CLOVER CORPORATION
LIMITED
ABN 85 003 622 866
Annual Report
For the Year Ended
31 July 2018
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
Non-Executive Director and Chairman
Non-Executive Director
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
CORPORATE DIRECTORY
Directors
Mr Rupert A Harrington
Mr Graeme A Billings
Mr Peter J Davey
Mr Ian D Glasson
Ms Cheryl L Hayman
Dr Merilyn J Sleigh
Secretary
Mr Paul A Sherman
Registered Office
39 Pinnacle Road
Altona North VIC 3025
Telephone:
Facsimile:
(03) 8347 5000
(03) 8347 5055
Auditors
PKF Melbourne Audit & Assurance Pty Ltd
Level 12
440 Collins Street
Melbourne VIC 3000
Share Registry
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street
Sydney NSW 2000
Telephone:
1300 850 505
Australian Securities Exchange Code
Ordinary Shares
CLV
Website
http://www.clovercorp.com.au
2
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
Table of Contents
Chairman’s Report
About Clover
Directors’ Report
Corporate Governance Statement
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Auditors’ Independence Declaration
ASX Additional Information
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6
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30
31
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33
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63
64
68
69
Vision
To optimise the health and development of adults, infants and children.
Mission Statement
To deliver science-based bioactives which provide health benefits to the adults, infants, and
children.
3
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CHAIRMAN’S REPORT
Clover Corporation Limited (Clover) reported a net profit after tax (NPAT) for the 12 months ended 31
July 2018 of $7.6m (2017: profit of $3.6m).
Sales revenue in FY2018 was $63.0m (2017: $47.9m) an increase of 31.5%.
Sales Revenue
EBIT
Profit before tax
Profit after tax
2018
Statutory
$000’s
62,961
10,220
10,616
7,588
2017
Statutory
$000’s
47,864
5,488
5,012
3,639
Sales for the year have grown 31.5% with revenue growth across all territories. Clover has
experienced increased demand from existing and new customers, delivering a 109% increase in net
profit after tax. The margin rate has improved across the year, with additional volume delivering
improved productivity. The company has benefited from its natural hedge policy better aligning sales
currency to purchasing currency.
Commercial
Clover has added to its commercial team with a business development manager located in New
Zealand, a market which has provided significant growth in recent times. The business has a strong
pipeline of new opportunities driven by a constant customer face to face development program
supported by a knowledgeable technical team. Clover has benefited from its new product
development work over recent years, with the hypoallergenic product now widely used across
specialty infant formula brands and the highly concentrated Omega 3 powder winning new business
in the growing nutraceutical gummy sector. Other product applications are in trial and product
development, with sales expected in the future. The infant formula market has continued to grow with
Chinese customers showing a preference for imported products, and many Chinese manufacturers
are positioning themselves off shore in Joint Ventures and greenfield sites to meet the consumer
sentiment.
China
Chinese regulations have changed with new regulations requiring brands to be registered and
licensed. This appears to have improved the demand of many of Clover’s customers, whilst smaller
brands have not achieved licensing or have lost favour with customers. Overall China demand has
grown with manufacturers reporting significant growth rates across the year.
Europe
Customers in Europe are preparing for the introduction of new regulations requiring them to include a
minimum of 20mg of DHA per 100k/cal by February 2020. Clover has worked with customers across
the European market assisting them to achieve the new requirement, which on average doubles their
DHA usage compared to current inputs. Whilst some brands will use direct oil injection, others will
supplement their product with a powder form of DHA. Clover expects to benefit from the change in
regulations with its superior Driphorm DHA powder formulation readily able to address the changed
requirements.
Australia & New Zealand
Strong demand in New Zealand has driven revenue, and Clover now has an additional New Zealand
based executive to manage the customer relationship. The Australian and New Zealand markets have
4
benefited from increased production facilities coming on line, with additional factories under
construction. The ‘clean, green’ image of these markets has attracted the Chinese consumer,
increasing demand and raising New Zealand to number three supplier of infant formula to China in
the world.
Americas
Clover’s distributor in North America has helped launch our highly concentrated DHA product into the
gummy market and is promoting applications into the sports nutrition, ready to drink and nutraceutical
markets. New distributors in South America have only just started with Clover products but have
already recorded initial orders, providing a promising route into both the North and South American
markets.
Research & Development
Clover has developed several new products across 2018 and as a result has made two new patent
applications. These new products should open new markets and enhance Clover’s existing offering,
providing a platform for future growth. Our dedicated Research and Development team has significant
knowledge in the Micro Encapsulation area, with their skills often called upon by customers. During
2018 Clover released a technical paper which cited clinical trial work encompassing the DHA lipid
found in Clover’s core products. The paper which was published in “Critical Reviews in Food Science
and Nutrition” journal clearly demonstrates the value of Omega 3 supplementation in supporting health
and development outcomes, and will assist customers in identifying target markets for new products
where clinical benefit has been established.
Operations
Clover has increased its production capacity at its Altona North refinery to meet increased demand,
and operates its current spray drying capacity within its available contracted time. The company is
endeavouring to establish additional capacity for drying in the 2019/20 years, securing relationships
with third party manufacturers and investing in additional capacity to meet forecasted demand.
Expenditure
Clover has experienced high volume growth, which has resulted in additional cost, but has still
contained operating expenses in 2018 to $8.3m (2017 $6.1m) with the unit overhead level consistent
with the prior period. During the past twelve months the company has purchased its production site
in Altona North, consolidating its Victorian operations onto one site, which will deliver further cost
savings and process improvements for years to come.
Inventories at year end were valued at $19.8m (2017: $18.8m), providing consistent inventory
turnover as the company continues to focus on maintaining tight inventory controls, with the increase
year on year reflecting the high volumes being manufactured and a strong raw material position. The
overall cash position of the business at year end was $7.9m (2017: $5.9m). Clover operates out of
underlying cash balances with minimal bank debt of $4.2m covering the current purchase of the Altona
North factory. The business continues to review investment opportunities for expansion into aligned
markets and products.
Dividend
Based on the performance of Clover in FY18 the Directors have decided to declare a fully franked
final dividend for FY18 of 1.25 cents per share. The record date for this dividend will be 30 October
2018, with payment due on 20 November 2018.
Whilst Clover’s performance remains susceptible to demand volatility in the Chinese Infant Formula
market, the outlook for FY19 is positive as Clover develops new markets and product opportunities,
with the impact of regulatory change in China and the EU flowing through to product applications.
Mr Rupert Harrington
Chairman
Date: 21 September 2018
5
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
ABOUT CLOVER
Company Focus: Clover seeks to improve human nutrition and quality of life by developing value-
added nutrients for use in foods or as nutritional supplements. In doing so, Clover provides a
competitive advantage for its customers, value to shareholders and a working environment in which
employees can fully utilise and develop their respective skills.
Company History: Clover was formed in 1988 as a family-owned Australian company providing lipid-
based ingredients for the food industry. Clover was listed on the ASX in November 1999.
In November 2002, Clover entered into a joint venture with the Queensland-based Food Spectrum
Group of companies. The incorporated joint venture, Nu-Mega Ingredients Pty Limited (Nu-Mega),
was 70% owned by Clover. The joint venture ceased in November 2007 when Clover acquired the
remaining 30% of Nu-Mega to make it a wholly owned subsidiary. Nu-Mega has significantly expanded
its markets, introducing new products with a focus on encapsulation technology and the delivery of
bioactive nutritional ingredients.
Company Operations: Clover operates from two sites:
The Company’s registered office and manufacturing plant for tuna oils and related products,
Head Office, Customer Service, Quality Assurance, and Sales and Marketing departments
are located in Altona, Victoria.
Innovation, Research & Development, Product Development, Technical Support
departments are located in Brisbane, Queensland.
Company Technology and Products. The major focus of the Company is on the delivery of
bioactive ingredients using proprietary encapsulation technology to produce ready-to-blend products
containing tuna oil and/or other nutritional lipids. The health benefits of omega-3 fatty acids in the diet
have been well documented and this has assisted in developing the expanding global market for
products containing these nutritionally important dietary components. One material that Clover uses
is tuna oil, which is high in DHA (docosahexaenoic acid), an essential fatty acid, which is recognized
for its importance in brain, nerve and eye tissue development in babies and infants. Clover, through
its subsidiary Nu-Mega, supplies refined Omega 3 oils and a range of other encapsulated ingredients
for use in infant formula, nutraceuticals, pharmaceuticals, and sports nutrition markets.
In addition to its own internally developed intellectual property, Clover has licensed patented
technology from the Commonwealth Scientific Industrial Research Organisation (CSIRO) for the
encapsulation of marine and algal oils to protect them from oxidation and degradation. Nu-Mega’s
Driphorm® range of microencapsulated powders enables the addition of Hi-DHA® tuna and/or algal
oils to a broad spectrum of products in a convenient and stable dry powder form. These ingredients
are marketed globally.
Clover continues to seek other nutritional and medical applications for its products, as well as
developing new types of products, often in conjunction with customers.
6
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT
Your directors present their report on the consolidated entity consisting of Clover Corporation Limited
(“the Company”) and the entities it controlled (“the consolidated entity”) at the end of, or during, the
year ended 31 July 2018.
Directors
The following persons were directors of Clover Corporation Limited during the financial year and up
to the date of this report:
Name and qualifications
Experience and special responsibilities
Mr Rupert A Harrington, BTech, MSc,
CDipAF, MAICD.
Non-Executive Director since 1 July 2015
Appointed Chairman 21 September 2017
Rupert Harrington is an experienced Director with a wealth
of experience in business strategy and M & A.
Mr. Harrington’s earlier career was in operational
management in the UK and Australia. His career since
1987 has been in Private Equity where he has an excellent
track record of delivering results for investors in sectors
including: health, technology, industrial services and
manufacturing. He is currently Chairman of
Advent Partners, a pre-eminent mid-market Australian PE
firm.
Mr. Harrington is Non-Executive Director of Pro Pac
Packaging (ASX: PPG) and Integral Diagnostics (ASX:
IDX). At the end of 2017 he resigned as a Non-Executive
Director of Bradken Limited following its successful
acquisition by Hitachi.
Mr Peter R Robinson, B.Com. (UNSW),
FAICD
Appointed Chairman 13 December 2002
Non-Executive Director since August 1997
Resigned 21 September 2017
Mr Robinson has held both executive and non-executive
directorships for a period of 30 years. Mr Robinson has over
30 years’ experience at general management and chief
executive officer level. During this period Mr Robinson has
had extensive experience in the pharmaceutical industry.
Mr Robinson joined Washington H. Soul Pattinson and
Company Limited (WHSP) in 1978 and was appointed an
Executive Director of WHSP in 1984. Mr Robinson retired
from WHSP March 31 2015.
Former listed company directorships in the past three years:
Australian Pharmaceutical Industries Limited, appointed May
2000, retired January 2018
TPI Enterprises Limited, appointed February 2013, retired
May 2018
7
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Name and qualifications
Experience and special responsibilities
Mr Graeme A Billings, BCom, FCA,
MAICD
Non-Executive Director since 14 May 2013
Chair of the Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Mr Peter J Davey, MBA, GradDip Bus.,
Dip.Art (Design), GAICD.
Executive Director since 11 November
2014
Mr Ian D Glasson BEng (Hons) MIE
Aust, GAICD
Non-Executive Director since 1 February
2017
Member of the Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Mr Billings has been a Chartered Accountant since 1980. Mr
Billings was a partner at Coopers and Lybrand and then
PricewaterhouseCoopers (PwC) for 24 years.
Mr Billings was head of PwC’s Melbourne Assurance
practice for a number of years as well as Global Leader of
PwC’s Industrial Products and Manufacturing industry
group.
Mr Billings brings a range of financial, corporate governance,
internal control, commercial and corporate transactional
skills to the Company.
Other current listed company directorships:
GUD Holdings Limited, appointed 2011
Korvest Limited, appointed 2013
Korvest Limited, Chairman appointed 2014
Azure Healthcare, Chairman appointed 2015
DomaCom Ltd, appointed 2014
Mr Davey has a track record of building businesses across a
diverse range of
industry sectors. He has held senior
management positions within a number of manufacturing and
distribution companies operating in competitive and diverse
markets. Mr Davey has particular strengths in sales and
marketing, and development and implementation of strategies
for growth.
Mr Davey was formerly Executive Manager AgriProdcuts and a
director of Viterra Australia Limited, responsible for the
AgriProducts division that traded in agricultural inputs, fertilizer,
seed and wool. In earlier roles, Mr Davey headed the Sales and
Marketing divisions of FMP Products and Hi Fert Pty Ltd.
During his career, Mr Davey has had a particular focus on
marketing based businesses operating in the Asia and Oceania
regions.
Mr Glasson is currently CEO of PGG Wrightson based in
Christchurch, New Zealand. He was formerly CEO of Gold Coin
Group / Zuellig Agriculture which managed a portfolio of animal
feed operations and farming ventures throughout South East
Asia. Prior to that he was CEO for seven years of Sucrogen
(formerly the sugar business of listed entity CSR and now
owned by Wilmar) which generated revenues of nearly $2 billion
and had extensive contacts across the local and international
food and beverage sector and retail market.
He has also had extensive agribusiness experience with
Goodman Fielder and Gresham Rabo, as well as spending the
first sixteen years of his career in the oil and gas sector with
Esso.
