18 Resolution Drive
PO Box 1246
Unanderra NSW 2526 Australia
ABN 27 001 641 292
P: +61 2 4272 0444
F: +61 2 4272 0400
E: companysecretary@bisalloy.com.au
www.bisalloy.com.au
The Manager - Listings
Australian Securities Exchange Limited
Exchange Centre
20 Bridge Street
SYDNEY NSW 2000
25 August 2023
Re: Compliance with Listing Rule 4.3A for the twelve months ended 30 June 2023
Dear Madam/Sir,
As approved by the Board of Bisalloy Steel Group Limited (ASX: BIS) and in accordance with Listing Rule 4.3A,
please find the following documents relating to Bisalloy Steel Group Limited’s results for the twelve months ended
30 June 2023:
• Appendix 4E Results for Announcement to the Market.
• Bisalloy’s FY2023 Annual Report including it’s Directors’ Report and audited Financial Statements
containing all other Appendix 4E requirements.
2023 Annual General Meeting
The 2023 Annual General Meeting of Bisalloy Steel Group Limited will be held on Friday, 06 October 2023,
11.00am (Sydney time) at the Sir James Fairfax Room of the Radisson Blu Plaza Hotel, located at 27 O’Connell
Street, Sydney, NSW 2000.
Yours faithfully
Carl Bowdler
Company Secretary
Bisalloy Steel Group Limited
Appendix 4E
BISALLOY STEEL GROUP LIMITED
A.C.N. 098 674 545
Appendix 4E – Preliminary Final Report
Financial year ended 30 June 2023
Results for announcement to the market
Absolute
Change
FY23
$’000
FY22
$’000
Revenue
Profit before tax
Profit after tax
Up
30.0%
Down
11.4%
Down
12.2%
Profit attributable to members
Down
14.6%
to
to
to
to
153,139
117,827
18,769
21,182
13,527
15,403
12,796
14,991
Dividends
Financial year ended 30 June 2023
Final dividend
Interim dividend
Financial year ended 30 June 2022
Final dividend
Interim dividend
Amount per share
Franked amount per share
9.5 cps
4.0 cps
9.0 cps
4.5 cps
100%
100%
100%
100%
Record date for determining entitlements to the
dividend 1
20 September 2023
1. The dividend reinvestment plan remains suspended until further notice and will not be in operation for the 2023 final dividend.
Other
Net tangible asset backing per share
FY23
142.0 cps
FY22
126.8 cps
Overview
1. Bisalloy Steel Group Ltd (“the Group”) delivered a FY23 Profit after tax attributable to members of $12.8m,
representing a 14.6% decrease on the prior year. The Group experienced more challenging business conditions in
FY23 driven by significant increases in input costs (Greenfeed, power and transport).
2. The Group’s distribution subsidiaries in Indonesia and Thailand continued to operate profitably over FY23 and made
a positive contribution to the Group result.
3. The Group’s cooperative joint venture (CJV) for the manufacture and sale of quench & tempered steel into China
and other North Asian markets generated a total operating profit before tax of $6.5m, which after local taxes resulted
in a 50% contribution to the Group of $2.4m for FY23.
Bisalloy Steel Group Limited
1
Heading 1
Controlled entities acquired or disposed
No material control over any entities was gained or disposed of during the financial year ended 30 June 2023.
Other information required by Listing Rule 4.3A
The remainder of the information requiring disclosure to comply with Listing Rule 4.3A is contained in the attached
Additional Information, Directors’ Report and Financial Report.
Audit
This report is based on financial statements that have been audited and an unqualified opinion has been issued.
Rowan Melrose
Managing Director and CEO
Sydney
24 August 2023
Bisalloy Steel Group Limited
2
Annual Report
2023
Contents
i
ii
2023 highlights
Chairman’s Report
79 Directors’ Declaration
80 Independent Auditor’s Report
iv Managing Director and Chief Executive
84 Additional Information
Officer’s Report
1 2023 Financial Report
86 Corporate Directory
2023 highlights
We are a proudly Australian company
producing the BISALLOY® range of quenched
and tempered performance steels across
three main product areas of high wear,
structural and armour grade specialty steels.
$23.0m
EBITDA
9.5c
Final Dividend
$2.3m
Net Debt
3%
Gearing
EBITDA $m
Debt $m
Gearing %
30
24
18
12
6
0
9
1
Y
F
0
2
Y
F
1
2
Y
F
2
2
Y
F
3
2
Y
F
15
12
9
6
3
0
9
1
Y
F
0
2
Y
F
1
2
Y
F
2
2
Y
F
3
2
Y
F
30
24
18
12
6
0
9
1
Y
F
0
2
Y
F
1
2
Y
F
2
2
Y
F
3
2
Y
F
2022 Annual Report Bisalloy Steel Group Limited | i
2023 Annual Report Bisalloy Steel Group Limited | i
Chairman’s Report
Your company is a safer and
more capable company than
it was 12 months ago.
Mr David Balkin AM,
Chairman
ii | Bisalloy Steel Group Limited 2023 Annual Report
Our safety record is exceptional in absolute terms and
way better than the industry average. Our balance
sheet has very low levels of debt, and our strong
financial performance for the year – despite some
significant headwinds we continue to face – enables us
to declare a final dividend of 9.5 cents, for a total year
dividends of 13.5 cents.
Our domestic market share for our core products
has grown because of our much better engagement
with, and understanding of, our customers’ needs and
requirements. We have re-engaged with our Chinese
Joint Venture (CJV) now that travel to China has
reopened. We are intently focused on the key enablers
of our growth strategy and intend to invest time and
resources to advance and develop them in the next
12 months. Finally, our Governance frameworks are
more refined without distracting the Board’s focus from
building a stronger and more profitable company.
However, we cannot be complacent.
We continue to compete with large multi-national
quench and tempered steel producers who see
supplying their steel to the Australian mining industry
as core to their business. We compete, not by cutting
prices, but by continuing to improve our product quality
and using our local supply capability to serve our
customers better than any steel importer can.
Global and local supply shocks combined with
Government policies to reduce carbon emissions have
delivered increases in both gas and electricity prices.
These increases continue to erode our profitability at
a time when your company has continued its efforts
to reduce emissions. We are concerned that state
and federal governments have little real appreciation
as to how sharply rising energy costs will ultimately
make energy intensive manufacturing in Australia
internationally uncompetitive. Bisalloy is Australia’s
only quench and tempered steel plate producer which
serves our mining and defence industries. We believe
that our local production capability is a vital part of
Australia’s self-reliance. We hope that the Australian
and state governments share a similar view.
Changes to international shipping markets with the
significant reduction of roll-on roll-off coastal shipping
from Australia’s east coast to the west coast, has
forced the company to use significantly higher cost
transportation to get its steel to the west coast. We are
working diligently to develop innovative alternatives to
reduce our freight costs and expect to make significant
progress in the next six months.
Finally, we would like to thank our stable group of
shareholders for their loyalty and support. Our
employees and the Board hope that we exceed your
expectations as we continue to strive for a better
performing and more profitable company.
Mr David Balkin AM,
Chairman
2023 Annual Report Bisalloy Steel Group Limited | iii
Managing Director and Chief
Executive Officer’s Report
Improving our Health,
Safety and Environment
performance and developing
the right culture is of critical
importance at Bisalloy.
Rowan Melrose
Managing Director and
Chief Executive Officer
iv | Bisalloy Steel Group Limited 2023 Annual Report
The safety of all employees, contractors and
stakeholders is our number one priority and we have
continued to evolve our standards and expectations.
Our focus on leading indicators such as hazards and
near misses has led to a 69% increase in our reporting.
This has allowed our business to take a much more
proactive approach to identify and manage our risks.
The improvement in our lagging indicators has also
been extremely positive. Our Lost Time Injury Frequency
Rate (LTIFR) is zero, our Total Recordable Injury
Frequency Rate (TRIFR) is zero, our Medical Treatment
Injury Frequency Rate (MTIFR) is zero and our All Injury
Frequency Rate (AIFR) for the group is 12.5. These
are remarkable statistics and are testament to the
dedication and commitment of all our employees at all
our sites.
In consideration of our environmental impact, during
the year we have undertaken a detailed analysis of
the Australian manufacturing facility. This review was
to understand our carbon footprint, our energy usage,
and our waste generation to develop a program of
works that will lead to a more efficient operation, a
reduction in waste from the plant, and our commitment
to be Carbon Neutral by 2030. We are in the process
of developing these opportunities, and although we
are setting longer term goals we continue to focus on
daily improvements. As an example, during the year
we were able to reduce our solid wastes by over 50%.
This was achieved by increasing recycling and overall
employee education.
In the annual report last year, we spoke of anticipated
headwinds including,” international steel plate prices,
increased shipping costs, disruptions to international
and domestic shipping, and ever increasing energy
costs”. These factors continued to affect the business
during the year but were offset by a less volatile
Quench and Tempered steel price cycle.
Our sales team have held their market positioning, and
this has been a driving force for this year’s results. Their
expertise and product knowledge, combined with their
customer centric, collaborative, and solutions-oriented
approach has delivered new partnerships and built on
existing relationships.
As mentioned, our operations have had to deal with
significant increases in both electricity and gas input
costs during the year. To manage these increases we
made the difficult decision to rationalize our workforce
and reduce our workshop employees by approximately
20%. Our freight costs and in particular sea freight
to our Western Australian market also increased
significantly during the year. We do not see this
situation changing in the near term and are looking at
alternative and more cost-effective forms of transport
to maintain our supply.
