Annual Report
Korvest Ltd
(ABN 20 007 698 106)
30 June 2023
Table of Contents
ESG STRATEGY STATEMENT AND CORE VALUES ..................................................................................................................... 3
DIRECTORS’ REPORT .............................................................................................................................................................. 7
REMUNERATION REPORT – AUDITED ................................................................................................................................... 13
5 YEAR SUMMARY ............................................................................................................................................................... 25
FINANCIAL STATEMENTS ...................................................................................................................................................... 26
ASX ADDITIONAL INFORMATION ......................................................................................................................................... 67
2
Korvest Ltd
ESG Strategy Statement and 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 Focussed
• Act with Integrity
• Work as One Team
•
Think Customer
•
Pursue Excellence
•
Financially Responsible
Social
Safety performance
Through ongoing continuous improvement and consultation, Korvest continued to drive down the numbers of lost time
injuries. Building on a significant reduction in FY22, the ongoing improvement in FY23 resulted in a reduction of the lost time
injury frequency rate by 67%.
This downwards trend was also evident in the total injury rate with a decrease of 44% during FY23.
Automation of manual handling tasks is a key area of improvement with the implementation of new tow tugs for moving loaded
trolleys around the manufacturing plant and the commissioning of our latest multi axis welding robot being rolled out during
the year.
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 providing access to free counselling and support across many areas such as health,
wellbeing, finances, psychology, legal, etc.
• Ongoing health surveillance program to monitor the hearing of employees
• Voluntary health screening including cholesterol and blood sugar readings
• Voluntary skin checks
• Voluntary influenza vaccinations
Korvest Charity Scheme
Korvest has operated a company-wide workplace giving charity scheme for many years. The scheme allows employees to make
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 2 years on a rotational basis.
A new initiative in FY23 saw Korvest launch the Korvest Community Support Program, providing donations to staff-nominated
not for profit groups, organisations and charities that are important to them and their community. A total of $24,500 was
donated by Korvest in FY23 under this scheme.
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.
3
Korvest Ltd
Objective
Actual 2022
Actual 2023
%
40%
50%
20%
Number
5
21
32
%
28%
58%
15%
Number
%
4
22
31
20%
63%
13%
Number of females in senior management positions
Number of females in administration/sales positions
Number of female employees in the whole organisation
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 states’ legislative requirements.
Legislative compliance
In October 2022, the SA EPA renewed Korvest’s licence for a further 3 years for the Kilburn factory.
Noise Management
Korvest continued to roll out Noise Management Plan initiatives over the period including:
•
•
•
Completing the replacement of steel plate drain covers with a concrete dish drain to remove noise when traffic
traversed the drain,
Increasing the fleet of electric forklifts, replacing previously LPG powered machines on site, and
Trialling the installation of PLEXIGLASS Soundstop Noise Barrier sheeting around some machines.
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.
With 12 months of production from our new system on the warehouse supplementing the original system on the factory roof
Korvest generated approximately 342.1MWh of electricity from the 580 Prospect Rd system. This contributed to approximately
22% of the factory’s overall power consumption for the period whilst contributing nearly 100MWh of power exported to the
grid.
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. What is observed now is the results of our investments with a repeated seasonal trend over
the winter period.
4
00.00050.0010.00150.0020.0025Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Kilburn CO2e tonnes per hours worked
Korvest Ltd
Year
22/23
21/22
Change
Total Scope 1 CO2e emissions
(tonnes)
2,237
2,206
Total Scope 2 CO2e emissions
(tonnes)
411
526
1.4% increase
21.9% reduction
Overall change
3.1% reduction
The significant reduction in our Scope 2 emissions is due to the full 12 months of generation by the Kilburn Warehouse solar
installation compared to only 6 month in the previous financial year.
The slight increase in the Scope 1 emissions were partly due to the increase in the company fleet of vehicles over the period.
However, Korvest are working to offset this increase with the introduction of hybrid sales representative’s vehicles and
additional electric forklifts as we change over the existing fleet.
Our focus has now turned to mains gas savings opportunities at the Kilburn plant with gas being a major input into our
galvanising processes and accounting for the majority of our total Scope 1 emissions. These are complex engineering projects
and will be implemented over the next 2 years.
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 web site.
Our galvanising dust plant operated for the full operational hours of the kettle this year with the zinc oxide collected from this
plant sold for recycling.
Waste Management & Recycling
Korvest initiated a new recycling data capturing system during the financial year. Korvest measures the tonnes of all materials
sent off site for recycling. This includes zinc composites recovered from the galvanising kettles and the dust plant, various
metals and wood. Prior to being sent off for recycling, zinc ash is reprocessed on site (MZR recovery) with approximately 45
tonnes of reclaimed zinc being added back into the galvanising kettles during the year.
5
Natural gasLPGPetrolDieselElectricitySource of Scope 1 and 2 Emissions
Korvest Ltd
Governance
Korvest’s corporate governance statement, which was approved by the Board on 24 July 2023 is available on the company’s
website at Corporate Governance.
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:-
Competition and Consumer Law,
• Anti bribery and corruption,
•
• Whistle-blower,
• Bullying and harassment,
•
• Modern Slavery.
IT Awareness and Cyber Safety, 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 completed a range of projects aimed at achieving at least Maturity
Level 1 for each of the Australian Signals Directorate (ASD) Essential 8.
User training plays a key role in reducing cyber risks and Korvest continued providing all IT users with regular training on cyber
security. Users receive a short 3 minute training video every 3-4 weeks on different cyber security topics. 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
Zinc ashZinc drossZinc via MZRWoodAluminiumSteelStainlessSteelCopperTonnes Recycled
Directors’ report
For the year ended 30 June 2023
The directors present their report together with the financial statements of Korvest Ltd (‘the Company’) for the financial year
ended 30 June 2023 and the auditor’s report thereon.
Korvest Ltd
DIRECTORS
The directors of the Company at any time during or since the end of the financial year are:
Name, qualifications and
independence status
Experience, special responsibilities and other directorships
Andrew Stobart
B. Eng (Hons), Grad Dip Bus Admin,
GAICD
Chairman
Appointed Chairman 31 August 2021
A Director since August 2016
Former Chairman Nexans Olex Australia & New Zealand
Member of Audit and Remuneration Committees
Chris Hartwig
BA(Acc), MAICD
Managing Director
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
Gerard Hutchinson
MBA, MBL, MSc(IS), BEc, MA
(Research), FCA, FAICD
Independent Non-Executive
Director
Gary Francis
BSc. (Hons) (Civil), MAICD
Independent Non-Executive
Director
Therese Ryan
LLB, GAICD
Independent Non-Executive
Director
A Director since November 2014
Mr Hutchinson has held roles of Chief Financial Officer and Managing
Director in a range of large and publicly-listed businesses across the
construction, engineering and services sectors. He is currently Chief
Financial Officer of Al-Futtaim Contracting
Chairman of Audit Committee and member of Remuneration
Committee
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
A Director since 1 September 2021
Director Sustainable Timber Tasmania
Chair Gippsland Water
Deputy Chair VicForests
Chair Hancock Victorian Plantations
Director Bapcor Limited until September 2022
Member of Audit and Remuneration Committees
Steven McGregor
BA(Acc), FCA, AGIA, ACG
Finance Director
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.
COMPANY SECRETARY
Mr Steven J W McGregor FCA, AGIA, ACG, 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.
7
Korvest Ltd
Directors’ Report
For the year ended 30 June 2023
RETIREMENT AND RE-ELECTIONS
In accordance with the Constitution, Gary Francis and Steven McGregor retire from the Board at the forthcoming Annual
General Meeting on 31 October 2023 and offer themselves for re-election.
DIRECTORS’ MEETINGS
The number of directors’ meetings, including meetings of committees of directors, and number of meetings attended by each
of the directors of the Company during the financial year are:
Director
Board
Audit
Committee
Remuneration
Committee
A
B
A
Mr A Stobart
12
12
Mr G Francis
12
12
Mr G Hutchinson
12
12
Ms T Ryan
12
12
Mr C Hartwig
12
12
Mr S McGregor
12
12
4
4
4
4
-
-
B
4
4
4
4
-
-
A
2
2
2
2
-
-
B
2
2
2
2
-
-
Nomination
Committee
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 2023 (FY23) was $107.48m, up 8.3% on the previous year. Price
rises for the general market to recover the impact of input cost increases was the primary reason for the revenue growth. The
timing of project requirements resulted in reduced project revenue in FY23.
