korvest Annual Report 2013

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ANNUAL REPORT
2013

Korvest Ltd
and controlled entities
ABN 20 007 698 106

Annual Report
30 June 2013

DIRECTORS’ REPORT
(INCLUDING REMUNERATION REPORT)

5 YEAR SUMMARY

CORPORATE GOVERNANCE STATEMENT

CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE FINANCIAL STATEMENTS

DIRECTORS’ DECLARATION

AUDIT REPORT

LEAD AUDITOR’S INDEPENDENCE DECLARATION

ASX ADDITIONAL INFORMATION

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 KORVEST LTDA Market Leading Infrastructure Provider.

Korvest Ltd has a strong track record in providing
complete solutions to the Mining, Petrochemical,
Data/Communications, Civil Construction, Water and
Energy sectors.

WWW.KORVEST.COM.AU

JOHN DICKIE
ENGINEERING MANAGER

STEVE JEFFS
HSEQ MANAGER

CHRIS HARTWIG
GENERAL MANAGER

EzyStrut manufactures one of the most diverse
ranges of cable and pipe support solutions in the
industry, suitable for almost any application.

EzyStrut offers the market reliability with
5 warehouses nationally, consistency with
stringent quality control, and innovative product
designs created after listening to customers and
understanding their expectations.

WWW.EZYSTRUT.COM.AU

STEVEN EVANS
GENERAL MANAGER

Premium suppliers of gratings, handrails,
stanchions, mesh, guarding and other
walkway infrastructure. Indax is a business
offering fast turnaround on all walkway
infrastructure components and fabrications.

WWW.INDAX.COM.AU

Korvest Galvanisers is a leading and award
winning galvaniser with the capability to hot dip
galvanise a range of items from large and difficult
fabrications to small fasteners, pipe fittings,
castings, general brackets and other components.

Korvest Galvanisers finish all work to the
AS4680:2006 standard.

WWW.KORVESTGALVANISERS.COM.AU

PAUL ASSAF
GENERAL MANAGER

Superior Bolting solutions for any industry. Titan
Technologies (S.E. Asia) has diverse and extensive
expertise and experience in bolting solutions.
Recently, Titan has been directly involved with a
number of projects in Australia and South East Asia
developing bolting solutions and providing expert
advice directly or jointly with affiliated Original
Equipment Manufacturer product distributors.

WWW.TITANTOOLS.COM.AU

Power Step is a leading designer, manufacturer
and distributor of Safety Access Systems for all
makes and models of large mobile equipment.
Headquartered in Brisbane, the company
has product representatives and product
distribution throughout Australia, Asia, Africa
and South America.

WWW.POWERSTEP.COM.AU

The directors present their report together with
the consolidated financial statements of the Group
comprising of Korvest Ltd (‘the Company’) and its
subsidiaries for the financial year ended 30 June 2013
and the auditor’s report thereon.

DIRECTORS

The directors of the Company at any time during or
since the end of the financial year are:

PETER BRODRIBB
F.I.E (AUST)

AGE 68

Non-Independent Non-Executive Director

A Director since 1984

Appointed Non-Executive Director in January 2005 after

retiring from the position of Managing Director that he had

held since 1984

PETER W STANCLIFFE
BE (CIVIL) FAICD

AGE 65

STEVEN J W MCGREGOR
BA (ACC), CA, ACSA, ACIS

AGE 41

Chairman Independent Non-Executive Director

Finance Director

Appointed as a Director and Chairman on 1 January 2009

Company Secretary since April 2008

Director Hills Holdings Limited

Director Automotive Holdings Group Limited

Appointed as Finance Director 1 January 2009

ALEXANDER H W KACHELLEK
BSC.CENG MIET FAICD

AGE 60

GRAEME A BILLINGS
BCOM FCA MAICD

AGE 57

Managing Director

A Director since June 2007

Independent Non-Executive Director

Appointed 3 May 2013

Mr Kachellek has experience in a number of industries

Chairman of Audit Committee

including Data Communications and Automotive, Lean

Mr Billings retired from PricewaterhouseCoopers in

Operations Consultancy and Manufacturing

2011 after 34 years where he was a senior partner in the

Director Austmine Ltd

Director Galvanising Association of Australia

Assurance practice

Director G.U.D. Holdings Limited

Director Clover Corporation Limited

EDWARD (TED) PRETTY
BA LLB (HONS)

AGE 55

GRAHAM L TWARTZ
B.A.(ADEL), DIP ACC (FLINDERS)

AGE 56

Non-Independent Non-Executive Director

Appointed 3 September 2012

A Director since 1999

Managing Director, Hills Holdings Limited

Chairman of Audit Committee

Director NextDC Limited

Retired 25 March 2013

Former Managing Director, Hills Holdings Limited

Retired 2 September 2012

STEVEN MCGREGOR

ALEXANDER KACHELLEK

GRAEME BILLINGS

PETER STANCLIFFE

PETER BRODRIBB

COMPANY SECRETARY

RE-ELECTIONS

Mr Steven J W McGregor CA, ACSA, ACIS, BA(Acc)
was appointed to the position of company secretary in
April 2008. Mr McGregor previously held the role of chief
operating officer and company secretary with an unlisted
public company for seven years.

In accordance with the Articles of Association, Peter
Stancliffe and Graeme Billings retire from the Board at the
forthcoming Annual General Meeting on 25 October 2013.
Both are eligible for re-election at that meeting and offer
themselves accordingly.

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 KORVEST LTDDIRECTORS’ MEETINGS

DIVIDENDS

The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by
each of the directors of the Company during the financial year are:

The directors announced a fully franked final dividend of 20.0 cents per share compared to 30.0 cents per share last year
and 26.0 cents at the half year. The full year dividend in relation to the 2013 year will therefore be 46.0 cents per share
compared to 53.0 cents per share for the previous year.

BOARD
MEETINGS

AUDIT COMMITTEE
MEETINGS

REMUNERATION COMMITTEE
MEETINGS

The final dividend will be paid on 6th September 2013.

DIRECTOR

Mr P.W. Stancliffe

Mr A.H.W. Kachellek

Mr G.L. Twartz

Mr P. Brodribb

Mr S.J.W. McGregor

Mr E Pretty

Mr G Billings

A = Number of Board meetings attended

B = Total Number of Board meetings available for attendance

FINANCIAL RESULTS

The revenue from trading activities for the year under review was $61.72m, down 14.7% on the record previous
year. Profit after tax was $3.825m, down by 38.3%. For much of the business it has been a difficult year reflecting a
sharp contraction in available project work and a general diminution of business confidence. The first half results were
underpinned by solid day-to-day trading with no major projects evident. It had been expected that this level of activity
would continue through the second half however in the fourth quarter the day-to-day work also slowed significantly.
In February 2013 Korvest acquired Power Step (Australia) Pty Ltd and Titan Technologies (SE Asia) Pty Ltd. These
newly acquired businesses did contribute positively to the group result in their four months of trading and like the other
Korvest businesses, they experienced difficult trading conditions in the fourth quarter. More detailed discussion on these
businesses is contained below in the review of operations.

A summary of dividends paid or declared by the Company to members since the end of the previous financial year were:

DECLARED AND PAID DURING THE YEAR 2013

Interim 2013 ordinary

Final 2012 ordinary

Total amount

CENTS PER SHARE

TOTAL AMOUNT $’000 FRANKED/ UNFRANKED

DATE OF PAYMENT

26.0

30.0

2,259

2,604

4,863

Fully franked

13 March 2013

Fully franked 6 September 2012

Franked dividends declared as paid during the year were franked at the rate of 30 per cent.

DECLARED AFTER END OF YEAR

After the reporting date the following dividends were proposed by the directors. The dividends have not been provided for
and there are no income tax consequences to the Company.

Final ordinary

Total amount

20.0

1,763

Fully franked 6 September 2013

The financial effect of these dividends has not been brought to account in the financial statements for the year ended 30
June 2013 and will be recognised in subsequent financial reports.

Dividends have been dealt with in the financial report as:

-Dividends

-Dividends – subsequent to 30 June 2013

4,863

1,763

NOTE

TOTAL AMOUNT $’000

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD

STRATEGY AND FUTURE PERFORMANCE

INDUSTRIAL PRODUCTS

Korvest’s businesses service a number of major markets
including mining, infrastructure, commercial and industrial.
Activity in most of these markets was subdued during the
past year and business confidence and trading conditions
appear challenging in the short term. However, there are still
a number of significant projects, particularly in infrastructure
and oil and gas, that are likely to proceed in the short to
medium term and these will provide opportunities for all
Korvest Group businesses. Korvest’s national footprint and
strong market position means that it is well placed to take
advantage of opportunities as they arise in these markets.

Korvest continues to have a strong balance sheet providing
the capacity for further growth by acquisition. Korvest would
consider taking on a prudent level of debt to fund suitable
acquisitions. In which case, as a guide, Korvest would look
to maintain a gearing ratio, measured as net debt/(net debt
plus equity), at below 25%.

Korvest has a long history of paying franked dividends.
Since July 2012 the Korvest dividend policy has been to
distribute 100% of after tax profits. This policy was adopted
due to the Group’s strong balance sheet, available franking
credits and the absence of a sizeable acquisition. The policy
remains in place for the 2013 final dividend. With the longer
term goal being to grow the business by acquisition the
dividend policy will continue to be monitored with these
factors in mind. Subject to future growth opportunities and
their funding requirements the longer term target dividend
payout ratio is in the 65-90% range.

PRINCIPAL ACTIVITIES AND
REVIEW OF OPERATIONS

The principal continuing activities of the Group consist
of hot dip galvanising, sheet metal fabrication, walkway
fabrication, manufacture of cable and pipe support systems
and fittings, design and assembly of access systems for
large mobile equipment and sale, repair and rental of high
torque tools.

The Group is comprised of the Industrial Products Group
which includes the EzyStrut and Indax businesses and
the newly acquired Power Step and Titan Technologies
businesses and the Production Group which includes the
Korvest Galvanisers and Korvest Manufacturing businesses.

In the Industrial Products group the EzyStrut cable and
pipe support business supplies products to contractors for
small industrial developments and also supplies products
for major infrastructure developments. In contrast to the
2012 financial year, 2013 was characterised by the lack of
significant project work. The demand for EzyStrut product
during the year came largely from the day-to-day market
however in the fourth quarter demand in this segment of the
market slowed. Whilst there are projects still in the pipeline
where EzyStrut products will be required, the experience of
FY2013 has been that these projects have been delayed or
deferred and are now expected to reach the supply stage
over the next 1-2 years.

Included in the Industrial Products group is the Indax
grating and handrail business. Indax experienced another
challenging year. Early in the second half the Queensland
fabrication operations were consolidated into the Kilburn
workshop after capacity was expanded following a site
reorganisation. This change was made to improve the
efficiency of the business by better utilising the Kilburn
based personnel and manufacturing facilities. Korvest
Galvanisers will benefit from the extra work through the
galvanising plant. Bringing that critical service within
the Korvest group enables customer lead times to be
improved. In June the business was further improved with
greater focus on efficiencies through lower overheads and
emphasis on leaner manufacturing. The results for the
Indax business were impacted on by the costs of closing
the Queensland facility, the June restructuring and a $265k
write off when the RPG Group went into administration.

In February 2013 Korvest purchased the Power Step and
Titan Technologies businesses. The two businesses were
purchased from the same vendor as a package.

Power Step designs and assembles access systems for
large mobile equipment. Power Step principally supplies
into the mining industry. In recent years Power Step has
developed a number of export markets including to South
America and Africa.

Titan Technologies supplies specialised tools in the form of
torque wrenches, hydraulic pumps and related accessories.
Titan distributes for a number of different manufacturers.
Titan also has a range of hire tools and pumps as well as a

service and repair facility at Archerfield in Queensland.

PRODUCTION

In the Production group the Galvanising business had
an improved year. The overall plant volumes for the main
zinc bath increased during the year. With a softening in
the Industrial Products segment the volumes contributed
by that part of the business decreased during the year.
However external customer volumes grew during the year
as the level of local projects continued to be strong together
with a number of local structural steel fabricators winning
projects around Australia and having the work galvanised at
the Korvest Adelaide plant.

RISK

During the year the Board and Management conducted a risk
review identifying and assessing the risks faced by the business
and the controls that are in place to mitigate those risks.

Operational risks identified relate principally to continuity of
supply and continuity of production. To ensure continuity
of supply Korvest monitors the performance of key
suppliers and establishes more than one supply source
for key products. For many bought in finished goods the
ability for the product to also be manufactured in-house
mitigates the risk.

Korvest has an in-house engineering and maintenance
department responsible for the continuity of production.
Key processes and items of plant are subjected to a robust
preventative maintenance programme. This has successfully
resulted in very low plant down-time over recent years.

Financial risks faced by the business are typical of those
faced by most businesses and centre around management
of working capital. In particular trade receivables and
inventory levels are constantly reviewed and performance
is monitored with key performance indicators on an
ongoing basis.

SIGNIFICANT CHANGES

In February 2013 Hills Finance Pty Ltd sold their 48%
interest in Korvest. At the time of the sale Hills Holdings
Limited (Hills) supplied to Korvest a number of services,
the most significant being the provision of information
technology infrastructure and administration. Hills have
agreed to continue to provide those services under the

same terms and conditions for such time as is necessary for
Korvest to transition to alternative providers.

The directors are not aware of any other significant changes
in the state of affairs of the Group that have occurred during
the financial year which have not been covered elsewhere in
this report.

EVENTS SUBSEQUENT TO REPORTING DATE

At the date of this report there is no matter or circumstance
that has arisen since 30 June 2013, that has significantly
affected, or may significantly affect:

i. the operations of the Group;

ii. the results of those operations; or

iii. the state of affairs of the Group;

in the financial years subsequent to 30 June 2013.

LIKELY DEVELOPMENTS

The Group will continue to pursue its policy of increasing
the profitability and market share of its major business
sectors during the next financial year. This will be done
by continuing to drive efficiencies in the manufacturing
processes with a focus on process cost reductions and
lead time improvements.

There will be a focus in all businesses on new product
development and also the introduction of complementary
products and services. New markets will also be
explored in the recently purchased Power Step and Titan
technologies businesses.

Korvest continues to look for growth by acquisition. The
types of business that are of interest include those that
provide vertical integration with existing Group businesses,
those that expand the product or service offering to the
Group’s existing customer base or those that may be
able to benefit from utilising the Group’s existing national
distribution network.

Operationally Korvest has projects in progress to transition
the information technology infrastructure and administration
away from Hills as well as to implement a new ERP system
for the Korvest group. These projects are expected to be
completed during the 2014 year.

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDFurther information about likely developments in the
operations of the Group and the expected results of those
operations in future financial years has not been included in
this report because disclosure of the information would be
likely to result in unreasonable prejudice to the Group.

DIRECTORS AND OFFICERS INSURANCE

Since the end of the previous financial year the Company
has paid insurance premiums in respect of directors’ and
officers’ liability and legal expenses insurance contracts, for
current and former directors and officers of the Company
and related entities. The insurance premiums relate to:

a. costs and expenses incurred by the relevant

officers in defending proceedings, whether civil or
criminal and whatever their outcome; and

b. other liabilities that may arise from their position,
with the exception of conduct involving a wilful
breach of duty or improper use of information or
position to gain a personal advantage.

