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2022
2022
Annual
Annual
Report
Report
Korvest Ltd has been proudly manufacturing in Australia, supplying to projects throughout Australia and supporting
Australian jobs for more than fifty years.
Since 1970, Korvest has built itself a strong reputation for being a capable supplier of cable and pipe supports, and
galvanising services. Korvest's business units work together to develop an integrated, complete solution quickly,
finished to recognised Australian and international standards.
EzyStrut produces a range of standard, customised and innovative cable and pipe support products for domestic,
commerical and industrial projects throughout Australia. Korvest Galvanisers operates a hot dip galvanising business
in South Australia, servicing a range of local and national customers.
Korvest's workforce of more than 200 employees is multi-skilled and lead by a central management team. Our
business units have the capacity to scale up production should a major project require more hands, or more hours,
to meet strict deadlines.
Nationally, Korvest has offices located in Adelaide, Sydney, Brisbane, Melbourne and Perth, with distributors in
Townsville, Hobart and Newcastle. The EzyStrut manufacturing plant and national distribution centre, along with the
Korvest Galvanisers facilities, are located in Adelaide, South Australia.
www.ezystrut.com.au
www.korvestgalvanisers.com.au
TABLE OF
CONTENTS
4
7
12
22
23
60
ESG STRATEGY & CORE VALUES
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
5 YEAR SUMMARY
FINANCIAL STATEMENTS
ASX ADDITIONAL INFORMATION
Korvest Ltd and controlled entities
ABN: 20 007 698 106
Annual Report, 30 June 2022
Cover art inspired by
Korvest Ltd's
involvement in the
Westconnex M4-M5
Link Tunnels project
ESG STRATEGY STATEMENT & CORE VALUES
Our ESG Vision is as follows:
Korvest aims to integrate ESG considerations into all facets of our business activities.
We conduct our business in a socially responsible and ethical manner, aiming to protect
the environment and benefit the communities where we work. We look after the health,
safety and wellbeing of our employees and ensure effective corporate governance,
whilst achieving strong financial performance.
Korvest has developed a set of values that underpin the way in which we operate and help to achieve our vision. The core values are as follows:
• Always Safe & Environmentally Focused
• Act with Integrity
• Work as One Team
• Think Customer
• Pursue Excellence
• Financially Responsible
SOCIAL
SAFETY PERFORMANCE
Through ongoing continuous improvement and consultation, Korvest drove down the numbers of lost time injuries compared to FY21, reducing
the lost time injury frequency rate by 49%.
This was in part achieved through the delivery of Safety "Back to Basics" training to the factory workforce. The training was developed and
delivered in house and focuses on the safety principles we all need to implement on a daily basis to keep ourselves and our co-workers safe at
work. A further roll-out of this training to interstate branches will be conducted in FY23.
Automation of manual handling tasks is a key area of improvement with some repetitive welding and stacking tasks completed during FY22. This
is an ongoing focus with further investment planned for FY23.
Manual lifting of products and raw materials during our manufacturing processes is a specific risk in our business and we have also invested in
additional jibs and hoists in our welding and fettling bays to further decrease the manual handling required.
EMPLOYEE HEALTH & WELLBEING
In addition to safety, Korvest undertakes a number of programmes aimed to improve the health and wellbeing of our employees, including:
• Employee Assistance Program allowing employees to access free counselling sessions for any reason
• Ongoing health surveillance program to monitor the hearing of employees
• Voluntary health screening including cholesterol and blood sugar readings
• Voluntary skin checks
• Voluntary free influenza vaccinations
• Paid time off for first and second COVID-19 vaccinations
KORVEST CHARITY SCHEME
Korvest has operated a company-wide charity scheme for many years. The scheme allows employees to make salary sacrificed donations to a
nominated charity that are matched on a dollar-for-dollar basis by the company. Korvest's Staff Consultative Committee choose the designated
charity for 3 years on a rotational basis.
DIVERSITY AND INCLUSION
Korvest is committed to promoting a culture that embraces a diverse mix of employees throughout all levels of the company. We recognise that
our success is directly related to our people. Our people reflect a growing diversity, with different gender, ages, family status, cultures, ethnicities,
and religions represented among our employees.
The Board and Management have set specific gender targets for various areas within the business. Our gender representation statistics are
shown in the table below against our long-term objective.
Number of females in senior management positions
Number of females in administration / sales positions
Number of female employees in the whole organisation
40%
50%
20%
Objective
%
Actual 2021
Actual 2022
Number
4
19
26
%
20%
49%
12%
Number
5
21
32
%
28%
58%
15%
4
ESG STRATEGY & CORE VALUESESG STRATEGY STATEMENT & CORE VALUESFor the year ended 30 June 2022 ENVIRONMENT
The protection of our environment is a cornerstone of our business. Korvest maintains ISO14001 (Environmental Management) accreditation,
a South Australian Environmental Protection Authority (EPA) Licence for the Kilburn manufacturing facility and a WHS Management System in
compliance with each state's legislative requirements.
LEGISLATIVE COMPLIANCE
Korvest voluntarily undertook an independent legislative compliance audit of our WHS&E management systems during the reporting period. The
audit was undertaken by external consultants with the systems measured against the requirements of the Model Work Health and Safety Laws
and Regulations, SA Environmental Protection legislation as well as our SA EPA licence conditions. There were no non-conformances raised by
the external consultants. Opportunitites for improvements identified as a result of the audit process will be assessed and implemented over the
next 12 months.
GOOD FOR ENVIRONMENT, GOOD FOR BUSINESS
Korvest has built a cooperative working relationship over a long period with the South Australian EPA. We are one of the longest environmentally
licenced organisations in the state.
We were honoured to be acknowledged by the SA EPA for our commitment to the environment by way of inclusion as a case study in the
2021 SA EPA "Good for Environment, Good for Business" publication. This publication showcases how successful, innovative businesses can
co-exist with expectations of the local community, delivering environmental improvements and investing in jobs and growth for the wellbeing and
prosperity of all South Australians.
NOISE MANAGEMENT
With the changing demographic of the Kilburn area, through the SA Urban Renewal Master Plan, Korvest in consultation with the SA EPA
voluntarily developed a Noise Management Plan to set out a pathway to reduce noise emissions from our Kilburn site. Initiatives underway or
completed include:
the replacement of forklift tonal reversing beepers with white noise alternatives
trialling the building of noise barriers around presses
•
•
• exchanging the warehouse fleet of forklifts for quieter models
• ongoing trial of electric forklifts in place of combustion engine models
The trial of electric forklifts was very successful with the first replacement since the trial specified as an electric unit.
ENERGY
Energy efficiency and greenhouse gas emissions go hand in hand. Efficient use of energy and implementing opportunities to generate solar
power have been an ongoing strategy for Korvest over a number of years.
During the reporting period, Korvest invested in a new roof-mounted, grid-connected 269kWDC/200kWAC Solar PV system installed on the roof
of the Kilburn warehouse. This is in addition to the existing 99kWDC system installed on the Manufacturing building and 73kWDC system on the
adjoining Fabrication building.
These systems, coupled with the LED lighting project completed at Kilburn in 2018, continue to drive down our main grid electricity consumption
and consequently our carbon footprint.
The combined solar systems generated approximately 203 MWhs of electricity in FY22. This is expected to increase in FY23 as we will have a
full 12 months generation from the new warehouse system.
The chart below demonstrates the effect of the LED and Solar Projects on CO2e emissions for the Kilburn plant relative to the hours worked over
the period.
Kilburn CO2e tonnes per hours worked
0.0025
0.002
0.0015
0.001
0.0005
0
Jul '18
Oct '18
Jan '19
Apr '19
Jul '19
Oct '19
Jan '20
Apr '20
Jul '20
Oct '20
Jan '21
Apr '21
Jul '21
Oct '21
Jan '22
Apr '22
Total Scope 1
CO2e emissions
for 2021-22
2206t
Total Scope 2
CO2e emissions
for 2021-22
526t
5
ESG STRATEGY & CORE VLAUES ESG STRATEGY STATEMENT & CORE VALUESFor the year ended 30 June 2022 ESG STRATEGY STATEMENT & CORE VALUES (Continued)
GALVANISING PLANT EMISSIONS
Korvest continues to participate in the National Pollution Inventory (NPI)
reporting scheme for our galvanising emissions. This data is publicly available
through the NPI website.