8
Korvest Ltd
Directors’ Report
For the year ended 30 June 2023
DIVIDENDS
The directors announced a fully franked final dividend of 35.0 cents per share (2022: 35.0 cents per share) following an interim
dividend of 25.0 cents per share at the half year (2022: 25.0 cents per share). The Dividend Reinvestment Plan (DRP) will
remain suspended for the final dividend. The dividend will be paid on 6 September 2023 with a record date of 18 August 2023.
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 2023
Interim 2023 ordinary
Final 2022 ordinary
Total amount
Cents per
share
Total
amount
$’000
Franked/
unfranked
25.0
35.0
2,892 Fully franked
4,045 Fully franked
6,937
Date of payment
3 March 2023
2 September 2022
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
35.0
4,052 Fully franked
4,052
6 September 2023
The financial effect of these dividends has not been brought to account in the financial statements for the year
ended 30 June 2023 and will be recognised in subsequent financial reports.
Dividends have been dealt with in the financial
report as:
Dividends
Dividends – subsequent to 30 June 2023
Note
Total
amount
$’000
18
18
6,937
4,052
PRINCIPAL ACTIVITIES, STRATEGY AND FUTURE PERFORMANCE
The principal activities of the Company consist of hot dip galvanising, sheet metal fabrication and the manufacture of cable
and pipe support systems and fittings.
The Company is comprised of the Industrial Products Group which includes the EzyStrut business and the Production Group
which includes the Korvest Galvanisers business.
Korvest’s businesses service a number of major markets including infrastructure, commercial, utilities, mining, food processing,
oil & gas, power stations, health and industrial segments.
Supply to the infrastructure sector remained strong in FY23 albeit at lower levels than was the case in FY22. The majority of
the infrastructure activity comprises road and rail tunnels on the Eastern Coast. Three major projects were completed during
FY23 and a further three major projects that were supplied during FY23 will continue into FY24. Subject to the broader
economic environment the day-to-day and project markets are expected to continue at similar levels to FY23.
Korvest’s recent and future focus for investment will be on production capability and capacity. Options are being explored to
redevelop parts of the Kilburn site to accommodate new equipment to further improve productivity.
Korvest has a long history of paying franked dividends. The target dividend payout ratio range is 65-90% of after tax profits.
9
Korvest Ltd
Directors’ Report
For the year ended 30 June 2023
REVIEW OF OPERATIONS
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.
Six major infrastructure projects were supplied at various times during the year. Three of those projects were completed
during the year, with the remaining three projects to continue into FY24.
The day-to-day and small project markets improved in all states when compared to the prior year. The improvement was due
to both volume increases and price increases.
Price increases were applied to maintain margins in response to increased input costs, particularly steel, freight and labour.
Inventory reduced from the higher levels that had been in place in response to the supply chain challenges experienced during
COVID19.
Production
The Galvanising business had reduced volumes compared to the record FY22 volumes. The reduction in EzyStrut major project
work resulted in lower levels of internal work for the plant in FY23. External volumes grew as did the average selling price for
external work. The selling price improvement is attributable to the introduction of a gas levy to recover the significant increase
in the cost of gas from 1 January 2023 when new contracted rates commenced.
The cost of zinc fluctuated over the course of the year but overall was higher in FY23 compared to FY22. The average cost of
zinc consumed in FY23 was 16% higher than in FY22. FY23 margins were comparable to the prior year as the extra costs of
zinc, gas and labour were recovered from customers via price increases and the gas levy.
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 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. During COVID19 the risk of global supply
chain disruption and labour shortages became evident. These risks have diminished during FY23 as global supply chains have
improved and the labour market issues have moderated.
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 in recent years. 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
consumption of externally generated electricity.
10
Korvest Ltd
Directors’ Report
For the year ended 30 June 2023
SIGNIFICANT CHANGES
In the opinion of the directors there were no significant changes in the state of affairs of the Company that occurred during
the financial year under review.
EVENTS SUBSEQUENT TO REPORTING DATE
Other than the dividend declared after reporting date, at the date of this report there is no matter or circumstance that has
arisen since 30 June 2023, that has significantly affected, or may significantly affect:
(i) the operations of the Company;
(ii) the results of those operations; or
(iii) the state of affairs of the Company;
in the financial years subsequent to 30 June 2023.
LIKELY DEVELOPMENTS
Korvest’s focus remains on improving the production capability at the Kilburn factory. Options are being explored to redevelop
parts of the Kilburn site to accommodate new equipment to further improve productivity.
Working capital management is always a focus area. Inventory levels have reduced as the risks from the last few years have
diminished. Increasing costs of key materials result in higher Inventory value however the focus is on reducing the volume of
inventory being held without impacting on customer service to minimise the value of stock being held. 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 Company 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 Company.
ENVIRONMENTAL REGULATION
Korvest’s Kilburn operations are subject to environment regulation under both Commonwealth and State legislation in relation
to its manufacturing and galvanising activities.
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 emissions 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.
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 for current and former directors and officers of the Company and related entities. The insurance premiums relate to:
a)
b)
costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and
whatever their outcome; and
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 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.
11
Korvest Ltd
Directors’ Report
For the year ended 30 June 2023
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 2023
30 June 2024
30 June 2025
Nil
Nil
Nil
84,814
65,230
67,232
Shares issued on exercise of options or performance rights
No options were exercised during the year ended 30 June 2023 or up to the date of this report.
Vested Performance Rights
91,796 ordinary shares of Korvest Ltd were issued during the year ended 30 June 2023 on the vesting of performance rights
granted under the Korvest Performance Rights Plan. No amount is payable on the vesting of the performance rights and
accordingly there are no amounts unpaid on the shares issued.
12
Korvest Ltd
Remuneration Report – Audited
For the year ended 30 June 2023
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
Company, including directors of the Company and other senior executives. KMP comprise the directors and senior executives
of the Company.
Compensation levels for KMP are competitively set to attract and retain appropriately qualified and experienced directors and
executives. The Company has not engaged third party consultants during FY23.
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 Company’s performance including the Company’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 Company’s performance and benefits for shareholder wealth, the remuneration committee have regard to
the indices set out below.
Profit after tax
Dividend
- Total amount paid
- Per issued share
Earnings per share
Share price as at 30 June
Return on invested capital (ROIC)
($'000)
($'000)
2023
11,177
2022
11,336
6,937
60.0c
96.7c
$7.75
23.5%
5,152
45.0c
99.0c
$7.01
26.7%
2021
6,054
3,169
28.0c
53.5c
$4.99
18.4%
2020
4,027
3,149
28.0c
35.8c
$4.00
13.8%
2019
2,885
1,787
16.0c
25.9c
$2.70
10.3%
13
Korvest Ltd
Remuneration Report – Audited
For the year ended 30 June 2023
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 Company 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 (25%)
New markets (20%)
Environmental (5%)
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.
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 Company 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 Company’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 average of the statutory
EPS for the FY21 and FY22 years. 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 2025)
% of rights that vest
Less than 252.398 cents
252.398 cents
Between 252.398 and 288.174
288.174 or greater
Nil
25%
Pro rata between 25% – 100%
100%
14
Remuneration Report
For the year ended 30 June 2023
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:
Korvest Ltd
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 Company’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 FY 23 will vest in accordance with the table below:
Average 3 year ROIC
Less than 8%
8%
Above 8% and below 12%
% of rights that vest
Nil
50%
Between 50% and 100% using a straight line
analysis
12% or greater
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 Company 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 Company’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 Company retains the right to terminate the contract
immediately by making payment in lieu of notice. The Company 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.
Services from remuneration consultants
No remuneration consultants were used during the year.
