CLOVER CORPORATION
LIMITED
ABN 85 003 622 866
Annual Report
For the Year Ended
31 July 2021
1
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 Toni L Brendish
Dr Simon P Green
Secretary
Mr Andrew G M Allibon
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
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CLOVER CORPORATION LIMITED
ABN 85 003 622 866
Table of Contents
Chairman’s Report
Managing Director’s Report
About Clover
Directors’ Report
Remuneration 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
4 - 5
6 - 8
9
10 - 24
15 - 22
25 - 32
33
34
35
36
37 - 66
67
68 - 71
72
73 - 74
Vision
To optimise the health and development of adults, infants and children.
Purpose Statement
In collaboration with key market participants, Clover develops customised high value nutritional
ingredients that enhance the wellbeing and dietary needs of their customers.
3
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CHAIRMAN’S REPORT
Dear Shareholders
On behalf of the Board of Directors of Clover Corporation Ltd (“Clover” or “Company”) I am pleased to
present our Annual Report for FY21.
Shareholders would be aware that Clover like much of the world has been impacted by the global
COVID-19 pandemic which has reduced sales for many of our customers combined with challenging
conditions in supplying infant formula into the China market. The Company continues to see good
opportunities for growth in health foods segments, however development of these markets was
constrained due to COVID.
The Company has continued to maintain a focus on the health and safety of its employees operating
under COVID-19 safe plans. Many staff have been asked to work from home for much of the year
whilst a core operational staff have maintained the day-to-day production of the business. Thankfully
no staff have contracted COVID-19 during the year. The Company has not received any financial
assistance from the government.
As highlighted at the half year, Clover experienced challenging trading conditions as our major
customers delayed new projects, reduced their orders due to lower consumer demand and the
challenges of servicing the China market. The FY21 financial summary is:
- Revenues of $60.5m (FY20: $88.3m)
- Net Profit after tax of $6.0m (FY20: $12.5m)
- Excluding the Melody Dairies operating loss and IP legal defence costs, the underlying
NPAT for FY21 would be $7.3m
Due to good cash management, the balance sheet remains strong with cash of $9.1m (FY20: $9.2m)
that places the business well to support growth opportunities and service existing debt.
Clover has continued its strong focus in the development of new products and in expanding into new
markets outside its traditional infant milk powder customer base. The Company maintains a strong
global pipeline of new opportunities with new products, customers and markets. This has resulted in
the Company launching new products through the FY21 which have gained immediate sales. The
targeted customers are now trialling these ingredients to develop their own new products which will be
released in the future. The Company continues to work with customers in developing encapsulated
products for the planned legislated changes in Omega 3 levels in infant milk powder segment in China.
Whilst it has experienced delays due to COVID-19 conditions, a reasonable conversion of this pipeline
should provide a base for future growth for the Company.
Clover has and will continue to invest in its people to ensure timely responses to customers and the
ongoing development and growth of the business. The Company also focuses on improving competitive
capability with the investment in Melody Dairies expected to be fully operational and at least cash
neutral in FY22. The R&D facility in Brisbane has been relocated to a larger facility that will include a
new pilot production plant that will improve confidentiality of product development plans and reduce
development time cycles.
4
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CHAIRMAN’S REPORT
Based on the performance of Clover in FY21 the Directors have declared a fully franked final dividend
for FY21 of 0.5 cent per share making the total dividend payable for the year ended 31 July 2021 1.0cps
(FY20: 2.5cps).
On behalf of the Board of Directors, I would like to thank our shareholders for their continued support.
I would also like to acknowledge and thank our CEO and employees for their continued hard work,
dedication and commitment to Clover.
Mr Rupert A Harrington
Chairman
Date: 20 September 2021
5
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
MANAGING DIRECTOR’S REPORT
Our Company has experienced a challenging year with many of our customers impacted by COVID-
19. Our larger customers have delayed projects and reduced their orders in the face of lower
consumer demand and the challenges of servicing the China market. This has ultimately impacted
Clover’s revenue for the year ended 31 July 2021 at $60.5 million (FY20: $88.3 million), a decrease
of 31.5% on the prior year. Net Profit After Tax for the year ended 31 July 2021 is reported at $6.0
million (FY20: $12.5 million).
Whilst our current results are disappointing, I continue to be very proud of our employees, they have
maintained flexibility, not missed an order, added new customers, and continued to provide revenue
and profitability under very trying circumstances. I am heartened with the potential for the future of the
business with new opportunities coming from new customers and products.
COVID-19
During the year Clover has continued to operate under a COVID-19 safe plan which has forced the
business to operate under stringent conditions to maintain the safety of our employees and the quality
of our product. The majority of our staff have worked from home. We have had limited opportunity to
travel and hold face to face meetings. All customer communication has been through e-mail, online
via video or phone calls making new customer development more challenging than ever. To combat
these challenges, the Company has developed online programmes to provide workshops with
customers creating new innovations that has attracted opportunities that will be realised in future
years.
No financial assistance has been received or sought through the pandemic. COVID-19 has caused
the closure of some customers for short periods, delayed the reduction in new product launches and
slowed traditional demand. As the vaccine rolls out, we expect markets to open and business to return
to a more normalised pattern. In July 2021, Clover was able to attend its first trade show in China.
This trade show provided an excellent opportunity to contact customers and develop new
opportunities which has resulted in immediate new business which highlights the importance of
needing to get back in front of customers at the earliest opportunity.
China
The Chinese government has legislated that the standard for infant formula will change, requiring all
infant formula to incorporate a minimum of 15mg/100Kcal of DHA and equivalent dosing of ARA (DHA
and ARA are both fatty acids critical in human development and naturally occurring in a mother’s
breast milk). Clover’s microencapsulated oil products which protect the oils from sensory issues of
smell and fishy taste are well suited to assist customer’s increasing the level of DHA and ARA. Clover
has worked closely with several Chinese infant formula customers to qualify our ingredients to meet
the new Chinese infant formula standard. Clover’s products have been and will continue to be listed
as registered ingredients in Chinese and Western infant formula customers licence applications for
sale through the China retail channel. The Company has developed relationships with a range of
distributors who provide a supply chain into infant formula customers. The new legislation takes effect
in February 2023, but we do not expect many infant formula customers to alter their formulations until
the legislated date.
Clover supplies many of the Western infant formula brands globally who have found it difficult trading
in the China market. The dynamics of the China distribution channel have changed through legislation
and government controls. At the same time, the traditional Daigou channel reliant on Chinese
students and travellers has virtually disappeared due to COVID-19.
Europe
Clover’s European demand has remained flat for the financial year delivering $10.4m (FY20 $11.5m)
in revenue. Most infant formula customers have experienced lower demand because of COVID-19
and from the China market. The mix of the Company’s business has shifted to a broader range of
6
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
MANAGING DIRECTOR’S REPORT cont
small to medium customers reducing exposure to a limited number of accounts previously serviced.
Clover has recently started selling refined Tuna oil in the EU market to its infant formula customers,
recording its first sale in the last quarter of FY21. The EU infant formula regulation changes (the EU
changed legislation in February 2020 for infant formula to contain a min 20mg/100Kcal of DHA) are
expected to deliver additional growth opportunities as the market moves from current COVID-19
restrictions.
Asia & ANZ
The Asian, Australian and New Zealand markets have been impacted the most by COVID-19 and
trading conditions into China. Many customers have experienced significant channel disruption and
reduced sales. Infant formula customers are shifting their channel strategies and market focus, which
we expect will deliver improved conditions in the future. Clover has successfully added new products
and customers in consumer led segments with nutraceutical and health food products, that are
relatively modest with longer term prospects of growth.
Clover has a 41.9% share in a Company called Melody Dairies Limited Partnership, based in New
Zealand which has built a spray dryer. Construction was completed in early 2021 but has struggled
to get government regulatory and customer acceptance testing due to COVID-19 market and travel
restrictions. This has resulted in Melody Dairies running at a loss for the year. Clover’s share of the
loss was $0.7m. Clover has now started manufacturing on the dryer for approved customers with
several others going through the process. The dryer is expected to deliver a break-even position for
the 2022 year, which will benefit the partnership and Clover’s FY22 operating result. The dryer is
strategically important to Clover providing improved cost and security of supply.
Americas
The Americas have not delivered growth across the year with many projects on hold due to customers
having their staff work from home. Our pipeline of opportunities is strong with many customers
considering or trialling new applications in the nutraceutical and health food market. Travel and trade
shows are the key to the USA growth and under current COVID-19 conditions we will be limited in
supporting this growth from our Australian based research and development (R&D) personnel.
Research & Development
Clover’s R&D continues to drive the future growth of the Company. Our R&D department maintains a
pipeline of new products with excellent progress and prospects for future market growth. Clover has
launched a high % encapsulated EPA powder. EPA is an Omega 3 fatty acid recognised for its
qualities in reducing inflammation and is being used in nutraceuticals and food for special medical
purposes. In July of this year, our R&D facility relocated to a larger premise to support the ongoing
development opportunities and provide the necessary footprint to incorporate a pilot production plant
to fast-track development of new products. We had been using a 3rd party to support trials which was
hampered by COVID-19 and ongoing cost and access challenges. The R&D team work closely with
customers to help them solve problems and develop new products. This is a key advantage in driving
opportunities for Clover.
