exchange for transferring the goods to the
customer. The variable consideration is estimated at contract
inception and constrained until it is highly probable that a
significant revenue reversal in the amount of cumulative revenue
recognised will not occur when the associated uncertainty
with the variable consideration is subsequently resolved.
Some contracts for the sale of steel plates provide customers
with a right of return and early settlement discounts. The
rights of return and early settlement discounts give rise to
variable consideration.
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
r)
Revenue from contracts with customers (continued)
Early Settlement Discounts
The Group provides early settlement discounts to certain
customers if the payment for the sale of goods is made within
a specified period of time. The discounts are offset against
amounts payable by the customer. To estimate the variable
consideration to which it will be entitled, the Group applies the
‘expected value method’ to estimate the settlement discounts
that will be issued. This method best predicts the amount
of variable consideration to which the Group will be entitled.
The Group then applies the requirements on constraining
estimates of variable consideration that can be included in the
transaction price.
(ii) Significant financing component
Generally, the Group receives payment for the sale of goods
between 30 to 90 days after the goods have been delivered.
Should a significant financing component exist, the Group
will apply the practical expedient in AASB 15. Using this, the
Group does not adjust the promised amount of consideration
for the effects of a significant financing component if it expects,
at contract inception, that the period between the transfer of
the promised good or service to the customer and when the
customer pays for that good or service will be one year or less.
(iii) Non-cash consideration
The Group does not receive non-cash consideration for the sale
of goods.
Contract balances
Contract Assets
A contract asset is the right to consideration in exchange for
goods or services transferred to the customer. If the Group
performs by transferring goods or services to a customer before
the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that
is conditional.
Trade Receivables
A receivable represents the Group’s right to an amount of
consideration that is unconditional (i.e., only the passage of time
is required before payment of the consideration is due). Refer
to accounting policies of financial assets in section p) Financial
instruments – initial recognition and subsequent measurement.
Contract Liabilities
A contract liability is the obligation to transfer goods or services
to a customer for which the Group has received consideration
(or an amount of consideration is due) from the customer. If a
customer pays consideration before the Group transfers goods
or services to the customer, a contract liability is recognised
when the payment is made or the payment is due (whichever is
earlier). Contract liabilities are recognised as revenue when the
Group performs under the contract.
s)
Other Income
Interest income
Interest income is recognised as it accrues using the effective
interest rate (EIR) method. The EIR is the rate that exactly
discounts estimated future cash receipts over the expected life
of the financial asset to the net carrying amount of the financial
asset. Interest income is included in finance income in the
statement of profit or loss and other comprehensive income.
Dividend income
Dividend income is recognised when the Group’s right to
receive the payment is established.
Borrowing costs
t)
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes
a substantial period of time to get ready for its intended use or
sale are capitalised as part of the cost of that asset. All other
borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds. Bisalloy
Steel Group Limited does not currently hold qualifying assets
but, if it did, the borrowing costs directly associated with this
asset would be capitalised (including any other associated
costs directly attributable to the borrowing and temporary
investment income earned on the borrowing).
Leases
u)
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right
to control the use of an identified asset, the Group uses the
definition of a lease in AASB 16.
This policy is applied to contracts entered into, on or after
1 July 2020.
Group as a lessee
At inception or on reassessment of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease and non-lease component on the basis
of their relative stand-alone prices. However, the Group has
elected for all leases in which it is a lessee, not to separate non-
lease components and will instead account for the lease and
non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount
of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
2022 Financial Report Bisalloy Steel Group Limited | 63
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
u)
Leases (continued)
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end
of the lease term, unless the lease transfers ownership of the
underlying asset to the Group by the end of the lease term or
the cost of the right-of-use asset reflects that the Group will
exercise a purchase option. In that case the right-of-use asset
will be depreciated over the useful life of the underlying asset,
which is determined on the same basis as those of property
and equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if the
that rate cannot be readily determined, the Group’s incremental
borrowing rate. Generally, the Group uses its incremental
borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by
obtaining interest rates from various external financing sources
and makes certain adjustments to reflect the terms of the lease
and type of asset leased.
