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ANNUAL
REPORT
15
Korvest Ltd, 580 Prospect Road, Kilburn, SA 5084
T: 61 8 8360 4500 | F: 61 8 8360 4599 | E: korvest@korvest.com.au
www.korvest.com.au
www.ezystrut.com.au
www.powerstep.com.au
www.titantools.com.au
www.korvestgalvanisers.com.au
15
1
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
5 YEAR SUMMARY
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
12
31
32
33
34
35
37
66
67
69
70
Korvest Ltd
ABN: 20 007 698 106
Annual Report, 30 June 2015
Gavin Christie
General Manager, Manufacturing and Supply Chain
3
KORVEST LTD:
A MARKET LEADING
INFRASTRUCTURE PROVIDER
Korvest Ltd (ASX:KOV) has a strong track record in providing ground-breaking,
complete solutions to a wide range of industries across Australia and the world.
With our businesses trading under the EzyStrut, Power Step, Titan Technologies and
Korvest Galvanisers names, we produce a range of standard as well as customised
and innovative products.
Through strong market penetration, with a reputation for producing high quality
products and delivering on time, Korvest is now one of Australia’s largest suppliers
of cable and pipe support systems, hydraulic and electric access systems for mobile
equipment, hydraulic and pneumatic tools and wrenches, as well as
galvanising services.
John Dickie
Engineering Manager
Steve Jeffs
QHSE Manager
Patrick Canny
Manager, Acquisitions
& Growth
WHEN CABLES AND PIPES ARE
INSTALLED IN ANY CONSTRUCTION
PROJECT THEY NEED TO BE SUPPORTED.
5
AUSTRALIA’S LEADING
RANGE OF CABLE AND PIPE
SUPPORT SYSTEMS
EzyStrut manufactures one of the most diverse range of cable and pipe support
solutions in the industry, suitable for almost any application and in a variety
of finishes.
EzyStrut’s products are found in numerous iconic Asia-Pacific locations, including
commercial constructions, wharfs, mine sites, tunnels, power stations and more.
A contributing factor to EzyStrut’s continued success is the ability to deliver
customised cable and pipe support solutions at competitive prices while maintaining
an extensive shelf range.
EzyStrut remains the largest Australian manufacturer of cable and pipe supports.
Chris Hartwig
Executive General
Manager
www.ezystrut.com.au
SAFETY ON ANY INDUSTRIAL VEHICLE
IS PARAMOUNT.
7
SAFETY ACCESS SYSTEMS
FOR ALL LARGE MOBILE
EQUIPMENT
All access systems supplied by Power Step are designed and manufactured in
Australia and offer access solutions for equipment in the mining, rail, marine and
aviation industries.
Power Step exports its products to Indonesia, Papua New Guinea, New Zealand,
New Caledonia and beyond.
Since its inception, Power Step has manufactured and sold over 800 access
systems. Power Step has designed access systems for all major OEMs.
All access systems designed by Power Step comply with the relevant Australian
Standards (AS1657/AS3868/SAE J185).
Paul Assaf
General Manager
(Power Step & Titan)
www.powerstep.com.au
INDUSTRIAL CONSTRUCTION NEEDS
STRENGTH AND RELIABILITY TO FASTEN
BOLTS OF ANY REQUIRED SIZE.
9
SUPERIOR AND COMPLETE
BOLTING SOLUTIONS
FOR ANY INDUSTRY
Titan Technologies (SE Asia) Pty Ltd sells international brand of Titan Hydraulic
Torque Wrenches, AirTite Pneumatic and the E-Tite Electric Continuous Torque
Wrenches, Electric/Hydraulic PT Pumps Air/ Hydraulic PT Pumps,
and related accessories.
Offering sales, hire and service, Titan Technologies has serviced job sites of all sizes
across Australia and the Asia-Pacific region.
www.titantools.com.au
STEEL USED IN CONSTRUCTION OR GENERAL
FABRICATION NEEDS PROTECTION AGAINST
CORROSION AND GALVANISING OFFERS THE
LONGEST TERM AND MOST RESILIENT SOLUTION.
11
QUICK TURNAROUND GALVANISING
OF THE LARGEST, SMALLEST,
AND MOST COMPLEX CONSTRUCTION INFRASTRUCTURE
A member of the Galvanizing Association of Australia (GAA), Korvest Galvanisers is a
leading galvaniser in Australia.
Korvest operates 2 galvanising kettles in SA:
A state-of-the-art ceramic kettle for high temperature spin galvanising of small
products and a large hot dip galvanising bath allowing single dipping of structural
members up to 13.5m in length.
With all work finished to AS/NZS4680:2006 and with stringent quality control
throughout the process, Korvest has been sought for international
galvanising requirements.
Steven Evans
General Manager
www.korvestgalvanisers.com.au
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
12
13
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 2015 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:
COMPANY SECRETARY
Mr Steven J W McGregor CA, AGIA, 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.
RE-ELECTIONS
In accordance with the Articles of Association, Peter Brodribb
and Gerard Hutchinson retire from the Board at the forthcoming
Annual General Meeting on 26 October 2015. Both are eligible for
re-election at that meeting and offer themselves accordingly.
Graeme Billings
59
Alexander Kachellek
62
Steven McGregor
43
Gerard Hutchinson
47
Peter Brodribb
70
Gary Francis
60
BCOM, FCA, MAICD
BSC.CENG MIET FAICD
BA (ACC), CA, AGIA, ACIS
MBA, MBL, MSc(IS), BEc, MA
(research), FCA, FCAID, FAIM
F.I.E (Aust)
BSC.HON. (CIVIL), MAICD
Mr Billings retired from
PricewaterhouseCoopers in 2011
after 34 years where he was a senior
partner in the Assurance practice.
Director G.U.D. Holdings Limited.
Director Clover Corporation Limited.
Appointed Chairman 18 September 2014.
A Director since May 2013.
A Director since June 2007.
Company Secretary since April 2008.
Appointed 19 November 2014.
A Director since 1984.
Appointed 11 February 2014.
Appointed as Finance Director
1 January 2009.
Mr Kachellek has experience in a
number of industries including Data
Communications and Automotive,
Lean Operations Consultancy
and Manufacturing.
Director Austmine Ltd.
Appointed Non-Executive Director in
January 2005 after retiring from the
position of Managing Director that he had
held since 1984.
Chairman of Remuneration Committee.
Chairman of Audit Committee.
Managing Director AusGroup Limited.
FORMER DIRECTOR
Peter Stancliffe
67
BE (Civil), FAICD
Appointed as Director and Chairman on
1 January 2009, retired 18 September 2014.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest LtdManaging DirectorFinance DirectorChairman Independent Non-Executive DirectorIndependentNon-Executive DirectorNon-IndependentNon-Executive DirectorIndependent Non-Executive DirectorIndependentNon-Executive Director DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
14
DIRECTORS’ MEETINGS
The number of directors’ meetings (including meetings of commit-
tees of directors) and number of meetings attended by each of the
directors of the Company during the financial year are:
DIRECTOR
Mr P Stancliffe
Mr A Kachellek
Mr P Brodribb
Mr S McGregor
Mr G Billings
Mr G Francis
Mr G Hutchinson
BOARD
MEETINGS
AUDIT COMMITTEE
MEETINGS
RENUMERATION
COMMITTEE MEETINGS
A
4
21
21
21
21
21
14
B
4
21
21
21
21
21
14
A
1
-
4
-
4
4
3
B
1
-
4
-
4
4
3
A
1
-
2
-
2
2
1
B
1
-
2
-
2
2
1
In line with the Board’s growth strategy, Korvest has been actively
engaged in reviewing potential acquisition opportunities during
the year. Approximately $0.2m of costs associated with these
activities are included in the year’s net profit after tax.
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
$63.0m, down 14.5% on the previous year. Profit after tax was
$1.5m compared to $5.6m in the previous year. The overall
results for the year were impacted by the impairment of $1.7m of
goodwill relating to the Power Step and Titan Technologies
businesses. These businesses principally service the mining
industry and with the significant slow-down in demand in that
sector the results of the businesses have been disappointing. As
a result of the uncertainty surrounding the timing of future projects
and recovery of activity in the mining sector and on the basis of an
impairment assessment performed during the first half the Board
took the decision to impair the goodwill. The exit of the Indax
business was completed during the year with all remaining
equipment and inventory sold. The review of operations set out
below contains more detailed commentary in relation to
business performance during the year.
15
DIVIDENDS
The directors announced a fully franked dividend of 12.0 cents
per share compared to 31.0 cents per share last year and 17.0
cents at the half year. The Dividend Reinvestment Plan (DRP) will
operate for the final dividend with the issue price calculated at a
5% discount to the volume weighted average market price for the
period from 19 to 25 August 2015 inclusive. The dividend will be
paid on 4 September 2015 with a record date of 21 August 2015.
A summary of dividends paid or declared by the Company to
members since the end of the previous financial year were:
CENTS PER
SHARE
TOTAL AMOUNT
$’000
FRANKED/
UNFRANKED
DATE OF PAYMENT
Declared and paid during the year 2015
Interim 2015 ordinary
Final 2014 ordinary
Total amount
17.0
31.0
1,786
3,246
5,032
Franked dividends declared and 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.
Fully franked
Fully franked
13 March 2015
5 September 2014
Final ordinary
Total amount
12.0
1,264
1,264
Fully franked
4 September 2015
The financial effect of these dividends has not been brought to
account in the financial statements for the year ended 30 June
2015 and will be recognised in subsequent financial reports.
Dividends have been dealt with in the financial report as:
Dividends
Dividends: subsequent to 30 June 2015
Note
23
23
5,032
1,264
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
16
17
STRATEGY AND FUTURE PERFORMANCE
Korvest’s businesses service a number of major markets including
infrastructure, commercial, utilities, mining, food processing, oil &
gas, power stations, health and industrial. Korvest continued to
supply a small number of large projects during the year. Recent
years have been characterised by the lack of medium to large
projects and the FY15 year saw no change in this situation.