Our Joint Ventures remain a central pillar of our
business strategy. The year has enabled enhanced
communication and collaboration with our partners
as travel restrictions have been removed, and
we have established a deeper understanding of
our joint venture partners’ goals and objectives.
Our commitment to fostering mutually beneficial
relationships creates a solid foundation for shared
2023 Annual Report Bisalloy Steel Group Limited | v
Managing Director and Chief Executive Officer’s Report
continued
success which has expanded our global reach,
leveraged their local expertise and networks, and
optimised our global supply chain.
Indonesia had a particularly strong year with a
demonstrable improvement in the bottom line
with their commitment to add more value to their
distribution capability.
Thailand increased sales volume year on year, but
increased product costs resulted in a reduction
in margins. They are developing new market
opportunities and value-added products which
will begin generating income and improve margins
this year.
We have been able to invest more time into the
Chinese JV. They continue to make a significant
contribution to Bisalloy despite China’s difficult
market conditions.
As much as we focus on optimizing the day-to-day
operations, we are also focusing on our strategic
and growth opportunities. During the year we have
developed a suite of strategic priorities and business
enablers to build and grow the business. Our planned
approach has identified several new markets,
new products and potential services that will be
investigated and potentially developed.
The past 12 months has been very positive for our
business. We continue to deliver very healthy financial
performance, have dramatically improved our health
and safety performance, and have made significant
internal and business systems changes. Some of
these changes have proved challenging but are
beginning to deliver the right outcomes. Critically, these
changes will be the foundation to allow significant
ongoing improvements. We have a clearer view of our
growth opportunities and growth enablers. This is a
transformational time for Bisalloy.
I would like to thank all our customers for their
ongoing support. We value your business, and we will
continue to work hard to improve our performance by
strengthening our relationships and building your trust.
I would also like to thank all the Bisalloy family for
their contribution to our success. It is a result of their
efforts, their contribution, and their resilience that
we have been able to make the progress we have
during the year and deliver a strong set of results for
our shareholders.
Mr Rowan Melrose
Managing Director and CEO
vi | Bisalloy Steel Group Limited 2023 Annual Report
2023
Financial Report
2023 Annual Report Bisalloy Steel Group Limited | 1
Directors’ Report
For the Year ended 30 June 2023
Your Directors submit their report for the Year ended
30 June 2023.
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
BSc, Civil Engineering
(WITS), MBA (Harvard)
Chairman
Skills and Experience:
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 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
B.E (Hons), M.App.Sc,
MBA
Managing Director and
Chief Executive Officer
Skills and Experience:
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 Applied 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:
Bisalloy Shangang (Shandong) Steel Plate Co., Limited
Bisalloy (Thailand) Co Ltd
Supervisory Boards:
President Commissioner of PT Bima Bisalloy
2 | Bisalloy Steel Group Limited 2023 Annual Report
Mr Ian Greenyer
B Sc (Hons)
Non-executive Director
Skills and Experience:
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 and
subject to re-election by rotation in October 2023.
Board Committees:
● Audit and Risk Committee
● Nominations and Remuneration Committee
Other Directorships:
Nil
Mr Michael Gundy
MBA, B Bus, Assoc Dip
Metallurgy
Non-executive Director
Skills and Experience:
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 October 2022.
Board Committees:
● Audit and Risk Committee
● Nominations and Remuneration Committee
Other Directorships:
Nil
Supervisory Boards:
PT Bima Bisalloy
2023 Annual Report Bisalloy Steel Group Limited | 3
Mr Bernard Landy
Dip Eng(Mech), FAICD
Non-executive Director
Skills and Experience:
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 last re-elected in October 2022.
Board Committees:
● Audit and Risk Committee
● Nominations and Remuneration Committee
Other Directorships:
Nil
Supervisory Boards:
Bisalloy Shangang (Shandong) Steel Plate Co. Ltd.
Company Secretary
Mr Carl Bowdler
B Bus, FCPA, MAICD, FGIA
Company Secretary
and Chief Financial
Officer
Skills and Experience:
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 Group’s majority owned
businesses – PT Bima Bisalloy and Bisalloy (Thailand) Co Ltd.
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:
D Balkin
I Greenyer
M Gundy
B Landy
R Melrose
Number of
ordinary shares
Number of
shares rights
7,781,095
100,000
67,054
32,500
–
–
–
–
–
52,742
4 | Bisalloy Steel Group Limited 2023 Annual Report
Directors’ Report (continued)For the year ended 30 June 2023 Dividends
Final dividend for FY23 recommended on ordinary shares (fully franked)
FY23 Interim Dividend paid in the year
FY22 Final Dividend paid in the year
Cents
9.5
4.0
9.0
$’000
4,508
1,898
4,238
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 Joint Venture (CJV) – Bisalloy Shangang
(Shandong) Steel Plate Co, Ltd.
Bisalloy delivered strong results in the 2022-23 financial
year. Our global Environment Health and Safety metrics
were extremely pleasing, and there were no lost time
or medically treated injuries. We were fully compliant
from an environmental perspective, and we satisfied all
safety, quality and environmental audits.
Our sales tonnes and our sales revenue improved year
on year and despite significant increases in input costs
(Greenfeed, power and transport), the business has
again delivered strong financial results.
Throughout the year we added to the existing
sales team through recruitment and internal role
reassignment to increase our focus across our market
segments. We now employ a diverse mix of sales
professionals drawing from functional experience
in steel distribution, plate processing, business
development, engineering, operations, mining,
earthmoving, and agriculture. Through reallocation
of internal personnel, we have added to the focus on
our armour business. Notably we were able to expand
our service offering by partnering with selected
channel partners to offer cut armour parts into key
domestic Defence projects as well as export orders.
This is a tremendous opportunity to further increase
the margin opportunities in the Defence business
utilising our nearly 30 years of experience as a Defence
industry supplier.
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 2023 Bisalloy utilised greenfeed steel
supply mainly from neighbouring BlueScope Steel in
Wollongong, complemented with selected supply from
international greenfeed suppliers, including the CJV.
Financial review
Operating results
Our businesses continued to perform well with strong
operational execution delivering growth in volume and
sales revenue through customer focus and disciplined
execution in a very competitive environment. While
the Gross Margin percentages reverted to normalised
levels in FY23 after increasing significantly in FY22
as market prices rose, strong volume growth in
FY23 supported increased gross margin dollars,
and offset the impact of higher greenfeed, energy
and transportation costs as well as absorbing the
one-off redundancy costs of our manufacturing
staff reductions.
The Group’s net profit for the year after income tax was
lower at $13,527,000 (2022: $15,403,000).
Operating expenses increased compared to FY22,
reflecting the one-off savings in overheads in FY22 not
repeated in FY23. With Covid restriction over, and a full
complement of employees on board, employment,
marketing and travel costs increased.
The impacts from Covid-19 lock-downs and a tepid
recovery in Chinese market conditions saw a fall
in both Volume and Sales in the CJV for the year.
2023 Annual Report Bisalloy Steel Group Limited | 5
Fortunately, these lost sales have been more than offset by lower administration and operating costs, resulting in a
small increase to earnings compared to FY22.
Operating results are summarised as follows:
Operating Segments
Australia
Overseas
Consolidated entity adjustments
Consolidated entity revenue and profit after tax for the year
FY23
Revenue
$’000
Profit
after tax
$’000
131,198
24,335
155,533
(2,394)
153,139
11,864
3,596
15,460
(1,933)
13,527
Delivering for Shareholders
We seek to deliver sustainable dividends for our shareholders. We know that many shareholders rely on the
dividends and related franking credits that they receive to support their income. By focusing on our operating
performance and capital generation through different economic environments, we can achieve sustainable
dividends over the long-term.
The Board has decided to pay a final dividend of 9.5 cents per share for the Year ended 30 June 2023, in addition to
the 4.0 cent interim dividend paid in April. The Dividend Re-investment Scheme remains suspended.
Dividend per share (cents)
16
14
12
10
8
6
4
2
0
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Interim Dividend (cents)
Final Dividend (cents)
6 | Bisalloy Steel Group Limited 2023 Annual Report
Directors’ Report (continued)For the year ended 30 June 2023
Basic earnings per share (cents)
Net profit attributable to members
($’000)
Return on equity (reported PAT/
equity) (%)
Gearing (net debt / net debt +
equity) (%)
Interim Dividend (cents)
Final Dividend (cents)
Dividend franking
Dividend Payout Ratio
FY17
3.4
FY18
8.2
FY19
8.3
FY20
14.9
FY21
19.3
FY22
32.2
FY23
27.0
1,509
3,636
3,682
6,736
8,810
14,991
12,796
6.6%
12.6%
12.6%
16.0%
18.5%
24.0%
18.6%
15%
–
2.5
100%
74%
16%
21%
27%
13%
–
4
100%
49%
–
4
100%
48%
–
5
100%
34%
–
9
100%
47%
12%
4.5
9
100%
42%
3%
4
9.5
100%
50%
Balance Sheet Strength
Balance Sheet strength is critical to our ability to serve our customers, drive core business outcomes and deliver
sustainable returns for our shareholders. Our liquidity and funding metrics remained strong. The strength of our
balance sheet means we are positioned to continue supporting our customers while delivering sustainable returns
to our shareholders.
