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2020 ANNUAL REPORT
www.korvest.com.au
A MARKET LEADING INFRASTRUCTURE PROVIDER
Since 1970, Korvest has built itself a strong reputation for being a capable supplier of cable and pipe supports, industrial
access and safety systems, fastening solutions, and galvanising services. Korvest’s business units work together to
develop an integrated, complete solution quickly and finished to recognised Australian and international standards.
EzyStrut produces a range of standard, customised and innovative products. Power Step and Titan Technologies design
and assemble access systems for large mobile equipment as well as bolting solutions. Korvest Galvanisers operates a
hot dip galvanising business in South Australia servicing a range of local and national customers.
Korvest’s workforce of around 190 employees is multi-skilled and lead by a central management team. Korvest has the
capacity to scale up production should a project require more hands or hours to meet strict deadlines.
Nationally, Korvest has offices located in Adelaide, Melbourne, Sydney, Brisbane and Perth, with distributors in
Townsville, Hobart and Newcastle. The EzyStrut manufacturing plant and national distribution centre are based in
Adelaide, South Australia.
WE DELIVER ON OUR PROMISE
www.ezystrut.com.au
www.titantools.com.au
Torque and Tension Solutions
Cable and Pipe Supports
www.korvestgalvanisers.com.au
www.powerstep.com.au
Galvanising
Safety Access Systems
TABLE OF CONTENTS
4
8
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
18
5 YEAR SUMMARY
19
FINANCIAL STATEMENTS
57
ASX ADDITIONAL
INFORMATION
Korvest Ltd and controlled entities
ABN: 20 007 698 106
Annual Report, 30 June 2020
DIRECTORS’ REPORT
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 2020 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:
Graeme Billings
Chris Hartwig
Chairman
BCom FCA MAICD
Managing Director
BA(Acc), MAICD
Appointed Chairman 18 September 2014
A Director since 28 February 2018
A Director since May 2013
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
Chairman Azure Healthcare Ltd
Director DomaCom Ltd
Member of Audit and Remuneration Committees
Mr Hartwig has held a number of senior roles in the
steel and electrical manufacturing industries.
Gerard Hutchinson
Gary Francis
Independent Non-Executive Director
MBA, MBL, MSc(IS), BEc, MA (Research), FCA,
FAICD, FAIM
A Director since November 2014
Mr Hutchinson has held roles at Chief Financial
Officer and Managing Director level in a range of large
businesses. He is currently Chief Financial Officer for
AF Construction LLC, a member of the Al-Futtaim
Group of Companies.
Director Depa PLC
Chairman of Audit Committee and member of
Remuneration Committee
Independent Non-Executive Director
BSc. (Hons) (Civil), MAICD
A Director since February 2014
Mr Francis has worked in the construction industry at
Senior Manager or Director level in Australia and Asia.
Chairman of Remuneration Committee and member
of Audit Committee
Andrew Stobart
Steven McGregor
Independent Non-Executive Director
B. Eng (Hons), Grad Dip Bus Admin, GAICD
Finance Director
BA(Acc), FCA, AGIA, ACIS
A Director since August 2016
Former Chairman Nexans Olex Australia & New
Zealand
Member of Audit and Remuneration Committees
Company Secretary since April 2008
Appointed as Finance Director 1 January 2009
Mr McGregor previously held the role of Chief
Operating Officer and Company Secretary for an
unlisted public company. Prior to that he spent 9
years in the assurance division of KPMG.
4
DIRECTORS’ REPORT COMPANY SECRETARY
Mr Steven J W McGregor FCA, 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.
RETIREMENT AND RE-ELECTIONS
In accordance with the Constitution, Gary Francis and Steven McGregor retire from the Board at the forthcoming Annual General Meeting on
23 October 2020 and offer themselves for re-election.
DIRECTORS’ MEETINGS
The number of directors’ meetings, including meetings of committees of directors, and number of meetings attended by each of the directors of
the Company during the financial year are:
Director
Mr G Billings
Mr G Francis
Mr G Hutchinson
Mr A Stobart
Mr C Hartwig
Mr S McGregor
Board
Meetings
Audit Committee
Meetings
Remuneration
Committee Meetings
A
15
15
15
15
15
15
B
15
15
15
15
15
15
A
4
4
4
4
-
-
B
4
4
4
4
-
-
A
1
1
1
1
-
-
B
1
1
1
1
-
-
A Number of meetings attended
B Total number of meetings available for attendance
FINANCIAL RESULTS
The revenue from trading activities for the year ended 30 June 2020 (FY20) was $63.088m, up 3.7% on the previous year. During the year the
Group qualified for the Government JobKeeper subsidy and $1.059m of income from this subsidy is included in the FY20 result. More details
on the impact and response to COVID-19 are provided in the review of operations on page 6. The Group recorded a profit after tax of $4.027m
compared to $2.885m in the previous year.
Increased levels of major project work in FY20 contributed to the improved result. Activity levels and margins grew across all business units in the
Group in FY20.
DIVIDENDS
The directors announced a fully franked final dividend of 13.0 cents per share (2019: 13.0 cents per share) following an interim dividend of 15.0
cents per share at the half year (2019: 9.0 cents per share). The Dividend Reinvestment Plan (DRP) will remain suspended for the final dividend.
The dividend will be paid on 4 September 2020 with a record date of 21 August 2020.
A summary of dividends paid or declared by the Company to members since the end of the previous financial year were:
Declared and paid during the year 2020
Cents per share
Total amount
$’000
Franked/
Unfranked
Date of payment
Interim 2020 ordinary
Final 2019 ordinary
Total amount
15.0
13.0
1,688
1,461
3,149
Fully franked
6 March 2020
Fully franked
6 September 2019
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.
Final ordinary
Total amount
Cents per share
13.0
Total amount
$’000
Franked/
Unfranked
Date of payment
1,465
1,465
Fully franked
4 September 2020
The financial effect of these dividends has not been brought to account in the financial statements for the year ended 30 June 2020 and will be
recognised in subsequent financial reports.
5
DIRECTORS’ REPORT DIRECTORS’ REPORT For the year ended 30 June 2020
DIRECTORS’ REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2020
Dividends have been dealt with in the financial report as:
Dividends
Dividends – subsequent to 30 June 2020
Note
18
18
Total amount
$’000
3,149
1,465
PRINCIPAL ACTIVITIES, STRATEGY AND FUTURE PERFORMANCE
The principal 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.
The Group is comprised of the Industrial Products Group which includes the EzyStrut, Power Step and Titan Technologies businesses and the
Production Group which includes the Korvest Galvanisers business.
Korvest’s businesses service a number of major markets including infrastructure, commercial, utilities, mining, food processing, oil & gas, power
stations, health and industrial segments.
Activity levels in the infrastructure sector have been the impetus for Korvest’s improved sales revenue over the past three years. The pipeline of
available work in this sector is strong with numerous significant road and rail tunnel projects expected to be constructed in the coming years.
Korvest has secured a major infrastructure project with supply commencing in July 2020 and is expected to continue throughout FY21 and into
FY22.
Korvest has invested significantly in manufacturing capability and capacity improvements during the year and intends to continue to invest in this
area over the coming years to ensure that it is able to capitalise on the significant number of opportunities expected to arise in its markets.
Korvest has a long history of paying franked dividends. The target dividend payout ratio range is 65-90% of after tax profits.
REVIEW OF OPERATIONS
COVID-19
COVID-19 impacted the global economy during the second half of the year. A Management Steering Committee was quickly established and met
frequently to implement a number of changes within the business. The majority of these changes were to minimise the impact of an outbreak,
should one occur, at any Korvest site. Changes implemented included strategies such as social distancing and hygiene practices, temperature
checking, shift and workgroup segregations, working from home and high levels of communication.
The Steering Committee successfully implemented a number of strategies to minimise any impact upon our supply chain. These included
movement of orders between alternative suppliers and an inventory build of fast moving stock items and raw materials held by our key steel
supplier. Korvest was able to keep operating both the manufacturing and distribution parts of its business with minimal disruption.
The Board held an additional three Board Meetings during the second half, predominantly to monitor the Steering Committee’s response to the
pandemic. The financial health of Korvest was supported by our strong balance sheet.
Work in relation to major projects continued largely unaffected albeit these projects were at the bid stage, rather than the supply stage during this
time. Day-to-day work continued at similar levels to what was experienced in the months prior to the COVID-19 restrictions.
The absence of major project work during this period meant that Korvest qualified in May 2020 for the Government JobKeeper scheme as the prior
year comparative period included significant project work. The current year results include $1.059m of JobKeeper income.
INDUSTRIAL PRODUCTS
In the Industrial Products segment, the EzyStrut cable and pipe support business supplies products for major infrastructure developments and also
supplies products to electrical wholesalers and contractors for small industrial developments.
The EzyStrut trading year was a tale of two halves. The first half was highlighted by the supply of two major infrastructure projects in NSW. Both
of those projects were completed during the first half. Unfortunately, in August 2019 one of the major project customers entered administration.
As there will be no distribution to unsecured creditors the amount of the debt has been written off. The second half did not contain any significant
project work and was instead underpinned by smaller project sales and continued support from the national wholesaler market.
The Power Step and Titan Technologies businesses had modest revenue growth during FY20 however profitability improved significantly as a result
of improved margins. The margin improvement was primarily driven by cost savings gained from improved sourcing. The combination of improved
margin and lower overhead structure meant that the businesses produced their best result under Korvest’s ownership.
6
DIRECTORS’ REPORT PRODUCTION
In the Production segment, the Galvanising business volumes grew as a result of more project work being undertaken in the local South Australian
market. The cost of zinc fell during FY20 providing some welcome relief from increases over recent years. Energy costs are a significant cost of the
galvanising business and these reduced during FY20. Electricity costs were down on the prior year due to the combination of reduced rates from
January 2020 and the impact of the prior year investment in energy efficiency measures including solar panels and LED lighting. In contrast gas
costs increased during the year due to price rises however a new supply contract has been signed effective from January 2021 with a 25% reduction
in usage rates.
RISK
The Board and Management periodically review and update an Enterprise Risk Register that identifies and assesses 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.
The risk register was updated during the year for risks identified as a result of the COVID-19 situation as well as the increasing prevalence globally
of cyber attacks.
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 purchased finished goods the ability for the product to also
be manufactured in-house mitigates the risk.
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.
Strategic risks cover a range of areas including competitors, customers and products together with global and local market developments.
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.
EVENTS SUBSEQUENT TO REPORTING DATE
At the date of this report there is no matter or circumstance that has arisen since 30 June 2020, 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 2020.