15
Korvest Ltd
Remuneration Report
For the year ended 30 June 2023
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 2022 and were applied for the entirety of the financial year ended 30 June
2023:
Chairman
Director
$136,067
$71,508
The Chairman of a Board Committee receives a further $11,894 p.a.
Superannuation is added to these fees where appropriate.
Non-executive directors do not receive performance-related compensation.
16
Remuneration Report
For the year ended 30 June 2023
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 Company are:
Korvest Ltd
Name
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
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Short Term
Fees
$
Post
employment
Superannuation
benefits
$
136,067
124,599
83,402
79,287
83,402
79,296
71,508
56,640
14,287
12,460
8,757
7,929
8,757
7,930
7,508
5,664
Total
$
150,354
137,059
92,159
87,216
92,159
87,226
79,016
62,304
-
-
-
22,654
374,379
362,476
2,265
39,309
36,248
24,919
413,688
398,724
17
Remuneration Report
For the year ended 30 June 2023
Korvest Ltd
Name
Executive Directors
C Hartwig 1
2023
Executive (Managing Director) 2022
S McGregor 1
2023
2022
Executive (Finance Director)
Executives / other KMP
S Taubitz 1
2023
2022
General Manager Sales
2023
G Christie
General Manager Operations
2022
Total executives’ remuneration 2023
2022
Short Term
Salary &
Fees*
$
360,583
343,287
333,285
315,899
286,569
250,060
210,000
200,000
1,190,437
1,109,246
Bonus
$
168,784
141,593
42,856
27,780
111,100
100,558
59,934
48,419
382,674
318,350
* Salary & fees includes payments for annual leave taken.
Other long
term – Long
Service
leave
$ **
Post
employment
Superannuation
benefits
$
Share based payments
Performance
Rights
$
Shares
$
Proportion of
remuneration
performance related %
Total
$
27,773
27,672
27,764
27,665
27,865
27,800
27,134
25,250
110,536
108,387
10,990
13,874
11,358
19,331
16,537
14,391
7,327
11,341
46,212
58,937
-
-
-
-
994
999
994
999
1,988
1,998
100,642
94,203
96,450
90,258
72,698
67,605
60,087
58,479
329,877
310,545
668,772
620,629
511,713
480,933
515,763
461,413
365,476
344,488
2,061,724
1,907,463
40.3
38.0
27.2
24.5
35.6
36.4
32.8
31.0
** 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 executives can elect to have some or all of the superannuation contributions above $27,500 paid as salary rather than
superannuation.
The proportion of performance related remuneration is bonuses and performance rights divided by total remuneration.
18
Korvest Ltd
Remuneration Report
For the year ended 30 June 2023
Performance rights over equity instruments granted as compensation during the reporting period
Details on performance rights that were granted as compensation to each KMP during the reporting period are as
follows:
Number of
performance rights
granted during the
year
Grant date
Fair value per right
at grant date ($)
Expiry date
18,490
17,730
13,164
10,052
26 Oct 2022
26 Oct 2022
26 Oct 2022
26 Oct 2022
$5.04
$5.04
$5.04
$5.04
30 June 2025
30 June 2025
30 June 2025
30 June 2025
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
Half of the performance rights issued to each KMP will be tested against an Earnings Per Share (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 Company
achieving performance hurdles. Details of the performance criteria are included in the long-term incentives
discussion on page 15.
No equity-settled share-based payment transaction terms (including performance rights granted as compensation to
KMP) have been altered or modified by the Company 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 Company 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
Amount paid on each share
91,796
Nil
19
Korvest Ltd
Remuneration Report
For the year ended 30 June 2023
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
25,936*
19,530
18,490
24,852*
18,710
17,730
17,930*
14,860
13,164
16,096*
12,130
10,052
Oct 20
Oct 21
Oct 22
Oct 20
Oct 21
Oct 22
Oct 20
Oct 21
Oct 22
Oct 20
Oct 21
Oct 22
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
% vested in
current year
% forfeited or
lapsed in
current year
Year in which grant
vests
100%
-
-
100%
-
-
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
30 Jun 23
30 Jun 24
30 Jun 25
30 Jun 23
30 Jun 24
30 Jun 25
30 Jun 23
30 Jun 24
30 Jun 25
30 Jun 23
30 Jun 24
30 Jun 25
* The three year performance period for performance rights issued in October 2020 ended on 30 June 2023. These
rights were tested against two performance hurdles, earnings per share (EPS) and return on invested capital (ROIC).
Korvest’s aggregate EPS was 249.2 over the performance period. This results in 100% of the EPS performance rights
vesting.
Korvest’s ROIC was 23.3% over the performance period. This results in 100% of the ROIC performance rights vesting.
20
Korvest Ltd
Remuneration Report
For the year ended 30 June 2023
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
93,115
89,288
66,293
50,621
210,540
201,735
145,545
130,650
(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 2022 to 30 June 2025) 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.
Options and rights over equity instruments
The movement during the reporting period in the number of options over ordinary shares in Korvest Ltd held directly,
indirectly or beneficially, by each KMP, including their related parties, is as follows:
Held at
1 July
2022
Granted as
compen-
sation
Exercised
Lapsed
73,538
70,460
18,490
17,730
(28,072)
(26,898)
52,196
45,646
13,164
10,052
(19,406)
(17,420)
-
-
-
-
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
No options held by KMP are vested but not exercisable.
Held at
1 July
2021
Granted as
compen-
sation
Exercised
Lapsed
85,645
82,066
19,530
18,710
(31,637)
(30,316)
57,148
52,680
14,860
12,130
(19,812)
(19,164)
-
-
-
-
Directors
C Hartwig
S McGregor
Executives
S Taubitz
G Christie
No options held by KMP are vested but not exercisable.
Held at
30 June
2023
Vested
during
the year
63,956
61,292
25,936
24,852
45,954
38,278
17,930
16,096
Held at
30 June
2022
Vested
during
the year
73,538
70,460
28,072
26,898
52,196
45,646
19,406
17,420
21
Remuneration Report
For the year ended 30 June 2023
Movements in shares
Korvest Ltd
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:
Allocated under
Employee/
Exec share plan
Held at 30
June 2022
Held at 30
June 2023
Purchases
Directors
C Hartwig
S McGregor
G Francis
G Hutchinson
A Stobart
T Ryan
Executives
S Taubitz
G Christie
86,034
89,738
8,947
500
16,000
3,000
20,506
37,480
-
-
-
-
-
-
-
-
28,072
26,898
-
-
-
-
19,542
17,556
114,106
116,636
8,947
500
16,000
3,000
40,048
55,036
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
T Ryan
Executives
S Taubitz
G Christie
Held at 30
June 2021
Purchases
Allocated under
Employee/
Exec share plan
Held at 30
June 2022
11,667
54,397
59,422
8,947
500
8,500
-
530
18,152
-
-
-
-
-
7,500
3,000
-
-
-
31,637
30,316
-
-
-
-
19,976
19,328
N/A*
86,034
89,738
8,947
500
16,000
3,000
20,506
37,480
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.
* G Billings retired 31 August 2021
22
Korvest Ltd
Remuneration Report
For the year ended 30 June 2023
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
Included in
remuneration $
(A)
168,784
42,856
111,100
59,934
Short-term incentive bonus
% vested in year
% forfeited in year
(B)
83.8
83.8
96.2
89.0
16.2
16.2
3.8
11.0
(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 Company, or their related entities, may purchase goods from the
Company. These purchases are on the same terms and conditions as those entered into by other Company employees or
customers and are trivial or domestic in nature.
23
Korvest Ltd
Directors’ Report
For the year ended 30 June 2023
DIRECTORS’ INTERESTS
The relevant interest of each director over the shares and rights over such instruments issued by the Company 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:
Korvest Ltd
Ordinary Shares
Korvest Ltd
Performance Rights
C Hartwig
S McGregor
G Francis
G Hutchinson
A Stobart
T Ryan
NON-AUDIT SERVICES
114,106
116,636
8,947
500
16,000
3,000
Unvested
38,020
36,440
-
-
-
Vested
25,936
24,852
-
-
-
During the year KPMG, the Company’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 Company; 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 Company, acting as an advocate for the
Company 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 66 and forms part of the Directors’ report for the financial year
ended 30 June 2023.