Liquidity and Funding
Gearing (net debt / net debt + equity) (%)
30%
25%
20%
15%
10%
5%
0
FY17
FY18
FY19
FY20
FY21
FY22
FY23
The Group has funded the cash paid in dividends from Operating Activities, whilst delivering lower gearing
compared to FY22.
The consolidated statement of cash flows details an increase in cash and cash equivalents before exchange rate
differences for the Year ended 30 June 2023 of $170,000 (2022: decrease of $564,000).
Operating Activities resulted in a net cash inflow of $11,138,000 (2022: inflow of $4,285,000).
2023 Annual Report Bisalloy Steel Group Limited | 7
Investing activities resulting in a net cash inflow of
$922,000 (2022: outflow of $341,000). This included cash
outflows of $915,000 (2022: $842,000) for investment in
operating plant and equipment, outflows of $112,000
(2022: $120,000) for intangibles and dividends received
of $1,949,000 (2022: $620,000).
Financing activities resulted in a net cash outflow of
$11,890,000 (2022: outflow of $4,508,000), including a
decrease of $6,081,000 in borrowings (2022: increase in
borrowings of $727,000) and the dividend paid in cash
to shareholders in October 2022 and April 2023 totalling
$5,416,000 (2022: $4,630,000).
The Group’s net debt decreased to $2.3m at
30 June 2023, down from $8.6m at 30 June 2022, with a
decrease in gearing to 3%, down from 12% 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 $5.5 million and a
premium finance facility of $0.42 million. The total limit
of these facilities is $26.9 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
We are accelerating product development efforts,
with several new products now or soon to be
released including;
Bisalloy® WEAR & STRUCTURAL steel development
● Bisalloy® WEAR 500XT – is a high hardness wear
steel with guaranteed toughness for applications
typically in off highway mining trucks. Materials
used in these applications demand superior
in-service properties such as toughness and
hardness, with the need for maximum workshop
productivity. Bisalloy® Wear 500XT has been
qualified with two global mining machinery OEMs,
with ensuing sales into the Chinese market, and
pending sales expected in the APAC market in FY24.
● Bisalloy® WEAR 550 – Extreme wearing high
hardness steel with crack resistance for liner
plate applications in mining, mineral processing,
quarrying and agriculture.
● Bisalloy® STRUCTURAL 110 – is a higher strength
structural grade now available particularly for
heavy vehicle builders seeking to optimise overall
design weight.
Bisalloy® ARMOUR/ARMOR steel development
● Bisalloy® ARMOUR VHH500 – is an existing product
now with upgraded hardness and toughness
properties for applications in applique armour.
● Bisalloy® ARMOUR RHA360 – is an existing product
now with extended thickness range to cater to a
broader range of applications in mobile military
equipment, particularly heavy tracked armoured
vehicles, needing higher blast protection.
ERP
With the introduction of our ERP upgrade combined
with the introduction of more modern reporting
platforms, this project will manage our movement
to an Integrated Business Planning system that is
anticipated to generate additional sales through better
stock fulfilment, while optimising working capital.
Joint Venture in China (CJV)
With the Chinese Steel Market under significant
pressure, we will invest further in product development,
with several new products scheduled to be released
in the coming months. Additionally, we are supporting
further efforts to strengthen the Bisalloy Bisplate brand
in the Chinese Domestic Market along with a greater
focus on opportunities in international markets.
Overseas Distribution
The Group’s overseas distribution operations in
Indonesia and Thailand continue to be profitable and
we are focussed on developing further their higher
margin processed Product sales opportunities.
Armour
Our Armour business continues to be of importance
both domestically and internationally. Current market
development activities are examining feasibility of
a greater presence in the North American defence
supply chain, while continuing to service our export
opportunity with global defence primes such as
Hanwha, Rheinmetall, and Thales.
FY24 Outlook
The Australian economy has been resilient
with relatively high commodity prices and low
unemployment. However, there are signs of downside
risks building, and a global slowdown driven by Chinese
demand poses a significant threat to steel prices and
therefore margins. Despite these headwinds, we remain
optimistic to deliver another strong year.
We will continue to invest domestically and
internationally in our business and execute on our
8 | Bisalloy Steel Group Limited 2023 Annual Report
Directors’ Report (continued)For the year ended 30 June 2023 purpose to provide innovative steel solutions for
extreme environments.
continue to be energy prices and ongoing disruption
on the east to west coast domestic sea-freight route.
Business risk management
The Group’s operating environment is complex and
dynamic. This introduces new risks and opportunities
and affects our current risk priorities. The Group Risk
Management Framework enables the Board, Executive
Leadership Team (ELT) and our people to make
informed risk decisions to support the delivery of our
strategy. The Board takes a proactive approach to
risk management and 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 purpose, 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 and governance issues along with
work, 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 Board and management are placing extra focus
on mitigating a number of our material strategic,
financial and non-financial risk types, due to their
potential to have a material impact on the Group, our
customers, shareholders and the community, now or in
the future.
The material business risks with the greatest potential
to impact on the financial outlook for the Group
● 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.
● 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.
● 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.
Significant changes in the state
of affairs
Total equity increased from $64,286,000 to $72,562,000
an increase of $8,275,000 that was driven by the
increase in net profit for the year offset by FY23 interim
and FY22 final dividends totalling $6,136,000 which were
paid to shareholders in October 2022 and April 2023.
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.
2023 Annual Report Bisalloy Steel Group Limited | 9
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 19 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, RSM Australia
Partners, as part of the terms of its audit engagement
agreement against claims by third parties arising from
the audit (for an unspecified amount). No payment has
been made to indemnify RSM Australia Partners during
or since the financial year.
Non-audit services
During the year the Company’s auditor, RSM Australia
Partners, has performed no other services other than
the audit and review of the financial statements.
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
Audit and review of financial
statements
Total paid to RSM Australia Partners
FY23
190,000
190,000
Proceedings on behalf of
the company
No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the company, or to intervene
in any proceedings to which the company is a party
for the purpose of taking responsibility on behalf of the
company for all or part of those proceedings.
Likely developments and
expected results
In FY24 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 FY23 with good momentum going into FY24.
Our Board in Action
Board Planning and Agenda Setting
The primary purpose of the Board is to ensure sound
and prudent management of the Group, providing
leadership and strategic guidance, and overseeing
the effective delivery of our purpose. Board meetings
are core to fulfilling these duties. In the 2023 financial
year, the Board held 18 meetings. In addition, the Board
and Executive Leadership Team (ELT) held a multi-day
strategy workshop.
To ensure the Board’s time is used efficiently and
discussions reflect the Group’s priorities, Board annual
plan and agendas are reviewed by respective Board
and Committee Chairs, in consultation with the Group
Company Secretary and CEO. Importantly, the Board
also retains flexibility for ad hoc matters to be raised
and discussed where appropriate.
10 | Bisalloy Steel Group Limited 2023 Annual Report
Directors’ Report (continued)For the year ended 30 June 2023 Board Activities
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
I Greenyer
M Gundy
R Melrose
B Landy
Remuneration report (audited)
The remuneration report for the Year ended
30 June 2023 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 three 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.
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.
Committee meetings
Directors’
meetings
Audit and Risk
Nominations and
Remuneration
11
11
11
11
11
11
4
4
4
4
4
4
3
3
3
3
3
3
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 CEO and other senior
executives, and the review and recommendation of
general remuneration principles.
Remuneration 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.
2023 Annual Report Bisalloy Steel Group Limited | 11
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 $700,000.
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 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 2023 is detailed in the table on
page 15 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.
Structure
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 2023 is detailed in the table on
page 15 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 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 2023 is detailed in the table on page 15
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
12 | Bisalloy Steel Group Limited 2023 Annual Report
Directors’ Report (continued)For the year ended 30 June 2023 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 rights granted
prior to 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 since 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.
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. Precedence suggests all plans
will be settled 50/50 between cash and shares.
A total of 274,824 share rights (2022: 217,905) were
granted under this scheme during the year.
At the 2022 AGM, 98.10% of the votes received supported
the adoption of the remuneration report for the Year
ended 30 June 2022. The company did not receive
any specific feedback at the AGM regarding its
remuneration practices.
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
The LTI program has been designed to align the
remuneration received by executive Directors
and executive 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 2022 Annual General Meeting (AGM), 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
2023 Annual Report Bisalloy Steel Group Limited | 13
Group performance
The Board has determined that 100% of the performance components of the 2023 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) (%)
18.60%
24.00%
18.50%
16.00%
12.60%
12.60%
6.60%
FY23
FY22
FY21
FY20
FY19
FY18
FY17
Details of key management personnel of the company and group
(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)
R Melrose
Managing Director and Chief Executive Officer (from 1 March 2022)
B Landy
Non-executive Director (from 1 March 2022)
(ii) Executives
M Enbom
Chief Operating Officer (from November 2019)
C Bowdler
Chief Financial Officer and Company Secretary (from 29 November 2021)
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
C Bowdler – Chief Financial Officer and Company Secretary (from 29 November 2021)
● 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 1 November 2019)
● Regular employment contract without fixed term
● Participation in STI and LTI schemes
● 3 months notice required for termination of employment
There are no termination benefits aside from the potential, at the board’s discretion, to payout any notice period.
14 | Bisalloy Steel Group Limited 2023 Annual Report
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F
2023 Annual Report Bisalloy Steel Group Limited | 17
Shareholdings of key management personnel
Shareholdings include shares held personally and through related parties.
