Kangaroo Island
Plantation Timbers Ltd
Annual Financial Report
ABN 19 091 247 166
For the year ended
30 June 2020
Corporate Information
Directors
Paul Lawrence McKenzie (Non-Executive Chairman)
Keith Desmond Lamb (Managing Director)
Shauna Marie Black (Executive Director)
John David Sergeant (Non-Executive Director)
Gregory Colin Boulton AM (Non-Executive Director)
Company Secretary
Victoria Marie Allinson
Registered Office
Unit 3B, Level 3,
60 Hindmarsh Square, Adelaide, South Australia 5000
Telephone: (08) 8227 2482
Facsimile: (08) 8223 1685
Principal Places of Business
Unit 3B, Level 3,
60 Hindmarsh Square
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 Registry
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
Contents
DIRECTORS ............................................................................................................................................. 2
COMPANY SECRETARY AND CHIEF FINANCIAL OFFICER .................................................................................. 4
DIVIDENDS .............................................................................................................................................. 5
PRINCIPAL ACTIVITIES ............................................................................................................................... 5
CORPORATE INFORMATION ........................................................................................................................ 5
OPERATING AND FINANCIAL REVIEW ............................................................................................................. 6
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS ........................................................................................... 9
SIGNIFICANT EVENTS AFTER BALANCE DATE .................................................................................................. 9
LIKELY DEVELOPMENTS ............................................................................................................................. 9
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS ................................................................... 10
PROCEEDINGS ON BEHALF OF THE COMPANY .............................................................................................. 10
DIRECTORS’ MEETINGS ........................................................................................................................... 10
COMMITTEE MEMBERSHIP ........................................................................................................................ 10
ROUNDING ............................................................................................................................................ 10
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES .................................................................................... 11
REMUNERATION REPORT (AUDITED) .......................................................................................................... 11
AUDITOR INDEPENDENCE DECLARATION .......................................................................................... 20
CORPORATE GOVERNANCE STATEMENT........................................................................................... 21
FINANCIAL REPORT .............................................................................................................................. 22
DIRECTORS’ DECLARATION ................................................................................................................. 63
INDEPENDENT AUDITOR’S REPORT .................................................................................................... 64
INVESTORS’ SUPPLEMENTARY INFORMATION .................................................................................. 68
P a g e | 1
Directors’ Report
Your directors submit their report for the year ended 30 June 2020.
Directors
The names and details of the Company’s directors in office during or since the end of the financial
year are as follows:
Position
Director
Non-Executive Chair
Paul McKenzie
Managing Director
Keith Lamb
Non-Executive Director(1) 2 March 2013
John Sergeant
Shauna Black
Executive Director
Graham Holdaway Executive Director
Gregory Boulton AM Non-Executive Director 1 November 2016 16 October 2018
Appointed
29 April 2005
15 October 2018
17 March 2015
17 March 2015
Last elected or
re-elected at AGM Resigned
10 November 2017
-
21 November 2019
21 November 2019
21 November 2019
-
-
-
-
6 May 2020
-
(1) Mr Sergeant was appointed as a non-executive director on 1 April 2020. He had served as an
Executive Director since 1 January 2015, including as Managing Director between 1 January
2015 and 1 June 2019, and before that had served as a non-executive director for the company
from 2 March 2013.
Names, qualifications, experience and special responsibilities
Paul McKenzie BSc(Agric), BCom, FAICD, AIAST
Non-Executive Chair
Board member since April 2005, appointed Chair July 2009. Member of the Audit
& Risk Committee.
Mr McKenzie is the Managing Partner of Agrarian Management, a leading Western
in Geraldton, Perth and
Australian agriculture consultancy with offices
Esperance. He has 29 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. Mr McKenzie was the founding
Chairman of Gage Roads Brewing Co (ASX: GRB) from concept to private
company to ASX listing in December 2006, and resigned in May 2008. In June 2008, he was
appointed director of Rural Financial Counselling Service (WA) (“RFCS”). RFCS administers a
federal government funded program in WA under the Department of Agriculture, Fisheries and
Forestry.
Mr McKenzie is Chair of the CRC for Honey Bee Products Ltd, Chair of Hay Australia Pty Ltd, and a
director of SALIC Australia Pty Ltd (the Saudi Agricultural & Livestock Investment Company’s
Australian entity). In the three years prior to 30 June 2020, Mr McKenzie held no director positions
with any other ASX listed companies.
Keith Lamb BForSc, GrDip (REM), MFor, EMBA, GAIDC, MIFA
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 $2.5 billion 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
Directors’ Report
In the three years prior to 30 June 2020, Mr Lamb held no director positions with any other ASX
listed companies.
John Sergeant BSc, BA (Hons I), FTRS, GAICD
Non-Executive Director
Board member since March 2013, Managing Director from January 2015 to June
2019, appointed Non-Executive Director on 1 April 2020. Member of the Audit &
Risk Committee.
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 is committed to working with the Island community,
local and State government and other stakeholders to help deliver a deep-water
export facility on Kangaroo Island that is fairly priced and accessible to all, and to establish plantation
timber as a significant employer and source of economic activity for Kangaroo Island and South
Australia.
Prior to joining the Company, he 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. In the three years prior to
30 June 2020, Mr Sergeant held no director positions with any other ASX listed companies.
Shauna Black 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 (“KI”)
for 15 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 severe flood damage sustained in June 2013 in the
MacGillivray/Haines area of KI, and is active in a number of local associations on
Kangaroo Island.
With a 30-year career in media, Ms Black was the Managing Editor of KI’s newspaper, The Islander,
for almost eight years. This followed a move from Adelaide after a 15-year stint at The Advertiser,
where amongst other things, she was 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. In the three years prior to 30 June 2020, Ms Black held no director
positions with any other ASX listed companies.
Graham Holdaway BCA, Dip Acc, MAICD
Executive Director (resigned 6 May 2020)
Board member from March 2015 and Executive Director of Operations from
April 2017 to his resignation on 6 May 2020.
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. In the three years prior to 30 June 2020 held no
director positions with other ASX listed companies.
P a g e | 3
Directors’ Report
Gregory Boulton AM BA(Accounting), FCA, FCPA, FAICD
Independent Non-Executive Director
Board member since November 2016.Chairman of Audit Committee.
Mr Boulton is a leading Adelaide Company Director with 35 years’ experience in
both public and private companies. He is the Chair of Southern Gold Ltd (ASX:
SAU), Chair of Kogi Iron Limited (ASX: KFE ), Chair of SA Pine Pty Ltd and Chair
of Super SA. He is also a Director of the Cancer Council of South Australia.
He has significant experience in 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.
He was President of Port Adelaide Football Club for 16 years.
Company Secretary and Chief Financial Officer
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 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.
Interests in the shares and options of the Company and related bodies
corporate
As at 30 June 2020 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
2019
2,654,860
-
3,119,970
871,785
456,670
183,730
7,287,015
Paul McKenzie
Keith Lamb
John Sergeant
Graham Holdaway(1)
Shauna Black
Gregory Boulton
Total
Placement
Shares
Other
Changes
Shares on
resignation
125,000
15,000
125,000
25,000
25,000
10,000
325,000
10,000
-
(625,000)
(250,000)
(60,000)
-
(925,000)
-
-
-
(646,785)
-
-
(646,785)
P a g e | 4
Closing
interest at
date of this
report
2,789,860
15,000
2,619,970
-
421,670
193,730
6,040,230
Directors’ Report
(1) Resigned on 6 May 2020.
Interest in Performance Rights
On 30 June 2020, directors were issued with a total of 2,256,896 Performance Rights under the
Group’s Performance Rights Plan which was last approved by Shareholders at the 2019 Annual
General Meeting (“AGM”). All other Performance Rights held by directors during the year expired
without vesting during the year. Individual holding of the Rights issued on 30 June 2020 are as follows:
∂ Paul McKenzie
282,112
∂ Keith Lamb 1,128,448
282,112
John Sergeant
∂
282,112
∂ Shauna Black
282,112
∂ Gregory Boulton AM
These Rights have not vested and have an expiry date of 29 June 2021. Refer to the Remuneration
Report for vesting conditions and further information.
Dividends
The directors have resolved not to declare a dividend for the year ended 30 June 2020. No dividends
were declared or 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 (“Group”):
Kangaroo Island
Plantation Timbers
Ltd
KI Seaport Pty Ltd
KIPT Holdings Pty
Ltd (formerly APR
Pty Ltd)
Kangaroo Island
Plantation
Management Pty
Ltd
RuralAus Finance
Limited
(de-registered 10
July 2019)
Kangaroo Island
Land Assets Ltd
Kangaroo Island
Timbers Pty Ltd
P a g e | 5
Directors’ Report
Employees
The consolidated entity employed 8 (full time equivalent) employees and 1.4 (full time equivalent)
Executive Directors at 30 June 2020 (2019: 4 employees and 3 Executive Directors).
Operating and financial review
Results of operations
Revenue for the period decreased by $89,000 to $126,000 (2019: $215,000) as a result of decreased
operating lease revenue.
During the period, the change in fair value of biological assets was a decrease of $109,216,000 (2019:
increase of $7,342,000) as a result of the bushfires over the December 2019 and January 2020
period.
Net comprehensive loss for the period was $25,597,268 (2019: profit $247,000), this is a $25,844,268
decrease in profits which is primarily due to:
Insurance Recoveries on fire-affected assets
Biological asset of standing timber decrease in fair
value
Tax benefit primarily relating to the deferred tax on
the revalued biological assets
Performance rights expensed but not vested as
conditions not yet met.
Wharf development costs expensed
Forestry expense increase due to wildfires
Lower borrowing costs due to loan repayment
Revaluation of land assets, net of tax
2020
2019
Income/
(Expense)
Income/
(Expense)
$000’s
68,026
$000’s
-
Increase/
(decrease)
in profits
$000’s
68,026
(109,216)
7,342
(116,558)
14,424
297
14,127
(176)
(172)
(1,422)
(2,623)
(970)
8,273
(2,273)
(1,585)
(1,464)
-
(4)
851
(1,038)
494
8,273
(15)
Other changes
(1,913)
(1,898)
Net comprehensive profit
(25,597)
247
(25,844)
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
2020
$’000
126
126
(33,870)
(33,870)
8,273
2019
$’000
215
2018
$’000
230
2017
$’000
185
215
247
-
247
-
230
185
13,052
-
13,052
36,086
-
36,086
-
227
P a g e | 6
Directors’ Report
Total comprehensive profit/(loss) after tax
2020
$’000
(25,597)
Basic earnings per share (cents)
Net tangible asset backing per security (cents)
(60.2)
214
2019
$’000
247
0.4
279
2018
$’000
2017
$’000
13,052
36,313
28
289
148
233
Commentary on results
Wildfire
KPT was impacted by several wildfires from neighbouring properties between 20th December 2019
and 21st January 2020. The impact of wildfire and associated backburning operations on the KPT
treecrop caused the Board to revalue the forest estate from $115.2 million (30 June 2019) to $5.95
million. In the immediate aftermath, the Board sought, and was granted, a suspension of trading in
the Company’s securities while it assessed the fire damage, associated insurance claims and future
business strategy. This suspension was lifted, at the Company’s request, on 31 March 2020.
In March and April 2020, KPT provided written submissions to the South Australian Government
Independent Inquiry and the Commonwealth Royal Commission for the 2019-20 wildfires. We shared
our vision that improvements to landscape management and firefighting efficacy can ameliorate the
risk and impact of future wildfire, on the community and ecology of Kangaroo Island. Our submission,
developed in cooperation with the Institute of Foresters of Australia (IFA) and Australian Forest
Products Association (AFPA), made several recommendations that we believe, if adopted, will
provide sufficient confidence for KPT, and the farming and tourist business communities, to reinvest
in Kangaroo Island. With this in mind, the Company has recently replanted a small section of its estate
that had been clear-felled before closure of the Timber Creek Mill.
Kangaroo Island Seaport
On 23 March 2020 Kangaroo Island Plantation Timbers (KPT or “the Company”) submitted to state
government the Response Document to the two rounds of public consultation (14 weeks in total),
held in calendar year 2019. As reported on 25 March 2020, this milestone was the final stage of an
extensive Environmental Impact Statement which demonstrates the overall positive social and
economic benefits of the Seaport to the community of Kangaroo Island, while minimising, mitigating
and in some cases eliminating entirely, any adverse environmental impact.
While the Company awaits advice from state government on its decision to approve the development
application, it is progressing with planning for the additional secondary approvals (which follow the
initial approval) for construction and operation of the seaport. These secondary approvals include
native title (of the seafloor), a road and traffic management plan, an environmental management plan
as well as industry standard workplace health and safety measures. Planning for the detailed design
and construction is also progressing, in anticipation that the undertakings made by the Company will
be adopted, together with any conditions required by state and federal government for approval of
the Seaport.