LIKELY DEVELOPMENTS
The significant pipeline of major infrastructure projects means that the Group is focused on ensuring that the business is well positioned to capitalise
on those opportunities. Therefore the investment in improving the factory capacity and capability will continue.
Working capital management remains a focus area. Collection of accounts receivables is always closely monitored however in the COVID-19
environment the emphasis increases. It should be noted that to date COVID-19 has not caused any material impacts to cash collections.
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.
INDEMNIFICATION AND INSURANCE OF OFFICER AND AUDITORS
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.
Korvest Ltd has not, during or since the financial year, indemnified or agreed to indemnify the auditor of Korvest Ltd against a liability incurred as
auditor.
7
DIRECTORS’ REPORT DIRECTORS’ REPORT For the year ended 30 June 2020 REMUNERATION REPORT AUDITED
For the year ended 30 June 2020
PRINCIPLES OF COMPENSATION
Remuneration is referred to as compensation throughout this report.
Key Management Personnel (KMP) have authority and responsibility for planning, directing and controlling the activities of the Group, including
directors of the Company and other executives. 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.
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.
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 below.
Profit / (Loss) after tax
Dividend
- Total amount paid
- Per issued share
Earnings per share
Share price as at 30 June
($'000)
($'000)
2020
4,027
3,149
28.0c
35.8c
$4.00
2019
2,885
1,787
16.0c
25.9c
$2.70
Return on invested capital (ROIC)
13.8%
10.3%
2018
1,369
889
8.0c
12.3c
$2.07
4.9%
2017
(1,578)
2,192
20.0c
(14.4c)
$2.36
(5.7%)
2016
950
2,328
22.0c
8.9c
$2.19
2.9%
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,
strategy implementation and risk management.
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 aimed at achieving strategic outcomes. The financial objectives relate to
earnings before interest and tax (EBIT) for various parts of the business depending on the KMP.
8
DIRECTORS’ REPORT The table below summarises the nature and weighting of the KPIs included in the STIs.
Managing Director
Financial performance (60%)
Operational performance (25%)
New markets (10%)
Safety (5%)
Other KMP *
Financial performance
Operational performance
New markets
Safety
Working capital
* Each KMP have different KPIs and weightings. Some individual’s STI structures do not include all KPI categories listed.
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 hurdles. 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. For performance rights issued during the year
two performance hurdles were applied. Half of the rights issued will be tested against each of the two performance hurdles.
The first performance hurdle relates to growth in basic earnings per share (EPS). EPS performance is measured in total over a three year period.
The performance hurdle is tested once at the completion of the three year performance period. The % growth is based on a base EPS which is
equal to the statutory EPS for the FY19 year. 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 year vesting period
% of rights that vest
Less than 5%
5%
Between 5% - 15%
15% or greater
Nil
25%
Pro rata between 25% – 100%
100%
The EPS objective was chosen because it is a good indicator of the Group’s earnings growth and is aligned to shareholder wealth objectives.
The second performance hurdle relates to Return on Invested Capital (ROIC). This is a new hurdle for the performance rights issued during the
year. The ROIC performance hurdle measures the efficiency in allocating capital to generate profitable returns. The ROIC is calculated as follows:
ROIC =
Net Operating Profit After Tax (NOPAT)
Total Invested Capital (TIC)
Where
• NOPAT is the average of the net operating profit after tax over the three years of the vesting period
• TIC is the average of the Group’s invested capital, calculated as follows: (current assets – current liabilities – cash and investments) +
(property, plant and equipment + goodwill + intangibles). The average TIC will be the average of the balances as at 30 June and 31
December during the vesting period.
The ROIC performance rights will vest in accordance with the table below:
Average 3 year ROIC
Less than 8%
8%
Above 8% and below 12%
12% or greater
% of rights that vest
Nil
50%
Between 50% and 100% using a straight line analysis
100%
In addition to the performance measures, there is also a service condition whereby unvested performance rights will lapse if the holder ceases
employment with the Group apart from in some specific circumstances such as death or permanent disability.
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.
9
DIRECTORS’ REPORT DIRECTORS’ REPORT For the year ended 30 June 2020
REMUNERATION REPORT - AUDITED (Continued)
For the year ended 30 June 2020
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
No remuneration consultants were used during the year.
NON-EXECUTIVE DIRECTORS
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.
The following base fees became effective on 1 July 2019 and were applied for the entirety of the financial year ended 30 June 2020:
Chairman
$133,916
Director
$66,964
The Chairman of a Board Committee receives a further $11,159 p.a.
Superannuation is added to these fees where appropriate.
Non-executive directors do not receive performance-related compensation.
10
DIRECTORS’ REPORT
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:
Short Term
Post
employment
Salary &
Fees
$
Bonus
$
Superannuation
benefits
$
Year
Other
long term
– Long
Service
leave
$*
Share based payments
Shares
$
Performance
Rights
$
Proportion of
remuneration
performance
related %
Total
$
Directors
G Billings
Non-executive
(Chairman)
G Francis
Non-executive
(Director)
G Hutchinson
Non-executive
(Director)
A Stobart
Non-executive
(Director)
2020
133,916
2019
130,650
2020
78,123
2019
83,448
2020
78,123
2019
76,218
2020
66,964
2019
65,331
-
-
-
-
-
-
-
-
12,722
12,412
7,422
-
7,422
7,241
6,219
6,206
-
-
-
-
-
-
-
-
C Hartwig 1,2
Executive
(Managing Director)
S McGregor 2
Executive
(Finance Director)
Total Directors'
Remuneration
2020
318,386
132,375
31,156
9,301
2019
325,558
94,710
25,006
9,650
2020
301,746
26,820
27,359
8,530
2019
295,328
29,430
24,026
15,198
2020
977,258
159,195
92,300
17,831
2019
976,533
124,140
74,891
24,848
Executives / other KMP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
146,638
143,062
85,545
83,448
85,545
83,459
73,183
71,537
40,033
531,251
18,883
473,807
38,862
403,317
19,566
383,548
78,895 1,325,479
38,449 1,238,861
S Taubitz
General Manager
Sales
G Christie
General Manager
Operations
Total Executives'
Remuneration
2020
215,000
64,500
23,268
2,956
999
23,105
329,828
2019
190,000
29,925
20,175
1,061
2020
193,000
25,883
19,999
4,829
2019
188,500
17,520
18,130
11,551
-
999
998
6,100
247,261
25,029
269,739
11,638
248,337
2020
408,000
90,383
43,267
7,785
1,998
48,134
599,567
2019
378,500
47,445
38,305
12,612
998
17,738
495,598
-
-
-
-
-
-
-
-
32.5
24.0
16.3
12.8
26.6
14.6
18.9
11.7
* 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.
1 C Hartwig was acting CEO from 4 September 2017 to 28 February 2018 prior to his appointment as Managing Director from 1 March 2018. In
July 2018 a payment of $12,550 was paid as back-pay for the period he was acting CEO. This payment is included in the 2019 Salary & Fees
amount.
2 Where annual superannuation contributions exceed $25,000 executives can elect to have some or all of the superannuation contributions above
$25,000 paid as salary rather than superannuation.
The proportion of performance related remuneration is bonuses and share based payments divided by total remuneration.
11
DIRECTORS’ REPORT DIRECTORS’ REPORT For the year ended 30 June 2020
REMUNERATION REPORT - AUDITED (Continued)
For the year ended 30 June 2020
PERFORMANCE RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION DURING THE REPORTING PERIOD
Details on performance rights that were granted as compensation to each KMP during the reporting period are as follows:
Number of
performance rights
granted during the
year
Grant date
Fair value per right
at grant date ($)
28,072
26,898
19,406
17,420
1 Nov 2019
1 Nov 2019
1 Nov 2019
1 Nov 2019
$2.63
$2.63
$2.63
$2.63
Expiry date
30 June 2022
30 June 2022
30 June 2022
30 June 2022
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
Half of the performance rights issued to each KMP will be tested against an EPS hurdle with the other half being tested against a Return on
Invested Capital (ROIC) hurdle. The fair value of the rights is $2.63.
All performance rights have a nil exercise price.
All performance rights expire on the earlier of their expiry date or termination of the individual’s employment. The performance rights are exercisable
for one year after the conclusion of the vesting period. In addition to the continuing employment service condition, the ability to exercise
performance rights is conditional on the Group achieving performance hurdles. Details of the performance criteria are included in the long-term
incentives discussion on page 9.
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.
EXERCISE OF PERFORMANCE RIGHTS GRANTED AS COMPENSATION
During or since the end of the financial year, the Group issued ordinary shares of the Company as a result of the exercise of performance rights as
follows (there are no amounts unpaid on the shares issued):
Number of Shares
33,152
Amount paid on each share Nil
12
DIRECTORS’ REPORT
ANALYSIS OF PERFORMANCE RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION
Details of vesting profiles of the options granted as remuneration to each director and key executive of the Company are detailed below:
Options / Rights Granted
Number
Date
% vested in
current year
% forfeited
or lapsed in
current year
Year in which
grant vests
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
28,000*
32,006
28,072
29,300*
30,669
26,898
20,043
19,406
19,000*
19,387
17,420
Nov 17
Oct 18
Nov 19
Nov 17
Oct 18
Nov 19
Oct 18
Nov 19
Nov 17
Oct 18
Nov 19
50%
-
-
50%
-
-
-
-
50%
-
-
50%
-
-
50%
-
-
-
-
50%
-
-
30 Jun 20
30 Jun 21
30 Jun 22
30 Jun 20
30 Jun 21
30 Jun 22
30 Jun 21
30 Jun 22
30 Jun 20
30 Jun 21
30 Jun 22
* The three year performance period for performance rights issued in November 2017 ended on 30 June 2020. These rights were tested against
two performance hurdles, EPS and RTSR. The EPS hurdle was not met. Korvest’s total shareholder return over the performance period was
91.5% which was at the 90th percentile of the comparator group. As a result 100% of the RTSR performance rights will vest. The vested rights
are able to be exercised up until 30 June 2021.
ANALYSIS OF MOVEMENTS IN PERFORMANCE RIGHTS GRANTED AS COMPENSATION
The movement during the reporting period, by value, of performance rights over ordinary shares in the Company held by each company director
and KMP are detailed below.
Granted in year $ (A)
Exercised in year $ (B)
Value of Rights / Options
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
73,798
70,712
51,016
45,795
32,457
40,219
-
17,640
(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 will be allocated to remuneration over
the vesting period (i.e. in years 1 July 2019 to 30 June 2022) subject to meeting the associated performance conditions.
(B) The value of the performance rights exercised during the year is calculated as the market price of shares as at the close of trading on the
date the options were exercised after deducting the price to exercise the option.
