Kangaroo Island
Plantation Timbers Ltd
Annual Financial Report
ABN 19 091 247 166
For the year ended
30 June 2019
For personal use only Corporate Information
Directors
Paul Lawrence McKenzie (Non-Executive Chairman)
Keith Desmond Lamb (Managing Director)
John David Sergeant (Executive Director)
Shauna Marie Black (Executive Director)
Graham Ian Holdaway (Executive Director)
Gregory Colin Boulton (Non-Executive Director)
Company Secretary
Victoria Marie Allinson
Registered Office
Aurora House, Suite 816
147 Pirie Street, Adelaide, South Australia 5000
Telephone: (08) 8227 2482
(08) 8223 1685
Facsimile:
Principal Places of Business
Aurora House, Suite 805
147 Pirie Street
Adelaide, South Australia 5000
70 Dauncey Street
Kingscote, South Australia 5223
Solicitors
Piper Alderman Lawyers
Level 16, 70 Franklin Street
Adelaide, South Australia 5000
Bankers
Commonwealth Bank of Australia Limited
CBA Specialised Agribusiness Solutions WA SA NT
Level 14D, 300 Murray Street
Perth, Western Australia 6000
Auditor
Grant Thornton Audit Pty Ltd
Level 3, 170 Frome Street
Adelaide, South Australia 5000
Share Register
Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell St
Adelaide, South Australia 5000
Telephone: (08) 8236 2300
Website
www.kipt.com.au
Australian Securities Exchange Code
KPT
For personal use only Contents
DIRECTORS ................................................................................................................................................... 2
CFO AND COMPANY SECRETARY .................................................................................................................... 4
DIVIDENDS .................................................................................................................................................... 5
PRINCIPAL ACTIVITIES ..................................................................................................................................... 5
CORPORATE INFORMATION.............................................................................................................................. 5
OPERATING AND FINANCIAL REVIEW ................................................................................................................. 5
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS............................................................................................... 9
SIGNIFICANT EVENTS AFTER BALANCE DATE ...................................................................................................... 9
LIKELY DEVELOPMENTS..................................................................................................................................10
DIVERSITY REPORT .......................................................................................................................................10
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS .......................................................................12
PROCEEDINGS ON BEHALF OF THE COMPANY ...................................................................................................12
DIRECTORS’ MEETINGS ..................................................................................................................................13
ROUNDING ...................................................................................................................................................13
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES .........................................................................................13
REMUNERATION REPORT (AUDITED) ................................................................................................................14
SHARE OPTIONS............................................................................................................................................23
AUDITOR INDEPENDENCE DECLARATION ...............................................................................................24
CORPORATE GOVERNANCE STATEMENT................................................................................................25
FINANCIAL REPORT.....................................................................................................................................26
DIRECTORS’ DECLARATION.......................................................................................................................69
INDEPENDENT AUDITOR’S REPORT..........................................................................................................70
INVESTORS’ SUPPLEMENTARY INFORMATION .......................................................................................74
P a g e | 1
For personal use only Directors’ Report
Your directors submit their report for the year ended 30 June 2019.
Directors
The names and details of the Company’s directors in office during or since the end of the financial
year are as follows:
Director
Position
Appointed
Last elected or
re-elected at AGM Resigned
Paul McKenzie
Non-Executive Chair 29 April 2005
10 November 2017
Keith Lamb
Managing Director
15 October 2018
-
John Sergeant
Shauna Black
Executive
Executive
2 March 2013
18 November 2014
17 March 2015
8 September 2015
Graham Holdaway
Executive
17 March 2015
5 October 2016
Gregory Boulton
Non-Executive
1 November 2016
16 October 2018
-
-
-
-
-
-
Mr Lamb was appointed as a director on 15 October 2018 and became an Executive on 11 March
2019 before taking over the managing director role from John Sergeant on 1 June 2019.
Directors were in office for the entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Paul McKenzie (appointed 29 April 2005) BSc(Agric), BCom, FAICD, AIAST
Non-Executive Chair
Board member since April 2005, appointed Chair July 2009. Paul is the Managing
Partner of Agrarian Management, a leading Western Australian agriculture
consultancy with offices in Geraldton, Perth and Esperance. Paul has 25 years’
experience in agribusiness, management, finance and primary production. He is
a past President of the Australian Association of Agricultural Consultants (WA)
Inc and a Ministerial Appointee to various agribusiness review and advisory
panels. Paul was the founding Chairman of Gage Roads Brewing Co (ASX:
GRB) from concept to private company to ASX listing in December 2006, and
In June 2008, Paul was appointed director of Rural
resigned in May 2008.
Financial Counselling Service (WA) (“RFCS”). RFCS administers a federal government funded
program in WA under the Department of Agriculture, Fisheries and Forestry.
Paul was appointed Chair of the CRC for Honey Bee Products Ltd in July 2017, and is Chair of
Hay Australia Pty Ltd, and a director of SALIC Australia Pty Ltd (the Saudi Agricultural & Livestock
Investment Company’s Australian entity).
Keith Lamb (appointed 15 October 2018) BA(Forestry), GAICD
Managing Director
Board member since 15 October 2018. Mr Lamb was appointed an Executive
Director on 11 March 2019 and became Managing Director on 1 June 2019.
Mr Lamb holds masters-level qualifications in Forestry and in Business
Administration. He was Director of Operations and Portfolio Manager for New
Forests Asset Management Pty Ltd (New Forests) from 2005 until 2017, with
responsibility for $2.5bn in timberland and related agricultural and industrial
assets. Mr Lamb has also served as a director of several forestry companies and
trusts within and outside the New Forests group. His early career included both
government and non-government forestry roles.
In addition to forestry operations management, Mr Lamb has considerable
expertise in raising and deploying institutional capital for direct investment in forestry and agro-
forestry projects.
P a g e | 2
For personal use only Directors’ Report
John Sergeant (appointed 2 March 2013) BSc, BA (Hons I), FAMSRS, GAICD
Executive Director
Board member since March 2013, Managing Director January 2015 to May
2019.
Mr Sergeant holds a BSc in Biological Sciences and a BA in Psychology from
the University of Sydney, where he was, for a number of years, a lecturer in the
Business School, teaching at the postgraduate level.
Sydney-based, Mr Sergeant nevertheless spends a substantial amount of his
time in South Australia and is familiar with all of the Company’s land and timber
assets. He is committed to working with the community and other stakeholders
and with local and State government to help deliver a deep water export facility on Kangaroo Island,
fairly priced and accessible to all, and to establish plantation timber as a significant employer and
source of economic activity.
Prior to joining the Company, he has managed a number of successful consultancy businesses and
served on the boards of Australian and multinational professional services firms. From 2003 to 2014,
Mr Sergeant was the Vice Principal of St Andrew’s College, within the University of Sydney.
He is currently a member of the boards of a number of private companies.
Shauna Black (appointed 17 March 2015) Dip Proj Mgt.
Executive Director
Board member since March 2015 and Executive Director of Community
Engagement since May 2017.
Ms Black has been a well-known and respected resident of Kangaroo Island for
14 years and is the Executive Officer of the Kangaroo Island Business and Brand
Alliance. She acted as Flood Recovery Co-ordinator for Kangaroo Island Council
following
the
flood damage sustained
MacGillivray/Haines area of KI, and is active in a number of local associations
on Kangaroo Island.
in June 2013
the severe
in
With a 30-year career in media, Ms Black was the Managing Editor of the Island’s newspaper, The
Islander, for almost eight years. This followed a move from Adelaide after a 15-year stint at The
Advertiser, including as its first personal finance editor and superannuation writer.
She is currently a member of the board of Media Super and chair of its Investment Committee and
is also the proprietor of Black Stump Media, a Kangaroo Island business specialising in media and
project management services.
Graham Holdaway (appointed 17 March 2015) BCA, Dip Acc, MAICD
Executive Director
Board member since March 2015 and Executive Director of Operations since
April 2017.
Mr Holdaway is an experienced director, having served on boards of natural
resources companies with operations in Australia, Indonesia, Papua New
Guinea and the United Kingdom.
He is a retired Chartered Accountant and a former partner of KPMG, with a
particular interest in the development of resources-related infrastructure.
Mr Holdaway is from a farming background and a tree-grower in his own
right, with eucalypt and radiata pine plantations in Victoria and on Kangaroo Island, South
Australia. He is based in regional Victoria.
He is currently a non-executive director of one other publicly listed company: Asset Resolution
Ltd (NSX: ASS).
P a g e | 3
For personal use only Directors’ Report
Gregory Boulton AM (Appointed 1 November 2016) BA(Accounting), FCA, FCPA, FAICD
Independent Non-Executive Director
Board member since November 2016.
Mr Boulton is a leading Adelaide Company Director with 25 years’ experience in
both public and private companies. He is the Chair of Southern Gold Ltd (ASX:
SAU) and Chair of SA Pine Pty Ltd. He is also a Director of Statewide
Superannuation Fund and the Cancer Council of South Australia.
His experience relevant to KIPT’s operations includes Governance, Logistics,
Timber, Resources and Finance.
Mr Boulton is a Fellow of the Institute of Chartered Accountants, CPA Australia and the Australian
Institute of Company Directors.
He was awarded an AM – Member in the General Division of the Order of Australia – for his services
to AFL Football administration, to the Community of South Australia and to Business.
Interests in the shares and options of the Company and related bodies
corporate
As at 30 June 2019 and at the date of this report, the interests of the directors, either directly or
indirectly, in the shares of Kangaroo Island Plantation Timbers Ltd were:
Interest in ordinary Shares
Opening
interest at
1 July
2018
2,654,860
-
3,119,970
871,785
456,670
176,230
7,279,515
Net changes
during the
period
Performance
based Rights
Issued
-
-
-
-
7,500
7,500
-
-
-
-
-
-
-
Closing
interest at
30 June
2019
2,654,860
-
3,119,970
871,785
456,670
183,730
7,287,015
Paul McKenzie
Keith Lamb
John Sergeant
Graham Holdaway
Shauna Black
Gregory Boulton
Total
Refer to Remuneration Report for further details.
Interest in Performance Rights
The Performance Rights Plan (“Plan”) and the corresponding Rights dated 16 October 2018 were
approved by Shareholders at the 2018 Annual General Meeting (“AGM”). At 30 June 2019, the
performance conditions had not been met. Refer to Remuneration Report for further details.
CFO and Company Secretary
Victoria Allinson (appointed 14 May 2013)
FCCA, AGIA
Vicky is a Fellow of The Association of Certified Chartered Accountants and a member of the
Governance Institute of Australia. She has over 30 years’ accounting and auditing experience,
including senior accounting positions in a number of listed companies and was an audit manager
for Deloitte Touche Tohmatsu. In addition, Vicky has gained professional experience while living
and working in both Australia and the United Kingdom.
She is current Chief Financial Officer (“CFO”), Company Secretary and Nominated Advisor
(NOMAD) of listed company, Asset Resolution Limited (NSX: ASS), and Company Secretary and
CFO for listed company, Elixir Energy Limited (ASX:EXR). Her previous experience has included
being Company Secretary and CFO for a number of ASX listed companies, including: Marmota
Limited, Safety Medical Products Ltd, Centrex Metals Ltd, Adelaide Energy Ltd, Enterprise Energy
P a g e | 4
For personal use only Directors’ Report
NL, and Island Sky Australia Ltd as well as a number of unlisted companies. In her role as Company
Secretary, Vicky has assisted a number of companies to list on the ASX.
Vicky has experience in all sizes of business from sole traders to large companies, in a wide variety
of business sectors. She is based in Adelaide, South Australia.
Dividends
The directors have resolved not to declare a dividend for the year ended 30 June 2019. No dividends
were paid during the previous year.
Principal activities
The principal activity during the year of entities within the consolidated group is forestry.
There have been no significant changes in the nature of activities during the year.
Corporate information
Corporate structure
Kangaroo Island Plantation Timbers Ltd is a publicly listed company that is incorporated and
domiciled in Australia. Kangaroo Island Plantation Timbers Ltd has prepared a consolidated
financial report incorporating the entities that it controlled during the financial year, which are
outlined in the following illustration of the Group’s corporate structure:
Kangaroo Island
Plantation Timbers
Ltd
KI Seaport Pty Ltd
KIPT Holdings Pty
Ltd (formerly APR
Pty Ltd)
Kangaroo Island
Plantation
Management Pty
Ltd
Employees
RuralAus Finance
Limited
(de-registered 10
July 2019)
Kangaroo Island
Land Assets Ltd
Kangaroo Island
Timbers Pty Ltd
The consolidated entity employed 4 (full time equivalent) employees and 3.1 (full time equivalent)
Executive Directors at 30 June 2019 (2018: 4 employees and 3 Executive Directors).
Operating and financial review
Group overview
Kangaroo Island Plantation Timbers Ltd and its 100%-owned subsidiaries (“Group”) have made
considerable progress towards monetising the Group’s timber assets, including:
P a g e | 5
For personal use only Directors’ Report
Environmental Impact Statement
Kangaroo Island Plantation Timbers Ltd submitted its Draft Environmental Impact Statement (Draft
EIS) for the proposed Kangaroo Island Seaport (“KI Seaport”) in late September 2018. The Draft
EIS addresses the requirements and guidelines specified by South Australia’s Development
Assessment Commission.
The EIS and its associated studies demonstrate that the KI Seaport can be built and operated in a
way that protects the environment, while providing significant social and economic advantages to
South Australia, and to the Kangaroo Island community in particular.
The KI Seaport, once built, is expected to unlock more than 250 full-time jobs, the majority on
Kangaroo Island, and to inject more than $50 million a year into the South Australian economy. The
project has not changed in scope or scale since it was originally declared a Major Development in
February 2017, although the design of the jetty structure has been modified to reduce the
environmental impact of the proposed seaport and to increase the separation from sensitive
receptors.
The Draft EIS was revised, based on feedback from State and Commonwealth agencies, and then
submitted to the Minister for Planning in January 2019. The EIS public consultation period ended
on 28 May 2019. Formal submissions made during the public consultation period and received from
government agencies are now being considered and addressed in the follow-up Response
Document.
The Major Development process encourages the modification and improvement of projects to
address public and government agency comments, together with any new information that may
arise throughout
the consultation processes. The Group will continue to investigate design
enhancements for the in-water structure to further reduce dredge quantities, improve circulation of
water in Smith Bay and further increase separation from sensitive receptors. Landside changes will
also be considered by the Group and its project partner Mitsui Bussan Woodchip Oceania Pty Ltd
(MWO), a wholly owned subsidiary of Mitsui & Co. Ltd. The Response Documents will provide
details of any such project improvements.
The Group will analyse and respond to all government and public submissions, constructively and
respectfully, with a view to delivering the project in a way that benefits the Island and the State,
while protecting the environment and existing Island businesses.
The EIS and the Response Document will together form the Final EIS, which will be lodged with
State and Commonwealth governments for their approval decision.
The Group has no control over the duration of the approval process. There is no right of appeal
against the final decision.
Kangaroo Island Plantation Timbers Ltd will make an ASX announcement when it lodges its
Response Document and will provide access to this document when the South Australian
Government makes it publicly available.
KI Seaport pontoon pre-approval works completed
In September 2017, Kangaroo Island Plantation Timbers Ltd acquired a large pontoon suitable to
form the berth face of the proposed KI Seaport, its proposed deep water wharf at Smith Bay,
Kangaroo Island. The pontoon has been undergoing reconditioning and refitting works in a shipyard
in Vietnam.
The Group now confirms that all planned work has been successfully completed and that the
pontoon has been transferred to a freshwater upriver storage location near Ho Chi Minh City. Any
further work will be delayed until after development approval.
The pontoon will be relocated to Smith Bay only when the retaining structures are in place to receive
it, as the final stage in the construction of the KI Seaport itself. Once the pontoon is in place, it will
be possible to export pine logs. Materials handling equipment will be constructed to connect the
land to the pontoon, to enable the efficient export of hardwood woodchips.
P a g e | 6
For personal use only Directors’ Report
Woodchip handling exclusivity agreement with MWO
Kangaroo Island Plantation Timbers Ltd announced on 17 August 2018 that it had entered into an
exclusivity agreement with MWO. Under this agreement, MWO intends to develop, maintain and
operate the woodchip handling facility at the KI Seaport, subject to certain conditions including
development approval.
The Group announced on 1 March 2019 that the agreement had progressed to the next stage,
based on the Company’s acceptance of a non-binding detailed proposal submitted by MWO. Under
the terms of the agreement, MWO will now prepare a binding proposal to be submitted to Group
later in the 2019 calendar year, unless otherwise agreed between the parties.
The proposed woodchip handling facility will include infrastructure capable of receiving, screening,
stockpiling, sampling, and loading woodchips into bulk vessels for export from the KI Seaport. The
parties have now agreed on various features and capacities of the planned woodchip handling
facility, which is planned to include a circular automated stacker and reclaimer. Such a system offers
quality and flexibility advantages over the pad and dozer approach typically used at other Australian
ports. MWO expects to draw on the considerable infrastructure development experience within the
wider MWO Australia group to deliver the facility.
The facility is planned to be operated under a toll woodchip handling agreement between MWO and
Kangaroo Island Plantation Timbers Ltd, which will enable the Group to export woodchips via the
facility on a fee per tonne basis. Under the agreement, ownership of the system is proposed to
revert to the Group after ten years. The Group has confirmed to MWO that the proposed pricing
regime is acceptable, and consistent with its budgeted costs. The woodchip handling project is
subject to final documentation.
Kangaroo Island Plantation Timbers Ltd has off-take arrangements in place with MWO for its
plantation-grown woodchip and log resources and these agreements have the flexibility to include
timber produced by the 13 independent timber growers on Kangaroo Island, if they wish to market
their timber through Kangaroo Island Plantation Timbers Ltd and MWO.
MoU with Flinders Ports
During the year, the Group announced that it had signed a Memorandum of Understanding (MoU)
with Flinders Ports Pty Ltd, under which the parties will work together on an exclusive basis to
achieve a port operating model that is designed to produce an optimal solution for the port owner,
port operator and port users, having regard to the outcomes achieved by Flinders Ports at the other
South Australian ports that it variously owns, operates and/or provides port management and
related services.
Flinders Ports is South Australia’s leading port operator, with seven ports located at Port Adelaide,
Port Lincoln, Port Pirie, Thevenard (Ceduna), Port Giles, Wallaroo and Klein Point. It operates and
provides services at other third-party ports in South Australia.
The Board believes that Flinders Ports’ ability to manage and deliver services at the new KI Seaport
using existing efficiencies from operating numerous ports in the region makes it an ideal partner for
the Group.
The MoU commits the parties to work together to achieve a mutually beneficial outcome. It sets out
a process for progressing towards a full port operating agreement, by locking in agreed milestones
as a condition for maintaining exclusivity.
The parties have also agreed in the MoU to share and protect each other’s intellectual property in
relation to marine operations at the KI Seaport.
Results of operations
Revenue for the period decreased by $15,000 to $215,000 (2018: $230,000) as a result of
decreased equipment hire revenue.
During the period, the change in fair value of biological assets amounted to $7,342,000 (2018:
$26,927,000).
P a g e | 7
For personal use only Directors’ Report
Net comprehensive profit for the period was $247,000 (2018: $13,052,000), this is a $12,805,000
decrease in profits which is primarily due to:
2018
2019
Income/
(Expense)
Income/
(Expense)
$000
26,927
$000
7,342
Increase/
(decrease)
in profits
$000
(19,585)
(6,053)
297
6,350
(215)
(172)
43
(2,881)
(1,199)
(2,273)
(1,585)
608
(386)
228
71
208
(377)
(155)
(1,366)
(342)
247
(12,805)
Biological assets being standing timber increase in
fair value based on valuations
Tax expense primarily relating to the deferred tax on
the revalued biological assets
Performance rights expensed but not issued as
conditions not yet met.
