ANNUAL REPORT
2019
VEEM LTD
ACN 008 944 009
CORPORATE INFORMATION
ABN 51 008 944 009
Directors
Brad Miocevich
Mark Miocevich
Ian Barsden
Peter Torre
Michael Bailey
Non-Executive Chairman
Managing Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director (appointed 17 July 2018)
Joint Company Secretaries
Tracy Caudwell
Peter Torre
Registered office
22 Baile Road
Canning Vale
WA 6155
Telephone:
+ 61 8 9455 9355
Facsimile:
+61 8 9455 9333
Principal place of business
22 Baile Road
Canning Vale
WA 6155
Telephone:
+ 61 8 9455 9355
Facsimile:
+61 8 9455 9333
Share registry
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
PERTH WA 6000
Telephone:
+61 8 9323 2000
Facsimile:
+ 61 8 9323 2033
Solicitors
Steinpreis Paganin
Level 4
The Read Buildings
16 Milligan Street
PERTH WA 6000
Telephone:
+61 8 9321 4000
Facsimile:
+ 61 8 9321 4333
Bankers
ANZ Banking Corporation
Level 7
77 St Georges Terrace
PERTH WA 6000
Telephone:
+61 8 6298 3987
Auditors
HLB Mann Judd
Level 4, 130 Stirling Street
PERTH WA 6000
Telephone:
+61 8 9227 7500
Securities Exchange Listing
VEEM Ltd shares are listed on the
Australian Securities Exchange (ASX: VEE)
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V E E M LT D
DIRECTORS' REPORT CONTENTS
Corporate Information
Chairman's Letter
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
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C H A I R M A N ' S L E T T E R
CHAIRMAN'S LETTER
I am pleased to present the
annual report for our
51st year in business.
NEW FACILITY OPENS
Recently we took
possession of our newest
facility: a purpose-built,
This year, we have invested strongly in marketing
activities, particularly for the gyrostabilizers and we
are seeing excellent results from this investment. Last
financial year we relocated our demonstration vessel -
a 64-foot, Viking 64’ Open Convertible sportfish boat,
with an onboard VG120 VEEM Gyro and running VEEM
interceptor propellers - to Europe.
4000 sqm factory which is fitted with a 25 tonne crane
to enable assembly of the new VEEM Gryo VG1000SD.
This new building will allow us to easily assemble and
fully test all VEEM gyros – ensuring they are fully
compliant with the very demanding requirements of the
world’s leading boat builders. This will include full testing
of what is currently our top of range product: the
VG1000SD. Testing can be done with the gyrostabilizer
actually in operation - at its full torque of 1000 Knm (1
Mega Newton Metre).
The net rental cost of this new facility has been very
modest, given that it now also houses equipment which
was stored in several other, rented facilities -and hence
that rental cost ceases.
NEW VEEM ASSEMBLY & TESTING FACILITY – IMAGE WITH
PERMISSION OF PHOTOGRAPHER: JANA MARIE PHOTOGRAPHY.
MARKET ACCEPTANCE
Our propellers are the number one choice for some of
the world’s leading marine vessel builders. This status is
only attained for products delivering the highest quality
and performance. The very high quality of engineering
in our propellers is echoed in our gyrostabilizers, as
is our outstanding level of after-purchase service.
Gyrostabilizers are a new technology in the market and
we are already being recognised as leaders in this field.
Damen Shipyards supported this view, with a purchase
order signed for a VG1000SD Gyrostabilizer unit. Orders
from the world’s leading superyacht builders were
received soon after.
VEEM VIKING DEMONSTRATION VESSEL
Throughout the financial year 2019, we hosted
representatives of the world’s leading shipyards
aboard the Viking, to experience the gyrostabilizers in
action. This resulted in a noticeable ‘shift’ in the market
perception and acceptance of our gyrostabilizers.
We have tested the gyrostabilizers in real conditions –
such as a 4,500 nautical mile journey through some of
the most challenging waters on Earth.
Our team attended the world’s leading superyacht
exhibitions, including the Canne and Monaco
Yacht Shows
MONACO YACHT SHOW – VEEM EXHIBITION STAND
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V E E M L I M I T E D
C H A I R M A N ' S L E T T E R
ESSENTIAL SUPERYACHT EQUIPMENT
Approval for the technical veracity of our new, large-
capacity marine gyrostabilizers and commercial
acceptance was achieved in the 2019 year.
Comments in leading industry journals this year
indicate that a VEEM gyro is becoming ‘essential
equipment’ for a superyacht.
“The later decision to install a VEEM Gyro was crucial, it
really makes the boat, offering exceptional stability in
often challenging conditions,” said Captain Danny Bos.
Propeller sales also rose during the year, as the market
acceptance of our wider product range gains momentum.
ANZAC BELL INSTALLATION
The 6.5 tonne, Anzac Bell was installed into the
Perth Bell Tower to mark the centenary of Anzac.
We are immensely proud to have had the privilege
of successfully completing the casting pour, at our
foundry, which is the largest non-ferrous foundry in the
southern hemisphere.
The Perth public heard the bell ringing for the first
time, on Remembrance Day 2019. This marked the
culmination of a ten-year project involving dozens
of skilled technicians and artisans, to produce this
homage to our ANZAC heritage.
DAME DESIGN AWARDS
VEEM Gyro achieved a ‘special mention’ in the
prestigious DAME Design Awards. The DAME Award
encourages progression and innovation within the
marine industry and is the world’s largest marine
equipment competition of its kind.
Based on the Award criteria of build quality, application
of materials, functionality and overall design, the judges
commented that:
“the VG260SD is ‘beautifully engineered’ to work as a
single installation for up to 250-tonne ships.“
BOARD STRENGTHENED
In July 2018, Mr Mike Bailey joined our Board.
Mr Bailey holds a Bachelor of Science with first class
Honours and a Master’s Degree in Naval Architecture.
He is a Chartered Engineer (UK), Member of the
Royal Institution of Naval Architects and a former
Member of the Royal Corps of Naval Constructors
(1968-78). Mr Bailey is well known and respected
within the marine and defence sectors and brings
more than 30 years’ experience in contract negotiation
and project management.
VEEM TEAM STRENGTH
Once again I am proud to work with a dedicated, skilled
group of people who are the ‘VEEM Team’.
I acknowledge again this year the many staff who
have foregone personal time to travel on behalf of our
company.
Thank you to those staff and those affected by this
additional sacrifice.
THE ANZAC BELL
Brad Miocevich
Non-Executive Chairman
C H A I R M A N ' S L E T T E R
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D I R E C TO R S ' R E P O RT
DIRECTORS’
REPORT
The Directors present their report together with the
financial statements of the Company for the financial
year ended 30 June 2019. In order to comply with the
provisions of the Corporations Act 2001, the Directors
report as follows.
The names of Directors who held office during or since
the end of the year and until the date of this report are
as follows. Directors were in office for this entire period
unless otherwise stated.
DIRECTORS
NON-EXECUTIVE
CHAIRMAN
Mr John Bradley Miocevich
B.Comm FAICD
Brad has been a Director of VEEM Ltd since 1983.
Combining trade qualifications with a Commerce
Degree in Finance and Banking, Brad has the unique
skills suitable for the management of an engineering
company. With a focus on strategic planning, he was
a member of the team responsible for the acquisition
of several companies over the 21 years including
S&S Foundry & Engineering and Timcast Foundry
and Engineering. Taking on the role of Director Marine
Propulsion in 2000, he has been the driving force in
creating VEEM’s now very successful international
propeller business. Brad provided the vision for VEEM’s
highly automated manufacturing processes making
VEEM the benchmark of propeller manufacturing
worldwide. Brad brings to the Board expertise in finance,
manufacturing engineering and marketing along with
practical knowledge of the Company and its markets.
In the 3 years immediately before the end of the
financial year, Brad has not served as a Director of any
other listed company.