Directors
D Balkin
I Greenyer
M Gundy
B Landy
R Melrose
Executives
M Enbom
C Bowdler
Balance at
30-Jun-22
Performance
rights
exercised
Other
Balance at
30-Jun-23
7,781,095
100,000
64,157
2,500
–
77,589
–
8,025,341
–
–
–
–
–
–
–
–
–
–
7,781,095
100,000
2,897
30,000
–
–
–
67,054
32,500
–
77,589
–
32,897
8,058,238
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 [19].
Mr Rowan Melrose
CEO and Managing Director
24 August 2023
18 | Bisalloy Steel Group Limited 2023 Annual Report
Directors’ Report (continued)For the year ended 30 June 2023 RSM Australia Partners
Level 13, 60 Castlereagh Street Sydney NSW 2000
GPO Box 5138 Sydney NSW 2001
T +61 (0) 2 8226 4500
F +61 (0) 2 8226 4501
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Bisalloy Steel Group Limited for the year ended 30 June
2023, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
LOUIS QUINTAL
Partner
Sydney, NSW
Dated: 24 August 2023
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
In thousands of dollars
Continuing operations
Revenue from contracts with customers
Cost of goods sold
Gross profit
Other (expenses) / income
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 interests
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
Net loss on cash flow hedge reserve
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 interests
Owners of the parent
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
20 | Bisalloy Steel Group Limited 2023 Annual Report
Consolidated
Notes
Year ended
30 June 2023
Year ended
30 June 2022
2
153,139
117,827
(120,521)
(86,754)
4(a)
4(b)
4(b)
5
6(a)
22(d)
32,618
(35)
(2,385)
(4,017)
(841)
(7,925)
–
17,415
(1,306)
227
2,433
18,769
(5,242)
13,527
731
12,796
13,527
–
218
(42)
43
(52)
167
13,694
856
12,838
13,694
27.0
26.7
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
32.2
31.6
Consolidated Statement of Profit or Loss and other Comprehensive IncomeFor the year ended 30 June 2023 In thousands of dollars
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Contract assets
Derivative Asset
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
Dividend Payable
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
Year ended
30 June 2023
Year ended
30 June 2022
9(a)
10
11
12
2.2
21
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)
2,052
23,421
47,106
2,427
247
33
485
1,834
26,240
39,847
1,505
138
–
–
75,771
69,564
9,583
123
26,090
580
53
59
36,488
112,259
9,299
125
26,738
634
157
69
37,022
106,586
25,838
20,888
1,020
360
1,971
373
183
376
108
7,526
2,729
1,790
317
–
386
95
30,229
33,731
3,358
1,342
288
4,480
9,468
39,697
72,562
15,227
40,674
12,066
67,967
4,595
72,562
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
2023 Annual Report Bisalloy Steel Group Limited | 21
Consolidated Statement of Financial PositionAs at 30 June 2023 Consolidated
Notes
Year ended
30 June 2023
Year ended
30 June 2022
165,766
(145,949)
39
(1,205)
(7,513)
11,138
–
(915)
(112)
1,949
922
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
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
9(b)
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 received / (used) from investing activities
Cash flows from financing activities
(Repayments) / Proceeds from borrowings
9(d)
(6,081)
Dividends paid to non-controlling interests
Dividends paid to shareholders of the parent
Principal lease payments
Net cash used in financing activities
Net increase / (decrease) in cash held
Net foreign exchange differences
Cash at the beginning of the financial year
Cash at the end of the financial year
–
(5,416)
(393)
(11,890)
170
48
1,834
2,052
9(a)
22 | Bisalloy Steel Group Limited 2023 Annual Report
Consolidated Statement of Cash FlowsFor the year ended 30 June 2023 4
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2023 Annual Report Bisalloy Steel Group Limited | 23
Consolidated Statement of Changes in EquityFor the year ended 30 June 2023
1. Corporate information
The financial report of Bisalloy Steel Group Limited and its subsidiaries (“the Group”) for the Year ended 30 June 2023
was authorised for issue in accordance with a resolution of the directors on 22 August 2023.
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
For the year ended 30 June 2023
Australia
Overseas
Total
117,924
10,880
23,957
378
141,881
11,258
Total revenue from contracts with customers
128,804
24,335
153,139
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
117,924
10,880
23,957
378
141,881
11,258
Total revenue from contracts with customers
128,804
24,335
153,139
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
24 | Bisalloy Steel Group Limited 2023 Annual Report
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
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
23,113
247
(376)
25,898
138
(386)
Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 2. Revenue from contracts with customers (continued)
2.2 Contract balances (continued)
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.
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 service is performed.
As at 30 June 2023, the unsatisfied performance obligations per each segment is presented below.
In thousands of dollars
Shipping and handling
Total Revenue from contracts with customers
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
376
376
386
386
The remaining performance obligations are expected to be recognised within the next 12 months.
3. Operating Segments
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.
Overseas operations
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.
2023 Annual Report Bisalloy Steel Group Limited | 25
3. Operating Segments (continued)
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 periodically and aims to
reflect what the business operation could achieve if they sold their output to external parties at arm’s length.
Major customers
The group has a number of customers to which it provides products. There are three customers who account for
29% (2022: 30%), 11% (2022: 5%) and 10% (2022: 14%) of total external revenue. All these customers are in the Australian
operating segment.
For the year ended 30 June 2023
Australia
Overseas
Total
128,804
24,335
2,394
131,198
153,139
2,394
-
24,335
155,533
(2,394)
153,139
15,460
227
1,306
2,161
2,433
5,117
112,656
1,378
32,679
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
11,864
3,596
Interest income
Interest expense
Depreciation
Share of profit of joint venture
Income tax expense
Segment assets
Capital expenditure
Segment liabilities
210
1,072
1,836
-
4,542
93,333
957
28,670
17
234
325
2,433
575
19,323
421
4,009
26 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 3. Operating Segments (continued)
In thousands of dollars
Revenue:
Sales to external customers
Inter-segment sales
Total segment revenue
Inter-segment elimination
Total consolidated revenue
For the year ended 30 June 2022
Australia
Overseas
Total
98,058
4,328
102,386
19,769
-
19,769
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
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
155,533
(2,394)
153,139
122,155
(4,328)
117,827
Segment net operating profit after tax
13,201
3,054
Interest income
Interest expense
Depreciation
Share of profit of joint venture
Income tax expense
Segment assets
Capital expenditure
Segment liabilities
-
507
1,895
-
5,409
90,145
1,356
28,411
In thousands of dollars
i)
Segment revenue reconciliation to the statement of comprehensive income
Total segment revenue
Inter-segment sales elimination
Total revenue
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 2023
Year ended
30 June 2022
106,779
33,565
3,917
8,878
153,139
86,387
21,083
3,495
6,862
117,827
2023 Annual Report Bisalloy Steel Group Limited | 27
3. Operating Segments (continued)
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
Total net profit before tax per the statement of profit or loss
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
15,460
(1,933)
5,242
18,769
16,255
(852)
5,779
21,182
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 2023
Year ended
30 June 2022
112,656
108,989
(1,027)
(2,629)
59
538
33
69
157
–
Total assets per the statement of financial position
112,259
106,586
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 2023
Year ended
30 June 2022
33,433
2,996
36,429
34,029
2,924
36,953
28 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 3. Operating Segments (continued)
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 2023
Year ended
30 June 2022
32,679
(1,243)
360
3,313
108
4,480
39,697
34,594
(2,158)
2,729
2,984
95
4,056
42,300
2023 Annual Report Bisalloy Steel Group Limited | 29
4. Other income and expenses
In thousands of dollars
(a) Other expenses / (income)
Foreign exchange loss / (gain)
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 and amortisation*
Cost of inventories
Provision for inventory
Cost of inventories recognised as an expense
Freight
Cost of goods sold
(d) Employee benefits expense*
Wages and salaries
Superannuation costs
Expense of share-based payments
*These costs are apportioned over several functions of the Group.
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
55
(20)
35
1,306
1,306
(227)
(227)
2,161
108,508
31
108,539
11,982
120,521
14,547
1,062
427
16,036
(114)
(13)
(127)
693
693
(11)
(11)
2,315
80,794
148
80,942
5,812
86,754
12,991
840
(154)
13,677
30 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 Investment in joint venture
5.
Interests in the joint venture (JV) 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 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.
Dividends of $1,949,365 (2022:$620,090) were received from the JV during the year.
In thousands of dollars
Joint venture’s statement of financial position:
Current assets, including cash of $2,374,064 (2022: $2,083,397)
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
Movement in carrying amount of the investment
Balance at 1 July
Share of profit
Dividend declared
Currency translation differences
Balance at 30 June
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
27,340
26
(8,200)
19,166
76,895
(70,275)
(151)
6,469
(1,603)
4,866
2,433
9,583
9,299
2,433
(1,949)
(200)
9,583
30,674
21
(12,097)
18,598
102,847
(96,790)
(43)
6,014
(1,414)
4,600
2,300
9,299
6,601
2,300
–
398
9,299
The joint venture has no capital commitments or contingent liabilities at 30 June 2023 (2022: None).