Wharf development costs expensed
Forestry expenses increase due to increased pre-
harvest preparations
Lower borrowing costs due to lower loan setup fees
(1,692)
(1,464)
Lower professional fees
Increase/(decrease) in executive fees due to board
changes
Other changes
Net comprehensive profit
Corporate Operations
Share issues
(448)
(363)
(1,024)
13,052
The Group announced the successful completion of an approximately $11 million share issue via
an institutional placement (Placement) and Share Purchase Plan (SPP). In early 2019, 4.67 million
new Kangaroo Island Plantation Timbers Ltd shares (“New Shares”) were issued under the
Placement and 0.483 million shares (“New Shares”) were issued under the SPP. The New Shares
were issued at a price of $2.00 per New Share.
Members of the Board and Management of the Group committed to subscribe for 330,000 New
Shares; under the Placement. The Shares will be issued after the 2019 Annual General Meeting,
subject to shareholder approval.
The funds were raised to meet additional approval costs, to fund unanticipated pontoon storage,
reconditioning and refurbishment costs, and to significantly increase contingency funds and working
capital. The additional funds also satisfy a condition precedent for bank funding of wharf
construction costs.
In addition:
24,977 shares were issued to related party Approvals Manager Peter Lockett in lieu of
consulting fees totaling $50,000;
3,380 shares were issues to related party Company Secretary Vicky Allinson in lieu of
consulting fees totaling $7,000; and
2,380 shares valued at $5,000 were issued to non-director employees under the Executive and
Employee Share Plan.
Change of Managing Director
Following the conclusion of the public and agency consultation period for the Kangaroo Island
Seaport development, the Group announced that Mr Keith Lamb had taken over as Managing
Director. This is part of a long-planned transition as the Group anticipates moving into port
P a g e | 8
For personal use only Directors’ Report
construction, forestry production and export operations, subject to regulatory approval. As part of
this transition, Mr Lamb was appointed as a director on 15 October 2018 and became an Executive
in March 2019 before taking over the managing director role on 1 June 2019. He has established a
base in Adelaide.
Mr John Sergeant remains in an executive capacity and will continue as an executive director as
Mr Lamb takes overall responsibility for the next phase in the Group’s transition to profitable and
sustainable operations.
Mr Sergeant will continue to be involved in the current development approval process, enabling Mr
Lamb to focus on the Group’s medium to long term growth.
Commonwealth Bank of Australia (“CBA”) loan facilities
The Group has a $57,100,000 facility with the CBA of which $29,700,000 (2018: $25,000,000) is
drawn down.
Earlier access to debt funding
During the year, the Group agreed with the bank to bring forward $8,000,000 of the $30,000,000
post-approval debt facility so that, if required, these funds would be available to fund pre-approval
costs, including work on the pontoon that will form part of the Kangaroo Island Seaport. At 30 June
2019, the Group has drawn down $4,700,000 leaving $3,300,000 available to be drawn down.
Performance indicators
Revenue from ordinary activities from
continuing operations
Revenue from ordinary activities from
continuing and discontinued operations
Profit/(loss) from ordinary activities
Profit/(loss) from discontinued operations
Profit/(loss) attributable to members for
the period
Other comprehensive income
Total comprehensive profit/(loss) after tax
2019
$’000
215
215
247
-
247
-
247
2018
$’000
230
2017
$’000
185
2016
$’000
85
230
185
85
13,052
36,086
(2,831)
-
-
-
13,052
36,086
(2,831)
-
227
135
13,052
36,313
(2,696)
Basic earnings per share
2019
0.4 cents
2018
28 cents
2017
148 cents
2016
(17) cents
Net tangible asset backing per security
279 cents
289 cents
233 cents
73 cents
Significant changes in the state of affairs
The significant changes affecting the Company and its subsidiaries are set out in Group Overview.
There have been no other significant changes in the state of affairs of the Group.
Significant events after balance date
On 29 July 2019, the Group advised that it had received and analysed all government agency
feedback received in response to the Draft EIS and confirmed that it was not aware of any matter
that would prevent the project from being approved.
P a g e | 9
For personal use only Directors’ Report
On 19 August 2019, the Group announced a $10,000 option to acquire a 50ha property adjoining
its existing controlled land at Smith Bay, Kangaroo Island, the site of its proposed KI Seaport. The
option allows the Group to acquire the land for a minimum price of $300,000, following approval of
the KI Seaport.
On 19 September 2019, the Group announced design enhancements to the proposed deep-water
facility that eliminate dredging and utilise a piled jetty structure.
There have been no other significant events after balance date.
Likely developments
The Group will continue to pursue its principal activities, being forestry and the production of timber
on Kangaroo Island.
The Company remains committed to working with other timber producers on Kangaroo Island, and
with local and state government, to develop a new deep-water wharf on Kangaroo Island.
Diversity Report
Introduction
The following is the Diversity Report for the financial year ended 30 June 2019 for Kangaroo Island
Plantation Timbers Ltd ("the Company") prepared for the purposes of the Company's Annual Report
for the year ended 30 June 2019.
Diversity Policy
The ASX introduced a requirement for all listed companies to adopt a Diversity Policy and a Diversity
Strategy by no later than 30 June 2011, to disclose those documents to the shareholders, and to
report to the shareholders each year on the current diversity position in the Company including
culture, gender and age, and the progress towards achievement of the strategy objectives.
The Diversity Policy is based upon the recommendations of the ASX and the Australian Institute of
Company Directors ("AICD") and as such will include requirements that may not be appropriate for
a small company such as Kangaroo Island Plantation Timbers Ltd. As with all matters included in
the ASX Corporate Governance Principles and Recommendations, any recommendation that is not
considered appropriate for the Company will be disclosed on an "if not why not" basis. The Policy
is outlined in the Statement of Corporate Governance which is available on the Company's web
site.
Responsibility
The Remuneration Committee (if formed, otherwise the Board) is charged with the responsibility for
implementation of the Diversity Policy and the oversight of the Diversity Strategy progress and
delegates that responsibility to the CEO. The Company Secretary is charged with the responsibility
for reporting to the Committee each year in accordance with the requirements of the Policy.
Current Position
As at 30 June 2019 there is an aggregate of 16 staff (prior: 14) (full and part time) including Directors,
employees and contractors (full and part time) in the Company. Of the aggregate 5 are female
(including 2 KMP, an Executive Director and the Company Secretary/Chief Financial Officer), 1 is
of different ethnic or cultural background, and 2 are of mature age. Consequently, it could be said
that the Company is already harnessing the benefits of a diverse workforce. A number of diversity
objectives were not implemented by the Group at this stage given its size and low staff numbers.
These are set out in the table below.
The current position with each of the strategy items and the time frame for achievement or otherwise
is listed in the following Table 1:
P a g e | 10
For personal use only Directors’ Report
Table 1
Strategy, initiative or program
By when Current position
Phase 1 – Strategies
1.1(a) The development and adoption of the Policy
June 2013 Completed
1.1(b) Embody within the Statement of Corporate
Governance
June 2013 Completed
1.1(c) Assignment of responsibility
June 2013 Completed
Phase 2 - Initiatives and Programs
At Board / Board Committee Level
1.2(a)(i)(A) Diversity is embedded as a relevant attribute
June 2013 Completed
1.2(a)(i)(B) Any skill / gap analysis matrix includes due regard
for the attributes of diversity
As required Will be prepared when
required
1.2(a)(i)(C) Clear statement exists as to the mix of skills and
diversity that the Board is looking to achieve
June 2013 Stated below and Included in
the Charter for the Board of
Directors
1.2(a)(ii) When addressing Board succession planning
June 2013
Included in the Charter for the
Board of Directors
1.2(a)(iii) Inclusion of Diversity related KPIs for CEO and
senior executives
June 2013 N/A given the size of Group
and number of staff
1.2(b)(i) Review the Company's HR policies
June 2013 N/A given the size of Group
and number of staff
1.2(b)(ii) Review the Company's physical environment &
cultural practices to ensure compliance with the Policy
June 2013 N/A given the size of Group
and number of staff
1.2(b)(iii) Ensure that the Company's recruitment practices
follow the Policy requirements
As required Will be prepared when
required
1.2(c)(i) Commit to career development
June 2013 N/A given the size of Group
and number of staff
1.2(c)(ii) Develop standing program and provide budget for
career development
Annual
As required
Notes:
The size and nature of the group, along with the regional location in which it holds its principal
assets, limits the number of initiatives and programs that are viable. This will be reviewed as
and when the group changes.
It should be noted that the ASX recognizes that there is an historical "skewed' pipeline of
qualified and experienced personnel in the market and, accordingly, the gender diversity targets
must be regarded as "soft" and subject to the overriding caveat stated at Item 8 in the Diversity
Policy. The gender diversity targets are detailed at Item 2(c) of the Diversity Strategy.
"Since good governance principles require independence, transparency, diversity and
flexibility, the Board acknowledges the importance of Board structure and, as a
consequence, the Board seeks to use the following provisions as guidance when
implementing an effective governance structure in the Company.”
P a g e | 11
For personal use only Directors’ Report
Board Skills
The Board should contain a relevant blend of expertise and diversity attributes (refer to
corporate governance statement for further information) as appropriate for a Company of its
size in:
Forestry;
Accounting;
Finance;
Business;
Financial instruments;
Legal matters (especially when not present in the Company Secretary); and
Marketing.
Diversity at Board Level and Generally
The Board respects the values and the competitive advantage of culture, gender, ethnicity and age
"diversity", and the benefits of its integration throughout the Group. The Board has adopted a
specific Diversity Policy in order to enrich the Group's perspective, improve corporate performance,
increase shareholder value, and enhance the probability of achievement of the Group's objectives.
When addressing Board succession planning (and other appointments throughout the Company)
the Board has ensured that the Diversity Policy is respected, efforts are made to identify prospective
appointees who have Diversity attributes and efforts are made for any short list of prospective
appointees to include at least one male and one female candidate.
Compliance
Having regard to the size of the Group and the nature of its business, it is considered that the
Company complies as far as possible with the spirit and intentions of the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations in respect to
diversity.
Environmental regulation and performance
The Group’s operations are subject to environmental regulations pursuant to the conditions of tree
farm planning permissions and the requirements of planning and regulatory approvals of local
government councils. The Group also operates under environmental legal and licence requirements
governing its sawmill. To the best of the directors’ knowledge, the Group has complied with all
environmental regulations relating to its activities during the year.
Indemnification and insurance of directors and officers
During the financial year the controlled entity, on behalf of the Group, paid insurance premiums in
respect of directors' and officers' insurance against liability, except wilful breach of duty, of a nature
that is required to be disclosed under section 300(8) of the Corporations Act 2001. In accordance
with the insurance policy, further details of the nature of the liabilities insured against and the amount
of the premium are prohibited from being disclosed.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the Company, or to intervene in any proceedings to which the
Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part
of those proceedings.
P a g e | 12
For personal use only Directors’ Report
Directors’ meetings
The number of meetings of directors held during the year and the number of meetings attended by
each director were as follows:
Number of
Directors
Meetings Held
while in office
11
Directors
Meetings
Attended
11
Number of
Audit & Risk
Meetings Held
while in office
3
8
11
11
11
11
7
11
11
11
11
n/a
n/a
n/a
n/a
3
Audit & Risk
Meetings
Attended
3
n/a
n/a
n/a
n/a
3
Paul McKenzie
Keith Lamb(1)(3)
John Sergeant(1)
Shauna Black(1)
Graham Holdaway(1)
Gregory Boulton(2)
(1) Executive Directors attend Audit and Risk Committee meetings by invitation.
(2) Appointed as Audit and Risk Committee Chair on 28 February 2017.
(3) Appointed as a director on 15 October 2018 and became an Executive on 11 March 2019
before taking over the managing director role from John Sergeant on 1 June 2019.
Committee membership
As at the date of this report, the Company had an Audit and Risk Committee of the Board of
Directors. Mr Boulton was the Independent Chair, and half of the members are independent non-
executive directors. The directors have considered that the committee is adequate for the
Company’s current circumstances.
In view of the size of the parent entity, the directors have considered that establishing a nomination
and remuneration committee would contribute little to its effective management and accordingly all
directors participate in decisions regarding the nomination and election of new Board members.
Rounding
The amounts contained in this report and in the financial report have been rounded to the nearest
$1,000 (where rounding is applicable) under the option available to the Company under ASIC Class
Order 2016/191. The Company is an entity to which the Class Order applies.
Auditor independence and non-audit services
The directors have received the auditor’s independence declaration, which is included on page 24
of this report. The declaration forms part of the Directors’ report.
No director of the Group is currently, or was formerly, a partner of Grant Thornton Audit Pty Ltd.
Non-Audit Services
Grant Thornton Audit Pty Ltd were appointed as auditors on 28 August 2013 and the appointment
confirmed by shareholders at a General Meeting held on 28 August 2013.
During the year, Grant Thornton, the Company’s auditors, performed certain other services in
addition to their statutory audit 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 and Risk Committee, is satisfied
that the provision of those non-audit services during the year is compatible with, and did not
compromise, the auditor independence requirements of the Corporations Act 2001 for the following
reasons:
P a g e | 13
For personal use only Directors’ Report
All non-audit services were subject to the corporate governance procedures adopted by the
Company and have been reviewed by the Audit and Risk Committee to ensure they do not impact
upon the impartiality and objectivity of the auditor; and
The non-audit services 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 risks and rewards.
The amounts received or due and receivable by Grant Thornton Audit Pty Ltd for:
An audit or review of the financial report of the entity and any other
entity in the consolidated entity
Grant Thornton
Taxation services Grant Thornton
Total
Consolidated
2019
$
2018
$
57,221
4,000
61,221
77,547
11,055
88,602
Remuneration report (audited)
This Remuneration Report outlines the director and executive remuneration arrangements of the
Company and the Group in accordance with the requirements of the Corporations Act 2001 and its
Regulations. For the purposes of this report Key Management Personnel (“KMP”) of the Group are
defined as those persons having authority and responsibility for planning, directing and controlling
the major activities of the Company and the Group, directly or indirectly, including any director
(whether executive or otherwise) of the parent company.
For the purpose of this report, the term “executive” encompasses the Managing Director and Chief
Financial Officer of the Parent and the Group.
Shareholders AGM votes on Remuneration Report
Kangaroo Island Plantation Timbers Ltd received 99.9% of ‘yes’ proxy votes and the Remuneration
Report for the financial year ending 30 June 2018 was adopted via a poll. The Company received
no specific feedback on its Remuneration Report at the Annual General Meeting.
Key management personnel
Key management personnel are as follows:
Directors
Position
Paul McKenzie (appointed 29 April 2005)
Keith Lamb (appointed 15 October 2018)
John Sergeant (appointed 2 March 2013)
Shauna Black (appointed 17 March 2015)
Chairman - Non-executive Director
Managing Director (from 1 June 2019)
Executive Director (Managing Director from 1
January 2015 to 31 May 2019)
Executive Director (since 1 May 2017)
Graham Holdaway (appointed 17 March 2015) Executive Director (since 1 April 2017)
Gregory Boulton (appointed 1 November
2016)
Independent Non-executive Director
Executives
Position
Victoria Allinson(appointed 14 May 2013)
Peter Lockett (appointed 8 May 2017)
Company Secretary, Chief Financial Officer
Approvals Manager
There have been no changes to Key Management Personnel after the reporting date and before
the date the financial accounts were authorised for issue.
P a g e | 14
For personal use only Directors’ Report
Remuneration committee
In view of the size of the parent entity, the directors have considered that establishing a nomination
and remuneration committee would contribute little to its effective management and accordingly all
directors participate in decisions regarding the nomination and election of new Board members.
The Board of Directors of the Company is responsible for determining and reviewing remuneration
arrangements for the directors and executives.
The Board of Directors assesses the appropriateness of the nature and amount of remuneration of
executives on a periodic basis by reference to relevant employment market conditions with the
overall objective of ensuring maximum stakeholder benefit from the retention of a high quality, high
performing director and executive team.
The Board of Directors met once during the year to consider specific remuneration matters; the
Board did not use the professional services of Remuneration Consultants during the year.
Remuneration philosophy and structure
The Company has structured remuneration packages for its executives and directors in order to
attract and retain people with the necessary qualifications, skills and experience to assist the
Company in achieving its desired results.
Remuneration is usually reviewed on an annual basis, taking into consideration both qualitative and
quantitative performance indicators, with reference to industry benchmarks.
A review of the amount of remuneration has been conducted in the period of this annual report. The
Board is of the opinion that remuneration should only be changed once the Group’s strategic plans
are further developed. The Shareholders approved an increase in the total Non-Executive
Remuneration cap to $400,000 plus performance rights at the 2016 AGM.
Timely production of Company accounts and records;
Overall performance of the directors and the executives of the Company are considered against:
Maintenance/improvement of the Net Tangible Assets of the Company;
Control of costs;
Investor relations;
Assessment of new opportunities; and
Employee performance.
Performance is reviewed on an annual basis; the last review was undertaken in September 2019.
Statutory performance indicators
The following table shows the key statutory performance indicators of the Group for the past 5 years,
all figures have been adjusted for the 10:1 share split:
Year
2019
2018
2017
2016
2015
2014
Net tangible assets per share
$2.79
$2.89
$2.33
$0.73
$0.79
$0.86
Earnings per share
Share price at 30 June
$0.04
$0.28
$1.48
($0.17)
($0.06)
($0.10)
$2.25
$2.15
$2.03
$1.60
$0.74
$0.30
The indicators used to determine remuneration are not necessarily consistent with the measures
used to determine the KMP’s remuneration. As a result, there may not be a direct correlation
between the key statutory performance measures set out above and the remuneration awarded.
Remuneration of Key Management Personnel (‘KMP’)
Remuneration is reviewed by the Board (unless a Remuneration Committee is established) and is
set at around the mid-point for professional personnel as measured by knowledge of the members
of the Remuneration Committee and augmented by reference to reports produced by professional
Human Resources consultants.
P a g e | 15
For personal use only Directors’ Report
Details of the nature and amount of each element of the remuneration of each Key Management
Personnel (‘KMP’) of the Company are shown in the table below:
Short term
Year
Salary &
fees
$
Cash
bonus
$
Post
employment
Annual
leave
provision
$
Super
$
Long
term
Long
service
leave
$
Share-based
payment
Executive
share &
Rights Plan(9)
$
Shares
$
Total
$
Non-Executive Directors
(NED)
P McKenzie(1) 2019
100,000
2018
100,000
G Boulton(2)
K Lamb(3)
2019
2018
2019
2018
J Sergeant(4) 2019
S Black(5)
2018
2019
2018
G Holdaway(6) 2019
Total NED
2018
2019
2018
90,000
75,000
27,585
-
68,493
68,493
75,000
75,000
75,000
75,000
436,078
393,493
Executive Director (ED)
K Lamb(3)
2019
2018
J Sergeant(4) 2019
87,706
-
258,752
2018
167,429
S Black(5)
2019
2018
G Holdaway(6) 2019
50,000
47,650
114,155
Total ED
2018
114,155
2019
2018
510,613
329,234
Other KMP
P Lockett(7)
V Allinson(8)
2019
2018
2019
2018
200,000
200,000
264,742
239,951
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,620
-
6,507
6,507
-
-
-
-
9,127
6,507
8,088
8,332
-
-
96,506
24,581
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,855
6,778
15,905
2,044
-
-
2,350
14,262
10,845
2,062
10,845
- 125,634
43,758
4,917
29,100
2,044
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,544
30,773
21,544
30,773
--
--
--
--
21,544
30,773
-
-
64,632
92,319
21,251
--
43,088
61,548
-
-
43,088
61,548
107,427
123,096
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
50,000
7,000
-
121,544
130,773
111,544
105,773
30,205
-
75,000
75,000
96,544
105,773
75,000
75,000
509,837
492,319
125,377
-
422,927
249,781
56,778
50,000
182,350
188,610
787,432
488,391
250,000
250,000
271,742
239,951
172,059
57,000
1,819,011
TOTAL
2019 1,411,432
- 125,634
52,885
2018 1,162,678
-
4,917
35,607
2,044
215,415
50,000
1,470,661
There are no cash bonuses or other non-monetary benefits during the current or prior year.