Day-to-day business is yet to show signs of improving on the
subdued levels that have been experienced over recent years.
Foreshadowing the slowdown in the Australian economy an export
strategy was developed and is now being implemented. The target
countries are Singapore, Hong Kong, New Zealand and the
Philippines. Korvest has yet to benefit from this investment but
there has been interest in the target markets.
Korvest’s strategy has been to focus on businesses where it holds
a strong market position. This strategy resulted in the closure
of the Indax business over the past year. The remaining Korvest
businesses continue to hold strong market positions and are
therefore well equipped to take advantage of opportunities as they
arise.
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 30%.
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 which is slightly above the upper end of the target
dividend payout ratio range of 65-90% of after tax profits. The
final dividend declared remains at the upper end of the target
range. The Board has reactivated the Dividend Reinvestment Plan
for the final dividend. This has been done to ensure that Korvest
continues to distribute its available franking credits to shareholders
whilst also preserving cash to the extent of the DRP participation
to be utilised in the growth opportunities that Korvest is
actively pursuing.
In April 2014 Korvest announced the exit of the Indax grating and
handrail business previously included in the Industrial Products
group. During the 2015 year the focus has been on selling the
business assets. This process was completed during the year
with all of the inventory being sold and all of the plant and
equipment sold or redeployed.
Power Step designs and assembles access systems for large
mobile equipment. Titan Technologies supplies specialised tools
in the form of torque wrenches, hydraulic pumps and related
accessories. Both businesses rely principally on the mining
industry and as a consequence the performance of both
businesses during the year was disappointing. The cost structure
of both the Power Step and Titan Technologies businesses were
reviewed during the year and a number of savings initiatives were
implemented.
Production
In the Production group the Galvanising business experienced
substantially reduced demand during the year. This resulted in
plant volumes in both the main bath and the spin plant being less
than has been experienced in recent years. External plant
volumes suffered the larger decline although the internal volumes
also fell as the activity in the Industrial Products segment eased.
Risk
The Board and Management periodically review and update risk
reviews that identify and assess the risks faced by the business
and the controls that are in place to mitigate those risks. General
Managers report to the board monthly on any changes to the risk
profile of their business unit. There have been few changes to the
risk environment faced by Korvest over the past year.
Operational risks 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.
PRINCIPAL ACTIVITIES AND REVIEW OF OPERATIONS
The principal continuing activities of the Group consist of hot dip
galvanising, sheet metal 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.
Korvest had another good year in terms of plant reliability and low
down time. The responsibility for this falls to the Korvest in-house
engineering and maintenance department. Preventative
maintenance programmes are in place for key processes and
items of plant and the low plant down time over recent years is an
indicator of the success of those programmes.
The Group is comprised of the Industrial Products Group which
includes the EzyStrut, Power Step and Titan Technologies and the
Production Group which includes the Korvest Galvanisers
business.
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.
Industrial Products
In the Industrial Products group the EzyStrut cable and pipe sup-
port business supplies products to contractors for small industrial
developments and also supplies products for major infrastructure
developments. EzyStrut performed credibly in a difficult market.
The business continued to supply two major oil and gas projects
during the year and these underpinned the EzyStrut performance.
Outside of the very small number of large projects the remaining
market conditions remained difficult and competitive.
During the year Korvest went live with a new Enterprise Resource
Planning (ERP) system. There was significant management input
on the project in the period leading up to implementation and
also post implementation to ensure that the risks associated with
projects of this type were mitigated.
SIGNIFICANT CHANGES
In the opinion of the directors there were no significant changes in
the state of affairs of the Group that occurred during the financial
year under review.
REMUNERATION REPORT - AUDITED
Principles of compensation
Remuneration is referred to as compensation throughout
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 2015, 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 2015.
LIKELY DEVELOPMENTS
Korvest continues to look for growth by export and acquisition.
The types of businesses 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. The
appointment of a Manager - Acquisitions and Growth in June
2014 has seen an increased focus on this area and a number of
acquisition opportunities have been evaluated over the past year.
The broad focus for the existing businesses continues to be on
innovation both in relation to new product development and
process improvement. With subdued market conditions the focus
on customer service remains critical and projects that assist with
manufacturing efficiency and improve lead times to improve
customer service are a priority. Korvest continues to invest in
resources to pursue opportunities in markets in the Asia Pacific
region that Korvest has not previously serviced.
Further 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.
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. KMP comprise the directors and senior
executives of the Group.
Compensation levels for KMP 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 KMP
(b) the KMP’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 25 October 2013 and is not to
exceed $450,000.
Performance linked compensation
Performance linked compensation includes both short-term and
long-term incentives, and is designed to reward KMP 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 KMP are set
annually. The KPIs include measures relating to financial and
operating performance, safety, strategy and risk measures.
The KPIs are chosen to directly align the individual’s reward to
the KPIs 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. The financial objectives relate
to earnings before interest and tax (EBIT) for various parts of the
business depending on the KMP.
The structure of the STIs was changed in the current year to
encompass a wider range of KPIs and with a capped level. Previ-
ously STIs were principally based on EBIT and were uncapped.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
18
REMUNERATION REPORT - CONTINUED
The table below summarises the nature and weighting of the KPIs
included in the STIs.
MANAGING DIRECTOR
OTHER KMP*
Acquisitions & Growth (35%)
Acquisitions & Growth
Asset Divestment (10%)
Asset Divestment
Financial performance (45%)
Financial performance
Safety (10%)
Safety
*Each KMP have different KPIs and weightings. Some individual’s
STI structure do not include all KPI categories listed.
Process Improvement
Long-term incentive bonus
Performance rights are issued under the Korvest Performance
Rights Plan to employees (including KMP) 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 com-
pletion 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. For the most recent issue of Performance Rights
the table below sets out the % of rights that vest depending on the
level of EPS growth achieved.
COMPOUND ANNUAL EPS
GROWTH OVER 3 YR
VESTING PERIOD
Less than 7.5%
7.5%
% OF RIGHTS THAT VEST
Nil
33.3%
Between 7.5% - 15%
Pro rata between 33.3% – 100%
15% or greater
The EPS objective was chosen because it is a good indicator of
the Group’s earnings growth and is aligned to shareholder wealth
objectives.
100%
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 KMP are
unlimited in term but capable of termination by providing 1 to 6
months’ notice depending on the KMP, 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 KMP.
On termination of employment the KMP are also entitled to receive
their statutory entitlements and accrued annual leave and long
service leave, as well as any entitlement to incentive payments and
superannuation benefits.
Services from remuneration consultants
The remuneration committee engaged the services of AON Hewitt
and Lillas Harrison as remuneration consultants to the board to
provide benchmarking data for the amount and components of the
KMP remuneration. AON Hewitt were engaged to provide
benchmarking advice on the executives’ remuneration in
comparison with organisations of similar size and complexity to
Korvest. Lillas Harrison were engaged to specifically provide
benchmarking from a South Australian perspective.
AON Hewitt was paid $20,670 for their benchmarking advice.
Lillas Harrison was paid $790 for their benchmarking advice.
AON Hewitt conducted interviews with each of the KMP to
understand the roles and responsibilities of each. Lillas Harrison
had no contact with any members of the KMP in preparing their
report. Both consultants were engaged by and reported directly to
the Chairman of the remuneration committee. With the exception
of the interviews conducted by AON Hewitt, there were no other
interactions between the consultants and KMP.
The scope of the AON Hewitt engagement was to provide data
and market commentary only. No recommendations were made
in relation to remuneration of KMP. Similarly, Lillas Harrison was
also engaged to provide South Australian market benchmarks and
made no recommendations in relation to remuneration of KMP.
The Board was aware of the process undertaken by AON Hewitt
and Lillas Harrison and the interactions with key management
personnel and is satisfied that their reports were made free from
undue influence by members of the key management personnel.
The remuneration committee consists entirely of non-executive
directors and is responsible for setting the remuneration levels
for KMP.
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.
Non-executive directors
Non-executive directors receive a fixed fee. The total remuneration
for all non-executive directors was last voted upon by sharehold-
ers at the AGM held on 25 October 2013 and is not to exceed
$450,000.
The current base fees became effective on 1 July 2014 and are:
Chairman $123,600
Director $61,800
The Chairman of a Board Committee receives a further
$10,300 p.a. Superannuation is added to these fees where
appropriate. Non-executive directors do not receive
performance-related compensation.
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 31.