Land Revaluation
A recent valuation of land and buildings owned by the Company shows an $11.8 million increase in
fair value. After accounting for tax, this equates to an $8.3 million increase. The independent valuation
of land and structures at 30 June 2020 amounts to $59.3 million.
The Board has used valuations provided by the independent external valuer, JLL Valuation Advisory
- Agribusiness.
The fair value valuation was prepared using a ‘Summation Approach’ whereby 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 assessed the rate per hectare for the productive component
of the land (exclusive of remnant vegetation and water bodies) as in the range of $2,730 per hectare
to $3,413 per hectare. The land’s location, rainfall, physical attributes, location of amenities and
improvements all influence where in this range a particular parcel of land is valued.
P a g e | 7
Directors’ Report
Insurance
Progress payments for the treecrop insurance received as at 30 June 2020 amount to $30 million
(consisting of three $10 million progress payments received: 4 February 2020, 20 April 2020 and 2
June 2020) against an expected total of $68 million, and for farmpack insurance $5.92 million
(consisting of four payments received: 25 February 2020 $1.0 million, 7 April 2020 $3.2 million, 4
June 2020 $0.71 million and 18 June 2020 $1.01 million) against an expected total of $6.2 million.
The majority of the payout received to date has been directed towards reducing debt, with a small
amount reserved for ongoing operations. The Company is confident that the total claim will be settled
in full and will continue to advise the market accordingly. As it did in its half year report, the Company
again notes that an additional $5m in treecrop insurance may be receivable, given ambiguity in the
wording of its insurance policy concerning the interaction of $5 million per-event excesses and the
overall limit of claims, which is $65 million. This additional amount has not been recognised in the
Company’s accounts.
Business Strategy
As a result of the wildfires, KPT has reviewed its business plan, with consideration given to market
positioning of the fire-affected product, and the business case for the Kangaroo Island Seaport
(Seaport). The impact of the fires introduced a new level of commercial risk and uncertainty and KPT
has therefore developed new finance strategies for the construction of the Seaport and ongoing
operations, which take into account the change to the resource, as well as options to reduce cost in
the supply chain. The overall goal of the Company is to restore the productive capacity of the estate
as quickly as possible, by removing the fire-affected trees in the most commercially efficient manner
available. Based on this financial analysis, it is the Company’s view that commercially harvesting and
exporting the fire-affected product is a better overall option than chaining and burning, which would
also cause ongoing environmental impact to our neighbours on Kangaroo Island and the mainland
through emissions of smoke and ash over a period of several years.
While the approvals and construction process for the Seaport continue, the Company has
investigated several options to start early harvesting and sales. As previously advised, no option has
been found to be capable of handling the entire volume of forest products from Kangaroo Island, or
of providing a margin better than that available from the proposed Seaport at Smith Bay.
As reported previously, KPT has begun restoring Company infrastructure, with removal of fire-
damaged dwellings, restoration of roads and water crossings, and a major refencing program.
Covid-19
While the Company acknowledges the trauma created by Covid-19 to the regional community of
Kangaroo Island and the national economy, we are able to report that neither the lockdown
requirements of the national Cabinet, the border restrictions imposed by the State Government, nor
the virus itself have adversely affected Company employees or operations. The Board has introduced
and updated policies and procedures for managing Covid-19 risk, and will continue to adhere to
government requirements and recommendations as new information and developments arise.
As we look forward to emerging from the coronavirus pandemic, it is reasonable to ask what the
impact will be on the Company’s future, and specifically our prospective markets. The forest sector
and importantly, the products produced from forests, are recognised as essential for the community
and economy. Plantation forests produce many products, the most widely recognised being timber
for house construction and pulp for printing, packaging (including food) and sanitary products
(including toilet paper). The Company’s prospective customers, both domestic and export, value
Australian forest products for their sustainability, reliability and quality. With many decades of
established customer relationships, our confidence in the longer-term business prospects of KPT,
and the products we supply, remains high despite the impact of the summer wildfires and more
recently the interruption of the Covid-19 response to supply chains.
KPT believes the Kangaroo Island Seaport will play a prominent part in the recovery of Kangaroo
Island and the wider South Australian economy. While the Covid-19 response continues, the
Company has reassured State and Federal governments of our commitment to the Seaport project
and the longer-term opportunities it provides for the benefit of our community.
P a g e | 8
Directors’ Report
Corporate Operations
Share issues
During the year, a total of 382,289 fully-paid ordinary Shares were issued, including 330,000 to
directors and management under a previous irrevocable and binding commitment to participate in
capital raising conducted in the prior financial year, subject to shareholder approval. These shares,
which raised a total of $660,000, were issued in December 2019 following receipt of shareholder
approval at the 21 November 2019 AGM.
A further 52,289 shares were issued during the year for services received, including 32,535 shares
to Approvals Manager Peter Lockett to settle $50,000 of consulting fees and 5,810 shares to a
company controlled by Company Secretary Victoria Allinson to settle $5,000 of professional services
fees. In addition, 13,944 shares valued at $12,000 were issued to other personnel under the
Company’s Executive and Employee Share Plan.
As at 30 June 2020 there were 56,463,788 ordinary Shares on issue and 2,256,896 Performance
Rights.
Changes to Board and Management
The Company recorded two changes to the Board during the period; on 1 April 2020 John Sergeant
completed his foreshadowed transition from Executive to Non-Executive Director, and on 6 May 2020
Graham Holdaway resigned as a Director of KPT to focus on his significant other commitments.
Following these changes to the Board, the Company welcomed two new specialists to the executive
team in the form of Alan Braggs and Rob Heathcote. Alan, a structural engineer, joins the KIPT team
as KI Seaport Manager bringing with him 28 years’ experience in project leadership, while Rob brings
his 38 years’ experience in production forestry to the fore as Operations Manager. In addition, Luke
Tregurtha joined the Company as a Business Analyst.
Commonwealth Bank of Australia (“CBA”) loan facilities
KPT has utilised insurance funds to fully repay its facility with the CBA, of which $29,700,000 was
drawn at 30 June 2019. The Company remains engaged with CBA regarding its finance requirements
for construction of the KI Seaport.
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 16 July 2020 the Company received a further insurance progress payment of $19.6 million, of
which $17.5 million relates to timber and $2.1 million to extras.
On 31 July 2020, the Company relocated its registered address and place of business to Unit 3B,
Level 3, 60 Hindmarsh Square, Adelaide SA 5000.
On 12 August 2020, the Company completed its unmarketable parcel buy back and 49,273 shares
were bought back at $0.85.
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 for export.
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.
P a g e | 9
Directors’ Report
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. 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 $19,238 (2019: $15,293)
insurance premiums in respect of directors' and officers' insurance against liability, except wilful
breach of duty. 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.
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
12
Directors
Meetings
Attended
12
Number of
Audit & Risk
Meetings Held
while in office
3
12
12
12
10
12
12
12
12
9
10
-
-
-
-
3
Audit & Risk
Meetings
Attended
3
-
-
-
-
3
Paul McKenzie
Keith Lamb(1)
John Sergeant(4)
Shauna Black(1)
Graham Holdaway(1)(3)
Gregory Boulton AM(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) Resigned 6 May 2020.
(4) Appointed to as a member of a Audit and Risk Committee from 1 April 2020.
Committee membership
As at the date of this report, the Company had an Audit and Risk Committee of the Non-Executive
Directors, of which Mr Boulton was the Independent Chair. The directors have considered that the
committee is adequate for the Company’s current circumstances.
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.
P a g e | 10
Directors’ Report
Auditor independence and non-audit services
The directors have received the auditor’s independence declaration, which is included on page 20 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:
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.
See Note 21 for amounts received or due and receivable by Grant Thornton Audit Pty Ltd.
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 Company and the Group.
Key management personnel
Key management personnel are as follows:
Directors
Paul McKenzie
Keith Lamb
John Sergeant
Shauna Black
Graham Holdaway (resigned 6 May 2020)
Gregory Boulton
Executives
Victoria Allinson
Peter Lockett
Luke Tregurtha
Alan Braggs
Rob Heathcote
Position
Chairman - Non-executive Director
Managing Director
Non-Executive Director
Executive Director
Executive Director
Independent Non-executive Director
Position
Company Secretary, Chief Financial Officer
Approvals Manager
Business Development Analyst
KI Seaport Manager
Operations Manager
P a g e | 11
Directors’ Report
There have been no changes to Key Management Personnel after the reporting date and before the
date the financial accounts were authorised for issue.
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 and
appointment of senior management.
The Board of Directors of the Company is responsible for determining and reviewing remuneration
arrangements for directors and executives.
The Board 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.
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 remuneration levels was not conducted during the year as the Board remains of the
opinion that total remuneration should only be changed once the Group’s strategic plans are further
developed. It is noted that Kangaroo Island Plantation Timbers Ltd received 99.5% of ‘yes’ proxy
votes and the Remuneration Report for the financial year ending 30 June 2019 was adopted via a
poll (also 99.5% in favour). The Company received no specific feedback on its Remuneration Report
at the Annual General Meeting.
The Board 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 Board 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.
In addition to cash remuneration, the Board utilises Performance Rights with vesting conditions tied
to Group share price performance to incentive directors and align a portion of their remuneration with
the objective of increasing shareholder wealth. The Group also has an Executive and Employee
Share Plan whereby shares can be issued to employees as a means of aligning a component of
employee remuneration with the Group’s share price performance.
Overall performance of the directors and the executives of the Company are considered against:
∂ Timely production of Company accounts and records;
∂ Maintenance/improvement of the Net Tangible Assets of the Company;
∂ Control of costs;
∂
∂ Assessment of new opportunities; and
∂ Employee performance.
Investor relations;
Performance is reviewed on an annual basis; the last review was undertaken in September 2020.
Key performance indicators
The following table shows the results of key performance indicators of the Group for the past 5 years,
all figures have been adjusted for the 10:1 share split:
Year
2020
2019
2018
2017
2016
Net tangible assets per
share
Earnings per share
Share price at 30 June
$2.14
$2.79
$2.89
$2.33
$0.73
($0.60)
$0.04
$0.28
$1.48
($0.17)
P a g e | 12
$0.80
$2.25
$2.15
$2.03
$1.60
Directors’ Report
With the exception of awards of Performance Rights, there is not a direct correlation between the
results of key performance measures set out above and the remuneration awarded.
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 in cash to non-executive directors is fixed at $400,000 per year.
Non-executive directors are paid a fixed amount per year. They are not eligible for any additional
payments, other than reimbursement of expenses incurred on behalf of the Group, and excluding the
value of any Performance Rights issued.
In the year ended 30 June 2020:
∂ Non-executive fees amounted to $75,000 (2019: $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 (2019: $10,000) and
∂ Non-executive chair fees amounted to $100,000 (2019: $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.
Executive remuneration
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities with the Group so as to:
∂ Align the interest of executives with those of shareholders; and
∂ Ensure total remuneration is competitive by market standards.
Structure
The Group reviews its staffing requirements on an ongoing basis. At the date of this report, there
were seventeen (2019: nine) employees (part time and full time), including the Executive Directors.
Twelve (2019: six) employees are based on Kangaroo Island, including one Executive Director.
The Company’s Company Secretary and CFO Victoria Allinson, Approvals Manager Peter Lockett,
KI Seaport Manager Alan Braggs and Operations Manager Rob Heathcote provide their services as
contractors:
∂ Allinson Accounting Solutions Pty Ltd is engaged to provide the Company’s financial,
administrative and company secretarial functions;
∂ Seaview Corporate Services Pty Ltd is engaged to provide the approval managerial services of
∂
Peter Lockett;
Infrastructure Consulting Pty Ltd is engaged to provide the KI Seaport management services of
Alan Braggs; and
∂ Heathcote Resources Pty Ltd is engaged to provide the operations management services of Rob
Heathcote.
Executive Directors have signed contracts setting out their obligations and remuneration. In addition,
Executive Directors are entitled to Performance Rights under the Plan.
There are no termination obligations regarding any of 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 KPIs set by the Board each year. The amount of salary and fees
and the payment of cash bonuses, if any, are at the Board’s ultimate discretion.
P a g e | 13
Directors’ Report
Total Remuneration - Key Management Personnel
Remuneration is reviewed by the Board and is set at around the mid-point for professional personnel
as measured by knowledge of the members of the Board.