P a g e | 16
For personal use only Directors’ Report
Notes:
(1) Mr McKenzie’s remuneration comprises:
a. annual director’s fees comprised of $100,000 Chairman’s fee, and
b. 1/7th of the performance rights pool of which Share Based payments have been valued
at $21,544 (2018: $30,773):
i. Performance rights dated 10 November 2017 $6,777 (2018: $15,851); and
ii. Performance rights dated 16 October 2018 $14,767 (2018: $nil).
(2) Mr Boulton’s remuneration comprises:
a. annual director’s fees comprised of $75,000 Director’s fee and a $10,000 Audit & Risk
Committee Chair extra duties fee from 1 July 2018; and
b. 1/7th of the performance rights pool of which Share Based payments have been valued
at $21,544 (2018: $30,773):
i. Performance rights dated 10 November 2017 $6,777 (2018: $15,851); and
ii. Performance rights dated 16 October 2018 $14,767 (2018: $nil).
(3)
The Managing Director, Mr Lamb‘s remuneration comprises:
a. annual director’s fees comprised of $27,585 Director’s fee ($75,000 per annum from
date of appointment as a director, being 15 October 2018) and $96,038 Executive fee.
Mr Lamb’s annual executive remuneration amounts to $275,000 from 1 June 2019
(previously $225,000 from date of appointment as an executive, being 11 March 2019);
b. annual leave provision amounted to $8,088 (2018: $nil); and
c. 2/7ths of the performance rights pool of which Share Based payments have been valued
at $21,251 (2018: $nil), subject to Shareholder approval:
i. Performance rights dated 10 November 2017 $nil (2018: $nil); and
ii. Performance rights dated 16 October 2018 $21,251 (2018: $nil).
(4) Mr Sergeant‘s remuneration comprises:
a. annual director’s fees comprised of $75,000 Director’s fee and $283,334 Executive fee.
Mr Sergeant’s annual executive remuneration amounts to $164,000 from 1 July 2019,
previously $275,000 from 1 June 2018 (prior year $175,000 from date on appointment,
being 1 May 2017 to 31 May 2018);
b. annual leave provision amounted to $96,506 (2018: $2,855); and
c. 2/7ths of the performance rights pool of which Share Based payments have been valued
at $43,088 (2018: $61,548):
i. Performance rights dated 10 November 2017 $13,554 (2018: $31,705); and
ii. Performance rights dated 16 October 2018 $29,534 (2018: $nil).
(5) Ms Black’s remuneration comprises:
a. annual director’s fees comprised of $75,000 Director’s fee and $50,000 Executive fee.
b. annual leave provision amounted to $6,778 (2018: $nil); and
c. 1/7th of the performance rights pool of which Share Based payments have been valued
at $21,544 (2018: $30,773):
i. Performance rights dated 10 November 2017 $6,777 (2018: $15,851); and
ii. Performance rights dated 16 October 2018 $14,767 (2018: $nil).
(6) Mr Holdaway’s remuneration comprises:
a.
annual director’s fees comprised of $75,000 Director’s fee and $125,000 Executive fee
from appointment on 1 April 2017;
b. annual leave provision amounted to $14,262 (2018: $2,062); and
c. 2/7ths of the performance rights pool of which Share Based payments have been valued
at $43,088 (2018: $63,610):
i. Performance rights dated 10 November 2017 $13,554 (2018: $31,705); ); and
ii. Performance rights dated 16 October 2018 $29,534 (2018: $nil).
(7) Mr Lockett was appointed as Approvals Manager on 8 May 2017. During the period $250,000
(2018: $250,000) of professional services were invoiced by Seaview Corporate Services Pty
Ltd, of which Mr Lockett has effective control. During the year $50,000 (2018: $50,000) of
P a g e | 17
For personal use only Directors’ Report
these fees have been paid or are to be paid in ordinary shares. At 30 June 2019 $12,500
(2018: $12,500) of these fees are accrued and will be paid in shares after the year end.
(8) Ms Allinson was appointed as CFO and Company Secretary on 14 May 2013. During the
year, professional accounting, administration and company secretarial fees of $271,742
(2018: $239,951) were invoiced by Allinson Accounting Solutions Pty Ltd, of which Victoria
Allinson is Managing Director and shareholder. $7,000 of these fees were paid in shares
(2018: $nil), of which $2,000 of shares were issues to Ms Allinson and $5,000 to her staff.
The services are provided by Ms Allinson and her three employees. At 30 June 2019, $30,898
(2018: $22,166) of these fees were payable.
(9)
During the year, the Board announced Performance Rights dated 16 October 2018 that were
approved by Shareholders at the 16 October 2018 Annual General Meeting. The Rights have
been valued based on AASB 2 Share-based Payment, further details are set out below.
No options were granted as part of remuneration during the year.
Performance Rights Plan
Interest in Performance Rights
Performance
Rights dated
16 October
2018
$
Performance
Rights dated
10 November
2017
$
Performance
Rights dated
24 February
2017
$
Total
Performance
Rights
$
Year
Non-Executive Directors
P McKenzie
G Boulton
Executive Directors
K Lamb(1)
J Sergeant
S Black
G Holdaway
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
14,767
-
14,767
-
21,251
-
29,534
-
14,767
-
29,534
-
124,620
-
6,777
15,851
6,777
15,851
-
-
13,554
31,702
6,776
15,851
13,554
31,702
-
47,439
110,957
-
14,922
-
14,922
-
-
-
29,842
-
14,922
-
29,843
21,544
30,773
21,544
30,773
21,251
-
43,088
61,544
21,544
30,773
43,088
61,545
-
104,451
172,059
215,408
(1) Mr K Lamb was appointed as a Non-Executive Director on 15 October 2018 and as an Executive on 11
March 2019. Under his agreement he is entitled to Performance Rights under the Performance Rights Plan,
on the same basis as other Directors, subject to Shareholder approval.
Performance Rights Plan
The Performance Rights Plan (“Plan”) was approved by Shareholders on 5 October 2016. The terms
of the Plan involve the issue of Shares that will rank equally with all other existing Shares in all
respects including voting rights and entitlement to participate in dividends and in future rights and
bonus issues.
In addition, a Plan participant must not dispose of any Shares acquired under the Plan before the
end of the restriction period (if any) which are subject to the Plan rules and the terms of the specific
offer from time to time.
The rationale for the Plan was, and is, to provide the Executive and the Non-Executive Directors of
the Company with increased remuneration in recognition of the additional duties of the respective
directors, and to incentivise them to align their interests more closely with those of Shareholders.
P a g e | 18
For personal use only Directors’ Report
While the Company's share price has begun to better reflect the underlying value of its assets,
there remains a substantial valuation gap that will be realised when a sustainable forestry industry
structure is created on Kangaroo Island.
Performance Rights dated 16 October 2018 and 10 November 2017
At the 16 October 2018 General Meeting, Shareholders approved performance rights dated 16
October 2018, triggered by meeting the following performance condition:
the volume-weighted average price (VWAP) of the Company’s Shares exceeds the relevant
price, based on the most recently-traded 1,000,000 shares.
Performance Rights dated 10 November 2017 expired on 9 November 2018 and were replaced with
Performance Rights dated 16 October 2018. The Performance Rights dated 10 November 2017,
were approved by Shareholders on 10 November 2017 and had identical performance conditions
and expired on 9 November 2018.
A summary of the Performance Rights is shown below:
Shares to be issued to directors:
20 Business Days
VWAP
J Sergeant &
G Holdaway
$3.50 or above
$4.25 or above
$5.00 or above
Total
Number
107,140
85,720
64,280
257,140
P McKenzie,
S Black &
G Boulton
Number
53,570
42,860
32,140
128,570
Escrow
Period
12 months
12 months
12 months
Total Shares
Number
374,990
300,020
224,980
899,990
Mr K Lamb was appointed as a Non-Executive Director on 15 October 2018 and as an Executive on 11 March
2019. Under his agreement, he is entitled to Performance Rights under the Performance Rights Plan, on the
same basis as other Directors, subject to Shareholder approval. The Rights will be in addition to the 899,990
approved by Shareholders at the 2018 AGM.
Valuation of Performance Rights dated 16 October 2018
AASB 2 Share-Based Payment requires that the Company record the cost of all forms of Director
remuneration in the Company's accounts and sets out parameters for determining this cost.
AASB 2 sets the valuation date (termed as Grant Date) as the date at which such a right has been
approved, being the date of the General Meeting, 16 October 2018.
The Directors do not believe that Black Scholes or Monte Carlo valuation methods are suitable for
the Performance Rights. The performance rights have been valued using the share price at the
Grant Date with a probability applied to each tranche. The Rights expire on 15 October 2019. The
valuation is based on the probability of achieving VWAP and the share price at 16 October 2018 of
$2.05, set out in the table below.
20 Business
Days VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Shares to
be issued
374,990
300,020
224,980
899,990
6 months
31 Dec 2018
$
28,458
1,498
434
30,390
6 months
30 Jun 2019
$
68,338
3,597
1,043
72,978
30 Jun 2020
$
33,888
7,205
3,135
44,228
Total Valuation
$
130,684
12,300
4,612
147,596
Valuation of Performance Rights dated 10 November 2017
AASB 2 Share-Based Payment requires that the Company record the cost of all forms of Director
remuneration in the Company's accounts and sets out parameters for determining this cost.
AASB 2 sets the valuation date (termed as Grant Date) as the date at which such a right has been
approved, being the date of the General Meeting, 10 November 2017.
The Directors do not believe that Black Scholes or Monte Carlo valuation methods are suitable for
the Performance Rights. The performance rights have been valued using the share price at the
P a g e | 19
For personal use only Directors’ Report
Grant Date with a probability applied to each tranche. The Rights expire on 9 November 2018. The
valuation is based on the probability of achieving VWAP and the share price at 10 November of
$2.20, set out in the table below.
20 Business
Days VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Shares
to be
issued
374,990
300,020
224,980
899,990
6 months
31 Dec 2018
$
21,950
1,788
421
24,159
6 months
30 Jun 2018
$
78,864
6,424
1,510
86,798
6 months
31 Dec 2017
$
39,432
4,989
3,019
47,440
Total Valuation
$
140,246
13,201
4,950
158,397
Valuation of Performance Rights dated 24 February 2017
AASB 2 Share-Based Payment requires that the Company record the cost of all forms of Director
remuneration in the Company's accounts and sets out parameters for determining this cost.
AASB 2 sets the valuation date (termed as Grant Date) as the date at which such a right has been
approved, being the date of the General Meeting, 24 February 2017.
The Directors do not believe that Black Scholes or Monte Carlo valuation methods are suitable for
the Performance Rights. The performance rights have been valued using the share price at the
Grant Date with a probability applied to each tranche. The valuation is set out in the table below.
20 Business Days
VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Shares
to be
issued
374,990
300,020
224,980
899,990
6 months
30 Jun 2017
$
412,623
65,359
2,250
480,232
6 months
31 Dec 2017
$
68,771
32,679
3,001
104,451
Total Valuation
$
481,394
98,038
5,251
584,683
Non-executive director remuneration
Objective
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability
to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to
shareholders.
Structure
The total amount paid to non-executive directors is determined by the Board from time to time for
presentation to and resolution by shareholders at the Annual General Meeting. The current
maximum aggregate remuneration paid to non-executive directors is fixed at $400,000 pa, as
approved by shareholders at the 2016 AGM.
The non-executive directors are paid a set amount per year. They are not eligible for any additional
payments, other than reimbursement of expenses incurred on behalf of the Group.
In the year ended 30 June 2019:
Non-executive fees amounted to $75,000 (prior year: $75,000) for each director;
Non-executive chair of the Audit & Risk Committee received an additional $10,000 per
annum in respect of these extra duties (prior year: $nil) and
Non-executive chair fees amounted to $100,000 (prior year: $100,000).
The directors have signed contracts setting out their obligations and remuneration.
Director performance reviews are in the form of informal annual self-review and discussion with the
other directors led by the Chairman.
P a g e | 20
For personal use only Directors’ Report
Executive remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with
their position and responsibilities with the Company so as to:
Align the interest of executives with those of shareholders; and
Ensure total remuneration is competitive by market standards.
Structure
The Company has reviewed its staffing requirements as part of the strategic restructure. The
number of staff employed: nine (2018: eight) employees (part time and full time), including the
Executive Directors, at the date of this report. Six (2018: six) employees are based on Kangaroo
Island, including one Executive Director.
The Company’s Chief Financial Officer (“CFO”) Victoria Allinson and Approvals Manager, Peter
Lockett both provided their services as contractors:
Allinson Accounting Solutions Pty Ltd is engaged to provide the Company’s financial,
administrative and company secretarial functions; and
Seaview Corporate Services Pty Ltd was engaged to provide the approval managerial
services of Peter Lockett.
The Executive Directors signed an employment contract setting out
their obligations and
remuneration. In addition, the Executive Directors are entitled to Performance Rights under the Plan.
There were no termination obligations with any of the executives. The total amount paid to
executives is determined by the Board on an annual basis as part of the annual performance review
of executives conducted by the Board based on KPI’s set by the Board each year for the executives.
The amount of salary and fees and the payment of cash bonuses, if any, are at the Board’s ultimate
discretion.
The Executive Directors’ remuneration is set out in detail on pages 19 and 20.
Shareholdings of key management personnel
Opening
interest at
1 July
2018
2,654,860
3,119,970
871,785
456,670
176,230
37,933
24,486
7,341,934
Net changes
during the
period(8)
Issued
in lieu of
fees
-
-
-
-
7,500
-
2,500
10,000
-
-
-
-
-
24,977
968
25,945
Closing
interest at
30 June
2019
2,654,860
3,119,970
871,785
456,670
183,730
62,910
27,954
7,377,879
Directors
Paul McKenzie(1)
John Sergeant(2)
Graham Holdaway (3)
Shauna Black(4)
Gregory Boulton(5)
Executives
Peter Lockett(6)
Victoria Allinson(7)
Total
(1) Paul McKenzie’s Shares comprise:
a. 2,132,500 (2018: 2,132,500) held by Aminac Pty Ltd of which Mr
McKenzie is the managing Director; and
b. 522,360 (2018: 522,360) held by Alke Pty Ltd (The McKenzie Family Trust No 2 A/C)
of which Mr McKenzie is the Managing Director.
(2) John Sergeant’s Shares comprise:
a. 2,099,664 (2018: 2,099,664) held by Phalaenopsis Pty Ltd ATF Sergeant Family Trust
of which Mr Sergeant has effective control;
b. 225,730 (2018: 418,230) direct interest;
P a g e | 21
For personal use only Directors’ Report
c. 794,576 (2018: 596,366) held by the Sergeant Family Superannuation Fund of which
Mr Sergeant has effective control; and
d. nil (2018: 5,710) held by Ms J Sergeant; Ms Sergeant is Mr Sergeant’s wife.
e. Mr Sergeant is also a unitholder in the Samuel Terry Absolute Return Fund, a Managed
Fund which is a substantial shareholder in the Company. Mr Sergeant has no influence
on the acquisition, disposal or voting of the shares held on behalf of Samuel Terry
Absolute Return Fund.
(3) Graham Holdaway’s Shares comprise:
a. 406,015 (2018: 406,015) held by Mr Graham Ian Holdaway and Mrs Kristina Mary Irving
Holdaway of which Mr Holdaway has effective control;
b. 265,770 (2018: 465,770) held by Holdaway & Holdaway Pty Ltd of which Mr Holdaway
has effective control, being a director and shareholder; and
c. 200,000 (2018: nil) direct interest.
(4) Shauna Black’s Shares comprise:
a. A direct interest in 66,670 (2018: 66,670) shares; and
b. 390,000 (2018: 390,000) held by Black Stump Regional Pty Ltd ATF the Taybric Family
Trust of which Ms Black has effective control.
(5) During the year Gregory Boulton acquired 7,500 shares pursuant to a Share Purchase Plan.
At the date of this report Mr Boulton’s shares comprise:
a. 183,730 (2018: 76,230) held by G Boulton Pty Ltd ATF .
(6) Peter Lockett was appointed as an Executive on 8 May 2017. At the date of this report Mr
Lockett’s 62,910 (2018: 37,933) shares are held by Mr P Lockett and Ms C Charnock
S/F AC of which Mr Lockett has effective control. During the year 24,977 shares
(2018: 20,433) shares were issued in payment of professional services invoiced by Seaview
Corporate Services Pty Ltd, of which Mr Lockett has effective control.
(7) During the year Victoria Allinson acquired 2,500 shares pursuant to a Share Purchase Plan
and received 968 shares in lieu of $2,000 consulting fees (of which $1,000 related to prior
year). At the date of this report Ms Allinson’s shares comprise:
a. 24,978 (2018: 21,510) shares held by Allinson Super Funds A/C of which she has
effective control; and
b. 2,976 (2018: 2,976) shares held directly.
(8) The increase in shares related to shares issue on 20 March 2019 under the Share Purchase
Plan at $2.00 per share.
Other Rights and Option holdings of key management personnel
Performance rights
Non-executives
Paul McKenzie(1)
Gregory Boulton(2)
Executive directors
Keith Lamb(3)
John Sergeant(4)
Graham Holdaway(5)
Shauna Black(6)
Executives
Peter Lockett
Victoria Allinson
Total
Opening
interest at
1 July 2018
Performance
Rights issued
Performance
Right lapsed
Closing
interest at
date of report
128,570
128,570
-
257,140
257,140
128,570
-
-
899,990
128,570
128,570
126,820
257,140
257,140
128,570
-
-
1,026,810
(128,570)
(128,570)
-
(257,140)
(257,140)
(128,570)
-
-
(899,990)
128,570
128,570
126,820
257,140
257,140
128,570
-
-
1,026,810
(1) During the year Mr McKenzie received 128,570 performance rights 16 October 2018 were
issued and 128,570 Performance Rights dated 10 November 2017 lapsed.
(2) During the year Mr Boulton received 128,570 performance rights 16 October 2018 were issued
and 128,570 Performance Rights dated 10 November 2017 lapsed.
P a g e | 22
For personal use only Directors’ Report
(3) Mr K Lamb was appointed as a Non-Executive Director on 15 October 2018 and as an Executive
on 11 March 2019, under his agreement he is entitled to 126,820 Performance Rights dated 16
October 2018 under the Performance Rights Plan, on the same basis as other Directors, subject
to Shareholder approval.
(4) During the year Mr Sergeant received 257,140 performance rights 16 October 2018 were issued
and 257,140 Performance Rights dated 10 November 2017 lapsed..
(5) During the year Mr Holdaway received 257,140 performance rights 16 October 2018 were
issued and 257,140 Performance Rights dated 10 November 2017 lapsed.
(6) During the year Ms Black received 128,570 performance rights 16 October 2018 were issued
and 128,570 Performance Rights dated 10 November 2017 lapsed.
There are no option holdings for the Group.
Related party transactions
Directors transaction
Income: Annual lease payment(1)
Consolidated
2019
$
2018
$
24,675
24,121
(1) The Lease agreement between Graham Holdaway and the Group commenced on 30 June 1999.
The lease is for 187.60 hectares of Land known as “Gosse East’ and has a term of 25 years.
Annual rent excluding GST for 30 June 2019 of $24,675 (2018: $24,121) is fully paid.
End of Remuneration Report
Share options
As at the date of this report, there were no options issued.
Signed in accordance with a resolution of the directors
Paul McKenzie
Chairman
Dated this 23rd day of September 2019
P a g e | 23
For personal use only Level 3, 170 Frome Street
Adelaide SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
F +61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Kangaroo Island Plantation Timbers Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Kangaroo
Island Plantation Timbers Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief,
there have been:
a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
I S Kemp
Partner – Audit & Assurance
Adelaide, 23 September 2019
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
For personal use only
Corporate Governance Statement
Kangaroo Island Plantation Timbers Ltd (“Company”) and the Board of Directors are responsible for
the Corporate Governance of the Group and are committed to achieving the highest standard of
Corporate Governance, business integrity and professionalism with due regard to the interests of
all stakeholders. The Board guides and monitors the business and affairs of the Group on behalf
of the shareholders by whom they are elected and to whom they are accountable.