Confirmation stack emissions monitoring and modelling was undertaken during
the period to ensure the new particulate bag house installed on the main
galvanising bath (pictured at right) was performing as expected. The results
have been outstanding with up to a 90% reduction in zinc oxide particulate
being emitted through the stack. The collected fume is discharged from the
plant into bags and on sold for recycling. Plume modelling has demonstrated
that Korvest complies with current EPA PM
air quality standards.
and PM
2.5
10
WASTE MANAGEMENT & RECYCLING
Korvest Galvanising undertake a process known as pickling, with the steel
running through a series of pre-treatment chemical baths to prepare the steel
for galvanising. Over time, due to impurities and concentration levels, these
fluids are removed by waste management contractors for treatment. Korvest
has implemented strategies over a number of years to minimise the number of
litres required to be removed and treated and considers the current processes
to be as efficient as possible.
A number of by-products from the galvanising process are sold to recyclers
for conversion into zinc and zinc related products. The primary by product is
known as ash. The ash is treated at Korvest in-house by use of a MZR Zinc
Recovery System. The recovered zind is re-used in the galvanising kettles
with the processed ash sold for recycling. In addition to ash, dross and the
particulates captured by the bag house are also sold for recycling. Wire used in
the hanging process is sold to scrap metal recyclers.
In the manufacturing process, scrap steel from perforations and the start of
production runs is sold to scrap metal recyclers.
GOVERNANCE
Korvest's corporate governance statement, which was approved by the Board on 22 July 2022 is available on the company's website at
https://www.korvest.com.au/assets/downloads/Korvest-Corporate-Governance-2022.pdf.
COMPLIANCE TRAINING
Korvest provides a range of relevant role-specific training to employees delivered in various ways including face-to-face sessions and online
modules. Compliance training is provided on a cyclical basis on a range of topics including:
• Anti-bribery and Corruption,
• Competition and Consumer Law,
• Whistle-blower,
• Bullying and harassment,
•
• Modern Slavery.
IT Awareness and Cyber Security, and
CYBER SECURITY
Given the increasing risks associated with cyber security, Korvest engages IT specialists to assist with the operation and security of the Korvest
IT environment. During the year Korvest engaged an expert to undertake an Australian Signals Directorate (ASD) Essential 8 assessment of
Korvest. As a result of that review, there are a range of projects that will be completed to further improve Korvest's cyber security environment.
User training plays a key role in reducing cyber risks and Korvest is now in its second year of providing all IT users with regular training on cyber
security. Over 80% of users have indicated that they have changed something they do in their daily work practices to make them more secure
after completing the training.
6
ESG STRATEGY & CORE VALUESESG STRATEGY STATEMENT & CORE VALUESFor the year ended 30 June 2022 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 2022 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:
Andrew Stobart
Chris Hartwig
Chairman
B.Eng (Hons), Grad Dip Bus Admin, GAICD
Appointed Chairman 31 August 2021.
A Director since August 2016.
Former Chairman Nexans Olex Australia & New Zealand.
Member of Audit and Remuneration Committees.
Managing Director
BA(Acc), MAICD
A Director since 28 February 2018.
Mr Hartwig has held a number of senior roles in the
steel and electrical manufacturing industries.
Director Galvanising Association of Australia.
Therese Ryan
Steven McGregor
Independent Non-Executive Director
LLB, GAICD
Appointed 1 September 2021.
Director Bapcor Limited.
Director Sustainable Timber Tasmania.
Chair Gippsland Water.
Deputy Chair VicForests.
Member of Audit and Remuneration Committees.
Finance Director
BA(Acc), FCA, AGIA, ACIS
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.
Gary Francis
Gerard Hutchinson
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.
Graeme Billings
Former Director
BACom, FCA, MAICD
Appointed Chairman 18 September 2014.
A Director since May 2013, retired 31 August 2021.
Independent Non-Executive Director
MBA, MBL, MSc(IS), BEc, MA (Research), FCA, FAICD,
FAIM
A Director since November 2014
Mr Hutchinson has held roles of Chief Financial Officer
and Managing Director in a range of large businesses
across the construction, engineering and services
sectors.
Mr Hutchison is currently Chief Financial Officer of
Estithmar Holding Q.P.S.C.
Chairman of Audit Committee and member of
Remuneration Committee.
7
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022 DIRECTORS’ REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2022
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, Andrew Stobart retires from the Board at the forthcoming Annual General Meeting on 21 October 2022 and
offers himself 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 A Stobart
Mr G Francis
Mr G Hutchinson
Ms T Ryan
Mr C Hartwig
Mr S McGregor
Board
Meetings
Audit Committee
Meetings
Remuneration
Committee Meetings
Nomination
Committee Meetings
A
4
15
16
16
12
16
16
B
4
16
16
16
12
16
16
A
1
4
4
4
3
-
-
B
1
4
4
4
3
-
-
A
1
1
1
1
-
-
-
B
1
1
1
1
-
-
-
A
-
-
-
-
-
-
-
B
-
-
-
-
-
-
-
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 2022 (FY22) was $99.223m, up 42.2% on the previous year. A significant volume
of large project work in the Industrial Products segment was the key driver for the improved revenue. In August, the Power Step and Titan
Technologies businesses were sold realising a pre-tax profit on sale of $0.74 million net of selling costs.
DIVIDENDS
The directors announced a fully franked final dividend of 35.0 cents per share (2021: 20.0 cents per share) following an interim divided of 25.0
cents per share at the half year (2021: 15.0 cents per share). The Dividend Reinvestment Plan (DRP) will remain suspended for the final dividend.
The dividend will be paid on 2 September 2022 with a record date of 19 August 2022.
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 2022
Cents per share
Total amount
$’000
Franked/
Unfranked
Date of payment
Interim 2022 ordinary
Final 2021 ordinary
Total amount
25.0
20.0
2,864
2,288
5,152
Fully franked
4 March 2022
Fully franked
3 September 2021
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
35.0
Total amount
$’000
Franked/
Unfranked
Date of payment
4,013
4,013
Fully franked
2 September 2022
The financial effect of these dividends has not been brought to account in the financial statements for the year ended 30 June 2022 and will be
recognised in subsequent financial reports.
8
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
Dividends have been dealt with in the financial report as:
Dividends
Dividends – subsequent to 30 June 2022
Note
18
18
Total amount
$’000
5,152
4,013
PRINCIPAL ACTIVITIES, STRATEGY AND FUTURE PERFORMANCE
The principal activities of the Group consist of hot dip galvanising, sheet metal fabrication, and the manufacture of cable and pipe support systems
and fittings.
The Group is comprised of the Industrial Products Group which includes the EzyStrut, and until their disposal, the Power Step and Titan
Technologies businesses. The Production Group includes the Korvest Galvanisers business.
Korvest’s businesses service a number of major markets including infrastructure, commercial, utilities, mining, food processing, oil and gas, power
stations, health and industrial segments.
Demand from the infrastructure sector has been increasing over recent years and this continued throughout FY22. Road and rail tunnels, primarily
on the East Coast, is where the bulk of the infrastructure activity is occurring. One major project was supplied through FY21 and supply continued
throughout FY22 and is now nearing completion. Three more projects commenced supply during FY22 and were supplied throughout the year.
With ongoing secured projects, Korvest enters FY23 with a healthy order book and project pipeline.
Korvest's recent and future focus for investment will be on improving production capabilty and capacity. Automation of processes is a key focus
of the factory development plan.
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
The Group continued to experience a number of COVID-related impacts during FY22. Global supply chains were significantly disrupted throughout
the year and for Korvest this caused delayed overseas shipments together with very significant increases in freight cost to import goods.
Throughout the second half of the year, as COVID infections increased throughout Australia, Korvest experienced workforce disruption as staff
isolated due to infection or being close contacts. The availability of casual labour hire became increasingly difficult as the year progressed, resulting
in extended lead times and significant overtime requirements.
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 business performed very strongly throughout FY22. Four major infrastructure projects were supplied during the year whereas
historically only one or two major projects are delivered in any one year. In addition to the record level of project work, the small project and day-to-
day markets also performed well with improvement achieved in all states compared to the prior year. Significant input cost increases, particularly
for steel and freight, were experienced during FY22 and these were passed onto customers through price rises applied in August and December
2021.