Other current company directorships:
Ricegrowers Ltd, appointed 2016
8
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Name and qualifications
Ms Cheryl L Hayman, B.Com, FAICD
Non-Executive Director since 9 July
2008
Member of the Audit Committee
Member of the Remuneration Committee
Chair of the Nomination Committee
Experience and special responsibilities
Ms. Hayman has extensive consumer goods, packaged food
and functional food industry experience including being former
Marketing Director for the Baking Division of George Weston
Foods (Australia/NZ) where she was largely responsible for
leading the successful launch of the Hi-DHA Tip Top Up bread
range.
Dr Merilyn J Sleigh, B.Sc, PhD,
DipCorp Man, FTSE, FAICD.
Non-Executive Director since 9 July
2008
Member of the Audit Committee
Chair of the Remuneration Committee
Member of the Nomination Committee
Ms. Hayman contributes significant strategic and marketing
expertise derived from a corporate career which spanned local
and global organisations. Her skills include developing
marketing and business strategy across diverse industry
segments, driving
innovation, stimulating new product
development, and business planning and branding across
social media platforms.
Today Cheryl is a professional Non-Executive Director across
public, government and not-for-profit company directorships:
Non-Executive Director, HGL Ltd (ASX: HNG) appointed 2016
Non–Executive Director, AIFST appointed 2016
Non-Executive Director, Peer Support Australia appointed
2007.
Non-Executive Director, Chartered Accountants Australia &
New Zealand appointed 2018
Dr Sleigh was trained as a Biochemist and was formerly CEO
& Managing Director of EvoGenix Limited, an ASX-listed
biotechnology company; Dean, Faculty of Life Sciences,
University of NSW; Director, Research & Development at
Peptech Limited and Scientist & Senior Manager, CSIRO.
She was until recently (retired June 2018) a director of
Relationships Australia (NSW) and the Chair of its social
enterprise RASE Pty Ltd, where she remains a director. She
is also a member of the Council of the University of
Technology Sydney.
Dr Sleigh contributes extensive experience in strategic
management of ASX-listed SMEs both as a director, and as a
CEO. She also provides scientific research and development
expertise relevant to Clover’s Innovations program and
commercialisation of its products.
Former listed company directorships in the last three years:
Tyrian Diagnostics Limited, appointed 2008, resigned 2016.
Company Secretary
Mr Paul Sherman, B.Bus, CA, MBA
Appointed 25 November 2016
Mr Sherman is a Chartered Accountant with over 20 years’
experience in executive finance roles across a broad range of
industries.
9
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Principal Activities
The principal activities of the consolidated entity during the course of the financial year were the
refining and sale of natural oils, the production of encapsulated powders and the research and product
development of functional food and infant nutrition ingredients. There were no significant changes in
the nature of the principal activities of the consolidated entity during the financial year.
Operating Results
The results for this report are for the financial year ended 31 July 2018, the comparative period
being the financial year ended 31 July 2017. Total revenue from sale of goods increased 31.5% to
$62,961,000. Net profit after tax is $7,588,000 (2017: profit of $3,639,000).
Review of Operations
A full review of operations is included in the Chairman’s Report appearing on pages 4 and 5 of this
Annual Report.
10
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Employees
The consolidated entity had 39 employees as at 31 July 2018 (2017: 33 employees).
Events Subsequent to Reporting Date
The company intends entering into a contract to purchase a share of a spray drying facility in Hamilton,
New Zealand. There are commitments of NZD11.3m to be paid by 31 December 2018. There will be
related commitments which shall be financed through a loan from the Bank of New Zealand.
Apart from the above, no other events have occurred subsequent to balance date that would
materially affect the results for the financial year.
Significant changes in the State of the Affairs
Other than as stated above, and in the accompanying Financial Report, there were no significant
changes in the state of the affairs of the consolidated entity during the financial year.
Likely Developments
The consolidated entity will continue to pursue its policy of increasing the profitability and market share
of its operating businesses during the next financial year.
Dividends
A fully franked final dividend of 0.75 cent per share for the 12 months ended 31 July 2017 was paid
on 20 November 2017. The total final 2017 dividend paid was $1,652,000.
The Directors have declared a fully franked final dividend of 1.25 cent per share ($2,064,771) in
respect of the year ended 31 July 2018. The record date for this dividend will be 30 October 2018 with
payment due on 20 November 2018. An interim dividend of 0.50 cent per share was paid for FY2018.
The total dividend declared in respect to FY2018 is 1.75 cent per share, an increase of 0.75 cent per
share compared with the total dividend declared for FY2017.
Environmental Regulations
The consolidated entity’s operations are subject to environmental regulations under the laws of the
Commonwealth and State. The consolidated entity complies with all applicable environmental
regulations.
11
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Directors’ Meetings
The number of directors’ meetings (including meetings of sub-committees of directors) and number
of meetings attended by each of the directors of the Company during the financial year are:
Directors Meetings
Nomination
Committee
Meetings
Audit Committee
Meetings
Remuneration
Committee Meetings
Director
Number
Eligible
to
Attend
Number
Attended
Number
Attended
Number
Eligible
to
Attend
Number
Eligible
to
Attend
Number
Attended
Number
Eligible
to
Attend
Number
Attended
R A Harrington
P R Robinson
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh
13
3
12
13
11
11
11
13
3
12
13
10
11
11
1
-
1
-
1
1
1
1
-
1
-
1
1
1
1
-
4
-
4
4
4
1
-
4
-
3
4
4
2
-
2
-
2
2
2
2
-
2
-
2
2
2
Insurance of Directors and Officers
During the financial year, the Company paid a premium in respect of a contract insuring its directors
and officers against all liabilities to another person (other than the Company or a related body
corporate) that may arise from their position, except where the liability arises out of conduct involving
lack of good faith. The contract covers any past, present or future director, secretary, executive officer
or employee of the Company and its controlled entities. Further details have not been disclosed due
to confidentiality provisions of the contract of insurance.
Rounding Off of Amounts
The Company is of a kind referred to in ASIC Corporations Instrument (Rounding in Financial/
Directors’ Reports) 2016/191, and accordingly amounts in the Financial Report and the Directors’
Report have been rounded off to the nearest thousand dollars, unless otherwise stated.
Proceedings on behalf of the Company
No person has applied for leave of the Court 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 any part of those proceedings.
The Company was not a party to any such proceedings during the financial year.
12
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Remuneration Report
The Remuneration Report outlines the director and executive remuneration arrangements of the
Company for the 2018 financial year in accordance with the requirements of the Corporations Act
2001 and its Regulations. It has been audited in accordance with section 300(A) of the Corporations
Act 2001 (as amended).
(i) Key Management Personnel
Key Management Personnel (KMP) in this report are those individuals having responsibility for
planning, directing and controlling the major activities of the Company during the financial year. They
include Non-Executive Directors, Executive Directors, and Executive KMP. The Directors and Chief
Executive Officer determined that those persons having authority and responsibility for planning,
directing and controlling activities are as listed below.
Name
Directors
R A Harrington
P R Robinson
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh
Executive KMP
P J Davey
P A Sherman
(ii) Remuneration Policy
Position
Non-Executive Chairman (appointed 21 September 2017)
Non-Executive Chairman (resigned 21 September 2017)
Non-Executive Director
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer and Managing Director
Chief Financial Officer and Company Secretary
The Company operates from two locations in Australia and markets its products internationally. All
Executive KMP are based in Australia.
Through an effective remuneration framework, the Company aims to:
Provide fair and equitable rewards;
Align rewards to business outcomes that are linked to creation of shareholder value;
Stimulate a high performance culture;
Encourage the teamwork required to achieve business and financial objectives;
Attract, retain and motivate high calibre employees; and
Ensure that remuneration is competitive in relation to peer companies in Australia.
13
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Remuneration Report (continued)
(iii) Remuneration Framework Responsibilities
The Board has established a Remuneration Committee to assist it in establishing a suitable
remuneration framework for the Company. Responsibilities of the Remuneration Committee are to
review and make recommendations to the Board on the following issues:
The structure of the total remuneration package (TRP) including base salary, other benefits,
short term incentive (bonus) and share-based long term incentive for the CEO;
The mechanism to be used to review and benchmark the competitiveness of this TRP;
The Key Performance Indicators (KPIs) to be set for the CEO;
Changes in the amounts of different components of the TRP following annual performance
review of the CEO;
Decision on whether the Long Term Incentive Plan will be offered for any year; the number of
performance rights to be awarded to the CEO and specified Executives under this plan when
offered; and setting of associated performance indicators for future assessment;
Determination of the number of performance rights vesting at the end of each three year
assessment period of the Long Term Incentive Plan, based on financial performance
indicators previously established; and
The remuneration and any other benefits of the Non-Executive Directors.
The Remuneration Committee consists of four independent Non-Executive directors, Dr Merilyn
Sleigh (Chair), Cheryl Hayman, Ian Glasson and Graeme Billings. The Company Secretary may act
as secretary of the Remuneration Committee. The Board Chairperson and any other Non-Executive
Directors may attend committee meetings in an ex officio capacity. Executives including the CEO,
and any advisors retained by the Committee may attend by invitation. More information on
Remuneration Committee meetings held during the year and Directors’ attendance at these meetings
can be found on page 12 of this report.
The Board is responsible for reviewing and resolving on recommendations from the Remuneration
Committee. In addition it:
Considers matters relating to remuneration of Executives reporting to the CEO;
Approves the establishment of or amendment to employee share, performance rights and any
other deferred incentive plan;
Considers matters related to Executive succession planning; and
Considers recommendations from the Nomination Committee in relation to Board succession
planning, to ensure an appropriate mix of skills, experience, expertise and diversity (subject
to the power of shareholders in General Meeting to elect or re-elect directors).
(iv) Non-Executive Directors’ Remuneration
A remuneration pool of $500,000 for the payment of Non-Executive directors was approved by
shareholders at the Annual General Meeting held in November, 2011. Total Non-Executive Directors
remuneration including superannuation paid at the statutory prescribed rate for the year ended 31
July 2018 was $365,066 which is within the approved amount.
The Board believes that the remuneration approved for Non-Executive Directors must:
Enable the Company to attract and retain suitably qualified directors with appropriate
experience and expertise; and
Recognise that given the small size of the Board, all Directors contribute extensively to the
work of committees. As such, current policy is that no additional fees apply to Directors for
their participation on Board committees.
Must be appropriate in the context of the overall financial performance of the company.
14
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Remuneration Report (continued)
The Remuneration Committee reviews fees for Non-Executive directors annually, utilising data on and
trends in Director and Chairperson remuneration in the relevant group of the top 500 ASX-listed
companies in Australia (from published reports), as well as data obtainable on director remuneration
in a number of peer companies either from the same industry or with similar market capitalisation and
financial performance. Remuneration consultants have been used every three years to assist in this
process but none have been engaged for this purpose in the past two financial years.
The Board has to date selected a simple remuneration policy whereby only fees and statutory
superannuation benefits are payable. The table on page 19 of this report shows fees paid to Non-
Executive Directors for the 2018 and 2017 financial years. Non-Executive Directors do not participate
in any share or performance rights plans. Non-Executive Directors are entitled to reimbursement of
travel or other reasonable expenses incurred by them in the course of discharging their duties.
(v) Executive Remuneration and Link to Business Strategy
The diagram below outlines components which may be included as part of the TRP for Executives.
TOTAL REMUNERATION PACKAGE
+
Total fixed remuneration
(cash salary,
superannuation and
non-monetary benefits)
FIXED
Short term
incentive
(cash
payment)
+
Long term
incentive
(performance
rights)
VARIABLE
=
Total
Remuneration
Package
The Managing Director and specified Executives (Executives) are eligible for Short Term Incentive
(STI) payments, while the Managing Director and Executives may also have access to a Long Term
Incentive in the form of Performance Rights. The most recent LTI Offer was made to the CEO and
Executives in October 2017.
The total fixed remuneration of the Managing Director is set against market benchmarks by use of a
remuneration consultant. The Company seeks this benchmark information every 2-3 years. At other
times, increases in fixed remuneration are determined by consideration of CPI salary increases
applied across the whole company, and use of published information on CEO/MD salaries in the top
500 ASX-listed companies and in companies from related industries of similar market capitalisation
and financial status, as described for review of fees for Non-Executive Directors.
The Company’s Executive remuneration is directly linked to its business strategy. The Board engages
in an annual strategy review with management, identifying key goals and challenges for the year and
the longer term. Following this, business plans and an annual budget are prepared and approved,
with Key Performance Indicators (KPIs) (both financial and non-financial) established for the business.
15
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Remuneration Report (continued)
These are the basis for KPIs for the CEO, set by the Board, and for other Executives, set by the CEO
according to the area of responsibility of each Executive.
A formal review of the achievement of each Executive is conducted by the CEO annually and
proposed changes in fixed remuneration and the Short Term Incentive (STI) to be paid are submitted
to the Board for noting. As noted in section (iii) above, the performance of the CEO against agreed
KPI’s is reviewed by the Remuneration Committee, and recommendations on adjustment to total fixed
remuneration and payment of the Short Term Incentive are made to the Board, for approval.
The STI is a variable cash payment with the maximum payment based on a percentage of the
Executive’s total fixed remuneration. For the Managing Director 50% applied in 2018 (30% in 2017),
while for other Executives, 10% applied in both years. The Company awards STI payments on
evidence that the Executives have achieved stretching work plan objectives and dealt with unexpected
challenges in a way that contributes to both short-term performance and long term prospects of the
Company. The Board retains discretion to vary STI payments outside of the set formula to recognise
overall company performance, changes in the Company’s circumstances during the year and
exceptional contributions by particular Executives.