FOR THE YEAR ENDED 30 JUNE 2015Korvest Ltd
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
20
REMUNERATION 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 KMP of
the Group are:
NAME
DIRECTORS
G Billings
Non-executive (Chairman)
P Brodribb
Non-executive (Director)
G Francis (appointed 11 Feb 2014)
Non-executive (Director)
G Hutchinson (appointed 19 Nov 2014)
Non-executive (Director)
A Kachellek
Executive (Managing Director)
S McGregor
Executive (Finance Director)
FORMER DIRECTOR
P Stancliffe (retired 18 September 2014)
Non-executive (Director)
EXECUTIVES/OTHER KMP
C Hartwig
Executive General Manager EzyStrut
S Evans
General Manager Galvanising
P Assaf
General Manager Power Step & Titan
Technologies
SHORT TERM
POST EMPLOYMENT
SHARE BASED PAYMENTS
SALARY & FEES
$
BONUS
$
SUPERANNUATION BENEFITS
$
OTHER LONG TERM
– LONG SERVICE LEAVE
$ *
SHARES
$
OPTIONS & RIGHTS
$
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
110,725
61,825
61,800
52,100
77,369
25,000
48,067
-
309,000
300,006
272,950
265,005
30,900
100,167
236,900
230,005
200,850
195,004
216,300
209,129
-
-
-
-
-
-
-
-
15,991
145,862
10,236
27,011
-
-
39,800
160,198
5,523
55,256
4,975
-
10,519
5,719
5,871
4,819
-
-
4,566
-
36,604
35,018
26,417
25,009
2,936
9,265
26,230
25,000
24,330
23,287
20,549
24,455
-
-
-
-
-
-
-
-
9,293
14,582
7,830
21,798
-
-
7,201
9,810
10,182
4,921
12,856
16,948
-
-
-
-
-
-
-
-
-
-
-
-
-
-
997
997
997
997
997
997
-
-
-
-
-
-
-
-
(39,763)
43,478
(31,479)
34,133
-
-
(21,538)
24,192
(14,911)
15,973
(8,284)
8,284
21
S300A (1)(E)(I) PROPORTION OF
REMUNERATION
PERFORMANCE RELATED %
-
-
-
-
-
-
-
-
(7.2)
35.1
(7.4)
16.4
-
-
6.3
41.0
(4.1)
24.1
(1.3)
3.2
TOTAL
$
121,244
67,544
67,671
56,919
77,369
25,000
52,633
-
331,125
538,946
285,954
372,956
33,836
109,432
289,590
450,202
226,971
295,438
247,393
259,813
* This represents the accounting expense relating to the change
in the provision for long service leave. It does not represent cash
payments or statutory obligations.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
22
REMUNERATION REPORT - CONTINUED
Options and rights over equity instruments granted as compensation
Details on performance rights that were granted as compensation
to each KMP 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
24,000
19,000
14,000
9,000
5,000
12 Nov 2014
12 Nov 2014
12 Nov 2014
12 Nov 2014
12 Nov 2014
3.76
3.76
3.76
3.76
3.76
30 June 2017
30 June 2017
30 June 2017
30 June 2017
30 June 2017
DIRECTORS
A Kachellek
S McGregor
EXECUTIVES
C Hartwig
S Evans
P Assaf
23
Exercise of options granted as compensation
During the reporting period the following shares were issued on
the exercise of performance rights previously granted as
compensation.
A Kachellek
S McGregor
C Hartwig
S Evans
NUMBER OF SHARES
AMOUNT PAID PER SHARE
13,895
9,925
9,925
3,970
$nil
$nil
$nil
$nil
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:
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 condition-
al on the Group achieving performance hurdles. Details of the
performance criterion are included in the long-term incentives
discussion on page 18.
No equity-settled share-based payment transaction terms
(including performance rights granted as compensation to KMP)
have been altered or modified by the Group during the reporting
period or the prior period.
DIRECTORS
A Kachellek
S McGregor
EXECUTIVES
C Hartwig
S Evans
P Assaf
OPTIONS GRANTED
NUMBER
DATE
% VESTED IN
CURRENT YEAR
%
FORFEITED
OR LAPSED
IN CURRENT
YEAR
YEAR IN WHICH
GRANT VESTS
25,000
24,000
24,000
20,000
19,000
19,000
10,000*
15,000
13,000
14,000
7,500
9,000
9,000
5,000
5,000
Nov 12
Nov 13
Nov 14
Nov 12
Nov 13
Nov 14
Mar 09
Nov 12
Nov 13
Nov 14
Nov 12
Nov 13
Nov 14
Nov 13
Nov 14
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
-%
100%
30 Jun-15
-%
-%
30 Jun 16
30 Jun 17
100%
30-Jun-15
-%
-%
-%
30-Jun 16
30 Jun 17
30 Jun 11
100%
30 Jun-15
-%
-%
30 Jun 16
30 Jun 17
100%
30 Jun-15
-%
-%
-%
-%
30 Jun 16
30 Jun 17
30 Jun 16
30 Jun 17
* - 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.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
24
REMUNERATION 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
A Kachellek
S McGregor
EXECUTIVES
C Hartwig
S Evans
P Assaf
VALUE OF RIGHTS/OPTIONS
GRANTED IN YEAR $ (A)
EXERCISED IN YEAR $
LAPSED OR FORFEITED IN YEAR
$ (B)
90,284
71,475
52,666
33,857
18,809
-
-
-
-
-
118,357
94,685
71,014
35,507
-
(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 2013 to 1 July 2016).
(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 Note 21 to the financial statements.
25
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 KMP, including their related parties,
is as follows:
HELD AT
1 JULY
2014 IFRS
GRANTED AS
COMPENSATION
EXERCISED
OTHER
CHANGES*
HELD AT
30 JUNE
2015
IFRS
HELD AT
30 JUNE
2015
ASX
VESTED
DURING THE
YEAR
ASX
VESTED AND
EXERCISED
DURING THE
YEAR ENDED
30 JUNE
2015
DIRECTORS
A Kachellek
S McGregor
EXECUTIVES
C Hartwig
S Evans
P Assaf
62,895
48,925
47,925
20,470
5,000
24,000
(13,895)
19,000
(9,925)
(25,000)
(20,000)
14,000
9,000
5,000
(9,925)
(3,970)
-
(15,000)
(7,500)
-
48,000
38,000
37,000
18,000
10,000
48,000
38,000
27,000
18,000
10,000
-
-
-
-
-
13,895
9,925
9,925
3,970
-
* Other changes represent options that expired, were cancelled or
were forfeited during the year.
No options held by KMP are vested but not exercisable.
HELD AT
1 JULY
2013
IFRS
90,000
60,000
50,000
17,500
-
DIRECTORS
A Kachellek
S McGregor
EXECUTIVES
C Hartwig
S Evans
P Assaf
GRANTED AS
COMPENSATION
EXERCISED
OTHER
CHANGES*
HELD AT
30 JUNE
2014
IFRS
HELD AT
30 JUNE
2014
ASX
VESTED
DURING THE
YEAR
ASX
VESTED AND
EXERCISED
DURING THE
YEAR ENDED
30 JUNE
2014
24,000
(30,000)
19,000
(15,000)
13,000
9,000
5,000
-
-
-
(21,105)
(15,075)
(15,075)
(6,030)
-
62,895
48,925
47,925
20,470
5,000
62,895
48,925
37,925
20,470
5,000
13,895
9,925
9,925
3,970
-
-
-
-
-
-
* Other changes represent options that expired, were cancelled or
were forfeited during the year.
No options held by KMP are vested but not exercisable.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
DIRECTORS’ REPORT (INCLUDING REMUNERATION REPORT)
26
27
REMUNERATION REPORT - CONTINUED
Movements in shares
The movement during the reporting period in the number of ordinary
shares in Korvest Ltd held, directly, indirectly or beneficially, by each
KMP, including their related parties, is as follows:
HELD AT
1 JULY 2014
PURCHASES
ALLOCATED UNDER
EMPLOYEE/
EXEC SHARE PLAN
HELD AT
30 JUNE 2015
SHARES HELD
SUBJECT TO
NON-RECOURSE
LOANS
DIRECTORS
P Stancliffe*
G Billings
P Brodribb
S McGregor
A Kachellek
G Francis
G Hutchinson*
EXECUTIVES
C Hartwig
S Evans
P Assaf
5,435
590
24,559
18,318
38,498
1,684
N/A
1,305
527
174
-
-
-
-
1,015
3,850
500
-
-
-
-
-
-
9,925
13,895
-
-
10,132
4,177
207
No shares were granted to KMP 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.
N/A
590
24,559
28,243
53,408
5,534
500
11,437
4,704
381
-
-
-
-
-
-
-
10,000
-
-
HELD AT
1 JULY 2013
PURCHASES
ALLOCATED UNDER
EMPLOYEE/ EXEC
SHARE PLAN
ALLOCATED
UNDER DRP
HELD AT
30 JUNE 2014
SHARES HELD
SUBJECT TO
NON-RECOURSE
LOANS
DIRECTORS
P Stancliffe
G Billings
P Brodribb
S McGregor
A Kachellek
G Francis*
EXECUTIVES
C Hartwig
S Evans
P Assaf*
4,600
500
20,781
500
2,258
N/A
931
272
-
-
-
-
-
319
1,425
-
-
-
-
-
-
15,000
30,000
-
174
174
174
835
90
3,778
2,818
5,921
259
200
81
-
5,435
590
24,559
18,318
38,498
1,684
1,305
527
174
-
-
-
-
-
-
10,000
-
-
No shares were granted to KMP 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 transactions
have only been recorded where they occurred whilst the person
was a member of KMP.
Analysis of bonuses included in remuneration
Executive bonuses are paid on the achievement of specified
performance targets. Those targets vary for each executive and
are aligned to each executive’s role and responsibilities. The
targets relate to financial, operational, strategic and safety
measures. Details of the vesting profile of the short-term incentive
cash bonuses awarded as remuneration to each director of the
Company, and to other key management personnel are
detailed below.
INCLUDED IN REMUNERATION $ (A)
% VESTED IN YEAR
% FORFEITED IN YEAR (B)
SHORT-TERM INCENTIVE BONUS
DIRECTORS
A Kachellek
S McGregor
EXECUTIVES
C Hartwig
S Evans
P Assaf
15,991
10,236
39,800
5,523
4,975
12%
23%
40%
11%
12%
88%
77%
60%
89%
88%
(A) Amounts included in remuneration for the financial
year represent the amount related to the financial year
based on the achievement of specified performance
criteria. The remuneration committee approved these
amounts on 30 July 2015.
(B) The amounts forfeited are due to the performance
criteria not being met in relation to the current
financial year.
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:
•
the non-audit services provided do not undermine the gen-
eral 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.
KORVEST LTD
ORDINARY
SHARES
51,115
18,650
590
28,243
5,534
500
KORVEST LTD
PERFORMANCE
RIGHTS
UNVESTED
48,000
-
-
38,000
-
-
A Kachellek
P Brodribb
G Billlings
S McGregor
G Francis
G Hutchinson
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
For details of non-audit services fees charged refer to Note 11 to
the financial statements.