Details of the nature and amount of each element of the remuneration for each member of KMP of
the Company are shown in the table below:
Short term benefits
Post
employ-
ment
benefits
Long
term
benefits
Share-based
payment
Year
Salary &
fees
$
Cash
bonus
$
Annual
leave
provision
$
Super
$
Long
service
leave
$
Executive
share &
Rights
Plan(9)
$
Shares
$
Non-Executive Directors (NED)
P McKenzie(1)
G Boulton(2)
K Lamb(3)
J Sergeant(4)
S Black(5)
G Holdaway(6)
Total NED
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
100,000
100,000
85,000
90,000
68,493
27,585
68,493
68,493
75,000
75,000
63,668
75,000
460,654
436,078
S Black(5)
J Sergeant(4)
Executive Directors (ED)
K Lamb(3)
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
G Holdaway(6)
Total ED
Other KMP
L Tregurtha(7)
A Braggs(8)
R Heathcote(9)
P Lockett(10)
V Allinson(11)
2020
2019
2020
2019
2020
2019
2020
2019
2020
251,142
87,706
101,065
258,752
59,763
50,000
96,941
114,155
508,911
510,613
6,227
-
19,500
-
48,122
-
200,000
200,000
266,901
-
-
-
-
6,507
2,621
6,507
6,507
-
-
-
-
13,014
9,127
23,858
8,332
22,685
24,581
-
-
10,934
10,845
57,477
43,758
591
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,440
8,088
26,575
96,506
8,010
6,778
12,820
14,262
69,845
125,634
-
-
-
-
-
-
-
-
-
P a g e | 14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,888
21,544
20,888
21,544
-
-
3,964
--
-
21,544
-
-
45,740
64,632
2,843
-
-
-
6,627
-
-
-
31,714
21,251
37,812
43,088
36,745
-
23,681
43,088
9,470 129,952
- 107,427
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12
-
-
-
-
-
-
-
-
- 1,000
-
-
-
-
-
-
-
-
-
-
-50,000
-50,000
- 5,000
Total
$
120,888
121,544
105,888
111,544
75,000
30,206
78,964
75,000
75,000
96,544
63,668
75,000
519,408
509,837
331,997
125,377
188,137
422,927
111,145
56,778
144,376
182,350
775,655
787,432
7,830
-
19,500
-
48,122
-
250,000
250,000
271,901
Directors’ Report
Short term benefits
Year
Salary &
fees
$
Cash
bonus
$
Annual
leave
provision
$
2019
Total Other KMP 2020
2019
264,742
540,750
464,742
TOTAL
2020
2019
1,510,315
1,454,623
-
-
-
-
-
Post
employ-
ment
benefits
Long
term
benefits
Share-based
payment
Long
service
leave
$
Executive
share &
Rights
Plan(9)
$
Shares
$
-
12
-
- 7,000
-56,000
-57,000
Super
$
-
-
-
-
591
-
Total
$
271,742
597,353
521,742
69,845
125,634
71,082
52,885
9,482 175,69256,000
- 172,05957,000
1,892,416
1,862,202
There are no cash bonuses or other non-monetary benefits during the current or prior year.
Notes:
(1) Mr McKenzie’s annual director’s fees are comprised of $100,000 (2019: $100,000) Chairman’s
fee.
(2) Mr Boulton’s annual director’s fees are comprised of $75,000 (2019: $75,000) Director’s fee and
a $10,000 (2019: $15,000) Audit & Risk Committee Chair extra duties fee.
(3) Managing Director, Mr Lamb‘s annual directors fees are comprised of $75,000 (2019: $30,205)
Director’s fee and $275,000 (2019: $96,038) Executive fee.
(4) Mr Sergeant‘s annual director’s fees are comprised of $75,000 (2019: $75,000) Director’s fee
and $123,750 (2019: $283,334) Executive fee. Mr Sergeant was appointed as a non-executive
director on 1 April 2020.
(5) Ms Black’s annual director’s fees comprised of $75,000 (2019: $75,000) Director’s fee and
$67,773 (2019: $50,000) Executive fee.
(6) Mr Holdaway’s director’s fees to the date of his resignation comprised of $63,668 (2019:
$75,000) Director’s fee and $107,875 (2019: $125,000) Executive fee.
(7) Mr Tregurtha was appointed as Business Development Analyst on 12 June 2020. During the
period $6,818 (2019: $nil) was paid in salary to Mr Tregurtha.
(8) Mr Braggs was appointed as KI Seaport Manager on 10 June 2020. During the period $19,500
(2019: $Nil) of professional services were invoiced by Infrastructure Consulting Pty Ltd, of
which Mr Braggs has effective control. At 30 June 2020 $Nil (2019: $Nil) of fees were payable.
(9) Mr Heathcote was appointed as Operations Manager on 6 May 2020. During the period
$48,122 (2019: $Nil) of professional services were invoiced by Heathcote Resources Pty Ltd,
of which Mr Heathcote has effective control. At 30 June 2020 $8,851.99 (2019: $Nil) of fees
were payable.
(10) Mr Lockett was appointed as Approvals Manager on 8 May 2017. During the period $250,000
(2019: $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 (2019: $50,000) of these
fees were paid in ordinary shares. At 30 June 2020 $12,500 (2019: $12,500) of fees were
payable.
(11) Ms Allinson was appointed as CFO and Company Secretary on 14 May 2013. During the year,
professional accounting, administration and company secretarial fees of $271,901 (2019:
$271,742) were invoiced by Allinson Accounting Solutions Pty Ltd, of which Victoria Allinson is
Managing Director and shareholder. $5,000 of these fees were paid in shares (2019: $7,000),
of which $1,000 of shares were issues to Ms Allinson and $4,000 to her staff. At 30 June 2020,
$37,356 (2019: $30,898) of fees were payable.
(12) During the year, the Board issued Performance Rights to directors on 21 November 2019
(expired on 30 June 2020), and on 30 June 2020 following shareholder approval in both cases.
The Rights were valued based on AASB 2 Share-based Payment, further details are set out
below and in Note 25.
No options were granted as part of remuneration during the year.
P a g e | 15
Directors’ Report
Performance Rights
The value of performance rights issued during the current and prior years which has been recognised
as Director Remuneration is shown below, organised by the issue date of the relevant batch of
Performance Rights. Note that the 2,256,896 Rights issued on 30 June 2020 have been valued (refer
below) but the related remuneration expense will not be recognised until the 2021 financial year.
Share based Remuneration - Performance Rights
Non-Executive Directors
P McKenzie
G Boulton
Executive Directors
K Lamb
J Sergeant(1)
S Black
G Holdaway(2)
Total
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Issued 21
November
2019
$
Issued 16
October
2018
$
Issued 10
November
2017
$
Total
Performance
Rights
$
15,857
-
15,857
-
31,714
-
31,714
-
31,714
-
13,620
-
5,031
14,767
5,031
14,767
-
21,251
10,062
29,534
5,031
14,767
10,062
29,534
140,476
-
35,216
124,620
-
6,777
-
6,777
-
-
-
13,554
-
6,776
-
13,554
-
47,439
20,888
21,544
20,888
21,544
31,714
21,251
41,776
43,088
36,745
21,544
23,681
43,088
175,692
172,059
(1) Mr Sergeant was appointed as a non-executive director on 1 April 2020. He had served as an Executive
Director from 1 January 2015 to 31 March 2020.
(2) Mr Holdaway resigned on 6 May 2020.
Performance Rights Plan
The Performance Rights Plan (“Plan”) was last approved by Shareholders on 21 November 2019.
Under the Plan, the Board can issue Performance Rights to Executive and the Non-Executive
Directors as remuneration for additional duties performed and to incentivise them to align their
interests more closely with those of Shareholders.
If the performance conditions and any other vesting conditions are met, an equivalent number of
Shares will be issued that rank equally with all other existing Shares in all respects.
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 Directors have used an adapted Monte Carlo valuation method to value the
Performance Rights, refer to Note 25 for further details. All Performance Rights expire the earlier of
twelve months after issue or if they are replaced by new Performance Rights.
Performance Rights Issued 30 June 2020
At the 30 June 2020 General Meeting, shareholders approved the issue of a total of 2,256,896
Performance Rights that expire on 29 June 2021. These Performance Rights replaced the expired
Performance Rights that had been issued on 21 November 2019. Keith Lamb received 50% of the
total Rights pool each, with John Sergeant, Shauna Black, Paul McKenzie and Greg Boulton receiving
12.5% each. The Performance Rights are triggered by meeting the following performance vesting
conditions:
∂
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.
P a g e | 16
Directors’ Report
Last 1,000,000
Shares Traded
VWAP
$1.25 or above
$1.50 or above
$1.75 or above
Total
John Sergeant
Shauna Black Paul
McKenzie
Greg Boulton
Rights (each)
94,037
125,383
62,692
1,128,448
Keith Lamb
Rights (each)
376,149
501,533
250,766
1,128,448
Total
Rights
752,297
1,003,065
501,534
2,256,896
Total Valuation
$
270,827
120,368
20,061
411,256
Performance Rights dated 21 November 2019
At the 21 November 2019 Annual General Meeting, shareholders approved the issue of a total of
1,285,700 Performance Rights, effectively replacing the expired Performance Rights that had been
issued on 16 October 2018. Keith Lamb, John Sergeant, Shauna Black and Graham Holdaway
received 20% of the total Rights pool each, with Paul McKenzie and Greg Boulton receiving 10%
each. These performance rights expired on 29 June 2020.
The Performance Rights are triggered by meeting the following performance vesting conditions:
∂
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.
Last 1,000,000
Shares Traded
VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Keith Lamb
John Sergeant
Shauna Black
Graham
Holdaway
Rights (each)
107,140
85,720
64,280
257,140
Paul McKenzie
Greg Boulton
Rights (each)
53,570
42,860
32,140
128,570
Total
Rights
535,700
428,600
321,400
1,285,700
Total Valuation
$
118,925
47,575
-
166,500
These Rights were resolved by the Directors to have expired unvested on 30 June 2020. Under
Accounting Standards, the value of these Rights must nonetheless be recognised and therefore the
value of $140,476 is included in individual director remuneration tables shown previously for the year
ended 30 June 2020.
Performance Rights - 16 October 2018
At the 16 October 2018 General Meeting, Shareholders approved 899,990 Performance Rights,
triggered by meeting the following performance vesting 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.
These performance rights expired on 15 October 2019.
Last 1,000,000 Shares
Traded VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
John Sergeant
Graham Holdaway
Rights (each)
107,140
85,720
64,280
257,140
Paul McKenzie
Greg Boulton
Shauna Black
Rights (each)
53,570
42,860
32,140
128,570
Total
Rights
374,990
300,020
224,980
899,990
Total Valuation
$
130,684
12,300
4,612
147,596
The total value of these rights of $147,596 included a portion ($35,216) that was recognised in the
current financial year and is reflected in the individual director remuneration table shown previously.
P a g e | 17
Directors’ Report
Shareholdings of key management personnel
Directors
Paul McKenzie (1)
Keith Lamb (2)
John Sergeant (3)
Graham Holdaway (4)
Shauna Black (5)
Gregory Boulton AM (6)
Executives
Luke Tregurtha(7)
Alan Braggs
Rob Heathcote
Peter Lockett (8)
Victoria Allinson (9)
Total
Opening
interest at
1 July
2019
Placement
Shares
Issued
2,654,860
-
3,119,970
871,785
456,670
183,730
-
-
-
62,910
27,954
7,377,879
125,000
15,000
125,000
25,000
25,000
10,000
-
-
-
5,000
-
330,000
Other
Changes
10,000
-
(625,000)
(896,785)
(60,000)
-
1,162
-
-
32,535
1,162
(1,536,926)
Closing
interest at
30 June
2020
2,789,860
15,000
2,619,970
-
421,670
193,730
1,162
-
-
100,445
29,116
6,170,953
(1) Paul McKenzie’s Shares comprise:
a. 2,132,500 (2019: 2,132,500) held by Aminac Pty Ltd ATF Aminac Superfund of which Mr
McKenzie is the Managing Director; and
b. 657,360 (2019: 522,360) held by Alke Pty Ltd of
which Mr McKenzie is the Managing Director.
(2) Keith Lamb’s Shares are held directly.
(3) John Sergeant’s Shares comprise:
a. 1,042,759 (2019: 2,099,664) held by Phalaenopsis Pty Ltd ATF Sergeant Family Trust
of which Mr Sergeant has effective control; and
b. 1,577,211 (2019: 794,596) held by the Sergeant Family Superannuation Fund of which
Mr Sergeant has effective control.
In the prior year, 225,730 Shares were held directly.
c.
d. 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.