KPIs set for the CEO each year include financial, strategic and operational targets as summarised in
the table below. KPIs for individual Executives reporting to the CEO include the overall financial goals
for the Company, and may otherwise focus principally on operational goals in areas contributing to
the overall goals (short and long term) for the Company, and for which the Executive is responsible.
The financial targets are set at two levels, with the initial target establishing a gateway to an
entitlement to an STI payment.
KPI type
Financial
Percent
contribution
to STI
40-60%
Strategic
20-50%
Operational
20-50%
Description - Examples
Link to Company Strategy
Achievement of revenue,
profit and free cash flow
targets set for the year in
the annual budget.
Establishment of agreed
strategic plans and
progress towards their
implementation.
Commercial development
of new products from the
R&D team; expansion of
sales – new products, new
customers; new market
sectors; meeting
regulatory challenges;
manufacturing efficiencies
and cost effective sourcing
of raw materials; effective
management of inventory,
debtors and creditors
(working capital
requirements).
Sets target for growth in sales and profits for
each year, contributing to increasing
shareholder value. Net free cash flow
provides for further investment in the business
and capacity to pay increasing dividends each
year.
Strategic KPI’s address the medium term
prospects for the company, including new
products, markets, customers and alliances,
and contributing to mitigation of business risk.
Operational KPIs address particular
challenges identified each year (but often on-
going) for continued growth of the business
for the future, in the key management areas of
Sales and Marketing, R&D output,
Manufacturing, Regulatory and Cash
Management. Examples include turning the
output from the R&D team into profitable
products attracting new sales. Adjustment to
the changing nature of the market, raw
material availability and manufacturing
efficiency are all required to maintain both
short term performance of the Company, and
long term growth.
16
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Remuneration Report (continued)
(vi) Long Term Incentive Plan
A Long Term Incentive (LTI) may be offered each year to the CEO at the discretion of the Board. The
incentive, when offered, is in the form of Performance Rights (rights to receive shares in the Company)
which are delivered according to the Terms of the Clover Corporation Long Term Incentive Plan and
an annual Letter of Invitation from the Board to the CEO, setting out the terms for vesting of
performance rights at the end of the three year period from the date of offer (the assessment period).
Performance Rights are issued for nil consideration and entitle the recipient to receive one Clover
Corporation share at no cost for each Performance Right that vests at the end of the assessment
period.
The number of Performance Rights offered at the start of each financial year is determined from a
percentage of the CEO’s total fixed remuneration for that year. This dollar value is converted into a
number of Performance Rights based on the Volume Weighted Average Price of Clover Corporation
shares on the ASX for the two week period up to and including the last day of the previous financial
year. Hurdles for vesting of Performance Rights are currently set for each year of the 3 year
assessment period, with vesting of Rights determined after the annual results for the company are
released to the market at the end of the third year. For example, performance against hurdles set for
an LTI offer if it were made in August 2017 would be assessed in September 2020, examining
achievement in each of the three years since the offer date. Hurdles for vesting of Performance Rights
reflect long term growth and financial performance of the Company relevant to growth in shareholder
value, including such parameters as Earnings per Share (EPS) growth over the three year period, and
Return on Equity (ROE) over the same period.
Executives may also be invited to participate in the Company’s Long Term Incentive Plan.
Performance Rights offered are on the same basis as for the CEO with the number calculated by
taking a percentage of the Executive’s total fixed remuneration for that year and converting this value
to the number of Performance Rights granted using the same methodology as for the CEO, as
described above.
Shares vesting as a result of assessment of achievements against hurdles are either purchased on-
market by the Company on behalf of the CEO and Executives, or shares can be issued subject to
shareholder approval. Any Performance Rights not vesting at the end of the assessment period lapse.
17
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Remuneration Report (continued)
The grants which were current during the financial year were:
Year of Offer
Performance
conditions
2016
Target – EPS
Max - EPS
2016
Target –ROE (%)
2017
Max–ROE (%)
Target – EPS
Max - EPS
2017
Target –ROE (%)
Max–ROE (%)
Targeted
result for year
ended
31 July 2017
Targeted
result for year
ended
31 July 2018
Targeted
result for
year ended
31 July 2019
Targeted
result for year
ended
31 July 2020
2.5c
3.2c
13.5%
17.1%
-
-
-
-
2.9c
3.7c
14.7%
18.8%
2.9c
3.7c
14.7%
18.8%
3.4c
4.3c
16.4%
20.8%
3.4c
4.3c
16.4%
20.8%
-
-
-
-
3.8c
4.6c
17.8%
22.8%
Note – 50% of the total value of the grant vests on achievement of the target and a further 50% on the achievement of the maximum.
As at 31 July 2018 the following are the performance rights whose conditions have been met, and
their vesting profile:
P Davey
P Sherman
Balance 31
July 2018
Rights granted
under LTI plan
dated
172,795
156,940
19,100
17,263
366,098
1 August 2016
1 August 2017
1 August 2016
1 August 2017
Rights
vesting
effective
year-ended
31 July 2019
31 July 2020
31 July 2019
31 July 2020
Under the terms of the LTI the following are further particulars relating to performance rights
transactions during the year. No rights will vest until 2019 or 2020 from the grants made in 2016 and
2017 respectively. However, given that annual targets have been set for these grants, the
performance conditions for each rights offer have been fulfilled for year ending 31 July 2018. Vesting
of these rights at the dates shown above is dependent on continued employment of the Executive.
Rights
Granted
Rights yet to be
fulfilled, subject
to service
conditions
Fair value of
the rights as
compensation*
Rights
whose
conditions
were fulfilled
in year
ending 31
July2018
P Davey
P Sherman
#
486,676
53,625
540,301
* Note: No LTI compensation has been paid in year ending 31 July 2018 or will be paid in year ending 31 July 2019. The actual
value of the Performance Rights will be dependent on the Clover share price at the time of vesting.
$
514,392
56,728
571,120
#
816,412
89,987
906,399
#
329,736
36,362
366,098
18
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Remuneration Report (continued)
(viii) Remuneration of Non-Executive Directors and Executive KMP
The following tables disclose details of the remuneration of the Directors and Executive KMP of the
consolidated entity.
2018
Directors
R A Harrington
P R Robinson
G A Billings
P J Davey 1,2
I D Glasson
C L Hayman
Dr M J Sleigh
Executive KMP
P A Sherman 1,2
Salary
and Fees
Superannuation
Contributions
$
89,082
15,913
57,100
394,018
57,100
57,100
57,100
727,413
$
8,463
1,512
5,424
41,520
5,424
5,424
5,424
73,191
Salary
and Fees
Superannuation
Contributions
$
213,756
213,756
$
21,203
21,203
STI
Remune
ration
$
-
-
-
191,954
-
-
-
191,954
STI
Remuner
ation
$
23,496
23,496
Non-cash
Benefits
LTI Rem-
uneration
Total
$
-
-
-
32,189
-
-
-
32,189
$
-
-
-
514,392
-
-
-
514,392
$
97,545
17,425
62,524
1,174,073
62.524
62.524
62.524
1,539,139
Non-cash
Benefits
LTI Rem-
uneration
Total
$
-
-
$
56,728
56,728
$
315,183
315,183
1. STI consist of amounts accrued in respect to 2018
2.
LTI consists of an accrual value for performance rights that are expected to vest in 2019 and 2020, as noted above
2017
Directors
R A Harrington
P R Robinson
G A Billings
P J Davey 3
I D Glasson 4
C L Hayman
Dr M J Sleigh
Salary
and Fees
Superannuation
Contributions
STI
Remuner
ation
Non-cash
Benefits
LTI Rem-
uneration
$
56,451
93,681
56,451
345,799
27,854
56,451
56,451
693,138
$
5,363
8,900
5,363
44,502
2,646
5,363
5,363
77,500
$
-
-
-
51,188
-
-
-
51,188
$
-
-
-
33,221
-
-
-
33,221
$
-
-
-
-
-
-
-
-
Total
$
61,814
102,581
61,814
474,710
30,500
61,814
61,814
855,047
Salary
and Fees
Superannuation
Contributions
STI
Payment
Non-cash
Benefits
LTI Rem-
uneration
Total
Executive KMP
P A Sherman 3
$
208,973
208,973
$
19,852
19,852
$
9,430
9,430
$
-
-
$
-
-
$
238,255
238,255
3. STI consist of amounts accrued in respect of 2017 and paid in 2018
4. I Glasson appointed as Director on 1 February 2017
19
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Remuneration Report (continued)
(ix) Employment Contracts
There are no specific employment contracts with Non-Executive Directors. Non-Executive Directors
are appointed under a letter of appointment and are subject to election and rotation requirements as
set out in the ASX listing rules and the Company’s constitution, per the ‘Board Nomination Policy and
Procedure for Selection and Appointment of Directors’ policy, which can be viewed in the Corporate
Governance section of the Company’s website at www.clovercorp.com.au.
Managing Director Mr Peter Davey was employed by the Company under a contract of employment.
Other Executives (standard contract)
All other Executives have rolling contracts. The Company may terminate the Executive’s employment
agreement by providing between one and three months’ written notice or providing payment in lieu of
the notice period (based on the fixed component of the executive’s remuneration), together with
statutory termination entitlements. The Company may terminate the contract at any time without notice
if serious misconduct has occurred. Where termination with cause occurs, the Executive is only
entitled to that portion of remuneration that is fixed, and only up to the date of termination.
Directors’ interests
The relevant interest of each director in the share capital of the Company, as notified by the directors
to the Australian Stock Exchange in accordance with section 205G(1) of the Corporations Act 2001,
at the date of this report is as follows:
Director
R A Harrington
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh
Ordinary
Shares
Performance
Rights*
322,748
50,000
23,454
40,000
200,000
312,397
948,599
-
-
329,736
-
-
-
329,736
* There are an additional 486,676 performance rights available to Mr Davey subject to
meeting relevant performance and employment conditions
20
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ REPORT (continued)
Auditor’s Independence and Non-audit Services
The Board of Directors is satisfied that the provision of non-audit services during the period is
compatible with the general standard of independence for auditors imposed by the Corporations Act
2001. The directors are satisfied that the services disclosed below did not compromise the external
auditor’s independence for the following reasons:
all non-audit services are reviewed and approved by the Board of Directors prior to
commencement to ensure they do not adversely affect the integrity and objectivity of the auditor;
and
the nature of the services provided do not compromise the general principles relating to auditor
independence as set out in the APES110 Code of Ethics for Professional Accountants set by the
Accounting Professional and Ethical Standards Board.
The following fees for non-audit services were paid/payable to the external auditors during the year
ended 31 July 2018:
Taxation services
Auditor’s Independence Declaration
$
8,853
8,853
A copy of the auditor’s independence declaration as required under section 307C of the Corporations
Act 2001 has been received by the Directors, and a copy is attached at page 68.
Signed in accordance with a resolution of the Board of Directors.
Rupert Harrington
Chairman
Melbourne
Date: 21 September 2018
21
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE
The Board of Clover Corporation Limited is committed to ensuring its policies and practices reflect
good corporate governance and recognises that for the success of the Company an appropriate
culture needs to be nurtured and developed throughout all levels of the Company.
This statement outlines the Company’s Corporate Governance practices in place throughout the year,
unless otherwise stated, and has been summarised into sections in line with the 8 core principles set
the ASX Corporate Governance Council’s “Corporate Governance Principles and
out
Recommendations – 3rd Edition”.
in
Principle 1 – Lay solid foundations for management and oversight
The Board is ultimately responsible for the operations, management and performance of the
Company. In discharging this responsibility, the Board delegates to senior management whose role
it is to manage the Company in accordance with the directions and policies set by the Board. The
Board monitors the activities of senior management in the performance of their delegated duties.
It is the responsibility of the Board to determine policies, practices, management and the operations
of the Company and to ensure that the Company is compliant with statutory, legal and other regulatory
obligations.
Responsibilities of the Board include the following:-
Determining corporate strategies, policies and guidelines for the successful performance of the
Company in the present and in the future;
Monitoring the performance and conduct of the Company;
Accountability to shareholders;
Ensuring that risk management procedures and compliance and control systems are in place
and operating effectively;
Monitoring the performance and conduct of senior management, and ensuring adequate
succession plans are in place; and
Ensuring the Company continually builds an honest and ethical culture.
The Board has delegated responsibility for the following to management:
Production of performance measurement reports;
Day to day management of the Company;
Managing the compliance and risk management systems;
Management of staff including, appointment, termination, staff development and performance
measurement.
The CEO is responsible for ensuring that the responsibilities delegated by the Board to management
are properly discharged.
The performance of the CEO is evaluated by the Board with reference to the overall performance of
the Company, its subsidiaries and associates in which the CEO represents the Company. Both
qualitative and quantitative measures are used to evaluate performance.
The CEO evaluates the performance of the other senior executives and reports to the Board. The
Board also reviews the performance of these executives via their attendance at Board meetings and
the monthly Board reports.
The performance of the senior executives of the Company was assessed, as set out above, during
the reporting period.
The Board is responsible for evaluating candidates and recommending individuals for appointment as
Directors. The Company undertakes appropriate background and screening checks prior to
nominating a Director for election by shareholders.
22
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE (continued)
Principle 1 – Lay solid foundations for management and oversight (continued)
The Company maintains written agreements with each Director and senior Executives that sets out
the terms of their appointment and outlines all relevant roles and obligations.
The Company Secretary is accountable to the Board, through the Chairman, and is responsible for
advising the Board and its Committees on governance matters, monitoring the Board and ensuring
Committee policies and procedures are followed, and coordinating the timely completion of Board
and Committee papers.