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 Corporate Governance.
Signed at Adelaide this Monday 24th of July 2023 in accordance with a resolution of the directors.
A STOBART, Director
C HARTWIG, Director
24
5 Year Summary
Korvest Ltd
2023
2022
2021
2020
2019
Sales revenue
Profit after tax
($'000)
107,484
99,223
69,786
63,088
60,843
($'000)
11,177
11,336
6,054
4,027
2,885
Depreciation/Amortisation (plant &
equipment)
Depreciation (right-of-use asset)
($'000)
1,459
1,282
1,434
1,286
1,469
($'000)
846
874
879
887
-
Cash flow from operations
($'000)
14,944
3,987
6,509
10,460
1,413
Profit from ordinary activities
- As % of Shareholders’ Equity
- As % of Sales Revenue
Dividend
- Total amount paid
- Per issued share
22.8%
10.4%
25.9%
11.4%
16.9%
8.7%
12.3%
6.4%
9.3%
4.7%
($'000)
6,937
60.0c
5,152
45.0c
3,169
28.0c
3,149
28.0c
1,787
16.0c
Earnings per share (Basic)
96.7c
99.0c
53.5c
35.8c
25.9c
Number of employees
Shareholders
- Number at year end
241
215
207
189
178
2,420
2,157
1,947
1,708
1,652
Net assets per issued ordinary share
Net tangible assets per issued ordinary share*
$4.24
$3.81
$3.82
$3.37
$3.17
$2.63
$2.90
$2.48
$2.76
$2.76
Share price as at 30 June
$7.75
$7.01
$4.99
$4.00
$2.70
* 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.
25
Korvest Ltd
Financial Statements
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ................................................................. 27
STATEMENT OF FINANCIAL POSITION ........................................................................................................................ 28
STATEMENT OF CASH FLOWS ..................................................................................................................................... 29
STATEMENT OF CHANGES IN EQUITY ......................................................................................................................... 30
NOTES TO THE FINANCIAL STATEMENTS .................................................................................................................... 31
BASIS OF PREPARATION ........................................................................................................................................................ 31
RESULTS FOR THE YEAR ............................................................................................................................................. 33
1.
2.
3.
4.
5.
6.
REVENUE ............................................................................................................................................................. 33
EXPENSES ............................................................................................................................................................. 33
FINANCE INCOME .................................................................................................................................................. 34
EARNINGS PER SHARE ............................................................................................................................................. 34
AUDITOR’S REMUNERATION ..................................................................................................................................... 35
SEGMENT REPORTING ............................................................................................................................................ 35
WORKING CAPITAL .................................................................................................................................................... 37
7.
8.
9.
10.
11.
TRADE AND OTHER RECEIVABLES ............................................................................................................................... 37
INVENTORIES ........................................................................................................................................................ 38
TRADE AND OTHER PAYABLES ................................................................................................................................... 39
EMPLOYEE BENEFITS ............................................................................................................................................... 39
PROVISIONS .......................................................................................................................................................... 42
TANGIBLE ASSETS ...................................................................................................................................................... 42
12.
13.
PROPERTY, PLANT AND EQUIPMENT ........................................................................................................................... 43
IMPAIRMENT TESTING ............................................................................................................................................. 46
LEASES ....................................................................................................................................................................... 46
14.
LEASES ................................................................................................................................................................ 46
CAPITAL STRUCTURE .................................................................................................................................................. 48
15.
16.
17.
18.
CASH AND CASH EQUIVALENTS ................................................................................................................................. 48
FINANCIAL INSTRUMENTS ........................................................................................................................................ 49
CAPITAL AND RESERVES ........................................................................................................................................... 53
DIVIDENDS ........................................................................................................................................................... 54
TAXATION .................................................................................................................................................................. 56
19.
CURRENT AND DEFERRED TAXES ................................................................................................................................ 56
GROUP COMPOSITION ............................................................................................................................................... 59
20.
SALE OF SUBSIDIARIES ............................................................................................................................................. 59
OTHER NOTES ............................................................................................................................................................ 59
21.
22.
23.
24.
KEY MANAGEMENT PERSONNEL ................................................................................................................................ 59
COMMITMENTS AND CONTINGENCIES ........................................................................................................................ 59
GUARANTEES ENTERED INTO BY THE COMPANY ........................................................................................................... 60
SUBSEQUENT EVENTS ............................................................................................................................................. 60
ASX ADDITIONAL INFORMATION ............................................................................................................................... 67
SHAREHOLDINGS (AS AT 21 JULY 2023) .................................................................................................................................. 67
VOTING RIGHTS .................................................................................................................................................................. 67
TWENTY LARGEST SHAREHOLDERS .......................................................................................................................................... 68
OFFICES AND OFFICERS......................................................................................................................................................... 68
26
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Korvest Ltd
Note
1
20
2
3
19
Revenue
Other income
Profit on sale of subsidiaries
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
4
4
The notes on pages 31 to 60 are an integral part of these financial statements.
2023
$’000
107,484
27
-
(91,432)
16,079
134
(137)
(3)
16,076
(4,899)
11,177
11,177
814
(244)
570
11,747
11,747
11,747
Cents
96.7
95.5
2022
$’000
99,223
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
27
Statement of financial position
As at 30 June 2023
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
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)
Note
15
15
7
8
12
14
9
10
14
10
19
14
11
17
17
Total equity attributable to equity holders of the Company
Total equity
The notes on pages 31 to 60 are an integral part of these financial statements.
2023
$’000
8,940
275
18,864
537
16,791
45,407
20,353
4,896
25,249
70,656
9,671
3,274
664
776
14,385
355
2,460
4,418
-
7,233
21,618
49,038
14,395
34,643
-
49,038
49,038
Korvest Ltd
2022
$’000
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
267
1,844
4,678
560
7,349
22,088
43,825
14,334
29,491
-
43,825
43,825
28
Statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Cash receipts from customers
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
Korvest Ltd
2023
$’000
122,979
(102,590)
20,389
135
(137)
(5,443)
14,944
53
-
(1,864)
(1,811)
(7)
(805)
(6,937)
(7,749)
5,384
3,556
8,940
2022
$’000
110,047
(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
Note
15
20
12
18
15
The notes on pages 31 to 60 are an integral part of these financial statements.
29
Korvest Ltd
Statement of changes in equity
For the year ended 30 June 2023
Balance at 1 July 2022
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 2023
Balance at 1 July 2021
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Total comprehensive income for the year
the
Transactions with owners of
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
Share
capital
$’000
Equity
compensation
reserve
$’000
Asset
revaluation
reserve
$’000
Profits
reserve
$’000
Retained
profits /
(losses)
$’000
Total
$’000
14,334
1,068
5,733
22,690
-
43,825
-
-
-
61
-
-
61
-
14,395
-
-
-
-
570
570
-
-
-
11,177
-
11,177
11,177
570
11,747
-
342
-
342
-
1,410
-
-
-
-
-
(6,937)
-
-
-
-
-
6,303
(6,937)
11,177
26,930
-
(11,177)
-
61
342
(6,937)
(6,534)
-
49,038
14,268
758
4,393
16,506
-
35,925
-
-
-
66
-
-
66
-
14,334
-
-
-
-
1,340
1,340
-
-
-
11,336
-
11,336
11,336
1,340
12,676
-
310
-
310
-
1,068
-
-
-
-
-
(5,152)
-
-
-
-
-
5,733
(5,152)
11,336
22,690
-
(11,336)
-
66
310
(5,152)
(4,776)
-
43,825
The notes on pages 31 to 60 are an integral part of these financial statements.
30
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
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 Company 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 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 financial statements comply with International Financial Reporting Standards (IFRSs) adopted by the International
Accounting Standards Board (IASB).
The Company disposed of its only subsidiaries on 31 August 2021 therefore the profit or loss of these subsidiaries up to the
date of disposal has been consolidated in the comparatives. Refer Note 20 for more information.
The financial statements were approved by the Board of Directors on 24 July 2023.
Basis of measurement
The 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 financial statements are presented in Australian dollars, which is the Company’s functional currency.