MANAGING DIRECTOR
Mr Mark David Miocevich
B.App.Sc (Mech Eng) FIE Aust
Mark has been a Director and senior manager of
VEEM for over 30 years. Commencing as Production
Director from 1983, he was then responsible for the
implementation of the Quality Assurance systems
until 1995. From 1995 until present he has been the
Managing Director of VEEM and for a period during
that time, the Managing Director of GA Perry and a
Director of Thomassen Services Australia. He was
responsible for the integration of Timcast Engineering
into VEEM during 2002. He brings to the Board
intimate knowledge of the Company, its systems and
strategic plan.
In the 3 years immediately before the end of the
financial year, Mark has not served as a Director of any
other listed company.
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V E E M L I M I T E D
D I R E C TO R S ' R E P O RT
NON-EXECUTIVE
DIRECTOR
Mr Ian Henry Barsden
CA
INDEPENDENT
NON-EXECUTIVE
DIRECTOR
Appointed 17 July 2018
Mr Michael Robert Bailey
MSc; CEng; MRINA
Ian is a member of the Chartered Accountants Australia
and New Zealand and is a former partner of a mid-tier
accounting firm. Ian brings over 31 years’ experience
in the accounting profession, advising and consulting
to a wide variety of businesses and industries
as to business structuring, taxation and financial
management. Ian has provided advisory services to
VEEM as a consultant since 1980.
In the 3 years immediately before the end of the
financial year, Ian has not served as a Director of any
other listed company.
INDEPENDENT
NON-EXECUTIVE
DIRECTOR/JOINT
COMPANY SECRETARY
Mr Peter Patrick Torre
B.Bus (Accounting), CA, AGIA
Peter was appointed Company Secretary of the
Company in September 2016 and as a Director of
the Company on 12 April 2018. He is a Chartered
Accountant, a Chartered Secretary and a member
of the Australian Institute of Company Directors. He
was previously a partner of an internationally affiliated
firm of Chartered Accountants. Peter is the Company
Secretary of several ASX listed companies. Peter is
the principal of Torre Corporate, a specialist corporate
advisory firm providing corporate secretarial services to
a range of listed companies.
In the 3 years immediately before the end of the
financial year, Peter has served as a Director of Mineral
Commodities Ltd, Volt Power Group Limited and Zenith
Energy Limited.
Mike brings 45 years experience in areas of naval
architecture, marine engineering, and project and
company management. He has operated in the
defence and offshore oil and gas sectors in Europe,
Asia and Australia with multinational and private
companies and as a consultant. Mike also held the
Business Development role in VEEM Engineering in the
1990's. He has, since 2000, been instrumental in the
establishment and operations of the highly successful
Australian Marine Complex - Common User Facility.
In the 3 years immediately before the end of the
financial year, Mike has not served as a Director of
any listed company. Mike has served as a Director of
AMC Management (WA) Pty Ltd, Facility Manager of the
Australian Marine Complex - Common User Facility.
JOINT COMPANY
SECRETARY
Mrs Tracy Pauline Caudwell
Cert.Bus.Stud, Assoc Dip Acct,
B.Acct, AGIA
Tracy joined VEEM in June 2005. Tracy has over 31
years experience in the finance field and is responsible
for managing the administration, accounting and
finance department providing the management team
and Board of Directors with accurate Key Performance
Indicators and financial performance.
D I R E C TO R S ’ R E P O RT
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D I R E C TO R S ' R E P O RT
INTERESTS IN THE SHARES OF THE
COMPANY AND RELATED BODIES CORPORATE
The following relevant interests in shares of the Company or a related body corporate were held by the Directors
as at the date of this report.
FULLY PAID ORDINARY SHARES
Directors
John Bradley Miocevich
Mark David Miocevich
(i)
(i)
Ian Henry Barsden
Peter Patrick Torre
Michael Robert Bailey
Number
80,000,000
80,000,000
50,000
60,000
75,000
(i) Mr Brad Miocevich and Mr Mark Miocevich have a relevant interest in VEEM Corporation Pty Ltd ATF the
Miocevich Family Trust which holds 80,000,000 fully paid ordinary shares in the Company.
SHARES UNDER OPTION OR ISSUED ON EXERCISE OF OPTIONS
At the date of this report there were no unissued ordinary shares or interests of the Company under option.
PRINCIPAL ACTIVITIES
The principal activities of the Company during the course of the year were:
• Production of propulsion and stabilization systems; and
• Manufacturing bespoke products and services for the marine, defence and mining industries.
OVERVIEW
The financial results of the Company for the 2019 financial year demonstrate another consistent performance
from the Company’s operations. The results are underpinned by the Company’s core engineering services which
will provide a consistent base for the years to come.
The most pleasing outcome of the financial year, whilst not yet reflected in the Company’s financial
performance, was the acceptance of the Company’s Gyrostabilizers by some of the World’s leading shipyards.
This acceptance followed a strong marketing push throughout the year, with the relocation of the VEEM Viking
vessel to Europe, to allow the representatives of the leading shipyards to see first-hand the VEEM Gyrostabilizer
at work. The costs of this exercise were born in this financial year, and the benefits will flow in the years to come.
VEEM'S NEW 4,000SQM ASSEMBLY FACILITY DESIGNED FOR VEEM GYRO.
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V E E M LT D
The vindication of the performance of the VEEM Gyros
by Damen Shipyards as announced immediately
following the year end, sets the turning point in the drive
to establish VEEM Gyros as the dominant player in the
gyro stabilization market. This followed with news of
VEEM Gyro orders by the world’s leading super yacht
builders. These, along with further marketing efforts will
see sales on VEEM Gyros significantly lift in the 2019
financial year and into the future.
CORPORATE
The Company’s governance framework was bolstered
during the year with the appointment of an additional
independent Non-executive Director to the Board of
the Company.
Mr Mike Bailey was appointed as a Director in
July 2018. Mike, a naval architect, has extensive
experience in managing highly-complex projects
across the defence, oil and gas, and mining sectors.
He is well respected in the industry.
With this new appointment, the Board will continue to
assess its governance framework to further comply
with the ASX Corporate Governance Principles and
Recommendations at the appropriate time.
The Company maintained its dividend policy
throughout the year with the payment of a final
dividend for FY2018 and an interim FY2019 dividend.
FINANCIAL AND OPERATING
PERFORMANCE
The Company is pleased to report the following key
metrics for the financial year 2019:
FY19
($)
FY18
($)
Operating Revenue
44,982,829
40,712,292
EBITDA
4,390,600
4,924,321
Statutory NPAT
2,230,796
2,756,918
EPS (cents)
1.72
2.12
The Company reported a Net Profit After Tax (NPAT)
for the year of $2,230,796 (2018: $2,756,918)
underpinned by revenue of $44,982,829 (2018:
$40,712,292).
Net assets increased to $31.1 million with a build up
in inventory related to work in progress and stock for
the increase in activity of production. Gyro inventories
remained stable.
As indicated at the half year, the result includes
approximately $950,000 in marketing and travel
costs mostly associated with the promotion of the
Company’s Gyro range within the global ship building
industry, including one-off costs associated with the
Company’s test vessel.
The Company also indicated that it expected to see an
increase in sales across all aspects of the business in
the second half and the Company is pleased to report
a 20% increase in sales on December 2018 half year.
Continued pressure on gross profit margins contributed
to the lower profit as compared to 2018 due to the
nature of the work undertaken, albeit with small gains
made in the second half over that of December 2018
half year.
The level of interest in the Company’s Gyro’s continues
to grow. The deliveries of Gyros for FY2019 resulted in
sales of $1.6m, lower than the earlier anticipated $2.8M,
purely due to delays in shipments.
GYRO MARKET ACCEPTANCE
FY19 was focused around completing the design phase
and establishing the VEEM Gyro range in the global
market place. The VEEM test vessel, Powerplay, worked
its way around Europe visiting many boat builders
and demonstrating at boat shows such as Monaco
and Cannes. It also spent time in the Netherlands,
where the first order for the VG1000SD was won from
Damen Ships. Further visits included the countries
of Italy, Malta, Croatia and Spain where VEEM’s larger
markets are. Powerplay was brought back to Perth in
November 2018.