Balance Sheet and operating expenditure
The Company maintains a strong balance sheet, recording positive cashflow for the year, with minimal
existing net debt levels, positioning it well for future investments.
Overall operating expenses were reduced in FY21 to $8.7m (FY20 $11.4m) through disciplined
management of all discretionary expenditure.
Clover has continued to incur significant legal expenses in enforcing its intellectual property rights
against Pharmamark Nutrition Pty Ltd and an individual.
7
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
MANAGING DIRECTOR’S REPORT cont
The stronger Australian dollar to US dollar through 2021 has further impacted the financial
performance. Given that more than 50% of sales are invoiced in US dollars, translation back into
Australian dollars have reduced reported revenues. On a like for like foreign exchange basis of FY20,
revenue would have been $3.1m higher.
Looking forward
The fundamentals of the business remain strong with opportunities for growth across markets and
segments currently impacted by COVID-19.
Clover will launch newly developed products and re-engage with customers to progress the new
product and application pipeline in China, Europe, and the USA as restrictions ease.
The Company will maintain focus on obtaining raw materials and supply chain management to
ensure customers are well serviced. To support future growth, Clover will also increase vertical
integration into its supply chain, establishing partners in supply and logistics and add value through
potential strategic acquisition and/or partnership.
Clover expects to capitalise on the above opportunities once markets and borders re-open, however
the timing is unknown. It is therefore difficult to provide meaningful guidance at this time.
Mr Peter J Davey
Managing Director & CEO
Date: 20 September 2021
8
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 Australian controlled sites and one 41.9% owned New Zealand location:
•
•
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.
• Melody Dairies Spray Drying facility which is managed and run by New Zealand Food
Innovation Waikato located in Hamilton, New Zealand.
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.
9
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTOR’S 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 2021.
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.
Rupert Harrington is an experienced Director with a wealth
of experience in business strategy and M & A.
Non-Executive Director since 1 July 2015
Appointed Chairman 21 September 2017
Chair of the Nomination Committee
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.
Mr. Harrington is Non-Executive Director of Pro Pac
Packaging (ASX: PPG) and Integral Diagnostics (ASX:
IDX).
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 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 non-executive Company directorships:
GUD Holdings Limited, Appointed Non-Executive Director
2011 / Chairman appointed 2020
Austco Healthcare, Chairman appointed 2015
Previously Graeme was Chairman of Korvest Ltd (resigned
in August 2021 ) and a Non-Executive Director and Audit
Committee Chair of DomaCom Ltd (resigned in June 2021 ).
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CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTOR’S REPORT
Name and qualifications
Experience and special responsibilities
Mr Peter J Davey
MBA, GradDip Bus., Dip.Art (Design),
GAICD.
Managing 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
Chair of the Remuneration Committee
Member of the Nomination Committee
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 AgriProducts
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.
Other current Non-Executive Company directorships:
Chairman Melody Dairies Ltd Partnership, appointed 30
October 2018.
Mr Glasson is former 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 Non-Executive directorships:
Ricegrowers Ltd, appointed 2016.
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CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTOR’S REPORT
Name and qualifications
Experience and special responsibilities
Ms Toni L Brendish
B.Com, Grad Dip Business Admin,
FAICD.
Non-Executive Director since 20 October
2020
Member of the Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Toni Brendish was most recently Chief Executive of
Westland Milk Products in the South Island of New
Zealand. Westland produces a range of Dairy products
including Infant Formula base powder and was New
Zealand’s second largest Co-operative prior to being
acquired by the Chinese Multinational; Yili.
Prior to joining Westland Ms Brendish worked for the
Danone Group for 11 years running their Infant Formula
and Dairy businesses including Manufacturing sites
across Australia and New Zealand, Malaysia and
Indonesia.
She has also worked for Kimberly-Clark, Colgate
Palmolive and other Blue Chip FMCG organisations.
Dr Simon P Green
BSc(Hons), PhD, GAICD
Non-Executive Director since 20 October
2020
Member of the Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Simon has 30 years of experience in the biotechnology
industry focused on the discovery, development and
commercialisation of life saving medicines.
He was actively involved in CSL’s global expansion over a
17 year period and held roles as Senior Vice President,
Global Plasma R&D and General Manager of CSL’s
manufacturing plants in Germany and Australia.
Simon is currently the founder and CEO of Immunosis Pty
Ltd, a start-up diagnostics company.
He is also a Partner and investment advisor at BioScience
Managers, a healthcare investment firm and serves on the
scientific advisory board for Imunexus Pty Ltd.
Simon previously served as a Non-Executive Director for
Acrux Pty Ltd, an ASX listed company from 2016-2019.
Mr Andrew G M Allibon,
B.Bus, CA
Chief Financial Officer & Co. Secretary
Mr Allibon is a Chartered Accountant with over 25 years’
experience in executive finance roles across a range of
industries.
12
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTOR’S REPORT
Principal Activities
The principal activities of the consolidated entity during 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 2021, the comparative period being
the financial year ended 31 July 2020. Total revenue from sale of goods decreased 31.5% to
$60,505,000. Net profit after tax is $6,004,000 (FY20: profit of $12,487,000).
Review of Operations
A full review of operations is included in the Chairman’s Report appearing on page 4 and the Managing
Director’s report appearing on pages 6 to 8 of this Annual Report.
Employees
The consolidated entity had 53 employees as at 31 July 2021 (FY20: 49 employees).
Events Subsequent to Reporting Date
No matter or circumstance has arisen since 31 July 2021 that has significantly affected or may
significantly affect the consolidated entity’s state of affairs in future financial years.
Significant changes in the State of the Affairs
Other than 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 2.5 cent per share for the 12 months ended 31 July 2020 was paid on
18 November 2020. The total final FY20 dividend paid was $4,157,752.
The Directors have declared a fully franked final dividend of 0.5 cent per share ($831,550) in respect of
the year ended 31 July 2021. The record date for this dividend will be 26 October 2021 with payment
due on 16 November 2021. An interim dividend of 0.5 cent per share was paid for FY21.
The total dividend declared in respect to FY21 is 1.0 cent per share, a decrease of 1.5 cent per share
compared with the total dividend declared for FY20.
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CLOVER CORPORATION LIMITED
ABN 85 003 622 866
DIRECTOR’S REPORT
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.
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:
Director
Directors Meetings
Nomination
Committee
Meetings
Audit Committee
Meetings
Number
Eligible
to
Attend
Number
Attended
Number
Eligible
to
Attend
Number
Attended
Number
Eligible
to
Attend
Number
Attended
Remuneration
Committee
Meetings
Number
Eligible
to
Attend
Number
Attended
R A Harrington
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh
Ms T L Brendish
Dr S P Green
15
13
15
13
3
3
11
11
15
13
15
13
3
3
11
11
Insurance of Directors and Officers
2
2
-
2
1
1
1
1
2
2
-
2
1
1
1
1
-
4
-
4
1
1
3
3
-
4
-
4
1
1
3
3
-
6
-
6
2
2
4
4
-
6
-
6
2
2
4
4
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
The Company has ongoing litigation proceedings against Pharmamark and an individual in relation to
breaches of Intellectual Property. Excluding these proceedings, 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.
Unissued shares or interests under option
As of the date of this report there are 86,942 Performance Rights offers whose conditions have been
met, entitling recipients to one share per right for issue in FY21. An additional 536,831 performance
rights are available, subject to meeting relevant conditions.
14
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
REMUNERATION REPORT (audited)
The Remuneration Report outlines the director and executive remuneration arrangements of the
Company for the 2021 financial year in accordance with the requirements of the Corporations Act
2001 and its Regulations. It has been audited in accordance with section 300 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, CEO and CFO. 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
Position
Directors
R A Harrington
G A Billings
P J Davey
I D Glasson
T L Brendish
Dr S P Green
C Hayman
M Sleigh
Executive KMP
P J Davey
P A Sherman
A G M Allibon *
Non-Executive Chairman
Non-Executive Director
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Appointed
Appointed
Resigned
Resigned
20 Oct 21
20 Oct 21
20 Oct 21
20 Oct 21
Chief Executive Officer and Managing Director
Chief Financial Officer and Company Secretary
Chief Financial Officer and Company Secretary
Resigned
Appointed
10 May 21
11 May 21
* Appointed as Company Secretary on 11 May 2021 and CFO effective 2 August 2021 having
served on an interim basis from 11 May 2021
(ii) Remuneration Policy
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.