2023 Annual Report Bisalloy Steel Group Limited | 31
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
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense
The income tax expense for the period is disclosed as follows:
Income tax expense attributable to continuing operations
(b) Amounts charged or credited directly to equity
Deferred income tax related to items charged or credited directly to equity
Actuarial losses and gains
Net gain on revaluation of land and buildings and derivative assets
Income tax expense reported in equity
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
4,861
4,861
381
381
5,242
5,242
5,242
5,555
5,555
224
224
5,779
5,779
5,779
(41)
13
(28)
(10)
(1,895)
(1,905)
(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% (2022: 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
Income tax expense on pre-tax net profit
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
18,769
5,631
209
232
218
(95)
(730)
(223)
5,242
21,182
6,355
225
13
137
(118)
(690)
(143)
5,779
32 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 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 2023
Year ended
30 June 2022
Year ended
30 June 2023
Year ended
30 June 2022
–
44
22
–
–
(7)
59
69
(10)
–
59
–
45
24
–
–
–
69
51
18
–
69
(5,532)
(5,365)
724
554
137
(395)
32
728
407
262
(116)
28
(4,480)
(4,056)
(4,056)
(396)
(28)
(4,480)
(1,929)
(222)
(1,905)
(4,056)
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 2023, 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
Derivatives
Deferred tax assets and liabilities reflected in the
balance sheet
Net DTA / (DTL)
Thailand
2023
Indonesia
2023
Thailand
2022
Indonesia
2022
–
44
22
(7)
59
(463)
116
171
–
(176)
–
45
24
–
69
(404)
112
92
–
(200)
(e) Current income tax at 30 June 2023 relates to the following:
The current tax payable for the Group of $360,154 (2022: $2,729,004) 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 $0 payable in the
Australian jurisdiction, $321,326 in the Indonesian tax jurisdiction and $38,828 in the Thailand tax jurisdiction.
The current tax receivable of $484,956 (2022: $Nil) and the non-current tax receivable of $53,247 (2022: $157,488)
for the Group represents the amount of income tax receivable in respect of the current and prior periods. The
2023 Annual Report Bisalloy Steel Group Limited | 33
6.
Income tax (continued)
amount of current tax receivable is attributed to the Australian tax jurisdiction and the non-current tax receivable is
attributable 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 2023, 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 (2022: Nil).
(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)
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
13,527
(731)
15,403
(412)
12,796
14,991
Thousands
Thousands
Weighted average number of ordinary shares for basic earnings per share
47,345
46,546
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
671
913
48,016
47,459
–
597
34 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023
8. Dividends paid or proposed
In thousands of dollars
(a) Dividends paid during the year
Interim: 4.0 cents per share (2022: 4.5 cents per share)
Final: 9.0 cents per share (2022: 9.0 cents per share)
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
1,898
4,238
6,136
2,104
4,147
6,251
(b) Proposed dividend (not recognised as a liability as at 30 June)
Final dividend for 2023: 9.5 cents per share (2022: 9.0 cents per share)
4,508
4,238
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%
13.633
9,199
Franking (debits) / credits that will arise from the receipt 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
(485)
2,589
(1,932)
11,216
(1,816)
9,972
2023 Annual Report Bisalloy Steel Group Limited | 35
9. Cash and cash equivalents
In thousands of dollars
(a) Reconciliation of cash
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 in foreign currency translation
Change in operating assets and liabilities
Decrease / (increase) in receivables and other assets
Increase in inventories
(Decrease) / increase in tax assets and liabilities
Increase in prepayments
Increase in trade creditors
Increase / (decrease) 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
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
2,051
1
2,052
1,833
1
1,834
13,527
15,403
2,161
427
31
(103)
(2,433)
10
73
2,813
(7,290)
(2,361)
(921)
5,122
82
11,138
2,315
(154)
148
78
(2,300)
61
314
(3,402)
(12,059)
1,463
(18)
2,965
(529)
4,285
1,329
(7,410)
(6,081)
5,817
(5,090)
727
36 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 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 2023
Year ended
30 June 2022
23,321
(208)
23,113
236
72
308
26,210
(312)
25,898
269
73
342
23,421
26,240
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
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
6,965
40,141
47,106
614
39,233
39,847
2023 Annual Report Bisalloy Steel Group Limited | 37
12. Other current assets
In thousands of dollars
Current
Prepayments
Non-current
Prepayments
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
2,427
2,427
123
123
1,505
1,505
125
125
13. Property, plant and equipment
a) Reconciliation of carrying amounts at the beginning and end of the period
In thousands of dollars
Consolidated
Year ended 30 June 2023
At 1 July 2022, net of accumulated
depreciation and impairment
Additions
Depreciation and amortisation charge for
the year
Exchange adjustment
At 30 June 2023, net of accumulated
depreciation and impairment
At 1 July 2022
Cost or fair value
Accumulated depreciation and impairment
Net carrying value
At 30 June 2023
Cost or fair value
Accumulated depreciation and impairment
Net carrying value
Freehold land
and buildings
Leasehold
improvements
Plant and
Equipment
Total
20,213
414
(490)
73
20,210
20,562
(349)
20,213
20,657
(447)
20,210
–
–
–
–
–
34
(34)
–
34
(34)
–
6,525
852
(1,505)
8
26,738
1,266
(1,995)
81
5,880
26,090
26,945
(20,420)
6,525
23,423
(17,543)
5,880
47,541
(20,803)
26,738
44,114
(18,024)
26,090
38 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 13. Property, plant and equipment (continued)
Revaluation of freehold land and freehold buildings
b)
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.
For June 2023, it was determined by the finance provider and supported by the directors that there was no
significant change in fair value for its Indonesian land and buildings. The directors also determined that there was
no significant change in fair value for its Australian land and buildings.
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
2023
Freehold land
and buildings
2022
Freehold land
and buildings
7,632
(2,967)
4,665
7,028
(2,524)
4,504
Leased assets
d)
‘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
Note
Consolidated
2023
25,431
659
2022
26,046
692
13(a)
26,090
26,738
2023 Annual Report Bisalloy Steel Group Limited | 39
13. Property, plant and equipment (continued)
Right-of-use assets in each category is shown below:
In thousands of dollars
Balance at 1 July 2022
Additions
Depreciation charge for the year
Exchange adjustment
Balance at 30 June 2023
In thousands of dollars
Balance at 1 July 2021
Additions
Depreciation charge for the year
Exchange adjustment
Balance at 30 June 2022
14. Intangible Assets
In thousands of dollars
Cost
Accumulated depreciation and impairment
Net carrying amount
Freehold land
and buildings
Plant and
equipment
70
393
(166)
(3)
294
622
1
(258)
–
365
Freehold land
and buildings
Plant and
equipment
182
42
(150)
(4)
70
445
473
(297)
1
622
Total
692
394
(424)
(3)
659
Total
627
515
(447)
(3)
692
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
746
(166)
580
634
–
634
The Group invested in the further development of their existing enterprise resource planning system. These
developments were completed in October 2022 and the new system went live in October 2022.
40 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 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 2022 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 2023 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 and 2023, 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 2023 financial year, 274,824 share
rights were awarded to executives under this scheme.
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 5.0% dividend yield for
Grants 21 and 22, and a 7.3% dividend yield for Grant 20
(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 2023:
Grant 15
Grant 17
Grant 18
Grant 19
Grant 20
Grant 21
Grant 22
Expiry term of three years
Value of
one right
Proportion of
rights that are
outstanding
$0.82
$1.89
$1.43
$1.43
$1.53
$1.80
$1.80
94.26%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
2023 Annual Report Bisalloy Steel Group Limited | 41
15. Share-based payment plans (continued)
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).
Grant 9
Vested
Grant 11
Vested
Grant 13
Forfeited
Grant 14
Forfeited
Grant 15
Unvested
Grant 16
Forfeited
Grant 17
Grant 18
Grant 19
Grant 20
Grant 21
Grant 22
Unvested
Unvested
Unvested
Unvested
Unvested
Unvested
Total
Grant date
Expiry date
Exercise price
16 Apr 2018
05 Nov 2018
11 Nov 2019
01 Jul 2021
06 Jul 2021
06 Jul 2021
27 Apr 20221 27 Apr 2022 27 Apr 2022 22 Sep 20222 22 Sep 2022 22 Sep 2022
30 Jun 2021
04 Nov 2021
10 Nov 2022
30 Jun 2023
05 Jul 2023
05 Jul 2023
01 Sep 2024 01 Sep 2024 01 Sep 2024 01 Sep 2025 01 Sep 2025 01 Sep 2025
$1.19
$1.66
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Grant date
Expiry date
Exercise price
Balance at 30 June 2021
110,357
155,179
377,024
188,512
235,640
565,536
Balance at 30 June 2021
New grants in the year
–
–
Exercised in the year
(110.357)
(155,179)
Forfeited during the year
Balance at 30 June 2022
Exercisable at 30 June 2022
New grants in the year
Balance at 30 June 2023
Exercisable at 30 June 2023
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(377,024)
(188,512)
–
–
–
–
–
–
–
–
–
–
–
–
–
235,640
–
–
235,640
–
–
–
Exercised in the year
New grants in the year
52,742
62,466
102,697
(565,536)
Forfeited during the year
Balance at 30 June 2022
52,742
62,466
102,697
–
–
–
–
–
Exercisable at 30 June 2022
New grants in the year
Exercisable at 30 June 2023
Balance at 30 June 2023
52,742
62,466
102,697
120,296
76,236
78,292
728,369
120,296
76,236
78,292
274,824
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,632,248
217,905
(265,536)
(1,131,072)
453,545
–
–
–
–
–
–
–
–
–
–
–
–
1. The grant date shown is the date of the initial award. The grant was formally approved by the shareholders at the AGM on the
21 October 2022.
2. The grant date shown is the date of the initial award. However, the 120,296 balance at 30 June 2023 still remains subject to
shareholder approval at the upcoming AGM and the fair value determined as at 30 June 2023 is $1.53
The weighted average remaining contractual life for the share rights outstanding as at 30 June 2023 is 1.177 years
(2022: 1.53 years).