During FY19 VEEM delivered $1.6m of VEEM Gyros. In
addition VEEM holds orders in hand to be delivered in
FY20 of $4.6m to date. VEEM is receiving an enquiry
per working day for information or quotations for
VEEM Gyros and it would appear that the market
has accepted the new technology and order levels
should continue to increase. FY19 has seen a swing
within VEEM from a huge push in marketing to gain
customer acceptance, to a focus on closing sales on
enquiries received.
The newly leased assembly hall of 4,000 sqm
primarily designed for gyro assembly was handed
over to VEEM on 1 July 2019. This new facility will
enable the assembly and test of the entire VEEM
gyro range including the range topping VG1000SD.
The new facility will include the ability to fully test the
VG1000SD operating at its full torque of 1,000Knm
(1 Mega Newton Metre).
Assembly and test of 100 units per year can be
comfortably accommodated in this new building.
The new facility will also house some of VEEM’s
existing military contracts that involve service and
storage, that were consolidated from other leased
facilities around Canning Vale.
PROPELLING FORWARD
Propeller sales rose to $16m for 2019 ($14m: 2018)
which is further indication that VEEM propellers are
continuing to penetrate global markets with the VEEM
and Conquest range of propellers. Conquest propellers
were increased in range by diameter and blade area
ratio to meet the needs of the replacement market.
D I R E C TO R S ’ R E P O RT
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DIRECTORS' REPORT The new VEEM shaft line software has been in test all
year and we have won several shaft lines in Europe and
Australia. Pricing expectations in the market have been
met with a focus on shaft lines in the 75mm to 200mm
diameter range which most closely matches VEEM’s
propeller range.
Designs were developed for the range of VEEM shaft
line products and global sources of some components
has commenced. This will be a focus for VEEM
going forward.
FY19 saw the development of the new VEEM
Propeller Scanner which enables our dealer network
to accurately measure all propellers and be able to
prove to customers what level of superiority VEEM
and Conquest propellers represents. This is a major
marketing tool for VEEM and helps position VEEM as
the industry authority on fixed pitch propellers.
DEFENCE
Defence work has been busy throughout the
year primarily through the volume of stabilizer
manufacturing for Austal Ships, one of VEEM’s
important local clients. These items are exported
and are expected to continue into the future. There
have been additional contracts executed and
some test manufacturing for prime subcontractors
working on the new SEA 1000, 1180 and 5000 naval
defence programs.
These programs are gathering momentum and enquiry
levels to gain the critical Australian manufacturing
content are growing. VEEM expects to gain a
substantial benefit from all of the programs in
this space.
Unusually, the Australian Submarine Corporation
refit program has been delayed and the order for the
next refit of Collins did not materialise during FY19 as
expected, however is expected during FY20. VEEM
is a regular recipient of substantial contracts for the
submarine refit program.
ANZAC BELL
FY19 saw the installation of the ANZAC Bell with
the first official sounding of the bell being on
Remembrance Day 11th November at 11am. This was a
big day for all Australians none less than the founding
family of VEEM Ltd, the Miocevich family, as they lost
a family loved one during the terrible time that was
World War 1.
Reports from the Whitechapel Bells Company are that
the VEEM ANZAC Bell casting was the most accurate
casting they had ever seen. Large accurate casting is
a specialty of VEEM and has been honed by working
with Austal Ships and the Australian Submarine
Corporation, over many years, to meet their demanding
manufacturing standards.
'ANZAC BELL', MANUFACTURED BY VEEM AND INSTALLED IN
PERTH BELL TOWER TO MARK THE CENTENARY OF ANZAC
OUTLOOK
As indicated, VEEM Gyro sales will again rise in FY20 as
further enquiries and orders increase.
The Australian Submarine Corporation refit is expected
to occur in FY20 along with the continual flow of work
in the defence industry.
VEEM’s underlying business will continue to produce
consistent results with FY20 expected to see an
improvement in the margins which were impacted
during FY19.
SIGNIFICANT CHANGES IN THE
STATE OF AFFAIRS
Other than disclosed elsewhere in this report, there
have been no significant changes in the state of affairs
of the Company to the date of this report.
SIGNIFICANT EVENTS AFTER
BALANCE DATE
Subsequent to the end of year an ordinary dividend of
$474,500 franked to 27.5% has been declared.
Other than the above, no matters or circumstances
have arisen since the end of the financial year which
have significantly affected or may significantly affect
the operating of the Company, the results of those
operations, or state of affairs of the Company in future
financial years.
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V E E M LT D
DIRECTORS' REPORT D I R E C TO R S ' R E P O RT
LIKELY DEVELOPMENTS AND
EXPECTED RESULTS
The Company will continue with its strategy as set out in
its Prospectus lodged with the ASX on 24 October 2016.
The commercialisation of the Company’s Gyro Stabilizing
will be a key priority during the 2020 financial year.
ENVIRONMENTAL LEGISLATION
The Company is not subject to any significant
environmental legislation.
DIVIDENDS
Dividends paid to members during the financial year
were as follows:
•
•
A final ordinary dividend of $338,000 was paid on
28 September 2018.
An interim ordinary dividend of $195,000 was paid
on 26 April 2019.
Since the end of the financial year the Directors have
recommended the payment of a final fully franked
ordinary dividend of $474,500 to be paid on or around
27 September 2019.
INDEMNIFICATION AND
INSURANCE OF DIRECTORS
AND OFFICERS
The Company has agreed to indemnify all the Directors
of the Company for any liabilities to another person (other
than the Company or related body corporate) that may
arise from their position as Directors of the Company and
its controlled entities, except where the liability arises out
of conduct involving a lack of good faith.
planning, directing and controlling the major activities
of the Company, directly or indirectly, including
any Director (whether executive or otherwise) of
the Company..
KEY MANAGEMENT PERSONNEL
The Directors set out below were the only key
management personnel of the Company during or
since the end of the financial year.
Directors
John Bradley Miocevich Chairman (non-executive)
Mark David Miocevich
Managing Director
Ian Henry Barsden
Non-Executive Director
Peter Patrick Torre
Michael Robert Bailey
Independent
Non-Executive Director
Independent
Non-Executive Director
(appointed 17 July 2018)
Except as noted, the named persons held their current
positions for the whole of the financial year and to the
date of this report.
REMUNERATION PHILOSOPHY
The performance of the Company depends upon the
quality of the Directors and executives. The philosophy
of the Company in determining remuneration levels is
to set competitive remuneration packages to attract
and retain high calibre employees.
REMUNERATION COMMITTEE
The Company did not have a separate Remuneration
and Nomination Committee during the year. The
full Board fulfilled the role typically undertaken by
a Remuneration Committee and was responsible
for determining and reviewing compensation
arrangements for the Directors.
During the financial year the Company paid a premium in
respect of a contract insuring the Directors and officers
of the Company and its controlled entities against any
liability incurred in the course of their duties to the extent
permitted by the Corporations Act 2001. The contract
of insurance prohibits disclosure of the nature of the
liability and the amount of the premium.
The Board assesses the appropriateness of the
nature and amount of remuneration of Directors
and executives on a periodic basis by reference to
relevant employment market conditions with an
overall objective of ensuring maximum stakeholder
benefit from the retention of a high quality Board and
executive team.
REMUNERATION REPORT
This report, which forms part of the Directors’ report,
outlines the remuneration arrangements in place for
the key management personnel (“KMP”) of VEEM
Ltd for the financial year ended 30 June 2019. The
information provided in this remuneration report has
been audited as required by Section 308(3C) of the
Corporations Act 2001.
The remuneration report details the remuneration
arrangements for KMP who are defined as those
persons having authority and responsibility for
REMUNERATION STRUCTURE
In accordance with best practice corporate
governance, the structure of non-executive Director
and executive remuneration is separate and distinct.
USE OF REMUNERATION CONSULTANTS
The Board has not used any independent remuneration
consultants during the year ended 30 June 2019.