The premiums were paid in respect of all of the directors and
officers of the Company. The directors have not included
details of the nature of the liabilities covered or the amount
of the premium paid in respect of the directors’ and officers’
liability and legal expenses insurance contracts, as such
disclosure is prohibited under the terms of the contract.

REMUNERATION REPORT - AUDITED

PERFORMANCE LINKED COMPENSATION

PRINCIPLES OF COMPENSATION

Remuneration is referred to as compensation throughout
this report.

Key Management Personnel (KMP) have authority and
responsibility for planning, directing and controlling the
activities of the Group, including directors of the Company
and other executives. Key management personnel comprise
the directors and senior executives of the Group.

Compensation levels for key management personnel are
competitively set to attract and retain appropriately qualified
and experienced directors and executives.

The compensation structures explained below are
designed to attract suitably qualified candidates, reward
the achievement of strategic objectives, and achieve the
broader outcome of creation of value for shareholders. The
compensation structures take into account:

a. the capability and experience of the key

management personnel

b. the key management personnel’s ability to control

performance; and

c. the Group’s performance including the Group’s

earnings.

FIXED COMPENSATION

Fixed compensation consists of base compensation (which
is calculated on a total cost basis), as well as employer
contributions to superannuation funds.

Compensation levels are reviewed annually by the
remuneration committee.

Non-executive directors receive a fixed fee. The total
remuneration for all non-executive directors was last voted
upon by shareholders at the AGM held on 16 October
2009 and is not to exceed $200,000. At the 2013 AGM
shareholders will be asked to approve an increase in
the pool to $450,000 to accommodate adjustments to
non-executive director fees to bring them in line with
market rates and to allow for an increase in the number of
independent, non-executive directors to broaden the skill
set of the board.

Performance linked compensation includes both short-
term and long-term incentives, and is designed to reward
key management personnel for meeting or exceeding their
financial and personal objectives. The short-term incentive
(STI) is an ‘at risk’ cash bonus, while the long-term incentive
(LTI) is provided as performance rights under the rules of the
Korvest Performance Rights Plan.

SHORT-TERM INCENTIVE BONUS

The key performance indicators (KPIs) for the key
management personnel are set annually. The KPIs include
measures relating to financial and operating performance,
safety, strategy and risk measures.

The financial performance objective is earnings before
interest and tax (EBIT) compared to budgeted amounts.
The KPI’s are chosen as they directly align the individual’s
reward to the KPI’s of the Group and to its strategy and
performance. The non-financial objectives vary with position
and responsibility and include measures such as achieving
strategic outcomes, safety and environmental performance
and delivery in full and on time (DIFOT).

LONG-TERM INCENTIVE BONUS

Performance rights are issued under the Korvest
Performance Rights Plan to employees (including key
management personnel) as determined by the remuneration
committee. Performance rights become vested
performance rights if the Group achieves its performance
hurdle. If rights become vested performance rights and do
not lapse, the holder is able to acquire ordinary shares in
the Company for no cash payment.

The performance hurdle relates to growth in basic earnings
per share (EPS). EPS performance is measured in total over
a three year period. The performance hurdle is tested once
at the completion of the three year vesting period. The %
growth is based on a base year which is the year prior to
the commencement of the vesting period. The table below
sets out the % of rights that vest depending on the level of
EPS growth achieved.

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDCOMPOUND ANNUAL
EPS GROWTH OVER 3 YR
VESTING PERIOD

Less than 10%

10%

% OF RIGHTS THAT VEST

Nil

33.3%

The Board is satisfied that the remuneration committee is
able to make a decision on remuneration levels without
undue influence by the members of the KMP about whom
the recommendations may relate.

Between 10% - 15%

Pro rata between 33.3 – 100%

NON-EXECUTIVE DIRECTORS

15% or greater

100%

The EPS objective was chosen because it is a good
indicator of the Group’s earning’s growth and is aligned to
shareholder wealth objectives.

The Company’s securities trading policy prohibits those
that are granted share-based payments as part of their
remuneration from entering into other arrangements that
limit their exposure to losses that would result from share
price decreases. Entering into such arrangements has been
prohibited by law since 1 July 2011.

SERVICE CONTRACTS

It is the Group’s policy that service contracts for all key
management personnel are unlimited in term but capable
of termination by providing 1 to 3 months’ notice, and
that the Group retains the right to terminate the contract
immediately by making payment in lieu of notice. The Group
has entered into a service contract with each executive key
management person.

The current base fees became effective on 1 March 2012
and are:

Chairman ............................................................... $60,500

Director ................................................................. $36,300

Since May 2013 the Chairman of the Audit Committee
receives a further $10,000 p.a.

Superannuation is added to these fees where appropriate.

Non-executive directors do not receive performance-related
compensation.

At the 2013 AGM shareholders will be asked to approve
an increase in the directors’ fees pool to $450,000. It is
intended that the directors’ fees will be increased to the
following levels to more accurately reflect market rates.

The key management personnel are also entitled to receive
on termination of employment their statutory entitlements
and accrued annual leave and long service leave, as
well as any entitlement to incentive payments and
superannuation benefits.

Chairman ............................................................. $120,000

Director ................................................................. $60,000

Chairman - Audit Committee ................................ $10,000

SERVICES FROM REMUNERATION CONSULTANTS

The remuneration committee has not engaged the services
of any remuneration consultants. The remuneration
committee determines the level of remuneration for senior
executives of the Group. The members of the remuneration
committee use their experience and knowledge to
determine appropriate compensation packages for the
senior executives.

The remuneration committee consists entirely of non-
executive directors.

CONSEQUENCES OF PERFORMANCE ON SHAREHOLDER WEALTH

In considering the Group’s performance and benefits for
shareholder wealth, the remuneration committee have
regard to the indices set out in the 5 Year Summary on
page 29.

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDREMUNERATION REPORT (CONTINUED)

DIRECTORS AND EXECUTIVE REMUNERATION

Details of the nature and amount of each major element of remuneration of each director of the Company, and other key
management personnel of the Group are:

NAME

DIRECTORS

P.W. Stancliffe

Non-executive (Chairman)

G.L. Twartz (retired 2 Sept 2012)

Non-executive (Director)

P. Brodribb

Non-executive (Director)

G Billings (appointed 2 May 2013)

Non-executive (Director)

E Pretty (appointed 2 Sept 2012,
retired 25 March 2013)

Non-executive (Director)

A.H.W. Kachellek

Executive (Managing Director)

S.J.W. McGregor

Executive (Finance Director)

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

2013

2012

SHORT TERM

POST EMPLOYMENT

SALARY &
FEES $

BONUS $

SUPERANNUATION
BENEFITS $

OTHER LONG TERM –
LONG SERVICE LEAVE $ *

SHARE BASED
PAYMENTS
SHARES $

SHARE BASED PAYMENTS
OPTIONS & RIGHTS $

TOTAL $

S300A (1)(e)(i)
PROPORTION OF
REMUNERATION
PERFORMANCE RELATED %

S300A (1)(e)(vi) VALUE OF
OPTIONS AS PROPORTION
OF REMUNERATION %

60,500

56,833

6,050

34,100

36,300

34,100

7,579

21,175

275,006

59,140

250,005

138,622

230,005

215,004

20,000

5,000

5,445

5,115

3,267

3,069

682

27,578

33,472

22,103

19,350

8,800

26,033

14,077

11,590

5,635

41,168

262

26,357

65,945

61,948

6,050

34,100

39,567

37,169

8,261

21,175

376,159

489,300

286,447

277,301

15.7

28.3

7.0

1.8

* This represents the accounting expense relating to the provision for long service leave. It does not represent cash
payments or statutory obligations.

1.5

8.4

0.1

9.5

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD
REMUNERATION REPORT (CONTINUED)

DIRECTORS AND EXECUTIVE REMUNERATION (CONTINUED)

NAME

EXECUTIVES / OTHER KMP

C.A. Hartwig

General Manager EzyStrut

S.W. Evans

General Manager Galvanising

A. P. Ifkovich

General Manager Indax

P Assaf (since 1 March 2013) 1

General Manager Power Step &
Titan Technologies

SHORT TERM

POST EMPLOYMENT

SALARY &
FEES $

BONUS $

SUPERANNUATION
BENEFITS $

OTHER LONG TERM –
LONG SERVICE LEAVE $ *

TERMINATION
BENEFIT $ (INCL LEAVE
ENTITLEMENTS PAID
ON TERMINATION)

SHARE
BASED
PAYMENTS
SHARES $

SHARE BASED
PAYMENTS OPTIONS &
RIGHTS $

TOTAL $

S300A (1)(e)(i)
PROPORTION OF
REMUNERATION
PERFORMANCE RELATED %

S300A (1)(e)(vi) VALUE OF
OPTIONS AS PROPORTION
OF REMUNERATION %

2013

2012

2013

2012

2013

2012

2013

2012

220,004

63,239

205,004

106,218

180,004

161,003

173,773

166,403

65,333

49,352

44,188

9,823

24,237

29,199

19,523

18,079

20,096

14,976

5,880

7,887

22,685

9,823

2,350

(313)

313

2,916

83,660

990

996

990

497

494

1,026

317,383

27,911

392,013

259,692

10,438

236,555

(10,438)

277,095

10,438

192,130

74,129

19.9

27.1

19.0

18.7

3.5

* This represents the accounting expense relating to the provision for long service leave. It does not represent cash
payments or statutory obligations.

1. P Assaf became a member of KMP effective from 1 March 2013 following the acquisition of Power Step and Titan
Technologies. This note only contains his remuneration from 1 March 2013.

0.3

7.1

4.4

(3.8)

5.4

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD
REMUNERATION REPORT (CONTINUED)

OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION

Details on performance rights that were granted as compensation to each key management person during the reporting
period and details on options that vested during the reporting period are as follows:

NUMBER OF
PERFORMANCE
RIGHTS GRANTED
DURING THE YEAR

GRANT DATE

FAIR VALUE PER
OPTION AT GRANT
DATE ($)

EXPIRY DATE

NUMBER OF
PERFORMANCE
RIGHTS/OPTIONS
VESTED DURING 2013

25,000

20,000

15,000

7,500

2-Nov-12

4.73

30-Jun-15

DIRECTORS

A Kachellek

S McGregor

EXECUTIVES

C Hartwig

S Evans

A Ifkovich

All performance rights have a nil exercise price.

All performance rights expire on the earlier of their expiry date or termination of the individual’s employment. The
performance rights are exercisable for one year after the conclusion of the vesting period. In addition to the continuing
employment service condition, the ability to exercise performance rights is conditional on the Group achieving performance
hurdles. Details of the performance criterion are included in the long-term incentives discussion on page 17.

No equity-settled share-based payment transaction terms (including performance rights granted as compensation to key
management personnel) have been altered or modified by the Group during the reporting period or the prior period.

EXERCISE OF OPTIONS GRANTED AS COMPENSATION

During the reporting period no shares were issued on the exercise of options previously granted as compensation.

ANALYSIS OF OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION

Details of vesting profiles of the options granted as remuneration to each director and key executive of the Company are
detailed below:

OPTIONS GRANTED

NUMBER

DATE

% VESTED IN CURRENT
YEAR

% FORFEITED OR
LAPSED IN CURRENT
YEAR

YEAR IN WHICH
GRANT VESTS

DIRECTORS

A Kachellek

S McGregor

EXECUTIVES

C Hartwig

S Evans

A Ifkovich

30,000*

35,000

25,000

15,000*

25,000

20,000

10,000*

25,000

15,000

10,000

7,500

10,000

7,500

Mar-09

Nov-11

Nov-12

Apr-10

Nov-11

Nov-12

Mar-09

Nov-11

Nov-12

Nov-11

Nov-12

Nov-11

Nov-12

100%

30-Jun-11

30-Jun-14

30-Jun-15

30-Jun-11

30-Jun-14

30-Jun-15

30-Jun-11

30-Jun-14

30-Jun-15

30-Jun-14

30-Jun-15

30-Jun-14

30-Jun-15

* - These options were issued under the previous Korvest Ltd Executive Share Plan. They vested during the year ended
30 June 2011 and were exercised in January 2011. Restricted ordinary shares were issued at an exercise price of $3.79
per share. Under the terms of the previous Korvest Ltd Executive Share Plan upon exercise of the options the individual
must pay the exercise price over a maximum term of 20 years. Dividends, after deduction of an amount intended for the
participant’s tax, are applied in payment of the exercise price. The arrangement to pay the exercise price over 20 years is
interest free and without personal recourse to the participants (recourse is limited to the shares themselves). As a result of
these arrangements, under AASBs, the instruments are treated as options until such time as the associated non-recourse
loan is fully repaid. The shares remain restricted from transfer until the completion of a 5 year service period from grant date
and until such time as the loan is fully paid.

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDREMUNERATION REPORT (CONTINUED)

ANALYSIS OF MOVEMENTS IN OPTIONS AND RIGHTS

The movement during the reporting period, by value, of options over ordinary shares in the Company held by each company
director and KMP are detailed below.

DIRECTORS’ INTERESTS

The relevant interest of each director over the shares and rights or options over such instruments issued by the Company
and other related bodies corporate. As notified by the directors to the Australian Securities Exchange in accordance with
S250G(1) of the Corporations Act 2001, at the date of this report is as follows:

DIRECTORS

A Kachellek

S McGregor

EXECUTIVES

C Hartwig

S Evans

A Ifkovich

GRANTED IN YEAR $ (A)

EXERCISED IN YEAR $

LAPSED OR FORFEITED IN YEAR $ (B)

VALUE OF RIGHTS/OPTIONS

118,357

94,685

71,014

35,507

66,821

A. The value of performance rights granted in the year is the fair value of the options calculated at grant date using

the Black Scholes option-pricing model. The total value of the options granted is included in the table above. This
amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2012 to 1 July 2015).

B. The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date the
option lapsed using the Black Scholes option-pricing model assuming the performance criteria had been achieved

Further details regarding options granted to executives under the Executive Share Plan are in Notes 21 and 28 to the
financial statements.

KORVEST LTD ORDINARY SHARES

KORVEST LTD ORDINARY SHARES
SUBJECT TO NON-RECOURSE LOAN

KORVEST LTD PERFORMANCE
RIGHTS

4,600

1,495

15,781

500

30,000

15,000

60,000

45,000

Peter Stancliffe

Alexander Kachellek

Peter Brodribb

Graeme Billings

Steven McGregor

NON-AUDIT SERVICES

During the year KPMG, the Group’s auditor, has performed certain other services in addition to their statutory duties. The
Board has considered the non-audit services provided during the year by the auditor and in accordance with written advice
provided by resolution of the Audit Committee, is satisfied that the provision of these services did not compromise the
auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services were subject to the corporate governance procedures adopted by the Group; and

• the non-audit services provided do not undermine the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the
auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for
the Group or jointly sharing risk and rewards.

ANALYSIS OF BONUSES INCLUDED IN REMUNERATION

For details of non-audit services fees charged refer to Note 11 to the financial statements.

With the exception of the Finance Director, executive bonuses are paid based on either Group earnings before interest
and taxation (EBIT) or divisional EBIT depending on the responsibilities of the individual executive. A percentage of EBIT
is determined at the beginning of the year based on budgets. This percentage is then applied to actual EBIT achieved.
Potential bonuses paid to executives under this methodology are not capped and therefore Korvest is unable to disclose the
% of short term incentives that vested or were forfeited.