Further details regarding options granted to executives under the Executive Share Plan are in Note 10 to the financial statements.
13
DIRECTORS’ REPORT DIRECTORS’ REPORT For the year ended 30 June 2020
REMUNERATION REPORT - AUDITED (Continued)
For the year ended 30 June 2020
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 2019
Granted as
compensation
Exercised
Lapsed
Held at
30 June
2020
Vested
during the
year
Directors
C Hartwig*
S McGregor
Executives
S Taubitz
G Christie
80,310
72,737
20,043
43,987
28,072
26,898
19,406
17,420
(20,304)
(12,768)
(14,000)
(14,650)
-
-
(5,600)
(9,500)
74,078
72,217
39,449
46,307
14,000
14,650
-
9,500
No options held by KMP are vested but not exercisable.
Held at
1 July 2018
AASB
Granted as
Compensation Exercised
Lapsed
Held at
30 June
2019
AASB
Held at
30 June
2019
ASX
Vested
during the
year
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
61,000
57,800
-
31,500
32,006
30,669
20,043
19,387
-
-
-
-
(12,696)
(15,732)
-
(6,900)
80,310
72,737
20,043
43,987
70,310
72,737
20,043
43,987
10,304
12,768
-
5,600
No options held by KMP are vested but not exercisable.
* During the year Chris Hartwig made the final repayment on a non-recourse loan attached to 10,000 options issued under a previous share plan.
The options vested in June 2011 and shares were issued however under Australian Accounting standards the instruments are treated as options
until such time as the loan is fully repaid. This accounts for 10,000 of the options shown as exercised during the FY20 year.
14
DIRECTORS’ REPORT
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 2019
Purchases
Allocated under
Employee/
Exec share plan
Held at
30 June 2020
8,667
20,093
32,004
6,271
500
5,500
2,522
-
-
-
-
-
-
3,000
-
-
-
20,304*
12,768
-
-
-
5,901
301
8,667
40,397
44,772
6,271
500
8,500
8,423
301
Directors
G Billings
C Hartwig
S McGregor
G Francis
G Hutchinson
A Stobart
Executives
S Taubitz
G Christie
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.
*Includes 10,000 shares previously held subject to a non-recourse loan.
Held at
1 July 2018
Purchases
Allocated under
Employee/
Exec share plan
Held at
30 June 2019
Shares held
subject to non-
recourse loans
667
13,993
32,004
6,271
500
500
2,128
-
8,000
6,100
-
-
-
5,000
-
-
-
-
-
-
-
-
394
-
8,667
20,093
32,004
6,271
500
5,500
2,522
-
-
10,000
-
-
-
-
-
-
Directors
G Billings
C Hartwig
S McGregor
G Francis
G Hutchinson
A Stobart
Executives
S Taubitz
G Christie
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.
15
DIRECTORS’ REPORT DIRECTORS’ REPORT For the year ended 30 June 2020
REMUNERATION REPORT - AUDITED (Continued)
For the year ended 30 June 2020
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.
KMP
C Hartwig
S McGregor
S Taubitz
G Christie
Maximum possible
STI
Included in
remuneration $ (A) % vested in year
% forfeited in year
(B)
Short-term incentive bonus
176,500
44,700
64,500
49,300
132,375
26,820
64,500
25,883
75
60
100
53
25
40
-
47
(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.
(B) The amounts forfeited are due to the performance criteria not being met in relation to the current financial year.
KEY MANAGEMENT PERSONNEL TRANSACTIONS
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.
16
DIRECTORS’ REPORT DIRECTORS’ INTERESTS
The relevant interest of each director over the shares and rights over such instruments issued by the Company and other related bodies corporate
as notified by the directors to the ASX in accordance with S250G(1) of the Corporations Act 2001, at the date of this report is as follows:
C Hartwig
G Billings
S McGregor
G Francis
G Hutchinson
A Stobart
Korvest Ltd
Ordinary Shares
40,397
8,667
44,772
6,271
500
8,500
Korvest Ltd
Performance Rights
Unvested
60,078
-
57,567
-
-
-
Vested
14,000
-
14,650
-
-
-
NON-AUDIT SERVICES
During the year KPMG, the Group’s auditor, has performed certain other services in addition to their statutory duties. The Board has considered the
non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the Audit Committee,
is satisfied that the provision of these services did not compromise the auditor’s independence requirements of the Corporations Act 2001 for the
following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Group; and
•
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or
decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risk and rewards.
For details of non-audit services fees charged refer to Note 5 to the financial statements.
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration is set out on page 56 and forms part of the Directors’ report for the financial year ended 30 June 2020.
ROUNDING OFF
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with
that Instrument, 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
http://www.korvest.com.au/assets/downloads/Korvest-Corporate-Governance-2020.pdf
Signed at Adelaide this Friday 24th of July 2020 in accordance with a resolution of the directors.
G A BILLINGS, Director
C A HARTWIG, Director
17
DIRECTORS’ REPORT DIRECTORS’ REPORT For the year ended 30 June 2020
5 YEAR SUMMARY
2020
2019
2018
2017
2016
Sales revenue
($'000)
63,088
60,843
56,962
44,731
54,981
Profit / (Loss) after tax
($'000)
4,027
2,885
1,369
(1,578)
950
Depreciation/Amortisation (plant &
equipment)
($'000)
1,286
1,469
1,625
1,710
1,716
Depreciation (right-of-use asset)
($'000)
887
-
-
-
-
Cash flow from operations
($'000)
10,460
1,413
5,110
(384)
7,432
Profit / (Loss) from ordinary activities
- As % of Shareholders’ Equity
- As % of Sales Revenue
Dividend
- Total amount paid
- Per issued share
- Times covered by profit from ordinary activities
($'000)
Earnings per share
Number of employees
Shareholders
- Number at year end
12.3%
6.4%
3,149
28.0c
2.2
9.3%
4.7%
1,787
16.0c
1.6
4.6%
2.4%
(5.4%)
(3.5%)
889
8.0c
1.5
2,192
20.0c
-
35.8c
25.9c
12.3c
(14.4c)
189
178
180
171
2.9%
1.7%
2,328
22.0c
0.4
8.9c
193
1,708
1,652
1,694
1,813
1,882
Net assets per issued ordinary share
$2.90
$2.76
$2.66
$2.63
$2.97
Net tangible assets per issued ordinary
share*
$2.48
$2.76
$2.66
$2.63
$2.97
Share price as at 30 June
$4.00
$2.70
$2.07
$2.36
$2.19
* The application of AASB 16 leases has affected the calculation of NTA per ordinary share as the lease liability forms part of the calculation however
the right-of-use asset does not. The 30 June 2020 amount would be $2.90 if calculated on a similar basis to prior years.
Y
R
A
M
M
U
S
R
A
E
Y
5
18
TABLE OF CONTENTS
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
BASIS OF PREPARATION
RESULTS FOR THE YEAR
1. REVENUE AND OTHER INCOME
2. EXPENSES
3. FINANCE INCOME
4. EARNINGS PER SHARE
5. AUDITOR’S REMUNERATION
6. SEGMENT REPORTING
WORKING CAPITAL
7. TRADE AND OTHER RECEIVABLES
8.
INVENTORIES
9. TRADE AND OTHER PAYABLES
10. EMPLOYEE BENEFITS
11. PROVISIONS
TANGIBLE ASSETS
20
LEASES
14. LEASES
CAPITAL STRUCTURE
15. CASH AND CASH EQUIVALENTS
16. FINANCIAL INSTRUMENTS
17. CAPITAL AND RESERVES
18. DIVIDENDS
TAXATION
19. CURRENT AND DEFERRED TAXES
GROUP COMPOSITION
20.
INVESTMENT IN SUBSIDIARIES
OTHER NOTES
21. KEY MANAGEMENT PERSONNEL
22. PARENT ENTITY DISCLOSURES
23. COMMITMENTS AND
CONTINGENCIES
24. SUBSEQUENT EVENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
LEAD AUDITOR’S INDEPENDENCE
DECLARATION
ASX ADDITIONAL INFORMATION
SHAREHOLDINGS (AS AT 23 JULY 2020)
VOTING RIGHTS
21
22
23
24
24
26
26
27
27
28
28
29
30
30
31
32
32
35
36
12. PROPERTY, PLANT AND EQUIPMENT
36
TWENTY LARGEST SHAREHOLDERS
13.
IMPAIRMENT TESTING
38
OFFICES AND OFFICERS
39
39
40
40
41
44
45
46
46
48
48
49
49
50
50
50
51
52
56
57
57
57
58
58
19
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Continuing operations
Sales revenue
Other income
JobKeeper income
Expenses, excluding net finance costs
Profit before financing costs
Finance income
Finance costs – lease liability interest
Net finance (cost)/income
Profit before income tax
Income tax expense
Profit from continuing operations
Profit for the year
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of property, plant and equipment
Related tax
Total other comprehensive income
Total comprehensive income for the period
Attributable to:
Equity holders of the Company
Total comprehensive income for the period
Earnings per share attributable to the ordinary equity
holders of the Company:
Basic earnings per share from continuing operations
Diluted earnings per share from continuing operations
Note
2020
$’000
1
2
3
19
4
4
63,088
-
1,059
(58,306)
5,841
84
(120)
(36)
5,805
(1,778)
4,027
4,027
940
(282)
628
4,685
4,685
4,685
Cents
35.8
35.5
2019
$’000
60,843
4
-
(56,775)
4,072
62
-
62
4,134
(1,249)
2,885
2,885
-
-
-
2,885
2,885
2,885
Cents
25.9
25.8
The Group has initially applied AASB 16 as at 1 July 2019 using the modified retrospective approach. Under this approach comparative
information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
See Note 14.
The notes on pages 24 to 50 are an integral part of these consolidated financial statements.
20
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2020
Note
2020
$’000
Assets
Cash and cash equivalents
Investment
Trade and other receivables
Prepayments
Inventories
Total current assets
Property, plant and equipment
Right-of-use asset
Total non-current assets
Total assets
Liabilities
Trade and other payables
Employee benefits
Tax payable
Lease liabilities
Provisions
Total current liabilities
Employee benefits
Deferred tax liability
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profit / (losses)
Total equity attributable to equity holders of the
Company
Total equity
15
15
7
8
12
14
9
10
14
11
10
19
14
11
17
17
6,470
275
10,111
357
10,555
27,768
15,857
4,655
20,512
48,280
5,901
2,624
832
782
34
10,173
172
801
3,965
520
5,458
15,631
32,649
14,202
18,447
-
32,649
32,649
2019
$’000
3,126
275
14,080
272
10,504
28,257
13,033
-
13,033
41,290
5,974
2,472
864
-
32
9,342
140
431
-
453
1,024
10,366
30,924
14,142
16,782
-
30,924
30,924
The Group has initially applied AASB 16 as at 1 July 2019 using the modified retrospective approach. Under this approach comparative
information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
See Note 14.