D I R E C TO R S ’ R E P O RT
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D I R E C TO R S ' R E P O RT
NON-EXECUTIVE DIRECTOR REMUNERATION
FIXED REMUNERATION
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.
The ASX Listing Rules specify that the aggregate
remuneration of non-executive Directors shall be
determined from time to time by a general meeting. The
Constitution of the Company as at the time of listing in
October 2016 provides that the aggregate remuneration
of non-executive Directors be set at $400,000.
The amount of aggregate remuneration sought to be
approved by shareholders and the manner in which it
is apportioned amongst Directors is reviewed annually
leading up to the Company’s Annual General Meeting. The
Board considers advice from external shareholders as well
as the fees paid to non-executive Directors of comparable
companies when undertaking the annual review process.
Fixed remuneration is reviewed annually by the
Board. The process consists of a review of relevant
comparative remuneration in the market and internally
and, where appropriate, external advice on policies
and practices. The Board has access to external,
independent advice where necessary.
Senior managers are given the opportunity to receive
their fixed (primary) remuneration in a variety of forms
including cash and fringe benefits such as motor
vehicles and expense payment plans. It is intended that
the manner of payment chosen will be optimal for the
recipient without creating undue cost for the Company.
The fixed remuneration component is detailed in Key
Management Personnel remuneration for the years
ended 30 June 2019 and 30 June 2018 tables.
2019 ANNUAL GENERAL MEETING
Each Director receives a fee for being a Director of the
Company. Given there are no committees currently in
place, no additional fees are paid.
The Remuneration Report for the year ended 30
June 2018 was approved by in excess of 75% of
shareholders at the Annual General Meeting.
SENIOR MANAGER AND EXECUTIVE DIRECTOR
REMUNERATION
Remuneration consists of reasonable fixed
remuneration only.
PERFORMANCE ON SHAREHOLDER WEALTH
In considering the Group’s performance and benefits for shareholder wealth, the Board have regarded the following
indices in respect of the current and previous three financial years:
EPS (cents per share)
Dividends (cents per share)
Net profit ($)
Share price ($)
2019
1.72
0.41
2018
2.12
1.61
2017
3.21
3.08
2,230,796
2,756,918
3,848,750
0.53
0.47
0.64
EMPLOYMENT CONTRACTS
Details of employment contracts with executive KMP:
Agreement with M. Miocevich (date of commencement 1 September 2016)
NAME
TERM OF AGREEMENT AND
TERMINATION PROVISIONS
BASE SALARY INCLUDING
SUPERANNUATION
TERMINATION
BENEFIT
M. Miocevich
This agreement has no set term.
Termination of the agreement
is 1 month’s notice by the
Executive or 3 months’ notice
by the Company and includes a
6 month restraint of trade.
Base: $385,000 per annum
plus
$25,000 superannuation
3 Months salary
Executive remuneration at this stage consists only of fixed remuneration which has been set at moderate levels for the
Managing Director. This is cognisant of the stage of development as a listed company and as the Company moves to
establish itself into new markets. The Company will continue to assess the executive remuneration and appropriately
incentivise key management with variable remuneration aligned to shareholder wealth in the periods to come.
12 |
V E E M LT D
RELATIVE PROPORTIONS
OF REMUNERATION OF
KMP THAT ARE LINKED
TO PERFORMANCE
Fixed
remuneration
Remuneration
linked to
performance
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Key Management Personnel remuneration for the years ended 30 June 2019 and 30 June 2018
SHORT-TERM
EMPLOYEE BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG
TERM
BENEFITS
SHARE
BASED
BENEFITS
30 June
2019
Salary & fee
Bonus
Non-
monetary
benefits
Other
Superannuation
Long
service
leave
Share
options
Directors
$
Bradley
Miocevich
Mark
Miocevich
111,696
391,268
Ian Barsden
55,848
Peter Torre
60,000
Michael
Bailey
60,000
Total
678,812
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
$
5,636
10,611
$
-
-
-
-
-
24,618
6,520
5,306
-
-
-
-
-
5,636
40,535
6,520
$
-
-
-
-
-
-
SHORT-TERM
EMPLOYEE BENEFITS
POST-
EMPLOYMENT
BENEFITS
LONG
TERM
BENEFITS
SHARE
BASED
BENEFITS
Total
$
$
127,943
100%
422,406
100%
61,154
100%
60,000
100%
60,000
100%
731,503
30 June
2018
Salary & fee
Bonus
Non-
monetary
benefits
Directors
$
Bradley
Miocevich
Mark
Miocevich
109,589
381,520
Ian Barsden
54,794
Peter Torre
38,266
Michael
Bailey
-
Total
584,169
$
-
-
-
-
-
-
$
-
-
-
-
-
-
Other
Superannuation
$
$
50,000
10,411
$
-
-
-
-
-
24,759
6,358
5,206
-
-
-
-
-
50,000
40,376
6,358
Total
$
$
170,000
100%
412,637
100%
60,000
100%
38,266
100%
-
-
680,903
$
-
-
-
-
-
-
RELATIVE PROPORTIONS
OF REMUNERATION OF
KMP THAT ARE LINKED
TO PERFORMANCE
Fixed
remuneration
Remuneration
linked to
performance
Long
service
leave
Share
options
$
-
-
-
-
-
$
-
-
-
-
-
No member of key management personnel appointed during the period received a payment as part of his or her
consideration for agreeing to hold the position.
No cash bonuses were granted during 2019 or 2018.
D I R E C TO R S ’ R E P O RT
| 13
DIRECTORS' REPORT D I R E C TO R S ' R E P O RT
EMPLOYEE SHARE OPTION PLAN
There were no employee share options granted as compensation in the current or prior financial year.
FULLY PAID ORDINARY SHARES
BALANCE AT
BEGINNING
OF YEAR
GRANTED AS
COMPEN
SATION
RECEIVED ON
EXERCISE OF
OPTIONS
NET CHANGE
OTHER
BALANCE AT
END OF YEAR
BALANCE
HELD
NOMINALLY
30 June
2019
Directors
$
Bradley
Miocevich
Mark
Miocevich
80,000,0001
80,000,0001
Ian Barsden
50,000
Peter Torre
60,000
Michael
Bailey
-
$
-
-
-
-
-
$
-
-
-
-
-
$
-
-
-
-
$
80,000,0001
80,000,0001
50,000
60,000
75,000
75,000
$
-
-
-
-
-
BALANCE AT
BEGINNING
OF YEAR
GRANTED AS
COMPEN
SATION
RECEIVED ON
EXERCISE OF
OPTIONS
NET CHANGE
OTHER
BALANCE AT
END OF YEAR
BALANCE
HELD
NOMINALLY
30 June
2018
Directors
$
Bradley
Miocevich
Mark
Miocevich
80,000,0001
80,000,0001
Ian Barsden
50,000
Peter Torre
Michael
Bailey
-
-
$
-
-
-
-
-
$
-
-
-
-
-
$
-
-
-
$
80,000,0001
80,000,0001
50,000
60,000
60,000
-
-
$
-
-
-
-
-
1. Mr Brad Miocevich and Mr Mark Miocevich have a relevant interest in VEEM Corporation Pty Ltd ATF the
Miocevich Family Trust which holds 80,000,000 fully paid ordinary shares in the Company.
The Company has entered into a lease agreement
with Voyka Pty Ltd, an entity controlled by an entity
related to Mr Mark Miocevich and Mr Brad Miocevich.
The Company paid Voyka Pty Ltd monthly rent of
$115,307 from July 2018 to March 2019 and $110,000
from April 2019 to June 2019 including GST, totalling
$1,367,763 for the twelve months to June 2019. The
rent is exclusive of any outgoings including rates, taxes,
insurance premiums and maintenance costs. The lease
was made on commercial terms. During the year, the
Company extended this lease for a further ten years
with rent charged at $110,000 a month including GST.
During the year, the Company signed a new lease
with Voyka Pty Ltd for new premises for a period of
ten years with rent charged of $43,035 a month,
including GST.