The Finance Director’s bonus is based on achievement of specified outcomes during the year. For the 2013 year there were
two outcomes. One in relation to system implementations and one in relation to acquisitions. Based on the performance
during the year 100% of the bonus was paid.

LEAD AUDITOR’S INDEPENDENCE DECLARATION

The lead auditor’s independence declaration is set out on page 86 and forms part of the Directors’ report for the financial
year ended 30 June 2013.

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDROUNDING OFF

The Company is of a kind referred to in ASIC Class Order
98/100 dated 10 July 1998 and in accordance with that
Class Order, amounts in the financial report and Directors’
report have been rounded off to the nearest thousand
dollars, unless otherwise stated.

Signed at Adelaide this Friday 26th of July 2013 in
accordance with a resolution of the directors.

P. W. STANCLIFFE
DIRECTOR

A. H. W. KACHELLEK
DIRECTOR

5 YEAR SUMMARY FOR THE YEAR ENDED 30 JUNE 2013

KORVEST LTD

5 YEAR SUMMARY

SALES REVENUE

PROFIT AFTER TAX

DEPRECIATION/AMORTISATION

CASH FLOW FROM OPERATIONS

PROFIT FROM ORDINARY ACTIVITIES

- As % of Shareholders’ Equity

- As % of Sales Revenue

- Per issued share

DIVIDEND

- Total amount paid

- Per issued share

- Times covered by profit from ordinary activities

EARNINGS PER SHARE

NUMBER OF EMPLOYEES

SHAREHOLDERS

- Number at year end

NET ASSETS PER ISSUED ORDINARY SHARE

NET TANGIBLE ASSETS PER ISSUED ORDINARY SHARE

SHARE PRICE AS AT 30 JUNE

2013

2012

2011

2010

2009

($'000)

61,723

72,322

67,384

55,774

62,892

($'000)

3,825

1,653

7,524

6,201

1,542

8,681

4,221

1,279

3,185

3,983

1,060

3,864

5,655

985

7,590

($'000)

10.8% 17.10% 12.70% 13.20% 19.50%

6.2%

44.0c

4,863

56.0c

0.8

44.0c

217

1,627

$4.01

$3.77

$5.80

8.60%

6.30%

7.10%

9.00%

71.4c

48.9c

46.3c

65.8c

3,299

38.0c

1.9

71.6c

259

1,271

$4.13

$4.65

2,244

26.0c

1.9

48.9c

242

1,247

$3.79

$3.57

2,921

32.0c

1.4

46.3

221

1,165

$3.49

$4.65

2,660

34.0c

2.1

65.9

204

1,094

$3.36

$3.70

DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDCORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2013

KORVEST LTD

This statement outlines the main corporate governance
practices in place throughout the financial year, which
comply with the ASX Corporate Governance Council
recommendations, unless otherwise stated.

PRINCIPLE 1 - LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT

The Group complies with the ASX recommendation
of recognising and publishing the respective roles and
responsibilities of the Board and senior executives
(Recommendation 1.1).

The Board’s primary role is the protection and enhancement
of long-term shareholder value. The Board believes that good
corporate governance is essential to fulfilling its role and that
it positively contributes to long-term shareholder value.

The Board delegates responsibility for the day-to-day
management of the Group to the Managing Director and
senior executives, but remains responsible for overseeing
the performance of the management team. To ensure that
this responsibility is clearly defined, the Board has delegated
a range of authorities to management through formal
delegations. These include limited expenditure authority
along with the limited authority to enter into contracts and
engage staff.

In general, the Board is responsible for, and has the authority
to determine, all matters relating to the policies, practices,
management and operations of the Group. It is required to
do all things that may be necessary to be done in order to
carry out the objectives of the Group. The Board has the
final responsibility for the successful operations of the Group.
Without intending to limit this general role of the Board, the
specific or principal functions and responsibilities include:

• Acting as an interface between the Group and

shareholders;

• Setting the goals of the Group;

• Reviewing the annual progress and performance

of the Group in meeting its objectives;

• Providing the overall strategic direction of the Group;

• Determining policies governing the operations of

the Group;

• Appointing and approving the terms and

conditions of the appointment of the Managing
Director (MD);

• Reviewing and providing feedback on the

performance of the MD;

• Endorsing the terms and conditions for senior
executives reporting to the MD through the
Remuneration Committee;

• Establishing and determining the powers and

functions of the committees of the Board, including
the Audit and the Remuneration Committee;

• Approving major operating plans;

• Approving the annual budget and long-term budgets;

• Board approval of all banking facilities;

• Approving all significant items of capital expenditure;

• Approving all significant operational expenditures

outside budget;

• Approving all mergers and acquisitions, and

property acquisitions and disposals;

• Approving the issue or cancellation of shares;

• Approving all significant loans to outside parties or

employees;

• Approving half-yearly and yearly accounts;

• Keeping the market informed about Korvest in

accordance with ASX rules;

• Reviewing its own performance;

• Resolution of major issues of material nature

affecting the organisation;

• Approving management reporting processes and

documentation;

• Approving all significant contracts, leases and

other company commitments; and

• Ensuring that all requirements of the ASX, ASIC,

ACCC, ATO and other relevant legislation are met.

A copy of the Board Charter and responsibilities is available
on the Company website at www.korvest.com.au

EXECUTIVE PERFORMANCE

The Managing Director reviews the performance of senior
executives regularly via a formal performance management
process. The executives are assessed on their performance
against specified performance objectives. During the
reporting period each senior executive has undertaken
this process with the Managing Director. The Managing
Director’s performance is reviewed annually by the
Chairman and a review was undertaken during the reporting
period.

PRINCIPLE 2 - STRUCTURE THE BOARD TO
ADD VALUE

ASX recommends the Company have a Board of an
effective composition, size and commitment to adequately
discharge its responsibilities and duties. Whilst Hills Finance
Pty Ltd was the major shareholder the Company did not
comply with all aspects of this Principle. Since the sale of
the Hills Finance Pty Ltd shareholding on 19 February 2013
the Company has complied with this Principle. The details
are set out below.

BOARD COMPOSITION

The Company constitution allows for a maximum of ten
directors. The Company Board currently comprises five
directors, three being non-executive directors plus the
Managing Director and Finance Director. The directors
come from a variety of business and professional
backgrounds and bring to the Board a range of skills
and experience relevant to the Company. Details of the
directors’ experience, expertise and terms in office are set
out on page 10 of this annual report.

BOARD INDEPENDENCE

While Hills Finance Pty Ltd was the major shareholder the
non-executive directors Messrs Stancliffe, Twartz and Pretty
were non-independent due to their positions as directors
at Hills Holdings Limited. Mr P. Brodribb is considered
non-independent due to his former position of Managing
Director of Korvest.

Since the sale of the Hills Finance Pty Ltd shareholding Mr
Stancliffe is now an independent director. Mr Billings is an
independent director.

The Board believes that the first priority in the selection
of directors is their ability to add value to the Board and
enhance the performance while safeguarding shareholders’
interests. Accordingly, relevant expertise and competence is
considered as important as technical independence.

The skills and experience of each director is set out in the
Director’s report.

THE ROLE OF THE CHAIRMAN

ASX recommendation 2.2 has been complied with since
February 2013 when the Hills Finance Pty Ltd major
shareholding ceased. Since then the Chairman, Mr P W
Stancliffe has been an independent non-executive director.
Prior to that he was considered to be non-independent
which therefore meant that ASX recommendation 2.2 was
not complied with. Mr Stancliffe’s considerable experience
in the various industries within which the Company operates
and the various positions and activities engaged in outside
the entity are considered invaluable in his role as Chairman.

In accordance with Recommendation 2.3 the roles of
Chairman and CEO are not held by the same person with Mr
A Kachellek being the Managing Director for the Company.

NOMINATION COMMITTEE

The Board has not established a Nomination Committee
due to the size of the Company. The Chairman, in
conjunction with other directors fulfils the tasks normally
delegated to a Nomination Committee.

A director appointed to fill a casual vacancy must stand
for election at the next Annual General Meeting. One third
of the non-executive directors must retire at each Annual
General Meeting, being those longest in office since their
last election. Those directors are eligible for re-election at
that meeting.

BOARD PERFORMANCE

The Company’s Board informally reviews the operations
of the Board and its committees and the performance of
its individual directors. The Board has also formalised a
process for the induction of new directors to ensure they
are provided with the information required to properly
perform their role.

BOARD OPERATIONS

During 2013 the Board met 13 times and the directors’
attendance at those meetings is set out on page 5 of this
annual report. The directors receive a comprehensive
Board pack, which includes financial statements and
executive reports. The Chairman and the Managing Director
communicate regularly between Board meetings. Senior
executives attend and present to Board and committee
meetings on particular issues when required.

All directors have unrestricted access to company records,
information and personnel and the Board has a policy
of allowing individual directors to seek independent
professional advice at the Company’s expense, subject to
the approval of cost by the Chairman. Such approval shall
not be unreasonably withheld.

PRINCIPLE 3 - PROMOTE ETHICAL AND
RESPONSIBLE DECISION-MAKING

The Company complies with the ASX recommendation
that the Company actively promote ethical and responsible
decision making.

While the Board has adopted those ASX principles of
good corporate governance that it has deemed pertinent,
it believes that these types of rules and regulations are of
limited value unless supported by a foundation of honesty
and integrity.

The Board has adopted a formal (written) Code of Conduct
for Korvest, effectively a corporate creed that is best
applied by asking “What is the right thing to do?” The code
applies to all employees within the Company from the
Board, through management to all other staff. The code
encourages all staff and other stakeholders to report any
breaches of the code to the Chairman of the Board, who is
required to investigate and report on all such matters.

The Code of Conduct is supported by more detailed
policies setting out the philosophy of the Company in
relation to its various stakeholders. A copy of the code is
available on the website at www.korvest.com.au.

DIVERSITY POLICY

Korvest is committed to creating a diverse workplace that is
fair and flexible, promotes personal and professional growth
and enables employees to enhance their contribution to

Korvest by drawing from their different backgrounds, beliefs
and experiences. Korvest has developed a diversity policy, a
copy of which can be found on the Korvest website.

The policy provides guidance for the development and
implementation of relevant plans, programs and initiatives to
recognise and promote gender workforce diversity across
all areas of the Korvest business.

The Board is responsible for setting specific gender diversity
objectives and a range of metrics designed to measure the
achievement of those objectives.

The Board is responsible for assessing, on an annual basis,
the objectives and the progress of the achievement against
Korvest’s gender diversity objectives. In accordance with
this policy and the ASX Corporate Governance Principles,
the Board has established the following objectives in relation
to gender diversity. The aim is to achieve these objectives
over the coming 3 years as positions become vacant and
appropriately skilled candidates are available.

OBJECTVITE

ACTUAL

% NUMBER

25%

35%

21 31%

10%

21 10%

Number of women in senior
management positions

Number of women in
administration/sales positions

Number of women employees
in the whole organisation

The Company has lodged the annual report required under
the Workplace Gender Equality Act 2012 and a copy of the
report is available on the Korvest website.

SHARE DEALINGS BY DIRECTORS AND OFFICERS

In accordance with the Company’s constitution, all directors
are required to be shareholders and hold a minimum of
500 shares within two months of their appointment. The
Company has for many years encouraged the holding of its
shares by directors and employees.

The Board has adopted a securities trading policy that
specifically precludes directors and officers from buying or
selling shares during specified black out periods relative to
the announcement of the annual or half-year results or if in

possession of price sensitive information not generally available
to the public. Employees are not to deal in shares on a short
term basis. A copy of the policy is available on the Korvest
website and details of directors’ individual shareholdings are
set out in Note 28 to the financial statements.

PRINCIPLE 4 - SAFEGUARD INTEGRITY IN
FINANCIAL REPORTING

The Company complies with the ASX recommendation
that a structure be in place to independently verify and
safeguard the integrity of the Company’s financial reporting.

COMMITMENT TO FINANCIAL INTEGRITY

The Board has policies designed to ensure that the
Company’s financial reports meet high standards of
disclosure and provide the information necessary to
understand the Company’s financial performance and
position. The policies require that the Managing Director
and Finance Director provide to the Board prior to the
Board approving the annual and half-year accounts, a
written statement that the accounts present a true and fair
view, in all material respects, of the Company’s financial
performance and position and are in accordance with
relevant accounting standards, laws and regulations.

AUDIT COMMITTEE

The Board has an Audit Committee. The committee has a
Board approved charter setting out its role, responsibilities,
structure and membership requirements. A copy of its
charter can be found on the Korvest website.

The committee consists of three directors, all of whom are
non-executive and two of the three are also independent.
The Chairman of the committee is an independent director
who is not the Chairman of the Board. The composition
of the committee is therefore in accordance with ASX
recommendation 4.2. The Managing Director, Finance
Director and external auditors are invited to attend
the committee meetings. Details of membership and
attendance at committee meetings are set out on page 12
of this annual report.

AUDIT PROCESS

The Company’s financial accounts are subject to an annual
audit by an independent, professional auditor, who also
reviews the half-year accounts. The Board requests the
external auditor to attend the Annual General Meeting each

year and to be available to answer shareholder questions
regarding the conduct of the audit and the preparation and
content of the auditor’s report.

AUDITOR INDEPENDENCE

The Board has in place policies for ensuring the quality
and independence of the Company’s external auditor. The
majority of fees paid to the external audit firm for work other
than the audit of the accounts were for taxation services.
Details of the amounts paid for both audit and non-audit
services are set out in Note 11 of this annual report. The
Board requires that adequate hand-over occurs in the year
prior to rotation of an audit partner to ensure an efficient
and effective audit under the new partner.

RISK MANAGEMENT AND OVERSIGHT

The Managing Director is charged with implementing
appropriate risk systems within the Company. He includes
in his report to the Board any issues or concerns.

The Board reviews all major strategies for their impact on
the risks facing the Company and takes appropriate action.
Similarly, the Company reviews all aspects of its operations
for changes to the risk profile on an annual basis.

PRINCIPLE 5 - MAKE TIMELY AND
BALANCED DISCLOSURE

The Company complies with the ASX recommendations
that the Company should promote timely and balanced
disclosures of all material matters concerning the Company.

The Board has established continuous disclosure controls
to ensure compliance with ASX Listing Rules. The Company
Secretary is responsible for ensuring that all matters
requiring disclosure are duly disclosed.

PRINCIPLE 6 - RESPECT THE RIGHTS
OF SHAREHOLDERS

The Company complies with the ASX recommendations
that the Company should respect the rights of shareholders
and facilitate the effective exercise of those rights.

The Board is committed to ensuring that shareholders
are informed of all non-confidential material matters. It
accomplishes this through:

CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD• the annual report distributed during September

COMMITMENT TO RESPONSIBLE EXECUTIVE REMUNERATION

each year and posted on the Korvest website; and

• making appropriate disclosure to the market

where necessary.

In May 2013 the company held a shareholder information
day and site tour at the Kilburn site.

Shareholders are encouraged to attend the Annual General
Meeting where the Board is available to answer questions
raised by shareholders.

PRINCIPLE 7 - RECOGNISE AND MANAGE RISK

The Company complies with the ASX recommendation
that the Company should establish a sound system of risk
oversight and management and internal control.

The Audit Committee oversees the operation of the risk
management controls established by the Company. The
Company’s approach to internal audit is to compile and
regularly review and update a risk register. The controls in
place to mitigate those identified risks are then the subject
of internal audit reviews to analyse their effectiveness.