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CLOVER CORPORATION LIMITED
ABN 85 003 622 866
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 include
reviewing and making recommendations to the Board on the following issues:
• The structure of the total remuneration package (TRP) including base salary, other benefits,
Short Term Incentive (STI) and share-based long term incentive for the CEO;
• The mechanism to be used to review and benchmark the competitiveness of this TRP;
• Changes in the amounts of different components of the TRP following annual performance
review of the CEO;
• Review and consideration of the structure of incentive plans operating within the Company
from time to time
• The Key Performance Indicators (KPIs) to be set for the CEO for each financial year;
• Review of performance against these KPIs at the end of each financial year, and
recommendation on the amount of STI to be paid to the CEO
• Decision on whether the Long-Term Incentive (LTI) 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 assessment
period of the LTI Plan, based on financial performance and other strategic 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, Mr Ian Glasson
(Chair), Ms Toni Brendish, Dr Simon Green and Mr Graeme Billings. The Company Secretary or head
of Human Resources 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 14 of this report.
The Board is responsible for reviewing and resolving on recommendations from the Remuneration
Committee, including :
• Considering matters relating to remuneration of Executives reporting to the CEO;
• Approving the establishment of or amendment to employee share, performance rights and
any other deferred incentive plan; and
• Considering matters related to Executive succession planning.
(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 2021 was $431,719 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
• be appropriate in the context of the overall financial performance of the Company.
16
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
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 regularly to assist in this process.
The Board has to date employed a simple remuneration policy whereby only fees and statutory
superannuation benefits are payable. The table on pages 21-22 of this report shows fees paid to
Non-Executive Directors for the 2021 and 2020 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 fixed remuneration
(cash salary,
superannuation and
non-monetary benefits)
FIXED
TOTAL REMUNERATION PACKAGE
+
STI (cash
payment)
+
LTI (performance
rights)
=
Total
Remuneration
Package
VARIABLE
The Managing Director and specified Executives (Executives) are eligible for STI payments, while the
Managing Director and Executives may also have access to an LTI in the form of Performance Rights.
The most recent LTI Offer was made to the CEO and Executives in August 2021.
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. It was last
reviewed in FY19 for setting remuneration from FY20.
Non-Executive Directors are responsible for appointing, briefing external consultants and managing
this process. 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 KPIs (both financial and non-financial) established for the business.
These are the basis for KPIs for the CEO, set by the Board, and for other Executives, set by the CEO.
A formal review of the achievement of each Executive is conducted by the CEO annually and
proposed changes in fixed remuneration and the STI to be paid are submitted to the Board for noting.
As noted in section (iii) above, the performance of the CEO against agreed KPIs is reviewed by the
Remuneration Committee, and recommendations on adjustment to total fixed remuneration and
payment of the STI are made to the Board, for approval.
17
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
REMUNERATION REPORT (Continued)
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 FY21 (50% in FY20),
while for other Executives, 10-20% applied in FY21 (10-20% applied in FY20).
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 and changes in the
Company’s circumstances during the year.
KPIs set for the CEO and individual executives each year include financial, strategic and operational
targets as summarised in the table below. The financial targets are set at two levels, with the initial
target establishing a gateway to an entitlement to an STI payment.
For FY21, the financial targets were not met, which has meant that the ‘gateway’ was not met. The
Board whilst having discretion on changes in the company circumstances has considered this position
and confirmed that no STI will be awarded for the FY21 year. This is noted on page 21.
KPI type
Percent
contribution
to STI
Financial
40-60%
Environment,
Social &
Governance
20-40%
Strategic
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.
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 dividends
each year.
Establishment of agreed
plans to secure the
sustainability of the
Company and progress
towards their
implementation.
Sustainability KPIs address the medium to
long term prospects for the Company,
including developing new products,
technologies, expanding markets,
contracting with customers and suppliers,
forming alliances, and contributing to
mitigation of business risk.
Establishment of agreed
plans to continue
developing the cultural &
social behavioural norms
of the Company
KPI’s that focus on a safe working
environment, continual improvement in
collaboration and addressing emerging
governance issues.
Commercial development
of new products from the
R&D team; expansion of
sales – new products,
new customers; meeting
regulatory challenges;
manufacturing efficiencies
and cost effective
sourcing of raw materials;
effective management of
inventory, debtors and
creditors (working capital
requirements).
Strategic KPIs address key priorities for the
Company to advance to the next stage of its
planned strategic direction, in the key
management areas of Sales and Marketing,
R&D output, Manufacturing, Regulatory and
Cash Management. Examples include fast-
tracking the output from the R&D team into
profitable products attracting new sales.
Adjustment to the changing nature of the
market, to raw material availability and to
manufacturing efficiency are all required to
maintain both short term performance of the
Company, and longer term growth.
18
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
REMUNERATION REPORT (Continued)
(vi) Long Term Incentive Plan
An 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 LTI Plan and a Letter of Invitation from the
Board to the CEO, setting out the terms for vesting of Performance Rights at the end of an 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 for a 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 reflect long term growth and financial performance of the Company
relevant to current and future growth in shareholder value, including such parameters as Earnings per
Share (EPS) growth over a three-year period, Return on Equity (ROE) over the same period, and
achievements in building the Company’s product portfolio, as reflected in New Product Sales.
Executives may also be invited to participate in the Company’s LTI 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 underlying Performance Rights that vest as a result of achievement of performance hurdles
are either purchased on-market by the Company on behalf of the CEO and Executives, or shares can
be issued provided that in the case of the CEO (who is also a director of the Company) shareholder
approval is obtained. Any Performance Rights not vesting at the end of the assessment period lapse.
In the 2021 financial year the Company issued 129,207 shares to the Clover Corporation Ltd
Employee Incentive Plans Trust (Clover EIPT). The Clover EIPT will issue shares to plan participants
upon exercising of the approved Rights in accordance with the achievement of performance hurdles.
19
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
REMUNERATION REPORT (Continued)
The grants which were current during the financial year were:
Year of
Offer
Performance
conditions
2018
Target – EPS
Targeted
result for
year ended
31 July 2021
8.03c
Targeted
result for
year ended
31 July 2022
-
Targeted
result for
year ended
31 July 2023
-
Max - EPS
9.18c
-
2019
Target – EPS
Max - EPS
2020
Target – EPS
Max - EPS
-
-
-
-
-
-
-
9.50c
10.70c
-
-
9.84c
11.40c
Note – 50% of the Performance Rights that are subject to a particular performance condition vest on
achievement of the target, and a further 50% on achievement of the stretch goals. In relation to the
2018 and 2019 Performance Rights, the financial performance condition accounted for 50% of the
total potential LTI and the other 50% is based upon achieving certain levels of New Product Sales
and strategic goals.
As at 31 July 2021 the following are the performance rights for KMP whose conditions have been met,
and their vesting profile:
As at
31 July 2021
Rights granted
plan dated
Rights exercisable
after
P Davey
P Sherman *
68,104
-
68,104
2018
2018
31 July 2021
31 July 2021
The most recent performance assessment period of the above 2018 Performance Rights ended on
31 July 2021 and the board of directors of the Company determined that the relevant performance
conditions had been satisfied for the FY21 period. In consequence, the 2018 Performance Rights
that have vested can now be exercised.
* Mr Sherman having resigned in May 2021 is not entitled to any 2018 vesting rights as he was not
employed at the time of vesting.
20
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
REMUNERATION REPORT (Continued)
Rights whose
conditions
were fulfilled in
years
preceding
31 July 2019
Rights whose
conditions
were fulfilled in
year ending 31
July 2020
Rights whose
conditions
were fulfilled in
year ending 31
July 2021
Sub total
Rights whose
conditions
were fulfilled
Rights yet to
be fulfilled,
subject to
achievement
of targets
and service
conditions
Rights
Exercised &
Exercisable
Total
open
Rights
P Davey
P Sherman
#
659,470
72,726
732,196
#
156,940
17,263
174,203
68,104
-
68,104
#
884,514
89,989
974,503
#
213,027
-
213,027
#
(816,410)
(89,989)
(906,399)
#
281,131
-
281,131
P Davey
P Sherman
Fair value of
the rights as
compensation
$
282,461
31,048
313,509
Fair value of
the rights as
compensation *
118,501
-
118,501
* Note: The actual value of the Performance Rights will be dependent on the Clover share
price at the time of vesting. Rights valued at 31 July 2021 ASX market price of $1.74
(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.
2021
Directors
R A Harrington
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh 3
Ms T L Brendish
Dr S P Green
3
1,2
3
Executive KMP
P A Sherman 1,2
Salary
and Fees
Superannuation
Contributions
STI
Remun-
eration
Non-cash
Benefits
LTI Rem-
uneration
Total
$
116,168
70,491
453,630
69,321
19,991
15,538
51,304
51,304
847,747
$
11,084
6,726
24,167
6,615
1,899
1,476
4,901
4,901
61,769
$
-
-
-
-
-
-
-
-
-
$
-
-
5,906
-
-
-
-
-
5,906
$
-
-
118,501
-
-
-
-
-
118,501
$
127,252
77,217
602,204
75,936
21,890
17,014
56,205
56,205
1,033,923
Salary
and Fees
Superannuation
Contributions
$
266,752
266,752
$
22,222
22,222
STI
Remun-
eration
$
-
-
Non-cash
Benefits
LTI Rem-
uneration
Total
$
-
-
$
-
-
$
288,974
288,974
1. STI gateway not achieved – no accrual recognised in FY21 (payable FY22)
2.