Share Rights Plan
The net amount entered in the Profit or Loss in relation to the above for the current year was a debit of $427,180
(2022: credit $153,545).
16. Pensions and other post-employment benefit plans
Superannuation commitments
The Group contributes to externally managed defined contribution superannuation plans, as well as an unfunded
defined benefit plan in Indonesia and a defined benefit plan in Thailand. The contributions are defined by the terms
of each individual employee’s employment.
42 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023
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).
15. Share-based payment plans (continued)
Grant 9
Vested
Grant 11
Vested
Grant 13
Forfeited
Grant 14
Forfeited
Grant 15
Unvested
Grant 16
Forfeited
16 Apr 2018
05 Nov 2018
11 Nov 2019
01 Jul 2021
06 Jul 2021
06 Jul 2021
30 Jun 2021
04 Nov 2021
10 Nov 2022
30 Jun 2023
05 Jul 2023
05 Jul 2023
$1.19
$1.66
$0.00
$0.00
$0.00
$0.00
Grant date
Expiry date
Exercise price
Grant 17
Unvested
Grant 18
Unvested
Grant 19
Unvested
Grant 20
Unvested
Grant 21
Unvested
Grant 22
Unvested
27 Apr 20221 27 Apr 2022 27 Apr 2022 22 Sep 20222 22 Sep 2022 22 Sep 2022
01 Sep 2024 01 Sep 2024 01 Sep 2024 01 Sep 2025 01 Sep 2025 01 Sep 2025
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Total
–
–
–
Balance at 30 June 2021
110,357
155,179
377,024
188,512
235,640
565,536
Balance at 30 June 2021
–
–
–
New grants in the year
52,742
62,466
102,697
Exercised in the year
(110.357)
(155,179)
Exercised in the year
(377,024)
(188,512)
(565,536)
Forfeited during the year
–
–
–
–
–
–
235,640
Balance at 30 June 2022
52,742
62,466
102,697
Exercisable at 30 June 2022
New grants in the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,632,248
217,905
(265,536)
(1,131,072)
453,545
–
120,296
76,236
78,292
274,824
235,640
Balance at 30 June 2023
52,742
62,466
102,697
120,296
76,236
78,292
728,369
Exercisable at 30 June 2023
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Grant date
Expiry date
Exercise price
New grants in the year
Forfeited during the year
Balance at 30 June 2022
Exercisable at 30 June 2022
New grants in the year
Balance at 30 June 2023
Exercisable at 30 June 2023
21 October 2022.
(2022: 1.53 years).
Share Rights Plan
(2022: credit $153,545).
1. The grant date shown is the date of the initial award. The grant was formally approved by the shareholders at the AGM on the
2. The grant date shown is the date of the initial award. However, the 120,296 balance at 30 June 2023 still remains subject to
shareholder approval at the upcoming AGM and the fair value determined as at 30 June 2023 is $1.53
The weighted average remaining contractual life for the share rights outstanding as at 30 June 2023 is 1.177 years
The net amount entered in the Profit or Loss in relation to the above for the current year was a debit of $427,180
16. Pensions and other post-employment benefit plans
Superannuation commitments
The Group contributes to externally managed defined contribution superannuation plans, as well as an unfunded
defined benefit plan in Indonesia and a defined benefit plan in Thailand. The contributions are defined by the terms
of each individual employee’s employment.
2023 Annual Report Bisalloy Steel Group Limited | 43
17. Trade and other payables
In thousands of dollars
Current
Trade payables
Other payables and accruals
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
20,975
4,863
25,838
17,883
3,005
20,888
Trade payables are non-interest bearing and are normally settled on 30 to 60 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
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
23,113
23,113
23,113
–
25,898
25,898
25,898
–
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
Borrowings secured by fixed and floating charges
1,020
7,526
Non-current
Borrowings secured by fixed and floating charges
3,358
2,932
Fair values
Unless disclosed below, the carrying amount of the Group’s current and non-current borrowings approximate their
fair value.
44 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023
18. Financial assets and financial liabilities (continued)
18.2 Financial liabilities (continued)
Interest rate, foreign exchange and liquidity risk
Details regarding interest rate, foreign exchange and liquidity risk is disclosed in note 18.3.
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)
– trade 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 2023
Year ended
30 June 2022
12,000
5,486
9,000
416
127
4,477
31,506
–
–
–
416
604
1,020
3,358
3,358
4,378
12,000
2,128
9,000
–
127
3,873
27,128
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
2023 Annual Report Bisalloy Steel Group Limited | 45
18. Financial assets and financial liabilities (continued)
18.2 Financial liabilities (continued)
(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
three-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 5.34% (2022: 2.84%).
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 2023.
Other financial liabilities
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 2023
Year ended
30 June 2022
25,838
25,838
25,838
-
20,888
20,888
20,888
-
18.3 Financial risk management
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.
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.
- 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.
Credit risk
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
46 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
and has the potential to be exposed to credit risk on a
specific customer.
or similar business administration is appointed to the
customer’s business.
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;
- To minimise late payments and any potential
bad debts through the constant application of
sound commercial debtor management on a
continuing basis;
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:
● Official Manager
● Receiver and Manager
● Administrator
● Liquidator
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 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, selected export 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 2023
Trade Receivables
In thousands of dollars
Current <=30 days
30-60
days
Expected credit loss rate
0.04%
0.35%
0.36%
Estimated total gross carrying
amount at default
Expected Credit Loss
20,892
9
1,132
4
834
3
61-90
days
0.00%
67
–
>91 days
>91 days*
0.00%
56.30%
55
–
341
192
Total
0.89%
23,321
208
30 June 2022
Trade Receivables
In thousands of dollars
Current <=30 days
30-60
days
Expected credit loss rate
0.02%
0.23%
0.17%
Estimated total gross carrying
amount at default
21,043
3,044
Expected Credit Loss
5
7
1,189
2
61-90
days
0.38%
522
2
>91 days
>91 days*
2.94%
78.04%
Total
1.19%
34
1
378
295
26,210
312
*Indonesian and Thai receivables with no insurance coverage.
2023 Annual Report Bisalloy Steel Group Limited | 47
18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
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 $5.5m 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
$90.0m (2022: $86.2m).
The Group also has a IDR 44.5 billion revolver facility with BCA in Indonesia. This facility is renewed annually with land
and buildings pledged as collateral.
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.
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 2023.
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 2023.
In thousands of dollars
6 months or less
6-12 months
1-5 years
Over 5 years
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
27,637
342
3,657
–
29,191
289
3,330
–
31,636
32,810
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.
48 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
In thousands of dollars
<=6 months 6-12 months
1-5 years
>5 years
Total
Year ended 30 June 2023
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
2,052
23,421
247
–
33
25,753
25,838
1,153
376
162
108
–
–
–
–
–
–
–
–
107
–
235
–
–
–
–
–
–
–
–
–
3,358
–
299
–
–
27,637
(1,884)
342
(342)
3,657
(3,657)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,052
23,421
247
–
33
25,753
25,838
4,618
376
696
108
–
31,636
(5,883)
2023 Annual Report Bisalloy Steel Group Limited | 49
18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
In thousands of dollars
<=6 months 6-12 months
1-5 years
>5 years
Total
Year ended 30 June 2022
Consolidated
Financial assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Derivatives
Inflows
Outflows
Financial liabilities
Trade and other payables
Interest bearing loans and borrowings
Contract liabilities
Lease liabilities
Derivatives – gross settled
Inflows
Outflows
Net outflow
1,834
26,240
138
–
–
28,212
20,888
7,660
386
162
95
–
29,191
(979)
–
–
–
–
–
–
–
114
–
175
–
–
–
–
–
–
–
–
–
2,932
–
398
–
–
289
(289)
3,330
(3,330)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,834
26,240
138
–
–
28,212
20,888
10,706
386
735
95
–
32,810
(4,598)
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.
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.
50 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023
18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
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.
In thousands of dollars
Sensitivity to USD
Consolidated
AUD/USD +10%
AUD/USD -10%
Post tax profit
Higher/(Lower)
Effect on equity
Higher/(Lower)
2023
2022
2023
2022
(88)
107
(77)
194
(608)
743
(592)
723
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 2023, 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
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
Cash and cash equivalents less cash on hand
2,051
1,833
Financial Liabilities
Bank loans
Net exposure
(4,378)
(2,327)
(10,458)
(8,625)
2023 Annual Report Bisalloy Steel Group Limited | 51
18. Financial assets and financial liabilities (continued)
18.3 Financial risk management (continued)
Interest rate sensitivity analysis
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)
Post tax profit
Higher/(Lower)
Other comprehensive
income
Higher/(Lower)
2023
2022
2023
2022
(16)
(16)
(60)
60
–
–
–
–
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 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.
At 30 June 2023 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.
52 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 l
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2023 Annual Report Bisalloy Steel Group Limited | 53
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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 2023
Year ended
30 June 2022
1,767
191
13
1,971
258
201
883
1,342
1,790
–
–
1,790
260
146
788
1,194
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.