(4) At 6 May 2020, the date of his resignation, Graham Holdaway’s Shares comprised:
a. 406,015 (2019: 406,015) held by G & K Super Fund A/C of which Mr Holdaway has
effective control; and
b. 240,770 (2019: 265,770) held by Holdaway & Holdaway Pty Ltd of which Mr Holdaway
has effective control.
(5) Shauna Black’s Shares comprise:
a. 66,670 (2019: 66,670) held directly; and
b. 355,000 (2019: 390,000) held by Black Stump Regional Pty Ltd ATF the Taybric Family
Trust of which Ms Black has effective control.
(6) Greg Boulton’s Shares are held by G Boulton Pty Ltd ATF
(same as in prior year).
(7) Luke Tregurtha’s Shares are held directly.
(8) Peter Lockett’s Shares are held by Mr P Lockett and Ms C Charnock S/F AC of
which Mr Lockett has effective control.
(9) Victoria Allinson’s Shares comprise:
a. 24,978 (2019: 24,978) held by Allinson Super Funds A/C of which she has effective
control;
b. 1,162 (2019: Nil) held by AZV Super Fund of which she has effective control; and
c. 2,976 (2019: 2,976) held directly.
P a g e | 18
Directors’ Report
Other Rights and Option holdings of key management personnel
The Group does not have any share options on issue. Shown below are the holdings of KMP in
Performance Rights.
Performance rights
Non-executives
Paul McKenzie
Gregory Boulton
Executive directors
Keith Lamb
John Sergeant
Graham Holdaway
Shauna Black
Total
Opening
interest at
1 July 2019
128,570
128,570
126,820
257,140
257,140
128,570
1,026,810
Performance
Rights issued
Performance Right
lapsed
Closing interest
at date of report
410,682
410,682
(257,140)
(257,140)
1,385,588
539,252
257,140
539,252
3,542,596
(383,960)
(514,280)
(514,280)
(385,710)
(2,312,510)
282,112
282,112
1,128,448
282,112
-
282,112
2,256,896
During the year there were two issues of Performance Rights, 1,285,700 on 21 November 2019 and
2,256,896 on 30 June 2020. The 21 November 2019 Rights, as well as all Rights held at the
beginning of the year (from 16 October 2018) expired during the year. Performance Rights on hand
at 30 June 2020, and at the date of this report, therefore reflect the 30 June 2020 issue only.
Other Related party transactions
Directors transaction
Income: Annual lease payment (1)
Consolidated
2020
$
2019
$
11,885
24,675
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 2020 amounted to $25,144 (2019: $24,675). Due to the impacts of
wildfires, the Company forgave all lease payments relating to the period following the fires, including
Mr Holdaway. Hence, Mr Holdaway’s lease was forgiven by $13,259. As at 30 June 2020 $11,885
remains outstanding. As noted previously, Mr Holdaway resigned from the Board on 6 May 2020.
End of Remuneration Report
Signed in accordance with a resolution of the directors
Paul McKenzie
Chairman
Dated: 29th September 2020
P a g e | 19
Level 3, 170 Frome Street
Adelaide SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T +61 8 8372 6666
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 2020, 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, 29 September 2020
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.
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 fourth edition of the Corporate Governance Principles and
Recommendations which was released by the ASX Corporate Governance Council on 27 February
2019 and is effective for financial years beginning on or after 1 July 2020.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2020 was
approved by the Board on 29th September 2020. The Corporate Governance Statement is available
at www.kipt.com.au.
P a g e | 21
Financial Report
Contents
Page
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ... 23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................... 24
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................ 25
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................ 26
1.
2.
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
u)
v)
w)
CORPORATE INFORMATION ........................................................................................................ 27
BASIS OF PREPARATION AND ACCOUNTING POLICIES....................................................................... 27
Basis of preparation .......................................................................................................... 27
Compliance with IFRS ....................................................................................................... 27
New accounting standards and interpretations ................................................................... 27
Basis of consolidation ....................................................................................................... 28
Segment reporting ............................................................................................................ 29
Cash and cash equivalents ............................................................................................... 29
Trade and other receivables .............................................................................................. 29
Biological Assets ............................................................................................................... 30
Financial Instruments ........................................................................................................ 30
Property, plant and equipment ........................................................................................... 31
Investment properties........................................................................................................ 32
Leases ............................................................................................................................. 33
Impairment of non-financial assets .................................................................................... 33
Trade and other payables.................................................................................................. 34
Provisions and employee leave benefits ............................................................................ 34
Contributed equity ............................................................................................................. 34
Revenue recognition ......................................................................................................... 34
Share-based payment transactions.................................................................................... 35
Income tax ........................................................................................................................ 35
Earnings per share............................................................................................................ 36
Comparative figures .......................................................................................................... 36
Fair value measurements .................................................................................................. 37
Significant accounting judgements, estimates and assumptions ......................................... 37
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES ............................................................... 38
3.
FAIR VALUE MEASUREMENT OF NON-FINANCIAL INSTRUMENTS .......................................................... 42
4.
SEGMENT REPORTING ............................................................................................................... 42
5.
REVENUE AND EXPENSES .......................................................................................................... 42
6.
INCOME TAX ............................................................................................................................ 44
7.
EARNINGS PER SHARE .............................................................................................................. 46
8.
9.
CURRENT ASSETS – CASH AND CASH EQUIVALENTS ....................................................................... 46
10. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES .................................................................... 47
11. OTHER CURRENT ASSETS ......................................................................................................... 47
12. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT .......................................................... 47
13. BIOLOGICAL ASSETS ................................................................................................................. 49
14. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES .................................................................... 52
15. CURRENT LIABILITIES – EMPLOYEE BENEFITS ................................................................................ 53
INTEREST-BEARING LIABILITIES ................................................................................................... 53
16.
17. CONTRIBUTED EQUITY ............................................................................................................... 53
18. RESERVES .............................................................................................................................. 54
19. CONTINGENT ASSETS AND LIABILITIES .......................................................................................... 55
20. RECONCILIATION OF STATEMENT OF CASH FLOWS .......................................................................... 55
21. AUDITOR REMUNERATION .......................................................................................................... 56
22. KEY MANAGEMENT PERSONNEL .................................................................................................. 56
23. RELATED PARTY DISCLOSURES ................................................................................................... 56
24. PARENT ENTITY DISCLOSURES ................................................................................................... 57
25. SHARE BASED PAYMENTS .......................................................................................................... 58
26. COMMITMENTS ........................................................................................................................ 62
27. EVENTS AFTER BALANCE DATE ................................................................................................... 62
P a g e | 22
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2020
Consolidated
Operating lease income
Bank interest
Revenue
Fair value gain/(loss) 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
Notes
6a
13
6b
6c
6d
6e
7
12
2020
$’000
61
65
126
(109,216)
68,146
181
(2,623)
(1,422)
(60)
(2,456)
(970)
(48,294)
14,424
(33,870)
8,273
8,273
2019
$’000
141
74
215
7,342
5
13
(1,585)
(2,273)
(32)
(2,271)
(1,464)
(50)
297
247
-
-
(25,597)
247
Basic and diluted earnings per share
8
EPS in cents
(60.20)
EPS in cents
0.47
The above Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
P a g e | 23
Consolidated Statement of Financial Position
As at 30 June 2020
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
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
TOTAL EQUITY
Notes
9
10
11
12
13
14
15
16
16
7
17
18
Consolidated
2020
$’000
8,521
32,356
100
40,977
74,858
5,942
4
80,804
2019
$’000
9,511
5
777
10,293
62,091
115,158
5
177,254
121,781
187,547
577
154
-
731
-
7,697
7,697
8,428
1,011
199
-
1,210
29,700
18,582
48,282
49,492
113,353
138,055
90,669
11,958
10,726
113,353
89,949
3,810
44,296
138,055
The above Statement of Financial Position should be read in
conjunction with the accompanying notes.
P a g e | 24
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
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
Government grant
Insurance Recovery
Net cash flows (used in) operating activities
Cash flows from investing activities
Proceeds from sale of plant and equipment
Purchase of wharf development assets
Purchase of plant and equipment
Net cash flows from (used in) investing
activities
Cash flows from financing activities
Proceeds from the issue of shares
Payment for share issue costs
Proceeds from (repayment of) bank borrowings
Net cash flows from (used in) 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
2020
$’000
206
(4,488)
(1,453)
65
(1,183)
-
50
35,926
29,123
287
(1,091)
(262)
(1,066)
660
(7)
(29,700)
(29,047)
(990)
9,511
8,521
The above Statement of Cash Flows should be read in
conjunction with the accompanying notes.
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
P a g e | 25
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Property,
plant &
equipment
Revaluation
Reserve
$’000
Option &
performance
Rights
Reserve
$’000
Accum-
ulated
Profit
$’000
Total
$’000
Issued
Capital
$’000
Treasury
Shares
$’000
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
-
-
-
Shares issued
Share issue costs
Share issue costs tax benefit
Net shares issued
Performance rights lapsed
Share-based payments
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
Balance at 1 July 2019
90,399
(450)
3,685
125
44,296 138,055
Profit for the period
Other comprehensive
income
Total comprehensive income
Shares issued
Share issue costs
Net shares issued
Performance rights lapsed
Share-based payments
Share issue costs
Transaction with owners
-
-
-
660
(5)
655
-
67
(2)
720
-
-
-
-
-
-
-
-
-
-
-
8,273
8,273
-
-
-
-
-
-
-
-
-
-
(33,870)
-
(33,870)
8,273
(33,870)
(25,597)
-
-
-
(300)
175
-
(125)
-
-
-
300
-
-
300
660
(5)
655
-
242
(2)
895
Balance at 30 June 2020
91,119
(450)
11,958
-
10,726
113,353
The above Statement of Changes in Equity should be read in
conjunction with the accompanying notes.
P a g e | 26
Notes to the Consolidated Financial Statements
1.
Corporate information
The financial report for Kangaroo Island Plantation Timbers Ltd for the year ended 30 June 2020
was authorised for issue in accordance with a resolution of the directors on 29 September 2020.
Kangaroo Island Plantation Timbers Ltd is a for-profit 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 biological assets, investment properties
and freehold land that have been measured at fair value.
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.
Impact of COVID-19 pandemic - Judgment has been exercised in considering the impacts that the
Coronavirus (COVID-19) pandemic has had, or may have, on the operations of the Group and its
financial position and results. At present it is not expected that the pandemic will have any significant
impact on the Group’s operations.
Group personnel, key supply chains, and other important stakeholder relationships have remained
largely unaffected by the pandemic. As at 30 June 2020 and the date of this report, there has been
no significant impact upon the financial results and position of the Group reported on in these
consolidated financial statements as a result of the COVID-19 pandemic. The Board and
management will continue to monitor the impact of the pandemic on the Group’s operations and
state of affairs.
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)
At the date of authorisation of these financial statements, several new, but not yet effective,
Standards and amendments to existing Standards, and Interpretations have been published by the
IASB. None of these Standards or amendments to existing Standards have been adopted early by
the Group. Management anticipates that all relevant pronouncements will be adopted for the first
period beginning on or after the effective date of the pronouncement. New Standards, amendments
and Interpretations not adopted in the current year have not been disclosed as they are not expected
to have a material impact on the Group’s financial statements.
The accounting policies applied by the Group in the consolidated financial statements are consistent
with those applied in the prior year, except for the adoption of new standards effective as of 1
January 2019. The Group has not early adopted any other standard, interpretation or amendment
that has been issued but is not yet effective. The Group applies, for the first time, AASB 16 Leases
and AASB Interpretation 23 - Uncertainty over Income tax treatments, for the year ending 30 June
2020. As required by AASB 134, the nature and effect of these changes are disclosed below.
P a g e | 27
Notes to the Consolidated Financial Statements
Several other amendments and interpretations apply for the first time in 2020, but do not have an
impact on the consolidated financial statements of the Group.
AASB 16 Leases
AASB 16 was issued in January 2016 and replaces AASB 117 Leases, AASB Interpretation 4
Determining whether an Arrangement contains a Lease, AASB Interpretation 115 Operating
Leases-Incentives and AASB Interpretation 127 Evaluating the Substance of Transactions Involving
the Legal Form of a Lease. AASB 16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases and requires lessees to account for all leases under a single
on-balance sheet model similar to the accounting for finance leases under AASB 117.
Transition to AASB 16
The Group has elected to account for it’s leases using one of the practical expedients as described
in AASB 16 C10(c), due to the short-term nature of the remaining lease terms on transition. Instead
of recognising a right-of-use asset and lease liability, the payments in relation to these leases and
low value leases are recognised as an expense in profit or loss on a straight-line basis over the
lease terms. At the date of transition a total of $9,000 was payable over the remaining period of
short-term lease of the Kangaroo Island office.