Diversity
The Company values and respects the skills that people with diverse backgrounds, experiences and
perspectives bring to the organisation. The Company is committed to rewarding performance and
providing opportunities that allow individuals to reach their full potential irrespective of background or
difference. When appointing or promoting people within the organisation the most suitably qualified
candidates are selected. As a result, diversity is promoted throughout the organisation.
In March 2012, the Company established a Diversity Policy to formalise its commitment to providing
equal access to opportunities irrespective of background or difference. The policy may be viewed in
the Corporate Governance section of the Company’s web site at www.clovercorp.com.au. The policy
governs the conduct of the Company, its wholly owned subsidiaries and all Directors and employees
of those entities.
The Company has adopted the ASX Corporate Governance Principles and Recommendations on
diversity. As at 31 July 2018 the organisation had 39 employees. The proportion of women
employees in the whole organisation as at 31 July 2018 was 33%. While the Company believes that
this represents a good level of gender diversity, it will continue to ensure that neither gender nor any
other differences interfere with the employment of individuals based on their suitability for the position
available.
The proportion of women in senior executive positions as at 31 July 2018 was 17%. The Company’s
objective is to incrementally grow this as vacancies allow and suitably qualified candidates are
available. The aim is to achieve female representation of 30% or more. The small number of senior
executive positions within the organisation and the low turnover rate limits the opportunity to increase
female representation in this area.
Two of the five Non-Executive Directors are women. The Board will continue to assess candidates
on their skills, knowledge and experience and on the relevance of these to the Company’s needs.
Principle 2 – Structure the Board to add value
The Company’s constitution states that its Board is to comprise no less than three and no more than
ten Directors. The names and details of the Directors of the Company at the date of this statement
are set out in the Directors’ Report.
At the date of this report the Board consisted of five Non-Executive Directors and one Executive
Director. Each Director has undertaken to provide the Board with all information that is relevant to
the assessment of his/her independence in a timely manner. The Board has assessed the
independence of its members and is of the view that the following Directors are independent:
Mr R Harrington - Non-Executive
Mr G A Billings - Non-Executive
Mr I D Glasson – Non-Executive
Ms C L Hayman - Non-Executive
Dr M J Sleigh - Non-Executive
23
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE (continued)
Principle 2 – Structure the Board to add value (continued)
The Company has established a Nomination Committee which currently consists of four independent
Non-Executive Directors, and is chaired by one of the independent Non-Executive directors. The
Committee periodically reviews the Board’s membership having regard to the Company’s particular
needs, both present and future. Where a committee member is due for re-election at the next Annual
General Meeting, that Director abstains from consideration of their nomination for re-election.
The Company has a Board Nomination Policy that sets out the process by which candidates are
identified and selected, the use of professional intermediaries and the requirement for a diverse range
of candidates to be considered. This policy may be viewed in the Corporate Governance section of
the Company’s web site at www.clovercorp.com.au.
The Nomination Committee considers the structure, balance and skills of the Board in making
decisions regarding appointment, retirement and nominations for re-election. When a vacancy
occurs, the necessary and desirable skills, expertise and experience required to complement the
Board are identified and a process to identify the most appropriate candidates is implemented. The
committee engages recruitment consultants and other independent experts to undertake research
and assessment as required.
Directors are initially appointed by the full Board, subject to election by the shareholders of the
Company at the next Annual General Meeting. Under the Constitution, one third of the Board is
required to retire from office each year. Retiring Directors may stand for re-election subject to
approval by the Board.
The company has an established induction procedure which allows new Board appointees to
participate fully and actively in Board decision making at the earliest opportunity.
The Board considers that the current Directors bring an appropriate mix of skills, breadth and depth
of knowledge and experience and diversity to meet the Board’s responsibilities and objectives. The
range of skills and experience possessed by the each of the Directors is set out in the Directors’
Report, and is summarised in the table below:
24
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE (continued)
Principle 2 – Structure the Board to add value (continued)
Skill Category
Description of Attribute
Board experience
and governance
Demonstrated commitment to highest standards
of governance, listed company expertise and
member of governance body
Current Board
Representation
Five Directors
Five Directors
Executive
leadership,
Capability as
Board Chair or
Committee Chair
Healthcare, infant
formula, nutrition
sector experience,
and working in the
health sciences
Strategy
Development
Financial and Risk
Management
Wholesale and
Distribution;
Inventory
Management and
Control
Business
Acquisition, Capital
Projects and
Integration
Remuneration,
Organisation
Development
Technical IP
Development, and
Protection
Marketing, Sales
and
Communications
Sustainable success in business at a Senior
Executive level in relevant industries, including
health, science, finance, investment, consumer
goods
Relevant business or Board experience in
operational sectors, local or international;
Knowledge of managing research, science and
development in a high technology environment
Five Directors
Experience in developing, implementing and
challenging plans of action designed to achieve
long term company goals and sustainable
competitive advantage and growth
Experience in financial accounting and reporting,
corporate finance, internal controls and/or
experience in business risk management at a
Board level in listed entity
Knowledge of supply chain and inventory
management; Experience working with
manufacturing, production, supply chain,
logistics and distribution nuances
Experience working with large scale capital
outlays and long-term investment horizons;
M&A, new business acquisition experience,
track record in developing an asset or business
portfolio over the long term that remains resilient
to systemic risk
Background in an industry that has faced
disruptive change; anticipating risks and facing
major market change. Board Remuneration
Committee membership or management in
relation to remuneration, and organisational
development or transformation
Development and management of IP,
trademarks and protection mechanisms for
competitive advantage, both local and global
scale; Knowledge and experience in
commercialising new product development
Senior executive experience in Marketing,
Communications and Brand development;
detailed understanding of corporate purpose to
create long-term company value, external
relationship building and valuable customer
experiences
Five Directors
Five Directors
Three Directors
Four Directors
Five Directors
Four Directors
Three Directors
In the discharge of their duties and responsibilities the Directors, either individually or jointly, have the
right to seek independent professional advice at the Company’s expense. In respect of advice to
individual Directors, the prior approval of the Chairman is required; such approval is not to be
unreasonably withheld. The Chairman is entitled to receive a copy of any such advice obtained.
25
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE (continued)
Principle 2 – Structure the Board to add value (continued)
The Chairman is responsible for monitoring and assessing the performance of individual Directors,
each Board committee and the Board as a whole. The Chairman interviews each Director and
provides feedback regarding their performance. In 2018 each Director independently completed an
external confidential assessment of the performance of the Board. The results of the assessments
are compiled into a written report which is presented to the Board and discussed. The performance
of each Director of the Company was assessed during the reporting period.
Principle 3 – Act ethically and responsibly
Code of Conduct
The Company has an established code of conduct dealing with matters of integrity and ethical
standards. The Board recognises the need for the Directors and employees to adhere to the highest
standards of behaviour and business ethics.
Professional conduct and ethical standards;
All Directors and employees are expected to abide by the code of conduct which covers a number of
areas including the following:-
Compliance with laws and regulations;
Relationships with shareholders, customers, suppliers and competitors;
Confidentiality and continuous disclosure;
Standards of workplace behaviour and equal opportunity;
Privacy and anti-discrimination;
Proper use of Company assets;
The environment; and
Investigation and reporting of breaches of the code.
Share Trading
The Company has established a share trading policy which may be viewed in the Corporate
Governance section of the Company’s web site at www.clovercorp.com.au.
Principle 4 – Safeguard integrity in financial reporting
The Company has an established Audit Committee, which has a formal charter outlining the
committee’s function, composition, authority, responsibility and reporting. The Audit Committee
charter may be viewed in the Corporate Governance section of the Company’s web site at
www.clovercorp.com.au.
There are currently four members of the Audit Committee, all of whom are non-executive Directors
and are considered to be independent (refer to principle 2 above).
Mr Billings, who is the Chair of the Audit Committee, is not the Chairman of the Board. The Chairman
of the Board is not a member of the Audit Committee. The details of the Audit Committee members
at the date of this statement and their attendance at meetings are set out in the Directors’ Report.
The Non-Executive Chairman, CEO, and Company Secretary may attend Audit Committee meetings
by invitation. The external auditors, PKF, are requested by the Audit Committee to attend appropriate
meetings to report on the results of their half-year review and of their planning for and result of the full
year audit.
26
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE (continued)
Principle 4 – Safeguard integrity in financial reporting (continued)
The function of the Audit Committee is to assist the Board in fulfilling its statutory and fiduciary
responsibilities relating to:
The external reporting of financial information, including the selection and application of
accounting policies;
The independence and effectiveness of the external auditors;
The effectiveness of internal control processes and management information systems;
Compliance with the Corporations Act, ASX Listing Rules and any other applicable requirements;
The application and adequacy of risk management systems within the Company.
The CEO and the Chief Financial Officer are required to state in writing to the Board, by submission
to the Audit Committee, that the Company’s financial statements present a true and fair view, in all
material respects, of the Company’s financial position and operational results and that they are in
accordance with relevant accounting standards. A declaration under Section 295A of the Corporations
Act from the CEO and Chief Financial Officer has been received in respect of the current reporting
period.
Principle 5 – Make timely and balanced disclosure
The Board recognises the need to ensure that all investors have equal and timely access to material
information regarding the Company and for announcements to be factual, clear, balanced and
complete.
The Company has established a Continuous Disclosure Policy to ensure compliance with the ASX
and Corporations Act continuous disclosure requirements. The policy requires timely disclosure
through the ASX company announcements platform of information concerning the Company that a
reasonable person would expect to have a material effect on the price or value of the Company’s
securities or which would materially influence the decision making of investors. Internal procedures
are in place to ensure that relevant information is communicated promptly.
The Chairman and CEO are responsible for determining disclosure obligations and the Company
Secretary is the nominated continuous disclosure officer for the Company.
Principle 6 – Respect the rights of security holders
The Board is committed to ensuring that shareholders are fully informed of all material matters
affecting the Company in a timely manner.
The dissemination of information is mainly achieved as follows:-
An Annual Report is distributed (electronically if preferred) to shareholders in November each
year;
A newsletter is periodically distributed to shareholders;
Announcements to the ASX and press releases advising of events which are of particular
significance to the progress and prospects of the Company, and
Significant information is also posted on the Company’s website.
In addition, shareholders are encouraged to attend and participate in the Annual General Meeting
(AGM) of the Company. The external auditor attends the AGM to answer shareholders’ questions
with regard to the conduct of the audit and the content of the Auditor’s Report.
27
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE (continued)
Principle 7 – Recognise and manage risk
The Company is committed to identifying and managing areas of significant business risk to protect
shareholders, employees, earnings and the environment. Arrangements in place include:-
Regular detailed financial, budgetary and management reporting;
Procedures to manage financial and operational risks;
Established organisational structures, procedures and policies dealing with the areas of health
and safety, environmental issues, industrial relations and legal and regulatory matters;
Comprehensive insurance and risk management programs;
Procedures requiring Board approval for all borrowings, guarantees and capital expenditure
beyond minor levels;
Where applicable, the utilisation of specialised staff and external advisors; and
Regular operational audits undertaken by major customers.
Management is responsible for the design and implementation of a risk management and internal
control system which manages the material business risks of the Company and reporting to the Board
on whether those risks are being managed efficiently. Management reported to the Board on an
ongoing basis during the current reporting period.
The Board of Directors regularly reviews the external risks to the Company. The Board reviews and
approves management’s plans to reduce the impact of potential risks and monitors progress against
these plans.
The Company does not have an internal audit function. Management is responsible for the design
and implementation of a risk management and internal control system which manages the material
business risks of the Company and reporting to the Board on whether those risks are being managed
efficiently. Management reported to the Board on an ongoing basis. The Board of Directors regularly
reviews the external risks of the Company. The Board reviews and approves management’s plans to
reduce the impact of potential risks and monitors progress against these plans.
The Company does not have any exposure to economic, environmental and social sustainability risks
to disclose during the reporting period.
The CEO and the Chief Financial Officer are required to state in writing to the Board, by submission
to the Audit Committee, that the risk management and internal control compliance systems are
operating efficiently and effectively. In their declaration under section 295A of the Corporations Act
the CEO and Chief Financial Officer have made this statement in respect of the current reporting
period.
Principle 8 – Remunerate fairly and responsibly
The Company has established a Remuneration Committee which currently consists of four
independent, non-executive Directors. The Committee makes recommendations to the full Board on
remuneration matters and other terms of employment for Executive Directors and Non-Executive
Directors.
Senior executive performance is continually monitored by the CEO and the CEO’s performance is
subject to continuous monitoring by the full Board.
The remuneration of the CEO is reviewed annually by the Remuneration Committee, which consists
of only Non-Executive Directors. The remuneration of the senior executive staff is reviewed annually
by the full Board after taking into consideration the recommendations of the Remuneration Committee
and the CEO.
The CEO and senior executive staff are remunerated by way of salary, performance incentive
payments, non monetary benefits, and superannuation contributions.
28
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE (continued)
Principle 8 – Remunerate fairly and responsibly (continued)
the Company’s performance, market rates,
Non-Executive Director’s fees are reviewed periodically by the full Board after taking into
consideration
the
recommendations of the Remuneration Committee. Non-Executive Directors are remunerated by way
of fees in the form of cash and superannuation contributions and are not entitled to receive bonus
payments or any equity based remuneration.
level of responsibility and
Remuneration is set so as to attract and retain suitable personnel and to motivate them to pursue the
long term growth and success of the Company.