END OF REMUNERATION REPORT
14 |
V E E M LT D
D I R E C TO R S ' R E P O RT
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 meetings held:
Number of meetings attended:
John Bradley Miocevich
Mark David Miocevich
Ian Henry Barsden
Peter Patrick Torre
Michael Robert Bailey
Meetings Held
Eligible to Attend
Meetings Attended
12
12
12
12
12
12
12
12
11
12
10
1. Mr Torre was present during all other meetings in his capacity as Joint Company Secretary.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or 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 any part of those proceedings.
NON-AUDIT SERVICES
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are
outlined in Note 20 to the financial statements. The Directors are satisfied that the provision of non-audit services
is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit
services have been reviewed to ensure that they do not impact the impartiality and objectivity of the auditor and
none of the services undermine the general principles relating to auditor independence as set out in Code of
Conduct APES 110: Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical
Standards Board.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of
the Company with Independence Declaration in relation to the audit of the annual report. This Independence
Declaration is set out on page 12 and forms part of this Directors’ report for the year ended 30 June 2019.
Signed in accordance with a resolution of the Directors.
MARK DAVID MIOCEVICH
Managing Director
Perth, 29 August 2019
D I R E C TO R S ’ R E P O RT
| 15
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of VEEM Ltd for the year ended 30 June 2019,
I declare that to the best of my knowledge and belief, there have been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
29 August 2019
N G Neill
Partner
16 | AU D I TO R ' S I N D E P E N D E N C E D E C L A R AT I O N
Page 12
V E E M LT D
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2019
NOTES
2019 ($)
2018 ($)
Continuing operations
Revenue
Other income
Change in inventories of finished goods and work
in progress
Raw materials and consumables
Employee benefits expense
Depreciation and amortisation expense
Repairs and maintenance expenses
Occupancy expenses
Borrowing costs expense
Other expenses
Profit before income tax expense
Income tax expense
2
2
2
2
3
44,982,829
(18,861)
40,712,292
(352,517)
3,205,821
1,308,949
(19,179,742)
(18,543,108)
(1,752,992)
(1,332,546)
(2,388,051)
(495,738)
(2,335,742)
(19,622,628)
(11,737,682)
(1,607,638)
(829,951)
(2,252,722)
(436,889)
(2,272,943)
2,141,870
2,908,271
88,926
(151,353)
Net profit for the year
2,230,796
2,756,918
Other comprehensive income, net of income tax
-
-
Total comprehensive income for the year
2,230,796
2,756,918
Basic earnings per share (cents per share)
5
1.72
2.12
The accompanying notes form part of these financial statements
S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E
| 17
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019
NOTES
2019 ($)
2018 ($)
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Current tax assets
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Total equity
7
8
9
10
3
11
3
12
13
14
15
14
3
2,874,087
6,857,362
304,708
8,873,661
11,038,548
13,352,264
1,004,793
538,515
892,605
1,016,048
22,313,305
24,439,286
12,944,012
14,313,086
1,574,170
12,730,774
27,248,956
49,562,261
1,036,683
11,922,950
27,272,719
51,712,005
6,767,045
1,798,075
1,022,878
6,709,914
5,259,379
1,176,569
9,587,998
13,145,862
7,415,705
1,384,555
8,111,442
978,494
8,800,260
9,089,936
18,388,258
22,235,798
31,174,003
29,476,207
16
5,140,616
5,140,616
26,033,387
24,335,591
31,174,003
29,476,207
The accompanying notes form part of these financial statements
18 | S TAT E M E N T O F F I N A N C I A L P O S I T I O N
V E E M LT D
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Balance at 1 July 2017
Profit for the year
Other comprehensive income, net of income tax
Total comprehensive income for the year
Dividend paid or provided for
Balance as at 30 June 2018
Profit for the year
Other comprehensive income, net of income tax
Total comprehensive income for the year
Dividend paid or provided for
Balance as at 30 June 2019
NOTES
ISSUED
CAPITAL
($)
RETAINED
EARNINGS
($)
TOTAL
EQUITY
($)
5,140,616
23,665,173
28,805,789
-
-
-
-
2,756,918
2,756,918
-
-
2,756,918
2,756,918
(2,086,500)
(2,086,500)
5,140,616
24,335,591
29,476,207
-
-
-
-
2,230,796
2,230,796
-
-
2,230,796
2,230,796
(533,000)
(533,000)
5,140,616
26,033,387
31,174,003
6
6
The accompanying notes form part of these financial statements
VG145SD GYRO RETROFITTED TO 34M MOTOR YACHT IN SAN DIEGO, USA
S TAT E M E N T O F C H A N G E S I N E Q U I T Y
| 19
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Income tax refunds received/(paid)
GST paid
NOTES
2019 ($)
2018 ($)
50,168,613
42,720,344
(40,811,130)
(41,830,494)
(495,738)
435,033
(840,812)
(408,412)
(1,329,022)
(597,379)
Net cash inflow/(outflow) from operating activities
7
8,455,966
(1,444,963)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Proceeds from sale of property, plant and equipment
(201,524)
(881,902)
18,865
(739,780)
(1,183,940)
27,309
Net cash (outflow) from investing activities
(1,064,561)
(1,896,411)
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid
7
7
1,000,000
(4,659,577)
6,000,000
(1,120,438)
(533,000)
(2,086,500)
Net cash (outflow)/inflow from financing activities
(4,192,577)
2,793,062
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
3,198,828
(324,741)
-
Cash and cash equivalents at the end of the year
7
2,874,087
(548,312)
344,932
(121,361)
(324,741)
The accompanying notes form part of these financial statements
20 |
V E E M LT D
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES
A. BASIS OF PREPARATION
These financial statements are general purpose
financial statements, which have been prepared in
accordance with the requirements of the Corporations
Act 2001, Accounting Standards and Interpretations
and comply with other requirements of the law.
The accounting policies detailed below have been
consistently applied to all of the years presented
unless otherwise stated. For the purpose of
preparing the financial statements, the Company is a
for-profit entity.
The financial statements have been prepared on a
historical cost basis. Historical cost is based on the
fair values of the consideration given in exchange for
goods and services.
The Company is a listed public Company, incorporated
in Australia and operating in Australia selling into the
domestic and global markets. The entity’s principal
activities are described in the Directors’ Report.
Going concern
This report has been prepared on the going concern
basis, which contemplates continuity of normal business
activities and the realisation of assets and settlements
of liabilities in the ordinary course of business.
B. ADOPTION OF NEW AND REVISED
STANDARDS
Standards and Interpretations applicable to
30 June 2019
In the year ended 30 June 2019, the Directors have
reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant
to the Company and effective for the reporting periods
beginning on or after 1 July 2018.
As a result of this review, the Directors have
determined that there is no material impact of the new
and revised Standards and Interpretations in issue and
effective for the current annual reporting period and
therefore no material change is necessary to Company
accounting policies.
AASB 9 replaces AASB 139 Financial Instruments:
Recognition and Measurement and makes changes to
a number of areas including classification of financial
instruments, measurements, impairment of financial
assets and hedge accounting model.
Financial instruments are classified as either held at
amortised cost or fair value.
Financial instruments are carried at amortised cost if
the business model concept can be satisfied.
All equity instruments are carried at fair value and
the cost exemption under AASB 139 which was used
where it was not possible to reliably measure the fair
value of an unlisted entity has been removed. Equity
instruments which are non-derivative and not held for
trading may be designated as fair value through other
comprehensive income (FVOCI). Previously classified
available-for-sale investments, now carried at fair value
are exempt from impairment testing and gains or loss
on sale are no longer recognised in profit or loss.
The AASB 9 impairment model is based on expected
loss at day 1 rather than needing evidence of an
incurred loss, this is likely to cause earlier recognition of
bad dept expenses. Most financial instruments held at
fair value are exempt from impairment testing.
The Company has applied this standard at the date of
initial application, being 1 July 2018 and has elected
not to restate comparative information. Accordingly,
the information presented for 30 June 2018 has
not been restated, and follows the classification and
measurement requirements of AASB 139.
There is no material impact to profit or loss or net
assets on the adoption of this new standard in the
current or comparative years.