Interpretation 23 - Uncertainty over income tax treatments
The first-time adoption of this amendment did not have any impact on the amounts recognised in
prior periods and is not expected to significantly affect the current or future periods.
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 0 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.
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.
P a g e | 28
Notes to the Consolidated Financial Statements
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
∂ Type or class of customer for the products and services
∂ Methods used to distribute the products or provide the services, and if applicable
∂ Nature of the regulatory environment
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.
Trade and other receivables
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 expected credit losses/uncollectible amounts.
P a g e | 29
Notes to the Consolidated Financial Statements
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 valuer or by a Directors’ assessment of their fair value
less costs to sell each year. Fair value is determined as the net present value of 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:
∂ Financial assets at amortised cost;
∂ Financial assets at Fair Value Through Profit or Loss (‘FVTPL’); or
∂ Financial assets at Fair Value Through Other Comprehensive Income (‘FVTOCI’).
All financial assets except for those carried 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.
P a g e | 30
Notes to the Consolidated Financial Statements
Financial Assets at Amortised Cost
Non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market are measured initially at fair value, and subsequently at amortised cost using the effective
interest method less provision for expected credit losses. Discounting is omitted where the effect of
discounting is immaterial. Financial assets at amortised cost are those instruments where
contractual cashflows are solely payments of principal and interest owing and the instruments are
managed as such. The Group's cash and cash equivalents, trade and most other receivables fall
into this category.
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.
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.
Financial Assets at FVTOCI
Non-derivative financial assets that are not held for trading are recognised at fair value, with
movements after initial recognition recorded as a separate component of equity until the asset is
derecognised or determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is recognised in profit or loss.
Reversals of impairment losses are recognised in other comprehensive income.
The fair values of assets 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 assets
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.
Classification and subsequent measurement of financial liabilities
The Group’s financial liabilities include trade and other payables.
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 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.
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 include 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:
P a g e | 31
Notes to the Consolidated Financial Statements
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(v)), less any impairment losses recognised
at the date of revaluation.
In accordance with AASB 13 Fair Value Measurement paragraph 27, the Group’s valuation basis
for its freehold land is as forestry land. The fair value valuation has been prepared using a
‘Summation Approach’ whereby the land value has been assessed as a rate per hectare which is
summated with the added value of any structural improvement. 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.
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.
Management has considered the triggers for impairment and concludes that no impairment is
required for the year ended 30 June 2020.
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.
P a g e | 32
Notes to the Consolidated Financial Statements
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.
Leases
l)
The Group has elected to account for short-term leases and leases of low-value assets using the
practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in
relation to these are recognised as an expense in profit or loss on a straight-line basis over the
lease term. At 30 June 2020 the Group was committed to a short-term lease of the Kangaroo Island
office expiring on 10 April 2021, and the total commitment at that date was $12,000. The group was
also committed to a low-value lease expiring on 13 July 2022, and the total commitment at that date
was $47,000.
Leases (Accounting policy applicable before 1 July 2019)
The economic ownership of a leased asset is transferred to the lessee if the lessee bears
substantially all the risks and rewards related to the ownership of the leased asset. The related
asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower,
the present value of the lease payments plus incidental payments, if any. A corresponding amount
is recognised as a finance leasing liability, irrespective of whether some of these lease payments
are payable up-front at the date of inception of the lease. Leases of land and buildings are classified
separately and are split into a land and a building element, in accordance with the relative fair values
of the leasehold interests at the date the asset is recognised initially.
Depreciation methods and useful lives for assets held under finance lease agreements correspond
to those applied to comparable assets which are legally owned by the Group. The corresponding
finance leasing liability is reduced by lease payments less finance charges, which are expensed as
part of interest on lease liabilities in the Statement of Profit and Loss.
The interest element of leasing payments represents a constant proportion of the capital balance
outstanding and is charged to profit or loss over the period of the lease. All other leases are treated
as operating leases. Payments on operating lease agreements are recognised as an expense on a
straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are
expensed as incurred.
Impairment of non-financial assets
m)
Non-financial assets are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Intangible assets with indefinite useful
lives and non-financial assets not yet available for use are tested for impairment annually and
whenever there is an indication that the asset may be impaired. 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.
P a g e | 33
Notes to the Consolidated Financial Statements
Trade and other payables
n)
Trade payables and other payables are carried at amortised cost due to their short-term nature, and
are not discounted. They represent liabilities for goods and services provided to the Group prior to
the end of the financial year on which the Group is obliged to make future payments. The amounts
are unsecured and are usually paid within 30 days of recognition.
Provisions and employee leave benefits
o)
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
p)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or other securities are shown in equity as a deduction, net of tax, from the proceeds.
Revenue recognition
q)
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.
Insurance claims
The Group recognises income from insurance claims at fair value at the time the insured event
occurs. Fair value is assessed as the best estimate of the insurance proceeds to be received and
is revised as necessary at reporting dates.
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 earns rental income from operating leases over some of its property (see Note 6). Rental
income is recognised on a straight-line basis over the term of the lease.
P a g e | 34
Notes to the Consolidated Financial Statements
Share-based payment transactions
r)
Equity settled share-based payments including the issue of performance rights made to directors
and other Group personnel are measured at fair value at grant date. Market based vesting
conditions, such as the achievement of specified share prices, are incorporated into the fair value
assessment at grant date. The fair value of performance rights is recognised as an expense, with
a corresponding increase in the share-based payments reserve in equity, over the period during
which the recipient becomes unconditionally entitled to the rights. The expense is not revised in
subsequent reporting periods for instruments that do not vest due to a failure to meet market based
vesting conditions.
Equity settled share-based payments to other parties are measured at the fair value of goods and
services received, except where the fair value cannot be estimated reliably, in which the transaction
is measured at the fair value of the equity instruments granted on the date the goods or services
are received.
Income tax
s)
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.
P a g e | 35
Notes to the Consolidated Financial Statements
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 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.
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
t)
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
on issue, adjusted for any bonus element.
Comparative figures
u)
Where necessary, comparatives have been reclassified and repositioned for consistency with
current year disclosures.
P a g e | 36
Notes to the Consolidated Financial Statements
Fair value measurements
v)
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 and
reports these to the Audit Committee. Management regularly reviews significant components of fair
value measurements, including unobservable inputs and other 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 through the Audit Committee.
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).
∂ 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.
The fair value of cash and short-term deposits, trade receivables, other current financial assets,
trade payables and other current liabilities approximate their carrying values largely due to the short-
term maturities of these instruments. Management reviews this assessment at least annually.
Significant accounting judgements, estimates and assumptions
w)
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
The Board has resolved to value the Group’s biological assets using the 30 June 2020 using a
director’s updated valuation which amounts to $5,942,626. The director’s valuation assumes that
until the Board has confirmed a viable strategy to remove the damaged timber from other plantations,
a fair value of $nil has been determined for all damaged or partially damaged timber plantations.
P a g e | 37
Notes to the Consolidated Financial Statements
The fair value of the Group’s biological assets has been calculated using a Directors valuation which
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.
Key Estimate – Valuation of Land
The fair value of the plantation land assets was calculated by an independent expert, JLL Valuations
and Advisory (‘JLL’), in their report dated 30 June 2020. The value provided is that of the Market
Value of the Company’s portfolio and also takes into account fair value measurements in
accordance with Australian Accounting Standards Board (AASB) 13. The combined approach
utilises the Highest and Best Use (HBU) of each property, 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.
A significant assumption in JLL’s valuation is the classification of all forestry areas within the portfolio
as “viable”. This is based on salvageability of standing timber over the next 4 years.
Buildings are depreciated on a straight-line basis over the estimated useful life of the asset.
Key Estimate – Carrying value of Wharf asset
The carrying amount of the Wharf asset (refer to note 12 for further detail) does not exceed the
recoverable amount and as a result no impairment is required, under AASB 116 Property, Plant and
Equipment. In accordance with AASB 136 Impairment of Assets the recoverable amount was
determined using the net present value of Value In use of the group of assets referred to as the
Wharf asset. The Wharf asset is capable of generating independent cash inflows.
Key Estimate – Valuation of Performance rights
The fair value of performance rights is measured at grant date using probabilistic estimates in
relation to future share prices and taking into account the terms and conditions upon which the
rights were granted.
The amount recognised as an expense for the 30 June 2020 and 30 June 2019 financial periods is
calculated using estimates of the expected vesting periods. Refer to Notes 18 and 25 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.
P a g e | 38
Notes to the Consolidated Financial Statements
Categories of Financial Assets and Liabilities
Total
$’000
8,521
32,356
100
40,977
Total
$’000
577
-
577
Assets at
FVTOCI
$’000
Assets at
FVTPL
$’000
Financial
assets at
amortised
cost
$’000
-
-
-
-
-
-
-
-
8,521
32,356
100
40,977
*Designated
at FVTPL
$’000
*Other
liabilities at
FVTPL
$’000
#Other
liabilities
$’000
-
-
-
-
-
-
-
Assets at
FVTOCI
$’000
-
-
-
577
-
577
Financial
assets at
amortised
cost
$’000
Total
$’000
Assets at
FVTPL
$’000
-
-
-
-
9,511
782
5
9,511
782
5
10,298 10,298
*Designated
at FVTPL
$’000
*Other
liabilities at
FVTPL
$’000
#Other
liabilities
$’000
Total
$’000
-
-
-
-
-
-
1,210
1,210
29,700 29,700
30,910 30,910
30 June 2020
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities
Trade and other payables
Non-current borrowings
Total
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
Total
* Carried at fair value
# Carried at amortised cost
Risk Exposures and Responses
Note
9
10
11
Note
14
16
Note
9
10
Note
14
16
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:
P a g e | 39
Notes to the Consolidated Financial Statements
Financial assets
Cash and cash equivalents
Term deposits
Financial liabilities
Interest bearing liabilities
Net exposure
Consolidated
2020
$’000
8,521
-
8,521
2019
$’000
9,511
-
9,511
-
(29,700)
8,521
(20,189)
The Group has utilised insurance funds to fully repay its facility with the CBA, of which $29,700,000
was drawn at 30 June 2019.
At 30 June 2020, 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:
Judgements of reasonably
possible movements:
Consolidated
+1%
-0.5%
Post tax profit
Higher/(lower)
2020
$’000
85
(42)
2019
$’000
(202)
101
Equity
Higher/(lower)
2020
$’000
2019
$’000
-
-
-
-
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 and other 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 2020.
Cash flows for financial assets and liabilities without fixed amounts or timing are based on the
conditions existing at 30 June 2020.
The remaining contractual maturities of the Group’s financial liabilities are:
P a g e | 40
Notes to the Consolidated Financial Statements
6 months or less
6-12 months
1-5 years
Over 5 years
Consolidated
2020
$’000
(577)
-
-
-
(577)
2019
$’000
(1,210)
-
(5,000)
(24,700)
(30,910)
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 2020
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial Liabilities
Trade and other payables
Non-current borrowings
Net Maturity
8,521
32,356
100
40,977
(577)
-
(577)
40,400
< 6
months
$’000
6-12
months
$’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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1-5
years
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
> 5
years
$’000
-
(29,700)
(29,700)
(29,700)
8,521
32,356
100
40,977
(577)
-
(577)
40,400
Total
$’000
9,511
782
5
10,298
(1,210)
(29,700)
(30,910))
(20,612)
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 | 41
Notes to the Consolidated Financial Statements
4. Fair value measurement of non-financial assets
The following table shows the Levels within the hierarchy of non-financial assets measured at fair
value on a recurring basis at 30 June 2020:
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
30 June 2020
Property, plant and equipment
Land held for production in Australia
Land and buildings
Biological assets
Standing timber
30 June 2019
Property, plant and equipment
Land held for production in Australia
Land and buildings
Biological assets
Standing timber
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,778
2,502
59,280
56,778
2,502
59,280
5,942
5,942
43,720
3,765
47,485
43,720
3,764
47,484
115,158
115,158
Land held for production in Australia (Level 3)
The fair value of the plantation land assets was calculated by an independent expert, JLL
Valuations and Advisory, in their report dated 30 June 2020.
Refer to Note 12 for further details.
Biological assets (Level 3)
The fair value of the Group’s biological assets was calculated by a Director’s valuation. Due to
wildfires that started in December 2019 approximately 95% of the plantation has been damaged,
leaving three plantations with limited fire damage, of which 512.5 acres is undamaged. The Board
has determined that the fair value of Group’s biological assets which amounts to $5,942,626. It was
determined that the fair value of damaged timber plantations are $nil.