Use of estimates and judgements
In preparing these financial statements management has made judgements and estimates that affect the application of
Company’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 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 statements and directors’ report have been rounded off to the
nearest thousand dollars, unless otherwise stated.
31
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency of the Company 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 2023 and earlier application is permitted;
however, the Company has not early adopted the new or amended standards in preparing these financial statements and they
are not expected to have a material effect on the Company’s financial statements.
32
Notes to the financial statements
For the year ended 30 June 2023
Results for the Year
This section focuses on the Company’s performance. Disclosures in this section include analysis of the Company’s profit before
tax by reference to the activities performed by the Company and analysis of key revenues and operating costs, segmental
information, net finance costs and earnings per share.
Korvest Ltd
1. Revenue
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 at a point in time when the customer gains control of the goods which is usually when the goods
are delivered to the customer or picked up from the Company’s premises. Revenue from galvanising services is recognised
at the point in time the services are provided which, given the short term nature of the process, is when the customers’
product has been galvanised. The Company’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.
2. Expenses
Accounting policies
Good and services tax
2023
$’000
107,484
2022
$‘000
99,223
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
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
Derecognition of site restoration provision
2023
$’000
68,397
15,612
2,894
4,974
71
44
(560)
91,432
2022
$’000
63,215
13,540
3,071
4,194
33
-
-
84,053
33
Notes to the financial statements
For the year ended 30 June 2023
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:
Loss/(Gain) 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)
3. Finance income
Accounting policies
Korvest Ltd
2023
$’000
21,109
2,653
1,820
1,674
13
61
342
44
306
1,459
846
-
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
-
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues, using the
effective interest rate method.
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 2023 was based on the net profit attributable to ordinary
shareholders of $11,177,000 (2022: $11,336,000) and a weighted average number of ordinary shares outstanding during
the financial year ended 30 June 2023 of 11,561,650 (2022: 11,446,930).
The calculation of diluted earnings per share at 30 June 2023 was based on the net profit attributable to ordinary
shareholders of $11,177,000 (2022: $11,336,000) and a weighted average number of potential ordinary shares
outstanding during the financial year ended 30 June 2023 of 11,704,006 (2022: 11,607,716).
34
Notes to the financial statements
For the year ended 30 June 2023
4.
Earnings per share (continued)
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 Company (KPMG Australia)
– audit and review of financial statements
Other services:
Auditors of the Company (KPMG Australia)
– taxation advice and tax compliance services *
– consulting services
Korvest Ltd
2023
Shares ’000
2022
Shares ’000
11,466
96
11,562
11,562
142
11,704
2023
Cents per
share
96.7
95.5
11,327
120
11,447
11,447
161
11,608
2022
Cents per
share
99.0
97.7
2023
$
2022
$
127,000
127,000
115,000
115,000
9,000
-
9,000
8,200
5,000
13,200
* The basis for determining the fee for other services was on a time and materials basis
6. Segment Reporting
Segment results that are reported to the Company’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 Company 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. It includes the business
trading under the EzyStrut name.
Production
Production segment represents the Korvest Galvanising business, which provides hot dip galvanising services.
35
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
6. Segment reporting (continued)
Geographical segments
The Company predominantly operates in Australia.
Customers
Revenue from one customer of the Group’s Industrial Products segment represented $12,924,000 of the Group’s total
revenues. In the prior year no single customer represented more than 10% of the Company’s total revenue.
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.
Business segments
Industrial Products
2023
$’000
2022
$’000
Production
2023
$’000
Sales revenue
Depreciation and amortisation
Depreciation ROU Asset
Reportable segment profit
before tax
Reportable segment assets
Capital expenditure
97,705
(866)
(843)
14,488
38,094
1,503
91,366
(704)
(865)
14,795
39,411
1,796
9,779
(316)
(2)
1,654
5,991
337
2022
$’000
7,857
(256)
(9)
1,292
5,939
230
Total
2023
$’000
107,484
(1,182)
(845)
16,142
44,085
1,840
Reconciliation of reportable segment profit, assets and other material items
Profit
Total profit for reportable segments
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
2023
$’000
16,142
-
(66)
16,076
44,085
10,730
9,215
4,896
1,730
70,656
1,840
24
1,864
1,182
277
1,459
2022
$’000
99,223
(960)
(874)
16,087
45,350
2,026
2022
$’000
16,087
815
(1,046)
15,856
45,350
10,000
3,831
5,211
1,521
65,913
2,026
84
2,110
960
322
1,282
36
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
Working Capital
Working capital represents the assets and liabilities the Company generates through its trading activity. The Company
therefore defines working capital as inventory, trade and other receivables, trade and other payables and provisions.
Careful management of working capital ensures that the Company 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
Impairment
2023
$’000
18,958
(133)
39
18,864
2022
$’000
16,967
(118)
25
16,874
The Company 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 Company uses quantitative and qualitative information and
analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking
information.
The Company 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.
The Company sells to a variety of customers including wholesalers and end users.
37
Notes to the financial statements
For the year ended 30 June 2023
7. Trade and other receivables (continued)
Movement in allowance for impairment
Balance at 1 July
Amounts written off against allowance
Net remeasurement of loss allowance
Balance at 30 June
8.
Inventories
Accounting policies
Inventories
Korvest Ltd
2023
$’000
(118)
65
(80)
(133)
2022
$’000
(120)
-
2
(118)
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
2023
$’000
3,872
357
12,562
16,791
2022
$’000
5,383
973
14,101
20,457
Finished goods are shown net of an impairment provision amounting to $732,000 (2022: $552,000) 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 2023 inventories of $59,410,000 (2022: $55,705,000) were recognised as an expense
during the year and included in cost of goods sold.
38
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
9. Trade and other payables
Accounting policies
Payables
Trade and other accounts payable are non-derivative financial instruments measured at cost.
Trade payables are recognised inclusive of the amount of goods and services tax (GST) which is recoverable from taxation
authorities. The net amount of GST recoverable from the taxation authority is included as part of receivables or payables.
Current
Trade payables and accrued expenses
Non-trade payables and accrued expenses
10. Employee benefits
Accounting policies
Short-term benefits
2023
$’000
4,679
4,992
9,671
2022
$’000
5,148
4,083
9,231
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 Company 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 Company’s net obligation in respect of long-term service benefits is the amount of future benefit that employees
have earned in return for their service in the current and prior periods. The obligation is calculated using expected future
increases in wage and salary rates, including related on-costs and expected settlement dates, and is discounted using the
rates attached to high quality corporate bonds at the reporting date which have maturity dates approximating to the
terms of the Company’s obligations.
Current
Liability for annual leave
Liability for long service leave
Non-current
Liability for long service leave
Total employee benefits
2023
$’000
1,467
1,807
3,274
355
3,629
2022
$’000
1,388
1,750
3,138
267
3,405
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.
39
Notes to the financial statements
For the year ended 30 June 2023
10. Employee benefits (continued)
Share based payments
Korvest Ltd
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.
Employee Share Bonus Plan
The Employee Share Bonus Plan allows Company 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.
Korvest Performance Rights Plan (KPRP)
The plan is designed to provide long term incentives to eligible senior employees of the Company 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. Since FY20 the two performance hurdles used have been Earnings per Share (EPS) and
Return on Invested Capital (ROIC).
Under the plan, eligible employees are offered Performance Rights, which enables the employee to acquire one fully paid
ordinary share in the Company for no monetary consideration, once the Performance Rights vest. The conditions
attached to the Performance Rights are measured over the three year period commencing at the beginning of the financial
year in which the Performance Rights are granted. If the performance conditions at the end of the three year period are
met, in whole or in part, all or the relevant percentage of the Performance Rights will vest.
Grant date
October 2020
October 2021
October 2022
Total performance rights
Plan
Performance
hurdles
KPRP
KPRP
KPRP
EPS/ROIC
EPS/ROIC
EPS/ROIC
Number of
rights
initially
granted
Number
outstanding
at balance
date
84,814
65,230
67,232
217,276
84,814
65,230
67,232
217,276
40
Notes to the financial statements
For the year ended 30 June 2023
10.