Further information of Directors’ and Executive remuneration is set out in the Remuneration Report.
For further information concerning the corporate governance practices of the Company refer to the
corporate governance section of the Company’s web site at www.clovercorp.com.au.
29
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
Notes
2018
$'000
2017
$'000
2
2
3
4
62,961
(44,714)
47,864
(36,279)
18,247
11,585
665
(476)
(2,594)
(4,184)
(1,518)
10,616
(3,028)
(2,163)
(2,821)
(1,113)
5,012
(1,373)
7,588
3,639
Revenue
Cost of goods sold
Gross profit
Other income / (expenses)
Marketing and sales expenses
Administration and corporate expenses
Research and development expenses
Profit before income tax
Income tax (expense)/credit
Profit after tax for the period attributable to
members of the parent entity
Other comprehensive profit/(loss)
Items that may be reclassified subsequently to profit
or loss:
Foreign currency translation adjustments
Other comprehensive profit/(loss) for the year
46
46
(38)
(38)
Total comprehensive profit for the year
7,634
3,601
Earnings per share (EPS)
Basic earnings per share (cent per share)
Diluted earnings per share (cent per share)
19
19
4.59
4.59
2.20
2.20
This Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
30
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2018
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets - prepayments
Non-current assets
Available for sale listed investment
Property, plant and equipment
Deferred tax assets
Intangible assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Current tax liabilities
Short-term provisions
Non-current liabilities
Interest bearing liabilities
Deferred tax liabilities
Long-term provisions
Total liabilities
Net assets
Equity
Issued capital
Foreign currency translation reserve
Retained profits/(Accumulated losses)
Total equity
Notes
6
7
8
9
10
4
11
12
13
14
13
4
14
15
16
2018
$'000
7,894
15,257
19,768
656
43,575
4
6,062
502
1,907
8,475
2017
$'000
5,916
12,125
18,811
763
37,615
5
2,262
852
1,907
5,026
52,050
42,641
7,821
450
1,278
599
10,148
3,737
-
20
3,757
9,243
-
148
526
9,917
-
120
28
148
13,905
10,065
38,145
32,576
32,920
(158)
5,383
38,145
32,920
(204)
(140)
32,576
This Statement of Financial Position should be read in conjunction with the accompanying notes.
31
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
Retained
Profits/
(Accumulated
Losses)
$'000
Foreign
Currency
Translation
Reserve
$'000
Issued
Capital
$'000
Total
$'000
Balance at 1 August 2016
32,920
(2,540)
(166)
30,214
Profit attributable to members of the
entity
Dividend paid
Foreign currency translation reserve
Balance at 31 July 2017
Balance at 1 August 2017
Profit attributable to members of the
entity
Dividend paid
Foreign currency translation reserve
-
-
-
32,920
32,920
-
-
-
3,639
(1,239)
-
-
3,639
(1,239)
-
(38)
(38)
(140)
(204)
32,576
(140)
(204)
32,576
7,588
(2,065)
-
-
7,588
(2,065)
-
46
46
Balance at 31 July 2018
32,920
5,383
(158)
38,145
This Statement of Changes in Equity should be read in conjunction with the accompanying notes.
32
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest (paid) / received
Income tax paid
Notes
2018
$ '000
2017
$ '000
60,413
(54,475)
(189)
(1,668)
46,081
(46,270)
47
(453)
Net cash inflow/ (outflow) from operating activities
18
4,081
(595)
Cash flows from investing activities
Acquisition of plant and equipment
(4,226)
(480)
Net cash outflow from investing activities
(4,226)
(480)
Cash flows from financing activities
Dividends paid
Repayment of interest bearing liabilities
Issue of interest bearing liabilities
5 (a)
(2,065)
(312)
4,500
(1,239)
-
-
Net cash outflow from financing activities
2,123
(1,239)
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the
period
1,978
(2,314)
5,916
8,230
Cash and cash equivalents at the end of the period
6
7,894
5,916
This Statement of Cash Flows should be read in conjunction with the accompanying notes.
33
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report covers Clover Corporation Limited (“the Company”) and controlled entities (“the
Group”). Clover Corporation Limited is a listed public company, incorporated and domiciled in
Australia.
Basis of preparation
The financial report is a general purpose financial report that has been prepared in accordance with
Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001.
The financial report also complies with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board.
The consolidated financial statements have been prepared on the basis of historical cost, except for
certain financial instruments that are measured at fair value at the end of each reporting period, as
explained in the accounting policies below. Historical cost is generally based on the fair values of the
consideration given in exchange for goods and services. All amounts are presented in Australian
dollars, unless otherwise noted.
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, regardless of whether that price is
directly observable or estimated using another valuation technique. In estimating the fair value of an
asset or a liability, the consolidated entity takes into account the characteristics of the asset or liability
if market participants would take those characteristics into account when pricing the asset or liability
at the measurement date. Fair value for measurement and/or disclosure purposes in these
consolidated financial statements is determined on such a basis, except for share-based payment
transactions that are within the scope of AASB 2, leasing transactions that are within the scope of
AASB 117, and measurements that have some similarities to fair value but are not fair value, such as
net realisable value in AASB 2 or value in use in AASB 136.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2
or 3 based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable
for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The consolidated entity has applied the relief available to it in ASIC Corporations Instrument
(Rounding in Financial/ Directors’ Reports) 2016/191 and accordingly amounts in the financial report
and the directors’ report have been rounded off to the nearest thousand dollars, unless otherwise
stated.
The financial report was authorised for issue on 21 September 2018 by the Board of Directors.
(a) (i) Changes in accounting policy and disclosures, standards and interpretations
This Note 1 details the material accounting policies adopted by the consolidated entity in the
preparation of the financial report.
The accounting policies adopted are consistent with those of the previous financial year.
34
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a) (i) Changes in accounting policy and disclosures, standards and interpretations
(continued)
There are no new or revised Accounting Standards and Interpretations issued by the AASB in respect
of the reporting period beginning 1 August 2017 that have any significant impact on the consolidated
entity in the current year or could impact on future periods.
(a) (ii) Early adoption of standards
The consolidated entity has not elected to apply any pronouncements before their operative date in
the annual reporting period beginning 1 August 2017.
(a) (iii) New accounting standards for application in future periods
The following Standards and Interpretations issued or amended are applicable to the consolidated
entity but are not yet effective and have not been adopted in preparation of the financial statements at
the reporting date. The consolidated entity’s assessment of the impact of these new standards and
interpretations is set out below.
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 11 Construction Contracts, AASB 18 Revenue and related Interpretations.
The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration the entity expects to be
entitled to in exchange for those goods or services. Accordingly, revenue will be recognised through
application of the following steps:
(i)
(ii)
(iii)
(iv)
(v)
Identify the contract(s) with a customer.
Identify the performance obligations in the contract.
Determine the transaction price.
Allocate the transaction price to the performance obligations in the contract
Recognise revenue when (or as) the entity satisfies a performance obligation.
AAAS 15 is effective for annual reporting periods beginning on or after 1 January 2018, and it is
available for early adoption. It is not anticipated that the Group will apply the standard until the year
commencing 1 August 2018. The Group has assessed that application of the standard is not expected
to have any material impact on the point at which revenue is recognised, as its principles embody an
approach consistent with the Group’s current policy to align recognition with performance obligation
satisfaction.
AASB 9 Financial Instruments
AASB 9 (December 2014) replaces AASB 139, and is effective for annual reporting periods beginning
on or after 1 January 2018. While AASB 9 is available for early adoption, it is not anticipated that the
Group will apply the standard until the year commencing 1 August 2018. Considering limited current
exposure to the following key aspects of the new standard, its application is not believed to be of
significant impact unless circumstances change.
35
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The application version of AASB 9:
(i)
(ii)
(iii)
(iv)
Introduces a new expected loss impairment model that will require more timely
recognition of expected credit losses;
Confirms previous amendments relating to new hedge accounting requirements,
including changes to hedge effectiveness testing, treatment of hedging costs, risk
components that can be hedged and disclosures;
Includes requirements for a simpler approach for classification and measurement of
financial assets compared with the requirements of AASB 139;
Provides that where the fair value option is used for financial liabilities the change in fair
value is to be accounted for by presenting that part attributable to change in credit risk in
other comprehensive income, and the remainder in profit or loss.
AASB 16 Leases.
AASB 16 is effective for annual reporting periods beginning on or after 1 January 2019. The Standard
requires lessees to initially recognise a lease liability for the obligation to make lease payments and a
right-of-use asset for the right to use the underlying asset for the lease term.
Though the standard can be early adopted that cannot be prior to the adoption of AASB 15. It is not
anticipated that the Group will apply the standard until the year commencing 1 August 2019.
Considering the group’s current portfolio of leased assets, the application of AASB 16 is not believed
to be of significant impact unless circumstances change.
(b) Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Clover Corporation
Limited and entities controlled by the Company and its subsidiaries. Control is achieved when the
Company is exposed or has rights to variable returns for its involvement with the subsidiary and has
the ability to affect those returns through its power over the subsidiary. All subsidiaries have a
reporting date of 31 July.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the
investee when the voting rights are sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The Company considers all relevant facts and circumstances in
assessing whether or not the Company's voting rights in an investee are sufficient to give it power,
including:
the size of the Company's holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
rights arising from other contractual arrangements; and
potential voting rights held by the Company, other vote holders or other parties;
any additional facts and circumstances that indicate that the Company has, or does not have,
the current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders' meetings
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and
ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in the consolidated statement of profit
36
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Principles of consolidation (continued)
or loss and other comprehensive income from the date the Company gains control until the date when
the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the
Company and to the non-controlling interests. Total comprehensive income of subsidiaries is
attributed to the owners of the Company and to the non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the consolidated entity's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the consolidated entity are eliminated in full on consolidation.
(c)
Income tax
The income tax expense (credit) for the period comprises current income tax expense (credit) and
deferred tax expense (credit).
Current income tax expense (credit) charged to the profit or loss is the tax payable on taxable income
calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the
reporting period. Current tax liabilities (assets) are therefore measured at the amounts expected to be
paid to (recovered from) the relevant taxation authority.
Deferred income tax expense (credit) reflects movements in deferred tax asset and deferred tax
liability balances during the period as well as unused tax losses.
Current and deferred income tax expense (credit) is charged or credited directly to equity instead of
the profit or loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred
tax assets also result where amounts have been fully expensed but future tax deductions are
available. No deferred income tax will be recognised from the initial recognition of an asset or liability,
excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates enacted or substantively
enacted at the end of the reporting period. Their measurement also reflects the manner in which
management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to
the extent that it is probable that future taxable profit will be available against which the benefits of the
deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the
reversal of the temporary difference can be controlled and it is not probable that the reversal will occur
in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
37
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
Income tax (continued)
liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-
off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
Tax consolidation
Clover Corporation Limited and its wholly-owned Australian subsidiaries have not formed an income
tax consolidated group under tax consolidation legislation.
Inventories
(d)
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured
products includes direct materials, direct labour and an appropriate portion of variable and fixed
overheads. Overheads are applied on the basis of normal operating capacity. Costs are assigned on
the basis of weighted average costs.
(e) Property, plant and equipment
Each class of property, plant and equipment is carried at cost, less where applicable any accumulated
depreciation and impairment losses.
Plant and equipment
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in
excess of the recoverable amount from these assets. The recoverable amount is assessed on the
basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
The cost of fixed assets constructed within the consolidated entity includes the cost of materials, direct
labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the consolidated entity and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the statement of comprehensive income during the financial period in
which they are incurred.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets, are depreciated on a
straight-line basis over their useful lives to the consolidated entity commencing from the time the asset
is held ready for use. Leasehold improvements are depreciated over the shorter of either the
unexpired period of the lease or the estimated useful lives of the improvements.
38
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e) Property, plant and equipment (continued)
The depreciation rates used for each class of depreciable assets are:
Class of Asset
Leasehold improvements, at cost
Plant and equipment, at cost
Furniture and equipment, at cost
Depreciation Rates
6.66% - 15.00%
5.00% - 33.33%
4.80% - 40.00%
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
If any indication of impairment exists and where the carrying values exceed the estimated recoverable
amount, the assets or cash-generating units are written down to their recoverable amount.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value
in use. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset.
Impairment losses are recognised in the statement of comprehensive income.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These are included in the statement of comprehensive income.
De-recognition
An item of plant and equipment is de-recognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
(f) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the
asset, but not the legal ownership that is transferred to entities in the consolidated entity, are classified
as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal
to the fair value of the leased property or the present value of the minimum lease payments, including
any guaranteed residual values. Lease payments are allocated between the reduction of the lease
liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives
or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the
lessor, are charged as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line
basis over the life of the lease term.
39
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the consolidated entity becomes a party
to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that
the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is
adopted).
Those financial instruments entered into by the consolidated entity are classified and measured as
set out below.
Classification and subsequent measurement
Financial instruments are subsequently measured at either of fair value, amortised cost using the
effective interest rate method, or cost. Fair value represents the amount for which an asset could be
exchanged or a liability settled, between knowledgeable, willing parties. Where available, prices
quoted in an active market are used to determine fair value. In other circumstances, valuation
techniques are adopted.
Amortised cost is calculated as:
a. the amount at which the financial asset or financial liability is measured at initial recognition;
b. plus or minus the cumulative amortisation of the difference, if any, between the amount
initially recognised and the maturity amount calculated using the effective interest method; and
c. less any reduction for impairment.