Lease payments included in the measurement of the lease
liability comprise of the following:
• Fixed payments, included in-substance fixed payments;
• Variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the
commencement date;
• Amounts expected to be payable under a residual value
guarantee; and
• The exercise price under a purchase option that the Group
is reasonably certain to exercise, lease payments in an
optional renewal period if the Group is reasonably certain
to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably
certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an
index or rate, if there is a change in the Group’s estimate of
the amount expected to be payable under a residual value
guarantee, if the Group changes it assessment of where it will
exercise a purchase, extension or termination option or if there
is a revised in-substance fixed lease payment.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases of low-value assets and short-term
leases, including IT equipment. The Group recognises the lease
payments associated with these leases as an expense on a
straight-line basis over the lease term.
Foreign currency translation
v)
The Group’s consolidated financial statements are presented
in Australian dollars (A$), which is the Company’s functional
and presentation currency. 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. Transactions in foreign currencies are initially
recorded in the functional currency rate ruling at the date of
the transaction. Monetary assets and liabilities denominated
in foreign currencies are retranslated at the functional
currency rate of exchange ruling at the statement of financial
position date.
All differences are taken to profit or loss. Non-monetary items
that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates
of the initial transactions.
The functional currency of the foreign operations is the currency
in circulation in the country they each reside in. As at the
reporting date, the assets and liabilities of these subsidiaries
are translated into the Company’s presentation currency (A$)
at the rate of exchange ruling at balance date, and their income
statements are translated at the weighted average exchange
rates for the year. The exchange differences arising on the
translation are recognised in the foreign currency translation
reserve within equity. On disposal of a foreign entity, the
deferred cumulative amount recognised in equity relating to that
particular foreign operation is recognised in the statement of
comprehensive income.
w) Earnings per share (EPS)
Basic EPS is calculated as net profit attributable to members,
adjusted to exclude 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,
adjusted for:
• costs of servicing equity (other than dividends);
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of
the right-of-use asset, or recorded in profit or loss if the carrying
amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets in ‘property, plant and
equipment’, the same line item as it presents underlying assets
of the same nature that it owns and lease liabilities in ‘lease
liabilities’ in the statement of financial position.
•
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.
64 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
Derivative financial instruments and hedging
x)
The Group uses derivative financial instruments such as forward
currency contracts to hedge its risks associated with foreign
currency risks. Such derivative financial instruments are initially
recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured at
fair value. Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when the fair value
is negative.
Any gains or losses arising from changes in fair value on
derivatives that do not qualify for hedge accounting are taken
directly to net profit or loss for the year.
The fair value of forward currency contracts is calculated by
reference to current forward exchange rates for contracts with
similar maturity profiles. The fair value of interest rate swap
contracts is determined by reference to market values for
similar instruments.
Amounts taken to equity are transferred to the statement
of profit or loss and other comprehensive income when the
hedged transaction affects profit or loss, such as when hedged
financial income or financial expense is recognised or when a
forecast sale or purchase occurs. Where the hedged item is the
cost of a non-financial asset or liability, the amounts taken to
equity are transferred to the initial carrying amount of the non-
financial asset or liability.
If the forecast transaction is no longer expected to occur,
amounts previously recognised in equity are transferred to profit
or loss. If the hedging instrument expires or is sold, terminated
or exercised without replacement or rollover, or if its designation
as a hedge is revoked, amounts previously recognised in
equity remain in equity until the forecast transaction occurs. If
the related transaction is not expected to occur, the amount is
taken to profit or loss.
Fair Value Hedges
For the purpose of hedge accounting, hedges are classified as:
•
fair value hedges: when hedging the exposure to changes in
the fair value of a recognised asset or liability; or
The change in the fair value of the hedged item attributable to
the risk hedged is recorded as part of the carrying value of the
hedged item and is also recognised in the statement of profit or
loss and other comprehensive income as a finance cost.
• cash flow hedges: when hedging exposure to variability
in cash flows that is either attributable to a particular risk
associated with a recognised asset or liability or a highly
forecast transaction or the foreign currency risk in an
unrecognised firm commitment.
At the inception of a hedge relationship, the Group formally
designates and documents the hedge relationship to which
the Group wishes to apply hedge accounting and the risk
management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging
instrument, the hedged item, the nature of the risk being
hedged and how the Group will assess whether the hedging
relationship meets the hedge effectiveness requirements
(including the analysis of sources of hedge ineffectiveness and
how the hedge ratio is determined). A hedging relationship
qualifies for hedge accounting if it meets all of the following
effectiveness requirements:
• There is ‘an economic relationship’ between the hedged
item and the hedging instrument.