Employee benefits (continued)
Measurement of fair values
Korvest Ltd
The fair value of both the ROIC and EPS hurdle rights were measured based on the Black-Scholes method. In addition, as
any resulting shares issued due to vested performance rights have a two year trading restriction, a discount for lack of
marketability is applied using the Finnerty Model.
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)
2023
$5.04
$7.01
-
35.4%
8.56%
3.92%
2.7 yrs
2 yrs
2022
$5.48
$6.45
-
33.67%
5.43%
1.79%
2.7 yrs
2 yrs
Reconciliation of outstanding share options/rights
Grant date Exercise
date
Expiry
date
Exer-
cise
price
Number of
rights at
beginning of
year
Rights
granted
Lapsed
Forfeited
Exer-
cised
2023
Nov 19
Oct 20
Oct 21
Oct 22
Jul 22
Jul 23
Jul 24
Jul 25
Jun 22
Jun 23
Jun 24
Jun 25
-
-
-
-
Weighted average exercise price
2022
Previous plan *
Mar 05
Jan 07
Jan 27
$4.36
Weighted average exercise price
Current plan
Oct 18
Nov 19
Oct 20
Oct 21
Jun 21
Jun 22
Jun 23
Jun 24
Jul 21
Jul 22
Jul 23
Jul 24
-
-
-
-
Weighted average exercise price
91,796
84,814
65,230
-
241,840
$Nil
-
-
-
67,232
67,232
$Nil
-
-
-
-
-
-
-
-
-
-
$Nil
$Nil
(91,796)
-
-
-
(91,796)
$Nil
Number
of options
at end of
year on
issue
-
84,814
65,230
67,232
217,276
$Nil
Exercis-
able at
30 June
84,814
-
-
84,814
$Nil
15,000
15,000
$4.36
100,929
91,796
84,814
-
277,539
$Nil
-
-
-
-
-
65,230
65,230
$Nil
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(15,000)
(15,000)
-
-
-
-
(100,929)
-
-
-
(100,929)
-
91,796
84,814
65,230
241,840
$Nil
-
91,796
-
-
91,796
$Nil
$Nil
$Nil
$Nil
* The Previous Plan was an option plan that entitled selected senior executives to acquire shares in the entity subject to the
successful achievement of performance targets related to improvements in total shareholder returns over a two-year option
period. The plan was discontinued in 2010. The shares issued pursuant to these options were 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.
41
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
11. Provisions
Accounting policies
A provision is recognised if, as a result of a past event, the Company 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.
Site restoration and safety
The Environment Protection Authority has advised the Company that no remedial works are required at the Kilburn site
at this time. As a result the previously held provision of $560,000 has been derecognised and reversed through profit and
loss.
Non-current
Site restoration
Tangible assets
2023
$’000
-
-
2022
$’000
560
560
The following section shows the physical tangible assets used by the Company 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 Company 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.
42
Notes to the financial statements
For the year ended 30 June 2023
12. Property, plant and equipment
Accounting policies
Recognition and measurement
Korvest Ltd
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 Company 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.
Fair value measurement
Land and buildings are usually 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. Due to volatility in industrial property markets over recent years, the Directors
obtained an independent valuation in both 2022 and 2023.
43
Notes to the financial statements
For the year ended 30 June 2023
12. Property, plant and equipment (continued)
Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the
expenditure will flow to the Company. On-going repairs and maintenance are expensed as incurred.
Korvest Ltd
Cost
Balance at 1 July 2021
Acquisitions
Disposals and write-offs
Revaluation
Balance at 30 June 2022
Balance at 1 July 2022
Acquisitions
Disposals and write-offs
Revaluation
Balance at 30 June 2023
Accumulated depreciation and impairment losses
Balance at 1 July 2021
Depreciation charge for the year
Revaluation
Disposals
Balance at 30 June 2022
Balance at 1 July 2022
Depreciation charge for the year
Revaluation
Disposals
Balance at 30 June 2023
Carrying amounts
At 30 June 2021
At 30 June 2022
At 30 June 2023
Land &
Buildings
(fair value)
$’000
8,232
-
-
1,768
10,000
Plant &
Equipment
(cost)
$’000
26,028
2,110
(1,696)
-
26,442
10,000
26
-
704
10,730
73
73
(146)
-
-
-
110
(110)
-
-
8,159
10,000
10,730
26,442
1,836
(281)
-
27,997
17,598
1,209
-
(1,597)
17,210
17,210
1,348
-
(184)
18,374
8,430
9,232
9,623
Total
$’000
34,260
2,110
(1,696)
1,768
36,442
36,442
1,862
(281)
704
38,727
17,671
1,282
(146)
(1,597)
17,210
17,210
1,458
(110)
(184)
18,374
16,589
19,232
20,353
44
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
12. Property, plant and equipment (continued)
Fair value hierarchy of land and buildings
At least every three years the directors obtain an independent valuation to support the fair value of Land and Buildings.
This valuation is used by the directors as a guide in determining the directors’ valuation for the Land and Buildings.
An independent valuation of Land and Buildings was carried out in June 2023 by Mr Ivo Kafka, 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 2023.
The carrying amount of the Land and Buildings at cost at 30 June 2023 if not revalued would be $846,000 (2022: $874,000).
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 2 fair values.
Significant unobservable inputs
Market yield – 7.9%
Potential rental rate - $65/m2
Land value for vacant land - $200/m2
Inter-relationship between key
unobservable inputs and fair value
measurement
The estimated market value would
increase if:
• Market yield was lower
•
Potential rental rate was
higher
Land value was higher
•
Valuation technique
income approach: the
Capitalised
valuation model applies a yield to the
property’s income 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
against its sale price 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.
45
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
13. Impairment testing
Accounting policies
The carrying amounts of the Company’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 Company has determined that calculation of the recoverable amount of assets or CGUs is not required as at 30 June
2023 as there were no impairment indicators.
Leases
14. Leases
At inception of a contract, the Company 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 Company 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 Company’s
incremental borrowing rate. The Company 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.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases. Lease payments
associated with these leases are expensed on a straight-line basis over the lease term.
46
Notes to the financial statements
For the year ended 30 June 2023
Leases as a lessee
The Company 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.
Korvest Ltd
Information about leases for which the Company is a lessee is presented below.
i.
Right-of-use assets
Warehouses
$’000
Forklifts
$’000
Balance at 1 July 2022
Additions to right-of-use assets
Depreciation of right-of-use asset
Balance at 30 June 2023
Balance at 1 July 2021
Additions to right-of-use assets
Depreciation of right-of-use asset
Balance at 30 June 2022
ii.
Lease liability
5,200
531
(835)
4,896
6,011
17
(828)
5,200
Current
Non-current
Total Lease liability
Amounts recognised in profit or loss
iii.
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
Leases commitment
11
-
(11)
-
57
-
(46)
11
2023
$’000
776
4,418
5,194
846
137
69
206
805
1,011
Total
$’000
5,211
531
(846)
4,896
6,068
17
(874)
5,211
2022
$’000
790
4,678
5,468
874
161
17
178
783
961
The Company has entered into agreements to lease two adjoining buildings in New South Wales to accommodate the
Sydney EzyStrut branch. One of the buildings will be sublet with the arrangement allowing Korvest to control a common
hardstand area between the two buildings. The buildings are new constructions and availability is dependent on the
completion of construction. One building became available in July 2023 and the second is expected to be completed in
the first half of FY24 therefore these leases are not recognised as a right of use asset/lease liability as at 30 June 2023. In
aggregate the first twelve months’ rent for the two properties will be $813,000 with this being offset by the sublease rent
of $295,000. The leases and sublease are subject to annual CPI escalation clauses and are for a term of 7 years.
47
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
Capital Structure
This section outlines how the Company manages its capital structure, including its balance sheet liquidity and access to capital
markets.