Other than the above, there is no material impact of
the new and revised Standards and Interpretations
on the Company and therefore no material change is
necessary to Company accounting policies.
Early adoption of Standards
On 1 July 2016, the Company early adopted
AASB 15 “Revenue from Contracts with Customers”
which is mandatory for years beginning on or after
1 January 2018.
AASB 16 Leases
AASB 16 replaces AASB 117 Leases. AASB 16 removes
the classification of leases as either operating leases of
finance leases-for the lessee – effectively treating all
leases as finance leases.
AASB 16 is applicable to annual reporting periods
beginning on or after 1 July 2019.
Impact on operating leases
AASB 16 will change how the Company accounts for
leases previously classified as operating leases under
AASB 117, which were off-balance sheet. On initial
application of AASB 16, for all leases (except as noted
below), the Company will:
•
•
Recognise right-of-use assets and lease liabilities
in the consolidated statement of financial position,
initially measured at the present value of the
future lease payments.
Recognise depreciation of right-of-use assets
and interest on lease liabilities in the consolidated
statement of profit or loss.
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 21
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
•
Separate the total amount of cash paid into a
principal portion (presented within financing
activities) and interest (presented within operating
activities) in the consolidated statement of
cash flows.
Lease incentives (e.g. rent-free period) will be
recognised as part of the measurement of the
right-of-use assets and lease liabilities whereas under
AASB 117 they resulted in the recognition of a lease
liability incentive, amortised as a reduction of rental
expenses on a straight-line basis.
Under AASB 16, right-of-use assets will be tested for
impairment in accordance with AASB 136 Impairment
of Assets. This will replace the previous requirement to
recognise a provision for onerous lease contracts.
For short-term leases (lease term of 12 months or
less) and leases of low-value assets (such as personal
computers and office furniture), the Company will opt
to recognise a lease expense on a straight-line basis as
permitted by AASB 16.
The Company has elected not to early adopt AASB
16 but has conducted a preliminary assessment of
the impact of the new standard based on the facts
and circumstances that existed at that date and have
concluded that the initial application of AASB 16 will
have the following impact on the Company’s leases as
regards classification and measurement.
As at 30 June 2019, the Company has non-cancellable
operating lease commitments of $16,394,700 in
respect of leases of premises.
The preliminary assessment indicates at balance date
the Company would have recognised a right-of-use
asset of $9,230,734 and a corresponding lease liability
of $9,283,749 in respect of all these leases.
The impact on profit or loss would have been to
decrease other occupancy expenses by $300,000,
to increase depreciation by $236,685 and to increase
interest expense by $116,330.
Under AASB 117, all lease payments on operating
leases are presented as part of cash flows from
operating activities. The impact of the changes under
AASB 16 would be to reduce the cash generated by
operating activities by $300,000 and to increase net
cash used in financing activities by the same amount.
Impact on finance leases
The main differences between AASB 16 and AASB
117 with respect to assets formerly held under a
finance lease is the measurement of the residual value
guarantees provided by the lessee to the lessor.
AASB 16 requires that the Company recognises as
part of its lease liability only the amount expected to
be payable under a residual value guarantee, rather
than the maximum amount guaranteed as required by
AASB 117.
On initial application the Company will present
equipment previously included in property, plant and
equipment within the line item for right-of use assets
and the lease liability, previously presented within
borrowing, will be presented in a separate line for
lease liabilities.
Based on an analysis of the Company’s finance
leases as at 30 June 2019 on the basis of the
facts and circumstances that exist at that date, the
Directors of the Company have assessed that the
impact of this change will not have an impact on the
amounts recognised in the Company’s consolidated
financial statements.
C. STATEMENT OF COMPLIANCE
The financial report was authorised for issue by the
Board of VEEM Ltd on 30 August 2019.
The financial report complies with Australian
Accounting Standards, which include Australian
equivalents to International Financial Reporting
Standards (AIFRS). Compliance with AIFRS ensures
that the financial report, comprising the financial
statements and notes thereto, complies with
International Financial Reporting Standards (IFRS).
D. SIGNIFICANT ACCOUNTING ESTIMATES
AND JUDGEMENTS
The application of accounting policies requires the
use of judgement, estimates and assumptions about
carrying values of assets and liabilities that are not
readily apparent from other sources. The estimates
and associated assumptions are based on historical
experience and other factors that are considered
to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions are recognised
in the period in which the estimate is revised if it affects
only that period or in the period of the revision and
future periods if the revision affects both current and
future periods.
Except as described below, in preparing the full-year
financial report, the significant judgement made by
management in applying the Company’s accounting
policies and the key sources of estimation uncertainty
were the same as those that applied to the financial
report for the year ended 30 June 2018.
Amortisation of product development
Product development is amortised based on units
of production as the Board has determined that this
appropriately apportions the costs of development
across the units produced to meet customer orders
and building of inventory to meet future orders. Product
development costs continue to be monitored to ensure
there are any indicators that these costs may be
impaired or whether the amortisation rate needs to
be accelerated.
22 |
V E E M LT D
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
are retranslated at the rate of exchange ruling at the
balance date.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible
temporary differences as management considers
that it is probable that sufficient future tax profits will
be available to utilise those temporary differences.
Significant management judgement is required to
determine the amount of deferred tax assets that can
be recognised, based upon the likely timing and the
level of future taxable profits.
Inventories
Management estimates the net realisable values
of inventories, taking into account the most reliable
evidence available at each reporting date. The future
realisation of these inventories may be affected by
future technology or other market-driven changes that
may reduce future selling prices.
Capitalisation of internally developed products
Distinguishing the research and development phases of
new products and determining whether the recognition
requirements for the capitalisation of development
costs are met requires judgement. After capitalisation,
management monitors whether the recognition
requirements continue to be met and whether there are
any indicators that capitalised costs may be impaired.
E. SEGMENT REPORTING
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker. The chief operating
decision maker, who is responsible for allocating
resources and assessing performance of the operating
segments, has been identified as the Board of Directors
of VEEM Ltd.
The Board has determined the operating segments
based on the reports reviewed by the Board of
Directors that are used to make strategic decisions.
The entity does not have any operational segments
with discrete financial information.
The Board of Directors review internal management
reports on a monthly basis that are consistent with
the information provided in the statement of profit
or loss and other comprehensive income, statement
of financial position and statement of cash flows.
As a result no reconciliation is required because the
information as presented is what is used by the Board
to make strategic decisions.
F. FOREIGN CURRENCY TRANSLATION
Both the functional and presentation currency of VEEM
Ltd is Australian dollars.
Transactions in foreign currencies are initially recorded
in the functional currency by applying the exchange
rates ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies
All exchange differences in the financial report are
taken to profit or loss. Non-monetary items that
are measured in terms of historical cost in a foreign
currency are translated using the exchange rate as at
the date of the initial transaction.
Non-monetary items measured at fair value in a
foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain
or loss.
G. REVENUE RECOGNITION
Revenue from contracts with customers is measured
at fair value of the consideration received or receivable.
Amounts disclosed as revenue are net of returns, trade
allowances, rebates and amounts collected on behalf
of third parties. Contract liabilities are recognised where
applicable in relation to sales.
Point in time recognition - sale of goods – propulsion
& stabilization
Revenue is recognised when the goods are delivered
and titles have passed, at which time all the following
conditions are satisfied:
•
•
•
•
•
the Company has transferred to the buyer the
significant risks and rewards of ownership of
the goods;
the Company retains neither continuing
managerial involvement to the degree usually
associated with ownership nor effective control
over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits
associated with the transaction will flow to the
Company; and
the costs incurred or to be incurred in respect of
the transaction can be measured reliably.
Over time recognition - Sale of goods and rendering of
services - mining & industrial engineering, propulsion
& stabilization, and defence
In determining whether performance obligations
are satisfied over time the Company considers
the following:
•
•
•
Legal control is often retained by the customer;
VEEM products and services are highly specialised
and often do not have an alternate use; and
Contracts are established with customers so
that VEEM has an enforceable right to payment
for performance completed to date, including
profit margin.