Inventory increased significantly during the year due to a combination of higher raw material costs, project items and increased holdings to mitigate
supply chain risks.
The Power Step and Titan Technologies businesses were sold in August 2021 after it was determined that they were no longer core businesses
that fitted with the remaining Korvest businesses.
PRODUCTION
In the Production segment, the Galvanising business volumes grew to record levels with the plant's highest annual tonnes being processed in
FY22. The significant increase in EzyStrut project work drove the higher galvanising volumes as all of the projects supplied during the year were
galvanised product. External tonnes fell slightly in FY22 although the revenue achieved increased due to a higher average sell price.
Price rises to customers were implemented during the year as a result of the increased price of zinc. The cost of zinc rose rapidly during the year
and peaked in April where the cost of zinc was 66% higher than the FY21 average. This has resulted in significantly higher value of zinc on hand
despite little change in quantity.
9
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022 DIRECTORS’ REPORT (Continued)
FOR THE YEAR ENDED 30 JUNE 2022
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 and this will encompass any changes to
the risk profile of their business unit.
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. The ability to manufacture locally became important during FY22 with the disruption
to global supply chains. Risks associated with the Australian labour market became an issue during FY22.
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. Credit insurance is carried to mitigate the collection risk associated with trade receivables.
Strategic risks cover a range of areas including competitors, customers and products together with global and local market developments.
Korvest's risks in relation to climate change are similar to those faced by other manufacturers. The cost and availability of energy has become
a significant national issue throughout FY22. Electricity is used in the factory and gas is used in the galvanising plant. Over recent years Korvest
has invested in solar at Kilburn and has 443kW of generation capacity on site to reduce our consumption of externally generated electricity.
Korvest's first ESG Strategy Statement can be found on pages 4 to 6 and outlines Korvest's approach and achievements in relation to a range of
environmental areas.
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
Other than the dividend declared after the reporting date, at the date of this report there is no matter or circumstance that has arisen since 30 June
2022, 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 2022.
LIKELY DEVELOPMENTS
Korvest's focus remains on improving the production capability at the Kilburn factory. Investment in equipment to automate processes or bring in
house significant external processes will receive priority.
Working capital management remains a focus area. Inventory levels rose significantly during FY22 and will be a key focus for the year ahead. Rising
input costs, stock held for projects and increased stock levels held to counteract supply chain risks have contributed to recent inventory increases.
Collection of accounts receivables has been well controlled during the year and this focus on collection will continue.
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.
ENVIRONMENTAL REGULATION
Korvest's Kilburn operations are subject to environment regulation under both Commonwealth and State legislation in relation to its manufacturing
and galvanising actitivies.
Korvest is committed to achieving a high standard of environmental performance through:
• maintenance of ISO14001 accreditation
•
•
•
regular monitoring of SA EPA licence requirements
implementing environmental management plans as required where there may be significant environmental impact
reporting annual emisions through the National Pollution Inventory report
Based on results of enquiries made, the Board is not aware of any significant breaches during the period covered by this report.
10
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022 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.
SHARE OPTIONS AND PERFORMANCE RIGHTS
OPTIONS
There are no unissued ordinary shares of Korvest Ltd under option at the date of this report.
UNVESTED PERFORMANCE RIGHTS
Performance rights granted become exercisable if certain performance requirements are achieved. If achieved, performance rights are exercisable
into the same number of ordinary shares in the company in the twelve month period following vesting.
Expiry Date (end of performance period)
Exercise Price
Number of Shares
30 June 2022
30 June 2023
30 June 2024
Nil
Nil
Nil
91,796
84,814
65,230
SHARES ISSUED ON EXERCISE OF OPTIONS OR PERFORMANCE RIGHTS
No options were exercised during the year ended 30 June 2022 or up to the date of this report.
VESTED PERFORMANCE RIGHTS
100,929 ordinary shares of Korvest Ltd were issued during the year 30 June 2022 on the vesting of performance rights granted under the Korvest
Performance Rights Plan. No amount is payable on the vesting of performance rights and accordingly there are no amounts unpaid on the shares
issued.
11
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022 REMUNERATION REPORT AUDITED
FOR THE YEAR ENDED 30 JUNE 2022
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
company has engaged third party consultants during FY22 in light of the tight labour market.
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 executive;
(b) the executive’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 executives 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.
($'000)
($'000)
Profit / (Loss) after tax
Dividend
- Total amount paid
- Per issued share
Earnings per share
Share price as at 30 June
Return on invested capital (ROIC)
2022
11,336
5,152
45.0c
99.0c
$7.01
2021
6,054
3,169
28.0c
53.5c
$4.99
2020
4,027
3,149
28.0c
35.8c
$4.00
2019
2,885
1,787
16.0c
25.9c
$2.70
26.7%
18.4%
13.8%
10.3%
2018
1,369
889
8.0c
12.3c
$2.07
4.9%
SHORT-TERM INCENTIVE BONUS
The key performance indicators (KPIs) for the executives 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 executive.
The table below summarises the nature and weighting of the KPIs included in the STIs.
Managing Director
Financial performance (50%)
Operational performance (20%)
New markets (20%)
Safety (10%)
Other Executives *
Financial performance
Operational performance
New markets
Safety & Environment
Working capital
* Each executive has different KPIs and weightings aligned with their focus of responsibility. Some individual’s STI structures do not include all KPI categories listed.
12
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022 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). The EPS objective was chosen because it is a good indicator of
the Group's earnings growth and is aligned to shareholder wealth objectives. 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. To determine the aggregate EPS performance required
over the performance period, a % growth is applied to a base EPS. For the most recent issue of Performance Rights, the base EPS is equal to the
statutory EPS for the FY21 year.
The table below sets out the % of rights that vest depending on the aggregate level of EPS achieved over the performance period.
Aggregate EPS over performance period (3 years to 30 June 2024) % of rights that vest
Less than 177.092 cents
177.092 cents
Between 177.092 and 202.194 cents
202.194 cents or greater
Nil
25%
Pro rata between 25% – 100%
100%
The second performance hurdle relates to Return on Invested Capital (ROIC). 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 issued during FY22 will vest in accordance with the table below:
Average 3 year ROIC
Less than 6%
6%
Above 6% and below 9%
9% 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.
SERVICE CONTRACTS
It is the Group’s policy that service contracts for all executives are unlimited in term but capable of termination by providing 1 to 6 months’ notice
depending on the executive, 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 executives 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.
13
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
REMUNERATION REPORT - AUDITED (Continued)
FOR THE YEAR ENDED 30 JUNE 2022
SERVICES FROM REMUNERATION CONSULTANTS
During the year AON Advisory Australia Pty Ltd (AON) were engaged to provide a remuneration benchmark analysis for Non-Executive Directors
and Executive members of the Key Management Personnel. AON did not make a remuneration recommendation but instead provided a
summary of Korvest's KMP remuneration compared to a benchmark comparison group for which they received a fee of $26,000.
AON met with one member of KMP to fully understand their role and responsibilities for the purposes of accurately benchmarking their
remuneration. This was the only interaction between Management and AON.
The AON report was supplied and presented directly to the Remuneration Committee. The Board confirms that given the limited interaction
between the consultants and Management, the Board is confident that the report was not unduly influenced by Management.
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 2021 and were applied for the entirety of the financial year ended 30 June 2022:
Chairman
$135,925
Director
$74,760
The Chairman of a Board Committee receives a further $12,456 p.a.
Superannuation is included in these fees.
Non-executive directors do not receive performance-related compensation.