As such, the Company has adopted the third edition of the Corporate Governance Principles and
Recommendations which was released by the ASX Corporate Governance Council on 27 March
2014 and became effective for financial years beginning on or after 1 July 2014.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2019 was
initially adopted on 21 June 2016 and a reviewed version adopted by the Board on 23 September
2019. The Corporate Governance Statement is available at www.kipt.com.au.
P a g e | 25
For personal use only Financial Report
Contents
Page
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME....27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ..................................................................28
CONSOLIDATED STATEMENT OF CASH FLOWS................................................................................ 29
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY...................................................................30
1.
2.
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
u)
v)
CORPORATE INFORMATION ............................................................................................................. 31
BASIS OF PREPARATION AND ACCOUNTING POLICIES .......................................................................... 31
Basis of preparation ............................................................................................................... 31
Compliance with IFRS ........................................................................................................... 31
New accounting standards and interpretations ...................................................................... 31
Basis of consolidation ............................................................................................................ 33
Segment reporting ................................................................................................................. 34
Cash and cash equivalents ....................................................................................................34
Trade and other receivables ..................................................................................................35
Biological Assets.................................................................................................................... 35
Financial Instruments............................................................................................................. 35
Property, plant and equipment ............................................................................................... 37
Investment properties ............................................................................................................ 38
Impairment of non-financial assets ........................................................................................ 38
Trade and other payables ...................................................................................................... 38
Provisions and employee leave benefits ................................................................................ 39
Contributed equity.................................................................................................................. 39
Revenue recognition .............................................................................................................. 39
Share-based payment transactions ....................................................................................... 39
Income tax ............................................................................................................................. 40
Earnings per share................................................................................................................. 41
Comparative figures............................................................................................................... 41
Fair value measurements....................................................................................................... 41
Significant accounting judgements, estimates and assumptions ........................................... 42
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES ..................................................................43
3.
FAIR VALUE MEASUREMENT OF NON-FINANCIAL INSTRUMENTS ............................................................ 47
4.
SEGMENT REPORTING .................................................................................................................... 48
5.
REVENUE AND EXPENSES ............................................................................................................... 48
6.
INCOME TAX..................................................................................................................................49
7.
EARNINGS PER SHARE.................................................................................................................... 51
8.
9.
CURRENT ASSETS – CASH AND CASH EQUIVALENTS .......................................................................... 52
10. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES ....................................................................... 52
11. OTHER CURRENT ASSETS .............................................................................................................. 53
12. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT ............................................................ 53
13. BIOLOGICAL ASSETS ...................................................................................................................... 55
14. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES ....................................................................... 58
15. CURRENT LIABILITIES – EMPLOYEE BENEFITS .................................................................................... 59
16.
INTEREST-BEARING LIABILITIES ........................................................................................................ 59
17. CONTRIBUTED EQUITY .................................................................................................................... 60
18. RESERVES ....................................................................................................................................60
19. CONTINGENT LIABILITIES................................................................................................................. 64
20. RECONCILIATION OF STATEMENT OF CASH FLOWS ............................................................................. 64
21. EVENTS AFTER BALANCE DATE ........................................................................................................ 64
22. AUDITOR REMUNERATION ............................................................................................................... 65
23. KEY MANAGEMENT PERSONNEL ....................................................................................................... 65
24. RELATED PARTY DISCLOSURES ....................................................................................................... 65
25. PARENT ENTITY DISCLOSURES ........................................................................................................ 66
26. SHARE-BASED PAYMENTS............................................................................................................... 67
27. COMMITMENTS .............................................................................................................................. 68
P a g e | 26
For personal use only Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2019
Consolidated
Notes
2019
$’000
6a
6a
13
6b
6c
6d
6e
7
Management fees
Operating lease – land
Operating lease - Equipment hire
Bank interest
Revenue
Cost of sales
Gross profit
Fair value gain on biological assets
Other income
Profit/(loss) on assets sold
Forestry expenses
Wharf feasibility costs
Administrative expenses
Other expenses
Finance costs
Profit/(loss) before income tax
Income tax (expense)/benefit
Net profit/(loss) for the year
Other comprehensive income
Items that will not be classified subsequently to
profit or loss
Net fair value gain in property, plant and
equipment
Other comprehensive income for the year net
of tax
Total comprehensive profit/(loss) for the year
attributable to members of the parent
-
132
9
74
215
-
215
7,342
5
13
(1,585)
(2,273)
(32)
(2,271)
(1,464)
(50)
297
247
-
-
2018
$’000
-
130
17
83
230
-
230
26,927
10
(1)
(1,199)
(2,881)
(66)
(2,223)
(1,692)
19,105
(6,053)
13,052
-
-
247
13,052
Basic and diluted earnings per share
8
EPS in cents
EPS in cents
0.5
28
The above Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
P a g e | 27
For personal use only Consolidated Statement of Financial Position
As at 30 June 2019
Consolidated
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Biological assets
Deferred tax asset
Other non-current assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Employee benefits
Interest-bearing liabilities
Total current liabilities
Interest-bearing liabilities
Deferred tax liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated profit/(losses)
TOTAL EQUITY
Notes
9
10
11
12
13
7
14
15
16
16
7
17
18
2019
$’000
9,511
5
777
10,293
62,091
115,158
10,948
5
188,202
198,495
1,011
199
-
1,210
29,700
29,530
59,230
60,440
2018
$’000
6,727
13
697
7,437
57,969
107,816
8,767
5
174,557
181,994
1,720
66
-
1,786
25,000
27,558
52,558
54,344
138,055
127,650
89,949
3,810
44,296
138,055
79,963
3,796
43,891
127,650
The above Statement of Financial Position should be read in
conjunction with the accompanying notes.
P a g e | 28
For personal use only Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Consolidated
Notes
20
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments to wharf development suppliers
Interest received
Borrowing costs
Tax refund
Net cash flows (used in) operating activities
Cash flows from investing activities
Purchase of land
Proceeds from sale of investment properties
Proceeds from sale of plant and equipment
Purchase of wharf development assets
Purchase of plant and equipment
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from the issue of shares
Payment for share issue costs
Proceeds from bank borrowings
Net cash flows from financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
9
2019
$’000
135
(3,575)
(2,332)
74
(1,445)
209
(6,934)
-
-
13
(4,721)
(34)
(4,742)
10,306
(546)
4,700
14,460
2,784
6,727
9,511
2018
$’000
170
(3,399)
(2,791)
83
(1,497)
-
(7,434)
(2,279)
96
4
(8,639)
(16)
(10,834)
20,000
(1,050)
-
18,950
682
6,045
6,727
The above Statement of Cash Flows should be read in
conjunction with the accompanying notes.
P a g e | 29
For personal use only Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
Property,
plant &
equipment
Revaluation
Reserve
$’000
Option &
performance
Rights
Reserve
$’000
Accum-
ulated
Losses
$’000
Total
$’000
Issued
Capital
$’000
Treasury
Shares
$’000
Balance at 1 July 2017
61,098
(450)
3,685
480
30,253
95,066
Profit for the period
Other comprehensive
income
Total comprehensive income
-
-
-
Shares issued
Share issue costs
Share issue costs tax
Net shares issued
Performance rights lapsed
Share-based payment
Transaction with owners
20,000
(1,050)
315
19,265
-
50
19,315
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,052
-
13,052
-
13,052
13,052
-
-
-
-
(586)
217
(369)
-
-
-
-
586
-
586
20,000
(1,050)
315
19,265
-
267
19,532
Balance at 30 June 2018
80,413
(450)
3,685
111
43,891
127,650
Balance at 1 July 2018
80,413
(450)
3,685
111
43,891
127,650
Profit for the period
Other comprehensive
income
Total comprehensive income
-
-
-
Share issued
Share issue costs
Share issue costs tax
Net shares issued
Performance rights lapsed
Share-based payment
Transaction with owners
10,306
(546)
164
9,924
-
62
9,986
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(158)
172
14
247
-
247
-
-
-
-
158
-
158
247
-
247
10,306
(546)
164
9,924
-
234
10,158
Balance at 30 June 2019
90,399
(450)
3,685
125
44,296
138,055
The above Statement of Changes in Equity should be read in
conjunction with the accompanying notes.
P a g e | 30
For personal use only Notes to the Consolidated Financial Statements
1.
Corporate information
The financial report for Kangaroo Island Plantation Timbers Ltd for the year ended 30 June 2019
was authorised for issue in accordance with a resolution of the directors on 23 September 2019.
Kangaroo Island Plantation Timbers Ltd is a company incorporated and domiciled in Australia and
limited by shares, which are publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’
report.
2.
Basis of preparation and accounting policies
Basis of preparation
a)
The financial report is a general-purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001 and Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board. The financial report
has been prepared on a historical cost basis, except for investment properties and freehold land
that have been measured at fair value. Kangaroo Island Plantation Timbers Ltd is a for-profit entity
for the purposes of preparing the financial report.
The financial report is presented in Australian dollars and all values are rounded to the nearest
thousand dollars ($’000) unless otherwise stated under the option available to the Company under
ASIC Class Order 2016/191. The Company is an entity to which the class order applies.
Compliance with IFRS
b)
The financial report complies with Australian Accounting Standards as issued by the Australian
Accounting Standards Board and International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board.
New accounting standards and interpretations
c)
A number of new and revised standards became effective for the first time for annual periods
beginning on or after 1 July 2018.
There is no material impact of new accounting standards and interpretations applied during the year,
the key charges are set out below:
AASB 15 Revenue from Contracts with Customers
AASB 15 provides new guidance for determining when the Group should recognise revenue. The
new revenue recognition model is based on the principle that revenue is recognised when control
of a good or service is transferred to a customer – either at a point in time or over time. The model
features a contract-based five-step analysis of transactions to determine whether, or how much
revenue is recognised.
The Group have assessed that there has been no impact on the Group’s previously reported
financial performance or financial position following the adoption of AASB 15.
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) for
annual periods beginning on or after 1 January 2018, bringing together all three aspects of the
accounting for financial instruments: classification and measurement; impairment; and hedge
accounting.
The Group has applied AASB 9 retrospectively, with the initial application date of 1 July 2018.
There were no material impacts on the comparative balances other than a change in
classification. There was no impact on hedging as the Group does not currently apply hedge
accounting. The effects of adopting AASB 9 are set out below:
P a g e | 31
For personal use only Notes to the Consolidated Financial Statements
(a) Classification and measurement
Under AASB 9, there is a change in the classification and measurement requirements relating to
financial assets. Previously, there were four categories of financial assets: loans and receivables,
fair value through profit or loss, held to maturity and available for sale. Under AASB 9, financial
assets are either classified as amortised cost, fair value through profit or loss or fair value through
other comprehensive income. For debt instruments, the classification is based on two criteria: the
Group’s business model for managing the assets; and whether the instruments’ contractual cash
flows represent ‘solely payments of principal and interest’ (SPPI) on the principal amount
outstanding. A financial asset can only be measured at amortised cost if both these tests are
satisfied. The assessment of the Group’s business model was made as of the date of initial
application, 1 July 2018, and then applied retrospectively to those financial assets that were not
derecognised before 1 July 2018. The assessment of whether contractual cash flows on debt
instruments are SPPI was made based on the facts and circumstances as at the initial recognition
of the assets.
(b) Financial Instruments
The adoption of AASB 9 did not result in a significant change to the recognition or measurement of
financial instruments for the Group as presented in the financial report. The following categories of
financial asset and liability required no classification or measurement adjustments as a result of
adopting AASB 9:
Cash and cash equivalents;
Trade and other receivables - this category only includes simple debt instruments where
the business model is to collect contractual cash flows and consequently amortised cost
has continued to be applied. No lifetime expected credit loss adjustments were considered
necessary;
Derivative financial instruments - subsequent measurement continues to be at fair value
through profit or loss;
Investment in listed companies - subsequent measurement continues to be at fair value
through profit or loss; and
Trade and other payables - subsequent measurement continues to be at amortised cost.
(c) Impairment
The adoption of AASB 9 has changed the Group’s accounting for impairment losses for financial
assets by replacing AASB 139’s incurred loss approach with a forward-looking expected credit
loss (ECL) approach. AASB 9 requires the Group to recognise an allowance for ECL’s for all debt
instruments not held at fair value through profit or loss and contract assets in the scope of IFRS
15.
The Group has reviewed and assessed the existing financial assets for impairment and the
change to a forward-looking ECL approach did not have any material impact on the amounts
recognised in the financial statements. The Group’s term deposits which are included within cash
and cash equivalents were assessed as having a low probability of default as they are held with
financial institutions with high credit ratings and the Group’s receivables (not subject to provisional
pricing) which are measured at amortised cost, are short term and the Group has strong risk
management policies in place to reduce any exposure.
Accounting standards issued but not yet effective and which have not been adopted early
by the Company
New / revised
pronouncement
Superseded
pronouncement
Nature of change
AASB 16
Leases
AASB 117
Leases
Int. 4
Determining
AASB 16:
replaces AASB 117 Leases and some
lease-related Interpretations
Likely
initial application
impact on
The entity currently
has only two office
leases
has
assessed there is no
and
P a g e | 32
For personal use only Notes to the Consolidated Financial Statements
New / revised
pronouncement
Superseded
pronouncement
Nature of change
Likely
initial application
impact on
requires all leases to be accounted for
‘on-balance sheet’ by lessees, other than
short-term and low value asset leases
provides new guidance on the application
of the definition of lease and on sale and
lease back accounting
largely
retains
the existing
lessor
accounting requirements in AASB 117
requires new and different disclosures
about leases
whether an
Arrangement
contains a
Lease
Int. 115
Operating
Leases—Lease
Incentives
Int. 127
Evaluating the
Substance of
Transactions
Involving the
Legal Form of a
Lease
in
material
impact of
these leases; as a
result AASB 16 is
not expected
to
have a material
the
impact
on
transactions
and
balances
recognised
the
financial statements
when
first
it
adopted for the year
ending 30
June
2020.
The standard will be
assessed when new
leasing agreements
are being negotiated
the
ensure
to
impacts are known
prior to the contract
being signed.
is
The Group has not elected to early adopt any new standards or amendments that are issued but
not yet effective, and has not yet assessed the impact of these standards.
Basis of consolidation
d)
The consolidated financial statements comprise the financial statements of Kangaroo Island
Plantation Timbers Limited and its subsidiaries as at and for the period ended 30 June each year
(the Group).
The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability to affect those returns through its power over the
subsidiary.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies. In preparing the consolidated financial statements,
all intercompany balances, transactions, unrealised gains and losses resulting from intra-Group
transactions and dividends have been eliminated in full.
All controlled entities have a June financial year-end.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and
cease to be consolidated from the date on which control is transferred out of the Group.
Investments in subsidiaries held by Kangaroo Island Plantation Timbers Ltd are accounted for at
cost in the parent entity less any impairment charges. Dividends received from subsidiaries are
recorded as a component of other revenues in the separate income statement of the parent entity,
and do not impact the recorded cost of the investment. Upon receipt of dividend payments from
subsidiaries, the parent will assess whether any indicators of impairment of the carrying value of
the investment in the subsidiary exist. Where such indicators exist, to the extent that the carrying
value of the investment exceeds its recoverable amount, an impairment loss is recognised. See
Note 25 for parent entity information.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The
acquisition method of accounting involves recognising at acquisition date, separately from goodwill,
the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the
acquiree. The identifiable assets acquired and the liabilities assumed are measured at their
acquisition date fair values.
P a g e | 33
For personal use only Notes to the Consolidated Financial Statements
The difference between the above items and the fair value of the consideration (including the fair
value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For
the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit
from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned
to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included in the carrying
amount of the operation when determining the gain or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measured based on the relative values of the operation disposed
of and the portion of the cash-generating unit retained.
Non-controlling interests are allocated their share of net profit after tax in the statement of
comprehensive income and are presented within equity in the consolidated statement of financial
position, separately from the equity of the owners of the parent.
Losses are attributed to the non-controlling interest even if that results in a deficit balance. A change
in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as
an equity transaction.
Segment reporting
e)
An operating segment is a component of an entity that engages in business activities from which it
may earn revenues and incur expenses (including revenues and expenses relating to transactions
with other components of the same entity), whose operating results are regularly reviewed by the
entity's chief operating decision maker in order to make decisions about resources to be allocated to
the segment and to assess its performance and for which discrete financial information is available.
This includes start-up operations, which are yet to earn revenues. Management will also consider
other factors in determining operating segments such as the existence of a line manager and the level
of segment information presented to the board of directors.
The group aggregates two or more operating segments when they have similar economic
characteristics, and the segments are similar in each of the following respects:
Nature of the products and services
Nature of the production processes
Methods used to distribute the products or provide the services, and if applicable
Nature of the regulatory environment
Type or class of customer for the products and services
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported
separately. However, an operating segment that does not meet the quantitative criteria is still reported
separately where information about the segment would be useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative
criteria are combined and disclosed in a separate category for “all other segments”.
There have been no changes from the prior period in the measurement methods used to determine
reported segment profit or loss.
Cash and cash equivalents
f)
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an
original maturity of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and
cash equivalents as defined above, net of outstanding bank overdrafts.
P a g e | 34
For personal use only Trade and other receivables
Notes to the Consolidated Financial Statements
g)
Trade receivables, which generally have 30-90 day terms, are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method, less an allowance for
any uncollectible amounts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be
uncollectible are written off when identified. An impairment allowance is recognised when there is
objective evidence that the Group will not be able to collect the receivable. Financial difficulties of
the debtor, default payments, or debts more than 60 days overdue are considered objective
evidence of impairment. The amount of the impairment loss is the receivable carrying amount
compared to the present value of estimated future cash flows, discounted at the original effective
interest rate.
Biological Assets
h)
Timber plantations
The Group has an interest in radiata pine and eucalypt plantations (the biological assets). The
biological assets are valued by an external independent valuer. All biological assets were
independently valued in thecurrent period. In periods where the biological assets are not valued by
an independent expert they will be valued by the Directors’ assessment to their fair value less costs
to sell at each reporting period. The fair value is determined as the net present value of the expected
future cashflows at harvest (discounted at a risk adjusted rate). Costs incurred in maintaining or
enhancing the plantations are capitalised when incurred and are classified as additions at cost
before the determination of the net increments in fair values.
Net increments or decrements in the fair value less cost to sell of the plantation trees are recognised
as income or expenses in profit or loss, determined as the difference between the total fair value
less costs to sell of the trees recognised as at the beginning of the period, adjusted for costs incurred
in maintaining or enhancing plantation trees which are capitalised, and the total fair value less costs
to sell of the plantation trees recognised as at the reporting date.
Further details including key assumptions can be found in Note 13.
Plantations which are expected to be harvested, processed and monetised within 12 months are
classified as current assets; all other biological assets are classified as non-current assets.
The Company has a comprehensive risk management strategy in place to monitor and oversee its
timber plantations. The policy framework is set by the Board, with risk management addressed via
fire risk management, plantation management practices, and experienced staff and Board.
Financial Instruments
i)
Recognition, Initial Measurement and Derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument, and are measured initially at fair value adjusted
by transaction costs, except for those carried at fair value through profit or loss, which are measured
initially at fair value. Subsequent measurement of financial assets and financial liabilities are
described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and all substantial risks and rewards are transferred. A
financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and Subsequent Measurement of Financial Assets
For the purpose of subsequent measurement, financial assets other than those designated and
effective as hedging instruments are classified into the following categories upon initial recognition:
Loans and receivables;
Financial assets at Fair Value Through Profit or Loss (‘FVTPL’);
Financial assets at Fair Value Through Other Comprehensive Income (‘FVTOCI’);
Held-To-Maturity (‘HTM’) investments; or
Available-For-Sale (‘AFS’) financial assets.