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration is set out on page 69
and forms part of the Directors’ report for the financial year ended
30 June 2015.
ROUNDING 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.
CORPORATE GOVERNANCE
The Company’s Corporate Governance Statement can be found
on the Korvest website at
www.korvest.com.au/index.php?PID=110
Signed at Adelaide this Thursday 30th of July 2015 in accordance
with a resolution of the directors.
G A BILLINGS, Director
A H W KACHELLEK, Director
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
FINANCIAL
STATEMENTS
Korvest Ltd
2015
5 YEAR SUMMARY
2015
2014
2013
2012
2011
31
SALES REVENUE
($’000)
63,025
73,756
61,723
72,322
67,384
PROFIT AFTER TAX
($’000)
1,455
5,603
3,825
6,201
4,221
DEPRECIATION/AMORTISATION
($’000)
1,642
1,774
1,652
1,542
1,279
CASH FLOW FROM OPERATIONS
($’000)
5,115
4,228
7,524
8,681
3,185
PROFIT FROM ORDINARY ACTIVITIES
- As % of Shareholders’ Equity
- As % of Sales Revenue
DIVIDEND
- Total amount paid
- Per issued share
- Times covered by profit from ordinary activities
4.4%
2.3%
15.1%
7.6%
10.8%
6.2%
17.1%
8.6%
12.7%
6.3%
($’000)
5,032
48.0c
0.3
12,830
146.0c
0.4
4,863
56.0c
0.8
3,299
38.0c
1.9
2,244
26.0c
1.9
EARNINGS PER SHARE
13.9c
64.1c
44.0c
71.6c
48.9c
NUMBER OF EMPLOYEES
225
242
217
259
242
SHAREHOLDERS
- Number at year end
2,029
2,034
1,627
1,271
1,247
NET ASSETS PER ISSUED ORDINARY SHARE
NET TANGIBLE ASSETS PER ISSUED ORDINARY SHARE
SHARE PRICE AS AT 30 JUNE
$3.13
$3.13
$3.55
$3.501
$3.332
$5.60
$4.01
$3.77
$5.80
$4.13
$4.13
$4.65
$3.79
$3.79
$3.57
1 Net assets per issued ordinary share figure was impacted by
the issue of 1,607,000 new shares in June 2014 in relation to the
Special dividend and Dividend Reinvestment Plan. Had these not
been issued, the figure would have been $4.14.
2 Net tangible assets per issued ordinary share figure was impact-
ed by the issue of 1,607,000 new shares in June 2014 in relation
to Special dividend and Dividend Reinvestment Plan. Had these
not been issued, the figure would have been $3.94.
FOR THE YEAR ENDED 30 JUNE 2015Korvest Ltd CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
32
In thousands of AUD
CONTINUING OPERATIONS
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 FROM CONTINUING OPERATIONS
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Revaluation of property plant and equipment
Related tax
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
ATTRIBUTABLE TO:
Equity holders of the Company
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
Note
2015
2014
7
8
10
10
63,025
73,756
(60,305)
(66,101)
2,720
7,655
41
(3)
38
50
(1)
49
2,758
7,704
12
(1,303)
(2,101)
1,455
1,455
-
-
-
1,455
1,455
5,603
5,603
(854)
256
5,005
5,005
5,005
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
CENTS
CENTS
13.9
13.9
64.1
63.6
13
13
In thousands of AUD
ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Tax receivable
Assets held for sale
TOTAL CURRENT ASSETS
Property, plant and equipment
Deferred tax asset
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Bank overdrafts
Trade and other payables
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
33
Note
2015
2014
14A
15
16
6
17
12
18
14A
19
21
22
21
12
22
-
13,592
13,611
273
-
27,476
15,907
-
25
15,932
43,408
500
6,359
2,743
42
-
497
17,706
11,303
-
1,452
30,958
15,912
180
1,755
17,847
48,805
-
8,184
2,255
95
699
9,644
11,233
438
51
333
822
10,466
32,942
12,833
20,109
-
32,942
32,942
657
-
333
990
12,223
36,582
12,764
23,818
-
36,582
36,582
The notes on pages 37 to 64 are an integral part of these consolidated financial statements.
The notes on pages 37 to 64 are an integral part of these consolidated financial statements.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
34
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
Income taxes paid
Note
2015
2014
73,394
75,806
(66,273)
(69,922)
7,121
5,884
38
49
(2,044)
(1,705)
NET CASH FROM OPERATING ACTIVITIES
14B
5,115
4,228
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment and assets held for sale
Acquisition of property, plant and equipment and intangible assets
17,18
NET CASH FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings
Proceeds from issue of share capital
Transaction costs related to issue of share capital
Dividends paid
NET CASH FROM FINANCING ACTIVITIES
Net decrease in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT 1 JULY
287
(1,367)
(1,080)
-
-
-
23
(1,949)
(1,926)
(167)
9,042
(288)
(997)
497
(1,941)
2,438
(BANK OVERDRAFTS) / CASH AND CASH EQUIVALENTS AT 30 JUNE
14A
(500)
497
In thousands of AUD
Balance at 1 July 2014
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
Share options exercised
Total contributions by and distributions to
owners of the Company
Transfer to profits reserve
Balance at 30 June 2015
SHARE
CAPITAL
EQUITY
COMPENSATION
RESERVE
ASSET
REVALUATION
RESERVE
PROFITS
RESERVE
RETAINED
EARNINGS
TOTAL
12,764
343
3,585
19,890
-
36,582
35
-
-
69
-
-
69
-
12,833
-
-
-
-
(132)
(132)
-
211
-
-
-
-
-
-
-
-
-
-
(5,032)
-
(5,032)
1,455
1,455
1,455
1,455
-
-
-
-
69
(5,032)
(132)
(5,095)
1,455
(1,455)
-
3,585
16,313
Profit
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
Issue of ordinary shares
Dividends to shareholders
Share options exercised
Total contributions by and distributions to owners
of the Company
Transfer to profits reserve
Balance at 30 June 2014
-
-
-
64
8,643
-
198
8,905
-
12,764
-
-
-
144
-
-
-
144
-
343
-
-
-
-
-
(12,833)
-
(12,833)
-
(598)
(598)
-
-
-
-
-
-
5,603
(5,603)
-
3,585
19,890
-
36,582
-
-
5,603
-
5,603
32,942
35,361
5,603
(598)
5,005
-
-
-
-
208
8,643
(12,833)
198
(3,784)
23
(5,032)
(12,830)
Balance at 1 July 2013
3,859
199
4,183
27,120
(5,032)
(4,243)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
The notes on pages 37 to 64 are an integral part of these consolidated financial statements.
The notes on pages 37 to 64 are an integral part of these consolidated financial statements.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd 37
17. PROPERTY, PLANT AND EQUIPMENT
52
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
58
58
60
62
62
63
63
63
63
64
NOTES TO THE FINANCIAL STATEMENTS
1. REPORTING ENTITY
2. BASIS OF PREPARATION
3. SIGNIFICANT ACCOUNTING POLICIES
38
38
38
38
(a) Basis of consolidation
39
(b) Foreign currency
(c) Financial instruments
39
(d) Property, plant and equipment 39
(e) Leases
40
(f) Intangible assets and goodwill 40
41
(g) Inventories
41
(h) Impairment
41
(i) Employee benefits
42
(j) Provisions
42
(k) Revenue
(l) Finance income and
finance costs
(m) Tax
(n) Goods and services tax
(o) Earnings per share
(p) Segment reporting
(q) Assets held for sale
(r) New standards and
interpretations not yet adopted 43
42
42
43
43
43
43
4. DETERMINATION OF FAIR VALUES
5. SEGMENT REPORTING
6. DISPOSAL GROUP HELD FOR SALE
7. REVENUE AND OTHER INCOME
8 EXPENSES
9. EMPLOYEE BENEFIT EXPENSES
43
45
46
47
47
47
10. FINANCE INCOME AND FINANCE COSTS
48
11. AUDITOR’S REMUNERATION
12. TAXES
13. EARNINGS PER SHARE
14A. (BANK OVERDRAFTS) / CASH AND
CASH EQUIVALENTS
14B. RECONCILIATION OF CASH FLOWS
FROM OPERATING ACTIVITIES
15. TRADE AND OTHER RECEIVABLES
16. INVENTORIES
48
48
49
50
51
51
51
FOR THE YEAR ENDED 30 JUNE 2015Korvest Ltd
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
38
39
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 2015
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 Reporting (Note 5).
2. BASIS OF PREPARATION
(a) Statement of compliance
The consolidated financial statements are general purpose finan-
cial 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).
The consolidated financial statements were approved by the
Board of Directors on 30th July 2015.
(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.
(c) Functional and presentation currency
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.
Estimates and underlying assumptions are reviewed on an ongo-
ing 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:
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.
(a) Basis of consolidation
Business combinations
Business combinations are accounted for using the acquisition
method as at the acquisition 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.
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.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to, variable
returns from its investment with the entity and has the ability affect
those returns through its power over the entity. The financial state-
ments of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date
that control ceases.
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.
• Note 3(c) and 15 – Trade and other receivables
• Note 3(g) and 16 – Inventories
• Note 3(j) and 22 – Provisions
• Note 3(q) and 6 – Assets held for sale
• Note 4 – Determination of fair values
(b) Foreign currency
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 trans-
lated 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 are translated using the
exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are generally
recognised in profit or loss.
(c) Financial instruments
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 determi-
nable payments that are not quoted in an active market. Such
assets are recognised initially at fair value plus any directly attrib-
utable 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 / Bank overdrafts
Cash and cash equivalents and Bank overdrafts 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.
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 and included as
a component of cash and cash equivalents for the statement of
cash flows.