14
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
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
$
Non-Executive Directors
A Stobart
Non-executive
(Chairman)
G Francis
Non-executive
(Director)
G Hutchinson
Non-executive
(Director)
T Ryan
Non-executive
(Director)
Former Director
G Billings
Non-executive
(Chairman)
retired 31 August 2021
Total Non-Executive
Directors'
Remuneration
Executive Directors
C Hartwig 1
Executive
(Managing Director)
S McGregor 1
Executive
(Finance Director)
2022
124,599
2021
66,964
2022
79,287
2021
78,123
2022
79,296
2021
78,123
2022
56,604
2021
-
2022
22,654
2021
133,916
2022
362,476
2021
357,126
-
-
-
-
-
-
-
-
-
-
-
-
12,460
6,361
7,929
7,422
7,930
7,422
5,664
-
2,265
12,722
36,248
33,927
-
-
-
-
-
-
-
-
-
-
-
-
2022
343,287 141,593
27,672
13,874
2021
332,372 166,500
27,647
10,507
2022
315,899
27,780
27,665
19,331
2021
308,813
41,040
26,614
11,329
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
137,059
73,325
87,216
85,545
87,226
85,545
62,304
-
24,919
146,638
398,724
391,053
94,203
620,629
100,037
637,063
90,258
480,933
95,857
483,653
Executives / other KMP
S Taubitz
General Manager
Sales
G Christie
General Manager
Operations
Total Executives'
Remuneration
2022
250,060 100,558
27,800
14,391
2021
221,742
83,600
25,285
12,845
2022
200,000
48,419
25,250
11,341
2021
196,900
52,500
21,164
7,727
999
997
999
997
67,605
461,413
66,455
410,924
58,479
344,488
61,464
340,752
2022
1,109,246 318,350
108,387
58,937
1,998
310,545 1,907,463
2021
1,059,827 343,640
100,710
42,408
1,994
323,813 1,872,392
-
-
-
-
-
-
-
-
-
-
38.0
41.8
24.5
28.3
36.4
36.5
31.0
33.4
* Salary & fees includes payments for annual leave taken.
** 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 Where annual superannuation contributions exceed $27,500 (2021: $25,000) executives can elect to have some or all of the superannuation
contributions above $27,500 paid as salary rather than superannuation.
The proportion of performance related remuneration is bonuses and share based payments divided by total remuneration.
15
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
REMUNERATION REPORT - AUDITED (Continued)
FOR THE YEAR ENDED 30 JUNE 2022
PERFORMANCE RIGHTS OVER EQUITY INSTRUMENTS GRANTED AS COMPENSATION DURING THE REPORTING PERIOD
Details on performance rights that were granted as compensation to each KMP during the reporting period are as follows:
Number of
performance rights
granted during the
year
Grant date
Fair value per right
at grant date ($)
19,530
18,710
14,860
12,130
25 Oct 2021
25 Oct 2021
25 Oct 2021
25 Oct 2021
$5.48
$5.48
$5.48
$5.48
Expiry date
30 June 2024
30 June 2024
30 June 2024
30 June 2024
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.
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 13.
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
100,929
Amount paid on each share Nil
16
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
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
28,072*
25,936
19,530
26,898*
24,852
18,710
19,406*
17,930
14,860
17,420*
16,096
12,130
Nov 19
Oct 20
Oct 21
Nov 19
Oct 20
Oct 21
Nov 19
Oct 20
Oct 21
Nov 19
Oct 20
Oct 21
100%
-
-
100%
-
-
100%
-
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 Jun 22
30 Jun 23
30 Jun 24
30 Jun 22
30 Jun 23
30 Jun 24
30 Jun 22
30 Jun 23
30 Jun 24
30 Jun 22
30 Jun 23
30 Jun 24
* The three year performance period for performance rights issued in November 2019 ended on 30 June 2022. These rights were tested against
two performance hurdles, earnings per share (EPS) and return on invested capital (ROIC).
Korvest’s aggregate EPS was 188.3 over the performance period. This results in 100% of the EPS performance rights vesting.
Korvest's ROIC was 20.2% over the performance period. This results in 100% of the ROIC performance rights vesting.
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 KMP are detailed
below.
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
Granted in year $ (A)
Exercised in year $ (B)
Value of Rights / Options
107,042
102,548
81,446
66,484
183,495
175,833
114,910
111,151
(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 2021 to 30 June 2024) 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 performance rights 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.
17
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
REMUNERATION REPORT - AUDITED (Continued)
FOR THE YEAR ENDED 30 JUNE 2022
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:
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
Held at
1 July 2021
Granted as
compensation
Exercised
Lapsed
85,645
82,066
57,148
52,680
19,530
18,710
14,860
12,130
(31,637)
(30,316)
(19,812)
(19,164)
Held at
30 June
2022
Vested
during the
year
-
-
-
-
73,538
70,460
52,196
45,646
28,072
26,898
19,406
17,420
No options held by KMP are vested but not exercisable.
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
Held at
1 July 2020
Granted as
Compensation Exercised
Lapsed
Held at
30 June
2021
Vested
during the
year
74,078
72,217
39,449
46,307
25,936
24,852
17,930
16,096
(14,000)
(14,650)
-
(9,500)
(369)
(353)
(231)
(223)
85,645
82,066
57,148
52,680
31,637
30,316
19,812
19,164
No options held by KMP are vested but not exercisable.
18
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
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
30 June 2021
Purchases
Allocated under
Employee/
Exec share plan
Held at
30 June 2022
Directors
G Billings
C Hartwig
S McGregor
G Francis
G Hutchinson
A Stobart
T Ryan
Executives
G Christie
S Taubitz
11,667
54,397
59,422
8,947
500
8,500
-
18,152
530
-
-
-
-
-
7,500
3,000
-
-
-
31,637
30,316
-
-
-
-
19,328
19,976
N/A
86,034
89,738
8,947
500
16,000
3,000
37,480
20,506
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.
Directors
G Billings
C Hartwig
S McGregor
G Francis
G Hutchinson
A Stobart
Executives
G Christie
S Taubitz
Held at
30 June 2020
Purchases
Allocated under
Employee/
Exec share plan
Held at
30 June 2021
8,667
40,397
44,772
6,271
500
8,500
8,423
301
3,000
-
-
2,676
-
-
-
-
-
14,000
14,650
-
-
-
9,729
229
11,667
54,397
59,422
8,947
500
8,500
18,152
530
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.
19
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
REMUNERATION REPORT - AUDITED (Continued)
FOR THE YEAR ENDED 30 JUNE 2022
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
182,700
46,300
110,200
61,000
141,593
27,780
100,558
48,419
77.5
60
91.3
79.4
22.5
40
8.7
20.6
(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.
20
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022 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
S McGregor
G Francis
G Hutchinson
A Stobart
T Ryan
Korvest Ltd
Ordinary Shares
86,034
89,738
8,947
500
16,000
3,000
Korvest Ltd
Performance Rights
Unvested
45,466
43,562
-
-
-
-
Vested
28,072
26,898
-
-
-
-
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 59 and forms part of the Directors’ report for the financial year ended 30 June 2022.
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-2022.pdf
Signed at Adelaide this Friday 22nd of July 2022 in accordance with a resolution of the directors.
A STOBART, Director
C HARTWIG, Director
21
DIRECTORS' REPORTDIRECTORS' REPORTFor the year ended 30 June 2022
5 YEAR SUMMARY
5 YEAR SUMMARY
Sales revenue
Profit after tax
Depreciation/Amortisation (plant &
equipment)
2022
2021
2020
2019
2018
($'000)
99,223
69,786
63,088
60,843
56,962
($'000)
11,336
6,054
4,027
2,885
1,369
($'000)
1,282
1,434
1,286
1,469
1,625
Depreciation (right-of-use asset)
($'000)
874
879
887
-
-
Cash flow from operations
($'000)
3,987
6,509
10,460
1,413
5,110
Profit / (Loss) from ordinary activities
- As % of Shareholders’ Equity
- As % of Sales Revenue
Dividend
- Total amount paid
- Per issued share
Earnings per share (Basic)
Number of employees
Shareholders
- Number at year end
25.9%
11.4%
16.9%
8.7%
12.3%
6.4%
($'000)
5,152
45.0c
99.0c
3,169
28.0c
53.5c
3,149
28.0c
35.8c
9.3%
4.7%
1,787
16.0c
25.9c
4.6%
2.4%
889
8.0c
12.3c
215
207
189
178
180
2,157
1,947
1,708
1,652
1,694
Net assets per issued ordinary share
$3.82
$3.17
$2.90
$2.76
$2.66
Net tangible assets per issued ordinary
share*
$3.37
$2.63
$2.48
$2.76
$2.66
Share price as at 30 June
$7.01
$4.99
$4.00
$2.70
$2.07
* From 2020 onwards 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. As a result the calculated NTA is lower than would have been the case prior to the
introduction of AASB 16.