P a g e | 35
For personal use only Notes to the Consolidated Financial Statements
All financial assets except for those at FVTPL, are subject to review for impairment at least at each
reporting date to identify whether there is any objective evidence that a financial asset or a group
of financial assets is impaired. Different criteria to determine impairment are applied for each
category of financial assets, which are described below.
All income and expenses relating to financial assets that are recognised in profit or loss are
presented within finance costs, finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. After initial recognition, these are measured at amortised cost
using the effective interest method less provision for impairment. Discounting is omitted where the
effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other
receivables fall into this category of financial instruments.
Individually significant receivables are considered for impairment when they are past due or when
other objective evidence is received that a specific counterparty will default. Receivables that are
not considered to be individually impaired are reviewed for impairment in groups, which are
determined by reference to the industry and region of a counterparty and other shared credit risk
characteristics. The impairment loss estimate is then based on recent historical counterparty default
rates for each identified group.
Financial Assets at FVTPL
Financial assets at FVTPL include financial assets that are either classified as held for trading or
that meet certain conditions and are designated at FVTPL upon initial recognition. All derivative
financial instruments fall into this category, except for those designated and effective as hedging
instruments, for which the hedge accounting requirements apply (see below).
Assets in this category are measured at fair value with gains or losses recognised in the profit or
loss. The fair values of financial assets in this category are determined by reference to active market
transactions or using a valuation technique where no active market exists.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are carried at amortised cost using the effective
interest method. Gains or losses are recognised in profit or loss when the loans and receivables are
derecognised or impaired. These are included in current assets, except for those with maturities
greater than 12 months after balance date, which are classified as non-current.
(ii) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as
available-for-sale or are not classified as any of the three preceding categories. After initial
recognition, available-for-sale investments are measured at fair value with gains or losses being
recognised as a separate component of equity until the investment is derecognised or until the
investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is recognised in profit or loss.
All other AFS financial assets are measured at fair value. Gains and losses are recognised in other
comprehensive income and reported within the AFS reserve within equity, except for impairment
losses and foreign exchange differences on monetary assets, which are recognised in profit or loss.
When the asset is disposed of or is determined to be impaired, the cumulative gain or loss
recognised in other comprehensive income is reclassified from the equity reserve to profit or loss
Interest
and presented as a reclassification adjustment within other comprehensive income.
calculated using the effective interest method and dividends are recognised in profit or loss within
‘finance income’.
Reversals of impairment losses for AFS debt securities are recognised in profit or loss if the reversal
can be objectively related to an event occurring after the impairment loss was recognised. For AFS
equity investments, impairment reversals are not recognised in profit or loss, and any subsequent
increase in fair value is recognised in other comprehensive income.
P a g e | 36
For personal use only Notes to the Consolidated Financial Statements
Classification and subsequent measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial
instruments.
Financial liabilities are measured subsequently at amortised cost using the effective interest
method, except for financial liabilities held for trading or designated at FVTPL, which are carried
subsequently at fair value with gains or losses recognised in profit or loss. All derivative financial
instruments that are not designated and effective as hedging instruments are accounted for at
FVTPL.
All interest-related charges and, if applicable, changes in an instrument's fair value that are reported
in profit or loss are included within finance costs or finance income.
The fair values of investments that are actively traded in organised financial markets are determined
by reference to quoted market bid prices at the close of business on the balance sheet date. For
investments with no active market, fair values are determined using valuation techniques. Such
techniques include: using recent arm’s length market transactions; reference to the current market
value of another instrument that is substantially the same; and discounted cash flow analysis and
option pricing models making as much use of available and supportable market data as possible
and keeping judgemental inputs to a minimum.
Property, plant and equipment
j)
Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Such costs includes the cost of replacing parts that are eligible for capitalisation
when the cost of replacing the parts is incurred. All other repairs and maintenance are recognised
in profit or loss as incurred.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as
follows:
Plant and equipment
Mobile plant and vehicles
Buildings
Straight Line
6-33%
20%
3%
The wharf assets will not be depreciated until the wharf is operational.
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year-end.
Freehold land and buildings
Freehold land is measured at fair value (refer to Note 2(u)), less any impairment losses recognised
at the date of revaluation.
In prior periods, the Group has assessed that the route to market for its biological assets is now
more probable than not (refer to 2(h) for further details). In accordance with AASB 13 Fair Value
Measurement paragraph 27, the Group has reassessed the valuation basis as a result of the
Group’s biological asset (timber) having a route to market; the land’s highest and best use now
being forestry land. All land valuations have been updated to reflect the highest and best use,
valuations were completed by an external independent valuer in the prior period. Further details of
the plantation land and buildings fair value valuation can be found in Note 12.
Any revaluation increment is credited to the asset revaluation reserve in equity, except to the extent
that it reverses a revaluation decrement for the same asset previously recognised in profit and loss,
in which case the increment is recognised in profit or loss.
Any revaluation decrement is recognised in the profit and loss, except to the extent that it offsets a
previous revaluation increment for the same asset, in which case the decrement is debited directly
to the asset revaluation reserve to the extent of the credit balance existing in the revaluation reserve
for that asset.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These are included in profit or loss within other income or expenses.
P a g e | 37
For personal use only Notes to the Consolidated Financial Statements
Upon disposal or derecognition, any revaluation reserve relating to the particular asset being sold
is transferred to retained earnings.
Certain leasehold land, held under perpetual crown lease, is treated in the same manner as freehold
land.
Buildings are depreciated on a straight-line basis over the estimated useful life of the asset.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no further future
economic benefits are expected from its use or disposal.
Investment properties
k)
Investment properties are initially measured at cost, including transaction costs. The carrying
amount includes the cost of replacing part of an existing investment property at the time that cost is
incurred if the recognition criteria are met, and excludes the costs of day-to-day servicing of an
investment property. Subsequent to initial recognition, investment properties are stated at fair value,
which reflects market conditions at the balance date. Gains or losses arising from changes in the
fair values of investment properties are included in the profit and loss in the year in which they arise.
Investment properties are derecognised either when they have been disposed of or when the
investment property is permanently withdrawn from use and no future economic benefit is expected
from its disposal. Any gains or losses on the retirement or disposal of an investment property are
recognised in the profit and loss in the year of retirement or disposal.
Transfers are made to investment property when, and only when, there is a change in use,
evidenced by ending of owner-occupation, commencement of an operating lease to another party
or ending of construction or development. Transfers are made from an investment property when,
and only when, there is a change in use, evidenced by commencement of owner-occupation or
commencement of development with a view to sale.
For a transfer from investment property to owner-occupied property or inventories, the deemed cost
of property for subsequent accounting is its fair value at the date of change in use. If the property
occupied by the Group as an owner-occupied property becomes an investment property, the Group
accounts for such property in accordance with the policy stated under Property, plant and equipment
up to the date of change in use. For a transfer from inventories to investment property, any
difference between the fair value of the property at that date and its previous carrying amount is
recognised in profit or loss. When the Group completes the construction or development of a self-
constructed investment property, any difference between the fair value of the property at that date
and its previous carrying amount is recognised in profit or loss.
Impairment of non-financial assets
l)
Non-financial assets are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels of which there are separately identifiable cash
inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-
generating units). Non-financial assets that suffer impairment are tested for possible reversal of the
impairment whenever events or changes in circumstances indicate that the impairment may have
reversed.
Management has considered the triggers for impairment and concludes that no impairment is
required for the year ended 30 June 2019.
Trade and other payables
m)
Trade payables and other payables are carried at amortised cost due to their short-term nature,
they are not discounted. They represent liabilities for goods and services provided to the Group
prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to
make future payments in respect of the purchase of these goods and services. The amounts are
unsecured and are usually paid within 30 days of recognition.
P a g e | 38
For personal use only Provisions and employee leave benefits
Notes to the Consolidated Financial Statements
n)
Provisions are recognised when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable than an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the profit
or loss net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the balance date. If the effect of the time value of money
is material, provisions are discounted using a current pre-tax rate that reflects the time value of
money and, where appropriate, the risks specific to the liability. The increase in the provision
resulting from the passage of time is recognised in finance costs.
Employee Leave Benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12 months of the reporting date, are recognised in respect
of employees’ services up to the reporting date.
They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities
for non-accumulating sick leave are recognised when the leave is taken and are measured at the
rates paid or payable.
Contributed equity
o)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Revenue recognition
p)
Revenue is recognised and measured at the fair value of the consideration received or receivable
to the extent it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is
recognised.
Timber sales
Timber sales are recognised when the Group has transferred to the buyer the significant risk and
reward of ownership, generally when the customer has taken delivery of the goods.
Interest
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial
instrument) to the net carrying amount of the financial asset.
Operating leases
The Group also earns rental income from operating leases of its property, plant and equipment (see
Note 6). Rental income is recognised on a straight-line basis over the term of the lease.
Share-based payment transactions
q)
The employee and officer share scheme allows Company employees to acquire shares of the
Company. The fair value of rights granted is recognised as an employee expense with a
corresponding increase in equity. The fair value is measured at grant date and spread over the
period during which the employees become unconditionally entitled to the rights.
The fair value of the right granted is measured using the share price at the grant date, taking into
account the terms and conditions upon which the rights were granted. The amount recognised as
an expense is adjusted to reflect the actual number of rights in the period in which they are issued.
P a g e | 39
For personal use only Income tax
Notes to the Consolidated Financial Statements
r)
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from, or paid to, the taxation authorities based on the current period’s
taxable income. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
when the deferred income tax liability arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; or
when the taxable temporary difference associated with investments in subsidiaries, associates
or interests in joint ventures, and the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable
future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward
of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences and the carry-forward of unused
tax assets and unused tax losses can be utilised except:
when the deferred income tax asset relating to the deductible temporary difference arises from
the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor the taxable profit or
loss; or
when the deductible temporary differences associated with investments in subsidiaries,
associates or interests in joint ventures; in which case a deferred tax asset is only recognised
to the extent that it is probable that the temporary difference will reverse in the foreseeable
future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are
recognised to the extent that it has become probable that future taxable profit will allow the deferred
tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply
to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit
or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to
set off current tax assets against current tax liabilities, and the deferred tax assets and liabilities
relate to the same taxable entity and the same taxation authority.
Tax consolidation legislation
Kangaroo Island Plantation Timbers Ltd and its wholly-owned Australian controlled entities have
implemented the tax consolidation legislation as of 1 July 2004.
The head entity, Kangaroo Island Plantation Timbers Ltd and the controlled entities in the tax
consolidation Group continue to account for their own current and deferred tax amounts. The Group
has applied the Group allocation approach in determining the appropriate amount of current taxes
and deferred taxes to allocate to members of the tax consolidated Group.
In addition to its own current and deferred tax amounts, Kangaroo Island Plantation Timbers Ltd
also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused
tax losses and tax credits assumed from controlled entities in the tax consolidation Group.
P a g e | 40
For personal use only Notes to the Consolidated Financial Statements
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are
recognised as amounts receivable from or payable to other entities in the Group. Details of the tax
funding agreement are disclosed in Note 7.
Any difference between the amounts assumed and amounts receivable or payable under the tax
funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax
consolidated entities.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
when the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part
of receivables or payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component
of cash flows arising from investing and financing activities, which is recoverable from, or payable
to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the taxation authority.
Earnings per share
s)
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted
to exclude any costs of servicing equity (other than dividends) and preference share dividends,
divided by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the parent and
adjusted for:
costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with dilutive potential ordinary
shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would
result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares,
adjusted for any bonus element.
Comparative figures
t)
Where necessary, comparatives have been reclassified and repositioned for consistency with
current year disclosures.
Fair value measurements
u)
Certain accounting policies and disclosures require the measurement of fair value, for both financial
and non-financial assets and liabilities.
Management has overall responsibility to oversee all significant fair value measurements, including
Level 3 fair values; management reports to the audit committee. Management regularly reviews
significant unobservable inputs and valuation adjustments. If third party information, such as
valuation reports, are used to measure fair values, then management assesses the evidence
obtained from the third parties to support the conclusion that such valuations meet the requirements
of AASB 13 Fair Value Measurement, including the level in the fair value hierarchy in which such
valuations should be disclosed. Significant valuation issues are reported to the Board of Directors.
The Group uses observable data as much as possible when measuring the fair value of an asset or
liability. Fair values of assets or liabilities are categorised into different levels in the fair value
hierarchy based on the lowest input used in the valuation techniques as follows:
Level 1: quoted (unadjusted market prices in active markets for identical assets or liabilities).
P a g e | 41
For personal use only Notes to the Consolidated Financial Statements
Level 2: valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
Level 3: valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
If the inputs used to measure the fair value of an asset or a liability might be categorised in different
levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the
same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following
Notes:
Note 12: Property, Plant and Equipment; and
Note 13: Biological Assets.
Management assessed that cash and short-term deposits’,
trade receivables’, other current
financial assets’, trade payables’ and other current liabilities’ carrying amounts approximate their
fair values largely due to the short-term maturities of these instruments.
Significant accounting judgements, estimates and assumptions
v)
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements and estimates on historical
experience and on other various factors it believes to be reasonable under the circumstances, the
results of which form the basis of the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different
assumptions and conditions.
Management has identified the following critical accounting policies for which significant judgements,
estimates, and assumptions are made. Actual results may differ from these estimates under
different assumptions and conditions and may materially affect financial results or the financial
position reported in future periods.
Key Estimate – Valuation of biological assets
In the current year, the fair value of the biological assets was calculated by an independent expert
Geddes Management Pty Ltd (Geddes) in its report dated 30 June 2019. The valuation model used
by Geddes allows the Group to estimate the value of its timber under various scenarios, and to
consider the impact of variables within and outside the Group’s control, such as harvesting costs,
internal road construction costs, haulage, wharf charges, exchange rates and international timber
prices. Like any forward-looking valuation, the outputs are sensitive to the choice of assumptions.
The resulting independent valuation of biological assets is $115,158,000, being an increase of
$7,342,000. Further details including key assumptions can be found in Note 13.
Key Estimate – Valuation of Land
The fair value of the plantation land assets was calculated by an independent expert McGees
Property in their report dated 19 July 2017. The valuation was carried out in accordance with IFRS
13 Fair Value Measurement, AASB 13 Fair Value Measurement, and AASB 116 Property, Plant and
Equipment. The valuation used a market approach that reflects observed prices for recent market
transactions for similar properties and incorporates adjustments for factors specific to the land in
question, including plot size, location, encumbrances and current use.
The significant unobservable input is the adjustment for factors specific to the land in question. The
extent and direction of this adjustment depends on the number and characteristics of the
observable market transactions in similar properties that are used as the starting point for valuation.
Although this input is a subjective judgement, management considers that the overall valuation
would not be materially affected by reasonably possible alternative assumptions.
P a g e | 42
For personal use only Notes to the Consolidated Financial Statements
The Board has reviewed the key valuation inputs and has concluded that there are no indicators
that an updated revaluation is required at 30 June 2019.
Buildings are depreciated on a straight line basis over the estimated useful life of the asset.
Key Estimate – Valuation of Performance rights
The fair value of the performance rights granted is measured using probabilistic estimates in relation
to the future share price, at the grant date, taking into account the terms and conditions upon which
the rights were granted.
The amount recognised as an expense for the 30 June 2019 and 30 June 2018 financial periods is
calculated using estimates for the expected vesting periods, fair value of the performance rights at
grant date and remaining uncertainties about the satisfaction of performance conditions. Refer to
Notes 18 and 26 for further details.
Key Estimate – Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences if management considers
that it is probable that future taxable profits will be available to utilise those temporary differences.
3.
Financial risk management objectives and policies
The Group’s principal financial instruments comprise receivables, payables, cash and short-term
deposits.
The Group manages its exposure to key financial risks in accordance with the Group’s financial risk
management policy. The objective of the policy is to support the delivery of the Group’s financial
targets whilst protecting future financial security.
The main risks arising from the Group’s financial instruments are interest rate risk and credit risk.
The Board reviews and agrees policies for managing each of these risks and they are summarised
below. Primary responsibility for identification and control of financial risks is shared between the
board members and executive management.
Categories of Financial Assets and Liabilities
30 June 2019
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Note
9
10
11
Financial Liabilities
Trade and other payables
Non-current borrowings
Total
Note
14
16
Assets at
FVTOCI
$’000
Assets at
FVTPL
$’000
Derivatives
used for
hedging
$’000
Financial
assets at
amortised
cost
$’000
-
-
-
-
-
-
-
-
-
-
-
-
9,511
782
5
10,298
*Derivatives
used for
hedging
$’000
*Designated
at FVTPL
$’000
*Other
liabilities at
FVTPL
$’000
#Other
liabilities
$’000
Total
$’000
9,511
782
10,298
Total
$’000
-
-
-
-
-
-
-
-
-
1,210
29,700
30,910
1,210
29,700
30,910
P a g e | 43
For personal use only Notes to the Consolidated Financial Statements
30 June 2018
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Note
9
10
Financial Liabilities
Trade and other payables
Non-current borrowings
Total
Note
14
16
Assets at
FVTOCI
$’000
Assets at
FVTPL
$’000
Derivatives
used for
hedging
$’000
Financial
assets at
amortised
cost
$’000
-
-
-
-
-
-
-
-
-
-
-
-
6,727
710
5
7,442
*Derivatives
used for
hedging
$’000
*Designated
at FVTPL
$’000
*Other
liabilities at
FVTPL
$’000
#Other
liabilities
$’000
Total
$’000
6,727
710
5
7,442
Total
$’000
-
-
-
-
-
-
-
-
-
1,786
25,000
26,786
1,786
25,000
26,786
* Carried at fair value
# Carried at amortised cost
Risk Exposures and Responses
Interest Rate Risk
The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s
interest bearing liabilities and short-term deposits.
At balance date, the Group had the following mix of financial assets and liabilities exposed to
Australian Variable interest rate risk that are not designated in cash flow hedges:
Financial assets
Cash and cash equivalents
Term deposits
Financial liabilities
Interest bearing liabilities
Net exposure
Consolidated
2019
$’000
2018
$’000
9,511
-
9,511
6,727
-
6,727
(29,700)
(25,000)
(20,189)
(18,273)
The Group has $29,700,000 (2018: $25,000,000) debt exposed to variable rates of interest. Interest
and borrowing costs are as follows:
90 day BBSY variable rate (2018: 1.86% and 2017: 1.79%); and
3.1% per annum charged on amounts drawn down.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the
balance date.
At 30 June 2019, if interest rates had moved, as illustrated in the table below, with all other variables
held constant, post tax profit and equity would have been affected as follows:
P a g e | 44
For personal use only Notes to the Consolidated Financial Statements
Judgements of reasonably possible
movements:
Consolidated
+1%
-0.5%
Post tax profit
Higher/(lower)
2019
$’000
2018
$’000
Equity
Higher/(lower)
2019
$’000
2018
$’000
202
(101)
175
(88)
-
-
-
-
The movements in profit are due to higher/lower interest costs from variable rate debt and cash
balances.
Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents
and trade and other receivables. The Group’s exposure to credit risk arises from potential default
of the counter party, with a maximum exposure equal to the carrying amount of these instruments.
Exposure at balance date is addressed in each applicable note.
Cash at bank is held at the Commonwealth Bank, which has an S&P (Standard & Poors) rating of
AA-.
Credit risk in trade receivables is managed in the following ways:
a regular risk review takes place on all receivables and loan balances; and
The Chief Financial Officer has direct responsibility of the recovery of outstanding accounts. All
overdue accounts are now sent directly to the Group’s lawyers for legal action after other avenues
of recovery have been exhausted.
Legal action on those particular accounts where the matter is being defended are dealt with directly
by the Chief Financial Officer and the lawyers involved.
The Chief Financial Officer regularly reports to the Board of Directors on these matters.