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
Recognition and measurement
Items of plant and equipment are measured at cost less accu-
mulated depreciation and any accumulated impairment losses.
Property is measured at fair value.
Cost 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 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
• Capitalised borrowing costs.
Purchased software that is integral to the functionality of the relat-
ed equipment is capitalised as part of that equipment.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
40
41
(d) Property, plant and equipment (continued)
When parts of an item of property, plant and equipment have dif-
ferent useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
Minimum lease payments made under finance leases are appor-
tioned between the finance expense and the reduction of the out-
standing 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.
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.
Subsequent expenditure
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.
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.
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
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).
The estimated useful lives for the current and comparative years of
significant items of property, plant and equipment are as follows:
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses.
• Buildings
• Plant and equipment 3-12 years
40 years
Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
(e) Leases
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.
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.
Other intangible assets
Other intangible assets that are required by the Group and have
finite useful lives are measured at cost less accumulated amortisa-
tion and any accumulated impairment losses.
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.
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 realis-
able 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
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.
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.
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 impairment loss had been recognised.
(i) Employee benefits
Short-term benefits
Short-term employee benefit obligations are expensed as the
related service is provided. A liability is recognised for the amount
expected to be paid 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.
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 corre-
sponding increase in equity. The fair value of the shares granted is
measured using a present value method.
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.
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 en-
tity 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 ex-
pense in profit or loss in the periods during which related services
are rendered by employees.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
42
43
(i) Employee benefits (continued)
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 obli-
gation 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 high quality
corporate 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 estimat-
ed 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.
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.
(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 or
upon completion when the customer requests delayed delivery.
(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.
(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.
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.
A deferred tax asset is recognised for unused tax losses, tax cred-
its 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 recognised 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.
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.
(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) Assets held for sale
Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly probable that
they will be recovered primarily through sale rather than
continuing use.
Such assets, or disposal groups, are generally measured at the
lower of their carrying amount and fair value less costs to sell. Any
impairment loss on a disposal group is allocated first to goodwill,
and then to the remaining assets and liabilities on a pro rata basis,
except that no loss is allocated to inventories, financial asset and
deferred tax assets, which continue to be measured in accordance
with the Group’s other accounting policies. Impairment losses
on initial classification as held-for-sale and subsequent gains and
losses on re-measurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets and property,
plant and equipment are no longer amortised or depreciated.
(r) 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 2015, 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.
NEW OR AMENDED
STANDARD
SUMMARY OF
REQUIREMENTS
POSSIBLE IMPACT
ON CONSOLIDATED
FINANCIAL
STATEMENTS
IFRS 9 Financial
IFRS 9, published in
The Group is assessing
instruments
July 2014, replaces the
potential impact on its
existing guidance in IAS
consolidated financial
39 Financial instru-
statements resulting from
ments: Recognition and
application of IFRS 9. The
Measurement. IFRS 9
effect is not expected to
includes revised guidance
be significant.
on the classification and
measurement of financial
instruments, including
a new expected credit
loss model for calculating
impairment on financial
assets, and the new
general hedge accounting
requirements. It also
carries forward the guid-
ance on recognition and
derecognition of financial
instruments from IAS 39.
IFRS 9 is effective for
annual reporting periods
beginning on or after 1
January 2018, with early
adoption permitted.
4. DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies and disclosures
require measurement of fair values, for both financial and
non-financial assets and liabilities.
The Group adopted IFRS 13 Fair Value Measurement, with date
of initial application of 1 July 2013. IFRS 13 establishes a single
framework for measuring fair value and making disclosures about
fair value measurements when such measurements are required
or permitted by other IFRSs. It unifies the definition of fair value
as the price that would be received to sell or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. It replaces and expands the disclosure
requirements about fair value measurements in other IFRSs. As a
result, the Group has applied additional disclosures in this regard
(see Notes 6 and 17).
In accordance with the transitional provisions of IFRS 13, the
Group has applied the new fair value measurement guidance pro-
spectively and has not provided any comparative information for
the new disclosures. Notwithstanding the above, the change had
no significant impact on the measurements of the Group’s assets
and liabilities.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
44
45
4. DETERMINATION OF FAIR VALUES (Continued)
The Group has an established control framework with respect to
the measurement of fair values. The Finance Director has overall
responsibility for all significant fair value measurements, including
Level 3 fair values.
(b) Inventories
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.
(c) Trade and other receivables
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.
The Finance Director regularly reviews significant unobservable
inputs and valuation adjustments. If third party information is used
to measure fair values, the Finance Director assesses the evidence
obtained from the third parties to support the conclusion that such
valuations meet the requirements of AASB, including the level in
the fair value hierarchy in which such valuations should
be classified.
Significant valuation issues are reported to the Audit Committee.
When measuring the fair value of an asset or liability, the Group
uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on
inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
• Level 2: inputs other than quoted prices included in Level
1 that are observable for the asset or liability, either directly
(i.e. prices) or indirectly (i.e. derived from prices)
• Level 3: inputs for asset or liability that are not based on
observable market data (unobservable inputs).
If inputs used to measure fair value of an asset or liability might be
categorised in different levels of the fair value hierarchy, then the
fair value measurement is categorised in its entirety in the same
level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement.
The Group recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during which the
change has occurred.
Further information about the assumptions made in measuring fair
values is included in relevant notes.
(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.
5. 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, Power Step and Titan Technologies
names and formerly the Indax name.
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.
INDUSTRIAL PRODUCTS
PRODUCTION
TOTAL
In thousands of AUD
External revenue
Depreciation and amortisation
Reportable segment profit before tax
Reportable segment assets
Capital expenditure
In thousands of AUD
2015
2014
58,338
67,199
1,157
5,155
29,561
692
1,218
6,609
33,023
1,010
2015
4,687
291
697
3,896
209
2014
6,557
363
2,085
3,842
57
Reconciliation of reportable segment profit, assets and other material items
PROFIT
Total profit for reportable segments
Impairment of goodwill
Unallocated amounts – other corporate expenses (net of corporate income)
Profit before income tax
ASSETS
Total assets for reportable segments
Land and buildings
Goodwill
Other unallocated amounts
Total assets
CAPITAL EXPENDITURE
Capital expenditure – reportable segments
Other unallocated amounts
Total capital expenditure
OTHER MATERIAL ITEMS
Depreciation and amortisation – reportable segments
Unallocated amounts – other corporate depreciation
Total
2015
2014
63,025
73,756
1,448
5,852
33,457
901
2015
5,852
(1,721)
(1,373)
2,758
33,457
7,246
-
2,705
43,408
901
466
1,367
1,448
194
1,642
1,581
8,694
36,865
1,067
2014
8,694
-
(990)
7,704
36,865
7,080
1,721
3,139
48,805
1,067
881
1,948
1,581
193
1,774
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
46
47
(c) Cumulative income or expense included in other
comprehensive income
There are no cumulative income or expenses included in other
comprehensive income relating to the disposal group.
(d) Measurement of fair values
(i) Fair value hierarchy
The non-recurring fair value measurement for the disposal group
of $1,452,000 was categorised as Level 3 fair value based on the
inputs used the valuation technique used (see Note 4).
(ii) Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in meas-
uring the fair value of the disposal group, as well as significant
unobservable inputs used.
VALUATION TECHNIQUE
SIGNIFICANT
UNOBSERVABLE INPUTS
Fair value property plant and equip-
Indicative offers from prospective buyers
ment was based on indicative offers
from prospective buyers received by
the Group.
The fair value of inventory reflects
recoverable amount determined with
reference to market price and consider-
ing net realisable value.
5. SEGMENT REPORTING (CONTINUED)
Geographical segments
The Group operates predominately in Australia.
Customers
Revenue from one customer of the Group’s Industrial Products
segment represented $13,029,000 (2014: $8,154,000) of the
Group’s total revenues.
6. DISPOSAL GROUP HELD FOR SALE
In April 2014 Korvest advised that the Indax business would be
exited and accordingly the assets associated with that business
were presented as a disposal group held for sale.
During 2015 all inventory has been sold and all plant and
equipment has been either sold or redeployed within the remaining
Korvest business.
(a) Impairment loss relating to the disposal group
As at 30 June 2014 impairment losses of $678,000 for write-
downs of the disposal group to the lower of its carrying amount
and its fair value less costs to sell were included in administration
expenses. In current year the impairment losses were applied
to the carrying amount of the property, plant and equipment
($263,000) and inventory ($415,000) within the disposal group.
The impairment losses were reversed to offset cost of property,
plant and equipment and inventory sold and shown as a reduction
in administrative expenses (see note 8).