22
22
5 YEAR SUMMARY5 YEAR SUMMARY TABLE OF CONTENTS
FINANCIAL STATEMENTS
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
12. PROPERTY, PLANT AND EQUIPMENT
13. IMPAIRMENT TESTING
24
25
26
27
28
29
29
29
30
31
31
32
34
34
35
35
35
38
39
39
41
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
21. SALE OF SUBSIDIARIES
OTHER NOTES
22. KEY MANAGEMENT PERSONNEL
23. PARENT ENTITY DISCLOSURES
24. COMMITMENTS & CONTIGENCIES
25. SUBSEQUENT EVENTS
DIRECTORS' DECLARATION
INDEPENDENT AUDITOR'S REPORT
LEAD AUDITOR'S INDEPENDENCE
DECLARATION
ASX ADDITIONAL INFORMATION
SHAREHOLDINGS (AS AT 20 JULY 2022)
VOTING RIGHTS
TWENTY LARGEST SHAREHOLDERS
OFFICES AND OFFICERS
42
42
43
43
44
48
48
49
49
51
51
52
52
52
53
53
53
54
55
59
60
60
61
61
23
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Note
2022
$’000
2021
$’000
Continuing operations
Sales revenue
Other income
Profit on sale of subsidiaries
JobKeeper income
Expenses, excluding net finance costs
Profit before financing costs
Finance income
Finance costs – lease liability interest
Net finance cost
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
1
21
2
3
19
4
4
99,223
69,786
19
815
-
(84,053)
16,004
13
(161)
(148)
15,856
(4,520)
11,336
11,336
1,914
(574)
1,340
12,676
12,676
12,676
Cents
99.0
97.7
-
-
1,864
(62,772)
8,878
14
(127)
(113)
8,765
(2,711)
6,054
6,054
-
-
-
6,054
6,054
6,054
Cents
53.5
52.7
The notes on pages 28 to 53 are an integral part of these consolidated financial statements.
24
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
Note
2022
$’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
2021
$’000
6,690
275
14,153
304
12,445
33,867
16,589
6,068
22,657
56,524
8,461
2,925
1,217
787
46
3,556
275
16,874
308
20,457
41,470
19,232
5,211
24,443
65,913
9,231
3,138
1,580
790
-
14,739
13,436
267
1,844
4,678
560
7,349
22,088
43,825
14,334
29,491
-
43,825
43,825
208
1,016
5,447
492
7,163
20,599
35,295
14,268
21,657
-
35,925
35,925
The notes on pages 28 to 53 are an integral part of these consolidated financial statements.
25
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
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
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of subsidiaries
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
21
12
15
2022
$’000
110,407
-
(101,964)
8,083
13
(161)
(3,948)
3,987
48
880
(2,110)
(1,182)
(4)
(783)
(5,152)
(5,939)
(3,134)
6,690
3,556
2021
$’000
76,611
2,386
(70,263)
8,734
14
(127)
(2,112)
6,509
20
-
(2,334)
(2,314)
(2)
(804)
(3,169)
(3,975)
220
6,470
6,690
The notes on pages 28 to 53 are an integral part of these consolidated financial statements.
26
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Share
capital
$’000
14,268
Equity
compensation
reserve
$’000
Asset
revaluation
reserve
$’000
Profits
reserve
$’000
Retained
profits /
(losses)
$’000
Total
$’000
758
4,393
16,506
-
35,925
Balance at 1 July 2021
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
Dividends to shareholders
Total contributions by and distributions to
owners of the Company
Transfer to profits reserve
Balance at 30 June 2022
-
-
-
66
-
-
66
-
-
-
-
-
310
-
310
-
-
1,340
1,340
-
-
-
-
-
14,334
1,068
5,733
-
-
-
-
-
(5,152)
(5,152)
11,336
22,690
Balance at 1 July 2020
14,202
433
4,393
13,621
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
Dividends to shareholders
Total contributions by and distributions to
owners of the Company
Transfer to profits reserve
-
-
-
66
-
-
66
-
Balance at 30 June 2021
14,268
-
-
-
-
325
-
325
-
758
-
-
-
-
-
-
-
-
4,393
-
-
-
-
-
(3,169)
(3,169)
6,054
16,506
11,336
11,336
-
1,340
11,336
12,676
-
-
-
-
66
310
(5,152)
(4,776)
(11,336)
-
-
-
43,825
32,649
6,054
6,054
-
-
6,054
6,054
-
-
-
-
66
325
(3,169)
(2,778)
(6,054)
-
-
35,925
The notes on pages 28 to 53 are an integral part of these consolidated financial statements.
27
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 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 2022 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 22 July 2022.
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 the 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 8 – Inventories
• Note 12 – Property, plant and equipment
ROUNDING
The Group 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 consolidated financial statements and directors’ report have been rounded off to the nearest thousand dollars, unless
otherwise stated.
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 currencies 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.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
A number of new standards are effective for annual periods beginning after 1 July 2022 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.
28
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 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.
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.
Goods 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.
2022
$’000
2021
$’000
99,223
69,786
2. EXPENSES
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
2022
$’000
63,215
13,540
3,071
4,194
33
-
84,053
2021
$’000
Restated*
44,285
12,692
2,809
2,872
(34)
148
62,772
*In the prior year financial report distribution expenses included invward freight costs of $2,185,000. In the current year inward freight costs have
been included within cost of goods sold. The prior period cost of goods sold disclosed above has been increased and the distribution expenses
decreased by $2,185,000 for comparability purposes. .
29
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
2. EXPENSES (continued)
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:
(Gain)/Loss on disposal of property, plant and equipment
Research and development expense
Depreciation – property, plant and equipment
Depreciation – right-of-use asset
(Profit) on sale of subsidiaries (before selling costs)
2022
$’000
20,179
2,440
1,615
1,590
24
66
310
(19)
247
1,282
874
(815)
2021
$’000
17,231
2,023
1,395
1,439
3
66
325
148
78
1,434
879
-
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.
30
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 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 2022 was based on the net profit attributable to ordinary shareholders of $11,336,126
(2021: $6,053,841) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2022 of 11,446,930
(2021: 11,309,777).
The calculation of diluted earnings per share at 30 June 2022 was based on the net profit attributable to ordinary shareholders of $11,336,126
(2021: $6,053,841) and a weighted average number of potential ordinary shares outstanding during the financial year ended 30 June 2022 of
11,607,716 (2021: 11,487,557).
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (BASIC)
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)
– taxation advice and tax compliance services
– consulting services
2022
Shares ’000
2021
Shares ’000
11,327
120
11,447
11,258
52
11,310
2022
Shares ’000
2021
Shares ’000
11,447
161
11,608
11,310
178
11,488
2022
Cents per
Share
99.0
97.7
2021
Cents per
Share
53.5
52.7
2022
$
115,000
115,000
8,200
5,000
13,200
2021
$
97,914
97,914
15,000
-
15,000
31
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
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.
GEOGRAPHICAL SEGMENTS
The Group predominantly operates in Australia.
CUSTOMERS
There was no individually significant customer that represented more than 10% of total revenue 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
2022
$’000
91,366
(704)
(865)
14,795
39,411
1,796
2021
$’000
63,254
(863)
(870)
6,804
28,361
1,503
2022
$’000
7,857
(256)
(9)
1,292
5,939
230
2021
$’000
6,532
(256)
(9)
859
5,267
723
2022
$’000
99,223
(960)
(874)
16,087
43,350
2,026
2021
$’000
69,786
(1,119)
(879)
7,663
33,628
2,226
32
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 6. SEGMENT REPORTING (continued)
RECONCILIATION OF REPORTABLE SEGMENT PROFIT, ASSETS AND OTHER MATERIAL ITEMS
Profit
Total profit for reportable segments
JobKeeper income
Profit on sale of subsidiaries
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
2022
$’000
16,087
-
815
(1,045)
15,856
45,350
10,000
3,831
5,211
1,521
65,913
2,026
84
2,110
960
322
1,282
2021
$’000
7,663
1,864
-
(762)
8,765
33,628
8,159
6,965
6,068
1,704
56,524
2,226
108
2,334
1,119
315
1,434
33
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
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.