In accordance with recommendation 7.3 the Managing
Director and Finance Director have declared, in writing
to the Board, that the financial risk management and
associated compliance and controls have been assessed
and found to be operating efficiently and effectively. The
operational and other risk management compliance
and controls, have also been assessed and found to be
operating efficiently and effectively. All risk assessments
covered the whole financial year and the period up to
the signing of the annual financial report for all material
operations in the Company.

PRINCIPLE 8 - REMUNERATE FAIRLY
AND RESPONSIBLY

The ASX recommendation is that the Company should
ensure that the level and composition of remuneration
is sufficient and reasonable and that its relationship to
corporate and individual performance is defined.

The Company has complied with this Principle during
the reporting period. For further information see the
Remuneration report in the Directors’ report.

The Board believes that it has a responsibility to ensure that
executive remuneration is fair and reasonable, having regard
to the competitive market for executive talent, structured
effectively to motivate and retain valued executives and
designed to produce value for shareholders.

REMUNERATION COMMITTEE

The Remuneration Committee sets policies for directors’
and senior executives’ remuneration, makes specific
recommendations to the Board on the remuneration of
directors and senior officers and undertakes a detailed
review of the performance of the Managing Director at
least annually. The committee consists of three non-
executive directors. Two of the three members of the
Remuneration Committee are independent directors. Details
of membership and attendance at committee meetings are
set out on page 12 of this annual report.

DIRECTORS’ REMUNERATION

The remuneration of non-executive directors is different
from that of executives. Executive directors receive a salary,
short term incentives and long term incentives in the form
of shares or options in accordance with plans approved
by shareholders. Further details in respect of executive
remuneration are set out on pages 17 to 26 of this report.

Non-executive directors receive a set fee per annum
and are fully reimbursed for any out of pocket expenses
necessarily incurred in carrying out their duties. They do not
receive any performance related remuneration, nor shares
or options as part of their remuneration.

When reviewing directors’ fees, the Board takes into
account any changes in the size and scope of the
Company’s activities, the potential liability of directors
and the demands placed on them in discharging their
responsibilities.

RETIREMENT BENEFITS

Directors receive their statutory superannuation
entitlements only.

OTHER ITEMS

INDEMNITY AND INSURANCE OF DIRECTORS

In accordance with the Company’s constitution and to the
extent permitted by law, the Company indemnifies every

person who is, or has been, a director or secretary and may
agree to indemnify a person who is or has been an officer
of the Company against a liability incurred by that person in
his or her capacity as such a director, secretary or officer, to
another person (other than the Company or a related body
corporate of the Company) provided that the liability does
not arise out of conduct involving a lack of good faith. In
addition, the Company has directors and officers insurance
against claims and expenses that the Company may be
liable to pay under these indemnities.

COMMITMENT TO ITS STAFF

The Company aspires to be a well regarded and progressive
employer that provides safe and rewarding workplaces for
its entire staff so that they can fully contribute their talents to
the achievement of corporate goals.

The Company encourages its staff to become shareholders
and share in the success of the Company. The current
employee share plan offers all permanent staff with more than
two years continuous service ordinary shares in the Company.

The Company is committed to protecting the health,
safety and wellbeing of its staff, contractors and visitors to
its premises.

COMMITMENT TO THE ENVIRONMENT

The Company cares about the environment and recognises
that protection of it is an integral and fundamental part
of its business. The Company has an environmental
management system in place and management assists staff
to understand and implement the relevant aspects of this
system in their day-to-day work. Environmental compliance
is monitored with relevant issues being reported through
management to the Board.

COMMITMENT TO THE COMMUNITY

The Board believes that the Company has a responsibility to
the Australian, South Australian and local community. The
Company aspires to be a good corporate citizen through the
effective provision of quality products and services, through
the taxes it pays, the employment and training it provides its
staff, the involvement of its staff in professional, educational
and community organisations and through the donations it
makes to various charities. The Company is justifiably proud
of its reputation as a dependable Australian entity.

CORPORATE GOVERNANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDCONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2013

KORVEST LTD

FOR THE YEAR ENDED 30 JUNE 2013

KORVEST LTD

IN THOUSANDS OF AUD

Revenue

Expenses, excluding net finance costs

PROFIT BEFORE FINANCING COSTS

Finance income

Finance expenses

NET FINANCE INCOME

PROFIT BEFORE INCOME TAX

Income tax expense

PROFIT FOR THE YEAR

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

ATTRIBUTABLE TO:

Equity holders of the Company

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

EARNINGS PER SHARE ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF
THE COMPANY:

Basic earnings per share from continuing operations

Diluted earnings per share from continuing operations

NOTE

2013

61,723

(56,386)

5,337

125

(5)

120

2012

72,322

(63,733)

8,589

148

5,457

8,737

(1,632)

3,825

CENTS

44.0

43.6

(2,536)

6,201

CENTS

71.6

71.3

The notes on pages 40 to 81 are an integral part of these consolidated financial statements.

IN THOUSANDS OF AUD

ASSETS

Cash and cash equivalents

Trade and other receivables

Inventories

Tax receivable

TOTAL CURRENT ASSETS

Property, plant and equipment

Intangible assets and goodwill

TOTAL NON-CURRENT ASSETS

TOTAL ASSETS

LIABILITIES

Trade and other payables

Loans and borrowings

Employee benefits

Provisions

Current tax liabilities

TOTAL CURRENT LIABILITIES

Employee benefits

Deferred tax liability

Provisions

TOTAL NON-CURRENT LIABILITIES

TOTAL LIABILITIES

NET ASSETS

EQUITY

Issued capital

Reserves

Retained earnings

TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

TOTAL EQUITY

The notes on pages 40 to 81 are an integral part of these consolidated financial statements.

NOTE

2013

2012

14A

2,438

12,534

9,506

24,528

17,509

2,114

19,623

44,151

5,230

167

1,812

169

7,378

624

455

333

1,412

8,790

35,361

3,859

31,502

35,361

5,170

14,779

8,683

28,632

17,381

46,013

5,078

1,557

1,428

8,063

404

886

333

1,623

9,686

36,327

3,783

4,387

28,157

36,327

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013

KORVEST LTD

IN THOUSANDS OF AUD

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers

Cash paid to suppliers and employees

Cash generated from operations

Interest received

Interest paid

Income taxes paid

NET CASH FROM OPERATING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment

Acquisition of subsidiary, net of cash acquired

Acquisition of property, plant and equipment

NET CASH FROM INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of share capital

Payment of finance lease liabilities

Dividends paid

NET CASH FROM FINANCING ACTIVITIES

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at 1 July

NOTE

2013

2012

70,640

(60,282)

10,358

125

(1)

(2,958)

7,524

(3,938)

(1,502)

(5,411)

(4)

(4,862)

(4,845)

(2,732)

5,170

80,154

(70,042)

10,112

148

(1,579)

8,681

(1,823)

(1,807)

(3,299)

(3,281)

3,593

1,577

14B

CASH AND CASH EQUIVALENTS AT 30 JUNE

14A

2,438

5,170

The notes on pages 40 to 81 are an integral part of these consolidated financial statements.

IN THOUSANDS OF AUD

Balance at 1 July 2012

Total comprehensive income for the
year

Profit

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

TRANSACTIONS WITH OWNERS OF THE
COMPANY RECOGNISED DIRECTLY IN EQUITY

CONTRIBUTIONS BY AND DISTRIBUTIONS TO
OWNERS OF THE COMPANY

Shares issued under the Share Plans

Dividends to shareholders

Total contributions by and distributions
to owners of the Company

Transfer to profits reserve

Balance at 30 June 2013

SHARE
CAPITAL

EQUITY COM-
PENSATION
RESERVE

ASSET
REVALUATION
RESERVE

3,783

204

4,183

(5)

PROFITS
RESERVE

RETAINED
EARNINGS

TOTAL

28,157

36,327

3,825

(4,862)

(4,791)

3,859

199

4,183

27,120

(27,120)

35,361

Balance at 1 July 2011

3,713

4,183

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Profit

Total other comprehensive income

Total comprehensive income for the year

TRANSACTIONS WITH OWNERS OF THE
COMPANY RECOGNISED DIRECTLY IN EQUITY

CONTRIBUTIONS BY AND DISTRIBUTIONS TO
OWNERS OF THE COMPANY

Shares issued under the Share Plans

Dividends to shareholders

Total contributions by and distributions
to owners of the Company

137

Balance at 30 June 2012

3,783

204

4,183

The notes on pages 40 to 81 are an integral part of these consolidated financial statements.

25,255

33,218

6,201

(3,299)

207

(3,299)

(3,092)

28,157

36,327

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013

KORVEST LTD

3. SIGNIFICANT ACCOUNTING POLICIES

1. REPORTING ENTITY

2. BASIS OF PREPARATION

(b) FOREIGN CURRENCY

(a) BASIS OF CONSOLIDATION

41
41
41
41
42
42
(c) FINANCIAL INSTRUMENTS
(d) PROPERTY, PLANT AND EQUIPMENT 43
44
(e) LEASED ASSETS
(f) INTANGIBLE ASSETS AND GOODWILL 44
44
45
45
46
46
(k) REVENUE
(l) FINANCE INCOME AND FINANCE COSTS 46
47
47
48
48

(n) GOODS AND SERVICES TAX

(o) EARNINGS PER SHARE

(p) SEGMENT REPORTING

(i) EMPLOYEE BENEFITS

(g) INVENTORIES

(h) IMPAIRMENT

(j) PROVISIONS

(m) TAX

(q) NEW STANDARDS AND

5. SEGMENT REPORTING

4. DETERMINATION OF FAIR VALUES

INTERPRETATIONS NOT YET ADOPTED 48
48
50
52
53
54

6. ACQUISITION OF SUBSIDIARIES

7. REVENUE AND OTHER INCOME

8. EXPENSES

9. EMPLOYEE BENEFIT EXPENSES

10. FINANCE INCOME AND FINANCE COSTS

11. AUDITORS’ REMUNERATION

12. TAXES

13. EARNINGS PER SHARE

14A. CASH AND CASH EQUIVALENTS

14B. RECONCILIATION OF CASH FLOWS
FROM OPERATING ACTIVITIES

15. TRADE AND OTHER RECEIVABLES

16. INVENTORIES

17. PROPERTY, PLANT AND EQUIPMENT

18. INTANGIBLE ASSETS AND GOODWILL

19. TRADE AND OTHER PAYABLES

20. LOANS AND BORROWINGS

21. EMPLOYEE BENEFITS

22. PROVISIONS

23. CAPITAL AND RESERVES

24. FINANCIAL INSTRUMENTS

25. OPERATING LEASES

26. CAPITAL AND OTHER COMMITMENTS

27. GROUP ENTITIES

28. KEY MANAGEMENT PERSONNEL

DISCLOSURES

29. RELATED PARTY DISCLOSURES

30. SUBSEQUENT EVENTS

31. PARENT ENTITY DISCLOSURES

54
55
55
55
57
58

58
59
59
60
61
61
62
64
68
69
71
75
75
75

76
80
81
81

1. REPORTING ENTITY

Korvest Ltd (the ‘Company’) is a company domiciled in
Australia. The address of the Company’s registered office
is 580 Prospect Road, Kilburn SA 5084. The consolidated
financial statements of the Company as at and for the
year ended 30 June 2013 comprise the Company and
its subsidiaries (together referred to as the ‘Group’ and
individually as ‘Group entities’). The Group is a for-profit
entity and is primarily involved in manufacturing businesses
as detailed in the segment note.

Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
and in any future periods affected.

Information about assumptions and estimation uncertainties
that have a significant risk of resulting in a material
adjustment within the next financial year are included in the
following notes:

• Note 3(c) and 15 – Trade and other receivables

2. BASIS OF PREPARATION

(a) STATEMENT OF COMPLIANCE

The consolidated financial statements are general
purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (AASBs)
adopted by the Australian Accounting Standards Board
(AASB) and the Corporations Act 2001. The consolidated
financial statements comply with International Financial
Reporting Standards (IFRSs) adopted by the International
Accounting Standards Board (IASB).

• Note 3(g) and 16 – Inventories

• Note 3(j) and 22 – Provisions

• Note 4 – Determination of fair values

3. SIGNIFICANT ACCOUNTING POLICIES

Except as described below, the accounting policies set
out below have been applied consistently to all periods
presented in these consolidated financial statements, and
have been applied consistently by the Group entities.

The consolidated financial statements were approved by the
Board of Directors on 26th July 2013.

(a) BASIS OF CONSOLIDATION

(i) BUSINESS COMBINATIONS

(b) BASIS OF MEASUREMENT

The consolidated financial statements have been prepared
on the historical cost basis except for land and buildings,
which are measured at fair value.

These consolidated financial statements are presented
in Australian dollars, which is the Company’s functional
currency. The Company is of a kind referred to in ASIC
Class Order 98/100 dated 10 July 1998 and in accordance
with that Class Order, all financial information presented
in Australian dollars has been rounded to the nearest
thousand unless otherwise stated.

(d) USE OF ESTIMATES AND JUDGEMENTS

The preparation of the consolidated financial statements
in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results
may differ from these estimates.

Business combinations are accounted for using the
acquisition method as at the acquisitions date – i.e. when
control is transferred to the Group. Control is the power to
govern the financial and operating policies of an entity so as
to obtain benefits from its activities. In assessing control, the
Group takes into consideration potential voting rights that
currently are exercisable.

The Group measures goodwill at acquisition date as:

• The fair value of the consideration transferred; plus

• The recognised amount of any non-controlling

interests in the acquiree; plus

• If the business combination is achieved in stages,
the fair value of the existing equity interest in the
acquiree; less

• The net recognised amount (generally fair value)
of the identifiable assets acquired and liabilities
assumed.

3. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

foreign currency are translated using the exchange rate at
the date of the transaction.

The consideration transferred does not include amounts
related to the settlement of pre-existing relationships. Such
amounts are generally recognised in profit or loss.

Transaction costs, other than those associated with the issue
of debt or equity securities, that the Group incurs in connection
with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair
value at the acquisition date. If contingent consideration
is classified as equity, it is not remeasured and settlement
is accounted for within equity. Otherwise, subsequent
changes to the fair value of the contingent consideration are
recognised in profit or loss.

(ii) SUBSIDIARIES

Subsidiaries are entities controlled by the Group. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.

(iii) TRANSACTIONS ELIMINATED ON CONSOLIDATION

Intra-group balances and transactions, and any unrealised
income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.

(b) FOREIGN CURRENCY

(i) FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at
exchange rates at the dates of transactions. Monetary
assets and liabilities denominated in foreign currencies at
the reporting date are retranslated to the functional currency
at the exchange rate at that date. The foreign currency
gain or loss on monetary items is the difference between
amortised cost in the functional currency at the beginning
of the year, adjusted for effective interest and payments
during the year, and the amortised cost in foreign currency
translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities that are measured
at fair value in a foreign currency are translated to the
functional currency at the exchange rate at the date that
the fair value was determined. Non-monetary assets and
liabilities that are measured based on historical cost in a

Foreign currency differences arising on retranslation are
generally recognised in profit or loss.

(i) NON-DERIVATIVE FINANCIAL ASSETS

The Group initially recognises loans and receivables on
the date that they are originated. All other financial assets
(including assets designated at fair value through profit or
loss) are recognised initially on the trade date, which is the
date that the Group becomes a party to the contractual
provision of the instrument.