(b) Assets and liabilities of disposal group held for sale
At 30 June 2014, the disposal group was stated at fair value less
costs to sell and comprised the following assets and liabilities:
In thousands of AUD
Plant and equipment
Inventories
ASSETS HELD FOR SALE
Payables
LIABILITIES HELD FOR SALE
Note
17
2015
2014
-
-
-
-
-
582
870
1,452
-
-
7. REVENUE AND OTHER INCOME
In thousands of AUD
REVENUE
Sales of goods
8. EXPENSES
In thousands of AUD
Cost of goods sold
2015
2014
63,025
63,025
73,756
73,756
Note
2015
2014
36,515
41,293
Sales, marketing and warehousing expenses
14,769
16,590
Administration expenses
Distribution expenses
Goodwill impairment
Other expenses
PROFIT BEFORE INCOME TAX HAS BEEN ARRIVED AT AFTER CHARGING / (CREDITING)
THE FOLLOWING ITEMS
Depreciation of buildings
Depreciation of plant and equipment
Decrease in provisions
Executive share plan expense
Employee share bonus plan expense
Impairment loss on trade receivables
Impairment loss on disposal group held for sale
Loss on disposal of property, plant and equipment
Research and development expense
9. EMPLOYEE BENEFIT EXPENSES
In thousands of AUD
Wages and salaries
Other associated personnel expenses
Contributions to defined contribution superannuation funds
Termination benefits
Increase in liability for annual leave
Increase in liability for long service leave
Equity-settled share-based payments
2,876
4,253
1,721
171
2,971
5,177
-
70
60,305
66,101
36
1,582
1,618
(53)
(132)
69
65
-
34
64
79
1,695
1,774
(74)
156
64
37
678
71
128
17
22
21
21
6
Note
2015
2014
19,227
18,879
21
21
21
21
2,161
1,493
140
41
228
(63)
2,319
1,521
34
145
331
220
23,227
23,449
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
48
49
10. FINANCE INCOME AND FINANCE COSTS
In thousands of AUD
Interest income on bank deposits held
Interest expense from bank overdrafts
Net financing income recognised in profit or loss
11. AUDITOR’S 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
Other taxation, consulting and due diligence services
12. TAXES
In thousands of AUD
TAX RECOGNISED IN PROFIT OR LOSS
Current tax expense
Current year
DEFERRED TAX EXPENSE
Origination and reversal of temporary differences
Total income tax expense in Statement of profit or loss and comprehensive income
NUMERICAL RECONCILIATION BETWEEN TAX EXPENSE AND PRE-TAX NET PROFIT
Profit before tax
Income tax using the domestic corporation tax rate of 30% (2014: 30%)
Non-deductible expenses – impairment of goodwill
Non-deductible expenses
Recognition of tax effect of previously unrecognised tax losses
Income tax expense on pre-tax net profit
2015
2014
41
(3)
38
50
(1)
49
2015
2014
93,300
93,300
82,800
82,800
9,900
9,900
26,933
26,933
2015
2014
1,381
1,381
(78)
1,303
2,758
827
516
(40)
-
1,303
2,815
2,815
(714)
2,101
7,704
2,311
-
40
(250)
2,101
12. TAXES (Continued)
RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
ASSETS
LIABILITIES
NET
In thousands of AUD
Property, plant and equipment
Inventories
2015
-
(269)
2014
-
(482)
Provisions / accruals
(1,119)
(1,053)
Other items
Tax loss carried forward
Tax (assets) / liabilities
Set off of tax
Net tax (assets) / liabilities
(319)
(250)
(1,957)
1,957
-
(255)
(250)
(2,040)
1,860
(180)
2015
1,552
453
-
3
-
2,008
(1,957)
51
2014
1,488
372
-
-
-
1,860
(1,860)
-
2015
1,552
184
2014
1,488
(110)
(1,119)
(1,053)
(316)
(250)
51
-
51
(255)
(250)
(180)
-
(180)
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
Tax loss carried forward
BALANCE
RECOGNISED
BALANCE
30 JUNE 2014
IN PROFIT
30 JUNE 2015
(1,488)
110
1,053
255
250
180
(64)
(294)
66
61
-
(231)
(1,552)
(184)
1,119
316
250
(51)
BALANCE
RECOGNISED
RECOGNISED
RECOGNISED
BALANCE
30 JUNE 2013
IN PROFIT
IN OCI
DIRECTLY IN
30 JUNE 2014
(1,825)
217
917
158
78
(455)
81
(107)
136
11
172
293
256
-
-
-
-
256
EQUITY
-
-
-
86
-
86
(1,488)
110
1,053
255
250
180
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
50
13. EARNINGS PER SHARE
Basic and diluted earnings per share
The calculation of basic earnings per share at 30 June 2015 was
based on the net profit attributable to ordinary shareholders of
$1,454,245 (2014: $5,602,803) and a weighted average number
of ordinary shares outstanding during the financial year ended
30 June 2015 of 10,484,041 (2014: 8,774,067). The calculation
of diluted earnings per share at 30 June 2015 was based on the
profit attributable to ordinary shareholders of $1,454,245 (2014:
$5,602,803) and a weighted average number of ordinary shares
outstanding during the financial year ended 30 June 2015 of
10,484,416 (2014: 8,816,524).
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)
In thousands of shares
Weighted average number of ordinary shares (basic)
Effect of Executive Share Plan
Weighted average number of ordinary shares at 30 June
EARNINGS PER SHARE
Basic and diluted earnings per share
In AUD cents
Basic earnings per share from continuing operations
Diluted earnings per share from continuing operations
14A. (BANK OVERDRAFT) / CASH AND CASH EQUIVALENTS
In thousands of AUD
Cash in hand
Bank balances
Call deposits
(Bank overdraft) / cash and cash equivalents in the statement of cash flows
The Group had an overdraft facility of $0.75m as at 30 June 2015.
2015
10,427
57
2014
8,710
64
10,484
8,774
2015
10,484
-
2014
8,774
43
10,484
8,817
2015
13.9
13.9
2015
1
(640)
139
(500)
2014
64.1
63.6
2014
2
(1,531)
2,026
497
14B. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
In thousands of AUD
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period
Adjustments for:
Depreciation and amortisation
Impairment of property, plant and equipment
Impairment of trade receivables
Impairment of inventories classified as held for sale
Impairment of goodwill
Loss on sale of property, plant and equipment
Equity-settles share-based payment (reversal)/expenses
Decrease / (increase) in trade and other receivables
Increase in inventories*
(Decrease) / increase in trade and other payables
Increase / (decrease) in deferred tax liabilities
(Decrease) / increase in income taxes payable
Increase in provisions and employee benefits
NET CASH FROM OPERATING ACTIVITIES
* Movement includes disposals of assets classified as held for sale as at 30 June 2014
15. TRADE AND OTHER RECEIVABLES
In thousands of AUD
CURRENT
Trade receivables
Other receivables and prepayments
51
Note
2015
2014
17, 18
17
8
8
8
8
21
1,455
5,603
1,642
1,774
-
62
-
1,721
34
(63)
263
214
415
-
47
208
4,851
8,524
4,052
(1,438)
(1,825)
231
(972)
216
(5,376)
(3,082)
3,304
(292)
748
402
5,115
4,228
Note
2015
2014
13,343
17,471
249
235
24
13,592
17,706
Trade receivables are shown net of provided impairment losses amounting to $627,000 (2014: $562,000).
16. INVENTORIES
In thousands of AUD
Raw materials and consumables
Work in progress
Finished goods
2015
2,623
506
10,482
13,611
2014
832
105
10,366
11,303
Finished goods are shown net of impairment losses amounting to $891,000 (2014: $891,000) arising from the likely inability to sell a
product range at or equal to the cost of inventory.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
52
17. PROPERTY, PLANT AND EQUIPMENT
In thousands of AUD
COST
Balance at 1 July 2013
Revaluation
Acquisitions
Disposals
Reclassification to assets held for sale
Balance at 30 June 2014
Balance at 1 July 2014
Acquisitions
Disposals
Transfer from assets held for sale
Transfer of hire equipment to inventory
Balance at 30 June 2015
DEPRECIATION AND IMPAIRMENT LOSSES
Balance at 1 July 2013
Depreciation charge for the year
Revaluation
Impairment
Disposals
Reclassification to assets held for sale
Balance at 30 June 2014
Balance at 1 July 2014
Depreciation charge for the year
Disposals
Transfer from assets held for sale
Transfer of hire equipment to inventory
Balance at 30 June 2015
CARRYING AMOUNTS
At 1 July 2013
At 30 June 2014
At 30 June 2015
LAND AND
BUILDINGS
(FAIR VALUE)
PLANT AND EQUIPMENT
(COST)
TOTAL
8,169
(1,089)
-
-
-
7,080
7,080
202
-
-
-
18,128
-
1,948
(244)
(1,424)
18,408
18,408
1,150
(131)
581
(44)
26,297
(1,089)
1,948
(244)
(1,424)
25,488
25,488
1,352
(131)
581
(44)
7,282
19,964
27,246
155
79
(234)
-
-
-
-
-
36
-
-
-
36
8,014
7,080
7,246
8,633
1,695
-
263
(173)
(842)
9,576
9,576
1,582
(77)
225
(3)
8,788
1,774
(234)
263
(173)
(842)
9,576
9,576
1,618
(77)
225
(3)
11,303
11,339
9,495
8,832
8,661
17,509
15,912
15,907
53
Fair value hierarchy
At least every three years the directors obtain an independent
valuation to support the fair value of Land and Buildings. This
valuation is used by the directors as a guide in determining the
directors’ valuation for the Land and Buildings. An independent
valuation of Land and Buildings was carried out in March 2014 by
Mr Mark Klenke, AAPI MRICS FFIN of AON Valuation Services on
the basis of the open market value of the properties concerned in
their highest and best use and was used as a reference for direc-
tor’s valuation as at 30 June 2015.
The carrying amount of the Land and Buildings at cost at 30 June
2015 if not revalued would be $1,217,209.
Level 3 fair values
The following table shows a reconciliation from the opening bal-
ances to the closing balances for Land and Buildings being based
on Level 3 fair values:
In thousands of AUD
Opening balance at 1 July 2013
Depreciation for the year
Change in fair value recognised in
Asset Revaluation Reserve
Tax effect of revaluation
Closing balance at 30 June 2014
Opening balance at 1 July 2014
Additions
Depreciation for the year
Closing balance at 30 June 2015
8,014
(80)
(598)
(256)
7,080
7,080
202
(36)
7,246
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in
measuring the fair value of Land and Buildings, as well as the
significant unobservable inputs used.