The notes on pages 24 to 50 are an integral part of these consolidated financial statements.
21
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Cash receipts from customers
Cash receipts from JobKeeper
Cash paid to suppliers and employees
Cash generated from operating activities
Interest received
Interest paid lease liabilities
Income tax (payments) / refunds
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Net cash from investing activities
Cash flows from financing activities
Transaction costs related to issue of share capital
Payment of lease liabilities
Dividends paid
Net cash from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
Note
15
12
15
2020
$’000
76,764
537
(65,083)
12,218
84
(120)
(1,722)
10,460
25
(3,196)
(3,171)
(1)
(795)
(3,149)
(3,945)
3,344
3,126
6,470
2019
$’000
66,461
-
(64,704)
1,757
62
-
(406)
1,413
24
(1,640)
(1,616)
(3)
-
(1,787)
(1,790)
(1,993)
5,119
3,126
The Group has initially applied AASB 16 as at 1 July 2019 using the modified retrospective approach. Under this approach comparative
information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
See Note 14.
The notes on pages 24 to 50 are an integral part of these consolidated financial statements.
22
FINANCIAL STATEMENTS Share
capital
$’000
14,142
Equity
compensation
reserve
$’000
Asset
revaluation
reserve
$’000
Profits
reserve
$’000
Retained
profits /
(losses)
$’000
Total
$’000
304
3,735
12,743
-
30,924
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Balance at 1 July 2019
Total comprehensive income for the
year
Profit for the year
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
Equity-settled share-based payments
Issue of ordinary shares
Dividends to shareholders
Total contributions by and distributions to
owners of the Company
Transfer to profits reserve
Balance at 30 June 2020
Balance at 1 July 2018
Total comprehensive income for the
year
Profit for the year
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
Equity-settled share-based payments
Issue of ordinary shares
Dividends to shareholders
Total contributions by and distributions to
owners of the Company
Transfer to profits reserve
Balance at 30 June 2019
-
-
-
60
-
-
-
60
-
14,202
14,084
-
-
-
58
-
-
-
58
-
-
-
-
-
129
-
-
129
-
433
248
-
-
-
-
56
-
-
56
-
-
658
658
-
-
-
-
-
-
4,393
-
-
-
-
-
(3,149)
(3,149)
4,027
13,621
4,027
4,027
-
658
4,027
4,685
-
-
-
-
-
60
129
-
(3,149)
(2,960)
(4,027)
-
-
32,649
3,735
11,854
(209)
29,712
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,787)
(1,787)
2,676
12,743
2,885
2,885
-
-
2,885
2,885
-
-
-
-
-
58
56
-
(1,787)
(1,673)
(2,676)
-
-
30,924
14,142
304
3,735
The Group has initially applied AASB 16 as at 1 July 2019 using the modified retrospective approach. Under this approach comparative
information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of initial application.
See Note 14.
The notes on pages 24 to 50 are an integral part of these consolidated financial statements.
23
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS
BASIS OF PREPARATION
CORPORATE INFORMATION
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 2020 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 6).
BASIS OF ACCOUNTING
Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting
Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial
statements comply with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB).
The consolidated financial statements were approved by the Board of Directors on 24 July 2020.
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.
Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.
USE OF ESTIMATES AND JUDGEMENTS
In preparing these consolidated financial statements management has made judgements and estimates that affect the application of Group’s 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 ongoing basis. Revisions to accounting estimates are recognised prospectively.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year
are included in the following notes:
• Note 7 – Trade and other receivables
• Note 8 – Inventories
• Note 11 – Provisions
• Note 12 – Property, plant and equipment
• Note 14 - Leases
FOREIGN CURRENCY
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the dates of transactions.
Monetary assets and liabilities denominated in foreign currency are translated into the functional currency at the exchange rate at the reporting date.
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 are generally recognised in profit or loss.
CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
The Group adopted AASB 16 leases on 1 July 2019. The Group applied AASB 16 using the modified retrospective approach. Accordingly the
comparative information presented is not restated. In the comparative period all of the lease arrangements that the Group had were considered to
be operating leases and therefore the lease payments were recognised in profit or loss on a straight line basis over the term of the lease. This now
changes under AASB 16 and the details of the changes in accounting policies are disclosed below.
AASB 16 LEASES
At the inception of a contract, the Group assesses whether a contract is, or contains, a lease which will be the case if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for consideration.
At the commencement or modification of a contract that contains a lease the Group recognises a right-of-use asset and a lease liability. The right-of-
use asset is initially measured at the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying assets or to restore the site on which it is located, less any lease
incentives received.
24
FINANCIAL STATEMENTS The right-of-use asset is subsequently depreciated using the straight line method from the commencement date to the end of the lease term. The
right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.
The Group determined its incremental borrowing rate by obtaining indicative interest rates from its bankers.
The lease liability is measured at amortised cost using the effective interest rate method. It is remeasured when there is a change in future lease
payments arising from a change in index or rate or if the Group changes its assessment of whether it will exercise an extension option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded
in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group’s leases consist of property leases for warehouse and factory facilities as well as leases for forklifts.
Short term leases
The Group has elected to not recognise a right-of-use asset and lease liability for short term leases. For these leases the Group recognises the lease
payments as an expense on a straight line basis over the lease term. The Group only has one such short term lease which relates to a property where
the Group has a month-to-month tenancy.
Impact on transition
On transition to AASB 16, the Group recognised right-of-use assets and lease liabilities. As these two amounts were the same there was no impact
on retained earnings. The impact on transition is summarised below.
In thousands of AUD
Right-of-use asset – Land and buildings
Right-of-use asset – Property, plant and equipment
Lease liabilities
1 Jul 2019
$’000
5,013
149
(5,162)
When measuring lease liabilities for leases that were previously classified as operating leases, the Group discounted lease payments using a weighted
average borrowing rate of 2.75%.
In thousands of AUD
Operating lease commitments at 30 June 2019 as disclosed in the Group’s consolidated financial statements
Discounted using the incremental borrowing rate at 1 July 2019
Extension options reasonably certain to be exercised
Leased forklifts not previously recognised in operating lease commitments
Lease liabilities recognised at 1 July 2019
1 Jul 2019
$’000
2,225
2,156
2,857
149
5,162
The difference between the above two numbers is due to the inclusion of extension options reasonably certain to be exercised which is a requirement
of AASB 16 but were not disclosed as lease commitments previously.
To assist with the understanding of the impact of the application of AASB 16 in this initial period refer to the summary below.
In thousands of AUD
Rights of use assets
Balance at 1 July 2019
Additions to right-of-use assets
Depreciation of right-of-use asset
Balance at 30 June 2020
Lease Liabilities
Balance at 1 July 2019
Increase in liability due to lease extensions or rent increases
Reduction in liability
Balance at 30 June 2020
Warehouses
Forklifts
149
-
(46)
103
5,013
380
(841)
4,552
5,162
380
(795)
4,747
Total
5,162
380
(887)
4,655
25
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
CHANGES IN SIGNIFICANT ACCOUNTING POLICIES (continued)
AASB 16 LEASES (continued)
Comparison of previous AASB 117 accounting treatment and new AASB 16 treatment
The following table has been included to compare the new accounting treatment under AASB 16 with how the same transactions would have been
shown under the previous AASB 117 for the period from 1 July 2019 to 30 June 2020.
In thousands of AUD
Previous AASB 117 accounting treatment
Expenses (lease payments)
Expenses (lease payments short term leases)
Cash flows from operating activities
Total
New AASB 16 treatment
Expenses (lease payments short term leases)
Interest expense
Depreciation right-of-use asset
Cash flows from operating activities
Cash flows from financing activities
Total
IFRIC 23 Uncertainty over Income Tax Treatments
Statement of
profit or loss
Statement of
cash flows
(915)
(96)
(1,011)
(96)
(120)
(887)
(1,103)
(1,011)
(1,011)
(216)
(795)
(1,011)
The Group’s existing accounting policy for uncertain income tax treatments is consistent with the requirements of IFRIC 23 Uncertainty over Income
Tax Treatments which became effective on 1 July 2019.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
A number of new standards are effective for annual periods beginning after 1 July 2020 and earlier application is permitted; however, the Group
has not early adopted the new or amended standards in preparing these consolidated financial statements and they are not expected to have a
material effect on the Group’s financial statements.
RESULTS FOR THE YEAR
This section focuses on the Group’s performance. Disclosures in this section include analysis of the Group’s profit before tax by reference to the
activities performed by the Group and analysis of key revenues and operating costs, segmental information, net finance costs and earnings per
share.
Underlying earnings before interest and tax (“EBIT”) and before exceptional items remain the Group’s key profit indicator. This reflects how the
business is managed and how the Directors assess the performance of the Group.
1. REVENUE AND OTHER INCOME
ACCOUNTING POLICIES
Sale of goods and services
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 from sale of goods (industrial products) is recognised when the customer
gains control of the goods which is usually when the goods are delivered to the customer or picked up from the Group’s premises. Revenue
from galvanising services is recognised at the point the services are provided which, given the short term nature of the process, is when the
customers’ product has been galvanised. The Group’s standard trading terms are 30 days end of month.
26
FINANCIAL STATEMENTS Good and services tax
Revenue is recognised net of goods and services tax (GST).
Sales revenue
Sale of goods and services
Disaggregation of revenue is presented in Note 6 Segment Reporting.
2. EXPENSES
2020
$’000
2019
$’000
63,088
60,843
ACCOUNTING POLICIES
Good and services tax
Expenses 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 expense.
EXPENSES BY NATURE
Cost of goods sold
Sales, marketing and warehousing expenses
Administration expenses
Distribution expenses
Bad and doubtful debts expense net of reimbursement right
Loss on sale of fixed assets
Profit before income tax has been arrived at after charging the
following expenses:
Employee benefits:
Wages and salaries
Other associated personnel expenses
Contributions to defined contribution superannuation funds
Expense relating to annual and long service leave
Termination benefits
Employee share bonus plan expense
Executive share plan expense
Other:
Loss on disposal of property, plant and equipment
Research and development expense
Depreciation – property, plant and equipment
Depreciation – right-of-use asset
2020
$’000
38,098
12,144
2,825
4,528
710
1
58,306
15,158
1,799
1,264
1,252
24
60
129
1
21
1,286
887
2019
$’000
37,529
11,852
2,678
4,712
4
-
56,775
15,462
1,842
1,217
1,304
101
62
56
-
79
1,469
-
3. FINANCE INCOME
ACCOUNTING POLICIES
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues, using the effective interest rate
method.