The effective interest method is used to allocate interest income or interest expense over the relevant
period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts
(including fees, transaction costs and other premiums or discounts) through the expected life (or when
this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying
amount of the financial asset or financial liability. Revisions to expected future net cash flows will
necessitate an adjustment to the carrying value with a consequential recognition of an income or
expense in profit or loss.
The consolidated entity does not designate any interests in subsidiaries, associates or joint venture
entities as being subject to the requirements of accounting standards specifically applicable to
financial instruments.
(i) Financial assets at fair value through profit or loss
Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading
for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are
designated as such to avoid an accounting mismatch or to enable performance evaluation where a
consolidated entity of financial assets is managed by key management personnel on a fair value basis
in accordance with a documented risk management or investment strategy. Such assets are
subsequently measured at fair value with changes in carrying value being included in profit or loss.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to
mature within 12 months after the end of the reporting period. (All other loans and receivables are
classified as non-current assets.)
40
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Financial instruments (continued)
Trade debtors and other receivables are recognised at the amount due. The consolidated entity
establishes a provision for any doubtful debts based on a review of all outstanding amounts at
period end. Bad debts are written off when they are identified.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed
or determinable payments, and it is the consolidated entity’s intention to hold these investments to
maturity. They are subsequently measured at amortised cost.
Held-to-maturity investments are included in non-current assets, except for those which are expected
to mature within 12 months after the end of the reporting period. (All other investments are classified
as current assets).
If during the period the consolidated entity sold or reclassified more than an insignificant amount of
the held-to-maturity investments before maturity, the entire held-to-maturity investments category
would be tainted and reclassified as available-for-sale.
(iv) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be
classified into other categories of financial assets due to their nature, or are designated as such by
management. They comprise investments in the equity of other entities where there is neither a fixed
maturity nor fixed or determinable payments.
Available-for-sale financial assets are included in non-current assets, except for those which are
expected to mature within 12 months after the end of the reporting period. (All other financial assets
are classified as current assets.)
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques
are applied to determine the fair value for all unlisted securities, including recent arm’s length
transactions, reference to similar instruments and option pricing models.
Impairment
At each reporting date, the consolidated entity assesses whether there is objective evidence that a
financial instrument has been impaired. In the case of available-for-sale financial instruments, a
prolonged decline in the value of the instrument is considered to determine whether an impairment
has arisen. Impairment losses are recognised in the statement of comprehensive income.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the
asset is transferred to another party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised
where the related obligations are discharged, cancelled or expired. The difference between the
carrying value of the financial liability extinguished or transferred to another party and the fair value of
consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in
profit or loss.
41
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h)
Impairment of assets
At each reporting date, the consolidated entity reviews the carrying values of its tangible and intangible
assets to determine whether there is any indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less
costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s
carrying value over its recoverable amount is expensed to the statement of comprehensive income.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated
entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.
(i)
Intangibles
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess
of the sum of the consideration transferred and the acquisition date fair value of any previously held
equity interest, over the acquisition date fair value of net identifiable assets acquired. Goodwill on
acquisitions of subsidiaries is included in intangible assets.
Goodwill is tested for impairment annually and is allocated to the consolidated entity’s cash generating
units or groups of cash generating units, which represent the lowest level at which goodwill is
monitored but where such level is not larger than an operating segment. Gains and losses on the
disposal of an entity include the carrying amount of goodwill related to the entity sold.
Changes in the ownership interests in a subsidiary are accounted for as equity transactions and do
not affect the carrying values of goodwill.
(j) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the consolidated entity’s entities is measured using the currency of
the primary economic environment in which that entity operates. The consolidated financial
statements are presented in Australian dollars which is the Company’s functional and presentation
currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-
end exchange rate. Non-monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the statement of
comprehensive income, except where deferred in equity as a qualifying cash flow or net investment
hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in
equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange
difference is recognised in the statement of comprehensive income.
42
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Cash and cash equivalents
For the purpose of the cash flow statement, cash includes cash on hand and in at-call deposits with
banks or financial institutions, net of bank overdrafts, and investments in money market instruments
with less than 14 days to maturity.
(l) Revenue
Revenue from the sale of goods is recognised upon the delivery of goods to customers. Revenue is
measured at the fair value of the consideration received or receivable after taking into account any
trade discounts and volume rebates allowed.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable
to the financial assets.
Dividend revenue is recognised when the right to receive a dividend has been established. Dividends
received from associates and joint venture entities are accounted for in accordance with the equity
method of accounting.
Revenue from the rendering of a service is recognised upon the delivery of the service to the
customers. All revenue is stated net of the amount of goods and services tax (GST).
(m) Trade and other payables
Trade and other payables represent liabilities outstanding at the end of the reporting period for goods
and services received by the Company during the reporting period, which remain unpaid. Amounts
are unsecured and are presented as current liabilities. They are normally settled in accordance with
the terms agreed with the respective creditors.
(n) Employee benefits
Provision is made for the consolidated entity’s liability for employee benefits arising from services
rendered by employees to reporting date. Employee benefits expected to be settled within one year
together with entitlements arising from wages, salaries and annual leave which will be settled after
one year, have been measured at the amounts expected to be paid when the liability is settled, plus
related on-costs. Other employee benefits payable later than one year have been measured at the
present value of the estimated future cash outflows to be made for those benefits.
Contributions are made by the consolidated entity to employee superannuation funds and are charged
as expenses when incurred.
(o) Provisions
Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a
result of past events, from which it is probable that an outflow of economic benefits will result and that
outflow can be reliably measured.
43
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p) Goods & services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount
of GST incurred is not recoverable from the Australian Tax Office. 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 expense.
Receivables and payables in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as operating cash flows.
(q) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the
Company, excluding any costs of servicing equity other than dividends, by the weighted average
number of ordinary shares, adjusted for any bonus elements.
Diluted earnings per share
Diluted earnings per share is calculated as net profit attributable to members of the Company,
adjusted for:
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive
potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the
period that would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares,
adjusted for any bonus elements.
(r) 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.
Operating segments have been identified based on the information provided to the chief operating
decision makers.
(s) Comparative figures
Where required by the Accounting Standards comparative figures have been adjusted to conform with
changes in presentation in the current financial period.
44
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t) Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the financial report based on
historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data; obtained both
externally and within the consolidated entity.
Key estimate
Impairment
The consolidated entity assesses impairment at each reporting date by evaluating conditions and
events specific to the consolidated entity that may be indicative of impairment triggers.
Recoverable amounts of relevant assets are reassessed using value-in-use calculations
performed. In assessing recoverable amounts a number of key estimates are made.
Key judgements
Impairment of goodwill:
Goodwill is allocated to the tuna oil cash-generation units which are based on the controlled
entity’s’ principal activities. The Company assessed the recoverable amount of goodwill and
determined that no impairment was required at reporting date. Recoverable amounts of relevant
assets are reassessed using value-in-use calculations that incorporate various key assumptions.
Refer to Note 11 for further details on the assumptions used in these calculations.
Inventory realisation:
The measurement of inventory at the lower of cost and net realisable value requires
judgements to be made in respect of the forecast demand for the consolidated entity’s products
and the matching of raw material purchasing and the manufacturing process to meet forecasts.
The possibility that inventory lines may exceed optimum levels or be obsolete is factored into
adjustments necessary to measure inventory at net realisable value, should it be determined
to be lower than cost.
Certain lines of inventory are carried at net realisable value, that being lower than cost (refer
to Note 8). The impact of net realisable value adjustments on the financial result for the year
is disclosed in Note 3.
Income tax:
Deferred tax assets are recognised for unused tax losses and tax offsets to the extent that it is
probable that taxable profit will be available against which the losses and offsets can be utilised.
Management judgement is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and the level of future taxable profits together with future
tax planning strategies.
45
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
2. Revenue and other income
Operating activities:
Sales of goods
Other income / (expenses):
Net exchange gains / (losses)
Interest revenue
Total revenue
3. Expenses
Profit before income tax includes
the following items:
Consolidated
2018
$'000
2017
$'000
62,961
62,961
645
20
665
47,864
47,864
(523)
47
(476)
63,626
47,388
Employee benefits expense:
5,752
4,496
Inventory impairment charge:
62
(32)
Depreciation and amortisation:
- leasehold improvements
- buildings
- plant and equipment
- office furniture and equipment
Loss on asset disposal
Interest expense
Minimum lease payments:
-
operating lease
4. Income tax expense/(credit):
(a) The components of tax expense/(credit)
comprise:
Current tax
Deferred tax liability
Deferred tax asset
40
216
438
7
701
60
209
163
-
369
36
568
-
-
206
399
2,798
(120)
350
3,028
140
(26)
1,259
1,373
46
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
4. Income tax expense/(credit)
(continued)
(b) Reconciliation of income tax
expense/(credit):
The aggregated amount of income tax expense
attributable to the period differs from the
amounts prima facie payable on profits from
ordinary activities. The difference is reconciled
as follows:
Prima facie tax payable on profit before income
tax at 30%
Tax effect amounts:
- Research and development
claim
- Sundry other
Income tax expense/(credit)
attributable to profit
(c) Deferred tax assets
Consolidated
2018
$'000
2017
$'000
3,184
1,504
(107)
(49)
(39)
(92)
3,028
1,373
Deferred tax asset
502
852
The deferred tax assets balance comprises the
following temporary differences:
Impairment of inventory
Provisions
Unrealised foreign exchange
Other temporary differences
Reconciliation:
Opening balance
(Charges) / credits to income statement
Closing balance
378
312
(198)
10
502
852
(350)
502
355
227
176
94
852
2,111
(1,259)
852
47
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
4. Income tax expense/(credit) (continued)
(d) Deferred tax liabilities
The deferred tax liability balance comprises
the following timing differences:
Depreciating assets
Reconciliation:
Opening balance
Charge / (benefit) to income statement
Closing balance
5. Dividends
(a) Dividend paid during the period
Final dividend for the year ended 31 July 2017 of 0.75
cent per share (2016FY: 0.50 cent per share) fully
franked at the tax rate of 30%, paid 21 November 2017
Interim dividend for the year ended 31 July 2018 of
0.50 cent per share (2017FY: 0.25 cent per share) fully
franked at the tax rate of 30%, paid 02 May 2018
Franking account balance
Franking credits available for subsequent financial
years
Consolidated
2018
$'000
2017
$'000
0
0
120
(120)
0
120
120
146
(26)
120
1,239
826
826
2,065
413
1,239
5,274
4,545
The above available amounts are based on the balance of the dividend franking account at the
period end adjusted for franking credits that will arise from the payment of the current tax liability;
franking debits that will arise from payment of dividends recognised as a liability at period end; and
franking credits that will arise from dividends recognised as a receivable at period end.
There were no dividend or distribution reinvestment plans operating during the financial period.
(b) Dividends declared after reporting date
The Directors have declared a final dividend for the financial year ended 31 July 2018 of 1.25 cent
per share (2017: final 0.75 cent per share) fully franked at 30%, payable on 20 November 2018,
but not recognised as a liability at the end of the financial period. The record date for this dividend
will be 30 October 2018.
48
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
6. Cash and cash equivalents
Cash at bank
Cash on deposit, at call
7. Trade and other receivables
Current
Trade debtors
Other debtors
Total current trade and other receivables
Provision for impairment of receivables
Consolidated
2018
$'000
2017
$'000
7,894
-
7,894
4,890
1,026
5,916
13,910
1,347
15,257
11,655
470
12,125
Trade receivables are amounts due from customers for goods sold in the ordinary course of
business. They are generally due for settlement between 30 and 120 days and therefore are
classified as current. Other receivables generally arise from transactions outside the usual
operating activities of the consolidated entity. Settlement timeframes may vary, though their
classification is current.
A provision for impairment is recognised when there is objective evidence that an individual trade
or other receivable is impaired. These amounts are included in impairment expense in the
statement of profit or loss.
Refer to Note 23 for more information on credit risk of trade and other receivables.
8. Inventories
Raw materials, at lower of cost & net realisable
value
Goods in transit
Finished goods, at lower of cost & net
realisable value
Total inventories
9. Other current assets
Prepayments
Deposit on proposed acquisition of property
Total other current assets
10,167
1,717
7,884
19,768
10,258
3,605
4,948
18,811
656
-
656
413
350
763
49
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
10. Property, plant and equipment
Land
Buildings, at cost
Less: accumulated depreciation
Total Buildings
Leasehold improvements, at cost
Less: accumulated depreciation
Total leasehold improvements
Plant and equipment, at cost
Less: accumulated depreciation
Total plant and equipment
Furniture and equipment, at cost
Less: accumulated depreciation
Total furniture and equipment
Consolidated
2018
$'000
2017
$'000
2,000
3,845
(934)
2,911
-
-
-
-
-
-
-
1,632
(843)
789
4,161
(3,037)
1,124
7,330
(5,867)
1,463
231
(204)
27
207
(197)
10
Total property, plant and equipment
6,062
2,262
Reconciliation of the carrying amounts of each class of asset at the beginning and the
end of the current financial period:
Land
Balance at beginning of the period
Additions
Carrying amount at the end of the period
Buildings
Balance at beginning of the period
Additions
Transfer, from leasehold improvements
Transfer, from other assets
Depreciation expense
Carrying amount at the end of the period
Leasehold improvements
Balance at beginning of the period
Transfer, to Buildings
Transfer, to Equipment
Depreciation expense
Carrying amount at the end of the period
-
-
-
-
-
-
-
-
-
952
-
-
(163)
789
-
2,000
2,000
-
2,390
387
350
(216)
2,911
789
(737)
(12)
(40)
0
50
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
Plant and equipment
Balance at beginning of the period
Additions, net of disposals
Transfers, from leasehold improvements
Foreign Currency Translation
Depreciation expense
Carrying amount at the end of the period
Furniture and equipment
Balance at the beginning of the period
Additions, net of disposals
Depreciation expense
Carrying amount at the end of the period
11. Intangible assets
Goodwill on acquisition, at cost
Total intangible assets
Consolidated
2018
$'000
2017
$'000
1,463
1,710
99
12
(12)
(438)
1,124
10
24
(7)
27
120
-
2
(369)
1,463
33
13
(36)
10
1,907
1,907
1,907
1,907
There were no acquisitions of controlled entities in 2018 (2017: None).