Refer to Note 10 for ageing analysis of receivables.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
the use of bank loans and other available credit lines.
The table below reflects all contractually fixed settlements and receivables for settlement,
repayments and interest resulting from recognised financial assets and liabilities as at 30 June 2019.
Cash flows for financial assets and liabilities without fixed amounts or timing are based on the
conditions existing at 30 June 2019.
The remaining contractual maturities of the Group’s financial liabilities are:
6 months or less
6-12 months
1-5 years
Over 5 years
Consolidated
2019
$’000
(1,210)
-
(5,000)
(24,700)
(30,910)
2018
$’000
(1,786)
(3,316)
-
(25,000)
(30,102)
P a g e | 45
For personal use only Notes to the Consolidated Financial Statements
Maturity analysis of financial assets and liability based on management’s expectations
Trade payables and other financial liabilities mainly originate from the financing of assets used in
our ongoing operations. These assets are considered in the Group’s overall liquidity risk. To monitor
existing financial assets and liabilities as well as to enable an effective controlling of future risks,
Kangaroo Island Plantation Timbers Ltd has established risk reporting that reflects the expectations
of management in regards to the expected settlement of financial assets and liabilities.
< 6
months
$’000
6-12
months
$’000
1-5
years
$’000
> 5
years
$’000
Total
$’000
Year ended 30 June 2019
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities
Trade and other payables
Non-current borrowings
Net Maturity
9,511
782
5
10,298
(1,210)
-
(1,210)
9,088
< 6
months
$’000
6-12
months
$’000
Year ended 30 June 2018
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities
Trade and other payables
Non-current borrowings
Net Maturity
6,727
710
5
7,442
(1,786)
-
(1,786)
5,656
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1-5
years
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(29,700)
(29,700)
(29,700)
> 5
years
$’000
-
-
-
-
-
(25,000)
(25,000)
(25,000)
9,511
782
5
10,298
(1,210)
(29,700)
(30,910))
(20,612)
Total
$’000
6,727
710
5
7,442
(1,786)
(25,000)
(26,786)
(19,344)
Fair value
The methods for estimating fair value are outlined in the relevant notes to the financial statements.
Price risk
The Group’s exposure to commodity and equity securities price risk is minimal as the Group does
not hold investments in equity securities.
P a g e | 46
For personal use only Notes to the Consolidated Financial Statements
4. Fair value measurement of non-financial instruments
The following table shows the Levels within the hierarchy of non-financial assets measured at fair
value on a recurring basis at 30 June 2019:
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
30 June 2019
Property, plant and equipment
Land held for production in Australia
Land and buildings
Biological assets
Standing timber
30 June 2018
Property, plant and equipment
Land held for production in Australia
Land and buildings
Biological assets
Standing timber
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43,720
3,765
47,485
43,720
3,764
47,484
115,158
115,158
43,720
1,520
45,240
43,720
1,520
45,240
107,816
107,816
The fair value of the Group’s plantation land was calculated by an independent expert, McGees
(SA) Pty Ltd (“McGees Property”), as at 30 June 2017. The Board have reviewed the key valuation
inputs and have concluded that there are no indicators that an updated revaluation is required at 30
June 2019.
The fair value of the Group’s biological assets was calculated by an independent expert Geddes
Management Pty Ltd, as at 30 June 2019.
Further information is set out below.
Land held for production in Australia (Level 3)
The fair value of the plantation land assets was calculated by an independent expert, McGees
Property, in their report dated 19 July 2017. The valuation was carried out in accordance with IFRS
13 Fair Value Measurement, AASB 13 Fair Value Measurement, AASB 116 Property, Plant and
Equipment. The valuation used a market approach that reflects observed prices for recent market
transactions for similar properties and incorporates adjustments for factors specific to the land in
question, including plot size, location, encumbrances and current use.
The significant unobservable input is the adjustment for factors specific to the land in question. The
extent and direction of this adjustment depends on the number and characteristics of the observable
market transactions in similar properties that are used as the starting point for valuation. Although
this input is a subjective judgement, management considers that the overall valuation would not be
materially affected by reasonably possible alternative assumptions. Refer to Note 12 for further
details.
Biological assets (Level 3)
The fair value of the biological assets was calculated by an independent expert, Geddes
Management Pty Ltd (Geddes) in in their report dated 30 June 2019. The valuation model used by
Geddes allows the Group to estimate the value of its timber under various scenarios, and to consider
the impact of variables within and outside the Group’s control, such as harvesting costs, internal
road construction costs, haulage, wharf charges, exchange rates and international timber prices.
As with any forward-looking valuation, the outputs are sensitive to the choice of assumptions. Refer
to Note 14 for further details.
P a g e | 47
For personal use only Notes to the Consolidated Financial Statements
Land held for sale in Australia (Level 3)
The review was carried out using a market approach that reflects observed prices for recent market
transactions for similar properties and incorporates adjustments for factors specific to the land in
question, including plot size, location, encumbrances and current use.
The significant unobservable input is the adjustment for factors specific to the land in question. The
extent and direction of this adjustment depends on the number and characteristics of the observable
market transactions in similar properties that are used as the starting point for valuation. Although
this input is a subjective judgement, management considers that the overall valuation would not be
materially affected by reasonably possible alternative assumptions.
5. Segment reporting
Year ended 30 June 2019 and 30 June 2018
The Group has operations in one business segment, forestry management.
The forestry management segment primarily involves the management of timber plantations and,
should favourable conditions exist, milling operations.
All operations are conducted in Australia.
6. Revenue and expenses
(a) Operating leases income
Operating leases: freehold land and buildings
Operating leases: equipment Other
Total
Consolidated
2019
$’000
2018
$’000
132
9
141
130
17
147
The Group leases a number of assets on operating leases:
Operating leases: freehold land and buildings $132,091 (2018: $130,193)
The Lease agreement between Graham Holdaway and the Group commenced on 30 June
1999. The lease is for 187.60 hectares of Land known as “Gosse East’ and has a term of 25
years. Annual rent excluding GST amounted to $24,675 (2018: $24,121) and is fully paid;
The Group had a holiday rental at its Smith Bay property until November 2017; the property
is no longer rented out. The annual rent received amounted to $nil (2018: $796);
The Group also have a residential lease on 10 (2018: 10) properties. The agreement is
cancellable and the annual rent received amounted to $72,816 (2018: $72,736); and
The Group also casually leases out certain properties for agistment and other purposes. The
annual income amounted to $34,600 (2018: $32,534).
Operating leases: equipment $8,755 (2018: $17,000)
The Group maintained an equipment lease which concluded in February 2019 (agreements
stated cancellable by lessor giving between six month notice). The annual income amounted
to $8,755 (2018: $17,000).
P a g e | 48
For personal use only Notes to the Consolidated Financial Statements
Consolidated
2019
$’000
2018
$’000
(b) Other income
Other income
Total Other income
(c) Sale of assets
Sale of investment properties
Cost of investment properties sold including sale costs
(Loss) on investment properties sold
Sale of equipment and motor vehicles
Cost of assets sold
(Loss)/profit on assets sold
Total profit/(loss) on assets sold
(d) Other expenses
Share-based payment
Audit fees
ASIC fees
Depreciation
ASX/share registry fees
Directors fees
Legal fees
Professional fees
Other corporate expenses
Other expenses
(e) Finance costs
Borrowing costs
Other interest
Finance costs
(f) Employee benefits expense
Wages and salaries
Non-Executive Directors’ fees (including super)
Share based payments
Performance rights
Annual leave provision
Long service leave provision
Defined contributions superannuation
Total employee and directors’ remuneration
7.
Income Tax
Income tax expense
a)
The major components of income tax expense are:
Income Statement
5
5
-
-
-
13
-
13
13
234
61
12
104
99
1,117
7
377
260
2,271
1,464
-
1,464
1,003
190
5
172
122
6
76
1,574
10
10
96
(101)
(5)
4
-
4
(1)
270
89
4
122
68
765
245
448
210
2,223
1,597
95
1,692
482
393
5
215
10
4
50
1,159
Consolidated
2019
$’000
2018
$’000
Adjustments in relation to previous income tax
Deferred income tax
Benefit from previously unrecognised tax loss used to reduce
deferred tax expense
Income tax expense/(benefit) reported in profit or loss
-
-
(297)
(297)
6,053
6,053
P a g e | 49
For personal use only Notes to the Consolidated Financial Statements
Profit/(loss) before tax
At the statutory income tax rate of 30% (2018: 30%)
Non-deductible expenses/capital gain on sale of land
Adjustment in respect of prior year
Tax loss brought to accounts as a deferred tax asset
Income tax expense/(benefit) reported in income statement
b) Amounts charged or credited to equity
Deferred income tax related to items charged (credited) to
equity
Net gain on property, plant and equipment
Share issue costs
Income tax expense reported in equity
Consolidated
2019
$’000
2018
$’000
(50)
(15)
-
312
-
297
19,105
5,731
66
256
-
6,053
-
(164)
(164)
-
(315)
(315)
Tax Consolidation
The Company and its 100% owned controlled entities have formed a tax consolidation Group.
Members of the Consolidated Entity have entered into a tax sharing arrangement in order to allocate
income tax expenses to the wholly owned controlled entities on a pro-rata basis. The agreement
provides for the allocation of income tax liabilities between the entities should the head entity default
on its tax payment obligations. At balance date, the possibility of default is remote. The head entity
of the tax consolidated Group is Kangaroo Island Plantation Timbers Ltd.
Tax effect accounting by members of the tax consolidated Group
Members of the tax consolidated Group have entered into a tax funding agreement. The tax funding
agreement provides for the allocation of current taxes to members of the tax consolidated Group.
Deferred taxes are allocated to members of the tax consolidated Group in accordance with a Group
allocation approach which is consistent with the principles of AASB 112 Income Taxes.
The allocation of taxes under the tax funding agreement is recognised as an increase/(decrease) in
the member entities’ intercompany accounts with the tax consolidated Group head company,
Kangaroo Island Plantation Timbers Ltd. In this regard the Company has assumed the benefit of
tax losses from the member entities as of the balance date. The nature of the tax funding agreement
is such that no tax consolidation contributions by or distributions to equity participants are required.
Tax losses not recognised
The gross value of tax losses recognised at 30 June 2019 amounted to $28,559,182 (2018:
$22,992,847).
Recognised deferred tax assets and liabilities
CONSOLIDATED
Trade and other receivables
Property, plant & equipment
Biological assets
Trade and other payables
Tax losses
Recognised tax losses
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Assets
2019
$’000
2018
$’000
Liabilities
2019
$’000
2018
$’000
Net
2019
$’000
2018
$’000
616
1,694
-
70
8,568
-
10,948
-
10,948
698
1,139
-
32
6,898
-
8,767
-
8,767
-
(5,845)
(23,685)
-
-
-
(29,530)
-
(29,530)
-
(5,850)
(21,708)
-
-
-
(27,558)
-
(27,558)
617
(4,151)
(23,685)
70
8,567
-
(18,582)
-
(18,582)
698
(4,711)
(21,708)
32
6,898
-
(18,791)
-
(18,791)
P a g e | 50
For personal use only Notes to the Consolidated Financial Statements
Deferred income tax
Deferred income tax at 30 June 2019 relates to the following:
Movements in temporary
differences during the
year
Property, plant & equipment
Biological assets
Capital raising costs
Trade and other payables
Tax losses
Movements in temporary
differences during the
year
Property, plant & equipment
Biological assets
Capital raising costs
Trade and other payables
Tax losses
Balance
1 July 18
$’000
(4,711)
(21,708)
698
32
6,898
(18,791)
Balance
1 July 17
$’000
(5,594)
(13,630)
596
26
5,549
(13,053)
Recognised
in Income
$’000
Recognised
on Acquisition
$’000
Recognised
in Equity
$’000
Balance
30 June 19
$’000
560
(1,977)
(245)
38
1,669
45
-
-
-
-
-
-
-
-
164
-
-
164
(4,151)
(23,685)
617
70
8,567
(18,582)
Recognised
in Income
$’000
Recognised
on Acquisition
$’000
Recognised
in Equity
$’000
Balance
30 June 18
$’000
883
(8,078)
(213)
6
1,349
(6,053)
-
-
-
-
-
-
-
-
315
-
-
315
(4,711)
(21,708)
698
32
6,898
(18,791)
8. Earnings per share
The following reflects the income and share data used in the total operation’s basic and diluted
earnings per share computations:
Consolidated
2019
$’000
2018
$’000
Earnings used in calculating earnings per share
a)
Net profit/(loss) attributable to ordinary equity holders of the parent
247
13,052
There is no dilution effect of the Performance Rights on earnings.
Weighted average number of shares
b)
Weighted average number of ordinary shares for basic earnings
per share
Effect of dilution:
2019
Number
Thousands
2018
Number
Thousands
52,659
46,412
Share options and performance rights
Weighted average number of ordinary shares adjusted for the
effect of Dilution
-
-
52,659
46,412
c) Basic and diluted earnings per share
Basic and diluted earnings per share
EPS in
cents
0.5
EPS in
cents
28
P a g e | 51
For personal use only Notes to the Consolidated Financial Statements
There are no instruments excluded from the calculation of diluted earnings per share that could
potentially dilute basic earnings per share in the future because they are anti-dilutive for either of the
periods presented.
There have been no other transactions involving ordinary shares or potential ordinary shares that
would significantly change the number of ordinary shares or potential ordinary shares outstanding
between the reporting date and the date of completion of these financial statements.
9.
Current assets – Cash and cash equivalents
Cash at bank and in hand
Consolidated
2019
$’000
2018
$’000
9,511
9,511
6,727
6,727
Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying
amounts of cash and cash equivalents represent fair value. At 30 June 2019 $2,534,436 (2018:
$3,316,263) is held in a restricted savings account, the funds can only be used to pay for CBA
borrowing costs.
Reconciliation to Cash Flow Statement
For the purposes of the Statement of Cash Flows, cash and cash equivalents amount to $9,511,000
(2018: $6,727,000).
10. Current assets – Trade and other receivables
Consolidated
2019
$’000
2018
$’000
5
5
13
13
Trade receivables (a)
Carrying amount of trade and other receivables
a)
Trade debtors are non-interest bearing and generally on 30-day terms.
Terms of trade
b)
At 30 June, the ageing analysis of trade receivables is as follows:
Allowance for impairment loss
Consolidated
2019
Trade and other Receivables
2018
Trade and other Receivables
61-90
Days
PDNI*
61-90 Days
CI*
+ 91
Days
PDNI*
+ 91 Days
CI*
Total
5
5
13
13
5
5
13
13
-
-
-
-
-
-
-
-
-
-
-
-
*PDNI – Past due not impaired – represents the portion of the outstanding amount that the debtor is servicing
under a mutually agreed repayment plan, but is more than 60 days past due.
*CI – Considered impaired
Credit risk and effective interest rate risk and fair values
c)
Details regarding the credit risk and effective interest rate of current receivables are disclosed in
Note 2(i). The net carrying amount of trade and other receivables is assumed to approximate their
fair value.
P a g e | 52
For personal use only Notes to the Consolidated Financial Statements
11. Other Current Assets
Prepayments
Consolidated
2019
$’000
2018
$’000
777
777
697
697
12. Non-current assets – Property, plant and equipment
a)
Reconciliation of carrying amounts at the beginning and end of the period
Year ended 30 June 2019
At 1 July 2018 net of accumulated depreciation
and impairment
Additions
Disposals
Adjustment in accumulated depreciation in
relation to disposals
Depreciation charge for year
At 30 June 2019 net of accumulated
depreciation and impairment
Freehold
land and
Buildings
$’000
Plant and
equipment
$’000
Wharf
asset
$’000
Total
$’000
47,501
400
10,068
57,969
-
-
-
(16)
47,485
24
(102)
84
(88)
318
4,220
-
-
-
14,288
4,244
(102)
84
(104)
62,091
At 30 June 2019
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
47,701
(216)
47,485
1,186
(868)
318
14,288
-
14,288
63,175
(1,084)
62,091
Year ended 30 June 2018
At 1 July 2017 net of accumulated depreciation
and impairment
Additions
Disposals
Adjustment in accumulated depreciation in
relation to disposals
Depreciation charge for year
At 30 June 2018 net of accumulated
depreciation and impairment
45,240
492
-
45,732
2,280
(5)
-
(14)
47,501
16
(36)
36
(108)
400
10,068
-
-
-
10,068
12,364
(41)
36
(122)
57,969
At 30 June 2018
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
47,701
(200)
47,501
1,264
(864)
400
10,068
-
10,068
59,033
(1,064)
57,969
The acquisition of wharf assets during the year is due to improvements to the floating pontoon of
$4.22 million (2018: $10.07 million). The wharf assets is not operational and therefore no
depreciation has been charged during the year (2018: $nil).
b)
Freehold land revaluations
The Group’s freehold land and buildings are stated at their revalued amounts, being the fair value
at the date of revaluation, less any subsequent accumulated depreciation and subsequent
accumulated impairment losses. The fair value measurements of the Group’s freehold land and
P a g e | 53
For personal use only Notes to the Consolidated Financial Statements
buildings as at 30 June 2017 are based on an independent expert’s valuation. The net result of the
independent revaluation in the prior year amounted to $322,000, of which $227,000 was recognised
in the asset revaluation reserve and $95,000 as deferred tax.
The Board has reviewed the key valuation inputs and has concluded that there are no indicators
that the freehold land values are materially different at 30 June 2019. The Board has concluded that
no updated revaluation is required at 30 June 2019. As a result, the Board has used the 30 June
2017 valuation, there have been no sales and all purchases have been at cost.
Independent expert’s valuation technique
The Board has elected to use valuations provided by the independent external valuer. In assessing
the fair value of land held, the Directors have re-assessed the highest and best use in accordance
with AASB 13 Fair Value Measurement paragraph 27, as a result of the Group’s biological asset,
timber now having a probable route to market. The land’s highest and best use is now forestry land
rather than encumbered non-forestry land.
The fair value valuation has been prepared using a ‘Summation Approach’; the land value has
been assessed as a rate per hectare which is summated with the added value of any structural
improvement. The independent expert has assessed the rate per hectare as in the range of $1,787
per hectare to $3,520 per hectare; plantable land would be at the upper end of this range, being
$2,900 to $3,200 per hectare. Based on this assessment, the Company’s land is valued at between
$2,300 and $2,900 per plantable hectare. The land’s location, rainfall, physical attributes, location
of amenities and improvements all influence where in this range a particular is valued.
In the prior year, the Group assessed that the proposed route to market for its biological assets is
now more probable than not (refer to Note 14 for further details) and biological assets are now
recognised; accordingly. The land is valued on the same basis as in the prior year: with the Group’s
land classed as forestry land.
All fair value estimates for land and buildings are included in Level 3 of the fair value hierarchy.
Significant Observable Inputs
(i)
Land valued assuming Smith Bay will be approved, enabling the export of timber.
(ii) The valuation assumed that plantation land will be utilized for the growing and harvesting of
plantation timber over the next 20 years.
(iii) Recent sales of land on Kangaroo Island and recent trends in the sale of land in a similar
plantation based area in South Australia and Victoria, discounted for island location.
Significant Unobservable Inputs
(i) Estimated price per hectare is determined by the independent expert after observing each
asset’s:
improvement including structural, fencing and water;
land and climatic characteristics including soil, climate and rainfall;
a. Location including surrounding land use, amenities and local services;
b.
c.
d. plantation details including planted hectares and age; and
e. occupancy including dwellings, structures and licenses/leases.
(ii)
the existence of an export wharf solidifies the view that the best use of Western Kangaroo
Island land is plantation forestry.
(iii) Economic overview including local, State and industry economic overview.