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
Net trade receivables
2022
$’000
16,967
(118)
25
16,874
2021
$’000
14,230
(120)
43
14,153
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.
The Group takes out trade credit insurance and 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.
Movement in allowance for impairment
Balance at 1 July
Amounts written off against allowance
Net remeasurement of loss allowance
Balance at 30 June
34
2022
$’000
(120)
-
2
(118)
2021
$’000
(241)
50
71
(120)
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 8. INVENTORIES
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.
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.
Current
Raw materials and consumables
Work in progress
Finished goods
2022
$’000
5,383
973
14,101
20,457
2021
$’000
3,576
670
8,199
12,445
Finished goods are shown net of an impairment provision amounting to $552,000 (2021: $1,222,000) 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.
During the year ended 30 June 2022 inventories of $55,705,000 (2021: $38,802,000) were recognised as an expense during the year and included
in cost of goods sold.
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
2022
$’000
5,148
4,083
9,231
2021
$’000
4,939
3,522
8,461
10. EMPLOYEE BENEFITS
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.
35
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
10. EMPLOYEE BENEFITS (continued)
Current
Liability for annual leave
Liability for long service leave
Non-current
Liability for long service leave
Total employee benefits
2022
$’000
1,388
1,750
3,138
267
3,405
2021
$’000
1,199
1,726
2,925
208
3,133
Accrued wages and salaries are included in accrued expenses in Note 9.
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.
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 each issue two performance hurdles are applied. The 2018 issue used Earnings per Share (EPS) and Relative Total Shareholder
Return (RTSR). The 2019 and 2020 issues used EPS and Return on Invested Capital (ROIC).
36
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 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.
Performance
hurdles
Number
of rights
initially granted
Number
outstanding at
balance date
EPS / ROIC
EPS / ROIC
EPS / ROIC
91,796
84,814
65,230
241,840
Grant date
November 2019
October 2020
October 2021
Total performance rights
Measurement of fair values
Plan
KPRP
KPRP
KPRP
The fair value of both the ROIC and EPS hurdle rights were measured based on the Black-Scholes method.
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)
91,796
84,814
65,230
241,840
2021
$3.92
$4.69
-
48.1%
5.97%
0.86%
2.7yrs
2yrs
2022
$5.48
$6.45
-
33.67%
5.43%
1.79%
2.7yrs
2yrs
37
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
10. EMPLOYEE BENEFITS (continued)
Reconciliation of outstanding share options/rights
GRANT
DATE
EXERCISE
DATE
EXPIRY
DATE
EXERCISE
PRICE
2022
PREVIOUS PLAN*
Mar 05
Jan 07
Jan 27
$4.36
Weighted average exercise price
CURRENT PLAN
Oct 18
Jul 21
Nov 19
Jul 22
Oct 20
Jul 23
Oct 21
Jul 24
Jun 21
Jun 22
Jun 23
Jun 24
-
-
-
-
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
15,000
15,000
$4.36
100,929
91,796
84,814
-
-
-
-
-
-
65,230
277,539
65,230
-
-
-
-
-
-
-
-
-
-
-
-
(15,000)
(15,000)
(100,929)
-
-
-
-
-
-
-
-
-
91,796
84,814
65,230
91,796
-
-
(100,929)
241,840
91,796
Weighted average exercise price
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
2021
PREVIOUS PLAN
Mar 05
Jan 07
Jan 27
$4.36
Weighted average exercise price
CURRENT PLAN
Nov 17
Jul 20
Oct 18
Jul 21
Nov 19
Jul 22
Oct 20
Jul 23
Jun 20
Jun 21
Jun 22
Jun 23
-
-
-
-
15,000
15,000
$4.36
38,150
102,105
91,796
-
-
-
-
-
-
84,814
-
-
-
(1,176)
-
-
232,051
84,814
(1,176)
-
-
-
-
-
-
-
-
-
15,000
15,000
$4.36
(38,150)
-
-
-
-
-
-
-
100,929
100,929
91,796
84,814
-
-
(38,150)
277,539
100,929
Weighted average exercise price
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
* The Previous Plan was an option plan that entitled 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.
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 were 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. In September 2021 the
last of these loans was extinguished and as a result the options were treated as having been exercised.
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.
38
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 Site restoration and safety
A provision of $560,000 (2020: $492,000) 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 (2021: 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 3.75% (2021: 3.29%) and an inflation rate of 3.0% (2021: 2.0%) have
been used for the calculation at 30 June 2022.
Current
Warranties
Non-current
Site restoration
2022
$’000
2021
$’000
-
560
560
46
492
538
TANGIBLE ASSETS
The 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
25 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.
39
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
12. PROPERTY, PLANT AND EQUIPMENT (continued)
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. This year, as a result of
fluctuating property values, the Directors obtained an independent valuation a year earlier than the policy dictated.
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 2020
Acquisitions
Disposals and write-offs
Revaluation
Balance at 30 June 2021
Balance at 1 July 2021
Acquisitions
Disposals and write-offs
Revaluation
Balance at 30 June 2022
Accumulated depreciation and impairment losses
Balance at 1 July 2020
Depreciation charge for the year
Revaluation
Disposals
Balance at 30 June 2021
Balance at 1 July 2021
Depreciation charge for the year
Revaluation
Disposals
Balance at 30 June 2022
Carrying amounts
At 30 June 2020
At 30 June 2021
At 30 June 2022
40
8,232
-
-
-
8,232
8,232
-
-
1,768
10,000
-
73
-
-
73
73
73
(146)
-
-
8,232
8,159
10,000
25,392
2,334
(1,698)
-
26,028
26,028
2,110
(1,696)
-
26,442
17,767
1,361
-
(1,530)
17,598
17,598
1,209
-
(1,597)
17,210
7,625
8,430
9,232
33,624
2,334
(1,698)
-
34,260
34,260
2,110
(1,696)
1,768
36,442
17,767
1,434
-
(1,530)
17,671
17,671
1,282
(146)
(1,597)
17,210
15,857
16,589
19,232
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 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 June 2022 by Mr Michael Lim, AAPI 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 2022.
The carrying amount of the Land and Buildings at cost at 30 June 2022 if not revalued would be $874,000 (2020: $928,000).
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.
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
SIGNIFICANT UNOBSERVABLE INPUTS
Market yield - 7.5%
Potential rental rate - $60/m2
Land value for vacant land - $185/m2
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 2022 as there were no
impairment indicators.
41
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
LEASES
14. LEASES
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.
Information about leases for which the Group is a lessee is presented below.
Warehouses
$'000
Forklifts
$'000
6,011
17
(828)
5,200
4,553
2,291
(833)
6,011
57
-
(46)
11
103
-
(46)
57
Total
$'000
6,068
17
(874)
5,211
4,656
2,291
(879)
6,068
i. Right-of-use assets
Balance at 1 July 2021
Additions to right-of-use assets
Depreciation of right-of-use asset
Balance at 30 June 2022
Balance at 1 July 2020
Additions to right-of-use assets
Depreciation of right-of-use asset
Balance at 30 June 2021
42
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 ii. Lease liability
Current
Non-current
Total Lease liability
iii. Amounts recognised in profit or loss
Depreciation right-of-use asset
Interest on lease liabilities
Expenses relating to short-term leases
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
2022
$’000
790
4,678
5,468
2022
$’000
874
161
17
2022
$’000
178
783
961
2021
$'000
787
5,447
6,234
2021
$’000
879
127
98
2021
$’000
225
804
1,029
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
2022
$’000
1,918
1,638
3,556
275
2021
$’000
2,691
3,999
6,690
275
43
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
16. CASH AND CASH EQUIVALENTS (continued)
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
(Reversal of) Impairment of inventories
Increase/(decrease) in provision for site rectification
(Profit) on sale of subsidiaries
Loss on disposal of property, plant and equipment
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
2022
$’000
11,336
1,282
874
33
(25)
68
(815)
(19)
380
13,114
(2,836)
(19)
(8,121)
902
208
364
375
3,987
2021
$’000
6,054
1,434
879
(71)
(174)
(28)
-
148
391
8,633
(3,970)
53
(1,716)
2,560
215
385
349
6,509
16. FINANCIAL INSTRUMENTS
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 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.