LTI consists of fair value of rights whose conditions were fulfilled in year ending 31 July 2021
3. ARC & Remuneration Committee Chair positions remuneration includes additional $5,000pa
21
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
REMUNERATION REPORT (Continued)
2020
Directors
R A Harrington
G A Billings
P J Davey 4,5
I D Glasson
C L Hayman
Dr M J Sleigh
Salary
and Fees
Superannuation
Contributions
$
114,624
69,622
441,094
64,675
64,675
69,622
824,312
$
10,889
6,614
25,000
6,144
6,144
6,614
61,405
STI
Remun-
eration
$
-
-
197,060
-
-
-
197,060
Non-cash
Benefits
LTI Rem-
uneration
Total
$
-
-
5,906
-
-
-
5,906
$
-
-
282,461
-
-
-
$
125,513
76,236
951,521
70,819
70,819
76,236
282,461 1,371,144
Executive KMP
P A Sherman 4,5
Salary
and Fees
Superannuation
Contributions
$
235,947
235,947
$
22,415
22,415
STI
Remun-
eration
$
42,919
42,919
Non-cash
Benefits
LTI Rem-
uneration
Total
$
-
-
$
31,048
31,048
$
332,329
332,329
4. STI consist of amounts accrued in respect to FY20 (paid in FY21)
5.
LTI consists of fair value of rights whose conditions were fulfilled in year ending 31 July 2020
(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
dated 24 October 2017. The contract provides for base salary and continuing access to incentive
remuneration subject to Remuneration Committee approval, 6 months’ termination notice by either
party, and non-solicitation and non-compete clauses.
Other Executives (standard contract)
All other Executives have rolling contracts. The Company may terminate the Executive’s employment
agreement by providing between 1 and 3 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.
22
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
REMUNERATION REPORT (Continued)
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
T L Brendish
Dr S P Green
Ordinary
Shares
Performance
Rights*
528,921
50,000
457,264
60,000
17,155
11,834
1,125,174
-
-
68,104
-
-
-
68,104
* There are an additional 213,027 performance rights available to Mr Davey subject to meeting
relevant performance and employment conditions.
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 2021:
Taxation structural and compliance services
$
13,046
13,046
23
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
REMUNERATION REPORT (Continued)
Auditor’s Independence Declaration
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 72.
Signed in accordance with a resolution of the Board of Directors.
Mr Rupert A Harrington
Chairman
Melbourne
Date: 20 September 2021
24
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 – 4th 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 to ensure a safe operating and inclusive environment
• 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.
has
its website
The Company
https://www.clovercorp.com.au/en/invest-our-business/governance/) that sets out the respective roles
and responsibilities of its board and management, and those matters which are expressly reserved to
the board and those which are delegated to management.
a Board Charter
disclosed
(which
on
is
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.
25
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE
Principle 1 – Lay solid foundations for management and oversight (continued)
The performance of the senior executives of the Company was assessed, as set out above, during
the reporting period.
The Company conducts an annual evaluation of the performance of the Board, its Committees and
individual Directors.
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.
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, beliefs or other factors. The policy was
updated on 31 July 2020 and 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.
As at 31 July 2021 the organisation had 53 employees. As the Company has less than 100 employees,
it is not a relevant employer under the Workplace Gender Equality Act 2012, despite this the Company
has adopted the ASX Corporate Governance Principles and Recommendations on diversity and
works to the following principles:
• Ensuring targets are based on current workforce data including growth, promotions and
attrition, and that they are achievable and provide stretch goals
Incorporating targets in leaders’ KPIs to improve accountability and sponsorship
•
• Sharing gender targets and updates on achievements, internally and externally, including
reporting to the board on a regular basis.
The proportion of women employees in the whole organisation was 37% and women in senior
executive positions as at 31 July 2021 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 at all levels of 40% or more.
The Company will continue to ensure that neither gender or diversity differences interfere with the
employment of individuals based on their suitability for the position available and aspires to achieve
greater diversity.
26
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE
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 A Harrington - Non-Executive
Mr G A Billings - Non-Executive
Mr I D Glasson – Non-Executive
Ms T L Brendish - Non-Executive
Dr S P Green - Non-Executive
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 Board 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 Nomination Committee Charter that sets out the process by which new Director
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:
27
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE
Principle 2 – Structure the Board to add value (continued)
Skill Category
Description of Attribute
Governance
Risk and
Compliance
Leadership
R&D / Product
Development
Strategy
Board
Capability
Adequate
Board experience as a director of an ASX listed company,
demonstrated commitment to highest standards of governance
including experience with companies subject to rigorous
governance standards and member of a governance body.
Experience with the establishment of risk and compliance
frameworks and the identification and monitoring key risks to the
company.
Significant
Sustainable success in business at a Senior Executive level or
including
in
practice
manufacturing, finance, R&D and consumer products.
relevant sectors
leadership
level
Significant
Knowledge and experience (local & international) of developing
and commercialising new science-based products with health
offerings.
Adequate
Experience in developing, implementing, and challenging a plan
of action designed to achieve the long-term goals of the
Company.
Significant
Financial and
Accounting
Experience in financial accounting and reporting, corporate
finance and internal financial controls. Includes the ability to
probe the adequacy of financial controls.
Adequate
Quality and Safety
Experience related to work health and safety governance and/or
quality governance.
Adequate
Regulatory, Legal,
and Public Policy
Experience in Government relations, public and regulatory
policy or qualified legal professional.
Developing
Business
Acquisition and
Integration
People, Culture and
Remuneration
Experience in M&A and implementation / business integration.
Significant
Management experience in relation to workplace culture,
remuneration,
succession,
diversity, and human resource management and or ASX listed
company Remuneration Committee membership.
organisational
development,
Significant
Technology Strategy
and Governance
Knowledge and experience in IT including artificial intelligence
(AI), privacy, data management, cyber security, document
protection and Digital Experiences
Developing
Environment and
Social
Global Experience
Experience in environmental and social governance.
Adequate
Expertise
international trading and operational expansion
in understanding
the challenges of growing
Significant
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.
28
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE
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 2021 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 lawfully, ethically and responsibly
Code of Conduct
The Company has an established code of conduct dealing with matters of integrity and ethical
standards, which can be viewed at the Corporate Governance section of the Company’s web site at
www.clovercorp.com.au.
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.
Whistle Blowing
The Company has established a Whistleblower policy which can be viewed at the Corporate
Governance section of the Company’s web site at www.clovercorp.com.au. It is the responsibility of
the Company Secretary and Managing Director to regularly update the board as to whether any
material incidents have been reported under that policy. With respect to confidentiality, our
employees have a range of options in respect of who they may contact including an Officer of Clover
Corporation, ASIC, APRA, the Auditors, an Actuary or legal practioner.
Anti-bribery and Corruption
The Company has established an Anti-bribery and Corruption policy which can be viewed at the
Corporate Governance section of the Company’s web site at www.clovercorp.com.au. It is the
responsibility of the Company Secretary and Managing Director to regularly update the board as to
whether any material incidents have been reported under that policy.
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.
29
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE
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 (but may attend committee meetings in an ex
officio capacity). 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.
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.
Before it is released to the market, the Chairman reviews any periodic corporate report that is not
reviewed by an external auditor.
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 which can be viewed at the Corporate
Governance section of the Company’s web site at www.clovercorp.com.au. 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 Company
Secretary is the nominated continuous disclosure officer for the Company.
It is the responsibility of the Company Secretary to ensure the board receives copies of all market
announcements promptly after they have been made.
The Company will not release any information publicly, including any new and substantive investor or
analyst presentation, that is required to be disclosed through the ASX, until the Company has received
formal confirmation of its release to the market by the ASX.
30
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE
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. The Company ensures
that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a
show of hands. The Company’s shareholders may elect to receive information from the Company and
its registry electronically. Otherwise the Company and its registry will communicate by post with
shareholders who have not elected to receive information electronically. The Company’s share
registry helps to manage these shareholder communication preferences. The Company’s share
registry is Computershare Investor Services Pty Ltd; https://www.computershare.com.au
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 and confirms it has
conducted such a review this financial period. 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.
31
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CORPORATE GOVERNANCE
Principle 7 – Recognise and manage risk (continued)
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.
the Company’s performance, market rates,
Non-Executive Director’s fees are reviewed periodically by the full Board after taking into
the
consideration
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.