5. Segment reporting
Consistent with the prior year, 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 lease income
Operating leases: freehold land and buildings
Operating leases: equipment
Total
P a g e | 42
Consolidated
2020
$’000
61
-
61
2019
$’000
132
9
141
Notes to the Consolidated Financial Statements
The Group leases a number of assets to third parties under operating lease arrangements:
Freehold land and buildings leases $61,019 (2019: $132,091)
∂ 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 2020 amounted to $11,885 (2019: $24,675).
Due to the impacts of wildfires, the Company forgave lease payments relating to the period
following the fires. Hence, Mr Holdaway’s lease was forgiven by $13,259.
As at 30 June 2020 $11,885 remains outstanding.
∂ The Group has a residential lease on 2 (2019: 10) properties. The reduced number of leased
properties is due to domestic dwellings being destroyed or severely damaged by wildfire. The
remaining agreement is cancellable and the annual rent received amounted to $41,707
(2019: $72,618); and
∂ The Group also casually leases out certain properties for agistment and other purposes.
Annual income amounted to $7,427 (2019: $34,600). The decrease in annual income from
leased properties pertains to 2020 lease fees not being charged as part of wildfire relief.
∂ Equipment leases $Nil (2019: $8,755)
The Group had an equipment lease which concluded in February 2019.
Consolidated
(b) Other income
Government Rebates
Insurance Recoveries
Other income
Total Other income
(c) Sale of assets
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
P a g e | 43
2020
$’000
50
68,026
70
68,146
287
(106)
181
181
243
100
11
158
90
1,127
75
354
298
2,456
970
-
970
2019
$’000
-
-
5
5
13
-
13
13
234
61
12
104
99
1,117
7
377
260
2,271
1,464
-
1,464
Notes to the Consolidated Financial Statements
(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
Superannuation
Total employee and directors’ remuneration
7. Income Tax
Income tax expense
a)
The major components of income tax expense are:
Current income tax
Deferred income tax
Income tax expense/(benefit) reported in profit or loss
Profit/(loss) before tax
Tax expense/(benefit) at the statutory income tax rate of 30%
(2019: 30%)
Non-deductible expenses/capital gain on sale of land
Adjustment in respect of prior year
Recognition of previously unrecognised tax losses
Income tax expense/(benefit) reported in income statement
b) Amounts charged or credited to equity
Share issue costs
Revaluation of land
Income tax expense reported in equity
Consolidated
2020
$’000
1,203
185
12
176
84
27
107
1,794
2019
$’000
1,003
190
5
172
122
6
76
1,574
Consolidated
2020
$’000
2019
$’000
-
(14,424)
(14,424)
(48,294)
(14,489)
65
-
-
(14,424)
-
(3,539)
(3,539)
-
(297)
(297)
(50)
(15)
-
312
-
297
(164)
(164)
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.
P a g e | 44
Notes to the Consolidated Financial Statements
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 2020 amounted to $23,225,757 (2019:
$28,559,182).
Recognised deferred tax assets and liabilities
Assets
2020
$’000
2019
$’000
Liabilities
Net
2020
$’000
2019
$’000
2020
$’000
2019
$’000
Capital raising Costs
Trade and other receivables
Property, plant & equipment
Biological assets
Trade and other payables
Tax losses
Net deferred tax
assets/(liabilities)
-
374
2,034
9,079
62
6,968
616
-
1,694
-
70
8,568
-
(16,830)
(9,384)
-
-
-
-
-
(5,845)
(23,685)
-
-
-
(16,456)
(7,350)
9,079
62
6,968
616
-
(4,151)
(23,685)
70
8,568
18,517
10,948
(26,214)
(29,530)
(7,697)
(18,582)
Deferred income tax
Deferred income tax for the year ended 30 June 2020 relates to the following:
Movements in temporary
differences during the
year
Property, plant & equipment
Biological assets
Capital raising costs
Trade and other receivables
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 19
$’000
(4,151)
(23,685)
616
-
70
8,568
(18,582)
Balance
1 July 18
$’000
(4,711)
(21,708)
698
32
6,898
(18,791)
Recognised
in Income
$’000
Recognised
on Acquisition
$’000
Recognised
in Equity
$’000
Balance
30 June 20
$’000
340
32,764
(616)
(16,456)
(8)
(1,600)
14,424
-
-
-
-
-
-
-
(3,539)
-
-
-
-
-
(3,539)
(7,350)
9,079
-
(16,456)
62
6,968
(7,697)
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)
P a g e | 45
Notes to the Consolidated Financial Statements
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
2020
$’000
2019
$’000
Earnings used in calculating earnings per share
a)
Net profit/(loss) attributable to ordinary equity holders of the parent
(33,870)
247
There is no dilutive 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:
Share options and performance rights
Weighted average number of ordinary shares adjusted for the
effect of dilution
c) Basic and diluted earnings per share
Basic and diluted earnings per share
2020
Number
Thousands
2019
Number
Thousands
56,264
52,659
-
-
56,264
52,659
EPS in
cents
(60.20)
EPS in
cents
0.47
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 both periods
presented.
On 12 August 2020, the Company completed its unmarketable parcel buy back and 49,273 shares
were bought back at $0.85 per share.
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
2020
$’000
8,521
8,521
2019
$’000
9,511
9,511
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 2020 $Nil (2019: $2,534,436)
is held in a restricted savings account, the funds can only be used to pay for CBA borrowing costs.
P a g e | 46
Notes to the Consolidated Financial Statements
10. Current assets – Trade and other receivables
Trade receivables (a)
Insurance receivable
Sundry Debtors
Carrying amount of trade and other receivables
a)
Trade debtors are non-interest bearing and generally on 30-day terms.
Terms of trade
Consolidated
2020
$’000
128
32,100
128
32,356
2019
$’000
5
-
-
5
Credit risk and effective interest rate risk and fair values
b)
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.
11. Other Current Assets
Prepayments
Consolidated
2020
$’000
100
100
2019
$’000
777
777
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 2020
At 1 July 2019 net of accumulated depreciation
and impairment
Additions
Disposals
Revaluation
Adjustment in accumulated depreciation in
relation to disposal/revaluation
Depreciation charge for year
At 30 June 2020 net of accumulated
depreciation and impairment
At 30 June 2020
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
Freehold
land and
Buildings
$’000
Plant and
equipment
$’000
Wharf
asset
$’000
Total
$’000
47,485
318
14,288
62,091
-
-
11,812
-
(17)
59,280
264
(605)
-
499
(142)
334
956
-
-
-
-
15,244
1,220
(605)
11,812
499
(159)
74,858
59,280
-
59,280
847
(513)
334
15,244
-
15,244
75,371
(513)
74,858
P a g e | 47
Notes to the Consolidated Financial Statements
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
At 30 June 2019
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
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
-
-
4,244
(102)
84
-
14,288
(104)
62,091
47,701
(216)
47,485
1,186
(868)
318
14,288
-
14,288
63,175
(1,084)
62,091
Additions to wharf assets during the year is due to improvements to the floating pontoon of $0.96
million (2019: $4.22 million). The wharf is not yet operational and therefore no depreciation has
been charged during the year (2019: $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. The fair value measurements of the Group’s freehold land and buildings
as at 30 June 2020 are based on an independent expert’s valuation. The net result of the
independent revaluation amounted to $11,812,000 of which $8,273,000 was recognised in the asset
revaluation reserve and $3,539,000 as deferred tax.
Independent expert’s valuation technique
The Board has elected to use valuations provided by the independent external valuer, JLL
Valuations and Advisory (‘JLL’).
The fair value of the land assets was calculated by JLL in their report dated 30 June 2020. The
valuation was carried out in accordance with AASB 13 Fair Value Measurement, AASB 116
Property, Plant and Equipment. This valuation method has been used by JLL as it provides the
best estimate of a price reasonably obtainable in the property market at the report date. The fair
value valuation has been prepared using a ‘Summation Approach’ whereby 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 for the productive
component of the land (exclusive of remnant vegetation and water bodies) as in the range of
$2,730 per hectare to $3,413 per hectare. The land’s location, rainfall, physical attributes, location
of amenities and improvements all influence where in this range a particular is valued.
All fair value estimates for land and buildings are included in Level 2 of the fair value hierarchy.
Significant Observable Inputs
(i) Recent sales of land on Kangaroo Island and recent trends in the sale of land in other
agricultural regions, adjusted for comparability considerations.
(ii) Land use deemed as Commercial Forestry.
Significant Unobservable Inputs
(i) Estimated price per hectare is determined by the independent expert after observing each
asset’s:
P a g e | 48
Notes to the Consolidated Financial Statements
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) A highly probable 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.
Sensitivity analysis
The fair value measurement of freehold land is sensitive to changes in the unobservable inputs
which may result in a significantly higher or lower fair value measurement. The following tables
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
2020
$’000
1,186
(1,186)
-
2019
$’000
905
(905)
-
Wharf asset
c)
The carry amount does not exceed the recoverable amount under AASB 116 Property, Plant and
Equipment, as a result management recommend that no impairment is required. In accordance with
AASB 136 Impairment of Assets the recoverable amount was determined by performing a Value In
Use calculation based on a 5-year cash flow forecast previously approved by the Board. The net
present value of the cash flows has been discounted based on a discount rate of 11.44%, assuming
an internal port access charge for the Company’s and other Growers timbers both undamaged and
an estimated proportion of damaged timber. The Wharf assets original value is based on cost and
there is no goodwill.
d) Operating lease
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/(loss)
Closing balance as at 30 June
Plantation timber at cost
Accumulated fair value gain
Total biological assets
Classified as non-current
P a g e | 49
Consolidated
2020
$’000
2019
$’000
115,158
107,816
(109,216)
5,942
7,342
115,158
25,178
(19,236)
5,942
25,178
89,980
115,158
5,942
115,158
Notes to the Consolidated Financial Statements
Fair value
The fair value of the Group’s biological assets was calculated by an independent expert, Geddes
Management Pty Ltd (Geddes), as at 30 June 2019. Due to wildfires that started in December 2019
approximately 95% of the Group’s biological assets has been damaged, leaving three plantations
with limited fire damage, of which 512.5 acres is undamaged.
The Board has resolved to value the Group’s biological assets at 30 June 2020 using a director’s
updated valuation which amounts to $5,942,626. The director’s valuation assumes that until the
Board has confirmed a viable strategy to remove the damaged timber from other plantations, a fair
value of $nil has been determined for all damaged or partially damaged timber plantations. The
model used is detailed below.
The valuation model used by directors 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, in the current year the key
milestone is:
∂ On 23 March 2020, the Company submitted the Response Document to the public consultation
process which, together with the Addendum Document submitted October 2019, and the
Revised EIS Submitted January 2019, represents the final form of documentation required by
government.
The fair value measurements for the biological assets is categorised as Level 2 in the fair value
hierarchy.
Due to lack of local data, the highest and best use of the Group’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 1.389 AUD or 72
cents US (2019: 1.370 AUD or 73 cents US).
(ii) The valuation is derived using a real pre-tax discount rate of 11.43% (nominal 13.78%) (2019
11.43% (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% (2019: 4.75%) and an equity
premium of 5% (2019: 5%), a beta of 1 (2019: 1), a gearing of 30% debt (2019: 30%), an alpha
of 2.0% (2019: 2.0%) and inflation of 2.1% (2019: 1.9%) forecast to 2021.
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 directors
model assumes a harvesting plan over 5 years commencing in 2021 (2019: commencing 2022
over 11 years).
(ii) The price of timber is determined with due consideration to market transactions and industry
projections including:
P a g e | 50
Notes to the Consolidated Financial Statements
o The price of hardwood logs (2019: hardwood chips) is determined after consideration of
current market transactions, arriving at a blue globulous log price of $90.42 (USD$65.10)
(2019: Chip Price $126.16 (USD$92.09)) per green metric tonne (GMT) after discounts
including dry fibre percentage, anticipated 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 $124.96 per
GMT (2019: between $76.33 (2018: $40.00) per GMT to $107.14) 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 Group may also accelerate its harvesting plan and complete its first harvesting cycle earlier
than originally planned.
The Group 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 5.0%
(2019: 4 cents or 5.48%)
Decrease in the AUD to USD by 4 cents 5.0%
(2019: 4 cents or 5.48%)
∂
2020
$’000
2019
$’000
(822)
(12,768)
822
14,248
(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:
P a g e | 51
Notes to the Consolidated Financial Statements
Eucalyptus globulus
Change in value
∂
∂
Increase in the price by 5% (2019: 5%)
Decrease in the price by 5% (2019: 5%)
(iii) Discount rate Risk Sensitivity Analysis
2020
$’000
801
(801)
2019
$’000
12,936
(12,936)
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 value
o
Increase in the nominal discount rate by 5% from 11.44%
to 12.01% (2019: 7% from 13.78% to 14.78%)
o Decrease in the nominal discount rate by 7% from 11.44%
to 12.01% (2019: 7% from 13.78% to 12.78%)
Project Risk
2020
$’000
2019
$’000
(28)
28
(6,993)
7,580
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. 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 of variation in future cash flows due to 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
2020
$’000
553
24
577
2019
$’000
982
29
1,011
a)
Trade payables
Trade payables are non-interest bearing and are normally settled on 30-day terms.