The Group derecognises a financial asset when the
contractual rights to the cash flows from the asset expire,
or if it transfers the rights to receive the contractual
cash flows in a transaction in which substantially all the
risks and rewards of ownership of the financial asset are
transferred. Any interest in such transferred financial assets
that is created or retained by the Group is recognised as a
separate asset or liability.

Financial assets and liabilities are offset and the net amount
presented in the statement of financial position when, and
only when, the Group has a legal right to offset the amounts
and intends either to settle them on a net basis or to realise
the asset and settle the liability simultaneously.

The Group classifies non-derivative financial assets into the
following categories: financial assets at fair value through
the profit or loss, held to maturity financial assets, loans and
receivables and available-for-sale financial assets.

Loans and receivables

Loans and receivables are financial assets with fixed or
determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to
initial recognition, loans and receivables are measured at
amortised cost using the effective interest method, less any
impairment losses (see Note 3 (h)).

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and
call deposits with maturities of three months or less from the

acquisition date that are subject to an insignificant risk of
changes in their fair value and are used by the Company in
the management of its short-term commitments.

the assets or restore the site, as estimate of the
costs of dismantling and removing the items and
restoring the site on which they are located, and

(ii) NON-DERIVATIVE FINANCIAL LIABILITIES

The Group initially recognises financial liabilities initially on
the trade date, which is the date that the Group becomes a
party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its
contractual obligations are discharged, cancelled or expire.

The Group classifies non-derivative financial liabilities
into the other financial liabilities category. Such financial
liabilities are recognised initially at fair value less any
directly attributable transaction costs. Subsequent to
initial recognition, these financial liabilities are measured at
amortised cost using the effective interest rate method.

Other financial liabilities comprise loans and other
borrowings, bank overdrafts, and trade and other payables.

Bank overdrafts that are repayable on demand and form an
integral part of the Group’s cash management are included
as a component of cash and cash equivalents for the
statement of cash flows.

(iii) SHARE CAPITAL

Ordinary shares

Ordinary shares are classified as equity. Incremental costs
directly attributable to issue of ordinary shares and share
options are recognised as a deduction from equity, net of
any tax effects.

(d) PROPERTY, PLANT AND EQUIPMENT

(i) RECOGNITION AND MEASUREMENT

Items of plant and equipment are measured a cost less
accumulated depreciation and any accumulated impairment
losses. Property is measured at fair value.

Costs includes expenditure that is directly attributable to the
acquisition of the asset. The cost of self-constructed assets
includes the following:

• The cost of materials and direct labour,

• Any costs directly attributable to bringing the assets

to a working condition for their intended use,

• When the Group has an obligation to remove

• Capitalised borrowing costs.

Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant
and equipment (calculated as the difference between the
net proceeds from disposal and the carrying amount of the
item) is recognised in profit or loss.

(ii) RECOGNITION AND MEASUREMENT

Subsequent expenditure is capitalised only when it is
probable that the future economic benefits associated with
the expenditure will flow to the Group. On-going repairs and
maintenance are expensed as incurred.

(iii) DEPRECIATION

Items of property, plant and equipment are depreciated
from the date that they are installed and are ready for use,
or in respect of internally constructed assets, from the date
that the asset is completed and ready for use.

Depreciation is calculated to write off the carrying value of
property, plant and equipment less the estimated residual
values using the straight-line basis over their estimated
useful lives. Depreciation is generally recognised in profit or
loss, unless the amount is included in the carrying amount
of another asset. Leased assets are depreciated over the
shorter of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership by
the end of the lease term. Land is not depreciated.

The estimated useful lives for the current and comparative
years of significant items of property, plant and equipment
are as follows:

• Buildings

40 years

• Plant and equipment

3-12 years

Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD3. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(e) LEASES

(i) LEASED ASSETS

Leases in terms of which the Group assumes substantially all
the risks and rewards of ownership are classified as finance
leases. On initial recognition the leased asset is measured at
an amount equal to the lower of its fair value and the present
value of the minimum lease payments. Subsequent to initial
recognition, the asset is accounted for in accordance with
the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are
not recognised on the Group’s statement of financial position.

(ii) LEASE PAYMENTS

Payments made under operating leases are recognised in
profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised as an integral part of
the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases
are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense
is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the
remaining balance of the liability.

(iii) DETERMINING WHETHER AN ARRANGEMENT CONTAINS
A LEASE

At inception of an arrangement, the Group determines
whether such an arrangement is or contains a lease. This
will be the case if the two following criteria are met:

• the fulfilment of the arrangement is dependent on

the use of a specific asset or assets; and

• the arrangement contains a right to use the asset(s).

At inception or upon reassessment of the arrangement,
the Group separates payments and other consideration
required by such an arrangement into those for the lease
and those for other elements on the basis of the relative
fair values. If the Group concludes for a finance lease that
it is impractical to separate the payments reliably, then an
asset and liability are recognised at an amount equal to
the fair value of the underlying asset. Subsequently the

liability is reduced as payments are made and an imputed
finance cost on the liability is recognised using the Group’s
incremental borrowing rate.

(f) INTANGIBLE ASSETS AND GOODWILL

(i) GOODWILL

Goodwill that arises upon the acquisition of subsidiaries is
presented with intangible assets. For the measurement of
goodwill at initial recognition, see Note 3(a)(i).

Subsequent measurement

Goodwill is measured at cost less accumulated
impairment losses.

(ii) OTHER INTANGIBLE ASSETS

Other intangible assets that are required by the Group and
have finite useful lives are measured at cost less accumulated
amortisation and any accumulated impairment losses.

(iii) SUBSEQUENT EXPENDITURE

Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific assets to which it relates. All other expenditure,
including expenditure on internally generated goodwill and
brands, is recognised in profit or loss as incurred.

(iv) AMORTISATION

Except for goodwill, intangible assets are amortised on a
straight-line basis in profit or loss over their estimated useful
lives, from the date that they are available for use.

The estimated useful lives for the current and comparative
years are as follows:

• patents and trademarks

5 years

Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.

(g) INVENTORIES

Inventories are measured at the lower of cost and net
realisable value. The cost of inventories is based on average
cost and includes expenditure incurred in acquiring the
inventories, production and conversion costs, and other
costs incurred in bringing them to their existing location
and condition. In the case of manufactured inventories and
work in progress, cost includes an appropriate share of
production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of
completion and estimated costs necessary to make the sale.

(h) IMPAIRMENT

(i) NON-DERIVATIVE FINANCIAL ASSETS

A financial asset not classified as at fair value through profit
or loss is assessed at each reporting date to determine
whether there is any objective evidence that it is impaired.
A financial asset is impaired if there is objective evidence of
impairment as a result of one or more events that occurred
after the initial recognition of the asset, and that the loss
event(s) had an impact on the estimated future cash flows
of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes
default or delinquency by a debtor or indications that a
debtor will enter administration. In addition, for an investment
in an equity security, a significant or prolonged decline in its
fair value below its cost is objective evidence of impairment.

(ii) NON-FINANCIAL ASSETS

The carrying amounts of the Group’s non-financial assets,
other than inventories and deferred tax assets, are reviewed
at each reporting date to determine whether there is any
indication of impairment. If any such indication exists then
the asset’s recoverable amount is estimated. Goodwill
is tested annually for impairment. An impairment loss is
recognised if the carrying amount of an asset or cash-
generating unit (CGU) exceeds its recoverable amount.

The recoverable amount of an asset or CGU is the greater
of its value in use and its fair value less costs to sell. 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 or CGU.
For impairment testing assets are grouped together into
the smallest group of assets that generate cash inflows
from continuing use that are largely independent of the
cash inflows of other assets or CGUs. Subject to an
operating segment ceiling test, CGUs to which goodwill has
been allocated are aggregated so that the level at which
impairment testing is performed reflects the lowest level at
which goodwill is monitored for internal reporting purposes.
Goodwill acquired in a business combination is allocated

to groups of CGUs that are expected to benefit from the
synergies of the combination.

Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any goodwill
allocated to the CGU (group of CGUs), and then to reduce
the carrying amount of the other assets in the CGU (group
of CGUs) on a pro rata basis.

Any impairment loss in respect of goodwill is not reversed.
For other assets, an impairment loss is reversed only to the
extent that the asset’s carrying amounts does not exceed
the carrying amount that would have been determined, net
of depreciation or amortisation, if no implement loss had
been recognised.

(i) EMPLOYEE BENEFITS

SHORT-TERM BENEFITS

Short-term employee benefit obligations are measured on
an undiscounted basis and are expensed as the related
service is provided. A liability is recognised for the amount
expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result of
past service provided by the employee and the obligation
can be estimated reliably.

SHARE-BASED PAYMENT TRANSACTIONS

The grant-date fair value of share-based payment awards
granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the
period that the employees become unconditionally entitled
to the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the
related service and non-market performance conditions
are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of
awards that do not meet the related service and non-
market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions,
the grant-date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up
for differences between expected and actual outcomes.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD3. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Employee Share Bonus Plan

The Employee Share Bonus Plan allows Group employees
to acquire shares of the Company. Shares are allotted to
employees who have served a qualifying period. Up to
$1,000 per year in shares is allotted to each qualifying
employee. The fair value of shares issued is recognised
as an employee expense with a corresponding increase
in equity. The fair value of the shares granted is measured
using a present value method.

Executive Share Plan

The Executive Share Plan and the Performance Rights Plan
allow Group employees to acquire shares of the Company.
The fair value of options or rights granted is recognised as
an employee expense with a corresponding increase in
equity. The fair value is measured at grant date and spread
over the period during which the employees become
unconditionally entitled to the options/right. The valuation
method takes into account the exercise price of the option/
right, the life of the option/right, the current price of the
underlying shares, the expected volatility of the share price,
the dividends expected of the shares and the risk-free
interest rate for the life of the option/right.

DEFINED CONTRIBUTION SUPERANNUATION FUNDS

A defined contribution plan is a post-employment benefit
plan under which an entity pays fixed contributions into
a separate entity and will have no legal or constructive
obligation to pay further amounts. Obligations for
contributions to defined contribution superannuation
funds are recognised as an employee benefit expense in
profit or loss in the periods during which related services
are rendered by employees. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.

OTHER LONG-TERM BENEFITS

The Group’s net obligation in respect of long-term service
benefits is the amount of future benefit that employees
have earned in return for their service in the current and
prior periods. The obligation is calculated using expected
future increases in wage and salary rates, including related

on-costs and expected settlement dates, and is discounted
using the rates attached to Government bonds at the
reporting date which have maturity dates approximating to
the terms of the Company’s obligations.

( j) PROVISIONS

A provision is recognised if, as a result of a past event, the
Group has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow
of economic benefits will be required to settle the obligation.
Provisions are determined by discounting risk adjusted
future expected cash flows at a pre-tax discount rate that
reflects the time value of money. The unwinding of the
discount is recognised as a finance cost.

(I) WARRANTIES

A provision for warranties is recognised when the underlying
products or services are sold. The provision is based on
historical warranty data and a weighting of all possible
outcomes against their associated probabilities.

(II) RESTRUCTURING

A provision for restructuring is recognised when the
Group has approved a detailed and formal restructuring
plan, and the restructuring either has commenced or has
been announced publicly. Future operating losses are not
provided for.

(k) REVENUE

SALE OF GOODS

Revenue from the sale of goods in the ordinary course of
business is measured at the fair value of the consideration
received or receivable, net of returns, trade discounts and
volume rebates. Revenue is recognised when the significant
risks and rewards of ownership have been transferred to
the customer, recovery of the consideration is probable,
the associated costs and possible return of goods can
be estimated reliably, there is no continuing management
involvement with the goods, and the amount of the revenue
can be measured reliably. Transfer of risks and rewards
vary according to the terms of individual sale contracts.
Transfer usually occurs when the product is received by the
customer.

(l) FINANCE INCOME AND FINANCE COSTS

Finance income comprises interest income on funds

invested. Interest income is recognised as it accrues, using
the effective interest rate method.

Finance expenses comprise interest expense on borrowings.

Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.

Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to taxes levied by the same tax
authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be
realised simultaneously.

(m) TAX

Tax expense comprises current and deferred tax. Current
and deferred tax are recognised in profit or loss except to
the extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.

CURRENT TAX

Current tax is the expected tax payable or receivable on
the taxable income or loss for the year, using tax rates
enacted or substantively enacted at the reporting date, and
any adjustment to tax payable in respect of previous years.
Current tax payable also includes any tax liability arising
from the declaration of dividends.

DEFERRED TAX

Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for
taxation purposes. Deferred tax is not recognised for:

• temporary differences on the initial recognition
of assets or liabilities in a transaction that is not
a business combination and that affects neither
accounting nor taxable profit or loss

• temporary differences related to investments in
subsidiaries, associates and jointly controlled
entities to the extent that the group is able to
control the timing of the reversal of the temporary
differences and it is probable that they will not
reverse in the foreseeable future

• taxable temporary differences arising on the initial

recognition of goodwill.

Deferred tax is measured at the tax rates that are expected
to be applied to temporary differences when they reverse,
using tax rates enacted or substantively enacted at the
reporting date.

A deferred tax asset is recognised for unused tax losses,
tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be
available against which they can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax
benefit will be realised.

TAX CONSOLIDATION

The Company and the wholly owned Australian subsidiaries
set out in Note 27 are part of a tax-consolidated group with
Korvest Ltd as the head entity. The implementation date of
the tax consolidation system for the tax-consolidated group
was 1 March 2013.

Current tax expense (income), deferred tax liabilities and
deferred tax assets arising from temporary differences of
the members of the tax-consolidated group are allocated
to the Company and recognised using a ‘group allocation’
approach. Deferred tax assets and deferred tax liabilities
are measured by reference to the carrying amounts of the
assets and liabilities in the Company’s balance sheet and
their tax values applying under tax consolidation.

Any current tax liabilities (or assets) and deferred tax assets
arising from unused tax losses of a member of the tax
consolidation group are assumed by the head entity of the
tax-consolidated group and are recognised as amounts
payable (receivable) to other entities in the tax-consolidated
group in conjunction with any tax funding arrangement
amounts. Any difference between these amounts is
recognised by the member of the tax consolidated group as
an equity contribution from or distribution to the head entity.

(n) GOODS AND SERVICES TAX

Revenue, expenses and assets are recognised net of the
amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the
taxation authority. In these circumstances, the GST is

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDrecognised as part of the cost of acquisition of the asset
or as part of the expense.

Receivables and payables are stated with the amount of
GST included. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability
in the Statement of financial position.

Accounting Standards. Subject to limited exceptions, AASB
13 is applied when fair value measurements or disclosures
are required or permitted by other AASBs. AASB 13 is
effective for annual periods beginning on or after 1 January
2013 with early adoption permitted.

AASB 119 Employee Benefits (2011)

Cash flows are included in the Statement of cash flows on
a gross basis. The GST components of cash flows arising
from investing and financing activities which are recoverable
from, or payable to, the ATO are classified as operating
cash flows.

AASB 119 (2011) changes the definition of short-term and
other long-term employee benefits to clarify the distinction
between the two. AASB 119 (2011) is effective for annual
periods beginning on or after 1 January 2013 with early
adoption permitted.

(o) EARNINGS PER SHARE

The Company presents basic and diluted earnings per
share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to
ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during
the period. Diluted EPS is determined by adjusting the
profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares, which
comprise share options granted to employees.