VALUATION
TECHNIQUE
SIGNIFICANT
UNOBSERVABLE
INPUTS
INTER-RELATIONSHIP
BETWEEN KEY UN-
OBSERVABLE INPUTS
AND FAIR VALUE
MEASUREMENT
Capitalised income
Market yield - 9.5%
The estimated market
Potential rental rate
$56/m2
Land value for vacant land
$150/m2
value would increase if:
•
Market yields were
higher
•
Potential rental
return was higher
•
Land value
was higher
approach: the valuation
model applies a yield to
the property’s value to
assess its value less
any required capital
expenditure. The yield
applied to the potential
rental return from the
property is based on
recent sales and has been
calculated by dividing the
estimated rental return
from comparable sales to
derive a fair market sales
price. Capitalised value
has been increased by
value of a vacant land as
the property has below
average site coverage
indicating further capacity
for development.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
54
18. INTANGIBLE ASSETS
In thousands of AUD
COST
Balance at 1 July 2013
Impact of post-acquisition reassessment
Balance at 30 June 2014
Balance at 1 July 2014
Impairment
Acquisitions
Balance at 30 June 2015
ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES
Balance at 1 July 2013
Amortisation for the year
Balance at 30 June 2014
Balance at 1 July 2014
Amortisation for the year
Balance at 30 June 2015
CARRYING AMOUNTS
At 1 July 2013
At 30 June 2014
At 30 June 2015
GOODWILL
PATENTS &
TRADEMARKS
2,071
(350)
1,721
1,721
(1,721)
-
-
-
-
-
-
-
-
2,071
1,721
-
44
-
44
44
-
15
59
1
9
10
10
24
34
43
34
25
TOTAL
2,115
(350)
1,765
1,765
(1,721)
15
59
1
9
10
10
24
34
2,114
1,755
25
Impairment testing for cash generating units containing goodwill
For the purposes of impairment testing, goodwill is allocated to the
The value in use was determined by discounting the future cash
flows expected to be generated from the continuing use of the
Group’s operating divisions. The aggregate carrying amounts of
unit. Value in use as at 30 June 2015 was determined similarly to
goodwill allocated to each CGU are as follows.
the 30 June 2014 goodwill impairment test and was based on the
In thousands of AUD
Power Step and Titan Technologies
2015
-
2014
1,721
During the year ended 30 June 2015 the Group recognised an
following key assumptions:
Discount rate
Terminal growth rate
14.6%
3.0%
impairment of goodwill in relation to the Power Step and Titan
Sales growth rate (average of next five years) 7.2%
Technologies businesses. The carrying amount of the cash gener-
ating unit (CGU) was determined to be higher than its recoverable
amount and an impairment loss of $1,721,000 (30 June 2014:
$nil) was recognised. The impairment loss was allocated fully to
The values assigned to the key assumptions represent
Management’s assessment of future trends in the industry and are
based on historical data from both internal and external sources.
goodwill and reduced the goodwill to $nil. The amount has been
Following the impairment loss relating to the Power Step and Titan
separately disclosed in Note 8.
Technologies businesses the recoverable amount is equal to the
carrying amount.
Other CGU’s were not tested for impairment as there were no
impairment indicators at 30 June 2015.
55
Note
24
2015
3,139
3,220
6,359
2014
4,338
3,846
8,184
2015
2014
40
(40)
-
2015
1,271
1,472
2,743
40
(40)
-
2014
1,230
1,025
2,255
438
3,181
657
2,912
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.
19. TRADE AND OTHER PAYABLES
In thousands of AUD
Other trade payables and accrued expenses
Non-trade payables and accrued expenses
20. 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
Non-current liabilities
Unsecured government loan at nominal value
Fair value adjustment
Unsecured government loan at fair value
21. EMPLOYEE BENEFITS
Current
In thousands of AUD
Liability for annual leave
Liability for long service leave
Non-Current
Liability for long-service leave
Total employee benefits
(a) Defined contribution superannuation funds
The Group makes contributions to defined contribution
superannuation funds. The amount recognised as an expense
was $1,492,663 for the financial year ended 30 June 2015 (2014:
$1,520,782).
(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
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
56
57
Total share options / performance rights
323,500
203,500
178,500
Weighted average exercise price
$Nil
$Nil
$Nil
21. EMPLOYEE BENEFITS (Continued)
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 and further issues have been
granted annually since. 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.
GRANT DATE
March 2005
March 2009
November 2013
November 2014
PLAN
ESP
ESP
KPRP
KPRP
NUMBER OF OPTIONS
/ RIGHTS INITIALLY
GRANTED
60,000
85,000
79,500
99,000
NUMBER
OUTSTANDING AT
BALANCE DATE
NUMBER
OUTSTANDING AT
BALANCE DATE
AASBs
15,000
10,000
79,500
99,000
ASX
-
-
79,500
99,000
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.
Measurement of fair values
The fair value of the rights granted through the KPRP was mea-
sured based on the Black-Scholes formula. Expected volatility
is estimated by considering historic share price volatility over the
twelve months prior to grant date.
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
Fair value at grant date
Risk free interest rate
(based on government bonds)
Advised Restriction period
(after vesting)
2015
$3.76
$5.22
-
32.0%
10.92%
3.34%
2014
$4.97
$6.44
-
32.7%
7.14%
4.17%
3yrs
3yrs
2yrs
2yrs
RECONCILIATION OF OUTSTANDING SHARE OPTIONS/RIGHTS
GRANT
DATE
EXERCISE
DATE
EXPIRY
DATE
EXERCISE
PRICE
RIGHTS
GRANTED
NUMBER OF
OPTIONS
/ RIGHTS AT
BEGINNING OF
YEAR
LAPSED
FORFEITED
EXERCISED
EXERCISABLE
AT 30 JUNE
NUMBER OF
OPTIONS
AT END OF
YEAR ON
ISSUE
2015
PREVIOUS PLAN
Mar 05
Jan 07
Jan 2027
$4.36
Mar 09
Jan 11
Jan 2031
$3.79
Weighted average exercise price
CURRENT PLAN
Nov 12
Jul 15
Jun 2015
Nov 13
Jul 16
Jun 2016
Nov 14
Jul 17
Jun 2017
-
-
-
15,000
10,000
25,000
$4.13
73,000
79,500
-
-
-
-
-
-
99,000
-
-
-
(73,000)
-
-
152,500
99,000
(73,000)
2014
PREVIOUS PLAN
Mar 05
Jan 07
Jan 2027
$4.36
Mar 09
Jan 11
Jan 2031
$3.79
Apr 10
Jan 11
Jan 2031
$3.79
Weighted average exercise price
CURRENT PLAN
Nov 11
Jul 14
Jun 2014
Nov 12
Jul 15
Jun 2015
Nov 13
Jul 16
Jun 2016
-
-
-
45,000
45,000
15,000
105,000
$4.03
110,000
73,000
-
-
-
-
-
-
-
79,500
-
-
-
-
(66,330)
-
-
183,000
79,500
(66,330)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000
10,000
25,000
$4.13
-
79,500
99,000
178,500
-
-
-
-
-
-
-
$Nil
$Nil
(30,000)
15,000
(35,000)
10,000
(15,000)
-
(80,000)
25,000
$4.00
$4.13
-
-
-
-
-
-
-
-
-
43,670
73,000
79,500
-
-
152,500
43,670
Weighted average exercise price
$Nil
$Nil
$Nil
$Nil
$Nil
EXPENSE RECOGNISED IN PROFIT OR LOSS
Equity-settled share-based payment transactions
In thousands of AUD
Share options granted in 2008
Share options granted in 2009
Performance rights granted in FY 2012
Performance rights granted in FY 2013
Performance rights granted in FY 2014
Performance rights granted in FY 2015
Expense arising from employee share scheme
Total expense recognised for equity-settled share-based payment
2015
2014
-
-
-
-
(132)
-
69
(63)
11
1
12
-
132
-
64
220
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
58
59
22. PROVISIONS
In thousands of AUD
Balance at 1 July 2014
Provisions made during the year
Provisions reduced during the year
Provisions used during the year
Balance at 30 June 2015
Current
Non-current
Site restoration and safety
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.
23. CAPITAL AND RESERVES
In thousands of shares
On issue at 1 July
Issued under the Employee Share Bonus Plan
Issued under the Executive Share Plan
Issued under Dividend Reinvestment Plan
Issued for cash
On issue 30 June - fully paid
ORDINARY SHARES
2015
10,427
43
37
-
-
2014
8,710
30
80
692
915
10,507
10,427
In the previous year the Company issued new shares under the
Dividend Reinvestment Plan applying to the Special Dividend.
Eligible shareholders (those with registered address in Australia
or New Zealand) had an opportunity to reinvest all or part of their
Special Dividend entitlement in the Company’s shares instead of
receiving cash. The new shares were issued at a 5% discount with
a cap price of $5.50 per share.
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.
Asset 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.
SITE
RESTORATION
WARRANTIES
333
-
-
-
333
-
333
333
95
27
(79)
(1)
42
42
-
42
Dividends
Dividends recognised in the current year by the Company are:
In thousands of AUD
2015
Interim 2015 ordinary
Final 2014 ordinary
Total amount
2014
Special 2014
Interim 2014 ordinary
Final 2013 ordinary
Total amount
CENTS PER SHARE
TOTAL AMOUNT
FRANKED / UFRANED
DATE OF PAYMENT
17.0
31.0
100.0
26.0
20.0
1,786
3,246
5,032
8,822
2,269
1,739
4,863
Fully franked
13 March 2015
Fully franked
5 September 2014
Fully franked
27 June 2014
Fully franked
12 March 2014
Fully franked
6 September 2013
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.
Franked dividends declared or paid during the year were franked
at the tax rate of 30%.
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
CENTS PER SHARE
TOTAL AMOUNT
FULLLY FRANKED
DATE OF PAYMENT
Final ordinary
Total amount
12.0
1,264
1,264
Fully franked
4 September 2015
2015
9,939
2014
10,975
The financial effect of these dividends have not been brought to
account in the financial statements for the financial year ended 30
June 2015 and will be recognised in subsequent financial reports.