P a g e | 52
Notes to the Consolidated Financial Statements
15. Current liabilities – employee benefits
Employee benefits
Annual Leave
Long service leave
Superannuation
Employee benefits are non-interest bearing.
16.
Interest-bearing liabilities
Current
Bank borrowings
Total current
Non-Current
Bank borrowings (a)
Total non-current
Consolidated
2020
$’000
92
53
9
154
Consolidated
2020
$’000
-
-
-
-
-
2019
$’000
164
27
8
199
2019
$’000
-
-
29,700
29,700
29,700
a)
KPT has utilised insurance funds to fully repay its facility with the CBA, of which
$29,700,000 was drawn at 30 June 2019.
17. Contributed equity
a) Issued and paid up capital
Ordinary shares fully paid
Consolidated
2020
$’000
2019
$’000
90,669
89,949
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
Director participation in share
placement (approved by shareholders
21 November 2019)
Share-based payment (Note 25)
Share issue costs, net of tax
End of the financial year
c) Capital management
2020
2019
Number of
shares
56,081,499
330,000
$’000
89,949
660
Number of
shares
50,897,512
5,153,250
52,289
-
56,463,788
67
(7)
90,669
30,737
-
56,081,499
$’000
79,963
10,306
62
(382)
89,949
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.
P a g e | 53
Notes to the Consolidated Financial Statements
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 2020 and 30 June 2019 were as follows:
Trade and other payables
Interest bearing liabilities
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing Ratio
As at 30 June 2020 the Company’s net cash exceeds debt.
The Group is not subject to any externally imposed capital requirements.
18. Reserves
Share based payments reserve (a)
Property, plant and equipment reserve (b)
a)
Share based payments reserve
Opening balance at 1 July
Movement:
Performance rights dated 21 November 2019
Performance rights dated 16 October 2018
Performance rights dated 21 November 2019 lapsed
Performance rights dated 16 October 2018 lapsed
Performance rights dated 10 November 2017 lapsed
Performance rights dated 10 November 2017
Closing balance at 30 June
Consolidated
2020
$’000
577
-
(8,521)
(7,944)
113,353
105,409
-
2019
$’000
1,011
29,700
(9,511)
21,200
138,055
159,255
13.31%
Consolidated
2020
$’000
-
11,958
11,958
Consolidated
2020
$’000
125
140
35
(140)
(160)
-
-
-
2019
$’000
125
3,685
3,810
2019
$’000
111
-
125
-
-
(158)
47
125
The share based payments reserve records the grant date fair value of performance rights issued
to directors, employees and other parties that has been recognised as an expense at the reporting
date. It also reflects the value of performance rights that are on issue but have not yet converted
into shares.
During the year, there were two separate issues of Performance Rights to directors: 21 November
2019 and 30 June 2020. A total of 1,285,700 Rights were issued in the former, which all expired
early on 30 June 2020. On 30 June 2020, a further 2,256,896 Rights were issued in the allocations
and with share price performance conditions as outlined in Note 26. The 30 June 2020 Performance
Rights expire on 29 June 2021.
Share-based payment expense for the year ended 30 June 2020 totalling $175,692 consists of the
full value of the 21 November 2019 issue ($140,475) and the final previously unrecognised portion
of Rights issued in the prior year ($35,217). The value of the 30 June 2020 Rights will be recognised
in future financial periods.
P a g e | 54
Notes to the Consolidated Financial Statements
The value of the 21 November 2019 Rights and the 16 October 2018 Rights (which includes the
balance at 1 July 2019) was transferred from the share based payment reserve to accumulated
profits at year end, as none of these rights actually vested.
Refer to Note 25 for further detail of the terms, conditions and allocations of the Rights issued during
the current financial year and related share based payment expense.
b)
Property, plant and equipment revaluation reserve
Opening balance at 1 July
Increase based on independent valuation
Deferred tax applicable to revaluation
Closing balance at 30 June
Consolidated
2020
$’000
3,685
11,812
(3,539)
11,958
2019
$’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.
19. Contingent assets and liabilities
The Company notes a contingent assts, being an additional $5m (2019: $nil) treecrop insurance
claim, which may be receivable, given ambiguity in the wording of its insurance policy concerning
the interaction of $5 million per-event excesses and the overall limit of claims, which is $65 million.
This additional amount has not been recognised in the Company’s accounts.
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.
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 25)
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
2020
$’000
2019
$’000
(33,870)
247
158
(181)
109,216
243
(14,425)
(31,673)
(345)
29,123
103
(13)
(7,343)
234
(209)
(71)
118
(6,934)
-
-
57,100
29,700
KPT has utilised insurance funds to fully repay its facility with the CBA, of which $29,700,000 was
drawn at 30 June 2019.
P a g e | 55
Notes to the Consolidated Financial Statements
21. Auditor remuneration
The auditor of Kangaroo Island Plantation Timbers Ltd is Grant Thornton Audit Pty Ltd.
An audit or review of the financial report of the Group
Taxation services
Total
22. Key management personnel
(a) Compensation of key management personnel
Non-executive Directors
Short-term benefits
Superannuation
Performance Rights
Executives
Short-term benefits
Superannuation
Long service leave
Performance Rights
Remuneration
Share-based remuneration payment
Total
Consolidated
2020
$
64,452
3,500
37,952
2019
$
57,221
4,000
61,221
Consolidated
2020
$
460,654
13,014
45,740
519,408
578,756
57,477
9,470
129,952
541,353
56,000
1,373,008
2019
$
436,078
9,127
64,632
509,837
636,247
43,758
-
107,427
464,742
57,000
1,309,174
1,892,416
1,819,011
The directors and executives have been reimbursed for Company expenses incurred during the
year.
23. 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:
KI Seaport Pty Ltd(i)
KIPT Holdings Pty Ltd(ii)
Kangaroo Island Plantation Management Pty Ltd
RuralAus Finance Limited(iii)
Kangaroo Island Land Assets Ltd
Kangaroo Island Timbers Pty Ltd
(i) KI Seaport Pty Ltd was incorporated on 29 January 2014 and is a wholly owned subsidiary
Percentage of equity
interest held by the
consolidated entity
2019
%
100
100
100
100
100
100
2020
%
100
100
100
nil
100
100
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Name
of Kangaroo Island Plantation Timbers Ltd.
P a g e | 56
Notes to the Consolidated Financial Statements
(ii) KIPT Holdings Pty Ltd is a wholly owned subsidiary of Kangaroo Island Plantation Timbers
Ltd and is the immediate parent entity to Kangaroo Island Plantation Management Pty Ltd,
Kangaroo Island Land Assets Ltd and Kangaroo Island Timbers Pty Ltd.
(iii) Deregistered on 10 July 2019.
Transactions with related parties
Controlled Entities
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.
Key management personnel
Details of the remuneration of key management personnel are included in Note 22 and 25 and in
the Remuneration Report.
Directors transactions
Income: Annual lease payment(1)
Consolidated
2020
$
2019
$
11,885
24,675
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 2020 amounted to $25,144 (2018: $24,675). Due to the
impacts of wildfires, the Company forgave lease payments relating to the period following the
fires. Hence, Mr Holdaway’s lease was forgiven by $13,259. As at 30 June 2020 $11,885 remains
outstanding. As noted previously, Mr Holdaway resigned from the Board on 6 May 2020.
24. Parent Entity disclosures
Information relating to Kangaroo Island Plantation Timbers Ltd:
Current assets
Non-current assets
Intercompany assets(a)
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total net assets
Issued capital
Option and performance rights reserve
Property, plant and equipment reserve
Retained earnings
Total shareholders’ equity
(Loss) of the parent entity
Net fair value gain in property, plant and equipment
Total comprehensive (loss)
P a g e | 57
2020
$’000
8,369
9,506
56,454
74,329
148
291
439
73,890
90,669
-
970
(17,749)
73,890
(1,253)
75
(1,178)
2019
$’000
9,474
8,389
86,850
104,713
387
29,853
30,240
74,473
89,949
125
895
(16,496)
74,473
(4,564)
-
(4,564)
Notes to the Consolidated Financial Statements
Parent entity guarantees, commitments and contingent liabilities
The Directors are not aware of any guarantees, commitments or contingent liabilities of the parent
entity.
25. Share based payments
Recognised share-based payment expenses
The expense recognised for remuneration and other services received during the year is shown in
the table below:
Performance Rights - Directors (a)
Shares issued to employees under the EESP (b)
Shares issued in lieu of consulting fees (c)
Total
Consolidated
2020
$
175,692
12,000
55,000
242,692
2019
$
172,060
5,000
57,000
234,060
(a) Performance Rights – Directors
During the year, there were two separate issues of Performance Rights to directors: 21 November
2019 and 30 June 2020. A total of 1,285,700 Rights were issued in the former, which all expired
early by resolution of the Board on 30 June 2020. On 30 June 2020, a further 2,256,896 Rights
were issued. The 30 June 2020 Performance Rights have an expiry date of 29 June 2021. The
allocations and share price performance conditions of both the November and June Rights issues
are outlined in further detail below.
Share-based payment expense for the year ended 30 June 2020 totalling $175,692 consists of the
full value of the 21 November 2019 issue ($140,475) and the final previously unrecognised portion
of Rights issued in the prior year ($35,217). The value of the 30 June 2020 Rights will be recognised
in future financial periods. Detail of share-based payment expense for the year is shown below.
(b) Share based payments - Performance Rights
Issued 21
November
2019
$
Issued 16
October
2018
$
Issued 10
November
2017
$
Total
Performance
Rights
$
Year
Non-Executive Directors
P McKenzie
G Boulton
Executive Directors
K Lamb
J Sergeant
S Black
G Holdaway
Total
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
-
6,777
-
6,777
-
-
-
-
13,554
-
6,776
-
13,554
-
47,439
20,888
21,544
20,888
21,544
31,714
21,251
41,776
43,088
36,745
21,544
23,682
43,088
175,692
172,059
15,857
-
15,857
-
31,714
-
31,714
-
31,714
-
13,620
-
5,031
14,767
5,031
14,767
-
21,251
10,062
29,534
5,031
14,767
10,062
29,534
140,476
-
35,216
124,620
P a g e | 58
Notes to the Consolidated Financial Statements
Director Holdings of Performance rights
Opening
interest at
1 July 2019
Performance
Rights issued
Performance
Right lapsed
Closing
interest at 30
June 2020
128,570
128,570
126,820
257,140
257,140
128,570
-
-
1,026,810
410,682
410,682
1,385,628
539,252
257,140
539,252
-
-
3,542,636
(257,140)
(257,140)
(383,960)
(514,280)
(514,280)
(385,710)
-
-
(2,312,510)
282,112
282,112
1,128,448
282,112
-
282,112
-
-
2,256,896
Non-executives
Paul McKenzie
Gregory Boulton
Executive directors
Keith Lamb
John Sergeant
Graham Holdaway
Shauna Black
Executives
Peter Lockett
Victoria Allinson
Total
Performance Rights Plan
The Performance Rights Plan (“Plan”) was last approved by Shareholders on 21 November 2019.
Under the Plan, the Board can issue performance rights to executive and non-executive directors
as remuneration for additional duties performed and to incentivise them to align their interests more
closely with those of shareholders.
If the performance conditions and any other vesting conditions are met, an equivalent number of
shares will be issued that rank equally with all other existing shares in all respects.
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.
Valuation and Recognition of Remuneration
Under AASB 2 Share-Based Payment the fair value of any share-based remuneration is determined
at the grant date and then recognised as an expense over the relevant vesting period. Performance
rights are normally valued based on the Company’s share price at the Grant Date and an assessed
probability of achievement. Vesting conditions that are market-based (such as achievement of a
particular share price) are included in the fair value assessment. The directors have used an
adapted Monte Carlo valuation method to value the performance rights
Remuneration expense is then recognised over the relevant term of the performance rights, on the
basis that the recipient must be in the employ of the Group at the time a performance condition is
met in order for the rights to vest. Amounts recognised as remuneration expense are not reversed
through profit and loss if the rights do not vest because of a failure to meet a market-based
performance condition. However, the value of performance rights that have lapsed or expired is
transferred from the share-based payment reserve to retaining earnings/accumulated profits.
The Performance Rights expire at the earlier of twelve months after approval or if they are replaced
with new Performance Rights.