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 23
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
Revenue is recognised by reference to the stage of
completion of the performance obligation. The stage of
completion of the performance obligation is determined
as follows:
•
•
•
Contract income is recognised by reference to
the total actual costs incurred at the end of the
reporting period relative to the proportion of the
total costs expected to be incurred over the life of
the performance obligation;
Servicing fees are recognised by reference to the
proportion of the total cost of providing the service
for the product sold; and
Revenue from time and material contracts are
recognised at the contractual rates as labour
hours are delivered and direct expenses are
incurred.
Interest income
Interest income from a financial asset is recognised
when it is probable that the economic benefits will flow
to the Company and the amount of revenue can be
reliably measured. Interest income is accrued on a time
basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that
assets net carrying amount on initial recognition.
H. GOVERNMENT GRANTS
Grants from the government are recognised at their
fair value where there is a reasonable assurance that
the grant will be received and the Company will comply
with all attached conditions.
Government grants relating to costs are deferred and
recognised in profit or loss over the period necessary
to match them with the costs that they are intended
to compensate.
I. BORROWING COSTS
Borrowing costs are capitalised that are directly
attributable to the acquisition, construction or
production of qualifying assets where the borrowing
cost is added to the cost of those assets until such
time as the assets are substantially ready for their
intended use or sale.
Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the
borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or
loss in the period in which they are incurred.
J. LEASES
Leases are classified as finance leases whenever the
terms of the lease transfers substantially all the risks
and rewards of ownership to the lessee. All other leases
are classified as operating leases.
Assets held under finance leases are initially recognised
at their fair value or, if lower, the present value of the
minimum lease payments, each determined at the
inception of the lease. The corresponding liability to the
lessor is included in the statement of financial position
as a finance lease obligation.
Lease payments are apportioned between finance
charges and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged
directly against income, unless they are directly
attributable to qualifying assets, in which case they are
capitalised in accordance with the general policy on
borrowing costs, refer Note 1(i).
Finance lease assets are depreciated on a straight line
basis over the estimated useful life of the asset.
Operating lease payments are recognised as an
expense on a straight line basis over the lease term,
except where another systematic basis is more
representative of the time pattern in which economic
benefits from the leased asset are consumed.
In the event that lease incentives are received to enter
into operating leases, such incentives are recognised
as a liability. The aggregate benefit of incentives is
recognised as a reduction of rental expense on a
straight-line basis, except where another systematic
basis is more representative of the time pattern in which
economic benefits from the leased asset are consumed.
K. INCOME TAX
The income tax expense or benefit for the period is
the tax payable on the current period’s taxable income
based on the applicable income tax rate adjusted by
changes in deferred tax assets and liabilities attributable
to temporary difference and to unused tax losses.
The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted
at the end of the reporting period. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
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.
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.
24 |
V E E M LT D
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
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
that, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; or
when the taxable temporary difference is
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 difference will not reverse in the
foreseeable future.
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward of
unused tax assets 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 credits 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 taxable profit or loss.
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 date and are recognised
to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to
be recovered.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been
enacted or substantively enacted at the balance date.
Income taxes relating to items recognised directly in
equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are
offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and
the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
L. 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.
M. IMPAIRMENT OF TANGIBLE AND INTANGIBLE
ASSETS
The Company assesses at each balance date whether
there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing
for an asset is required, the Company makes an estimate
of the asset’s recoverable amount. An asset’s recoverable
amount is the higher of its fair value less costs to sell
and its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets
or group of assets and the asset's value in use cannot
be estimated to be close to its fair value. In such cases
the asset is tested for impairment as part of the cash-
generating unit to which it belongs. When the carrying
amount of an asset or cash-generating unit exceeds
its recoverable amount, the asset or cash-generating
unit is considered impaired and is written down to its
recoverable amount.
In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset. Impairment losses relating to continuing operations
are recognised in those expense categories consistent
with the function of the impaired asset unless the asset is
carried at revalued amount (in which case the impairment
loss is treated as a revaluation decrease).
An assessment is also made at each balance date as to
whether there is any indication that previously recognised
impairment losses may no longer exist or may have
decreased. If such indication exists, the recoverable
amount is estimated. A previously recognised impairment
loss is reversed only if there has been a change in the
estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised.
If that is the case the carrying amount of the asset is
increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would
have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior
years. Such reversal is recognised in profit or loss unless
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 25
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
the asset is carried at revalued amount, in which case the
reversal is treated as a revaluation increase. After such
a reversal the depreciation charge is adjusted in future
periods to allocate the asset’s revised carrying amount,
less any residual value, on a systematic basis over its
remaining useful life.
N. CASH AND CASH EQUIVALENTS
Cash comprises cash at bank and in hand. Cash
equivalents are short term, highly liquid investments
that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of
changes in value. Bank overdrafts are shown within
borrowings in current liabilities in the statement of
financial position.
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.
O. TRADE AND OTHER RECEIVABLES
Trade receivables are measured on initial recognition at
fair value and are subsequently measured at amortised
cost using the effective interest rate method, less
any allowance for impairment. Trade receivables are
generally due for settlement within periods ranging
from 15 days to 60 days.
Impairment of trade receivables is continually reviewed
and those that are considered to be uncollectible are
written off by reducing the carrying amount directly.
An allowance account is used when there is objective
evidence that the Company will not be able to collect all
amounts due according to the original contractual terms.
Factors considered by the Company in making this
determination include known significant financial
difficulties of the debtor, review of financial information
and significant delinquency in making contractual
payments to the Company. The impairment allowance
is set equal to the difference between the carrying
amount of the receivable and the present value
of estimated future cash flows, discounted at the
original effective interest rate. Where receivables are
short-term, discounting is not applied in determining
the allowance.
The amount of the impairment loss is recognised
in the statement of profit or loss and other
comprehensive income within other expenses. When
a trade receivable for which an impairment allowance
had been recognised becomes uncollectable in
a subsequent period, it is written off against the
allowance account. Subsequent recoveries of amounts
previously written off are credited against other
expenses in the statement of profit or loss and other
comprehensive income.
P. INVENTORIES
(i) Raw material, stores and work in progress
Raw materials, stores and work in progress are stated at
the lower of cost and net realisable value. Cost comprises
direct materials, direct labour and an appropriate
proportion of variable and fixed overhead expenditure,
the latter being allocated on the basis of normal operating
capacity. Costs are assigned to individual items of stock
mainly on the basis of average cost.
(ii) Contract work in progress
Contract work in progress is stated at cost plus
attributable profit to date (based on percentage of
completion of each contract) less progress billings.
Cost includes all costs directly related to specific
contracts and an allocation of overhead expenses
incurred in connection with the Company’s contract
operations. Where a loss on completion is indicated
that loss is brought to account in the current year.
Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to
make the sale.
Q. FINANCIAL ASSETS
Recognition and de-recognition
Financial assets are recognised when the Company
becomes a party to the contractual provisions of the
financial instrument.
Financial assets are derecognised when the
contractual rights to the cash flows from the
financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain
a significant financing component and are measured
at the transaction price in accordance with AASB 15,
all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
For the purpose of subsequent measurement, financial
assets, other than those designated and effective
as hedging instruments, are classified into the
following categories:
•
•
•
•
amortised cost
fair value through profit or loss (FVTPL)
equity instruments at fair value through other
comprehensive income (FVOCI)
debt instruments at fair value through other
comprehensive income (FVOCI).
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.
26 |
V E E M LT D
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.
Equity instruments at fair value through other
comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held
for trading are eligible for an irrevocable election at
inception to be measured at FVOCI.
Under Equity FVOCI, subsequent movements in fair
value are recognised in other comprehensive income
and are never reclassified to profit or loss.
Dividends from these investments continue to be
recorded as other income within the profit or loss
unless the dividend clearly represents return of capital.
This category includes unlisted equity securities that
were previously classified as ‘available-for-sale’ under
AASB 139.
Any gains or losses recognised in other comprehensive
income (OCI) are not recycled upon de-recognition of
the asset.