32
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 2021
Notes
2021
$'000
2020
$'000
2
3
3
3
4
60,505
88,281
(180)
(401)
(42,267)
(3,135)
(3,792)
(78)
(588)
(58,566)
(3,795)
(5,361)
(1,791)
(2,195)
(764)
(42)
8,175
(2,171)
17,656
(5,169)
6,004
12,487
Revenue
Net Exchange Losses
Net Interest expense
Raw materials, consumables & conversion costs
Marketing and sales expenses
Administration and corporate expenses
Research and development expenses
Share of net profit of investments accounted for
under the equity method
Profit before income tax
Income tax (expense)
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
(14)
(14)
14
14
Total comprehensive profit for the year
5,990
12,501
Earnings per share (EPS)
Basic earnings per share (cent per share)
Diluted earnings per share (cent per share)
21
21
3.61
3.61
7.51
7.45
This Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
33
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2021
Notes
2021
$'000
2020
$'000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax asset
Other current assets - prepayments
Non-current assets
Property, plant and equipment
Right of use assets
Investments in associates
Deferred tax assets
Intangible assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Lease liability
Current tax liabilities
Short-term provisions
Non-current liabilities
Interest bearing liabilities
Lease liability
Long-term provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
6
7
8
4
9
10
11
4
12
13
14
15
16
14
15
16
17
18
9,091
13,265
30,777
431
1,173
54,737
6,994
1,108
13,072
914
1,907
23,995
9,241
16,781
31,933
-
1,118
59,073
5,756
93
13,580
1,077
1,907
22,413
78,732
81,486
5,295
1,623
113
-
807
7,838
11,454
996
28
12,478
8,009
1,616
97
584
630
10,936
12,904
-
77
12,981
20,316
23,917
58,416
57,569
35,603
(166)
22,979
58,416
35,368
237
21,964
57,569
This Statement of Financial Position should be read in conjunction with the accompanying notes.
34
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
Issued
capital
Retained
profits
$'000
$'000
Share-
based
payment
reserve
$'000
Foreign
currency
translation
reserve
$'000
Total
$'000
Balance at 1 August 2019
32,920
12,387
Share issue for period
2,448
-
Profit attributable to members of the
entity
Dividend paid
Share-based payment reserve
Foreign currency translation reserve
-
-
-
-
12,487
(2,910)
-
-
389
-
-
-
-
-
(166)
45,141
-
-
-
-
14
2,448
12,487
(2,910)
389
14
Balance at 31 July 2020
35,368
21,964
389
(152)
57,569
Balance at 1 August 2020
35,368
21,964
389
(152)
57,569
Share issue for period
235
-
Profit attributable to members of the
entity
Dividend paid
Share-based payment reserve
Foreign currency translation reserve
-
-
-
-
6,004
(4,989)
-
-
Balance at 31 July 2021
35,603
22,979
-
-
-
(389)
-
-
-
-
-
-
235
6,004
(4,989)
(389)
(14)
(14)
(166)
58,416
This Statement of Changes in Equity should be read in conjunction with the accompanying notes.
35
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Net Interest paid
Income tax paid
Notes
2021
2020
$ '000
$ '000
63,821
89,786
(52,333)
(75,157)
(401)
(588)
(2,859)
(7,380)
Net cash inflow from operating activities
20
8,228
6,661
Cash flows from investing activities
Acquisition of plant and equipment
Proceeds from sale of financial assets
Investment in Associates
(1,831)
(556)
-
-
-
(3,461)
Net cash outflow on investing activities
(1,831)
(4,017)
Cash flows from financing activities
Dividends paid
5 (a)
(4,989)
(2,910)
Repayment of interest bearing liabilities
Lease payments
Share based payments
Issue of interest bearing liabilities
(1,443)
(1,564)
(115)
(108)
-
-
-
2,908
Net cash outflow on financing activities
(6,547)
(1,674)
Net (decrease) / increase in cash held
Cash and cash equivalents at the beginning of the
period
Cash and cash equivalents at the end of the period
6
(150)
970
9,241
9,091
8,271
9,241
This Statement of Cash Flows should be read in conjunction with the accompanying notes.
36
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report covers Clover Corporation Limited (“the Company”) and controlled entities (“the
consolidated entity“ or “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 and measurements that have some similarities to
fair value but are not fair value, such as net realisable value in AASB 102 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 20 September 2021 by the Board of Directors.
This Note 1 details the material accounting policies adopted by the consolidated entity in the
preparation of the financial report.
37
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(a) (i) Changes in accounting policy and disclosures, standards and interpretations
The consolidated entity has adopted all amendments to Australian Accounting Standards which
became applicable for the consolidated entity from 1 August 2020. No significant impact has arisen
on recognition, measurement, or disclosure in the financial report from application of these standards.
(a) (ii) New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have been issued or amended but are not
yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period
ended 31 July 2021. The consolidated entity has assessed that there will not be a significant impact
arising on adoption of these new or amended Accounting Standards and Interpretations.
(b) Principles of consolidation and investment in associates
Investment in controlled entities
The consolidated financial statements incorporate the financial statements of 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
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.
38
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
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.
Investment in associates
Associates are entities over which the consolidated entity has significant influence but not control or
joint control. Investments in associates are accounted for using the equity method. Under the equity
method, the share of the profits or losses of the associate is recognised in profit or loss and the share
of the movements in equity is recognised in other comprehensive income. Investments in associates
are carried in the statement of financial position at cost plus post acquisition changes in the
consolidated entity’s share of net assets of the associate. Goodwill relating to the associate is included
in the carrying amount of the investment and is neither amortised nor individually tested for
impairment. Dividends received or receivable from associates reduce the carrying amount of the
investment.
The consolidated entity discontinues the use of the equity method upon the loss of significant influence
over the associate and recognises any retained investment at its fair value. Any difference between
the associate's carrying amount, fair value of the retained investment and proceeds from disposal is
recognised in profit or loss.
(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. In determining the current tax position,
Research and Development incentive allowances are accounted as tax credits, reducing income tax
payable and current tax expense.
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.
39
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(c)
Income tax (continued)
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
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.
(d)
Inventories
Raw materials, work in progress and finished goods 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.
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 operating profit or loss 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.
40
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(e) Property, plant and equipment (continued)
The depreciation rates used for each class of depreciable assets are:
Class of asset
Buildings, at cost
Plant and equipment, at cost
Furniture and equipment, at cost
Depreciation Rates
4.00% - 15.00%
5.00% - 33.33%
10.00% - 33.00%
The residual values, useful lives and methods of depreciation or property plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.
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.
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. Gains and losses on disposals are determined by
comparing proceeds with the carrying amount. These are included in operating profit or loss.
(f) Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable,
any lease payments made at or before the commencement date net of any lease incentives received,
any initial direct costs incurred, and an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or
the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects
to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its
estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement
of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease
liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease
payments on these assets are expensed to profit or loss as incurred.
41
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(g) Leases
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the
consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less
any lease incentives receivable.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts of lease liabilities are remeasured if there is a modification, a change in the lease term, a
change in the lease payments or a change in the assessment of an option to purchase the underlying
asset. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use
asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
(h) Financial instruments
Financial instruments are recognised initially on the date that the consolidated entity becomes party
to the contractual provisions of the instrument. On initial recognition, all financial instruments are
measured at fair value plus transaction costs, except for instruments measured at fair value through
profit or loss where transaction costs are expensed as incurred.
Financial assets
All recognised financial assets are subsequently measured at either amortised cost using the effective
interest rate method or fair value depending on their classification.
The consolidated entity’s financial assets are measured at amortised cost and comprise trade and
other receivables and cash and cash equivalents.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its
carrying value is written off.
Allowance for expected credit losses (ECL)
For trade receivables and contract assets, the consolidated entity applies a simplified approach in
calculation of ECLs. Thus, the consolidated entity does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime ECLs at each reporting date. The consolidated
entity’s current impairment allowance has been based on historical credit loss experience, adjusted
for forward looking factors specific to the debtors and the economic environment.
The loss allowance is recognised in profit or loss.
Financial liabilities
The consolidated entity measures all financial liabilities initially at fair value less transaction costs,
subsequently financial liabilities are measured at amortised cost using the effective interest rate
method.
The financial liabilities of the consolidated entity comprise trade payables, bank and other loans and
lease liabilities.
42
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(i)
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. 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.
Any excess of the asset’s carrying value over its recoverable amount is expensed to profit or loss.
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.
(j)
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.
(k) 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.
43
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(l) 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.
(m) Revenue
Revenue is recognised and measured at the fair value of the consideration received or receivable,
after taking into account any trade discounts and volume rebates allowed, to the extent that it is
probable that economic benefit will flow to the consolidated entity and the revenue can be reliably
measured.
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity
is expected to be entitled in exchange for transferring goods or services to a customer. For each
contract with a customer, the consolidated entity: identifies the contract; identifies the performance
obligations in the contract; and determines the transaction price; and recognises revenue when or as
each performance obligation is satisfied in a manner that depicts the transfer to the customer of the
goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the
customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer
and any other contingent events. Such estimates are determined using either the 'expected value' or
'most likely amount' method. The measurement of variable consideration is subject to a constraining
principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are recognised as a refund
liability.
Revenue from sale of inventory is recognised at the point in time when control of the assets are
transferred to the customer, which is generally upon delivery.
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 are accounted for in accordance with the equity method of accounting.
All revenue is stated net of the amount of goods and services tax (GST).