Performance Rights Issued 30 June 2020
Due to impact of the wildfires on Kangaroo Island during the year on the Group’s timber plantation
assets and consequently on the Company’s share price, the directors resolved that the terms of the
performance rights issued on 21 November 2019 (discussed below) were no longer appropriate.
On the 30 June 2020 shareholders approved new performance rights dated 30 June 2020) and the
expiry of the on 21 November 2019 performance rights issued.
The 30 June 2020 Performance Rights were issued in the three tranches with different share price
performance conditions as shown below and expiring 29 June 2021. Managing Director Keith Lamb
was allocated 50% of the total Rights pool, with the remaining 4 directors are allocated 12.5% of
the pool each.
P a g e | 59
Notes to the Consolidated Financial Statements
The Performance Rights are triggered by meeting the following performance vesting conditions:
∂
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
Last 1,000,000
Shares Traded
VWAP
$1.25 or above
$1.50 or above
$1.75 or above
Total
Managing
Director
Keith Lamb
Rights
376,149
501,533
250,766
1,128,448
4 Other
Director Rights
(each)
94,037
125,383
62,692
282,112
Total
Right
s
752,297
1,003,065
501,534
2,256,896
Total Valuation
$
270,827
120,368
20,061
411,256
The valuation of each tranche is based on the probability of achieving the relevant volume-weighted
average share price (VWAP) and the share price at 30 June 2020 of $0.80. As noted previously,
remuneration expense related to these rights will be recognised commencing 1 July 2020 and no
expense was recognised at 30 June 2020.
The valuation is set out in the table below.
20 Business Day
VWAP
$1.25 or above
$2.50 or above
$1.75 or above
Total
Post-split
Shares to
be issued
752,297
1,003,065
501,534
2,256,896
Share price at
grant date
$0.80
$0.80
$0.80
Probability
45%
Valuation $
270,827
15%
5%
120,368
20,061
411,256
Any shares issued on the vesting of rights will be subject to a mandatory 12 month escrow period.
Performance Rights dated 21 November 2019
At the 21 November 2019 Annual General Meeting, shareholders approved the issue of a total of
1,285,700 Performance Rights, effectively replacing the expired performance rights that had been
issued on 16 October 2018. Keith Lamb, John Sergeant, Shauna Black and Graham Holdaway
received 20% of the total Rights pool each, with Paul McKenzie and Greg Boulton receiving 10%
each.
The Performance Rights are triggered by meeting the following performance vesting conditions:
∂
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
Last 1,000,000
Shares Traded
VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Keith Lamb
John Sergeant
Shauna Black
Graham Holdaway
Rights (each)
107,140
85,720
64,280
257,140
Paul
McKenzie
Greg
Boulton
Rights (each)
53,570
42,860
32,140
128,570
Total
Rights
535,700
428,600
321,400
1,285,700
Total Valuation
$
118,925
47,575
-
166,500
These rights were resolved by the Directors to have expired unvested on 30 June 2020. Under
Accounting Standards the value of these rights must nonetheless be recognised and therefore a
value of $140,476 is recognised in the current year.
The valuation is set out in the table below.
P a g e | 60
Notes to the Consolidated Financial Statements
20 Business Day
VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
Post-split
Shares to
be issued
535,700
428,600
321,400
1,285,700
Share price at
grant date
$2.22
$2.22
$2.22
Performance Rights - 16 October 2018
Probability
10%
5%
0%
Valuation $
118,925
47,575
-
166,500
899,990 Performance Rights dated 16 October 2018 expired in October 2019. 899,990
Performance rights dated 16 October 2018 expired in October 2019. The total value of these
rights of $147,597 included a portion, being $44,228, that was recognised in the current financial
year.
The Performance Rights are triggered by meeting the following performance vesting conditions:
∂
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
Last 1,000,000 Shares
Traded VWAP
$3.50 or above
$4.25 or above
$5.00 or above
Total
John Sergeant
Graham Holdaway
Rights (each)
107,140
85,720
64,280
257,140
Paul McKenzie
Greg Boulton
Shauna Black
Rights (each)
53,570
42,860
32,140
128,570
Total
Rights
374,990
300,020
224,980
899,990
Total Valuation
$
130,684
12,300
4,612
147,596
The performance rights were valued via an adapted Monte Carlo valuation method using the share
price at the Grant Date with a probability applied to each tranche. The valuation was based on the
probability of achieving VWAP and the share price at 16 October 2018 of $2.05, set out in the table
below.
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
Post-split
Shares to
be issued
374,990
300,020
224,980
899,990
Share price at
grant date
$2.05
$2.05
$2.05
Probability
17%
2%
1%
Valuation
$
130,684
12,301
4,612
147,597
(b) Shares issued under Executive & Employee Share Plan (EESP)
∂ 13,944 shares were issued to employees during the year under the EESP. Shares were
valued at the Company’s closing price on the ASX on the date of issue ($0.86) and
remuneration expense of $12,000 was recognised (2019: $5,000). Eleven employees were
issued 1,162 (2019: 476) shares each.
(c) Shares issued in lieu of consulting fees
∂ The Group’s Approvals Manager Mr Peter Lockett invoices his services via Seaview
Corporate Services Pty Ltd, of which Mr Lockett has effective control. During the year
$50,000 (2019: $50,000) of these services have been paid in Shares. Shares are paid at
20-day VWAP as at the last day of each quarter.
P a g e | 61
Notes to the Consolidated Financial Statements
Mr Lockett’s shares issued in lieu of fees for the period are outlined in the table below.
Date of Issue
18 December 2019
18 December 2019
24 June 2020
24 June 2020
Fees Invoiced
$
12,500
12,500
12,500
12,500
50,000
20-Day VWAP Shares Issued Consideration
$2.394
$2.191
$2.273
$0.776
5,221
5,704
5,500
16,110
32,535
$
12,500
12,500
12,500
12,500
50,000
∂ 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. $5,000 of these fees were paid in shares (2019: $7,000), of which $1,000 of
shares were issues to Ms Allinson and $4,000 to her employees. 5,810 shares were issued
at $0.861 per share; 1,162 shares to Ms Allinson and 4,648 to her employees.
26. Commitments
Commitments
The Group has commissioned a number of studies and expected wharf development assets costs,
however the Group is not committed to incurring these costs at 30 June 2020. In addition, the Group
has leased two offices throughout the year ended 30 June 2020.
Consolidated
Lease Commitments
Consolidated
Other Commitments
2020
$’000
2019
$’000
2020
$’000
2019
$’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
35
-
-
-
35
32
-
-
-
32
-
-
-
-
-
-
-
-
-
-
There are no other commitments as at 30 June 2020.
27. Events after balance date
On 16 July 2020 the Company received a further insurance progress payment of $19.6 million, of
which $17.5 million relates to timber and $2.1 million to extras.
On 31 July 2020, the Company relocated its registered address and place of business to Unit 3B,
Level 3 60 Hindmarsh Square, Adelaide SA 5000.
On 12 August 2020, the Company completed its unmarketable parcel buy back and 49,273 shares
were bought back at $0.85.
The Board does not believe the COVID-19 pandemic will have any impact on the Group’s ability to
continue as a going concern.
There have been no other significant events after balance date.
P a g e | 62
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 2020 are in accordance with
the Corporations Act 2001, including:
ƒ Giving a true and fair view of its financial position as at 30 June 2020
and of its performance for the financial year ended on that date;
ƒ 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 2020.
On behalf of the Board
Chairman
Dated this 29th day of September 2020
P a g e | 63
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 2020 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 2020 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.
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 2(w), 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 core 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 2(w), 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.
The Group’s biological assets were significantly affected by
the bushfires on Kangaroo Island in December 2019 and
January 2020, resulting in a significant reduction in the fair
value of the biological assets.
The value of the biological assets recorded on the
consolidated statement of financial position is material and fair
value adjustment 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;
Obtaining the external valuation for land;
Assessing the expertise and qualification of management's
expert;
Considering the appropriateness of the valuation
technique against the requirements of the relevant
Australian Accounting Standard;
Identifying key assumptions in the valuation and
comparing to the market data and supporting
documentation;
Testing mathematical accuracy of the valuation by
agreeing inputs utilised in the valuation model to
supporting documentation such as land titles and available
market data; and
Assessing the appropriateness of the related disclosures
within the financial statements.
Our procedures included, amongst others:
Reviewing the Board paper in relation to consideration of
the appropriate 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;
Considering the appropriateness of the valuation
methodology against the relevant Australian Accounting
Standard and industry wide valuation technique;
Identifying key assumptions in the valuation and
comparing to the market data and supporting
documentation, where applicable;
Performing sensitivity analysis on key assumptions;
Utilising the expertise of an internal expert to assess the
appropriateness of the discount rate; and
Assessing the appropriateness of the related disclosures
within the financial statements.
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 2020, 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: https://www.auasb.gov.au/auditors_responsibilites/ar1_2020.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 pages 11 to 19 of the Directors’ report for the year ended 30 June
2020.
In our opinion, the Remuneration Report of Kangaroo Island Plantation Timbers Limited, for the year ended 30 June
2020 complies with section 300A of the Corporations Act 2001.
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, 29 September 2020
Investors’ supplementary information
As at 18 September 2020
The information contained below is to be read in conjunction with the annual report of Kangaroo
Island Plantation Timbers Ltd dated 30 June 2020.
Details of top 20 shareholders
The following is a list of the top 20 Shareholders of the Company:
Rank Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
WASHINGTON H SOUL PATTINSON AND COMPANY
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
AMINAC PTY LTD
MR JOHN DAVID SERGEANT
GWYNVILL TRADING PTY LTD
MR STEPHEN PATRICK WARD + MRS JULIE PATRICIA WARD + MR
JAMES MICHAEL WARD
UBS NOMINEES PTY LTD
SHANDORA ONE PTY LTD
ROBERTS PIKE FOUNDATION PTY LTD
PHALAENOPSIS PTY LTD
ALKE PTY LTD
AUSTRALIAN PHILANTHROPIC SERVICES FOUNDATION PTY LTD
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
BENGER SUPERANNUATION PTY LIMITED
MR GRAHAM IAN HOLDAWAY + MRS KRISTINA MARY IRVING
HOLDAWAY
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Number of
Shares
16,894,463
6,506,003
4,943,492
2,179,976
2,132,500
1,807,211
1,135,000
1,050,000
903,357
701,500
700,000
687,759
657,360
585,000
559,614
495,210
429,529
406,015
% of
Shares
29.95
11.53
8.76
3.86
3.78
3.20
2.01
1.86
1.60
1.24
1.24
1.22
1.17
1.04
0.99
0.88
0.76
0.72
0.71
CS FOURTH NOMINEES PTY LIMITED
400,987
BRISPOT NOMINEES PTY LTD
TOTALS: TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES
TOTAL REMAINING HOLDERS BALANCE
Distribution of shareholder numbers
394,329
43,569,305
12,845,210
0.70
77.23
22.77
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
TOTAL
Total
holders
111
181
62
159
53
566
Number of
Shares
63,252
464,226
483,437
5,617,304
49,786,296
% of
Shares
0.11
0.82
0.86
9.96
88.25
56,414,515
100.00
Number of shareholders with less than a marketable parcel of securities
On 12 August 2020, the Company completed its unmarketable parcel buy back and 49,273 shares
were bought back at $0.85.
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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
Number of
shares held
% of total
shares
Samuel Terry Asset
Management Pty Ltd
JP Morgan Nominees Australia Limited
Mr Frederick Woollard
Total
14,813,544
1,965
14,815,509
26.26%
0.003%
26.26%
Washington H Soul
Pattinson and
Company Limited
Brickworks Limited
Washington H Soul Pattinson and Company
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
Total
John Sergeant
John David Sergeant
Phalaenopsis Pty Ltd
Sergeant Family Superannuation Fund
Total
Paul McKenzie
Aminac Pty Ltd
Alke Pty Ltd (The McKenzie Family Trust No
2 A/C)
Total
6,660,087
11.81%
6,660,087
11.81%
3,561,894
70,833
3,632,727
-
1,042,759
1,577,211
2,619,970
6.31%
0.13%
6.44%
-
1.85%
2.80%
4.64%
2,132,500
3.78%
657,360
2,789,860
1.17%
4.95%
Unlisted options
There are no unlisted options.
Performance rights
There are 2,256,896 performance rights on issue.
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.
Buy Backs
On 12 August 2020, the Company completed a unmarketable parcel buy-back and 49,273 shares
were bought back at $0.85. No Shareholder approval was required due to the size of this buy-
back.
Securities Exchange
The Company is listed on the Australian Securities Exchange under the ASX stock code KPT.
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