P a g e | 54
For personal use only Notes to the Consolidated Financial Statements
Sensitivity analysis
The fair value measurement of freehold land is sensitive to changes in the unobservable inputs
in a significantly higher or lower fair value measurement. The following tables
which may result
demonstrate the sensitivity to a reasonably possible change in significant unobservable inputs, with
all other variables held constant (change in profit and equity):
Forestry land
Increase in estimated market value per hectare by 2%
Decrease in estimated market per hectare by 2%
Consolidated
2019
$’000
905
(905)
-
2018
$’000
905
(905)
-
Operating lease
c)
The Group earns rental income from operating leases of its investment properties (see Note 6).
13. Biological assets
Opening balance at 1 July
Add fair value adjustment:
Fair value gain
Closing balance as at 30 June
Plantation timber at cost
Accumulated fair value gain
Total biological assets
Classified as current
Classified as non-current
Fair value
Consolidated
2019
$’000
2018
$’000
107,816
80,889
7,342
115,158
26,927
107,816
25,178
89,980
115,158
-
115,158
25,178
82,638
107,816
-
107,816
The fair value of the biological assets for the year ended 30 June 2019 was calculated by an
independent expert, Geddes Management Pty Ltd (Geddes), in its report dated 30 June 2019. The
valuation model used by Geddes allows the Group to estimate the value of its timber under various
scenarios, and to consider the impact of variables within and outside the Group’s control, such as
harvesting costs, internal road construction costs, haulage, wharf charges, exchange rates and
international timber prices. As with any forward-looking valuation, the outputs are sensitive to the
choice of assumptions.
The Group considers the development of wharf infrastructure that allows exploitation of the
substantial standing timber resource to be more probable than not. As a result, the Group believes
it has sufficient certainty about the form and quantum of future cash flows to maintain its valuation
approach. The key milestones achieved and taken into consideration by the Board are:
Acquisition of Smith bay site, a deep-water wharf site in close proximity to its plantations;
Acquisition of Forestry Investment Trust estate (“FIT Estate”) completed on 28 April 2017;
The Groups estate now includes approximately 25,408 ha of land of which more than 14,034
is planted the majority with eucalyptus globulus. KIPT now owns Ballast Head, New Forests’
proposed alterative wharf site;
Major Project Status granted in February 2017;
$57.1 million CBA facility established in March 2017;
$80.0 million raised via shares issued since 1 July 2016;
Draft EIS submitted 1 October 2018 and revised EIS January 2019;
P a g e | 55
For personal use only Acquisition of 173ha coastal site that adjoins its Smith Bay site to the west;
Notes to the Consolidated Financial Statements
Woodchip Offtake agreement signed with MWO in late 2017;
Log sale and purchase agreement signed with MWO in October 2018;
MOU with Flinders Ports signed January 2019;
Release of EIS by State Government on 11th April 2019 - the public consultation has been
completed and KIPT is finalising its response documents; and
On 7th December 2018 KIPT announced that a fire had affected two properties, and released a
preliminary estimate that approx. 1.25% of the treecrop assets could be affected. The independent
valuer at 30 June 2019 has taken a more conservative approach and concluded the total cost is
$2.3 million.
The fair value measurements for the biological assets have been independently valued by Geddes
Management Pty Ltd (“Geddes”) at 30 June 2019 and as such, are categorised as Level 3 in the
fair value hierarchy.
Independent expert’s valuation technique
In Australia, the Association of Consulting Foresters of Australia, now a branch of the Institute of
Foresters of Australia, developed the Australian Standard for Valuing Commercial Forests version
2.1 (July 2012) which is recognised globally within both the accounting and forestry professions for
its sound guidance for forest valuation.
The valuation method used by Geddes is prepared under the Australian Standard for Valuing
Commercial Forests version 2.1 (July 2012). The valuation method used by Geddes is the present
Value Method. This method is widely used and requires a discounted cashflow model, the model
allows the valuer to estimate the value of timber under various scenarios, and considers the impact
of variables within and outside the Group’s control, such as harvesting costs, internal road
construction costs, haulage, wharf charges, exchange rates and international timber prices.
Due to lack of local data, the highest and best use of the Company’s plantation timber is considered
to be commercial timber production for export markets. In accordance with AASB 141 Agriculture
the valuation is on a pre-tax basis.
As with any forward-looking valuation, the outputs are sensitive to the choice of assumptions.
Significant Observable Inputs
(i) US Dollar exchange rate used is consistent throughout the valuation model at 1.370 AUD or 73
cents US (2018: 1.266 AUD or 79 cents US).
(ii) The valuation is derived using a real pre-tax discount rate of 11.43% (nominal 13.78%) (2018
11.65%, nominal 13.78%); calculated using the CAPM formula. Material inputs are an
Australian 10 year bond rate for risk free rate of return of 4.75% (2018: 4.75%) and an equity
premium of 5% (2018: 5%), a beta of 1 (2018: 1), a gearing of 30% debt (2018: 30%), an alpha
of 2.0% (2018: 2.0%) and inflation of 2.1% (2018: 1.9%) forecast to 2020.
A deferral in harvest year may result in higher production as a more mature tree is harvested, this
may alter the fair value measurement, depending on the ratio of the growth rate to the discount rate.
Significant Unobservable Inputs
(i) Current trees are between 14 and 36 years old. The volumes have been estimated by the valuer
assisted by the implementation of a Woodstock inventory model by PF Olsen. The Geddes
model assumes a harvesting plan over 11 years commencing in 2022 (2018: commencing
2020).
(ii) The price of timber is determined with due consideration to market transactions and industry
projections including:
P a g e | 56
For personal use only Notes to the Consolidated Financial Statements
The price of hardwood chips is determined after consideration of current market
transactions, arriving at a blue. globulous chip price of $126.16 (USD$92.09) (2018:
$105.22 (USD$83.12)) per green metric tonne (GMT) after discounts including dry fibre
percentage, anticipated chip losses, discount to allow for market fluctuations and
marketing commissions The estimates are in real dollars.
o The price of pine logs is determined for a range of log grades after consideration of current
market transactions. Using the PF Olsen inventory data, an estimate of revenue per hectare
at harvest is calculated on a property by property basis. The average price varies from
$76.33 (2018: $40.00) per GMT to $107.14 (2018: $115.07) per GMT. These estimates are
again in real dollars.
o Costs to maintain the plantations are estimated on a per hectare per annum basis. Prior to
harvest an allowance is made for in plantation roading costs. This is also denominated on
a per hectare basis and varies according to the specific conditions on each plantation
property.
o The costs at harvest (harvesting, haulage, port access and other pre-export costs) are
estimated on a per GMT basis for both hardwood and softwood.
(iii) The fair value measurement of biological assets is sensitive to changes in the unobservable
inputs which may result in a significantly higher or lower fair value measurement:
o An increase in timber production or timber prices would result in a higher fair value
measurement.
o A decrease in timber production or timber prices would result in a lower fair value
measurement.
o An increase in harvesting, processing, marketing or plantation maintenance costs would
result in a lower fair value measurement.
o A decrease in harvesting, processing, marketing or plantation maintenance costs would
result in a higher fair value measurement.
Deferral in harvest year
A deferral in harvest year may result in higher production as a more mature tree is harvested, this
may alter the fair value measurement, depending on the ratio of the growth rate to the discount rate.
The Company may also accelerate its harvesting plan and complete its first harvesting cycle earlier
than originally planned.
The Company is aware that Wharf approval and construction may take longer than forecast.
However, it believes that any delays will result in a less than material change in the valuation of the
Biological Asset.
Sensitivity analysis
(i) Foreign Currency Sensitivity Analysis
The following tables demonstrate the sensitivity of the fair value measurement of biological assets
to a reasonably possible change in USD exchange rate, with all other variables held constant:
Change in value
Increase in the AUD to USD by 4 cents or 5.48%
(2018: 4 cents or 5.06%)
Decrease in the AUD to USD by 4 cents 5.48%
(2018: 4 cents or 5.06%)
2019
$’000
2018
$’000
(12,768)
(9,560)
14,248
10,620
P a g e | 57
For personal use only Notes to the Consolidated Financial Statements
(ii) Price Risk Sensitivity Analysis
The following tables demonstrate the sensitivity of the fair value measurement of biological assets
to a reasonably possible change in price, with all other variables held constant:
Eucalyptus globulus
Change in equity
Increase in the price by 5% (2018: 5%)
Decrease in the price by 5% (2018: 5%)
(iii) Discount rate Risk Sensitivity Analysis
2019
$’000
2018
$’000
12,936
(12,936)
10,480
(10,480)
The following tables demonstrate the sensitivity of the fair value measurement of biological assets
to a reasonably possible change in discount rate, with all other variables held constant:
Change in equity and profit
o
Increase in the nominal discount rate by 7% from 13.78%
to 14.78% (2018: 7% from 13.78% to 14.78%)
Decrease in the nominal discount rate by 7% from 13.78%
to 12.78% (2018: 7% from 13.78% to 12.78%
o
2019
$’000
2018
$’000
(6,993)
(5,450)
7,580
5,820
Project Risk
The Group is exposed to the following risks relating to its timber plantations.
(i) Supply and Demand Risk
The Group is exposed to risks arising from fluctuations in the price and sales volume of Eucalyptus
globulus, Eucalyptus nitens and Pine radiata Sandalwood. When possible, the Group intends to
manage this risk by aligning its harvest volume to market supply and demand. Management
performs regular industry trend analysis for projected harvest volumes and pricing. The Group has
signed a Memorandum of Understanding with Mitsui Bussan Woodchip Oceania Pty Ltd (MWO),
an Australian subsidiary of a Japanese conglomerate Mitsui & Co Ltd, with a view to entering into
an exclusive timber off-take agreement. This Agreement will mitigate an element of demand risk.
(ii) Climate and Other Risks
The Group’s timber plantations are exposed to the risk of damage from climate changes, diseases,
forest fires and other natural forces. The Group has processes in place aimed at monitoring and
mitigating these risks, including regular forest health inspections and industry pest and disease
surveys. The island location also mitigates some of these risks. In addition, the group is seeking
certain local Government protection that is given to other Kangaroo Island businesses in preventing
introduction of diseases from the mainland.
(iii) Foreign Currency Risk
Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate
because of changes in foreign exchange rates. Timber prices are typically denominated in $US,
although the main customers are located in Asia. The Group is considering using appropriate
financial instruments to reduce its exposure to foreign currency risks.
14. Current liabilities – Trade and other payables
Trade payables (a)
PAYG tax payable
Consolidated
2019
$’000
982
29
1,011
2018
$’000
1,707
13
1,720
a)
Trade payables
Trade payables are non-interest bearing and are normally settled on 30-day terms.
P a g e | 58
For personal use only Notes to the Consolidated Financial Statements
15. Current liabilities – employee benefits
Employee benefits
Annual Leave
Long service leave
Superannuation
Consolidated
2019
$’000
2018
$’000
164
27
8
199
42
20
4
66
Represent annual leave, long service leave and superannuation entitlements of employees within
the Group and are non-interest bearing.
16.
Interest-bearing liabilities
Current
Bank borrowings (a)
Total current
Non-Current
Bank borrowings (a)
Total non-current
Consolidated
2019
$’000
2018
$’000
-
-
-
-
29,700
29,700
25,000
25,000
29,700
25,000
a)
The Company has a $57,100,000 facility with the CBA that can be drawn down as follows:
1. $25,000,000 (‘first draw down’), which was fully drawn down in the prior year;
2. $8,000,000 (‘second draw down’); which is available for draw down, at 30 June
2019 $4,700,000 has been drawn down and $3,300,000 remains available for
drawdown; and
3. $22,000,000 (‘third draw down’) is available to fund Wharf Construction once
approval is obtained.
In addition, further CBA asset finance will be available.
Interest of 1.79% (2018: 1.79%) per annum based on BBSY variable rate and fees
of 3.1% (2018: 3.1%) per annum on amounts drawn down amounted to $1,464,098
(2018: $1,597,364) during the year. The facility is secured by:
4. First ranking charge over all assets including all present and acquired property
(excluding Smith Bay wharf site and Ballast Head land) and plantation assets;
marine leases (if applicable), wharf assets and shares in subsidiary undertakings.
5. A charge over Smith Bay wharf site and Ballast Head land will not be registered
until the second drawdown is required. The two assets are valued at $1,100,000
by the Independent Valuer (refer to Note 12 for further detail).
6. An account set off deed over deposited funds of $2,534,436 (2018: $3,316,263)
(refer to Note 9 for further details).
The Company is also subject to a number of loan covenants, all of which have been
complied with since initial draw down of the facility on 28 April 2017.
b)
The carrying amount of interest-bearing liabilities approximates their fair value as the
interest payable on these borrowings is close to current market rates.
P a g e | 59
For personal use only Notes to the Consolidated Financial Statements
17. Contributed equity
a) Issued and paid up capital
Ordinary shares fully paid
Consolidated
2019
$’000
2018
$’000
89,949
79,963
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
b) Movements in shares on issue
Beginning of financial year
Placement and share purchase plan
announced on 18 February 2019
Placement announced on 4 December
2017
Share-based payment (Note 26)
Share issue costs
End of the financial year
c)
Capital management
2019
Number of
shares
50,897,512
5,153,250
2018
$’000
79,963
10,306
Number of
shares
40,874,809
-
$’000
60,648
-
-
-
10,000,000
20,000
30,737
-
56,081,499
62
(382)
89,949
22,703
-
50,897,512
50
(735)
79,963
Capital consists of share capital and borrowings of $119.649 million (2018: $104.963 million).
When managing capital, management’s objective is to ensure the entity continues as a going
concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders.
Management also aims to maintain a capital structure that ensures the lowest cost of capital
available to the entity.
Management monitors capital through the gearing ratio (net debt/total capital). The gearing ratios
at 30 June 2019 and 30 June 2018 were as follows:
Trade and other payables
Interest bearing liabilities
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing Ratio
Consolidated
2019
$’000
1,011
29,700
(9,511)
21,200
138,055
159,255
13.31%
2018
$’000
1,720
25,000
(6,727)
19,993
127,650
147,643
13.54%
The Group is not subject to any externally imposed capital requirements.
18. Reserves
Option and Performance Rights reserve (a)
Property, plant and equipment reserve (b)
Consolidated
2019
$’000
125
3,685
3,810
2018
$’000
111
3,685
3,796
P a g e | 60
For personal use only Notes to the Consolidated Financial Statements
a)
Option and Performance Rights reserve
Opening balance at 1 July
Movement:
Performance rights dated 16 October 2018
Performance rights dated 10 November 2017 lapsed
Performance rights dated 10 November 2017
Performance rights dated 24 February 2017 lapsed
Performance rights dated 24 February 2017
Closing balance at 30 June
Consolidated
2019
$’000
2018
$’000
111
125
(158)
47
-
-
125
480
-
-
111
(584)
104
111
The option reserve is used to recognise the grant date fair value of options and performance rights
issued to employees but not yet exercised.
The Performance Rights Plan (“Plan”) was approved by Shareholders on 16 October 2018. The
terms of the Plan involve the issue of Shares that will rank equally with all other existing Shares in
all respects including voting rights and entitlement to participate in dividends and in future rights and
bonus issues.
In addition, a Plan participant must not dispose of any Shares acquired under the Plan before the
end of the restriction period (if any), which are subject to the Plan rules and the terms of the specific
offer from time to time.
The rationale for the Plan was, and is, to provide the Executive and Non-Executive Directors of the
Company with increased remuneration in recognition of the additional duties of the respective
directors, and to incentivise them to align their interests more closely with those of other
Shareholders.
While the Company's share price has begun to better reflect the underlying value of its assets, there
remains a substantial valuation gap that might be realised once a sustainable forestry industry is
established on Kangaroo Island.
Performance Rights Plan
Interest in Performance Rights
Performance
Rights dated
16 October
2018
$
Performance
Rights dated
10 November
2017
$
Performance
Rights dated
24 February
2017
$
Total
Performance
Rights
$
Year
Non-Executive Directors
P McKenzie
G Boulton
Executive Directors
K Lamb(1)
J Sergeant
S Black
G Holdaway
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
14,767
-
14,767
-
21,251
-
29,534
-
14,767
-
29,534
-
124,620
-
P a g e | 61
6,777
15,851
6,777
15,851
-
-
13,554
31,702
6,777
15,851
13,555
31,702
-
47,440
110,957
-
14,922
-
14,922
-
-
-
29,842
-
14,922
-
29,843
21,544
30,773
21,544
30,773
21,251
-
43,088
61,544
21,544
30,773
43,089
61,545
-
104,451
172,060
215,408
For personal use only Notes to the Consolidated Financial Statements
(1) Mr K Lamb was appointed as a Non-Executive Director on 15 October 2018 and as an Executive on
11 March 2019, under his agreement he is entitled to Performance Rights dated 16 October 2018
under the Performance Rights Plan, on the same basis as other Directors subject to Shareholder
approval.
Performance Rights Plan
The Performance Rights Plan (“Plan”) was approved by Shareholders on 5 October 2016. The terms
of the Plan involve the issue of Shares that will rank equally with all other existing Shares in all
respects including voting rights and entitlement to participate in dividends and in future rights and
bonus issues.
In addition, a Plan participant must not dispose of any Shares acquired under the Plan before the
end of the restriction period (if any) which are subject to the Plan rules and the terms of the specific
offer from time to time.
The rationale for the Plan was, and is, to provide the Executives and the Non-Executive Directors
of the Company with increased remuneration in recognition of the additional duties of the respective
directors, and to incentivise them to align their interests more closely with those of Shareholders.
While the Company's share price has begun to better reflect the underlying value of its assets, there
remains a substantial valuation gap that might be realised once a sustainable forestry industry is
established on Kangaroo Island.
Performance Rights dated 16 October 2018 and 10 November 2017
At the 16 October 2018 General Meeting, Shareholders approved performance rights dated 16
October 2018, triggered by meeting the following performance condition:
the volume-weighted average price (VWAP) of the Company’s Shares exceeds the relevant
price, based on the most recently-traded 1,000,000 shares.
Performance Rights dated 10 November 2017 expired on 9 November 2018 and were replaced with
Performance Rights dated 16 October 2018. The Performance Rights dated 10 November 2017
were approved by Shareholders on 10 November 2017, had identical performance conditions and
expired on 9 November 2018.
A summary of the Performance Rights is shown below:
Shares to be issued to directors:
20 Business Day
VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
J Sergeant &
G Holdaway
Number
107,140
85,720
64,280
257,140
P McKenzie,
S Black &
G Boulton
Number
53,570
42,860
32,140
128,570
Escrow
Period
12 months
12 months
12 months
Total Shares
Number
374,990
300,020
224,980
899,990
Mr K Lamb was appointed as a Non-Executive Director on 15 October 2018 and as an Executive on 11 March
2019, under his agreement he is entitled to Performance Rights dated 16 October 2018 under the Performance
Rights Plan, on the same basis as other Director’s subject to Shareholder approval.
Valuation of Performance Rights dated 16 October 2018
AASB 2 Share-Based Payment requires that the Company record the cost of all forms of Director
remuneration in the Company's accounts and sets out parameters for determining this cost.
AASB 2 sets the valuation date (termed as Grant Date) as the date at which such a right has been
approved, being the date of the General Meeting, 16 October 2018. In addition, the Company has
announced that it intends to seek shareholder approval for the issue of Performance Rights 16
October 2018 to newly-appointed non-executive director Keith Lamb, in amounts and on terms
identical to those applying to other non-executive directors.
The Directors do not believe that Black Scholes or Monte Carlo valuation methods are suitable for
the Performance Rights. The performance rights have been valued using the share price at the
Grant Date with a probability applied to each tranche. The Rights expire on 15 October 2019.
P a g e | 62
For personal use only Notes to the Consolidated Financial Statements
The valuation is based on the probability of achieving VWAP and the share price at 16 October
2018 of $2.05, set out in the table below.
20 Business Day
VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Shares to
be issued
374,990
300,020
224,980
899,990
6 months
31 Dec 2018
$
28,458
1,498
434
30,390
6 months
30 Jun 2019
$
68,338
3,598
1,043
72,978
30 Jun
2020
$
33,888
7,205
3,135
44,228
Total
Valuation
$
130,684
12,300
4,612
147,596
Valuation of Performance Rights dated 10 November 2017
AASB 2 Share-Based Payment requires that the Company record the cost of all forms of Director
remuneration in the Company's accounts and sets out parameters for determining this cost.