(a) Impairment assessment
Goodwill is allocated to the tuna oil cash-generating unit which is based on the controlled entities’
principal activities.
During the 31 July 2018 financial year, the Company assessed the recoverable amount of goodwill
relating to the tuna oil segment and determined that goodwill is not impaired. The recoverable amount
of the cash-generating unit, being the assets of the cash-generating unit and goodwill, was assessed
by reference to the cash-generating unit’s value-in-use. Value-in-use is calculated based on the
present value of cash flow projections over a 5 year period approved by the Board of Directors. The
cash flows are discounted using a rate of 12% and 2% annual growth rates. Management believes
that any reasonable possible change in key assumptions on which recoverable amount is based would
not cause the aggregate carrying amount of the cash generating unit to exceed its recoverable
amount.
12. Trade and other payables
Current
Trade creditors
Sundry creditors and other accruals
5,984
1,837
7,821
8,916
327
9,243
51
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
13. Interest Bearing Liabilities
Current interest bearing liabilities
Non-current interest bearing liabilities
Assets pledged as security
Consolidated
2018
$'000
2017
$'000
450
3,737
4,187
-
-
-
The interest bearing liabilities are secured by a first mortgage over land and buildings (with a carrying
value of $4.911m), as well as a general charge over Group assets.
14. Provisions
Aggregate employee entitlements:
Current
Non-current
Total employee entitlements
15. Issued capital
(a) Issued and paid up capital
165,181,696 (2017:165,181,696) fully paid
ordinary shares
Total contributed equity
599
20
619
526
28
554
32,920
32,920
32,920
32,920
The Company has issued share capital amounting to 165,181,696 ordinary shares of no par value.
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in
proportion to the number of shares held. At shareholders’ meetings, each ordinary share is entitled to
one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
(a) Movement in ordinary shares
There were no movements in issued capital during the financial period.
Options
There are no options over the unissued capital of the Company at the end of the financial period.
52
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
(b) Capital management
The Company’s objective in managing capital is to continue to provide shareholders with attractive
investment returns and ensure that the Company can fund its operations and continue as a going
concern.
The Company’s capital consists of shareholders’ equity plus net debt. The movement in equity is
shown in the Consolidated Statement of Changes in Equity. At 31 July 2018 gross debt was
$4,187,000 (2017: $ nil).
There are no externally imposed capital requirements.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or raise debt.
16. Reserves
The foreign currency translation reserve records exchange differences arising on translation of the
financial statements of foreign subsidiaries.
Foreign currency translation
Total
(158)
(158)
(204)
(204)
17. Parent company information
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Total equity
Net profit for the period before other
comprehensive income
Total comprehensive income for the period
Earnings per share (cents per share)
2018
$'000
2017
$'000
71
22,065
605
22,481
22,136
23,085
1,176
-
1,176
177
120
297
20,960
22,789
32,920
(11,960)
20,960
32,920
(10,131)
22,789
236
236
(386)
(386)
1.4c
(0.23)c
53
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
Controlled entities:
Nu-Mega Lipids Pty Limited
Nu-Mega Ingredients Pty Limited
Subsidiaries:
- Nu-Mega Ingredients Limited
- Nu-Mega Ingredients Limited
- Nu-Mega Ingredients (NZ)
Limited
Country of
Incorporation
Australia
Australia
United
Kingdom
United States
of America
New Zealand
Percentage Owned
2017
2018
%
%
100
100
100
100
100
100
100
100
100
100
Contingent liabilities
There are no contingent liabilities at the reporting date.
18. Reconciliation of cash flow
Reconciliation of cash flow from operating
activities to operating profit
Profit for the period
Non cash items :
- Amortisation and depreciation
Change in assets and liabilities, net of the effects of
purchase of subsidiaries
(Increase)/Decrease in receivables
(Increase)/Decrease in other assets
(Increase)/Decrease in inventories
(Decrease)/Increase in payables
(Decrease)/Increase in deferred tax liabilities
Decrease/(Increase) in deferred tax assets
(Decrease)/Increase in current tax liabilities
(Decrease)/Increase in employee entitlements
Net cash inflow/(outflow) from operating activities
Consolidated
2018
$ '000
2017
$ '000
7,588
3,639
701
568
(3,082)
(242)
(958)
(1,350)
(120)
350
1,130
64
4,081
(1,260)
(39)
(5,179)
746
(23)
1,259
(320)
14
(595)
54
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
19. Earnings per share
The following reflects the income and share data used in the calculation of basic and diluted earnings per
share:
2018
2017
$ 000
$ 000
(a) Reconciliation of earnings to net profit or loss
Profit attributable to members of the parent entity
7,588
3,639
Earnings used to calculate basic and diluted EPS
7,588
3,639
(b) Weighted average number of ordinary shares outstanding
during the period used in the calculation of basic and diluted
earnings per share
165,181,696
165,181,696
(c) Basic and Diluted earnings per share (cents per
share)
4.59c
2.20c
20. Auditor's remuneration
Remuneration of the auditor of the parent
entity in respect of:
- Auditing and reviewing the financial
reports of the Company and the
controlled entities
- Taxation services
21. Related party transactions
(a) Ultimate parent entity:
$
$
92,000
8,853
100,853
94,000
19,763
113,763
Clover Corporation Limited is the ultimate parent entity of the consolidated entity.
(b) Ownership interests:
Information in relation to ownership interest in controlled entities is provided in Note 17.
55
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
22. Key management personnel compensation
(a) Names and positions held in the consolidated entity of key management personnel in office at any
time during the period were:
Name
Directors
R A Harrington
P R Robinson
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh
Executive KMP
P A Sherman
Position
Non-Executive Chairman (appointed 21 September 2017)
Non-Executive Chairman (resigned 21 September 2017)
Non-Executive Director
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Financial Officer and Company Secretary
Key management personnel remuneration has been included in the Remuneration Report section
of the Directors’ Report. The table below summarises the total compensation:
Short-term benefits
Long-term benefits
(b) Performance rights:
2018
$
1,283,202
571,120
1,854,322
2017
$
1,093,302
-
1,093,302
There were 366,098 Performance Rights offers available to key management personnel whose
conditions have been met as at 31 July 2018, which vest during 2019 or 2020. There were an
additional 540,301 Performance Rights offers available to key management personnel, subject to
meeting relevant conditions.
(c) Shareholding:
Directors
R A Harrington
P R Robinson
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh
Balance
31 July
2017
57,748
1,396,441
50,000
23,454
-
200,000
257,397
Resignation
Adjustment
Shares
Purchased
& Sold
Balance
31 July
2018
-
(1,396,441)
-
-
-
-
-
265,000
-
-
-
40,000
-
55,000
322,748
0
50,000
23,454
40,000
200,000
312,397
1,985,040
(1,396,441)
360,000
948,599
56
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
23. Management of financial risk
The consolidated entity's principal financial instruments consist of cash, deposits with bank, accounts
receivable, payables and borrowings.
Financial risk management policies
The consolidated entity manages its exposure to key financial risks, including interest rate and
currency risk in accordance with the consolidated entity's financial risk management policies. The
majority of sales are transacted in US dollars and Australian dollars. The objective of the policies is to
support the delivery of the consolidated entity's financial targets whilst protecting future financial
security.
Primary responsibility for identification and control of financial risks rests with the audit and risk
committee under the authority of the board. The board reviews and agrees policies for managing each
of the risks identified below, including the review of credit risk policies and future cash flow
requirements.
Specific financial risk exposures and management
The main risks arising from the consolidated entity's financial instruments are interest rate risk, foreign
currency risk, price risk, credit risk and liquidity risk. Interest rate risk is not significant given the
consolidated entity has minimal borrowings. The consolidated entity uses different methods to
measure and manage different types of risks to which it is exposed. These include monitoring levels
of exposure to foreign exchange risk and assessments of market forecasts for foreign exchange rates.
Ageing analysis and monitoring of specific credit allowances are undertaken to manage credit risk
and liquidity risk is monitored through the development of future rolling cash flow forecasts.
(a) Foreign currency risk
As a result of the consolidated entity having cash balances, trade receivables and trade payables
denoted in foreign currency, the consolidated entity's statement of financial position can be affected
by movements in the relevant exchange rates relative to the Australian dollar. The consolidated entity
utilises foreign exchange hedges to manage its exposure to currency fluctuations arising from the
purchase of goods and services in foreign currency.
At 31 July 2018, the consolidated entity had the following financial assets and liabilities denominated
in foreign currency.
Financial assets
Cash and cash equivalents
Trade and other receivable
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
2018
$'000
2017
$'000
818
11,597
12,415
1,347
9,049
10,396
(1,761)
(10,654)
(4,603)
(4,603)
57
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
23. Management of financial risk (continued)
(a) Foreign currency risk (continued)
At 31 July 2018, had the Australian Dollar moved as illustrated in the table below with all other
variables held constant, profit after tax and equity would have been affected as follows:
Foreign exchange movement
Change in Profit
USD/AUD + 5%
USD/AUD - 5%
EURO/AUD + 5%
EURO/AUD - 5%
GBP/AUD + 5%
GBP/AUD - 5%
NZD/AUD + 5%
NZD/AUD - 5%
Post Tax Profit
Higher/(Lower)
2018
$'000
2017
$'000
Change in Equity
Higher/(Lower)
2018
$'000
2017
$'000
(499)
548
(240)
265
(499)
548
(240)
265
(5)
5
(1)
1
(5)
6
(28)
31
(5)
6
(2)
3
(5)
5
(1)
1
5
6
(28)
31
(5)
6
(2)
3
Significant assumptions used in the foreign currency exposure sensitivity analysis include:
Reasonable estimates of movements in foreign exchange rates were determined based on a
review of the last two years’ historical movements and economic forecasters’ expectations.
The reasonable movement of 5% was calculated by taking the spot rates for each currency
as at reporting date, moving this spot rate by 5% and then re-converting the foreign currency
into Australian dollars at the revised spot rate.
The net exposure at reporting date is representative of what the consolidated entity was, and
is expecting, to be exposed to in the next twelve months from reporting date.
(b) Price risk
The consolidated entity's exposure to commodity and price risk is considered minimal. There are
annual fixed price purchase contracts in place for forecast raw material requirements. From time to
time it may be necessary to purchase raw materials from outside of the agreements.
58
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
23. Management of financial risk (continued)
(c) Credit risk
Credit risk arises from the financial assets of the consolidated entity, which comprise cash and cash
equivalents, trade and other receivables. The consolidated entity's exposure to credit risk arises from
potential default of the counter party, with a maximum exposure equal to the carrying amount of the
financial assets.
The consolidated entity trades only with recognised, creditworthy third parties, and as such collateral
is not requested nor is it the consolidated entity's policy to securitize its trade and other receivables.
It is the consolidated entity's policy that all customers who wish to trade on credit terms are subject to
credit verification procedures including an assessment of their independent credit rating, financial
position, past experience and industry reputation. Risk limits are set for each individual customer in
accordance with parameters monitored by the CEO.
These risk limits are regularly monitored. A breakdown of receivables showing those within/out of
terms is shown below. Receivable balances are monitored on an ongoing basis to minimize the
occurrence of bad debts.
Trade receivables as at 31 July 2018
Trade receivables:
Within terms
Over terms
Total
Consolidated
2018
$'000
2017
$'000
13,543
367
13,910
11,654
-
11,654
For the remaining financial assets there are no significant concentrations of credit risk within the
consolidated entity and financial instruments are spread amongst a number of AAA rated financial
institutions.
59
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
23. Management of financial risk (continued)
(d) Liquidity risk
Liquidity risk arises from the financial liabilities of the consolidated entity and the consolidated entity’s
subsequent ability to meet these obligations to repay their financial liabilities and other obligations as
and when they fall due.
The consolidated entity's objective is to maintain a balance between continuity of funding and flexibility
through the use of cash balances, borrowings, working capital and leasing.
Maturity analysis of financial assets and liability based on management's expectations
The risk implied from the values shown in the tables below, reflects a balanced view of cash inflows
and outflows. Leasing obligations, trade payables and other financial liabilities mainly originate from
the financing of assets used in the consolidated entity’s ongoing operations such as property, plant,
equipment and investments in working capital.
Consolidated
Realisable cash flows from
financial assets
Cash and cash equivalents
Trade and other receivables
Anticipated cash inflows
Financial liabilities and
obligations due for payment
Trade and other payables
Interest bearing liabilities
Leasing commitments
Anticipated cash outflows
Net inflow/(outflow)
(e) Interest Rate Risk
Balance as at
31 July 2018
Less
than 1
year
1-5
years
$'000
$'000
$'000
Over 5
years
$'000
7,894
15,257
23,151
7,894
15,257
23,151
-
-
-
(7,821)
(4,187)
(361)
(12,369)
10,782
(7,821)
(450)
(127)
(8,398)
14,753
-
(3,737)
(234)
(3,971)
(3,971)
-
-
-
-
-
-
-
The consolidated entity’s primary interest rate risk arises from long-term borrowings. The consolidated
entity’s bank loans outstanding, totalling $4,187,000 (2017: $nil) are principal and interest payment
loans, bearing interest at a current annual rate of 4.6%.