The directors determine the appropriate capital structure of the Company, specifically how much is realised from shareholders
and how much is borrowed from the financial institutions to finance the Company’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
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 / (Profit) 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
2023
$’000
1,270
7,670
8,940
275
2023
$’000
11,176
1,459
846
71
180
(560)
-
44
412
13,628
(2,061)
(229)
3,486
440
372
(916)
224
14,944
2022
$’000
1,918
1,638
3,556
275
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
48
Notes to the financial statements
For the year ended 30 June 2023
16. Financial instruments
Accounting policies
Korvest Ltd
A number of the Company’s accounting policies and disclosures require measurement of fair values, for both financial
and non-financial assets and liabilities.
The Company 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 Company uses market observable data as far as possible. Fair
values are categorised into different levels in a fair value hierarchy based on inputs used in the valuation techniques as
follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. prices) or indirectly (i.e. derived from prices)
Level 3: inputs for asset or liability that are not based on observable market data (unobservable inputs).
If inputs used to measure fair value of an asset or liability might be categorised in different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as
the lowest level input that is significant to the entire measurement.
The Company 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
Cash, cash equivalents and Investments
Trade and other receivables
Trade and other payables
Classification under AASB 9
Amortised cost
Amortised cost
Amortised cost
49
Notes to the financial statements
For the year ended 30 June 2023
16. Financial instruments (continued)
Financial risk management
Overview
Korvest Ltd
The Company 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 Company, 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 Company.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Company’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.
2023
$’000
9,215
18,864
2022
$’000
3,831
16,874
2021
$’000
6,965
4,153
50
Notes to the financial statements
For the year ended 30 June 2023
16. Financial instruments (continued)
Trade and other receivables
Korvest Ltd
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers the demographics of the Company’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 Company’s standard payment and delivery terms and conditions are offered. The Company’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 Company’s benchmark creditworthiness may transact with the Company only on a
prepayment basis. The Company takes out trade credit insurance to reduce the Company’s credit risk exposure.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the Company may have a secured
claim. The Company otherwise does not require collateral in respect of trade and other receivables.
The Company uses an expected credit loss (ECL) model to measure the allowance for losses. The Company uses
quantitative and qualitative information based on the Company’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
2023
$’000
18,799
65
18,864
2022
$’000
16,804
70
16,874
At 30 June 2023, the Company’s most significant customer, located in Australia, accounted for $3,989,194 of the trade
and other receivables carrying amount (2022: $3,758,589).
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
2023
$’000
11,834
6,682
348
-
18,864
2022
$’000
11,740
4,963
171
-
16,874
51
Notes to the financial statements
For the year ended 30 June 2023
16. Financial instruments (continued)
Liquidity risk
Korvest Ltd
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company’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 Company’s reputation.
The Company monitors the level of expected cash inflows on trade and other receivables together with expected cash
outflows on trade and other payables.
The following are the remaining contractual maturities at the end of the reporting period of financial liabilities and leases,
including estimated interest payments. The amounts disclosed are the contractual undiscounted cash flows (inflows
shown as positive, outflows as negative).
2023
Contractual cash flows
Carrying
amount
$’000
Total
$’000
Less
than 1
year
$’000
1-5
years
More than
5 years
$’000
$’000
Carrying
amount
$’000
Total
2022
Contractual cash flows
Less than
1 year
1-5 years More
than 5
years
$’000
$’000
$’000
$’000
Non-derivative
financial liabilities
Trade and other
payables
Lease liabilities*
9,671
5,194
(9,671)
(5,867)
(9,671)
(923)
-
(2,535)
14,865
(15,538)
(10,594)
(2,535)
-
(2,409)
(2,409)
9,231
5,468
(9,231)
(6,225)
(9,231)
(930)
-
(2,362)
-
(2,933)
14,699
(15,456)
(10,161)
(2,362)
(2,933)
* 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 Company’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 Company is exposed to currency risk on 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 Company 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 Company’s profit or equity.
Interest rate risk
The Company 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 Company’s profit or equity.
52
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
16. Financial instruments (continued)
Other market price risk
The Company 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 Company does not enter into commodity contracts other than to
meet the Company’s expected usage requirements.
Capital management
The Company’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 Company was not subject to externally imposed capital requirements.
The Company 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 Company’s financial assets and liabilities are considered to be a reasonable approximation
of their fair values.
17. Capital and reserves
Accounting policies
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares and share
options are recognised as a deduction from equity, net of any tax effects.
Asset revaluation reserve
The revaluation reserve relates to land and buildings measured at fair value in accordance with Australian Accounting
Standards.
Profits reserve
The profits reserve represents current year and accumulated profits transferred to a reserve to preserve the characteristic
as a profit. 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.
53
Notes to the financial statements
For the year ended 30 June 2023
17. Capital and reserves (continued)
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
Korvest Ltd
2023
Shares ’000
2022
Shares ’000
11,466
18
92
11,576
11,327
23
116
11,466
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
2023
Interim 2023 ordinary
Final 2022 ordinary
Total amount
2022
Interim 2022 ordinary
Final 2021 ordinary
Total amount
Unrecognised amounts
Cents
per share
Total amount
$’000
Percentage
franked
25.0
35.0
25.0
20.0
2,892
4,045
6,937
2,864
2,288
5,152
100%
100%
100%
100%
Tax
rate
30%
30%
30%
30%
Date of
payment
3 March 2023
2 September 2022
4 March 2022
3 September 2021
After the balance sheet date the following dividends were proposed by the directors. The dividends have not been
provided.
2023
Final 2023 ordinary
Cents
per share
Total amount
$’000
Percentage
franked
Tax rate
Date to be paid
35.0
4,052
100%
30% 6 September 2023
The financial effect of these dividends have not been brought to account in the financial statements for the financial year
ended 30 June 2023 and will be recognised in subsequent financial reports.
54
Notes to the financial statements
For the year ended 30 June 2023
18. Dividends (continued)
Dividend franking account
30% franking credits available to shareholders of Korvest Ltd for
subsequent financial years
Korvest Ltd
2023
$’000
2022
$‘000
14,020
12,466
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
(a) franking credits that will arise from the payment of the current tax liabilities;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the year-end;
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the year-end; and
(d) franking credits that the entity may be prevented from distributing in subsequent years.
The ability to utilise the franking credits is dependent upon being able to declare dividends. The impact on the dividend
franking account of dividends proposed after the reporting date but not recognised as a liability is to reduce it by
$1,736,000 (2022: reduce by $1,720,000).
55
Notes to the financial statements
For the year ended 30 June 2023
Taxation
Korvest Ltd
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 Company’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 Company 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.
56
Notes to the financial statements
For the year ended 30 June 2023
19. Current and deferred taxes (continued)
Income tax recognised in the income statement
Current tax expense
Current year
Prior year
Deferred tax expense
Origination and reversal of temporary differences
-
-
relating to current year
relating to prior year
Korvest Ltd
2023
$’000
4,614
(87)
4,527
302
70
372
2022
$’000
4,312
-
4,312
208
-
208
Total income tax expense in Statement of profit or loss and
comprehensive income
4,899
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% (2022:30%)
Non-deductible expenses
Capital loss on sale of subsidiaries
Prior year over provision
Income tax expense on pre-tax net profit
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
2023
$’000
16,075
4,823
92
-
(16)
4,899
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 liabilities
Assets
2023
$‘000
-
1,558
220
1,149
28
19
552
3,526
(3,526)
-
2022
$‘000
-
1,640
166
1,249
28
26
552
3,661
(3,661)
-
Liabilities
2023
$‘000
(3,800)
(1,469)
(717)
-
-
-
(5,986)
3,526
(2,460)
2022
$‘000
(3,207)
(1,563)
(735)
-
-
-
(5,505)
3,661
(1,844)
Net
2023
$‘000
(3,800)
89
(497)
1,149
28
19
552
(2,460)
-
(2,460)
2022
$’000
15,856
4,757
28
(265)
-
4,520
2022
$‘000
(3,207)
77
(569)
1,249
28
26
552
(1,844)
-
(1,844)
57
Notes to the financial statements
For the year ended 30 June 2023
19. Current and deferred taxes (continued)
Movement in deferred tax balances during the year
Korvest Ltd
Property, plant and equipment
Leases
Inventories
Provisions / accruals
Provision for doubtful debts
Other
Tax loss carried forward
Property, plant and equipment
Leases
Inventories
Provisions / accruals
Provision for doubtful debts
Other
Tax loss carried forward
Balance
30 June 22
Recognised in
profit
Recognised
directly in equity
$’000
(3,207)
77
(569)
1,249
28
26
552
(1,844)
$’000
(278)
12
72
(100)
-
(8)
-
(302)
$’000
(244)
-
-
-
-
-
-
(244)
Balance
30 June 21
Recognised in
profit
Recognised
directly in equity
$’000
(2,374)
50
(163)
1,169
8
7
287
(1,016)
$’000
(259)
27
(406)
126
20
19
265
(208)
$’000
(574)
-
-
-
-
-
-
(574)
Over
provision
prior year
$’000
(70)
-
-
-
-
-
-
(70)
Disposed in
sale of
subsidiaries
$’000
-
-
-
(46)
-
-
-
(46)
Balance
30 June 23
$’000
(3,799)
89
(497)
1,149
28
18
552
(2,460)
Balance
30 June 22
$’000
(3,207)
77
(569)
1,249
28
26
552
(1,844)
58
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
Group Composition
This section outlines the Group’s structure and changes thereto.