AASB 2 sets the valuation date (termed as Grant Date) as the date at which such a right has been
approved, being the date of the General Meeting, 10 November 2017.
The Directors do not believe that Black Scholes or Monte Carlo valuation methods are suitable for
the Performance Rights. The performance rights have been valued using the share price at the
Grant Date with a probability applied to each tranche. The Rights expire on 9 November 2018. The
valuation is based on the probability of achieving VWAP and the share price at 10 November of
$2.20, set out in the table below.
20 Business Day
VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Shares to
be issued
374,990
300,020
224,980
899,990
6 months
31 Dec 2018
$
21,950
1,788
421
24,159
6 month
30 Jun 2018
$
78,864
6,424
1,510
86,798
6 months
31 Dec 2017
$
39,432
4,989
3,019
47,440
Total
Valuation
$
140,246
13,201
4,950
158,397
Valuation of Performance Rights dated 24 February 2017
AASB 2 Share-Based Payment requires that the Company record the cost of all forms of Director
remuneration in the Company's accounts and sets out parameters for determining this cost.
AASB 2 sets the valuation date (termed as Grant Date) as the date at which such a right has been
approved, being the date of the General Meeting, 24 February 2017.
The Directors do not believe that Black Scholes or Monte Carlo valuation methods are suitable for
the Performance Rights. The performance rights have been valued using the share price at the
Grant Date with a probability applied to each tranche. The valuation is set out in the table below.
20 Business Day
VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Shares
to be
issued
374,990
300,020
224,980
899,990
6 months
30 Jun 2017
$
412,623
65,359
2,250
480,232
6 months
31 Dec 2017
$
68,771
32,679
3,001
104,451
Total
Valuation
$
481,394
98,038
5,251
584,683
b)
Property, plant and equipment revaluation reserve
Closing balance at 30 June
Consolidated
2019
$’000
2018
$’000
3,685
3,685
The property, plant & equipment revaluation surplus is used to record increments and decrements
on the revaluation of non-current assets. In the event of a sale of an asset, any balance in the
reserve in relation to the asset is transferred to retained earnings.
P a g e | 63
For personal use only Notes to the Consolidated Financial Statements
19. Contingent liabilities
The directors are not aware of any other matter or circumstance not otherwise dealt with in the
report or consolidated financial statements that has significantly, or may significantly, affect the
operations of the consolidated entity.
As previously disclosed, the Group is a party to litigation, the aim of which is to resolve the status
of certain easements affecting and benefitting its property at Smith Bay. It is not expected that the
outcome of this litigation will have a material financial impact on the consolidated entity.
20. Reconciliation of statement of cash flows
Reconciliation from the net profit after tax to the net cash flows
from operations
Net profit/(loss)
Adjustments for
Depreciation
(Profit)/Loss on sale of property, plant and equipment
Net Fair value decrease/(increase) on biological assets
Share-based payment (Note 26)
Changes in assets and liabilities
Increase/(decrease) in deferred tax
(Increase)/decrease in receivables and other debtors
Increase/(decrease) in trade and other payables
Net cash (used in)/from operating activities
Loan facilities
Facilities available:
Total facilities – CBA loan facility
Facilities used at 30 June
Consolidated
2019
$’000
2018
$’000
247
13,052
103
(13)
(7,343)
234
(209)
(71)
118
(6,934)
122
1
(26,926)
265
6,053
2
(5)
(7,434)
57,100
57,100
29,700
25,000
On 8 March 2017 the Company secured a funding agreement with the Commonwealth Bank of
Australia (CBA or the Bank). Subject to certain conditions precedent, including all necessary
development approvals, the Bank will lend up to $57.1m in total. This will support:
Part financing of the FIT land and plantation acquisition $25 million, as drawn down on 28
April 2017;
The anticipated construction cost of the Company’s proposed Smith Bay Wharf; plus
an allowance for equipment finance and working capital.
21.
Events after balance date
On 29 July 2019, the Group advised that it had received and analysed all government agency
feedback received in response to the Draft EIS and confirmed that it was not aware of any matter
that would prevent the project from being approved.
On 19 August 2019, the Group announced a $10,000 option to acquire a 50ha property adjoining
its existing controlled land at Smith Bay, Kangaroo Island, the site of its proposed KI Seaport. The
option allows the Group to acquire the land for a minimum price of $300,000, following approval of
the KI Seaport.
On 19 September 2019, the Group announced design enhancements to the proposed deep-water
facility that eliminate dredging and utilise a piled jetty structure.
There have been no other significant events after balance date.
P a g e | 64
For personal use only Notes to the Consolidated Financial Statements
22. Auditor remuneration
The auditor of Kangaroo Island Plantation Timbers Ltd is Grant Thornton Audit Pty Ltd.
Amounts received or due and receivable by auditors for:
An audit or review of the financial report of the entity and any other
entity in the consolidated entity
Grant Thornton
Taxation services Grant Thornton
23. Key management personnel
(a) Compensation of key management personnel
Directors
Fees
Superannuation
Performance Rights
Executives
Executive Directors
Superannuation
Long service leave
Performance Rights
Fees
Share-based remuneration payment
Total
Consolidated
2019
$
2018
$
57,221
4,000
61,221
77,547
11,055
88,602
Consolidated
2019
$
436,078
9,127
64,632
509,837
636,247
43,758
-
107,427
464,742
57,000
1,309,174
2018
$
393,493
6,507
92,319
492,319
334,151
29,100
2,044
123,096
439,951
50,000
978,342
1,819,011 1,470,661
The directors and executives have been reimbursed for Company expenses incurred during the
year.
Refer to the Remuneration Report for further information.
24. Related party disclosures
Ultimate parent
The ultimate parent entity is Kangaroo Island Plantation Timbers Ltd, a publicly listed company
domiciled and incorporated in Australia.
Subsidiaries
The consolidated financial statements include the financial statements of Kangaroo Island
Plantation Timbers Ltd and the subsidiaries listed in the following table:
P a g e | 65
For personal use only Notes to the Consolidated Financial Statements
Percentage of equity
interest held by the
consolidated entity
2018
%
100
100
100
100
100
100
2019
%
100
100
100
100
100
100
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Name
KI Seaport Pty Ltd(i)
KIPT Holdings Pty Ltd (previously APR Pty Ltd)(iv)
Kangaroo Island Plantation Management Pty Ltd(ii)
RuralAus Finance Limited(iii)
Kangaroo Island Land Assets Ltd(ii)
Kangaroo Island Timbers Pty Ltd(ii)
(i) KI Seaport Pty Ltd was incorporated on 29 January 2014 and is a wholly owned subsidiary
of Kangaroo Island Plantation Timbers Ltd.
(ii) These wholly owned subsidiaries’ immediate parent entity is APR Pty Ltd, a wholly owned
subsidiary of Kangaroo Island Plantation Timbers Ltd.
(iii) The subsidiary RuralAus Finance Limited was deregistered on 10 July 2019.
(iv) APR Pty Ltd changed its name to KIPT Holdings Pty Ltd on 6 May 2019.
Key management personnel
Details relating to key management personnel, are included in the Remuneration Report and Note
23.
Transactions with related parties
Transactions between Kangaroo Island Plantation Timbers Ltd and other entities in the wholly
owned group during the period consisted of:
Loans advanced by Kangaroo Island Plantation Timbers Ltd; and
Loans advanced to Kangaroo Island Plantation Timbers Ltd.
Loans provided by the Company to wholly owned entities are made on an interest free basis and
are repayable on demand.
All inter-entity transactions and balances are eliminated in the consolidated financial statements.
Related party transactions
Directors transactions
Income: Annual lease payment(1)
Consolidated
2019
$
2018
$
24,675
24,121
(1) The Lease agreement between Graham Holdaway and the Group commenced on 30 June
1999. The lease is for 187.60 hectares of Land known as “Gosse East’ and has a term of 25
years. Annual rent excluding GST for 30 June 2019 of $24,675 (2018: $24,121) is fully paid.
25.
Parent Entity disclosures
Information relating to Kangaroo Island Plantation Timbers Ltd:
Current assets
Non-current assets
Intercompany assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total net assets
P a g e | 66
2019
$’000
9,474
8,389
86,850
104,713
387
29,853
30,240
74,473
2018
$’000
6,688
9,661
78,105
94,454
282
25,293
25,575
68,879
For personal use only Notes to the Consolidated Financial Statements
Issued capital
Option and performance rights reserve
Property, plant and equipment reserve
Retained earnings
Total shareholders’ equity
(Loss) of the parent entity
Total comprehensive (loss)
2019
$’000
2018
$’000
89,949
125
895
(16,496)
74,473
(4,564)
(4,564)
79,963
111
895
(12,090)
68,879
(2,997)
(2,997)
Parent entity guarantees, commitments and contingent liabilities
The directors are not aware of any guarantees, commitments or contingent liabilities of the parent
entity.
26.
Share-based payments
Recognised share-based payment expenses
The expense recognised for employee services received during the year is shown in the table
below:
Performance Rights (a)
Paid to employees during the year under the EESP (b)
Paid in lieu of consulting fees (c)
Total expense from security-based payment transactions
Equity-settled share-based payment transactions are as follows:
(a) The directors’ Performance Rights
Consolidated
2019
$
172,060
5,000
57,000
234,060
2018
$
215,414
5,000
50,000
270,414
Non-Executive Directors
P McKenzie
G Boulton
Executive Directors
K Lamb(1)
J Sergeant
S Black
G Holdaway
Total
Year
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Performance
Rights dated
16 October
2018
$
Performance
Rights dated
10 November
2017
$
Performance
Rights dated
24 February
2017
$
Total
Performance
Rights
$
6,777
15,851
6,777
15,851
-
-
13,554
31,702
6,777
15,851
13,555
31,702
-
47,440
110,957
-
14,922
-
14,922
-
-
-
29,842
-
14,922
-
29,843
21,544
30,773
21,544
30,773
21,251
-
43,088
61,544
21,544
30,773
43,089
61,545
-
104,451
172,060
215,408
14,767
-
14,767
-
21,251
-
29,534
-
14,767
-
29,534
-
124,620
-
P a g e | 67
For personal use only Notes to the Consolidated Financial Statements
(1) Mr K Lamb was appointed as a Non-Executive Director on 15 October 2018 and as an Executive on
11 March 2019, under his agreement he is entitled to Performance Rights dated 16 October 2018
under the Performance Rights Plan, on the same basis as other Directors subject to Shareholder
approval.
Refer to Note 18 for further details.
(b) Shares issued under Executive & Employee Share Plan (EESP)
$5,000 (2018: $5,000) were paid to employees during the year under the EESP. Under the
EESP the five employees were issued 476 (2018: 454) shares each.
(c) Shares issued in lieu of consulting fees
Mr Peter Lockett was appointed as Approvals Manager on 8 May 2017. Mr Lockett's
professional services are invoiced by Seaview Corporate Services Pty Ltd, of which, Mr
Lockett has effective control. During the year $50,000 (2018: $50,000) of these services
have been paid in Shares. At 30 June 2019 $12,500 (2018: $12,500) accrued and are
payable in ordinary shares.
Ms Victoria Allinson is the Group’s CFO and Company Secretary and provides professional
accounting, administration and company secretarial fees which are invoiced by Allinson
Accounting Solutions Pty Ltd, of which Victoria Allinson is Managing Director and
shareholder. $7,000 of these fees were paid in shares (2018: $nil), of which $2,000 of
shares were issues to Ms Allinson and $5,000 to her employees.
27. Commitments
Commitments
The Group has commissioned a number of studies and expected wharf development assets costs,
all such costs at 30 June 2019 can be cancelled. In addition, the Group has leased two offices
throughout the year ended 30 June 2019.
Consolidated
Lease Commitments
Consolidated
Other Commitments
2019
$’000
2018
$’000
2019
$’000
2018
$’000
Due no later than one year
Later than one year but no later than 2 years
Later than 2 years but no later than 5 years
Later than 5 years
Total
32
-
-
-
32
32
-
-
-
32
-
-
-
-
-
-
-
-
-
-
There are no other commitments as at 30 June 2019.
P a g e | 68
For personal use only Directors’ Declaration
In accordance with a resolution of the directors of Kangaroo Island Plantation Timbers Ltd, I
state that:
In the opinion of the directors:
o The consolidated financial statements and notes of Kangaroo Island Plantation
Timbers Ltd for the financial year ended 30 June 2019 are in accordance with
the Corporations Act 2001, including:
Giving a true and fair view of its financial position as at 30 June 2019
and of its performance for the financial year ended on that date;
Complying with Accounting Standards (including the Australian
Accounting Interpretations) and Corporations Regulations 2001; and
The financial statements and notes also comply with International Financial Reporting
Standards as disclosed in Note 2(a); and
There are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made
to the Directors in accordance with Section 295A of the Corporations Act 2001 for the
financial year ended 30 June 2019.
On behalf of the Board
Chairman
Dated this 23rd day of September 2019
P a g e | 69
For personal use only Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
Correspondence to:
GPO Box 1270
Adelaide, SA 5001
T +61 8 8372 6666
Independent Auditor’s Report
To the Members of Kangaroo Island Plantation Timbers Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Kangaroo Island Plantation Timbers Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. 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 Group in accordance with the auditor independence requirements of 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 (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
For personal use only
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. These matters were 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 these matters.
Key audit matter
How our audit addressed the key audit matter
Valuation of land (Note 1(u), 4 and 12)
The Group has assessed the route to market for its biological
assets and has determined the principal and most
advantageous market for the land is forestry land.
Due to the nature of the asset, the valuation technique
includes a model that uses a number of inputs from internal
and external sources.
This area is a key audit matter due to the significant level of
judgement, including:
Estimated price per hectare taking into consideration land
location, land improvements, plantation details and
occupancy; and
The best use of the land.
Valuation of biological assets (Note 1(u), 4 and 13)
Biological assets which include mature and immature radiata
pine and eucalypt plantations are stated at fair value less
estimated point of sale costs. In the past, the Group has
estimated this to be zero on the basis without an export
facility, the trees have no value.
The Group now considers the development of wharf
infrastructure is more probable than not and as a result
recognised biological assets in the statement of financial
position.
The value of the biological assets recorded on the
consolidated statement of financial position is significant.
Additionally, the Group’s assessment of the related value
involves judgements about the future results of the assets,
including cash flow forecasts.
This area is a key audit matter due to the significant level of
management judgement, including:
Identification and measurement of hardwood and softwood
resources;
Assumptions made by management in the discounted
cash flow model; and
The assumptions used in relation to the harvesting plans.
Our procedures included, amongst others:
Reviewing the Board paper prepared detailing the
appropriate basis for the fair value of land;
Performing an assessment of the reasonableness of the
impairment triggers adopted by management and
assessment of the indicators;
Assessing the expertise and qualification of management's
expert; and
Assessing the appropriateness of the related disclosure
within the financial statements.
Our procedures included, amongst others:
Reviewing the Board paper in relation to consideration of
the basis for the fair value of the biological assets;
Assessing the expertise and qualification of management's
expert;
Considering the events that have caused the Board to
reassess the probability of development of the wharf
infrastructure;
Identifying key assumptions in the valuation and
comparing to the market data and supporting
documentation, where applicable;
Performing sensitivity analysis on key assumptions;
Assessing the appropriateness of the discount rate; and
Assessing the appropriateness of the related disclosures
within the financial statements.
For personal use only
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, 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.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are 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 the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and 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 this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Kangaroo Island Plantation Timbers Limited, for the year ended 30 June
2019 complies with section 300A of the Corporations Act 2001.
For personal use only
Responsibilities
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 responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
I S Kemp
Partner – Audit & Assurance
Adelaide, 23 September 2019
For personal use only
Investors’ supplementary information
As at 18 September 2019
The information contained below is to be read in conjunction with the annual report of Kangaroo
Island Plantation Timbers Ltd dated 30 June 2019.
Details of top 20 shareholders
The following is a list of the top 20 Shareholders of the Company:
Rank Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
WASHINGTON H SOUL PATTINSON AND COMPANY
MR PETER ROBIN JOY
AMINAC PTY LTD
PHALAENOPSIS PTY LTD
NATIONAL NOMINEES LIMITED
ONE MANAGED INVESTMENT FUNDS LIMITED
GWYNVILL TRADING PTY LTD
AOTEAROA INVESTMENT COMPANY PTY LIMITED
MR JOHN DAVID SERGEANT
UBS NOMINEES PTY LTD
BRISPOT NOMINEES PTY LTD
ROBERTS PIKE FOUNDATION PTY LTD
CITICORP NOMINEES PTY LIMITED
SHANDORA ONE PTY LTD
ALKE PTY LTD
CS FOURTH NOMINEES PTY LIMITED
MR DAVID NEIL CONSTABLE
AUSTRALIAN PHILANTHROPIC SERVICES FOUNDATION PTY
LTD
Number of
Shares
14,831,642
5,066,311
4,431,440
2,375,000
2,132,500
2,099,664
2,067,500
1,192,051
1,135,000
1,050,000
794,576
781,827
717,622
700,000
675,561
560,000
522,360
517,212
515,500
500,000
% of
Shares
26.45
9.03
7.90
4.23
3.80
3.74
3.69
2.13
2.02
1.87
1.42
1.39
1.28
1.25
1.20
1.00
0.93
0.92
0.92
0.89
TOTALS: TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES
TOTAL REMAINING HOLDERS BALANCE
42,665,766
13,415,733
76.08
23.92
Distribution of shareholder numbers
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
TOTAL
Total
holders
407
145
64
171
53
840
Number of
Shares
101,573
405,738
499,570
5,914,407
49,160,211
% of
Shares
0.18
0.72
0.89
10.55
87.66
0.00
Number of shareholders with less than a marketable parcel of securities
As at 18 September 2019, there were a total of 256 shareholders with less than a marketable
parcel of securities held in Kangaroo Island Plantation Timbers Ltd.
P a g e | 74
For personal use only Investors’ supplementary information (continued)
Details of substantial shareholders
The following is a list of substantial shareholders of the Company and their associates:
Name of substantial
shareholder
Registered holder of the shares
Samuel Terry Asset
Management Pty Ltd
JP Morgan Nominees Australia Limited
Mr Frederick Woollard
Number of
shares held
% of total
shares
13,123,544
1,965
13,125,509
23.40%
0.004%
24.40%
Washington H Soul
Pattinson and
Company Limited
Washington H Soul Pattinson and Company
Limited
4,585,524
8.18%
Brickworks Limited
Shareholding in Washington H Soul
Pattinson and Company Limited
Paradice Investments
Management Pty Ltd
Paradice Investments Management Pty Ltd
Transcontinental Asset management Pty Ltd
John Sergeant
John David Sergeant
Phalaenopsis Pty Ltd
Sergeant Family Superannuation Fund
Paul McKenzie
Aminac Pty Ltd
Alke Pty Ltd (The McKenzie Family Trust No
2 A/C)
4,585,524
3,561,894
70,833
3,632,727
225,730
2,099,664
794,576
3,119,970
8.18%
6.35%
0.13%
6.48%
0.40%
3.74%
1.42%
5.56%
2,132,500
3.80%
522,360
2,654,486
0.93%
4.73%
Unlisted options
There are no unlisted options.
Performance rights
There are 899,990 performance rights shares that have been approved by Shareholders but not
been issued.
Types of securities and voting rights
There is one class of ordinary shares. Each share is entitled to one vote when a poll is called,
otherwise each member present at a meeting or by proxy has one vote on a show of hands.
Number and class of shares held in escrow
There are currently no ordinary shares held in escrow.
On-Market Buy Backs
There is no current on–market buy back at the date of this report.
Securities Exchange
The Company is listed on the Australian Securities Exchange.
P a g e | 75
For personal use only