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 the Standards, including the level in the fair value hierarchy in which such valuations should be classified.
Significant valuation issues are required to be reported to the Audit Committee.
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into
different levels in a fair value hierarchy based on inputs used in the valuation techniques as follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. prices) or
indirectly (i.e. derived from prices)
Level 3: inputs for asset or liability that are not based on observable market data (unobservable inputs).
44
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022
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.
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
Amortised cost
Trade and other receivables
Trade and other payables
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.
2022
$’000
3,831
16,874
2021
$’000
6,965
14,153
45
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
16. FINANCIAL INSTRUMENTS (continued)
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.
The Group takes out trade credit insurance to reduce the Group’s credit risk exposure.
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
Other
2022
$’000
2021
$’000
16,804
14,067
70
-
80
6
16,874
14,153
At 30 June 2022, the Group’s most significant customer, located in Australia, accounted for $3,758,589 of the trade and other receivables carrying
amount (2021: $3,239,121).
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
2022
$’000
11,740
4,963
171
-
16,874
2021
$’000
9,827
4,259
67
-
14,153
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.
46
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 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).
2022
Contractual cash flows
2021
Contractual cash flows
Carrying
amount
Total
Less
than
1 year
1-5
years
More
than 5
years
Carrying
amount
Total
Less
than 1
year
1 - 5
years
More
than 5
years
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Non-derivative
financial liabilities
Trade and other payables
Lease liabilities*
9,231
5,468
(9,231)
(9,231)
-
-
(6,225)
(930)
(2,362)
(2,933)
8,461
6,234
(8,461)
(8,461)
-
-
(7,158)
(949)
(2,712)
(3,497)
14,699
(15,456)
(10,161)
(2,362)
(2,933)
14,695
(15,619)
(9,410)
(2,712)
(3,497)
* 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.
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.
The Group holds trade credit insurance to insure some of the risk associated with the collection of trade receivables.
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.
47
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
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. 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.
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
2022 Shares ’000
2021 Shares ’000
11,327
23
116
11,466
11,258
31
38
11,327
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
2022
Interim 2022 ordinary
Final 2021 ordinary
Total amount
2021
Interim 2021 ordinary
Final 2020 ordinary
Total amount
Cents per
share
Total amount
$’000
Percentage
franked
Tax
rate
Date of payment
25.0
20.0
15.0
13.0
2,864
2,288
5,152
1,699
1,470
3,169
100%
100%
100%
100%
30%
4 March 2022
30% 3 September 2021
30%
30%
5 March 2021
4 September 2020
UNRECOGNISED AMOUNTS
After the balance sheet date the following dividends were proposed by the directors. The dividends have not been provided.
2022
Final 2022 ordinary
Cents per
share
Total amount
$’000
Percentage
franked
Tax
rate Date of payment
35.0
4,013
100%
30% 2 September 2022
The financial effect of these dividends have not been brought to account in the financial statements for the financial year ended 30 June 2022 and
will be recognised in subsequent financial reports.
48
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 DIVIDEND FRANKING ACCOUNT
30% franking credits available to shareholders of Korvest Ltd for subsequent financial years
2022
$’000
12,466
2021
$’000
10,363
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
(a)
(b)
(c)
(d)
franking credits that will arise from the payment of the current tax liabilities;
franking debits that will arise from the payment of dividends recognised as a liability at the year-end;
franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at the year-end; and
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 $1,720,000 (2021: reduce by $972,000).
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.
IFRIC 23 Uncertainty over Income Tax Treatments
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.
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.
49
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
19. CURRENT AND DEFERRED TAXES (continued)
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. Power Step (Australia) Pty Ltd and Titan
Technologies (SE Asia) Pty Ltd left the tax consolidated group on 31 August 2021.
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.
INCOME TAX RECOGNISED IN THE INCOME STATEMENT
2022
$’000
2021
$’000
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
4,312
4,312
208
208
4,520
NUMERICAL RECONCILIATION BETWEEN TAX EXPENSE AND PRE-TAX NET PROFIT
Profit before tax
Income tax using the domestic corporation tax rate of 30% (2021:30%)
Non-deductible expenses
Capital loss on sale of subsidiaries
Income tax expense on pre-tax net profit
RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
2022
$’000
15,856
4,757
28
(265)
4,520
2,496
2,496
215
215
2,711
2021
$’000
8,765
2,630
81
-
2,711
Assets
Liabilities
Net
2022
$’000
-
(1,640)
(166)
(1,249)
(28)
(26)
(552)
(3,661)
3,661
-
2021
$’000
-
(1,871)
(367)
(1,169)
(8)
(7)
(287)
(3,709)
3,709
-
2022
$’000
3,207
1,563
735
-
-
-
-
2021
$’000
2,374
1,821
530
-
-
-
-
5,505
(3,661)
1,844
4,725
(3,709)
1,016
2022
$’000
3,207
(77)
569
2021
$’000
2,374
(50)
163
(1,249)
(1,169)
(28)
(26)
(552)
1,844
-
1,844
(8)
(7)
(287)
1,016
-
1,016
Property, plant and equipment
Leases
Inventories
Provisions / accruals
Provision for doubtful debts
Other
Tax loss carried forward
Tax (assets) / liabilities
Set off of tax
Net tax (assets) / liabilities
50
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 MOVEMENT IN DEFERRED TAX BALANCES DURING THE YEAR
Property, plant and equipment
Leases
Inventories
Provisions / accruals
Provision for doubtful debts
Other
Tax loss carried forward
Tax loss carried forward
Balance
30 June 21
$’000
Recognised
in profit
$’000
Recognised
directly in
equity
$’000
Disposed
in sale of
subsidiaries
$’000
Balance
30 June 22
$’000
(2,374)
50
(163)
1,169
8
7
287
(1,016)
(259)
27
(406)
126
20
19
265
(208)
(574)
-
-
-
-
-
-
-
-
-
(46)
-
-
-
(3,207)
77
(569)
1,249
28
26
552
(574)
(46)
(1,844)
Balance
30 June 20
$’000
Recognised
in profit
$’000
Recognised
directly in
equity
$’000
Property, plant and equipment
(2,139)
(235)
Leases
Inventories
Provisions / accruals
Provision for doubtful debts
Other
Tax loss carried forward
Tax loss carried forward
27
(88)
1,061
51
-
287
(801)
23
(75)
108
(43)
7
-
(215)
-
-
-
-
-
-
-
-
Balance
30 June 21
$’000
(2,374)
50
(163)
1,169
8
7
287
(1,016)
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.
51
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 30 JUNE 2022
20. INVESTMENT IN SUBSIDIARIES (continued)
GROUP ENTITIES
Parent entity
Korvest Ltd
Subsidiaries
Power Step (Australia) Pty Ltd
Power Step (Chile) SpA
Titan Technologies (SE Asia) Pty Ltd
Country of Incorporation
Ownership interest
2022
%
2021
%
Australia
Australia
Chile
Australia
-
-
-
100
100
100
21. SALE OF SUBSIDIARIES
On 31 August 2021 Power Step (Australia) Pty Ltd and its controlled entity, and Titan Technologies (SE Asia) Pty Ltd were sold. Consideration
received was $880,000. Net assets sold were $65,000 resulting in a profit on sale of $815,000 not including costs of $72,000 that were incurred
in selling the business. The assets and liabilities sold were as follows:
Trade and other receivables
Inventory (net of provision)
Property, plant and equipment
Other assets
Deferred tax assets
Trade and other payables
Employee provisions
Provisions
Net assets sold
$’000
81
134
72
15
46
(133)
(102)
(48)
65
OTHER NOTES
22. KEY MANGEMENT PERSONNEL
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
Andrew Stobart
(Chairman)
Gary Francis
Gerard Hutchinson
Therese Ryan
(Appointed 1 September 2021)
Graeme Billings
(Retired 31 August 2021)
EXECUTIVE DIRECTORS
EXECUTIVES
Chris Hartwig
(Managing Director)
Steven McGregor
(Finance Director & Company Secretary)
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
Long term benefits
Share based payments
52
2022
$
2021
$
1,790,072
1,760,573
144,635
58,937
312,543
134,637
42,408
325,807
2,306,187
2,263,425
FINANCIAL STATEMENTSFINANCIAL STATEMENTSFor the year ended 30 June 2022 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.
23. PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ending 30 June 2022 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
2022
$’000
11,919
1,340
13,259
41,470
65,913
14,739
22,088
14,334
29,491
-
43,825
2021
$’000
5,713
-
5,713
32,327
55,563
12,827
20,221
14,268
21,074
-
35,342
GUARANTEES ENTERED INTO BY THE COMPANY
Bank guarantees given by the Company in favour of customers and landlords amounted to $1,462,047 (2021: $990,908). The significant increase
is due to performance guarantees provided in relation to the large infrastructure projects commenced during FY22.
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 2022, the Company had contractual commitments for the acquisition of property, plant and equipment of $1,034,000 (2021: $650,000).
24. COMMITMENTS AND CONTINGENCIES
The commitments and contingencies of the group are the same as for the parent entity outlined in note 23.
25. SUBSEQUENT EVENTS
Other than the dividend disclosed in Note 18, 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.
53
FINANCIAL STATEMENTSINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021FINANCIAL STATEMENTSFor the year ended 30 June 2022 DIRECTORS' DECLARATION
For the year ended 30 June 2022
DIRECTORS’ DECLARATION
For the year ended 30 June 2022
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 24 to 53 and the Remuneration report in the
Directors’ report, set out on pages 12 to 20, are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the
financial year ended on that date; and
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 2022.
3. The Directors draw attention to the Basis of preparation note on page 28, which includes a statement of compliance with International
Financial Reporting Standards.
Dated at Adelaide this 22nd July 2022
Signed in accordance with resolution of directors:
ANDREW STOBART
DIRECTOR
54
DIRECTOR'S DECLARATIONDIRECTORS' DECLARATIONFor the year ended 30 June 2022
To the shareholders of Korvest Ltd
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Korvest Ltd (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
giving a true and fair view of the
Group
financial
June 2022 and of
performance for the year ended on
that date; and
its
complying with Australian Accounting
Standards
the Corporations
Regulations 2001.
and
Basis for opinion
The Financial Report comprises:
Consolidated statement of financial position as at 30
June 2022;
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 2022;
Notes including a summary of significant accounting
policies; and
Directors' Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the
the 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
requirements of the Accounting Professional and Ethical St
for 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 these requirements.
Key Audit Matters
The Key Audit Matter we identified was the valuation of finished goods inventory.
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.
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming
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 global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
55
INDEPENDENT AUDITOR'S REPORTINDEPENDENT AUDITOR'S REPORTFor the year ended 30 June 2022
Valuation of finished goods inventory ($14.101m)
Refer to Note 8 to the Financial Report - Inventories
The key audit matter
How the matter was addressed in our audit
Our
procedures
included
applying
our
finished goods
of
inventory against
requirements of the accounting standards;
the
to identify finished goods that are slow moving
or selling below cost;
impairment assessment at year-end, by:
-
-
Assessing the accuracy of the underlying
finished goods inventory provision model
by performing computation checks;
Checking the accuracy of the ageing of
inventory, as a proxy for expected time
period to sell, by product, as a key input
in the finished goods inventory provision.
We evaluated the expected time period
to sell inventory on hand using the sales
/ usage quantities experienced during
FY22. We checked a sample of those
sales quantities to sales invoices.
Comparing the unit cost of each finished good
assessment to the average sales price for the
year of these products, as a proxy for expected
recoverable amount.
the provision percentages by aging category,
business and knowledge of the market; and
Attending stocktakes in significant locations
included
potentially obsolete finished goods inventory.
slow moving
identifying
and
The valuation of EzyStrut
inventory is a key audit matter due to the:
finished goods
EzyStrut finished goods inventory being
specialised in nature;
Importance of EzyStrut finished goods
inventory
the business
operations and financial performance of the
Group;
valuation
to
the
amount of
impairment provision.
Estimating the provision, and therefore the
net carrying value of
finished goods
inventory, requires consideration of the
quantity of
finished goods on hand,
anticipated future usage and expected
recoverable amount. Such judgments may
inventory
finished goods
impairment
provision, and therefore the overall net
carrying value of finished goods inventory,
necessitating additional audit effort.
In auditing this key audit matter, we used
senior team members who understand the
economic environment.
56
INDEPENDENT AUDITOR'S REPORTINDEPENDENT AUDITOR'S REPORTFor the year ended 30 June 2022
Other Information
provided in addition to the Financial Report and the
the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do 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
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
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.
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
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our
57
INDEPENDENT AUDITOR'S REPORTINDEPENDENT AUDITOR'S REPORTFor the year ended 30 June 2022
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report
of Korvest Limited for the year ended 30
June 2022, 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
*
30 June 2022.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Paul Cenko
Partner
Adelaide
22 July 2022
* This is the original version of the audit report over the financial statements signed by the directors on 22 July 2022.
Page references should be read as follows to reflect the correct references now that the financial statements have been
presented in the context of the annual report in its entirety: the Remuneration Report is set out on pages 12 to 20, as
opposed to pages 13 to 23 outlined above.
58
INDEPENDENT AUDITOR'S REPORTINDEPENDENT AUDITOR'S REPORTFor the year ended 30 June 2022
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 2022 there have been:
i.
ii.
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.
KPMG
KPM_INI_01
Paul Cenko
Partner
Adelaide
22 July 2022
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
59
LEAD AUDITOR'S INDEPENDENCE DECLARATIONLEAD AUDITOR'S INDEPENDENCE DECLARATION For the year ended 30 June 2021LEAD AUDITOR'S INDEPENDENCE DECLARATIONFor the year ended 30 June 2022
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 21 JULY 2022)
SUBSTANTIAL SHAREHOLDERS
The number of shares held by substantial shareholders and their associates are set out below:
Shareholder
Colonial First State Investments Limited
Phoenix Portfolios Pty Ltd
Donald Cant Pty Ltd
VOTING RIGHTS
ORDINARY SHARES
Refer to note 17 in the financial statements.
OPTIONS
Refer to note 10 in the financial statements.
Percentage
9.9%
8.2%
5.3%
Number
1,138,760
941,380
621,759
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
1,076
763
152
154
12
2,157
Units
394,135
1,973,721
1,153,417
3,515,038
4,429,694
11,466,005
% Issued Capital
3.44
17.21
10.06
30.66
38.63
100
The number of shareholders holding less than a marketable parcel of ordinary shares is 105.
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.
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ASX ADDITIONAL INFORMATIONASX ADDITIONAL INFORMATIONFor the year ended 30 June 2022 TWENTY LARGEST SHAREHOLDERS
Name
Citicorp Nominees Pty Limited
Donald Cant Pty Ltd
J P Morgan Nominees Australia Pty Limited
Anacacia Pty Ltd
Creative Living (Qld) Pty Ltd
National Nominees Limited
Rathvale Pty Limited
Brazil Farming Pty Ltd
Allegro Two Super Fund Pty Ltd
Mr William Francis Cannon
Robert Nairn Pty Ltd
Brazil Farming Pty Ltd
Angueline Capital Pty Limited
Gotterdamerung Pty Limited
Mr Steven McGregor
Mr Chris Hartwig
Gotterdamerung Pty Limited
Mrs Helen Elizabeth Rollinson
Manatee P/L
Ms Nina Tschernykow
OFFICES AND OFFICERS
COMPANY SECRETARY
Steven John William McGregor BA(Acc), FCA, AGIA, ACG
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)
Number of
Ordinary Shares
Held
Percentage of
Capital Held
1,188,137
10.36
621,759
596,735
502,152
320,000
283,392
191,558
166,416
164,500
130,083
129,162
124,554
100,000
91,430
89,738
86,034
79,539
72,343
71,838
60,720
5.42
5.20
4.38
2.79
2.47
1.67
1.45
1.43
1.13
1.13
1.09
0.87
0.80
0.78
0.75
0.69
0.63
0.63
0.53
5,070,090
43.87
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ASX ADDITIONAL INFORMATIONINDEPENDENT AUDITOR'S REPORT For the year ended 30 June 2021ASX ADDITIONAL INFORMATIONFor the year ended 30 June 2022 We deliver on our promise
A
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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
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.korvestgalvanisers.com.au
www.ezystrut.com.au
www.korvestgalvanisers.com.au