27
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
4. 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.
BASIC AND DILUTED EARNINGS PER SHARE
The calculation of basic earnings per share at 30 June 2020 was based on the net profit attributable to ordinary shareholders of $4,026,958
(2019: $2,885,349) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2020 of 11,238,716
(2019: 11,157,875).
The calculation of diluted earnings per share at 30 June 2020 was based on the net profit attributable to ordinary shareholders of $4,026,958
(2019: $2,885,349) and a weighted average number of potential ordinary shares outstanding during the financial year ended 30 June 2020 of
11,330,387 (2019: 11,191,027).
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (BASIC)
2020
Shares ’000
2019
Shares ’000
11,178
61
11,239
11,239
91
11,330
11,132
26
11,158
11,158
33
11,191
2020
Cents per
Share
35.8
35.7
2019
Cents per
Share
25.9
25.8
2020
$
97,250
97,250
8,280
8,280
2019
$
100,654
100,654
7,175
7,175
Issued ordinary shares at 1 July
Effect of shares issued during year
Weighted average number of ordinary shares at 30 June
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (DILUTED)
Weighted average number of ordinary shares (basic)
Effect of Executive Share Plan
Weighted average number of ordinary shares at 30 June
BASIC AND DILUTED EARNINGS PER SHARE
Basic earnings per share from continuing operations
Diluted earnings per share from continuing operations
5. AUDITOR’S REMUNERATION
Audit services:
Auditors of the Group (KPMG Australia)
– audit and review of financial statements
Other services:
Auditors of the Group (KPMG Australia)
– tax compliance services
28
FINANCIAL STATEMENTS 6. 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.
BUSINESS SEGMENTS
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
Industrial Products segment 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.
Production
Production segment represents the Korvest Galvanising business, which provides hot dip galvanising services.
Both reportable segments consist of the aggregation of a number of operating segments in accordance with AASB 8 Operating Segments.
GEOGRAPHICAL SEGMENTS
The Group predominantly operates in Australia.
CUSTOMERS
There was no individually significant customer that would represent more than 10% of total revenues in the current financial year.
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 profit before tax (PBT). Inter-segment transactions are not recorded as
revenue. Instead a cost allocation relating to the transactions is made based on negotiated rates.
Sales revenue
Depreciation and amortisation
Depreciation ROU asset
Reportable segment profit before tax
Reportable segment assets
Capital expenditure
Industrial Products
Production
Total
2020
$’000
57,089
(766)
(879)
4,497
22,423
2,536
2019
$’000
55,697
(875)
-
4,286
25,178
1,136
2020
$’000
5,999
(218)
(8)
690
4,583
570
2019
$’000
5,146
(209)
-
519
4,159
448
2020
$’000
63,088
(984)
(887)
5,187
27,006
3,106
2019
$’000
60,843
(1,084)
-
4,805
29,336
1,584
29
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
6. SEGMENT REPORTING (continued)
RECONCILIATION OF REPORTABLE SEGMENT PROFIT, ASSETS AND OTHER MATERIAL ITEMS
Profit
Total profit for reportable segments
JobKeeper income
Unallocated amounts – other corporate expenses (net of corporate income)
Profit before income tax
Assets
Total assets for reportable segments
Land and buildings
Cash, cash equivalents and investments
Right-of-use asset
Other unallocated amounts
Total assets
Capital expenditure
Capital expenditure for reportable segments
Other corporate capital expenditure
Total capital expenditure
Other material items
Depreciation and amortisation for reportable segments
Unallocated amounts – corporate depreciation
Total depreciation and amortisation
2020
$’000
5,187
1,059
(441)
5,805
27,006
8,232
6,745
4,655
1,642
48,280
3,106
90
3,196
984
302
1,286
2019
$’000
4,805
-
(671)
4,134
29,336
7,333
3,401
-
1,220
41,290
1,584
56
1,640
1,084
385
1,469
WORKING CAPITAL
Working capital represents the assets and liabilities the Group generates through its trading activity. The Group therefore defines working capital
as inventory, trade and other receivables, trade and other payables and provisions.
Careful management of working capital ensures that the Group can meet its trading and financing obligations within its ordinary operating cycle.
This section provides further information regarding working capital management and analysis of the elements of working capital.
7. TRADE AND OTHER RECEIVABLES
ACCOUNTING POLICIES
Trade receivables
Trade receivables are non-derivative financial instruments that are initially recognised at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at amortised cost using the effective interest method, less any identified impairment losses.
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.
30
FINANCIAL STATEMENTS Goods and services tax
Trade receivables are recognised inclusive of the amount of goods and services tax (GST) which is payable to taxation authorities. The net
amount of GST payable to the taxation authority is included as part of receivables or payables.
Current
Trade receivables
Less: Allowance for impairment
Add: Reimbursement right
JobKeeper receivable
Net trade receivables
2020
$’000
9,758
(241)
72
522
10,111
2019
$’000
14,688
(608)
-
-
14,080
Impairment
The Group uses an allowance matrix to measure the Expected Credit Loss (ECL) of trade receivables. Loss rates are calculated using a “roll
rate” method based on the probability of a receivable progressing through successive stages of delinquency to write-off.
When determining the credit risk for trade receivables the Group uses quantitative and qualitative information and analysis, based on the
Group’s historical experience and informed credit assessment and including forward-looking information.
On 1 April 2020 the Group took out trade credit insurance. This gives rise to a reimbursement right for any expected credit loss that arises on
trade receivables. This reimbursement right is recognised at the same time as the expected credit loss provision is recognised.
COVID-19 has not had a significant impact on the ECL provision. This is because Korvest has not observed any material change in the
payment behaviour of customers and the aging of trade receivables since COVID-19. The introduction of credit insurance also reduces any
impact of COVID-19 should this occur in the future.
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.
Movement in allowance for impairment
Balance at 1 July
Amounts written off against allowance
Impairment loss recognised
Balance at 30 June
8. INVENTORIES
2020
$’000
(608)
1,149
(782)
(241)
2019
$’000
(639)
31
-
(608)
ACCOUNTING POLICIES
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on average cost and includes
expenditure incurred in acquiring the inventories, production and conversion costs, and other costs incurred in bringing them to their existing
location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production
overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated
costs necessary to make the sale.
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.
Non-financial assets such as inventories are recognised net of amount of goods and services tax (GST), except where the amount of GST
incurred is not recoverable from taxation authority, it is recognised as part of the cost of acquisition of the asset.
31
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
8. INVENTORIES (continued)
Current
Raw materials and consumables
Work in progress
Finished goods
2020
$’000
2,393
283
7,879
10,555
2019
$’000
2,339
351
7,814
10,504
Finished goods are shown net of an impairment provision amounting to $1,396,000 (2019: $1,454,000) arising from the likely inability to sell
a product range at or equal to the cost of inventory.
The impairment provision is calculated having regard for the quantity of stock on hand for each item in comparison to usage over the past
year. Where items have been on hand for more than twelve months and more than ten years of stock are held based on recent sales history,
then a provision is held for the entire stock value (net of scrap recoveries). Using the same measures, where more than five but less than ten
years of stock are on hand 20% of the value (net of scrap recoveries) is provided for.
9. TRADE AND OTHER PAYABLES
ACCOUNTING POLICIES
Trade and other accounts payable are non-derivative financial instruments measured at cost.
Trade payables are recognised inclusive of the amount of goods and services tax (GST) which is recoverable from taxation authorities. The net
amount of GST recoverable from the taxation authority is included as part of receivables or payables.
Current
Trade payables and accrued expenses
Non-trade payables and accrued expenses
10. EMPLOYEE BENEFITS
2020
$’000
3,024
2,877
5,901
2019
$’000
3,279
2,695
5,974
ACCOUNTING POLICIES
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.
Long-term benefits
The Group’s net obligation in respect of long-term service benefits is the amount of future benefit that employees have earned in return for their
service in the current and prior periods. The obligation is calculated using expected future increases in wage and salary rates, including related
on-costs and expected settlement dates, and is discounted using the rates attached to high quality corporate bonds at the reporting date which
have maturity dates approximating to the terms of the Company’s obligations.
Current
Liability for annual leave
Liability for long service leave
Non-current
Liability for long service leave
Total employee benefits
Accrued wages and salaries are included in accrued expenses in note 9.
32
2020
$’000
1,039
1,585
2,624
172
2,796
2019
$’000
925
1,547
2,472
140
2,612
FINANCIAL STATEMENTS Defined contribution superannuation funds
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will
have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution superannuation funds are
recognised as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Share based payments
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 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.
The fair value of the performance rights with only non-market performance conditions 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.
The fair value of performance rights with market related performance conditions is measured using a Monte Carlo simulation.
Employee Share Bonus Plan
The Employee Share Bonus Plan allows Group employees to receive shares of the Company. Shares are allotted to employees who
have served a qualifying period. Up to $1,000 per year in shares is allotted to each qualifying employee. The fair value of shares issued is
recognised as an employee expense with a corresponding increase in equity. The fair value of the shares granted is measured using a present
value method.
Executive Share Plan
The Executive Share Plan and the Performance Rights Plan allow Group employees to receive 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.
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. The shares issued pursuant to these options are financed by an interest
free loan from the Company repayable within twenty years from the proceeds of dividends declared by the Company. These loans are of a
non-recourse nature. For accounting purposes these 20-year loans are treated as part of the options to purchase shares, until the loan is
extinguished at which point the shares are recognised.
The options were offered only to selected senior executives.
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. For issues made between November 2011 and November 2015 only one performance hurdle related to earnings per
share (EPS) was used. From the November 2016 issue onwards a second hurdle related to Relative Total Shareholder Return (RTSR) was
introduced.
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.