(p) SEGMENT REPORTING

Segment results that are reported to the Group’s Managing
Director (the chief operating decision maker) include items
directly attributable to a segment as well as those that can
be allocated on a reasonable basis. Unallocated items
comprise mainly corporate assets, head office expenses,
and income tax assets and liabilities.

(q) NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning
after 1 July 2012, and have not been applied in preparing
these consolidated financial statements. Those which may
be relevant to the Group are set out below. The Group does
not plan to adopt these standards early, and continues to
assess the impact on the entity.

4. DETERMINATION OF FAIR VALUES

A number of the Group’s accounting policies and
disclosures require the determination of fair value, for
both financial and non-financial assets and liabilities. Fair
values have been determined for measurement and/or
disclosure purposes based on the following methods. When
applicable, further information about the assumptions made
in determining fair values is disclosed in the notes specific
to that asset or liability.

(a) PROPERTY, PLANT AND EQUIPMENT

The fair value of property, plant and equipment recognised
as a result of a business combination is the estimated
amount for which a property could be exchanged on the
date of acquisition between a willing buyer and a willing
seller in an arm’s length transaction after proper marketing
wherein the parties had each acted knowledgeably. The
fair value of items of plant, equipment, fixtures and fittings
is based on the market approach and cost approaches
using quoted market prices for similar items when available
and depreciated replacement cost when appropriate.
Depreciated replacement cost reflects adjustments for
physical deterioration as well as functional and economic
obsolescence. Land and buildings are valued by an
independent valuer every three years. In the intervening
years between independent valuations the directors make
an assessment of the value of the land and buildings having
regard for the most recent independent valuation.

AASB 13 Fair Value Measurement (2011)

(b) INVENTORIES

AASB 13 provides a single source of guidance on how fair
value is measured, and replaces the fair value measurement
guidance that is currently dispersed throughout Australian

The fair value of inventories acquired in a business
combination is determined based on its estimated selling
price in the ordinary course of business less the estimated

costs of completion and sale, and a reasonable profit
margin based on the effort required to complete and sell
the inventories.

The fair values of trade and other receivables are estimated
as the present value of future cash flows, discounted at the
market rate of interest at the measurement date. Short-
term receivables with no stated interest rate are measured
at the original invoice amount if the effect of discounting is
immaterial. Fair value is determined at initial recognition and,
for disclosure purposes, at each annual reporting date.

(d) CONTINGENT CONSIDERATION

The fair value of contingent consideration arising in a
business combination is calculated using the income
approach based on the expected payment amounts and
their associated probabilities (i.e. probability-weighted).
Since the contingent consideration is long-term in nature, it
is discounted to present value.

(e) SHARE-BASED PAYMENT TRANSACTIONS

The fair value of the performance rights is measured using
the Black-Scholes formula. Measurement inputs include
share price on measurement date, exercise price of the
instrument, expected volatility (based on weighted average
historic volatility of the Company’s share prices, adjusted
for changes expected due to publicly available information),
weighted average expected life of the instruments,
expected dividends, and the risk-free interest rate (based on
government bonds). Service and non-market performance
conditions attached to the transactions are not taken into
account in determining fair value.

(f) OTHER NON-DERIVATIVE FINANCIAL LIABILITIES

Other non-derivative financial liabilities are measured at fair
value, at initial recognition and for disclosure purposes, at
each annual reporting date. Fair value is calculated based on
the present value of future principal and interest cash flows,
discounted at the market rate of interest at the measurement
date. For finance leases the market rate of interest is
determined by reference to similar lease agreements.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD5. SEGMENT REPORTING

The Group has two reportable segments. The business is organised based on products and services. The following
summary describes the operations in each of the Company’s reportable segments.

Industrial Products - includes the manufacture of electrical and cable support systems, steel fabrication and access systems.
It also includes the sale, hire and repair of high torque tools. It includes the businesses trading under the EzyStrut, Indax,
Power Step and Titan Technologies names.

Production – represents the Korvest Galvanising business, which provides hot dip galvanising services. The reportable
segment also includes light to medium fabrication of components and machine guarding.

Both reportable segments consist of the aggregation of a number of operating segments in accordance with AASB 8
Operating Segments.

Information regarding the operations of each reportable segment is included below in the manner reported to the chief
operating decision maker as defined in AASB 8. Performance is measured based on segment earnings before interest and tax
(EBIT). Inter-segment transactions are not recorded as revenue. Instead a cost allocation relating to the transactions is made
based on negotiated rates.

IN THOUSANDS OF AUD

External revenue

Depreciation and amortisation

Reportable segment profit before tax

Reportable segment assets

Capital expenditure

INDUSTRIAL PRODUCTS

PRODUCTION

TOTAL

2013

2012

55,512

66,543

1,102

3,811

25,985

580

968

7,675

27,886

1,435

2013

6,211

384

1,695

4,161

230

2012

5,779

417

1,324

4,066

218

2013

2012

61,723

72,322

1,486

5,506

30,146

810

1,385

8,999

31,952

1,653

IN THOUSANDS OF AUD

2013

2012

Reconciliation of reportable segment profit, assets and other material items

PROFIT

Total profit for reportable segments

Unallocated amounts – other corporate expenses

Profit before income tax

ASSETS

Total assets for reportable segments

Other unallocated amounts

Total assets

CAPITAL EXPENDITURE

Capital expenditure – reportable segments

Other unallocated amounts

Total

OTHER MATERIAL ITEMS

Depreciation – reportable segments

Unallocated amounts – other corporate depreciation

Total

GEOGRAPHICAL SEGMENTS

The Group operates predominately in Australia.

CUSTOMERS

The Group does not derive 10% or more of its revenue from any single customer.

5,506

(49)

5,457

8,999

(262)

8,737

30,146

14,005

44,151

31,952

14,061

46,013

810

692

1,502

1,486

166

1,652

1,653

170

1,823

1,385

156

1,541

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD6. ACQUISITION OF SUBSIDIARIES

IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED

On 28 February 2013 the Group purchased 100% of the issued capital of Power Step (Australia) Pty Ltd (Power Step) and
Titan Technologies (SE Asia) Pty Ltd (Titan). Power Step designs and assembles access systems for large mobile equipment.
Titan sells, hires and services high torque wrenches and hydraulic tensioning tools. The businesses were sold as a package
by the same vendor.

The acquisition is expected to provide an increased reach into the mining and resources market. In addition it will also
provide access to overseas markets that the Group has previously not had exposure in.

In the four months to 30 June 2013 businesses contributed revenue of $1,995,000 and profit of $116,000 to the Group’s
results. If the acquisition had occurred on 1 July 2012, management estimates that consolidated revenues would have been
$68.6 million and consolidated profit for the year would have been $4,225,000. In determining these amounts, management
has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been
the same if the acquisition had occurred on 1 July 2012.

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired
and liabilities assumed at the acquisition date.

NOTE

IN THOUSANDS OF AUD

Plant and equipment

Intangible assets

Inventories

Trade receivables

Other debtors and prepayments

Current tax asset

Deferred tax asset

Cash and cash equivalents

Loans and borrowings

Trade and other payables

Provisions (employee entitlements and warranty)

CONSIDERATION TRANSFERRED

IN THOUSANDS OF AUD

Cash

Deferred consideration

Contingent consideration

DEFERRED CONSIDERATION

2013

3,646

461

500

4,607

All of the trade receivables are expected to be collectible.

GOODWILL

Goodwill was recognised as a result of the acquisition as follows.

Total consideration transferred

Fair value of identifiable net assets

2013

385

1,803

845

488

(293)

(171)

(280)

(418)

2,535

4,606

2,535

2,071

Under the sale agreement 5% of the consideration is payable six months after completion and a further 5% is payable 12
months after completion.

CONTINGENT CONSIDERATION

At the time of the acquisition transaction Titan’s distributorship agreement with Titan Technologies International Inc (TTI
Inc), a US based tool manufacturer, had lapsed. $500,000 of the agreed consideration is payable on the execution of an
agreement between Titan and TTI Inc whereby Titan is appointed as an authorised dealer of TTI Inc on terms satisfactory to
Korvest. The Group has included the $500,000 as contingent consideration.

The goodwill is attributable mainly to the skills and technical talent of the Power Step work force and the benefits to the
Korvest Group of expanding into markets that Korvest currently does not have exposure to. None of the goodwill recognised
is expected to be deductible for tax purposes.

ACQUISITION-RELATED COSTS

The Group incurred acquisition-related costs of $62,500 related to external legal fees and due diligence costs. These costs
have been included in ‘administration expenses’ in the Group’s profit or loss (see Note 8).

7. REVENUE AND OTHER INCOME

IN THOUSANDS OF AUD

REVENUE

Sales of goods

2013

2012

61,723

72,322

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD8. EXPENSES

IN THOUSANDS OF AUD

Cost of goods sold

Distribution expenses

Sales, marketing and warehousing expenses

Administration expenses

Other expenses

PROFIT BEFORE INCOME TAX HAS BEEN ARRIVED AT AFTER CHARGING / (CREDITING) THE
FOLLOWING ITEMS

Depreciation of buildings

Depreciation of plant and equipment

Increase / (decrease) in provisions

Executive share plan expense

Employee share bonus plan expense

Impairment loss/(reversal) on trade receivables

Impairment loss/(reversal) on inventories

Loss on disposal of property, plant and equipment

Research and development expense

9. EMPLOYEE BENEFIT EXPENSES

Wages and salaries

Other associated personnel expenses

Contributions to defined contribution superannuation funds

Termination benefits

Increase / (decrease) in liability for annual leave

Increase in liability for long service leave

Equity-settled share-based payments

NOTE

2013

2012

33,908

39,805

5,215

15,106

2,090

6,014

15,543

2,267

104

56,386

63,733

1,574

1,652

(58)

411

(167)

1,464

1,541

137

860

104

16,703

17,458

2,358

1,397

258

(32)

316

2,379

1,376

104

203

188

21,066

21,780

10. FINANCE INCOME AND FINANCE COSTS

IN THOUSANDS OF AUD

RECOGNISED IN PROFIT OR LOSS

Interest income on bank deposits held

Interest expense from bank overdrafts

Net financing income recognised in profit or loss

11. AUDITORS’ REMUNERATION

IN AUD

AUDIT SERVICES

Auditors of the Group

KPMG Australia:

Audit and review of financial statements

OTHER SERVICES

Auditors of the Group

KPMG Australia

In relation to other taxation, consulting and due diligence services

12. TAXES

IN THOUSANDS OF AUD

TAX RECOGNISED IN PROFIT OR LOSS

CURRENT TAX EXPENSE

Current year

Adjustments for prior years

DEFERRED TAX EXPENSE

Origination and reversal of temporary differences

Total income tax expense in Statement of profit and loss and comprehensive income

2013

2012

125

(5)

120

148

70,300

67,000

35,402

13,908

1,569

1,574

1,632

2,943

(173)

2,770

(234)

2,536

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD12. TAXES (CONTINUED)

IN THOUSANDS OF AUD

NUMERICAL RECONCILIATION BETWEEN TAX EXPENSE AND PRE-TAX NET PROFIT

Profit before tax

Income tax using the domestic corporation tax rate of 30% (2012: 30%)

Increase in income tax expense due to:

Non-deductible expenses

Under / (over) provided in prior years

Income tax expense on pre-tax net profit

RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets and liabilities are attributable to the following:

2013

2012

5,456

1,639

8,737

2,621

(12)

1,632

(173)

2,536

IN THOUSANDS OF AUD

Property, plant and equipment

Inventories

Provisions / accruals

Other items

Tax loss carried forward

Tax (assets) / liabilities

Set off of tax

Net tax (assets) / liabilities

ASSETS

LIABILITIES

NET

2013

(542)

(917)

(157)

(78)

(1,694)

1,694

2012

(347)

(688)

(276)

(1,311)

1,311

2013

1,825

324

2,149

(1,694)

455

2012

1,871

322

2,197

(1,311)

886

2013

1,825

(218)

(917)

(157)

(78)

455

2012

1,871

(25)

(688)

(272)

886

MOVEMENT IN DEFERRED TAX BALANCES DURING THE YEAR

IN THOUSANDS OF AUD

Property, plant and equipment

Inventories

Provisions / accruals

Other items

Tax loss carried forward

IN THOUSANDS OF AUD

Property, plant and equipment

Inventories

Provisions / accruals

Other items

BALANCE
30 JUNE 12

RECOGNISED IN
PROFIT

(1,871)

688

272

(886)

(107)

101

(114)

(55)

BALANCE
30 JUNE 11

RECOGNISED IN
PROFIT

(1,845)

(23)

602

146

(1,120)

(26)

126

234

ACQUIRED IN
BUSINESS
COMBINATIONS

BALANCE 30
JUNE 13

(1,825)

299

128

486

217

917

158

(455)

BALANCE
30 JUNE 12

(1,871)

688

272

(886)

13. EARNINGS PER SHARE

BASIC AND DILUTED EARNINGS PER SHARE

The calculation of basic earnings per share at 30 June 2013 was based on the net profit attributable to ordinary shareholders
of $3,824,810 (2012: $6,200,676) and a weighted average number of ordinary shares outstanding during the financial year
ended 30 June 2013 of 8,693,760 (2012: 8,662,730). The calculation of diluted earnings per share at 30 June 2013 was
based on the profit attributable to ordinary shareholders of $3,824,810 (2012: $6,200,676) and a weighted average number
of ordinary shares outstanding during the financial year ended 30 June 2013 of 8,772,279 (2012: 8,696,195).

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES

IN THOUSANDS OF SHARES

Issued ordinary shares at 1 July

Effect of shares issued during year

Weighted average number of ordinary shares at 30 June

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (DILUTED)

Weighted average number of ordinary shares (basic)

Effect of Executive Share Plan

Weighted average number of ordinary shares at 30 June

2013

8,680

8,694

8,772

2012

8,640

8,663

8,696

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD15. TRADE AND OTHER RECEIVABLES

IN THOUSANDS OF AUD

CURRENT

Other receivables and prepayments

Trade receivables

NOTES

2013

2012

174

12,360

12,534

109

14,670

14,779

Trade receivables are shown net of provided impairment losses amounting to $525,000 (2012: $918,000).

16. INVENTORIES

IN THOUSANDS OF AUD

Raw materials and consumables

Work in progress

Finished goods

538

194

8,774

9,506

536

8,246

8,683

Finished goods are shown net of impairment losses amounting to $991,000 (2012: $1,158,000) arising from the likely
inability to sell a product range.

13. EARNINGS PER SHARE (CONTINUED)

IN AUD CENTS

BASIC AND DILUTED EARNINGS PER SHARE

Basic earnings per share from continuing operations

Diluted earnings per share from continuing operations

14A. CASH AND CASH EQUIVALENTS

IN THOUSANDS OF AUD

Bank balances

Call deposits

Cash and cash equivalents in the statement of cash flows

The Group had an undrawn overdraft facility of $0.75 million as at 30 June 2013.