• The effect of credit risk does not ‘dominate the value
changes’ that result from that economic relationship.
• The hedge ratio of the hedging relationship is the same
as that resulting from the quantity of the hedged item that
the Group actually hedges and the quantity of the hedging
instrument that the Group actually uses to hedge that
quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting
are accounted for as described below:
Cash Flow Hedges
The effective portion of the gain or loss on the hedging
instrument is recognised directly in equity, while the ineffective
portion is recognised in profit or loss.
When an unrecognised firm commitment is designated as a
hedged item, the subsequent cumulative change in the fair
value of the firm commitment attributable to the hedged risk is
recognised as an asset or liability with a corresponding gain or
loss recognised in profit or loss.
The Group discontinues fair value hedge accounting if the
hedging instrument expires or is sold, terminated or exercised,
the hedge no longer meets criteria for hedge accounting or
the Group revokes the designation. Any adjustment to the
carrying amount of a hedge financial instrument for which the
effective interest method is used is amortised to the profit or
loss. Amortisation may begin as soon as an adjustment exists
and shall begin no later than when the hedged item ceases to
be adjusted for changes in its fair value attributable to the risk
being hedged.
y)
Fair Value Measurement
The Group measure financial instruments such as derivatives at
fair value at each reporting date.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either:
•
•
in the principal market for the asset or liability, or
in the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must be
accessible by the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing
the asset or liability, assuming that market participants act in
their economic best interest.
2022 Financial Report Bisalloy Steel Group Limited | 65
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 28. Summary of significant accounting policies (continued)
x)
Derivative financial instruments and hedging (continued)
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable
• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers
have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of the reporting period.
Changes in accounting standards
z)
The accounting policies adopted in the preparation of the condensed consolidated financial statements are consistent with those
followed in the preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2021, except for
the adoption of new standards effective as of 1 July 2021. The Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
aa) Standards issued but not yet effective
A number of new standards are effective for annual periods beginning after 1 July 2021 and earlier application is permitted; however
the Group has not early adopted the new or amended standards in preparing these consolidated financial statements. No new
standard is considered to have a material impact on the Group.
66 | Bisalloy Steel Group Limited 2022 Financial Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2022 In accordance with a resolution of the directors of Bisalloy Steel Group Limited, I state that:
In the opinion of the directors:
a. the financial statements and notes 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 2022 and of its performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001;
b. the financial statements and notes also comply with International Financial Reporting Standards (AASB) as disclosed in note 28.
c.
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
d. as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified
in Note 24 will be able to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of
Cross Guarantee.
e.
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 financial year ended 30 June 2022.
On behalf of the Board
Rowan Melrose
Managing Director
25 August 2022
2022 Financial Report Bisalloy Steel Group Limited | 67
Directors’ DeclarationFor the year ended 30 June 2022 68 | Bisalloy Steel Group Limited 2022 Financial Report
Independent Auditor’s ReportFor the year ended 30 June 2022 2022 Financial Report Bisalloy Steel Group Limited | 69
Independent Auditor’s Report (continued)For the year ended 30 June 2022 70 | Bisalloy Steel Group Limited 2022 Financial Report
Independent Auditor’s Report (continued)For the year ended 30 June 2022 2022 Financial Report Bisalloy Steel Group Limited | 71
Independent Auditor’s Report (continued)For the year ended 30 June 2022 Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 31 July 2022.
a.
Distribution of equity securities
The number of shareholders, by size of holding in each class of share are:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
The number of shareholders holding less than a marketable parcel of shares based on a share
price of $1.90
There are performance rights issued. Performance rights do not carry a right to vote.
Ordinary Shares
Number of
Holders
Number of
Shares
769
936
345
400
43
457,854
2,480,556
2,610,070
12,519,608
29,020,589
2,493
47,088,677
90
7,794
Listed Ordinary Shares
Number of
Shares
% of
Ordinary
Shares
b.
Twenty largest shareholders
The number of shareholders, by size of holding in each class of share are:
1. BALRON NOMINEES PTY LTD
2.
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
3. BNP PARIBAS NOMINEES PTY LTD
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