33
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
10. EMPLOYEE BENEFITS (continued)
Plan
ESP
KPRP
KPRP
KPRP
Grant date
March 2005
November 2017
November 2018
November 2019
Total share options /
performance rights
Number of options
/ rights initially
granted
Number outstanding
at balance date
AASBs
Number outstanding
at balance date
ASX
60,000
76,300
102,105
91,796
330,201
15,000
38,150
102,105
91,796
247,051
-
38,150
102,105
91,796
232,051
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
For the FY20 issues the fair value of both the ROIC and EPS hurdle rights were measured based on the Black-Scholes method. In FY19 the
fair value of the rights granted through the KPRP with an EPS hurdle was measured based on the Black-Scholes formula and the fair value
of the rights granted through the KPRP with an RTSR hurdle was measured using a Monte Carlo simulation. 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
Risk free interest rate
Life of options
Advised restriction period (after vesting)
2020
2019
RTSR hurdle
EPS Hurdle
$2.63
$3.24
-
35.4%
6.8%
1.06%
3 yrs
2 yrs
$1.83
$2.60
-
40.0%
4.6%
2.09%
3 yrs
2 yrs
$2.03
$2.60
-
40.0%
4.6%
2.09%
3 yrs
2 yrs
34
FINANCIAL STATEMENTS NUMBER OF
OPTIONS/RIGHTS
AT BEGINNING
OF YEAR
RIGHTS
GRANTED
LAPSED
FORFEITED EXERCISED
NUMBER OF
OPTIONS AT
END OF YEAR
ON ISSUE
EXERCISABLE
AT 30 JUNE
Reconciliation of outstanding share options/rights
GRANT
DATE
EXERCISE
DATE
EXPIRY
DATE
EXERCISE
PRICE
2020
PREVIOUS PLAN
Mar 05
Jan 07
Jan 27
Mar 09
Jan 11
Jan 31
$4.36
$3.79
Weighted average exercise price
CURRENT PLAN
Nov 16
Jul 19
Nov 17
Jul 20
Nov 18
Jul 21
Nov 19
Jul 22
Jun 19
Jun 20
Jun 21
Jun 22
-
-
-
-
15,000
10,000
25,000
$4.13
33,152
76,300
102,105
-
-
-
-
-
-
-
91,796
-
-
-
-
(38,150)
-
-
211,557
91,796 (38,150)
-
-
-
-
-
-
-
-
Weighted average exercise price
$Nil
$Nil
$Nil
$Nil
2019
PREVIOUS PLAN
Mar 05
Jan 07
Jan 27
Mar 09
Jan 11
Jan 31
$4.36
$3.79
Weighted average exercise price
CURRENT PLAN
Nov 16
Jul 19
Nov 17
Jul 20
Nov 18
Jul 21
Jun 19
Jun 20
Jun 21
-
-
-
15,000
10,000
25,000
$4.13
74,000
76,300
-
-
-
-
-
-
102,105
-
-
-
(40,848)
-
-
150,300
102,105
(40,848)
-
-
-
-
-
-
-
Weighted average exercise price
$Nil
$Nil
$Nil
$Nil
-
-
-
-
38,150
-
-
38,150
$Nil
-
-
-
-
15,000
-
15,000
$4.36
-
-
102,105
91,796
193,901
$Nil
15,000
10,000
25,000
$4.13
(10,000)
(10,000)
(33,152)
-
-
-
(33,152)
-
-
-
-
-
-
-
-
33,152
76,300
102,105
178,405
$Nil
-
-
33,152
$Nil
11. PROVISIONS
ACCOUNTING POLICIES
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably,
and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting
risk adjusted future expected cash flows at a pre-tax discount rate that reflects the time value of money. The unwinding of the discount is
recognised as a finance cost.
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. 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.
35
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
10. EMPLOYEE BENEFITS (continued)
Site restoration and safety
A provision of $520,000 (2019: $453,000) is held 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 based on an estimate of the cost to rectify the site. It has been assumed
that the rectification would occur in 15 years (2019: 15 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 2.8% (2019: 3.17%) and an inflation rate of 2.0%
(2019: 2.0%) have been used for the calculation at 30 June 2020.
Current
Warranties
Non-current
Site restoration
2020
$’000
2019
$’000
34
520
554
32
453
485
TANGIBLE ASSETS
TThe following section shows the physical tangible assets used by the Group to operate the business, generating revenues and profits.
This section explains the accounting policies applied and specific judgments and estimates made by the Directors in arriving at the net book value
of these assets.
Depreciation
Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally
constructed assets, from the date that the asset is completed and ready for use.
Depreciation is calculated to write off the carrying value of property, plant and equipment less the estimated residual values using the straight-
line basis over their estimated useful lives. Depreciation is generally recognised in profit or loss, unless the amount is included in the carrying
amount of another asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain
that the Group will obtain ownership by the end of the lease term. Land is not depreciated.
The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:
• Buildings
• Plant and equipment
40 years
3-12 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
12. PROPERTY, PLANT AND EQUIPMENT
ACCOUNTING POLICIES
Recognition and measurement
Items of plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Land and
buildings are 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, an 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 related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components)
of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal
and the carrying amount of the item) is recognised in profit or loss.
36
FINANCIAL STATEMENTS
Fair value measurement
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.
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.
Land & Buildings
(fair value)
$’000
Plant &
Equipment (cost)
$’000
Total
$’000
Cost
Balance at 1 July 2018
Acquisitions
Disposals and write-offs
Balance at 30 June 2019
Balance at 1 July 2019
Acquisitions
Disposals and write-offs
Revaluation
Balance at 30 June 2020
Accumulated depreciation and impairment losses
Balance at 1 July 2018
Depreciation charge for the year
Disposals
Balance at 30 June 2019
Balance at 1 July 2019
Depreciation charge for the year
Revaluation
Disposals
Balance at 30 June 2020
Carrying amounts
At 30 June 2018
At 30 June 2019
At 30 June 2020
7,382
35
-
7,417
7,417
-
-
815
8,232
42
42
-
84
84
42
(126)
-
-
7,340
7,333
8,232
20,980
1,605
(244)
22,341
22,341
3,196
(145)
-
25,392
15,438
1,427
(224)
16,641
16,641
1,244
-
(118)
17,767
5,542
5,700
7,625
28,362
1,640
(244)
29,758
29,758
3,196
(145)
815
33,624
15,480
1,469
(224)
16,725
16,725
1,286
(126)
(118)
17,767
12,882
13,033
15,857
37
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
12. PROPERTY, PLANT AND EQUIPMENT (continued)
FAIR VALUE HIERARCHY OF LAND AND BUILDINGS
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 April 2020 by Mr Mark Klenke, AAPI MRICS 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 the directors' valuation as at 30 June 2020.
The carrying amount of the Land and Buildings at cost at 30 June 2020 if not revalued would be $983,000 (2019:$1,037,700).
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. The valuation of land and buildings is based on Level 3 fair values.
SIGNIFICANT UNOBSERVABLE
INPUTS
Market yield - 8.0%
Potential rental rate - $55/m2
Land value for vacant land - $177/m2
INTER-RELATIONSHIP BETWEEN KEY
UNOBSERVABLE INPUTS
AND FAIR VALUE MEASUREMENT
The estimated market value would
increase if:
• Market yield was lower
•
•
Potential rental rate was higher
Land value was higher
VALUATION TECHNIQUE
Capitalised income 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
the value of vacant land as the property has
below average site coverage indicating further
capacity for development.
13. IMPAIRMENT TESTING
ACCOUNTING POLICIES
The carrying amounts of the Group’s tangible 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. An impairment loss is recognised if the carrying
amount of an asset or cash-generating unit (CGU) exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset or CGU. For impairment testing assets are grouped together into the smallest
group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying
amount of the assets in the CGU (group of CGUs) on a pro rata basis.
Any impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the assets'
carrying amounts do not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
RESULTS
The Group has determined that calculation of the recoverable amount of assets or CGUs is not required as at 30 June 2020 as there were
no impairment indicators.
38
FINANCIAL STATEMENTS LEASES
14. LEASES
The Group has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated
and continues to be reported under AASB 117. The details of accounting policies under AASB 117 are disclosed separately.
POLICY APPLICABLE BEFORE 1 JULY 2019
Assets held under operating leases were not recognised in the Group’s statement of financial position. Operating lease payments were
recognised as an expense on a straight-line basis over the lease term. Lease incentives received were recognised as an integral part of the
total lease expense, over the term of the lease.
POLICY FROM 1 JULY 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This policy is applied to contracts
entered into on or after 1 July 2019.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date,
plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term.
The right-of-use asset is periodically reduced by any impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease, or if that rate cannot be readily determined, the Group’s incremental borrowing rate. The Group
determines its incremental borrowing rate by seeking from its bankers, indicative interest rates for the type of asset being leased.
Lease payments included in the measurement of the lease liability comprise the following:
•
•
fixed payments; and
variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date;
The lease liability is measured at amortised cost using the effective interest rate method. It is remeasured when there is a change in future
lease payments arising from a change in index or rate. When the lease liability is remeasured in this way, a corresponding adjustment is
made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
Leases as a lessee
The group leases warehouse facilities and forklifts. Warehouse leases are generally for periods ranging from 3 to 10 years with options to
renew the lease after that date. Warehouse leases provide for annual rent reviews based on CPI or market rents. For warehouse leases it is
assumed to be reasonably certain that all options will be exercised. Forklifts leases are for 5 years with no renewal option.
All warehouse and forklift leases were originally entered prior to 1 July 2019 and were previously classified as operating leases under
AASB 117.
Information about leases for which the Group is a lessee is presented below.
i. Right-of-use assets
Balance at 1 July 2019
Additions to right-of-use assets
Depreciation of right-of-use asset
Balance at 30 June 2020
Warehouses
Forklifts
5,013
380
(841)
4,553
149
-
(46)
103
Total
5,162
380
(887)
4,655
39
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
14. LEASES (continued)
ii. Lease liability
Current
Non-current
Total Lease liability
iii. Amounts recognised in profit or loss
2020 – Leases under AASB 16
Depreciation right-of-use asset
Interest on lease liabilities
Expenses relating to short-term leases
2019 – Operating leases under AASB 117
Lease expense
iv. Amounts recognised in statement of cash flows
Cash flows used in operating activities
Cash flows used in financing activities
Total cash outflow for leases
2020
$’000
782
3,965
4,747
2020
$’000
887
120
96
2020
$’000
216
795
1,011
2019
$’000
994
2019
$’000
994
-
994
CAPITAL STRUCTURE
This section outlines how the Group manages its capital structure, including its balance sheet liquidity and access to capital markets.
The directors determine the appropriate capital structure of the Group, specifically how much is realised from shareholders and how much is
borrowed from the financial institutions to finance the Group’s activities now and in the future.
15. CASH AND CASH EQUIVALENTS
ACCOUNTING POLICIES
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are
subject to an insignificant risk of changes in their fair value and are used by the Company in the management of its short-term commitments.
Investments and term deposits comprise deposits with maturities greater than three months at balance date.
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.