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
2023
2022
Indonesia
Thailand
Indonesia
Thailand
6.29
8.00
2.58
3.00
7.25
8.00
1.04
3.00
Consolidated
For the year ended 30 June 2023
Future minimum
lease payments
Present value of
minimum lease
payments
Interest
397
299
–
696
(24)
(11)
–
(35)
373
288
–
661
54 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 20. Lease liabilities (continued)
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
21. Derivative financial instruments
In thousands of dollars
Current Assets
Forward currency contracts – Fair value hedges
Current Liabilities
Forward currency contracts – Fair value hedges
Forward currency contracts – Cash flow hedges
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
Year ended
30 June 2023
Year ended
30 June 2022
43
46
89
25
85
110
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
33
33
65
43
108
–
–
95
–
95
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
Payables
During the Year ended 30 June 2023, in order to protect against exchange rate movements and to manage
the payables process, the Group had entered into forward exchange contracts to purchase $EUR 1.39m (2022:
$EUR 0.35m), $USD 6.55m (2022: Nil) and $AUD 2.47m (2022: $AUD 4.2m). These contracts hedged highly probable
forecasted purchases and they were timed to mature when payments are scheduled to be made.
2023 Annual Report Bisalloy Steel Group Limited | 55
21. Derivative financial instruments (continued)
Fair value hedges
As at balance date, the details of outstanding contracts in respect of fair value hedges were:
In thousands of dollars
30 June 2023
30 June 2022
30 June 2023
30 June 2022
Average exchange rate
Buy USD $ Sell AUD $
Buy AUD $ Sell IDR $
Buy USD $ Sell THB $
Buy AUD $ Sell THB $
(1)
–
(4)
(30)
–
(6)
–
–
0.6666
–
–
10,209.0000
34.5700
23.1257
–
–
Cash flow hedges
As at balance date, the details of outstanding contracts in respect of cash flow hedges were:
In thousands of dollars
Buy USD $ Sell AUD $
30 June 2023
30 June 2022
30 June 2023
30 June 2022
(19)
–
0.6684
–
Average exchange rate
Receivables
During the Year ended 30 June 2023, 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 5.3m (2022: $USD 4.8m).
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 2023
30 June 2022
30 June 2023
30 June 2022
66
(89)
0.6887
0.6889
Average exchange rate
Cash flow 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 2023
30 June 2022
30 June 2023
30 June 2022
62
–
0.6908
–
Average exchange rate
56 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 22. Contributed equity and reserves
In thousands of dollars
(a) Ordinary shares, issued and fully paid
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
15,227
14,507
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
47,088,677
14,507
45,967,851
12,886
Number of
shares
2023
$’000
Number of
shares
2022
$’000
New shares issued under Dividend Reinvestment Plan
361,379
–
720
–
932,880
187,946
1,621
–
47,450,056
15,227
47,088,677
14,507
Exercise of performance rights
Balance at 30 June
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 2023 and 2022.
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 2023 and 2022 were
as follows:
In thousands of dollars
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
The Group is not subject to any externally imposed capital requirements.
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
4,378
(2,052)
2,326
72,562
74,888
3%
10,458
(1,834)
8,624
64,286
72,910
12%
2023 Annual Report Bisalloy Steel Group Limited | 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
Other reserves
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
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
3,922
134
(9)
–
731
(183)
4,595
3,457
176
–
65
412
(188)
3,922
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
33,907
12,796
107
(6,136)
40,674
25,116
14,991
51
(6,251)
33,907
58 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 22. Contributed equity and reserves (continued)
In thousands of dollars
(f) Reserves
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
Currency translation
differences
Share-based payments
Depreciation transfer for
revaluation of buildings
Net gain / (loss) on cash
flow hedge
Actuarial gains / (losses)
Consolidated
Employee
equity
benefits
reserve
Foreign
currency
translation
reserve
Cash flow
hedge
reserve
Asset
reval-
uation
reserve
Equity
settlement
reserve
Other
reserves
Total
6,187
398
(84)
6,955
295
–
(56)
(152)
–
–
–
87
–
181
–
–
–
159
655
–
–
–
–
–
814
66
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(30)
–
–
–
–
(51)
–
4,406
10,542
–
–
(135)
–
–
–
–
152
–
–
–
–
–
–
–
41
–
550
(43)
–
–
–
–
–
–
–
–
–
34
(9)
655
(56)
–
(51)
41
4,406
11,950
66
181
(135)
(30)
34
12,066
At 30 June 2023
268
880
(30)
10,407
550
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.
2023 Annual Report Bisalloy Steel Group Limited | 59
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
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
192
–
192
299
–
299
These capital expenditure commitments relate to plant upgrade works.
(b) 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.
60 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 24. Related parties
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.
There were no transactions during the year with Director related entities.
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
Bisalloy Shangang (Shandong) Steel Plate Co.,Limited*
Percentage of
equity interest held
by the
consolidated entity
30 June 2023
%
Percentage of
equity interest held
by the
consolidated entity
30 June 2022
%
100.00
60.00
85.00
85.00
100.00
100.00
60.00
85.00
85.00
100.00
50.00
50.00
Country of
Incorporation
Australia
Australia
Indonesia
Thailand
Thailand
United States
of America
People’s
Republic of
China
* 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.
2023 Annual Report Bisalloy Steel Group Limited | 61
24. Related parties (continued)
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:
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
Income tax receivable
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
62 | Bisalloy Steel Group Limited 2023 Annual Report
Closed Group
30 June 2023
Closed Group
30 June 2022
15,503
(4,542)
10,961
25,889
73
(6,136)
30,787
606
19,946
37,443
530
247
2,210
60,982
5,125
23,147
580
123
28,975
89,957
23,904
–
416
1,955
252
108
376
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
18,352
2,589
6,063
1,791
256
89
386
27,011
29,526
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 24. Related parties (continued)
In thousands of dollars
Non-current liabilities
Loans and borrowings
Lease liabilities
Employee benefit liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Contributed equity
Reserves
Accumulated profits
TOTAL SHAREHOLDERS’ EQUITY
Closed Group
30 June 2023
Closed Group
30 June 2022
3,358
121
460
4,442
8,381
35,392
54,565
15,228
8,550
30,787
54,565
2,932
387
406
4,118
7,843
37,369
48,869
14,508
8,472
25,889
48,869
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:
In thousands of dollars
Related Party
Bisalloy Shangang (Shandong) Steel Plate
Co.,Limited
Sales to &
purchases
from
Amounts owed by
related parties
Amounts owed to
related parties
2023
2022
2,017
655
–
86
–
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 2023 were $2,016,827 (2022: $655,118).
Outstanding balances at year-end are unsecured.
2023 Annual Report Bisalloy Steel Group Limited | 63
24. Related parties (continued)
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
Total compensation paid to key management personnel
25. Events after the balance date
No significant events after the balance sheet date.
26. Auditors’ remuneration
The auditor of Bisalloy Steel Group Limited is RSM Australia Partners.
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
1,993,431
1,807,529
129,750
65,041
–
–
135,400
49,663
–
107,834
427,180
(153,546)
2,615,402
1,946,880
In thousands of dollars
Amounts received or due and receivable by RSM* 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 RSM for:
– an audit or review of the financial report of any other entity in the
consolidated Group
*Bisalloy Steel Group Limited’s auditor in 2022 was KPMG.
Consolidated
Year ended
30 June 2023
Year ended
30 June 2022
140
–
50
190
144
12
63
219
64 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 27. Parent entity information
In thousands of dollars
30 June 2023
30 June 2022
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
530
1,922
–
–
15,227
(13,341)
36
1,922
6,775
6,775
–
3,153
2,589
2,589
14,508
(13,980)
36
564
207
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
q) Goods and services tax
r)
Revenue from contracts with customers
s) Other income
t)
Borrowing costs
u)
Leases
b) Basis of consolidation and investments in
joint venture
c) Significant accounting judgements, estimates
v)
Foreign currency translation
w) Earnings per share (EPS)
and assumptions
d) Operating segments
e)
Taxation
f) Cash and cash equivalents
g) Trade and other receivables
h)
Inventories
i)
j)
Property, plant and equipment
Intangible assets
k)
Trade and other payables
l) Contributed equity
m) Employee benefits
n) Share-based payment transactions
o) Provisions
p)
Financial Instruments
x) Derivative financial instruments and hedging
y)
Fair value measurement
z) Changes in accounting standards
aa) Standards issued but not yet effective
a) Basis of preparation
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.
2023 Annual Report Bisalloy Steel Group Limited | 65
28. Summary of significant accounting policies (continued)
a) Basis of preparation (continued)
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.
b) Basis of consolidation and investments
in 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 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
66 | Bisalloy Steel Group Limited 2023 Annual Report
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.
c) Significant accounting judgements,
estimates 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 amounts of certain
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 28. Summary of significant accounting policies (continued)
c) Significant accounting judgements, estimates and assumptions (continued)
assets and liabilities within the next annual reporting
period are:
– nature of the products and services,
– nature of production processes,
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
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).
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:
–
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 is still reported separately where
information about the segment would be useful to
users of the financial statements.
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.
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.
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
2023 Annual Report Bisalloy Steel Group Limited | 67
28. Summary of significant accounting policies (continued)
e) Taxation (continued)
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:
– when the deferred tax asset relating to the
deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
–
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 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.
f) Cash and cash equivalents
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.
g) Trade and other receivables
A receivable represents the Group’s right to an amount
of consideration that is unconditional (i.e., only the
passage of time is required before payment of the
consideration is due). Refer to accounting policies 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.