(f) Fair value
All assets and liabilities recognised in the statement of financial position, whether they are carried at
cost or at fair value, are recognised at amounts that represent a reasonable approximation of fair
value, unless otherwise stated in the applicable notes.
The carrying amounts of cash and bank balances, other receivables and other payables approximate
their fair values due to their short term nature.
60
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
24. Operating segments
Identification of reportable segments
The consolidated entity operates in the industry of manufacturing tuna oil and encapsulated products
in Australia. Whereas in the previous financial year, a treasury segment was separately disclosed, the
Chief Executive Officer and the Board of Directors consider that there is no true separation of the
treasury function from the primary business and operating segment of the Group, nutritional oil and
microencapsulated powders. Financial information about the business as a whole is reported to and
reviewed by the Chief Executive Officer and Board of Directors on a monthly basis, in order to assess
performance and determine the allocation of resources.
Geographical information
Revenues from external customers by domestic and export location of operations and information
about its non-current assets by location of assets is shown in the following table.
Revenue from
external customers
2017
$'000
2018
$'000
Non-current assets
2017
$'000
2018
$'000
Australia / New Zealand
Asia
Europe
Americas
Total
37,650
18,485
4,111
2,715
24,032
18,260
3,195
2,377
62,961
47,864
7,970
-
-
-
7,970
4,169
-
-
-
4,169
During the financial year there were 2 customers who represented 38% and 19% of total sales
respectively.
Greater than 90% of total sales revenue is generated by the export market.
61
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2018
Consolidated
2018
$’000
2017
$’000
25. Capital and leasing commitments
(a) Operating lease commitments
Operating leases primarily related to premises, contracted for but not
capitalised in the financial statements:
Payable:
Not later than 1 year
Later than 1 year but not later than 5 years
Total operating leases
127
234
361
371
-
371
26. Events subsequent to reporting date
The company intends entering into a contract to purchase a share of a spray drying facility in Hamilton,
New Zealand. There are commitments of NZD11.3m to be paid by 31 December 2018. There will be
related commitments which shall be financed through a loan from the Bank of New Zealand.
Apart from the above, no other matter or circumstance has arisen since 31 July 2018 that has
significantly affected, or may significantly affect the consolidated entity's operations, the results of
those operations, or the consolidated entity's state of affairs in future financial years.
27. Contingent liabilities
There are no contingent liabilities at the reporting date.
62
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTORS’ DECLARATION
The Directors of Clover Corporation Limited declare that in their opinion:
(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 31 July 2018
and of its performance for the period 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
as disclosed in note 1; and
(c) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts
as and when they become due and payable.
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 ending 31 July
2018.
This declaration is made in accordance with a resolution of the Board of Directors.
Rupert Harrington
Chairman
Melbourne
Date: 21 September 2018
63
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CLOVER CORPORATION LIMITED
REPORT ON THE FINANCIAL REPORT
Opinion
We have audited the accompanying financial report of Clover Corporation Limited (the Company), which comprises
the consolidated statement of financial position as at 31 July 2018, and the consolidated statements of profit or loss
and other comprehensive income, changes in equity, and cash flows for the year then ended, notes comprising a
summary of significant accounting policies and other explanatory information, and the Directors’ Declaration of the
Company and the consolidated entity (the Group) comprising the Company and the entities it controlled at the year’s
end or from time to time during the financial year.
In our opinion, the accompanying financial report is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s consolidated financial position as at 31 July 2018 and of its consolidated
financial performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance about whether the financial report is free from material misstatement. Our responsibilities under those
standards are further described in the Auditor’s Responsibility section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with 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.
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 year. These matters were addressed in the context of our audit of the financial report as
a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each
matter below, our description of how our audit addressed the matter is provided in that context.
Key audit matter – Inventory existence and
valuation
As at 31 July 2018, the carrying value of inventory
was $19,768,000 (2017: $18,811,000) as disclosed in
note 8 of the financial report. Inventory is the most
significant of the Group’s assets, and accordingly we
considered it a Key Audit Matter.
The Group’s manufacturing planning processes
consider forecast customer demand and access to
materials from a range of suppliers. These factors
impact on the quantity of raw material and finished
goods inventory on hand, and necessitate minimum
inventory levels to ensure that the Group’s sales
objectives continue to be met.
How our audit addressed this matter
Our procedures included but were not limited to:
Attending and observing year-end inventory counts
performed by Management at locations of significance;
Testing the accuracy of perpetual inventory records for a
sample of products to check descriptions, quantities and
the recording of inventory movements;
Evaluating the design of processes to capture the costs of
purchase and conversion and those other costs incurred
in bringing inventories to their present location and
condition;
64
PKF Melbourne
Audit & Assurance Pty Ltd
ABN 75 600 749 184
Liability limited by a scheme
approved under Professional
Standards Legislation
Melbourne
Level 12, 440 Collins Street
Melbourne VIC 3000 Australia
p
f
+61 3 9679 2222
+61 3 9679 2288
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and
does not accept any responsibility or liability for the actions or inactions of any individual member of correspondent firm or firms.
For office locations visit www.pkf.com.au
Key audit matter – Inventory existence and
valuation (continued)
A standard cost system is used to account for inputs
to inventory. Management conducts regular analysis
to actualise the cost of inventory, and to determine
whether adjustment to the carrying amount is
required to reflect net realisable value, if that is
lower than cost.
How our audit addressed this matter (continued)
Testing on a sample basis the reasonableness of standard
costs compared to actual costs of purchase and
production;
Considering the turnover cycle of inventory, assessing the
allocation of purchase price and efficiency variances; and
Challenging the adequacy of adjustments made to
inventory for it to be measured at the lower of cost and
net realisable value on the basis of actual and forecast
sales activity, and Management’s assessment of
qualitative factors.
Key audit matter – Revenue recognition
How our audit addressed this matter
The Group’s sales revenue amounted to $62,961,000
during the year (2017: $47,864,000). Note 1(l)
Revenue describes the accounting policies applicable
to distinct revenue streams, noting that revenue
from the sale of goods, after adjusting for discounts
or allowances, is recognised upon the delivery of
goods to customers. Shipments dispatched but not
yet delivered to customers are classified as goods in
transit inventories.
On the basis of the significance of the account and
the processes to determine recognition point, we
have considered revenue recognition as a Key Audit
Matter.
Key audit matter – Assessment of the carrying
amount of goodwill
As at 31 July 2018, the carrying value of goodwill was
$1,907,000 (2017: $1,907,000) as disclosed in note
11 of the financial report.
The Group’s goodwill arose from a business
combination in 2007 relating to the then tuna oil
segment, which remains fundamental to the Group’s
primary business and operating segment, nutritional
oil and microencapsulated powders. Determination
as to whether or not there is an impairment relating
to an asset or Cash Generating Unit (CGU) involves
significant judgement about the future cash flows
and plans for the asset or CGU.
Further disclosure regarding the Group’s impairment
assessment is contained in Note 11.
We have determined that the evaluation of the
recoverable amount of goodwill is a Key Audit
Matter.
Our procedures included but were not limited to:
evaluating a sample of contracts and agreeing revenue
amounts to the records accumulated as inputs to the
financial statements, including supporting billing systems
and bank records; these procedures enabled our
assessment of the values recorded and the timing of
revenue recognition as appropriate to the timeframe of
product delivery;
evaluating the cut-off process and its reliability to fairly
account for dispatches not yet delivered to customers at
the reporting date and the recognition of revenue in
accordance with the Group accounting policies; and
assessing the consistency of the Group’s accounting
policies in respect of revenue recognition with the criteria
prescribed by the applicable standard, AASB 118
Revenue.
How our audit addressed this matter
Our procedures included but were not limited to:
Evaluating the impairment calculations including the
testing of the recoverable amount of the CGU;
Assessing the reasonableness of the cash flow projections
prepared by Management and approved by the Board
and used in the impairment model;
Evaluating the reasonableness of key assumptions
including the discount rate, forecast growth and terminal
value assumptions;
Testing the arithmetic accuracy of the impairment model;
Reviewing Management’s sensitivity analysis around the
key drivers of the cash flow projections, and assessing the
likelihood of such movements occurring sufficient to give
rise to an impairment; and
Assessing the appropriateness of the disclosures included
in Note 11.
65
Other Information
Other information is financial and non-financial information in the annual report of the Group which is provided in
addition to the financial report and our Auditor’s Report thereon. The directors are responsible for the other
Information in the annual report.
Our opinion on the financial report does not cover the other Information and, accordingly, we do not express any
form of assurance conclusion thereon, with the exception of our opinion on the Remuneration Report.
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 the other information
we obtained prior the date of the Auditor’s Report, we are required to report that fact. We have nothing to report in
this regard.
Directors’ responsibility for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal 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 Note 1, the Directors also state, in accordance with
Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report complies
with International Financial Reporting Standards.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability 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 cease operations, or have no realistic alternative but to do
so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit.
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 and 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 Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individual or in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors.
We conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events and conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion on the financial report. Our conclusions are based on the audit
66
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those that were of most significance in the audit of
the financial report of the current year and are therefore key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
REPORT ON THE REMUNERATION REPORT
Opinion
We have audited the Remuneration Report included in pages 13 to 20 of the Directors’ Report for the year ended 31
July 2018. In our opinion, the Remuneration Report of Clover Corporation Limited for the year then ended 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.
PKF
Melbourne, 21 September 2018
Steven Bradby
Partner
67
AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF CLOVER CORPORATION LIMITED
In relation to our audit of the financial report of Clover Corporation Limited for the year ended 31 July 2018, to the best
of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the
Corporations Act 2001 or any applicable code of professional conduct.
PKF
Melbourne, 21 September 2018
Steven Bradby
Partner
PKF Melbourne
Audit & Assurance Pty Ltd
ABN 75 600 749 184
Liability limited by a scheme
approved under Professional
Standards Legislation
Melbourne
Level 12, 440 Collins Street
Melbourne VIC 3000 Australia
p
f
+61 3 9679 2222
+61 3 9679 2288
PKF Melbourne Audit & Assurance Pty Ltd is a member firm of the PKF International Limited family of legally independent firms and
does not accept any responsibility or liability for the actions or inactions of any individual member of correspondent firm or firms.
For office locations visit www.pkf.com.au
68
CLOVER CORPORATION LIMITED
ABN: 85 003 622 866
Additional ASX Information
Additional information required by the Australian Securities Exchange Listing Rules and not disclosed
elsewhere in this report.
Shareholdings as at 31 August 2018
Substantial shareholders
The number of shares held by substantial shareholders and their associates is set out below:
Washington H. Soul Pattinson and Company Limited
Brickworks Limited1
37,411,939 ordinary shares
37,411,939 ordinary shares
1 Details included on substantial shareholder notice dated 18 November 2013. Shares held by Brickworks Limited represent
a technical relevant interest as a result of Brickworks Limited’s shareholding in Washington H. Soul Pattinson & Company
Limited.
Distribution of shareholders as at 31 July 2018
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total Number of Holders
Total number of holders of less than a marketable parcel, being 321
shares @ 1.56
435
1,056
668
920
117
3,196
88
Voting rights
On a show of hands every Shareholder present in person or by proxy at a general meeting shall have
one vote.
Where a poll is demanded, every Shareholder present in person or by proxy at a general meeting
shall have one vote for every ordinary share held.
69
CLOVER CORPORATION LIMITED
ABN: 85 003 622 866
ASX Additional Information - Continued
Twenty largest shareholders as at 31 July 2018*
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Washington H Soul Pattinson & Company
UBS Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
Evelin Investments Pty Ltd
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Australia) Ltd
National Nominees Ltd
HSBC Custody Nominees (Australia) Ltd A/C 2
Incani & Papadoppoulos Super Pty Ltd
Mr Peter Howells
Brett Paton Family Super Fund A/C
Neweconomy Com AU Nominees Pty Ltd
Connaught Consultants (Finance) Pty Ltd
Mr Charles Neil Hamish Drummond
Mr Garrie Ellice
Mr Pei Yin Foo
BNP Paribas Nominees Pty Ltd
Ms Nina Tschernykow
JP Morgan Nominees Australia Ltd
Ganesh Super Fund A/C
Total top 20 shareholders
Total number of shares on issue
* As shown on the register, beneficial holdings may differ.
Securities quoted by the ASX
Number of
Fully Paid
Ordinary
Shares
Percentage
of Issued
Ordinary
Shares (%)
37,411,939
17,818,066
7,667,701
7,550,000
5,705,904
5,581,078
3,954,141
3,827,125
2,113,350
1,558,138
1,550,000
1,435,248
1,427,600
1,101,685
1,094,963
1,108,000
1,001,940
878,881
855,636
850,816
22.65
10.79
4.64
4.57
3.45
3.38
2.39
2.32
1.28
0.94
0.94
0.87
0.86
0.67
0.66
0.62
0.61
0.53
0.52
0.52
104,402,211
165,181,696
63.21%
All of the Company’s issued ordinary shares are quoted by the ASX under the code CLV.
Register of securities
New South Wales
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street
Sydney NSW 2000
Telephone: 1300 850 505
70