Bank balances
Call deposits
Cash and cash equivalents in the statement of cash flows
Term deposits
2020
$’000
1,356
5,114
6,470
275
2019
$’000
1,884
1,242
3,126
275
40
FINANCIAL STATEMENTS RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities
Profit for the year
Adjustment for:
Depreciation and amortisation
Depreciation right-of-use asset
Impairment of trade receivables
Impairment of inventories
Increase in provision for site rectification
Other
Equity-settled share-based payment expense
Changes in:
Trade and other receivables
Prepayments
Inventories
Trade and other payables
Deferred tax
Income taxes payable
Provisions and employee benefits
Net cash from operating activities
16. FINANCIAL INSTRUMENTS
2020
$’000
4,027
1,286
887
710
(58)
67
1
189
7,109
3,259
(85)
7
(72)
88
(32)
186
10,460
2019
$’000
2,885
1,469
-
(4)
(10)
20
(2)
114
4,472
(4,126)
(29)
(1,098)
1,308
(20)
864
42
1,413
ACCOUNTING POLICIES
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 applies AASB 13 Fair Value Measurement, which establishes a single framework for measuring fair value and making disclosures
about fair value measurements when such measurements are required or permitted by other Accounting Standards. It unifies the definition of
fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. It replaces and expands the disclosure requirements about fair value measurements in other Accounting Standards.
As a result, the Group has applied additional disclosures in this regard within Notes 7 and 17.
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).
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 13, including the level in the fair value hierarchy in which such valuations should be classified.
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.
Significant valuation issues are required to be reported to the Audit Committee.
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.
41
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
16. FINANCIAL INSTRUMENTS (continued)
Financial assets and liabilities
All financial assets and liabilities are initially recognised at the fair value of consideration paid or received, net of transaction costs as appropriate,
and subsequently carried at fair value or amortised cost, as indicated in the table below.
FINANCIAL ASSETS AND LIABILITIES
CLASSIFICATION UNDER AASB 9
Cash, cash equivalents and Investments
Trade and other receivables
Trade and other payables
Amortised cost
Amortised cost
Amortised cost
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.
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 board of directors has overall responsibility for the establishment and oversight of the risk management framework.
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:
Cash, cash equivalents and Investments
Trade and other receivables
Cash and cash equivalents
The cash, cash equivalents and investments are held with major Australian banks.
2020
$’000
6,745
10,111
2019
$’000
3,401
14,080
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also
considers the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate,
as these factors may have an influence on credit risk, particularly in the current deteriorating economic circumstances.
There is an established credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard
payment and delivery terms and conditions are offered. The Group’s review includes external ratings and 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.
On 1 April 2020 the Group took out trade credit insurance to reduce the Group’s credit risk exposure.
42
FINANCIAL STATEMENTS The Group uses an expected credit loss (ECL) model to measure the allowance for losses. The Group uses quantitative and qualitative
information based on the Group’s historical experience, informed credit assessment and including forward-looking information.
The maximum exposure to credit risk for trade and other receivables at the end of the reporting period by geographic region was as follows:
Carrying values
Australia
New Zealand
South America
Other
2020
$’000
2019
$’000
10,106
14,013
2
2
1
24
39
4
10,111
14,080
At 30 June 2020, the Group’s most significant customer, located in Australia, accounted for $2,999,049 of the trade and other receivables
carrying amount (2019: $2,472,702).
Impairment losses
The ageing of the trade and other receivables at the reporting date that were not impaired is set out below.
Gross
Not past due nor impaired
Past due 0-30 days
Past due 31-90 days
More than 91 days
Liquidity risk
2020
$’000
7,798
2,101
212
-
10,111
2019
$’000
10,431
3,642
7
-
14,080
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled
by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
The Group monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and
other payables.
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).
2020
Contractual cash flows
2019
Carrying
amount
Total
1-5 years
Less
than
1 year
More
than 5
years
Carrying
amount
Contractual
cash flows
6 months
or less
6 – 12
months
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Non-derivative
financial liabilities
Trade and other
payables
Lease liabilities*
5,901
4,747
(5,901)
(5,373)
(5,901)
-
(902)
(2,611)
(1,860)
10,648
(11,274)
(6,803)
(2,611)
(1,860)
5,974
N/A
5,974
(5,974)
(5,974)
N/A
N/A
(5,974)
(5,974)
-
N/A
-
* No comparative disclosures for lease liabilities as AASB 16 Leases was adopted from 1 July 2019. The lease liability contractual cashflows
include any optional lease renewal periods where those options have not yet been exercised. They do not include any CPI based adjustments
for future periods as the rate of those adjustments is unknown.
43
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
16. FINANCIAL INSTRUMENTS (continued)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the Australian dollar (AUD). The
currencies in which these transactions primarily are denominated are US dollars (USD) and Thai Baht (THB).
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.
During the year the Group took out trade credit insurance to insure some of the risk associated with the collection of trade receivables. This
is the only change in the Group’s approach to capital management during the year.
ACCOUNTING CLASSIFICATIONS AND FAIR VALUES
The carrying amounts of the Group’s financial assets and liabilities are considered to be a reasonable approximation of their fair values.
17. CAPITAL AND RESERVES
ACCOUNTING POLICIES
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.
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. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
44
FINANCIAL STATEMENTS SHARE CAPITAL
Ordinary shares
On issue at 1 July
Issued under the Employee Share Bonus Plan
Issued under the Executive Share Plan
On issue at 30 June – fully paid
2020
Shares ’000
2019
Shares ’000
11,178
11,132
37
43
46
-
11,258
11,178
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.
18. DIVIDENDS
ACCOUNTING POLICIES
Dividends paid are classified as distribution of profit consistent with the balance sheet classification of the related debt or equity instrument.
RECOGNISED AMOUNTS
2020
Interim 2020 ordinary
Final 2019 ordinary
Total amount
2019
Interim 2019 ordinary
Final 2018 ordinary
Total amount
Cents per
share
Total
amount
$’000
Percentage
franked
Tax
rate
Date of
payment
15.0
13.0
9.0
7.0
1,688
1,461
3,149
1,006
781
1,787
100%
100%
100%
100%
30%
6 March 2020
30% 6 September 2019
30%
30%
8 March 2019
7 September 2018
UNRECOGNISED AMOUNTS
After the balance sheet date the following dividends were proposed by the directors. The dividends have not been provided.
Cents per
share
Total
amount
$’000
Percentage
franked
Tax
rate
Date of
payment
2020
Final 2020 ordinary
13.0
1,465
100%
30% 4 September 2020
The financial effect of these dividends have not been brought to account in the financial statements for the financial year ended 30 June 2020
and will be recognised in subsequent financial reports.
DIVIDEND FRANKING ACCOUNT
30% franking credits available to shareholders of Korvest Ltd for subsequent financial years
2020
$’000
9,224
2019
$’000
8,884
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 $628,000 (2019: reduce by $624,000).
45
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
TAXATION
This section outlines the tax accounting policies, current and deferred tax impacts, a reconciliation of profit before tax to the tax charge and the
movement in deferred tax assets and liabilities.
19. CURRENT AND DEFERRED TAXES
ACCOUNTING POLICIES
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 credits and deductible temporary differences, to the extent that it is probable
that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Tax consolidation
The Company and the wholly owned Australian subsidiaries set out in Note 20 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 consolidated 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.
46
FINANCIAL STATEMENTS INCOME TAX RECOGNISED IN THE INCOME STATEMENT
Current tax expense
Current year
Deferred tax expense
Origination and reversal of temporary differences
- relating to current year
Total income tax expense in Statement of profit or loss and
comprehensive income
2020
$’000
1,690
1,690
88
88
1,778
NUMERICAL RECONCILIATION BETWEEN TAX EXPENSE AND PRE-TAX NET PROFIT
Profit before tax
Income tax using the domestic corporation tax rate of 30% (2019:30%)
Non-deductible expenses
Income tax expense on pre-tax net profit
RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
2020
$’000
5,805
1,742
36
1,778
Property, plant and equipment
Leases
Inventories
Provisions / accruals
Provision for doubtful debts
Tax loss carried forward
Tax (assets) / liabilities
Set off of tax
Net tax (assets) / liabilities
Assets
Liabilities
Net
2020
$’000
-
(1,424)
(419)
(1,061)
(51)
(287)
(3,242)
3,242
-
2019
$’000
-
-
(436)
(975)
(181)
(287)
(1,879)
1,879
-
2020
$’000
2,139
1,397
507
-
-
-
4,043
(3,242)
801
2019
$’000
1,780
-
530
-
-
-
2,310
(1,879)
431
2020
$’000
2,139
(27)
88
(1,061)
(51)
(287)
801
-
801
2019
$’000
1,270
1,270
(21)
(21)
1,249
2019
$’000
4,135
1,240
9
1,249
2019
$’000
1,780
-
94
(975)
(181)
(287)
431
-
431
47
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
19. CURRENT AND DEFERRED TAXES (continued)
MOVEMENT IN DEFERRED TAX BALANCES DURING THE YEAR
Property, plant and equipment
Leases
Inventories
Provisions / accruals
Provision for doubtful debts
Tax loss carried forward
Tax loss carried forward
Property, plant and equipment
Inventories
Provisions / accruals
Provision for doubtful debts
Tax loss carried forward
Tax loss carried forward
Balance
30 June 19
$’000
(1,780)
-
(94)
975
181
287
(431)
Recognised in
profit
$’000
Recognised
directly in equity
$’000
Balance
30 June 20
$’000
(76)
28
6
86
(132)
-
(88)
(282)
-
-
-
-
-
(282)
Balance
30 June 18
$’000
Recognised in
profit
$’000
(1,862)
(129)
970
190
380
(451)
82
35
5
(9)
(93)
20
(2,138)
28
(88)
1,061
49
287
801
Balance
30 June 19
$’000
(1,780)
(94)
975
181
287
(431)
GROUP COMPOSITION
This section outlines the Group’s structure and changes thereto.
20. INVESTMENT IN SUBSIDIARIES
ACCOUNTING POLICIES
Basis of consolidation
These financial statements are the financial statements for all the entities that comprise the Group, being the Company and its subsidiaries as
defined in Accounting Standard AASB 10 Consolidated Financial Statements.
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 to affect those returns through its power over the entity. The financial statements 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.
48
FINANCIAL STATEMENTS GROUP ENTITIES
Parent entity
Korvest Ltd
Subsidiaries
Power Step (Australia) Pty Ltd
Power Step (Chile) SpA
Titan Technologies (SE Asia) Pty Ltd
OTHER NOTES
21. KEY MANGEMENT PERSONNEL
Country of Incorporation
Ownership interest
Australia
Australia
Chile
Australia
2020
%
2019
%
100
100
100
100
100
100
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)
• Gary Francis
• Gerard Hutchinson
• Andrew Stobart
EXECUTIVE DIRECTORS
• Chris Hartwig (Managing Director)
• Steven McGregor (Finance Director and
Company Secretary)
EXECUTIVES
• Gavin Christie (General Manager, Operations)
• Stephen Taubitz (General Manager Sales -
EzyStrut)
KEY MANAGEMENT PERSONNEL COMPENSATION POLICY
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.