68 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 28. Summary of significant accounting policies (continued)
h)
Inventories (continued)
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.
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.
2023 Annual Report Bisalloy Steel Group Limited | 69
28. Summary of significant accounting policies (continued)
j)
Intangible assets (continued)
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 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.
70 | Bisalloy Steel Group Limited 2023 Annual Report
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 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
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 28. Summary of significant accounting policies (continued)
n)
Share-based payment transactions (continued)
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 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)
– 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:
2023 Annual Report Bisalloy Steel Group Limited | 71
28. Summary of significant accounting policies (continued)
p)
Financial instruments (continued)
– 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
- Trade and other receivables
Note 28(c)
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
72 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 28. Summary of significant accounting policies (continued)
p)
Financial instruments (continued)
liabilities designated upon initial recognition as at fair
value through profit or loss.
The difference in the respective carrying amounts is
recognised in the statement of 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.
Gains or losses on liabilities held for trading are
recognised in the statement of profit or loss.
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.
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.
q) Goods and services tax
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;
–
receivables and payables are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the ATO is included as 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
r)
customers
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.
2023 Annual Report Bisalloy Steel Group Limited | 73
28. Summary of significant accounting policies (continued)
r)
Revenue from contracts with customers (continued)
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.
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.
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.
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
(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
74 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 28. Summary of significant accounting policies (continued)
s) Other Income (continued)
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.
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
2023 Annual Report Bisalloy Steel Group Limited | 75
28. Summary of significant accounting policies (continued)
u)
Leases (continued)
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.
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.
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.
Earnings per share (EPS)
w)
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:
Short-term leases and leases of low-value assets
– costs of servicing equity (other than dividends);
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 (AUD$), 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 (AUD$) 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
–
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.
x) Derivative financial instruments
and hedging
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.
For the purpose of hedge accounting, hedges are
classified as:
76 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 28. Summary of significant accounting policies (continued)
x) Derivative financial instruments and hedging (continued)
–
fair value hedges: when hedging the exposure to
changes in the fair value of a recognised asset or
liability; or
– 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.
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
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.
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.
Fair Value Measurement
y)
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.
2023 Annual Report Bisalloy Steel Group Limited | 77
28. Summary of significant accounting policies (continued)
z) Changes in accounting standards
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 2022, except for the
adoption of new standards effective as of 1 July 2022.
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 2022 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.
y)
Fair Value Measurement (continued)
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.
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.
78 | Bisalloy Steel Group Limited 2023 Annual Report
Notes to the Consolidated Financial Statements (continued)For the year ended 30 June 2023 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 2023 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 2023.
On behalf of the Board
Mr Rowan Melrose
CEO and Managing Director
24 August 2023
2023 Annual Report Bisalloy Steel Group Limited | 79
Directors’ DeclarationFor the year ended 30 June 2023 INDEPENDENT AUDITOR’S REPORT
To the Members of Bisalloy Steel Group Limited
RSM Australia Partners
Level 13, 60 Castlereagh Street Sydney NSW 2000
GPO Box 5138 Sydney NSW 2001
T +61 (0) 2 8226 4500
F +61 (0) 2 8226 4501
www.rsm.com.au
Opinion
We have audited the financial report of Bisalloy Steel Group Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors' declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial
performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Key Audit Matter
How our audit addressed this matter
Recognition of revenue from contracts with customers
Refer to Note 2 in the financial statements
Revenue for the year ended 30 June 2023 was
$153,156,000. The primary revenue stream is sale
of goods.
Revenue is considered to be a Key Audit Matter
because:
•
•
•
•
significance of revenue in financial statement
that
contracts
that contain
include
few
there are
the
performance obligations
services of shipping and handling. This
performance obligation is satisfied over time as
the service is performed. This results in
complex and judgemental revenue recognition
to allocate the accurate transaction prices of
sale of goods portion and services portion.
in determining the transaction price for the sale
of goods, the management considers the
effects of variable consideration, existence of
significant financing components, non-cash
consideration, and consideration payable to
the customer (if any).
the Group has a revenue recognised over a
satisfaction of performance obligation in a bill-
and-hold
the
management recognise revenue on invoice.
arrangement
in which
Our audit procedures included, among others:
• Obtaining an understanding of the systems and
procedures put in place by management in adopting
AASB 15, and evaluating their effectiveness;
• Assessing
the Group’s
the appropriateness of
and
for
accounting
measurement
variable
revenue,
consideration, against the requirements of AASB 15
Revenue from Contracts with Customers.
policies
of
recognition
including
the
• Obtaining external audit confirmation of sales
transactions from a sample of customers.
• Year-end cut-off, selecting samples of
revenue
transactions across varying contract arrangements
applicable to the Group and test against the timing of
revenue recognition to underlying documents including,
the sales invoice, delivery dockets and bill of lading.
• Obtaining understanding of the Group’s estimate of the
highly probable amount of the variable consideration
against the specific contract terms. This includes the
customers’ early settlement discounts against the terms
of the contract.
• Considering the management’s presentation of sales
performance obligation satisfied in a bill-and-hold
arrangement per AASB 15 para. 119(a).
• Assessing the adequacy of the disclosures in the
financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2023, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf
This description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 18 of the directors' report for the year ended
30 June 2023.
In our opinion, the Remuneration Report of Bisalloy Steel Group Limited, for the year ended 30 June 2023,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
LOUIS QUINTAL
Partner
RSM Australia Partners
Sydney, NSW
Dated: 24 August 2023
2023 Annual Report Bisalloy Steel Group Limited | 83
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 2023.
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 $1.995
There are performance rights issued. Performance rights do not carry a right to vote.
Ordinary shares
Number of
holders
Number of
shares
935
1,154
409
464
549,358
3,152,170
3,172,102
13,297,780
35
27,278,646
2,997
47,450,056
128
14,720
84 | Bisalloy Steel Group Limited 2023 Annual Report
ASX Additional InformationFor the year ended 30 June 2023 b.
Twenty largest shareholders
1
2
3
4
BALRON NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
EVELIN INVESTMENTS PTY LIMITED
5 HORRIE PTY LTD
6 CITICORP NOMINEES PTY LIMITED
7
SOUTHERN STEEL INVESTMENTS PTY LIMITED
8 MR MANFRED REIS + MRS EVELYN JEANETTE REIS
9 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
10 RATHVALE PTY LIMITED
11 NETWEALTH INVESTMENTS LIMITED
12 MR NIGEL BURGESS + MRS YUKARI BURGESS
13 KILCONQUHAR SUPERANNUATION FUND PTY LTD
14 HILLMORTON CUSTODIANS PTY LTD
15 BALKIN PTY LTD
16 FINANCE ASSOCIATES PTY LTD
17 NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
18 ALLOY STEELS AUSTRALIA PTY LTD
19 G CHAN PENSION PTY LTD
20 KELPADOR INVESTMENTS PTY LTD
Listed ordinary shares
Number of
shares
% of ordinary
shares
7,409,505
5,428,683
2,432,036
1,349,330
1,340,482
910,563
867,393
650,000
549,601
520,240
506,000
447,317
436,000
434,121
371,590
300,600
258,436
256,935
239,990
233,113
15.62
11.44
5.13
2.84
2.83
1.92
1.83
1.37
1.16
1.10
1.07
0.94
0.92
0.91
0.78
0.63
0.54
0.54
0.51
0.49
Date of
last notice
Number of
shares
Full paid
%
c.
Substantial Shareholders
The names of substantial shareholders who have notified the
Company in accordance with section 671B of the Corporations
Act 2001 are:
SOUTHERN STEEL INVESTMENTS Pty Limited
31 August 2020
8,664,611
SAMUEL TERRY ASSET MANAGEMENT PTY LTD
29 July 2022
5,769,463
GREIG & HARRISON PTY LTD
10 January 2023
3,988,102
18.26
12.16
8.40
Voting Rights:
All ordinary shares carry one vote per share without restriction.
2023 Annual Report Bisalloy Steel Group Limited | 85
Annual General Meeting
The Group will hold its 2023 Annual General Meeting
at 11:00am on Friday, 06 October 2023. Copies of the
annual report or further information can be obtained
by emailing companysecretary@bisalloy.com.au or
writing to the Company Secretary at the registered
office. An electronic copy of this report is available on
the Company’s website.
Registered Office
18 Resolution Drive
Unanderra NSW 2526
Telephone: +61 (0)2 4272 0444
Facsimile: +61 (0)2 4272 0445
www.bisalloy.com.au
companysecretary@bisalloy.com.au
Auditors
RSM Australia Partners
Level 13, 60 Castlereagh Street
Sydney NSW 2000
Telephone: +61 (0)2 8226 4500
Facsimile: +61 (0)2 8226 4501
www.rsm.global/australia
Bankers
Westpac Banking Corporation
Share Registry
Computershare Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
GPO Box 2975
Melbourne VIC 3001
Telephone (within Australia): 1300 738 768
Telephone: +61 (0)3 9415 4377
Facsimile: +61 (0)3 9473 2500
www.computershare.com
Legal Advisors
Holding Redlich
Level 8, 555 Bourke Street
Melbourne VIC 3000
Telephone: +61 (0)3 9321 9999
www.holdingredlich.com
Corporate Governance Report
www.bisalloy.com.au/investor-centre/corporate-
governance/
86 | Bisalloy Steel Group Limited 2023 Annual Report
Corporate DirectoryFor the year ended 30 June 2023