14B. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES

IN THOUSANDS OF AUD

CASH FLOWS FROM OPERATING ACTIVITIES

Profit for the period

Adjustments for:

Depreciation

Impairment of trade receivables

Impairment of inventories

Loss on sale of property, plant and equipment

Equity-settled share-based payment expenses

(Increase)/decrease in trade and other receivables

(Increase)/decrease in inventories

(Decrease)/increase in trade and other payables

(Decrease)/increase in deferred tax liabilities

(Decrease)/increase in income taxes payable

(Decrease)/Increase in provisions and employee benefits

Net cash from operating activities

2013

2012

44.0

43.6

71.6

71.3

483

1,955

2,438

589

4,581

5,170

3,825

6,201

1,653

411

(167)

5,850

2,716

1,146

1,541

860

104

189

8,975

386

413

(1,088)

(2,381)

(1,383)

226

7,524

(234)

1,191

331

8,681

NOTES

17,8

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD17. PROPERTY, PLANT AND EQUIPMENT

Balance at 1 July 2011

Other acquisitions

Disposals

Balance at 30 June 2012

Balance at 1 July 2012

Acquisitions through business combinations

Other acquisitions

Disposals

Balance at 30 June 2013

DEPRECIATION AND IMPAIRMENT LOSSES

Balance at 1 July 2011

Depreciation charge for the year

Disposals

Balance at 30 June 2012

Balance at 1 July 2012

Acquisitions through business combinations

Depreciation charge for the year

Disposals

Balance at 30 June 2013

CARRYING AMOUNTS

At 1 July 2011

At 30 June 2012

At 30 June 2013

LAND AND
BUILDINGS
(FAIR VALUE)

PLANT AND
EQUIPMENT
(COST)

TOTAL

8,100

18,019

26,119

1,823

(538)

1,823

(538)

8,100

19,304

27,404

8,100

19,304

27,404

8,169

155

8,100

8,023

8,014

865

1,433

(3,474)

18,128

8,876

1,464

(394)

9,946

480

1,574

(3,367)

8,633

9,143

9,358

9,495

865

1,502

(3,474)

26,297

8,876

1,541

(394)

10,023

480

1,652

(3,367)

8,788

17,243

17,381

17,509

An independent valuation of Land and Buildings was carried out in May 2011 by Mr Jeffrey Millar, AAPI of AON Valuation
Services, on the basis of the open market value of the properties concerned in their highest and best use. Land was valued
at $5,000,000 and buildings were valued at $3,100,000. A capitalisation rate of 9.25% (2012: 9.25%) was used in arriving at
the valuation. The carrying amount of the Land and Buildings at cost at 30 June 2013 if not revalued would be $1,115,000.

18. INTANGIBLE ASSETS AND GOODWILL

IN THOUSANDS OF AUD

COST

Balance at 1 July 2012

Acquisitions through business combinations

Balance at 30 June 2013

ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES

Balance at 1 July 2012

Amortisation for the year

Balance at 30 June 2013

CARRYING AMOUNTS

At 1 July 2011

At 30 June 2012

At 30 June 2013

GOODWILL

TRADEMARKS

TOTAL

2,071

2,115

2,071

2,114

IMPAIRMENT TESTING FOR CASH GENERATING UNITS CONTAINING GOODWILL

For the purposes of impairment testing, goodwill is allocated to the Group’s operating divisions. The aggregate carrying
amounts of goodwill allocated to each CGU are as follows.

IN THOUSANDS OF AUD

Power Step and Titan Technologies

19. TRADE AND OTHER PAYABLES

IN THOUSANDS OF AUD

Other trade payables and accrued expenses

Non-trade payables and accrued expenses

Contingent consideration

2013

2,071

2012

NOTE

2013

2,883

1,847

500

5,230

2012

3,541

1,537

5,078

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD20. LOANS AND BORROWINGS

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more
information about the Group’s exposure to interest rate and foreign currency risk, see Note 24.

IN THOUSANDS OF AUD

CURRENT LIABILITIES

Unsecured loan

Finance lease liabilities

NON-CURRENT LIABILITIES

Unsecured government loan at nominal value

Fair value adjustment

Unsecured government loan at fair value

2013

2012

156

167

(40)

IN THOUSANDS OF AUD

Less than one year

Between one and five years

More than five years

FUTURE MINIMUM LEASE
PAYMENTS

INTEREST

PRESENT VALUE OF MINIMUM
LEASE PAYMENTS

2013

2012

2013

2012

2013

2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD21. EMPLOYEE BENEFITS

IN THOUSANDS OF AUD

Liability for annual leave

Liability for long service leave

NON CURRENT

Liability for long-service leave

Total employee benefits

2013

1,085

727

1,812

2012

994

563

1,557

624

2,436

404

1,961

GRANT DATE

March 2005

March 2009

November 2011

November 2012

Total share options / performance rights

PLAN NUMBER OF OPTIONS
/ RIGHTS INITIALLY
GRANTED

NUMBER
OUTSTANDING AT
BALANCE DATE AASBS

NUMBER
OUTSTANDING AT
BALANCE DATE ASX

ESP

KPRP

60,000

85,000

120,000

80,500

345,500

45,000

60,000

110,000

73,000

288,000

110,000

73,000

183,000

Options subject to a non-recourse loan for the purchase of shares are not recognised as exercised by International Financial
Reporting Standards, until the loan is extinguished at which point the shares are recognised.

(a) DEFINED CONTRIBUTION SUPERANNUATION FUNDS

MEASUREMENT OF FAIR VALUES

The Group makes contributions to defined contribution superannuation funds. The amount recognised as an expense was
$1,397,167 for the financial year ended 30 June 2013 (2012: $1,376,066).

The fair value of the rights granted through the KPRP was measured based on the Black-Scholes formula. Expected volatility
is estimated by considering historic share price volatility over the twelve months prior to grant date.

(b) SHARE BASED PAYMENTS (EQUITY-SETTLED)

EXECUTIVE SHARE PLAN (ESP) - DISCONTINUED

In March 2005, the Group established a share option plan that entitled selected senior executives to acquire shares in the
entity subject to the successful achievement of performance targets related to improvements in total shareholder returns
over a two-year option period. The plan was discontinued in 2010 with no new issues made under the plan since that time.
The plan remains in operation for those employees granted options under that plan prior to 2010.

The options were exercisable if the total shareholder return (measured as share price growth plus dividends paid) over a
two-year period from the grant date exceeded ten per cent plus CPI per annum. Once exercised the shares are forfeited if
the holder ceases to be an employee of the Group within a further three-year period. The shares issued pursuant to these
options are financed by an interest free loan from the Company repayable within twenty years from the proceeds of dividends
declared by the Company. These loans are of a non-recourse nature. For accounting purposes these 20-year loans are
treated as part of the options to purchase shares, until the loan is extinguished at which point the shares are recognised.

The options were offered only to selected senior executives. Details of the options are below:

KORVEST PERFORMANCE RIGHTS PLAN (KPRP)

In August 2011 the Company established a performance rights plan to replace the ESP. In November 2011 the first
performance rights were granted under the plan. A further issue was granted in November 2012. The plan is designed to
provide long term incentives to eligible senior employees of the Group and entitles them to acquire shares in the Company,
subject to the successful achievement of performance hurdles related to earnings per share (EPS).

Under the plan, eligible employees are offered Performance Rights, which enables the employee to acquire one fully paid
ordinary share in the Company for no monetary consideration, once the Performance Rights vest. The conditions attached to
the Performance Rights are measured over the three year period commencing at the beginning of the financial year in which
the Performance Rights are granted. If the performance conditions at the end of the three year period are met, in whole or in
part, all or the relevant percentage of the Performance Rights will vest.

The inputs used in the measurement of the fair value at grant date of the KPRP were as follows.

Fair value at grant date

Share price at grant date

Exercise price

Share price volatility

Dividend yield

Risk free interest rate (based on government bonds)

Life of options

2013

$4.73

$6.40

35.4%

8.28%

3.11%

3 yrs

2012

$3.13

$4.15

50.1%

6.27%

4.01%

3 yrs

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD21. EMPLOYEE BENEFITS (CONTINUED)

RECONCILIATION OF OUTSTANDING SHARE OPTIONS/RIGHTS

GRANT DATE

2013
PREVIOUS PLAN

Mar-05

Mar-09

Apr-10

Weighted average exercise price

CURRENT PLAN

Nov 11

Nov 12

Weighted average exercise price

2012
PREVIOUS PLAN

Mar 05

Mar 09

Apr 10

Weighted average exercise price

CURRENT PLAN

Nov 11

Weighted average exercise price

EXERCISE DATE

EXPIRY DATE

EXERCISE PRICE

NUMBER OF
OPTIONS/RIGHTS AT
BEGINNING OF YEAR

RIGHTS GRANTED

LAPSED

FORFEITED

EXERCISED NUMBER OF OPTIONS
AT END OF YEAR ON
ISSUE

EXERCISABLE AT
30 JUNE 2013

Jan-07

Jan-11

Jan-27

Jan-31

$4.36

$3.79

Jul 14

Jul 15

Jul 2014

Jul 2015

Jan 07

Jan 11

Jan 2027

Jan 2031

$4.36

$3.79

Jul 14

Jul 2014

$Nil

52,500

45,000

15,000

112,500

$4.06

120,000

52,500

50,000

15,000

117,500

$4.04

80,500

$Nil

120,000

$Nil

(7,500)

(10,000)

(7,500)

(17,500)

(5,000)

$3.79

45,000

15,000

105,000

$4.03

110,000

73,000

183,000

$Nil

52,500

45,000

15,000

112,500

$4.06

120,000

$Nil

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD21. EMPLOYEE BENEFITS (CONTINUED)

EXPENSE RECOGNISED IN PROFIT OR LOSS

Equity-settled share-based payment transactions

IN THOUSANDS OF AUD

Share options granted in 2007

Share options granted in 2008

Share options granted in 2009

Performance rights granted in FY 2012

Performance rights granted in FY 2013

Expense arising from employee share scheme

Total expense recognised for equity-settled share-based payment

22. PROVISIONS

IN THOUSANDS OF AUD

Balance at 1 July 2012

Assumed in a business combination

Provisions made during the year

Provisions reduced during the year

Provisions used during the year

Balance at 30 June 2013

Current

Non-current

SITE RESTORATION AND SAFETY

2013

2012

(9)

126

189

SITE
RESTORATION

WARRANTIES

333

227

(88)

169

A provision of $360,000 was initially made during the financial year ended 30 June 2003 in respect of the Company’s
obligation to rectify potential environmental damage at the main site premises in Kilburn. The provision is reassessed annually
and is now based on an estimate of the current day cost to rectify the site. It has been assumed that the rectification would
occur in 10 years. Provisions are determined by discounting risk adjusted future expected cash flows at a pre-tax discount
rate that reflects the time value of money. A discount rate of 6.5% and an inflation rate of 3.0% have been used for the
calculation.

WARRANTIES

Power Step assemblies are sold with a warranty period of 12 months from installation date or 18 months from invoice date,
whichever occurs first. The provision is based on estimates made from historical warranty data associated with similar
products. The entire warranty provision has been treated as current.

23. CAPITAL AND RESERVES

IN THOUSANDS OF AUD

On issue at 1 July

Issued under the Employee Share Bonus Plan

Issued under the Executive Share Plan

On issue at 30 June – fully paid

ORDINARY SHARES

2013

8,680

2012

8,640

8,710

8,680

The Company made two issues of ordinary shares under the Employee Share Bonus Plan during the year. All employees
meeting the service criteria were eligible to participate in the issue. The shares are issued at market value.

Effective 1 July 1998, the Company Law Review Act abolished the concept of par value shares and the concept of
authorised capital. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

REVALUATION RESERVE

The revaluation reserve relates to land and buildings measured at fair value in accordance with Australian Accounting
Standards.

PROFITS RESERVE

The profits reserve represents current year and accumulated profits transferred to a reserve to preserve the characteristic as
a profit and not appropriate against prior year accumulated losses. Such profits are available to enable payment of franked
dividends in the future.

EQUITY COMPENSATION RESERVE

The Equity compensation reserve represents the accumulated expense recognised for share-based payments granted by
the Company to date. This reserve will be reversed against share capital or retained earnings when the underlying shares
vest in the employee. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the
Company’s own equity instruments.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD23. CAPITAL AND RESERVES (CONTINUED)

DIVIDENDS

Dividends recognised in the current year by the Company are:

IN THOUSANDS OF AUD

2013

Interim 2013 ordinary

Final 2012 ordinary

Total amount

2012

Interim 2012 ordinary

Interim 2012 special

Final 2011 ordinary

Total amount

CENTS PER SHARE

TOTAL AMOUNT

FRANKED/
UNFRANKED

DATE OF PAYMENT

26.0

30.0

18.0

5.0

15.0

2,259

2,604

4,863

1,564

435

1,300

3,299

Fully franked

13 March 2013

Fully franked

6 September 2012

Fully franked

9 March 2012

Fully franked

9 March 2012

Fully franked 8 September 2011

The ability to utilise the franking credits is dependent upon being able to declare dividends. The impact on the dividend
franking account of dividends proposed after the reporting date but not recognised as a liability is to reduce it by $755,560
(2012: $1,130,516).

24. FINANCIAL INSTRUMENTS

FINANCIAL RISK MANAGEMENT

OVERVIEW

The Group has exposure to the following risks from their use of financial instruments:

• credit risk;

• liquidity risk; and

• market risk.

The board of directors has overall responsibility for the establishment and oversight of the risk management framework.

Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. The Audit Committee oversees how management
monitors compliance with the risk management policies and procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.

Franked dividends declared or paid during the year were franked at the tax rate of 30%.

CREDIT RISK

After the balance sheet date the following dividends were proposed by the directors. The dividends have not been provided.
The declaration and subsequent payment of dividends has no income tax consequences.

IN THOUSANDS OF AUD

Final ordinary

Total amount

CENTS PER SHARE

TOTAL AMOUNT

20.0

1,763

FRANKED/
UNFRANKED

DATE OF PAYMENT

Fully franked 6 September 2013

The financial effect of these dividends have not been brought to account in the financial statements for the financial year
ended 30 June 2013 and will be recognised in subsequent financial reports.

DIVIDEND FRANKING ACCOUNT

IN THOUSANDS OF AUD

2013

2012

30% franking credits available to shareholders of Korvest Ltd for subsequent financial years

12,841

13,484

The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:

(a) franking credits that will arise from the payment of the current tax liabilities;

(b) franking debits that will arise from the payment of dividends recognised as a liability at the year-end;

(c) franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at
the year-end; and

(d) franking credits that the entity may be prevented from distributing in subsequent years.

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers.

EXPOSURE TO CREDIT RISK

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at
the reporting date is summarised below:

IN THOUSANDS OF AUD

Cash and cash equivalents

Trade and other receivables

NOTE

14A

2013

2012

2,438

12,534

5,170

14,779

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers the demographics of the Group’s customer base, including the default risk of the industry
and country in which customers operate, as these factors may have an influence on credit risk, particularly in the current
deteriorating economic circumstances.

There is an established credit policy under which each new customer is analysed individually for creditworthiness before the
Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings and
in some trade references when applicable and available. Purchase limits are established for each customer, which represent
the maximum open amount without requiring further approval. These limits are subject to on-going review. Customers that
fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD24. FINANCIAL INSTRUMENTS (CONTINUED)

Goods are sold subject to retention of title clauses, so that in the event of non-payment the Group may have a secured
claim. The Group otherwise does not require collateral in respect of trade and other receivables.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and
other receivables and investments. The main components of this allowance are a specific loss component that relates to
individually significant exposures, and a collective loss component established for groups of similar assets in respect of
losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of
payment statistics for similar financial assets.