KEY MANAGEMENT PERSONNEL COMPENSATION
The key management personnel compensation comprised:
Short-term employee benefits
Post-employment benefits
Termination payments
Long term benefits
Share based payments
2020
$
1,642,237
128,145
-
25,616
129,027
2019
$
1,592,870
119,489
149,498
(14,640)
57,684
1,925,025
1,903,901
INDIVIDUAL DIRECTORS AND EXECUTIVES COMPENSATION DISCLOSURES
Information regarding individual directors’ and executives’ compensation and some equity instrument disclosure as permitted by Corporations
Regulations 2M.3 is provided in the remuneration report section of the Directors’ report.
49
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2020
22. PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ending 30 June 2020 the parent entity of the Group was Korvest Ltd.
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
Share capital
Reserves
Retained earnings
Total Equity
2020
$’000
3,677
658
4,335
26,639
47,187
8,585
14,780
14,202
18,205
-
32,407
2019
$’000
2,984
-
2,984
27,769
41,313
9,035
10,280
14,143
16,890
-
31,033
GUARANTEES ENTERED INTO BY THE COMPANY
Bank guarantees given by the Company in favour of customers and landlords amounted to $10,656 (2019: $57,483).
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 2020, the Company had contractual commitments for the acquisition of property, plant and equipment of $542,000 (2019:
$187,000).
23. COMMITMENTS AND CONTINGENCIES
The commitments and contingencies of the group are the same as for the parent entity outlined in note 22.
24. 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.
S
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DIRECTORS’ DECLARATION
For the year ended 30 June 2020
DIRECTORS’ DECLARATION
For the year ended 30 June 2020
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 20 to 50 and the Remuneration report in the Directors’
report, set out on pages 8 to 16, 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 2020 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 2020.
3. The Directors draw attention to the Basis of preparation note on page 24, which includes a statement of compliance with International
Financial Reporting Standards.
Dated at Adelaide this 24th July 2020
Signed in accordance with resolution of directors:
GRAEME BILLINGS
DIRECTOR
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51
Independent Auditor’s Report
Independent Auditor’s Report
Report on the audit of the Financial Report
To the shareholders of Korvest Ltd
Opinion
To the shareholders of Korvest Ltd
We have audited the Financial Report of
Report on the audit of the Financial Report
Korvest Ltd (the Company).
The Financial Report comprises:
In our opinion, the accompanying Financial
Report of the Company is in accordance with
Opinion
the Corporations Act 2001, including:
We have audited the Financial Report of
•
giving a true and fair view of the Group's
Korvest Ltd (the Company).
financial position as at 30 June 2020 and
of its financial performance for the year
In our opinion, the accompanying Financial
ended on that date; and
Report of the Company is in accordance with
the Corporations Act 2001, including:
•
•
complying with Australian Accounting
Standards and the Corporations
giving a true and fair view of the Group's
Regulations 2001.
financial position as at 30 June 2020 and
of its financial performance for the year
ended on that date; and
•
Basis for opinion
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
• Consolidated statement of financial position as at 30
June 2020;
The Financial Report comprises:
• Consolidated statement of profit or loss and other
comprehensive income, consolidated statement of
cash flows and consolidated statement of changes in
equity for the year ended 30 June 2020;
• Consolidated statement of financial position as at 30
June 2020;
• Directors' Declaration.
• Notes including a summary of significant accounting
policies; and
• Consolidated statement of profit or loss and other
comprehensive income, consolidated statement of
cash flows and consolidated statement of changes in
equity for the year ended 30 June 2020;
The Group consists of the Company and the entities it
controlled at the year end or from time to time during the
• Notes including a summary of significant accounting
financial year.
policies; and
• Directors' Declaration.
The Group consists of the Company and the entities it
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
controlled at the year end or from time to time during the
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
financial year.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
Basis for opinion
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
Code.
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
Key Audit Matters
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
audit of the Financial Report of the current period.
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming
Code.
our opinion thereon, and we do not provide a separate opinion on this matter.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current period.
Liability limited by a scheme approved
under Professional Standards
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming
Legislation.
our opinion thereon, and we do not provide a separate opinion on this matter.
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
52
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards
Legislation.
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR'S REPORT
Valuation of finished goods inventory ($7.879m)
Refer to Note 8 to the Financial Report – Inventories
The key audit matter
How the matter was addressed in our audit
The valuation of finished goods inventory is a
key audit matter due to the:
• Size of the finished goods inventory
is significant to the
balance, which
balance sheet (16.3% of total assets);
•
•
Finished
specialised in nature;
goods
inventory
being
Importance of finished goods inventory
valuation to the business operations and
financial performance of the Group;
• Group’s judgment involved in estimating
the amount of the impairment provision.
Estimating the provision, and therefore
the value of finished goods inventory,
requires consideration of the volume of
finished goods on hand, anticipated
future usage and expected recoverable
amount. Such judgments may have a
the Group’s
significant
impairment
finished goods
provision, and
the overall
finished goods
carrying
inventory, necessitating additional audit
effort.
inventory
therefore
impact on
value of
In auditing this key audit matter, we used
senior team members who understand the
Group’s business, industry and the relevant
economic environment.
Our procedures included:
• Assessing the Group’s policies for the valuation of
finished goods inventory against the requirements of
the accounting standards;
• Applying our understanding of the Group’s business
model
the Group’s
methodology to identify slow moving finished goods
and finished goods selling below cost;
evaluating
critically
in
•
Testing
impairment assessment at year-end, by:
finished goods
the Group’s
inventory
- Assessing the integrity of the finished goods
inventory provision, including the accuracy of
the underlying calculations by performing
computation checks;
- Checking
the accuracy of expected stock
turnovers, by product, as a key input in the
finished goods
inventory provision. The
expected stock turnover is applied against
escalating obsolescence assumptions when
calculating
inventory
provision. We evaluated expected stock
turnovers using the quantity of finished goods
on hand at year end and sales quantities
experienced in FY20. We checked a sample of
those sales quantities to sales invoices;
finished goods
the
• Comparing the unit cost of each finished good on
hand from the Group’s impairment assessment to
the average sales price for the year of these
products, as a proxy for expected recoverable
amount;
• Challenging the Group’s assumptions, such as the
provision percentages by product category and aging,
using our understanding of the Group’s business and
knowledge of market.
• Attending
stocktakes
locations
in
observing the Group’s processes, which included
identifying slow moving and potentially obsolete
finished goods inventory.
significant
53
INDEPENDENT AUDITOR’S REPORTFor the year ended 30 June 2020
Other Information
Other Information is financial and non-financial information in Korvest Ltd’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the
Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error; and
assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
54
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR'S REPORT
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of Korvest Ltd for the year ended 30 June
2020, complies with Section 300A of the
Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in
pages 8 to 16 of the Directors’ report for the year ended
30 June 2020.
responsibility
the
Our
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
to express an opinion on
is
KPMG
Paul Cenko
Partner
Adelaide
24 July 2020
55
INDEPENDENT AUDITOR’S REPORTFor the year ended 30 June 2020 Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Korvest Ltd
I declare that, to the best of my knowledge and belief, in relation to the audit of Korvest Ltd for the
financial year ended 30 June 2020 there have been:
To the Directors of Korvest Ltd
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001
i.
in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
ii.
I declare that, to the best of my knowledge and belief, in relation to the audit of Korvest Ltd for the
financial year ended 30 June 2020 there have been:
i.
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001
in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
ii.
KPMG
KPMG
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56
Paul Cenko
Partner
Adelaide
Paul Cenko
24 July 2020
Partner
Adelaide
24 July 2020
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards
Legislation.
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards
Legislation.
ASX ADDITIONAL INFORMATION
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out
below.
SHAREHOLDINGS (AS AT 23 JULY 2020)
SUBSTANTIAL SHAREHOLDERS
The number of shares held by substantial shareholders and their associates are set out below:
Shareholder
Perpetual Limited
Mitsubishi UFJ Financial Group, Inc
Phoenix Portfolios Pty Ltd
Donald Cant Pty Ltd
VOTING RIGHTS
ORDINARY SHARES
Refer to note 18 in the financial statements.
OPTIONS
Refer to note 10 in the financial statements.
Percentage
10.63%
10.21%
6.07%
5.43%
Number
1,198,653
1,150,462
684,607
611,759
DISTRIBUTION OF EQUITY SECURITY HOLDERS
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
NUMBER OF EQUITY SECURITY HOLDERS
Total Holders
785
638
141
131
13
1,708
Units
286,476
1,638,875
1,078,247
2,806,050
5,463,285
11,272,933
% Issued Capital
2.54
14.54
9.57
24.89
48.46
100
The number of shareholders holding less than a marketable parcel of ordinary shares is 216.
SECURITIES EXCHANGE
The Company is listed on the Australian Securities Exchange. The Home exchange is Sydney.
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.
57
ASX ADDITIONAL INFORMATIONFor the year ended 30 June 2020 Number of
Ordinary Shares
Held
Percentage of
Capital Held
1,202,785
1,174,103
630,822
611,759
501,202
320,000
191,558
167,316
165,000
144,026
124,554
118,412
102,083
84,327
72,350
72,343
60,720
60,683
54,644
52,390
10.67
10.42
5.60
5.43
4.45
2.84
1.70
1.48
1.46
1.28
1.10
1.05
0.91
0.75
0.64
0.64
0.54
0.54
0.48
0.46
5,911,077
52.44
ASX ADDITIONAL INFORMATION (continued)
FOR THE YEAR ENDED 30 JUNE 2020
TWENTY LARGEST SHAREHOLDERS
Name
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
Donald Cant Pty Ltd
National Nominees Limited
Creative Living (Qld) Pty Ltd
Rathvale Pty Limited
Brazil Farming Pty Ltd
Angueline Capital Pty Limited
Allegro Two Super Fund Pty Ltd
Brazil Farming Pty Ltd
Robert Nairn Pty Ltd
Mr William Francis Cannon
Gotterdamerung Pty Limited
Camden Equity Pty Ltd
Mrs Helen Elizabeth Rollinson
Ms Nina Tschernykow
A & R Truda Pty Ltd
Mr Geoffrey Neil Huddleston + Mrs Raelene Jane Huddleston
Kalingo Pty Ltd
OFFICES AND OFFICERS
COMPANY SECRETARY
Steven John William McGregor BA(Acc), FCA, 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: 1300 556 161 (within Australia) or +61 3 9415 4000 (outside Australia)
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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