Contract assets
A contract asset is the right to consideration in exchange for goods transferred to the customer. If the
Group performs by transferring goods to a customer before the customer pays consideration or before
payment is due, a contract asset is recognised for the earned consideration that is conditional.
Contract liabilities
A contract liability is the obligation to transfer goods to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Group transfers goods to the customer, a contract liability is recognised when
the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised
as revenue when the Group performs under the contract.
44
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(n) 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 consolidated entity 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.
(o) Employee benefits
Provision is made for the consolidated entity’s liability for employee benefits arising from services
rendered by employees to the 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.
(p) 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.
(q) Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards in respect of shares, in the form of performance rights, that are
provided to employees in exchange for the rendering of services.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is
independently determined using the Binomial option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term
of the option, together with non-vesting conditions that do not determine whether the consolidated
entity receives the services that entitle the employees to receive payment. No account is taken of any
other vesting conditions.
The cost is recognised in employee benefits expense, together with a corresponding increase in
equity, over the period in which the service and, where applicable, the performance conditions are
fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at
each reporting date until the vesting date reflects the extent to which the vesting period has expired
and the consolidated entity’s best estimate of the number of equity instruments that will ultimately
vest. The expense or credit in the statement of profit or loss for a period represents the movement in
cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest because non-market performance
and/or service conditions have not been met. Where awards include a market or non-vesting
condition, the transactions are treated as vested irrespective of whether the market or non-vesting
condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the
grant date fair value of the unmodified award, provided the original vesting terms of the award are
45
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
met. An additional expense, measured as at the date of modification, is recognised for any
modification that increases the total fair value of the share-based payment transaction, or is otherwise
beneficial to the employee. Where an award is cancelled by the entity or by the counterparty, any
remaining element of the fair value of the award is expensed immediately through profit or loss.
(r) 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.
(s) 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.
(t) 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.
(u) Comparative figures
Where required by the Accounting Standards comparative figures have been adjusted to conform with
changes in presentation in the current financial period.
46
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(v) 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, several key estimates are made.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and
judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and
makes assumptions to allocate an overall expected credit loss rate for each group. These
assumptions include recent sales experience and historical collection rates.
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 12 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.
47
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
2. Revenue and other income
Operating activities:
Sales of goods
Other income:
Interest revenue
Total revenue
The disaggregation of revenue from
contracts with customers is as follows:
Timing of revenue:
Goods transferred at a point in time
Geographical location:
Australia / New Zealand
Asia
Europe
Americas
3. Expenses
Profit before income tax includes the following items:
Employee benefits expense
Share-based payments expense / (credit)
Inventory Scrap / Impairment
Melody Dairies contractual charges
Depreciation and amortisation:
- buildings
- plant and equipment
- office furniture and equipment
- right-of-use assets
Unrealised FX
Realised FX
Net exchange losses
Interest expense
Minimum lease payments:
-
short term leases
Consolidated
2021
$'000
2020
$'000
60,505
88,281
2
2
2
2
60,507
88,283
60,505
88,281
21,667
24,317
10,444
4,077
60,505
46,021
26,307
11,505
4,448
88,281
6,470
(154)
90
1,126
214
300
80
113
707
(487)
667
180
403
6,984
548
498
-
205
308
56
110
679
791
(713)
78
590
415
365
48
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
4. Income tax expense:
(a) The components of tax expense comprise:
Current tax
Deferred tax asset
(b) Reconciliation of income tax expense/(credit):
The aggregated amount of income tax expense attributable
to the period differs from the amount’s 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
Deferred tax asset
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
(d) Tax receivable
Consolidated
2021
$'000
2020
$'000
2,008
163
2,171
4,996
173
5,169
2,452
5,297
(363)
82
(121)
(7)
2,171
5,169
914
1,077
136
233
495
50
914
1,077
(163)
914
431
106
538
245
188
1,077
1,250
(173)
1,077
-
49
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
5.Dividends
(a) Dividend paid during the period
Final dividend for the year ended 31 July 2020 of 2.5
cent per share (FY19: 1.75 cent per share) fully franked
at the tax rate of 30%, paid 18 November 2020
Interim dividend for the year ended 31 July 2021 of 0.5
cent per share (FY20: 0.00 cent per share)
Franking account balance
Franking credits available for subsequent financial
years
Consolidated
2021
$'000
2020
$'000
4,157
2,910
832
4,989
0
2,910
13,137
12,328
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 2021 of 0.5 cent
per share (FY20: final 2.5 cent per share) fully franked at 30%, payable on 16 November 2021, but
not recognised as a liability at the end of the financial period.
The record date for this dividend will be 26 October 2021.
50
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
6. Cash and cash equivalents
Cash at bank
7. Trade and other receivables
Current
Trade debtors
Other debtors
Total current trade and other receivables
Provision for impairment of receivables
Consolidated
2021
$'000
2020
$'000
9,091
9,091
9,241
9,241
13,014
251
13,265
16,719
62
16,781
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.
Refer to Note 25 for more information on credit risk of trade and other receivables.
8. Inventories
Raw materials
Goods in transit
Finished goods
Less: provision for inventory obsolescence
Total Inventories
18,743
1,677
10,500
30,920
(143)
30,777
12,624
1,603
17,943
32,170
(237)
31,933
51
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
9. Property, plant and equipment
Land, at cost
2,000
2,000
Consolidated
2021
$'000
2020
$'000
Buildings, at cost
Less: accumulated depreciation
Total Buildings
Plant and equipment, at cost
Less: accumulated depreciation
Total plant and equipment
Furniture and equipment, at cost
Less: accumulated depreciation
Total furniture and equipment
4,029
(1,547)
2,482
6,209
(3,837)
2,372
500
(360)
140
4,003
(1,333)
2,670
4,458
(3,537)
921
445
(280)
165
Total property, plant and equipment
6,994
5,756
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
Carrying amount at the end of the period
Buildings
Balance at beginning of the period
Additions
Depreciation expense
Carrying amount at the end of the period
Plant and equipment
Balance at beginning of the period
Additions, net of disposals
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
2,000
2,000
2,000
2,000
2,670
26
(214)
2,482
921
1,750
1
(300)
2,372
165
55
(80)
140
2,717
158
(205)
2,670
990
247
(8)
(308)
921
70
151
(56)
165
52
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
10. Right of use assets
Right of use assets – premises
Less: accumulated depreciation
Balance from prior year
Balance recognised upon transition
Additions to Right of use assets
Depreciation expense
Carrying amount at end of period
11. Investment in associates
Consolidated
2021
$'000
2020
$'000
1,129
(21)
1,108
93
-
1,128
(113)
1,108
204
(111)
93
-
204
-
(111)
93
Investment in Melody Dairies, at cost
Total Investment in associates
13,072
13,072
13,580
13,580
Through an agreement with three other investing parties on 5 November 2018 the consolidated
entity has a 41.9% (FY20: 41.9%) interest in Melody Dairies, a limited partnership established
for the purpose of undertaking construction and operation of a manufacturing facility in New
Zealand. The objective of the project is to enable expansion of the consolidated entity’s capacity
to deliver its products to the market, through its equity interest in the project.
The consolidated entity’s interest in Melody Dairies is accounted using the equity method in the
consolidated financial statements. As of the reporting date, the consolidated entity’s investment
is represented by its share of assets, cash and related working capital amounts to an equity
accounted total of $13,622,000, net of $550,000 in equity accounted operating losses.
12. Intangible assets
Goodwill on acquisition, at cost
Total intangible assets
1,907
1,907
1,907
1,907
There were no acquisitions of controlled entities in FY21 (FY20: None).
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 2021 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
53
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
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.
13. Trade and other payables
Current
Trade creditors
Sundry creditors and other accruals
14. Interest bearing liabilities
Current interest bearing liabilities
Non-current interest bearing liabilities
Assets pledged as security
Consolidated
2021
$'000
2020
$'000
4,921
374
5,295
6,298
1,711
8,009
1,623
11,454
13,077
1,616
12,904
14,520
The interest bearing liabilities are secured by a first mortgage over the investment in Melody
Dairies (with a carrying value of $13.072m), land and buildings (with a carrying value of $4.563m),
as well as a general charge over the consolidated entity’s assets.
15. Lease liabilities
Current lease liabilities
Non-current lease liabilities
< 1 year
1 -5 years
> 5 years
113
996
1,109
97
-
97
Total
undiscounted
lease
liabilities
Lease liabilities
included in the
Statement of
Financial Position
2021
Lease Liabilities
2020
Lease Liabilities
126
108
$’000
$’000
$’000
$’000
504
630
1,260
$’000
1,109
-
-
108
97
The Company is reasonably certain that the lease term (inclusive of options) of the newly occupied
facility in Queensland will be exercised and have disclosed the lease term as 10 years.
54
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
16. Provisions
Aggregate employee entitlements:
Current
Non-current
Total employee entitlements
17. Issued capital
(a) Issued and paid up capital
Consolidated
2021
$'000
2020
$'000
807
28
835
630
77
707
166,439,311 (FY20:166,310,104) fully paid ordinary
shares
Total contributed equity
35,603
35,603
35,368
35,368
The Company has issued share capital amounting to 166,439,311 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
The Company issued 129,207 shares during the financial period at a value of $235,157.