The maximum exposure to credit risk for trade and other receivables at the end of the reporting period by geographic region
was as follows

IN THOUSANDS OF AUD

Australia

South America

Africa

South East Asia

Impairment losses

2013

2012

12,357

14,779

117

12,534

14,779

The ageing of the trade and other receivables at the reporting date that were not impaired was as follows:

Not past due nor impaired

Past due 0-30 days

Past due 31-90 days

More than 91 days

GROSS

7,094

3,957

1,206

277

GROSS

8,551

4,255

1,680

293

12,534

14,779

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

Balance at 1 July

Amounts written off against allowance

Impairment loss (recognised) / reversed

Balance at 30 June

(918)

646

(253)

(525)

(499)

427

(846)

(918)

During the year a project based customer was placed into administration which resulted in an impairment loss of $265,000.
The goods were sold to the customer under a retention of title clause. Legal processes were used to recover the debt
however this proved to be unsuccessful. A portion of the 30 June 2013 impairment loss relates to an entity from within the
Hastie Group that was placed into administration in May 2012. The remainder of the impairment loss at 30 June 2013 relates
to a number of customers where an assessment has been made that the amounts are likely to be uncollectable.

The Group sells to a variety of customers including wholesalers and end users and does not have a concentration of credit
risk in any one sector.

Based on the Group’s monitoring of customer credit risk, the Group believes that, except as indicated above, no impairment
allowance is necessary in respect of trade receivables not past due.

Cash and cash equivalents

The Group held cash and cash equivalents of $2,438,000 at 30 June 2013 (2012: $5,170,000), which represents its
maximum credit exposure on these assets. The cash and cash equivalents are held with major Australian banks.

LIQUIDITY RISK

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as
far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows
on trade and other payables.

In addition, the Group maintains the following lines of credit:

• $0.75 million overdraft facility that is unsecured.

The following are the remaining contractual maturities at the end of the reporting period of financial liabilities, including
estimated interest payments. The amounts disclosed are the contractual undiscounted cash flows (inflows shown as
positive, outflows as negative).

IN THOUSANDS OF AUD

NON-DERIVATIVE FINANCIAL LIABILITIES

CARRYING
AMOUNT

2013
CONTRACTUAL
CASH FLOWS

6 MTHS OR
LESS

6 – 12
MNTHS

CARRYING
AMOUNT

2012
CONTRACTUAL
CASH FLOWS

6 MTHS OR
LESS

Trade and other payables

4,730

(4,730)

(4,500)

Unsecured Loans

Contingent consideration

Finance Lease

156

500

(156)

(500)

(11)

(500)

(6)

(230)

(156)

(5)

5,078

(5,078)

5,397

(5,397)

(5,006)

(391)

5,078

(5,078)

MARKET RISK

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency risk

The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the Australian
dollar (AUD). The currency in which these transactions primarily are denominated is US dollars (USD).

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD24. FINANCIAL INSTRUMENTS (CONTINUED)

Exposure to currency risk

25. OPERATING LEASES

LEASES AS LESSEE

The Group did not have any material exposure to foreign currency risk and as a result movements in the Australian dollar
against other currencies will not have a material impact on the Group’s profit or equity.

At the end of the reporting period, the future minimum lease payments under non-cancellable operating leases are payable
as follows:

Interest rate risk

The Group is not currently exposed in any material way to interest rate risk. The risk is limited to the re-pricing of short term
deposits utilised for surplus funds. Such deposits generally re-price approximately every 30 days.

Exposure to interest rate risk

Movements in interest rates will not have a material impact on the Group’s profit or equity.

Other market price risk

IN THOUSANDS OF AUD

Less than one year

Between one and five years

More than five years

2013

829

1,602

2,431

2012

796

1,496

2,372

The Group has no material financial instrument exposure to other market price risk as it is not exposed to either commodity
price risk or equity securities price risk. The Group does not enter into commodity contracts other than to meet the Group’s
expected usage requirements.

The Group leases a number of warehouse and factory facilities under operating leases. The leases typically run for a period
of five years, with an option to renew the lease after that date. Lease payments are increased every five years to reflect
market rentals. None of the leases includes contingent rentals. Rentals are increased by CPI or similar each year.

CAPITAL MANAGEMENT

The Group’s objectives when managing capital (net debt and equity) are to safeguard its ability to continue as a going
concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.

During the year the Group was not subject to externally imposed capital requirements.

There were no changes in the Group’s approach to capital management during the year.

ACCOUNTING CLASSIFICATIONS AND FAIR VALUES

FAIR VALUES VS CARRYING VALUES

The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial
position are as follows:

NOTE

14A

CARRYING
AMOUNT

FAIR VALUE

CARRYING
AMOUNT

FAIR VALUE

2013

2012

12,534

14,779

2,438

5,170

(5,230)

(5,078)

(167)

9,575

(167)

9,575

14,871

IN THOUSANDS OF AUD

Trade and other receivables

Cash and cash equivalents

Trade and other payables

Loans and borrowings

During the financial year ended 30 June 2013, $844,918 was recognised as an expense in the Statement of profit and loss
and comprehensive income in respect of operating leases (2012: $836,535).

26. CAPITAL AND OTHER COMMITMENTS

IN THOUSANDS OF AUD

CAPITAL EXPENDITURE COMMITMENTS

PLANT AND EQUIPMENT

Contracted but not provided for and payable:

Within one year

One year or later and no later than five years

Later than five years

27. GROUP ENTITIES

Power Step (Australia) Pty Ltd

Power Step (Chile) SpA

Titan Technologies (SE Asia) Pty Ltd

2013

2012

156

COUNTRY OF INCORPORATION

OWNERSHIP INTEREST

2013
%

100

Australia

Chile

Australia

2012
%

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD28. KEY MANAGEMENT PERSONNEL DISCLOSURES

The following were key management personnel of the Company at any time during the reporting period and unless otherwise
indicated were key management personnel for the entire period:

Non-executive Directors

• Peter Stancliffe (Chairman)

• Peter Brodribb

• Graeme Billings (Appointed 3 May 2013)

• Ted Pretty (Appointed 3 Sep 2012, Retired 25 March 2013)

• Graham Twartz (Retired 2 Sep 2012)

Executive Directors

• Alexander Kachellek (Managing Director)

• Steven McGregor (Finance Director and Company Secretary)

Executives

• Chris Hartwig (General Manager, EzyStrut)

• Steven Evans (General Manager Galvanising)

• Andrew Ifkovich (General Manager, Indax) (ceased 17 June 2013)

• Paul Assaf (General Manager Power Step & Titan Technologies) Commenced 1 March 2013 as KMP.

KEY MANAGEMENT PERSONNEL COMPENSATION

The key management personnel compensation comprised:

2013

2012

1,476,823

1,416,481

129,812

123,261

83,660

43,190

(1,041)

62,971

117,805

1,732,444

1,720,518

IN AUD

Short-term employee benefits

Post employment benefits

Termination benefits

Long term benefits

Equity compensation benefits

INDIVIDUAL DIRECTORS AND EXECUTIVES COMPENSATION DISCLOSURES

Information regarding individual directors’ and executives’ compensation and some equity instruments disclosure as
permitted by Corporations Regulations 2M.3. is provided in the Remuneration report section of the Directors’ report.

Apart from the details disclosed in this note, no director has entered into a material contract with the Company since the end
of the previous financial year and there were no material contracts involving directors’ interests existing at year-end.

OTHER KEY MANAGEMENT PERSONNEL TRANSACTIONS WITH THE GROUP

From time to time, key management personnel of the Group, or their related entities, may purchase goods from the Group.
These purchases are on the same terms and conditions as those entered into by other Group employees or customers and
are trivial or domestic in nature.

OPTIONS AND RIGHTS OVER EQUITY INSTRUMENTS

The movement during the reporting period in the number of options over ordinary shares in Korvest Ltd held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:

HELD AT
1 JULY 2012
IFRS

GRANTED AS
COMPENSATION

EXERCISED

OTHER
CHANGES *

HELD AT
30 JUNE 2013

HELD AT
30 JUNE 2013
ASX

VESTED
DURING THE
YEAR

ASX
VESTED AND
EXERCISED
DURING THE
YEAR ENDED
30 JUNE 2013

DIRECTORS

A Kachellek

S McGregor

EXECUTIVES

C Hartwig

S Evans

A Ifkovich

P Assaf

65,000

40,000

25,000

20,000

35,000

10,000

15,000

7,500

90,000

60,000

45,000

50,000

27,500

40,000

27,500

(17,500)

* Other changes represent options that expired, were cancelled or were forfeited during the year.

No options held by key management personnel are vested but not exercisable.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD28. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)

MOVEMENTS IN SHARES

HELD AT
1 JULY 2011
IFRS

GRANTED AS
COMPENSATION

EXERCISED

OTHER
CHANGES *

HELD AT
30 JUNE 2012

HELD AT
30 JUNE 2012
ASX

VESTED
DURING THE
YEAR

ASX
VESTED AND
EXERCISED
DURING THE
YEAR ENDED
30 JUNE 2012

30,000

15,000

35,000

25,000

10,000

25,000

10,000

65,000

40,000

35,000

25,000

35,000

10,000

25,000

10,000

DIRECTORS

A Kachellek

S McGregor

EXECUTIVES

C Hartwig

S Evans

A Ifkovich

* Other changes represent options that expired, were cancelled or were forfeited during the year.

No options held by key management personnel are vested but not exercisable.

The movement during the reporting period in the number of ordinary shares in Korvest Ltd held, directly, indirectly or
beneficially, by each key management person, including their related parties, is as follows:

HELD AT
1 JULY 2012

PURCHASES

ALLOCATED
UNDER EMPLOYEE
SHARE PLAN

SALES

HELD AT
30 JUNE 2013

SHARES HELD
SUBJECT TO NON-
RECOURSE LOAN

DIRECTORS

P. Stancliffe

G. Billings *

P. Brodribb

S. McGregor

A. Kachellek

G. Twartz *

T Pretty *

EXECUTIVES

C. Hartwig

S. Evans

P Assaf *

A Ifkovich *

1,000

N/A

15,781

500

2,258

29,115

N/A

782

123

N/A

3,600

500

5,000

1,000

149

4,600

500

20,781

500

2,258

N/A

931

272

N/A

15,000

30,000

10,000

No shares were granted to key management personnel during the reporting period as compensation other than those
provided under the employee share plan on the same terms and conditions as for all employees.

* Shareholding has been noted as N/A where the person was not a member of KMP at that date. Purchase and sale
transaction have only been recorded where they occurred whilst the person was a member of KMP.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTD28. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)

30. SUBSEQUENT EVENTS

HELD AT
1 JULY 2011

PURCHASES

ALLOCATED
UNDER EMPLOYEE
SHARE PLAN

SALES

HELD AT
30 JUNE 2012

SHARES HELD
SUBJECT TO NON-
RECOURSE LOAN

1,000

29,115

15,781

500

1,258

529

1,000

253

123

1,000

29,115

15,781

500

2,258

782

123

15,000

30,000

10,000

DIRECTORS

P. Stancliffe

G. Twartz

P. Brodribb

S. McGregor

A. Kachellek

EXECUTIVES

C. Hartwig

S. Evans

A Ifkovich

29. RELATED PARTY DISCLOSURES

IDENTITY OF RELATED PARTIES

The Company has a related party with its key management personnel (see Note 28) and for the period up until 19 February
2013 with Hills Holdings Limited as its ultimate parent entity.

OTHER RELATED PARTY TRANSACTIONS

ULTIMATE PARENT ENTITY

For the period until 19 February 2013 the following material transactions took place with Hills Holdings Limited under normal
commercial terms and conditions.

IN AUD ($)

Sales

Purchases

Payment of dividends

Amounts payable at reporting date (current)

Amounts receivable at reporting date (current)

2013

2012

106,571

101,758

643,837

1,095,663

1,263,104

1,599,933

N/A

101,490

30,450

There has not arisen between the end of the year and the date of this report any item, transaction or event of a material
nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group in subsequent
financial periods.

31.PARENT ENTITY DISCLOSURES

As at, and throughout, the financial year ending 30 June 2013 the parent entity of the Group was Korvest Ltd.

IN THOUSANDS OF AUD

RESULT OF PARENT ENTITY

Profit for the period

Other comprehensive income

Total comprehensive income for the period

FINANCIAL POSITION OF PARENT ENTITY AT YEAR END

Current assets

Total Assets

Current liabilities

Total Liabilities

Total equity of the parent entity comprising of:

Share capital

Reserves

Retained earnings

TOTAL EQUITY

2013

2012

3,730

6,201

3,730

6,201

21,918

43,664

28,632

46,013

6,240

8,398

7,820

9,686

3,859

31,407

35,266

3,783

4,387

28,157

36,327

GUARANTEES ENTERED INTO BY THE COMPANY

Bank guarantees given by the Company in favour of customers amounted to $394,000 (2012: $489,000).

The Group’s bankers have provided an overdraft facility that is interchangeable between the Australian Group entities. The
Company has guaranteed the subsidiaries’ debt under this facility.

CONTINGENT LIABILITIES OF THE COMPANY

The Company does not have any contingent liabilities other than the guarantees disclosed above.

PARENT ENTITY CAPITAL COMMITMENTS FOR ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT

At 30 June 2013, the Company had contractual commitments for the acquisition of property, plant and equipment totalling
$156,000 (2012: $61,000). These commitments are not recognised as liabilities as the relevant assets have not yet been
received.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 (CONTINUED)KORVEST LTDDIRECTORS’ DECLARATION FOR THE YEAR ENDED 30 JUNE 2013

KORVEST LTD

1. In the opinion of the Directors of Korvest Ltd (the Company):

a. the consolidated financial statements and notes that are set out on pages 36 to 81 and the Remuneration

report in the Directors’ report, set out on pages 17 to 26, are in accordance with the Corporations Act 2001,
including:

i. giving a true and fair view of the Group’s financial position as at 30 June 2013 and of its performance for

the financial year ended on that date; and

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

b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they

become due and payable.

2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the

chief executive officer and chief financial officer for the financial year ended 30 June 2013.

3. The Directors draw attention to Note 2(a) to the financial statements, which includes a statement of compliance

with International Financial Reporting Standards.

Dated at Adelaide this 26th day of July 2013.

Signed in accordance with a resolution of directors:

PETER STANCLIFFE

DIRECTOR

ASX ADDITIONAL INFORMATION FOR THE YEAR ENDED 30 JUNE 2013

KORVEST LTD

Additional information required by the Australian Securities
Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below

OTHER INFORMATION

Korvest Ltd, incorporated and domiciled in Australia, is a
publicly listed company limited by shares.

SHAREHOLDINGS (AS AT 25 JULY 2013)

ON MARKET BUY BACK

SUBSTANTIAL SHAREHOLDERS

There is no current on-market buy back.

The number of shares held by substantial shareholders and
their associates are set out below:

SHAREHOLDER

Citicorp Nominees Pty Limited

RBC Investor Services Australia Nominees
Pty Limited (PI Pooled A/C)

Donald Cant Pty Ltd

NUMBER

1,192,501

1,054,669

521,844

VOTING RIGHTS

ORDINARY SHARES

Refer to note 23 in the financial statements

OPTIONS

Refer to note 21 in the financial statements

DISTRIBUTION OF EQUITY SECURITY HOLDERS