20. 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.
Other Notes
21. Key management 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
Executive Directors
•
•
Chris Hartwig (Managing Director)
Steven McGregor (Finance Director and Company Secretary)
Executives
• Gavin Christie (General Manager, Operations)
•
Stephen Taubitz (General Manager Sales - EzyStrut)
Key management personnel compensation policy
Apart from the details disclosed in this note, no director has entered into a material contract with the Company since the
end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end.
Key management personnel compensation
The key management personnel compensation comprised:
Short-term employee benefits
Post-employment benefits
Long term benefits
Share based payments
2023
$
1,947,490
149,845
46,212
331,865
2,475,412
2022
$
1,790,072
144,635
58,937
312,543
2,306,187
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.
22. Commitments and contingencies
At 30 June 2023, the Company had contractual commitments for the acquisition of property, plant and equipment of
$1,847,000 (2022: $1,034,000).
59
Korvest Ltd
Notes to the financial statements
For the year ended 30 June 2023
23. Guarantees entered into by the Company
Bank guarantees given by the Company in favour of customers and landlords amounted to $1,489,407 (2022:
$1,462,047).
24. 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 Company in subsequent financial periods.
60
Korvest Ltd
Directors’ declaration
For the year ended 30 June 2023
1.
In the opinion of the Directors of Korvest Ltd (the Company):
(a)
the financial statements and notes that are set out on pages 27 to 60 and the Remuneration report in the Directors’
report, set out on pages 13 to 23, are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s financial position as at 30 June 2023 and of its performance for
the financial year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2.
3.
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 2023.
The Directors draw attention to the Basis of preparation note on page 31, which includes a statement of compliance with
International Financial Reporting Standards.
Dated at Adelaide this 24th July 2023
Signed in accordance with resolution of directors:
Andrew Stobart
Director
61
Independent Auditor’s Report
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 Company’s
financial position as at 30 June 2023 and of its
financial performance for the year ended on that
date; and
•
complying with Australian Accounting Standards
and the Corporations Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Statement
financial
of
position
as
at
30 June 2023;
• Statement of profit or
and other
comprehensive income, Statement of cash flows
and Statement of changes in equity for the year
then ended 30 June 2023;
loss
• Notes
including a summary of significant
accounting policies; and
• Directors’ Declaration.
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 Auditor’s responsibilities for the audit
of the Financial Report section of our report.
We are independent of the Company in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these
requirements.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current period.
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.
62
Valuation of finished goods inventory ($12.562 million)
Refer to Note 8 to the Financial Report – Inventories
The key audit matter
How the matter was addressed in our audit
The valuation of EzyStrut finished goods inventory
is a key audit matter due to:
Our procedures included applying our understanding of
the Company’s business model in:
•
•
•
EzyStrut
specialised in nature;
finished goods
inventory being
•
Importance of EzyStrut
finished goods
inventory valuation to the business operations
and financial performance of the Company;
and
Company’s judgment involved in estimating
the amount of the 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 have a significant impact
on the Company’s finished goods inventory
impairment provision, and
the
overall net carrying value of finished goods
inventory, necessitating additional audit effort.
therefore
In auditing this key audit matter, we used senior
team members who understand the Company’s
business, industry and the relevant economic
environment.
•
•
•
•
•
Assessing the Company’s policies for the valuation
of
the
against
requirements of the accounting standards;
finished goods
inventory
Critically evaluating the Company’s methodology
to identify finished goods that are slow moving or
selling below cost;
Testing the Company’s finished goods inventory
impairment assessment at year-end, by:
–
–
Assessing the accuracy of the underlying
finished goods inventory provision model by
performing computation checks; and
in
the
finished goods
Checking the accuracy of the expected time
period to sell inventory, by product, as a key
input
inventory
provision. We evaluated the expected time
period to sell inventory on hand using the
sales / usage quantities experienced during
the year ended 30 June 2023. We checked a
sample of those sales quantities to sales
invoices;
Comparing the unit cost of each finished good on
hand from the Company’s impairment assessment
to the average sales price for the year of these
products, as a proxy for expected recoverable
amount;
Challenging the Company’s assumptions, such as
the provision percentages by product category and
aging, using our understanding of the Company’s
business and knowledge of the market; and
locations
in significant
Attending stocktakes
observing
the Company’s processes, which
included identifying slow moving and potentially
obsolete finished goods inventory.
63
Other Information
Other Information is financial and non-financial information in Korvest Ltd’s annual reporting which is provided
in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other
Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express
an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information and
based on the work we have performed on the Other Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;
implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
assessing the Company’s ability to continue as a going concern and whether the use of the going
concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless they either intend to liquidate the
Company or to cease operations or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the
Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar2_2020.pdf.
This description forms part of our Auditor’s Report.
64
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Korvest Ltd for the year ended 30 June 2023,
complies with Section 300A of
the
Corporations Act 2001.
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages
13 to 23 of the Directors’ report for the year ended
30 June 2023.
Our responsibility
is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Darren Ball
Partner
Adelaide
24 July 2023
65
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Korvest Ltd
I declare that, to the best of my knowledge and belief, in relation to the audit of Korvest Ltd for the
financial year ended 30 June 2023 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
Darren Ball
Partner
Adelaide
24 July 2023
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.
66
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 2023)
Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Korvest Ltd
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.
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
Total Holders
1,231
846
171
161
11
2,420
9.8%
7.3%
5.4%
Number
1,138,760
844,564
621,759
NUMBER OF EQUITY SECURITY HOLDERS
Units
462,295
2,163,205
1,302,622
3,575,591
4,072,576
11,576,289
% Issued Capital
3.99
18.69
11.25
30.89
35.18
100
The number of shareholders holding less than a marketable parcel of ordinary shares is 78.
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.
67
ASX Additional information
For the year ended 30 June 2023
Twenty largest shareholders
Name
Citicorp Nominees Pty Limited
Donald Cant Pty Ltd
J P Morgan Nominees Australia Pty Limited
Creative Living (Qld) Pty Ltd
Anacacia Pty Ltd
National Nominees Limited
Rathvale Pty Limited
Allegro Two Super Fund Pty Ltd
Brazil Farming Pty Ltd
Mr William Francis Cannon
Brazil Farming Pty Ltd
Robert Nairn Pty Ltd
Mr Steven McGregor
Gotterdamerung Pty Limited
Gotterdamerung Pty Limited
Mrs Helen Elizabeth Rollinson
Angueline Capital Pty Limited
Mr Chris Hartwig
Ms Nina Tschernykow
A & R Truda Pty Ltd
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)
Korvest Ltd
Number of ordinary
Shares held
1,201,392
621,759
552,063
320,000
308,037
282,934
191,558
173,780
166,416
130,083
124,554
100,000
95,878
91,430
79,539
72,343
70,000
67,187
60,720
60,683
4,770,356
Percentage of
capital held
10.38
5.37
4.77
2.76
2.66
2.44
1.65
1.50
1.44
1.12
1.08
0.86
0.83
0.79
0.69
0.62
0.60
0.58
0.52
0.52
41.21
68