Rights to capital
At the reporting date there were 86,942 performance rights offers whose conditions had been met,
entitling recipients to one share per right, which vest in 2021. In the case of the CEO / Managing
Director’s 68,104 rights, these rights will require shareholder approval at the November 2021
Annual General Meeting for shares to be issued.
There are an additional 536,831 performance rights available to entitling recipients that have been
granted but are still subject to meeting conditions of achievement in future years.
(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.
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.
55
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
18. Reserves
Foreign currency translation
Share-based payment reserve
Total
Consolidated
2021
$'000
2020
$'000
(166)
-
(166)
(152)
389
237
The foreign currency translation reserve records exchange differences arising on translation of the
financial statements of foreign subsidiaries.
The Long Term Incentive Plan grants shares in the Company to certain employees. The fair value of
performance rights granted under the Long Term Incentive Plan is recognised as an employee
expense with a corresponding increase in the equity reserve.
Share-based payments
Certain employees (including key management personnel) have been granted performance rights
under the consolidated entity’s Long Term Incentive Plan during the current and previous financial
year.
The performance rights do not give the holder a legal or beneficial interest in ordinary fully paid shares
in the Company until those rights vest. Prior to vesting, performance rights do not carry a right to vote
or receive dividends. When the performance rights have vested, ordinary fully paid shares will be
allocated, and these shares will rank equally with existing shares.
The following table summarises the performance conditions in respect of active grants for which 50%
of the performance rights that are subject to a particular condition vest on achievement of the target,
and a further 50% on achievement of the stretch goals.
.
Issue date
Targeted
result year
ended
31 July 2021
August 2018
Targeted
result year
ended
31 July 2022
August 2019
Targeted
result year
ended
31 July 2023
August 2020
Vesting and test date
July 2021
July 2022
8.03c
9.18c
-
-
-
-
-
-
9.50c
10.70c
-
-
Target – EPS
Max - EPS
Target – EPS
Max - EPS
Target – EPS
Max - EPS
Target – EPS
Max - EPS
July 2023
-
-
-
-
9.84c
11.40c
Targeted
result year
ended
31 July 2024
August 2021
July 2024
5% compound
growth on FY21
NPAT
15% compound
growth on FY21
NPAT
56
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
In relation to the rights granted on the previous page, the performance condition shown in the table
accounts for 50% of the total potential LTI and the other 50% is based upon achievement of targeted
levels of new product sales and strategic goals.
The movement in the number of rights on issue is summarised in the following table.
Number of rights
Granted
Opening balance
1,317,276
Fulfilled /
(Lapsed)
(Vested)
(1,128,408)
To be
fulfilled
147,420
Closing
balance
336,288
Weighted
average fair
value of grants
issued $’000
$ 576
336,288
(38,108)
(86,942)
325,593
536,831
$ 933
31 July 2020
Total rights
31 July 2021
Total rights
The weighted average fair value of the performance rights granted to employees was historically
determined on the basis of the price paid by the Company to acquire the settlement shares on market.
In the current financial year the weighted average fair value of the rights granted has been calculated
on the last 10 days VWAP share price as at 31 July 2021 - $1.738
19. Parent company information
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated Gains / (Losses)
Total equity
2021
$'000
2020
$'000
90
43,456
5,576
22,253
43,546
27,829
1,074
1,074
512
512
42,472
27,315
35,603
6,869
42,472
35,368
(8,053)
27,315
57
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
Net profit for the period before other
comprehensive income
Total comprehensive income for the period
Consolidated
2021
$ '000
2020
$ '000
19,912
19,912
3
3
Earnings per share (cents per share)
12.0c
0.0c
The FY21 result includes a dividend issued by Nu-Mega Ingredients Pty Ltd on 13 April 2021 for
$19,777,180. In FY20 no dividend was received.
Controlled entities:
Country of
Incorporation
Clover Corporation Ltd Employee
Incentive Plans Trust
Australia
Nu-Mega Ingredients Pty Limited
Australia
Subsidiaries:
- Nu-Mega Ingredients Limited
United Kingdom
- Nu-Mega Ingredients Limited
United States of America
- Nu-Mega Ingredients (NZ) Limited
- Nu-Mega Ingredients NL B.V.
New Zealand
Netherlands
Percentage Owned
2021
%
100
100
100
100
100
100
2020
%
100
100
100
100
100
100
58
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
20. Reconciliation of cash flow from operating activities to
Operating Profit
Profit for the period
Non cash items :
- Amortisation and depreciation
- Foreign exchange on international assets & liabilities
- Melody Dairies Limited Partnership Loss
- Employee benefits not paid in cash
Change in assets and liabilities, net of the effects of purchase of
subsidiaries
Decrease /(Increase) in receivables
(Increase)/Decrease in other assets
(Increase)/Decrease in inventories
(Decrease)/Increase in payables
(Decrease)/Increase in employee entitlements
Decrease/(Increase) in deferred tax assets
Decrease(/Increase) in current tax asset
Net cash inflow from operating activities
2021
$'000
2020
$'000
6,004
12,487
707
(272)
764
(154)
3,516
(55)
1,156
(2,714)
128
163
679
67
42
548
1,666
(160)
(4,252)
(2,247)
43
174
(1,015)
(2,386)
8,228
6,661
59
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
21. Earnings per share
The following reflects the income and share data used in the calculation of basic and diluted
earnings per share:
2021
$ 000
2020
$ 000
(a) Reconciliation of earnings to net profit or loss
Profit attributable to members of the parent entity
Earnings used to calculate basic and diluted EPS
6,004
6,004
12,487
12,487
(b) Weighted average number of ordinary shares
outstanding during the period used in the calculation
of basic earnings per share
(c) Weighted average number of ordinary shares
outstanding during the period used in the calculation
diluted earnings per share
(d) Basic earnings per share (cents per share)
(e) Diluted earnings per share (cents per share)
166,310,104
166,310,104
166,439,311
166,636,294
3.61c
3.61c
7.51c
7.45c
The weighted average number of potential dilutive ordinary shares in FY21 is accounted for by:
- Shares Issued on 31 July 2021
129,207
22. 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
97,500
95,000
- Taxation structuring and compliance services
13,046
110,546
38,504
133,504
23. Related party transactions
(a) Ultimate parent entity:
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 19.
60
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
24. 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
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh
T Brendish
Dr S Green
Executive KMP
P A Sherman
A G Allibon
Position
Non-Executive Chairman
Non-Executive Director
Chief Executive Officer and Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Financial Officer and Company Secretary
Chief Financial Officer and Company Secretary
Key management personnel remuneration has been included in the Remuneration
Report section of the Directors’ Report. Mr Allibon acting on an interim basis as a
consultant has not been included in the table below that summarises the total
KMP compensation:
Short-term benefits
Long-term benefits
(b) Performance rights:
2021
$
1,204,396
118,501
1,322,897
2020
$
1,389,964
313,509
1,703,473
There were 68,104 Performance Rights offers available to Key management personnel whose
conditions have been met as at 31 July 2021. There were an additional 384,097 Performance Rights
offers available to key management personnel, subject to meeting relevant conditions. The right to
convert 68,104 Performance Rights to key management personnel was satisfied in financial year
ending 31 July 2021.
(c) Shareholding:
Directors
R A Harrington
G A Billings
P J Davey
I D Glasson
C L Hayman
Dr M J Sleigh
T Brendish
DR S Green
Balance
31 July 2020
Shares
Purchased
& (Sold)
Retirement
Balance
31 July 2021
471,781
50,000
213,444
60,000
230,000
312,397
-
-
1,337,622
57,140
-
243,821
-
-
-
17,155
11,834
329,950
-
-
-
-
(230,000)
(312,397)
-
-
(542,397)
528,921
50,000
457,265
60,000
-
-
17,155
11,834
1,125,175
61
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
25. 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 2021, 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
2021
$'000
2020
$'000
989
9,989
10,978
442
13,412
13,854
(12,753)
(12,753)
(14,736)
(14,736)
At 31 July 2021, 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:
62
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
25. Management of financial risk (continued)
Foreign exchange movement
Change in Profit
AUD:USD + 5%
AUD:USD - 5%
AUD:EUR + 5%
AUD:EUR - 5%
Post Tax Profit
Higher/(Lower)
2021
$'000
2020
$'000
Change in Equity
Higher/(Lower)
2021
$'000
2020
$'000
(185)
205
(127)
141
(369)
408
(116)
128
(185)
205
(127)
141
(369)
408
(116)
128
AUD/NZD + 5%
AUD/NZD - 5%
(10)
11
(11)
12
494
(518)
543
(570)
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.
(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.
63
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
25. Management of financial risk (continued)
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 2021
Trade receivables:
Within terms
Over terms
Total
Consolidated
2021
$'000
2020
$'000
12,533
481
13,014
16,068
651
16,719
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.