DIVIDEND FRANKING AMOUNT
In thousands of AUD
30% franking credits available to shareholders of Korvest Ltd for
subsequent financial years
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.
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 $541,662 (2014: reduce
by $1,388,685).
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
60
61
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.
Credit Risk
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
Note
14A
2015
-
2014
497
Trade and other receivables
15
13,592
17,706
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the
individual characteristics of each customer. However, manage-
ment 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.
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 receiva-
bles at the end of the reporting period by geographic region was
as follows.
In thousands of AUD
Australia
South East Asia
Other
CARRYING VALUE
2015
2014
12,657
16,844
807
128
778
84
13,592
17,706
At 30 June 2015, the Group’s most significant customer, located
in Australia, accounted for $2,683,600 of the trade and other
receivables carrying amount (2014: $4,981,412).
Impairment losses
The ageing of the trade and other receivables at the reporting date
that were not impaired was as follows:
In thousands of AUD
Not past due nor impaired
Past due 0-30 days
Past due 31-90 days
More than 91 days
GROSS
2015
7,902
3,125
2,354
211
2014
11,387
5,612
707
-
13,592
17,706
The movement in the allowance for impairment in respect of trade
receivables during the year was as follows:
In thousands of AUD
Balance at 1 July
Amounts written off
against allowance
Impairment loss recognised
2015
(562)
25
(90)
(627)
2014
(525)
148
(185)
(562)
The impairment loss at 30 June 2015 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.
Impairment losses (Continued)
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.
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.
(Bank overdraft) / cash and cash equivalents
The Group had a bank overdraft of $500,000 (2014: cash and
cash equivalents of $497,000) at 30 June 2015, which represents
its maximum credit exposure on these assets. The bank overdraft
/ cash and cash equivalents is held with major Australian banks.
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:
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.
• $0.75m 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
Bank overdraft
Trade and other payables
2015
2014
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS
6 MTHS
OR LESS
6 – 12
MNTHS
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS
6 MTHS
OR LESS
6 – 12
MNTHS
500
6,359
6,859
(500)
(500)
(6,359)
(6,359)
(6,859)
(6,859)
-
-
-
-
8,184
8,184
-
-
(8,184)
(8,184)
(8,184)
(8,184)
-
-
-
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 instru-
ments. 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).
Exposure to currency risk
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.
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
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.
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.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
62
63
24. FINANCIAL INSTRUMENTS (Continued)
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:
In thousands of AUD
Note
CARRYING AMOUNT
FAIR VALUE
CARRYING AMOUNT
2015
2014
Trade and other receivables
Cash and cash equivalents
Bank overdraft
Trade and other payables
15
14A
14A
19
13,592
-
(500)
(6,359)
6,733
13,592
-
(500)
(6,359)
6,733
17,706
497
-
(8,184)
10,019
FAIR VALUE
17,706
497
-
(8,184)
10,019
The carrying amounts of the above financial assets and liabilities
are considered to be a reasonable approximation of their
fair values.
25. OPERATING LEASES
Leases as lessee
26. CAPITAL AND OTHER COMMITMENTS
At the end of the reporting period, the future minimum lease
payments under non-cancellable operating leases are payable as
follows:
In thousands of AUD
Capital expenditure
commitments
PLANT AND EQUIPMENT
2015
2014
In thousands of AUD
Less than one year
2015
838
2014
778
Contracted but not provided for
and payable:
Between one and five years
1,580
1,043
Within one year
-
-
133
133
More than five years
-
-
2,418
1,821
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 periodically to reflect market
rentals. None of the leases includes contingent rentals. Rentals
are increased by CPI or similar each year.
During the financial year ended 30 June 2015, $929,913 was
recognised as an expense in the Statement of profit or loss and
other comprehensive income in respect of operating leases.
(2014: $897,585).
COUNTRY OF INCORPORATION
OWNERSHIP INTEREST
Australia
Chile
Australia
2015 (%)
2014 (%)
100
100
100
100
100
100
29. RELATED PARTY DISCLOSURES
Identity of related parties
The Company has a related party with its key management
personnel (see Note 28). Hills Limited was considered a related
party until 18 September 2014 by virtue of Peter Stancliffe being
a director of both companies. Hills Limited ceased to be a related
party on 18 September 2014 when Peter Stancliffe retired as a
Korvest Director. Transactions between the Company and Hills
Limited were carried out under normal commercial terms
and conditions.
30. SUBSEQUENT EVENTS
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.
27. GROUP ENTITIES
Power Step (Australia) Pty Ltd
Power Step (Chile) SpA
Titan Technologies (SE Asia) Pty Ltd
28. 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
Graeme Billings (Chairman)
Peter Brodribb
Peter Stancliffe (Retired 18 September 2014)
Gary Francis (Appointed 11 February 2014)
Gerard Hutchinson (appointed 19 November 2014)
Executive Directors
Alexander Kachellek (Managing Director)
Steven McGregor (Finance Director and Company Secretary)
Executives
Chris Hartwig (Executive General Manager, EzyStrut)
Steven Evans (General Manager, Galvanising)
Paul Assaf (General Manager, Power Step & Titan Technologies)
Key management personnel compensation
The key management personnel compensation comprised:
In AUD
2015
2014
Short-term employee benefits
1,641,386
1,826,568
Post employment benefits
158,022
152,572
Long term benefits
47,362
68,059
Equity compensation benefits
(112,984)
129,051
1,733,786
2,176,250
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.
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd NOTES TO THE FINANCIAL STATEMENTS
64
31. PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ending 30 June 2015 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
Guarantees entered into by the Company
Bank guarantees given by the Company in favour of customers
amounted to $124,899 (2014: $456,953). 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 2015, the Company had contractual commitments
for the acquisition of property, plant and equipment totalling $nil
(2014: $133,000). These commitments are not recognised as
liabilities as the relevant assets have not yet been received.
2015
2014
2,027
-
2,027
25,055
45,015
8,783
11,201
12,833
20,981
-
5,995
(598)
5,397
29,017
49,112
11,008
12,230
12,764
24,118
-
33,814
36,882
FOR THE YEAR ENDED 30 JUNE 2015Korvest Ltd DIRECTOR’S DECLARATION
AUDIT REPORT
66
67
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 37 to 64 and the Remuneration
report in the Directors’ report, set out on pages 17 to 27, 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 2015 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 2015.
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 30th day of July 2015.
Signed in accordance with a resolution of directors:
GRAEME BILLINGS
Director
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd
AUDIT REPORT
68
LEAD AUDITOR’S INDEPENDENCE DECLARATION
69
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd ASX ADDITIONAL INFORMATION
ASX ADDITIONAL INFORMATION
70
Additional information required by the Australian Securities Ex-
change Limited Listing Rules and not disclosed elsewhere in this
report is set out below.
SHAREHOLDINGS (AS AT 28 JULY 2015)
Substantial Shareholders
The number of shares held by substantial shareholders and their
associates are set out below:
SHAREHOLDER
NUMBER
Perpetual Limited
10.1%
1,063,197
Colonial First State Asset
Management (Australia) Limited
Donald Cant Pty Ltd
9.2%
6.2%
972,869
650,724
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
NUMBER OF EQUITY SECURITY HOLDERS
CATEGORY
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
TOTAL HOLDERS
934
759
195
131
10
2,029
UNITS
370,738
1,896,903
1,448,663
2,938,250
3,877,766
10,532,320
% ISSUED CAPITAL
3.52
18.01
13.75
27.90
36.82
100.00
The number of shareholders holding less than a marketable
parcel of ordinary shares is 252.
Securities Exchange
The Company is listed on the Australian Securities Exchange.
The Home exchange is Adelaide.
Other information
Korvest Ltd, incorporated and domiciled in Australia, is a publicly
listed company limited by shares.
On Market Buy Back
There is no current on-market buy back.
71
NUMBER OF ORDINARY
SHARES HELD
PERCENTAGE OF
CAPITAL HELD
1,068,075
10.14
800,715
650,724
320,000
319,094
294,337
168,122
165,359
100,276
87,919
84,327
65,000
64,546
61,481
60,720
54,644
51,440
50,000
50,000
49,859
7.60
6.18
3.04
3.03
2.79
1.60
1.57
0.95
0.83
0.80
0.62
0.61
0.58
0.58
0.52
0.49
0.47
0.47
0.47
4,566,638
43.34
TWENTY LARGEST SHAREHOLDERS
NAME
Citicorp Nominees Pty Limited
RBC Investor Services Australia Nominees Pty Limited
Donald Cant Pty Ltd
De Bruin Securities Pty Ltd
Brazil Farming Pty Ltd
J P Morgan Nominees Australia Limited
Angueline Capital Pty Limited
BNP Paribas Noms Pty Ltd
National Nominees Limited
Keiser Investments Pty Ltd
Gotterdamerung Pty Limited
Bourgeoisie Calypso Pty Ltd
Allegro Two Super Fund Pty Ltd
Mr William Francis Cannon
Mr John Frederick Bligh
Mr Geoffrey Neil Huddleston + Mrs Raelene Jane Huddleston
Manovert Pty Ltd
Fosterton Holdings Pty Limited
Mr Francis Stephen Rudolph Sullivan
R & GK Holdings Pty Limited
OFFICES AND OFFICERS
Company Secretary
Steven John William McGregor BA(Acc), CA, AGIA, ACIS
Principal Registered Office
Korvest Ltd
580 Prospect Road
Kilburn, South Australia, 5084
Ph: (08) 8360 4500
Fax: (08) 8360 4599
Locations of Share Registry
Adelaide
Computershare Investor Services Pty Ltd
Level 5
115 Grenfell Street
Adelaide, South Australia, 5000
Ph: (08) 8236 2300
Fax: (08) 8236 2305
FOR THE YEAR ENDED 30 JUNE 2015FOR THE YEAR ENDED 30 JUNE 2015Korvest LtdKorvest Ltd