(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 liabilities
Anticipated cash outflows
Net inflow/(outflow)
Balance as at
31 July 2021
Less
than 1
year
1-5
years
$'000
$'000
$'000
Over 5
years
$'000
9,091
13,265
22,356
9,091
13,265
22,356
-
-
-
5,295
13,077
1,109
19,481
2,875
5,295
1,623
126
7,044
15,312
-
11,454
458
11,912
(11,912)
-
-
-
-
-
525
525
(525)
64
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
(e) Interest rate risk
The consolidated entity’s primary interest rate risk arises from long-term borrowings. The consolidated
entity’s bank loans outstanding, totalling $13,077,000 (FY20: $14,520,000) are principal and interest
payment loans, bearing interest at a weighted average current annual rate of 2.72%.
(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.
26. Operating segments
Identification of reportable segments
The consolidated entity operates in the industry of manufacturing tuna oil and encapsulated products
in Australia. 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
2020
$'000
2021
$'000
Non-current assets
2020
$'000
2021
$'000
Australia / New Zealand
Asia
Europe
Americas
21,667
24,317
10,444
4,077
46,021
26,307
11,505
4,448
23,738
-
-
-
21,336
-
-
-
Total
60,505
88,281
23,738
21,336
During the financial year there were 2 customers who represented 38% and 11% of total sales
respectively (FY20: 41% and 18% respectively).
Greater than 90% of total sales revenue is generated by the export market.
65
CLOVER CORPORATION LIMITED
ABN 85 003 622 866
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE FINANCIAL YEAR ENDED 31 JULY 2021
27. Events subsequent to reporting date
No matter or circumstance has arisen since 31 July 2021 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.
28. Contingencies
Litigation has continued in defence of the Company’s Intellectual Property by the Company and
Nu-Mega Ingredients Pty Ltd against an individual and Pharmamark Nutrition Pty Ltd. During the
year ended 31 July 2021 the company continued to incur legal and other expenses in conducting
the litigation, and this is expected to continue until the matter is resolved.
The Directors are of the opinion that the Company has good prospects of success in the
litigation. The additional information usually required by AASB 137 Provisions, Contingent
Liabilities and Contingent Assets is not disclosed on the grounds that it can be expected to
prejudice seriously the outcome of the litigation.
There are no contingent liabilities at the reporting date.
.
66
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 2021
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
2021.
This declaration is made in accordance with a resolution of the Board of Directors.
Mr Rupert A Harrington
Chairman
Melbourne
Date: 20 September 2021
67
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CLOVER CORPORATION LIMITED
Report on the Financial Report
Auditor’s Opinion
We have audited the accompanying financial report of Clover Corporation Limited (the Company) and its controlled
entities (collectively the Group), which comprises the consolidated statement of financial position as at 31 July 2021,
and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity, and the consolidated statement of cash flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory information, and the Directors’ Declaration of the Company
and of 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 financial position as at 31 July 2021 and of its 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. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report.
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act
2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current 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 2021, the carrying value of inventory
was $30,777,000 (2020: $31,933,000) as disclosed in
note 8 of the financial report.
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.
A standard cost system is used to account for inputs
to inventory. Management conducts regular analysis
to determine the cost of inventory, and whether
adjustment to the carrying amount is required to
reflect net realisable value, if that is lower than cost.
Inventory is the most significant of the Group’s
assets, and accordingly we considered it a Key Audit
Matter.
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;
accessing and assessing information in support of
inventory held at other locations;
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;
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
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation
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 or correspondent firm or firms.
(continued)
68
Key audit matter – Inventory existence and
valuation (continued)
How our audit addressed this matter (continued)
•
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 $60,505,000
during the year (2020: $88,281,000). Note 1(m)
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 used to determine the recognition
point, we have considered revenue recognition as a
Key Audit Matter.
Key audit matter – Investment in associate (Melody
Dairies)
A controlled entity’s 41.9% equity interest in Melody
Dairies constitutes significant influence over a
production facility. The objective of the investment in
the facility is to enable expansion of the Group’s
capacity to deliver its products to the market.
The Group’s investment is initially recognised at cost
under the equity method, and the carrying amount is
thereafter adjusted for the Group’s share of the
profit or loss of the investee, as described in note 11.
The equity accounted carrying amount of the
investment is also disclosed in note 11 as
$13,072,000 (2020: $13,580,000) and note 14
includes related amortised bank borrowings secured
by the Group’s investment.
On the basis of the significance of the investment and
its related borrowings we have considered this a Key
Audit Matter.
Other Information
Our procedures included but were not limited to:
•
•
•
evaluating a sample of contracts, identifying contracted
performance obligations, 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 aligned to fulfilment of the Group’s
performance obligations, transferred at a point in time;
evaluating the cut-off process and its reliability to fairly
account for dispatches not yet transferred to customers
at the reporting date and the recognition of revenue in
accordance with the Group’s 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 15
Revenue from contracts with customers.
How our audit addressed this matter
Our procedures included but were not limited to:
•
•
•
•
confirming our understanding of the terms and
conditions of the partnership arrangement, and
evaluating the appropriateness of Management’s
assessment that the nature of the Group’s investment in
the production facility is that characterised as an investor
of significant influence;
validating the accounting treatment of the investment
under the equity method in accordance with AASB 128
Investment in Associates and Joint Ventures;
inquiring of Management and assessing whether there
are any impairment indicators obligating the Group to
perform an impairment analysis under AASB 136
Impairment of Assets; and
assessing the appropriateness of the disclosures included
in note 11 and the validity of classifying borrowings
between current and non-current liabilities as disclosed
in note 14.
The Directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 31 July 2021 but does not include the financial report and our our
Auditor’s Report thereon.
Our opinion on the financial report does not cover the other information and, accordingly, we do not express any form
of assurance conclusion thereon, with the exception of our opinion on the Remuneration Report.
69
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’ Responsibilities for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the 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 objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with 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. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. 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.
Obtain an understanding of internal control relevant to the audit 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
Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Directors.
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. Our conclusions are based on the
audit 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.
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.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the group financial report. We are responsible for the
direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation
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 or correspondent firm or firms.
70
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, actions taken to eliminate threats or safeguards applied.
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 the 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
Auditor’s Opinion
We have audited the Remuneration Report included in pages 15 to 22 of the Directors’ Report for the year ended 31
July 2021.
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, 20 September 2021
Steven Bradby
Partner
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation
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 or correspondent firm or firms.
71
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
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 2021, I declare
to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001; and
(b) no contraventions of any applicable code of professional conduct.
PKF
Melbourne, 20 September 2021
Steven Bradby
Partner
PKF Melbourne Audit & Assurance Pty Ltd ABN 75 600 749 184
Level 12, 440 Collins Street, Melbourne, Victoria 3000
T: +61 3 9679 2222 F: +61 3 9679 2288 www.pkf.com.au
Liability limited by a scheme approved under Professional Standards Legislation
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 or correspondent firm or firms.
72
CLOVER CORPORATION LIMITED
ABN: 85 003 622 866
Additional ASX Information
ASX Information
Additional information required by the Australian Securities Exchange Listing Rules and not disclosed
elsewhere in this report.
Shareholdings as at 31 July 2021
Substantial shareholders
The number of shares held by substantial shareholders and their associates is set out below:
Washington H. Soul Pattinson and Company Limited
33,713,035 ordinary shares
Distribution of shareholders as at 31 July 2021
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 286
shares @ 1.75
1,405
2,102
859
934
99
5,399
278
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.
73
CLOVER CORPORATION LIMITED
ABN: 85 003 622 866
Additional ASX Information
Twenty largest shareholders as at 31 July 2021*
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 LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LTD
UBS NOMINEES PTY LTD
EVELIN INVESTMENTS PTY LIMITED
HSBC CUSTODY NOMINEES (AUS) LIMITED
NATIONAL NOMINEES LIMITED
INCANI & PAPADOPPOULOS SUPER PTY LTD
CITICORP NOM PTY LTD
MR PETER HOWELLS
CUSTODIAL SERVICES LIMITED
MR GARRIE ELLICE
BUTTONWOOD NOMINEES PTY LTD
NEWECONOMY COM AU NOMINEES PTY LTD
MR PEI YIN FOO
MS NINA TSCHERNYKOW
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
GANESH SUPER FUND
CONNAUGHT CONSULTANTS (FINANCE) PTY LTD
BELLITE PTY LTD
Number of
Fully Paid
Ordinary
Shares
Percentage
of Issued
Ordinary
Shares (%)
33,713,035
22,113,069
14,198,164
11,172,125
7,550,000
4,352,064
4,194,992
2,010,000
1,532,000
1,500,000
1,055,169
1,020,000
941,281
905,663
900,000
858,881
786,952
774,696
767,000
719,600
20.26
13.29
8.53
6.71
4.54
2.61
2.52
1.21
0.92
0.90
0.63
0.61
0.57
0.54
0.54
0.52
0.47
0.47
0.46
0.43
111,064,691
55,374,620
66.73
33.27
* As shown on the register, beneficial holdings may differ.
Securities quoted by the ASX
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
74