Debt instruments at fair value through other
comprehensive income (Debt FVOCI)
Financial assets with contractual cash flows
representing solely payments of principal and interest
and held within a business model of collecting the
contractual cash flows and selling the assets are
accounted for at debt FVOCI.
The Company accounts for financial assets at FVOCI if
the assets meet the following conditions:
•
•
they are held under a business model whose
objective it is to “hold to collect” the associated
cash flows and sell financial assets; and
the contractual terms of the financial assets
give rise to cash flows that are solely payments
of principal and interest on the principal
amount outstanding.
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
The classification is determined by both:
•
•
the entity’s business model for managing the
financial asset
the contractual cash flow characteristics of the
financial asset.
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.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if
the assets meet the following conditions (and are not
designated as FVTPL):
•
•
they are held within a business model whose
objective is to hold the financial assets to collect
its contractual cash flows
the contractual terms of the financial assets
give rise to cash flows that are solely payments
of principal and interest on the principal
amount outstanding.
After initial recognition, these are measured at
amortised cost using the effective interest method.
Discounting is omitted where the effect of
discounting is immaterial. The Company’s cash and
cash equivalents, trade and most other receivables
fall into this category of financial instruments as well
as listed bonds that were previously classified as
held-to-maturity under IAS 39.
Financial assets at fair value through profit or
loss (FVTPL)
Financial assets that are held within a different
business model other than ‘hold to collect’ or ‘hold to
collect and sell’ are categorised at fair value through
profit and loss. Further, irrespective of business
model financial assets whose contractual cash flows
are not solely payments of principal and interest
are accounted for at FVTPL. All derivative financial
instruments fall into this category, except for those
designated and effective as hedging instruments, for
which the hedge accounting requirements apply.
The category also contains an equity investment. The
Company accounts for the investment at FVTPL and
did not make the irrevocable election to account for
the investment in unlisted and listed equity securities
at fair value through other comprehensive income
(FVOCI). The fair value was determined in line with the
requirements of AASB 9, which does not allow for
measurement at cost.
Assets in this category are measured at fair value with
gains or losses recognised in profit or loss.
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| 27
VEEM BESPOKE 1900MM DIAMETER, 5 BLADE VEEMSUPERYACHT
SERIES PROPELLER
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
Any gains or losses recognised in other comprehensive
income (OCI) will be recycled upon de-recognition of
the asset.
involvement is the amount of the transferred asset that
the Company may repurchase, except that in the case
of a written put option (including a cash-settled option
or similar provision) on an asset measured at fair value,
the extent of the Company’s continuing involvement is
limited to the lower of the fair value of the transferred
asset and the option exercise price.
R. DERECOGNITION OF FINANCIAL ASSETS
AND FINANCIAL LIABILITIES
Financial liabilities
Financial assets
A financial asset (or, where applicable, a part of a
financial asset or part of a Company of similar financial
assets) is de-recognised when:
•
•
•
the rights to receive cash flows from the asset
have expired;
the Company retains the right to receive cash
flows from the asset, but has assumed an
obligation to pay them in full without material
delay to a third party under a ‘pass-through’
arrangement; or
the Company has transferred its rights to receive
cash flows from the asset and either:
-
has transferred substantially all the risks and
rewards of the asset, or
has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.
-
When the Company has transferred its rights to receive
cash flows from an asset and has neither transferred
nor retained substantially all the risks and rewards
of the asset nor transferred control of the asset, the
asset is recognised to the extent of the Company’s
continuing involvement in the asset. Continuing
involvement that takes the form of a guarantee over
the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration received that the Company
could be required to repay.
When continuing involvement takes the form of a
written and/or purchased option (including a cash-
settled option or similar provision) on the transferred
asset, the extent of the Company’s continuing
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by
another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange or
modification is treated as a derecognition of the original
liability and the recognition of a new liability, and
the difference in the respective carrying amounts is
recognised in profit or loss.
S. IMPAIRMENT OF FINANCIAL ASSETS
The Company assesses at each balance date
whether a financial asset or Group of financial assets
is impaired.
Financial assets carried at amortised cost
If there is objective evidence that an impairment loss
on loans and receivables carried at amortised cost has
been incurred, the amount of the loss is measured as
the difference between the asset’s carrying amount
and the present value of estimated future cash flows
(excluding future credit losses that have not been
incurred) discounted at the financial asset’s original
effective interest rate (i.e. the effective interest rate
computed at initial recognition). The carrying amount
of the asset is reduced either directly or through use
of an allowance account. The amount of the loss is
recognised in profit or loss.
The Company first assesses whether objective
evidence of impairment exists individually for
financial assets that are individually significant, and
individually or collectively for financial assets that are
not individually significant. If it is determined that no
objective evidence of impairment exists for an
VEEM'S VG1000SD WILL BE INSTALLED ON BOARD DAMEN'S FCS 7011 73.6M HIGH SPEED CREW TRANSFER VESSEL
28 |
V E E M LT D
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
individually assessed financial asset, whether
significant or not, the asset is included in a Group of
financial assets with similar credit risk characteristics
and that Group of financial assets is collectively
assessed for impairment. Assets that are individually
assessed for impairment and for which an impairment
loss is or continues to be recognised are not included in
a collective assessment of impairment.
If, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be
related objectively to an event occurring after the
impairment was recognised, the previously recognised
impairment loss is reversed. Any subsequent reversal
of an impairment loss is recognised in profit or loss, to
the extent that the carrying value of the asset does not
exceed its amortised cost at the reversal date.
Financial assets carried at cost
If there is objective evidence that an impairment loss
has been incurred on an unquoted equity instrument
that is not carried at fair value (because its fair value
cannot be reliably measured), or on a derivative asset
that is linked to and must be settled by delivery of
such an unquoted equity instrument, the amount
of the loss is measured as the difference between
the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the
current market rate of return for a similar financial
asset. Such impairment loss shall not be reversed in
subsequent periods.
T. PROPERTY, PLANT AND EQUIPMENT
Plant and equipment is stated at cost less accumulated
depreciation and any accumulated impairment losses.
Such cost includes the cost of replacing parts that are
eligible for capitalisation when the cost of replacing the
parts is incurred. Similarly, when each major inspection
is performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement
only if it is eligible for capitalisation.
Depreciation is calculated on a straight-line basis over
the estimated useful life of the assets as follows:
Motor vehicles
Plant and equipment
Computer equipment
3-10 years
5-30 years
3-5 years
The assets' residual values, useful lives and
amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
Impairment
The carrying values of plant and equipment are
reviewed for impairment at each balance date, with
recoverable amount being estimated when events or
changes in circumstances indicate that the carrying
value may be impaired.
The recoverable amount of plant and equipment is the
higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to
the asset.
For an asset that does not generate largely
independent cash inflows, recoverable amount is
determined for the cash- generating unit to which the
asset belongs, unless the asset's value in use can be
estimated to approximate fair value.
An impairment exists when the carrying value of an
asset or cash-generating unit exceeds its estimated
recoverable amount. The asset or cash-generating unit
is then written down to its recoverable amount.
For plant and equipment, impairment losses are
recognised in the statement of profit or loss and other
comprehensive income in the cost of sales line item.
De-recognition and disposal
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.
Any gain or loss arising on de-recognition of the
asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the
asset) is included in profit or loss in the year the asset
is derecognised.
U. INTANGIBLE ASSETS
Intangible assets acquired separately
Intangible assets acquired separately are recorded at
cost less accumulated amortisation and impairment.
Amortisation is charged on a straight-line basis over
their estimated useful lives. The estimated useful life
and amortisation method is reviewed at the end of
each annual reporting period, with any changes in
these accounting estimates being accounted for on a
prospective basis.
Internally generated intangible assets
Expenditure on research activities is recognised
as an expense in the period in which it is incurred.
Where no internally generated intangible asset can be
recognised, development expenditure is recognised as
an expense in the period as incurred.
An intangible asset arising from development (or from the
development phase of an internal project) is recognised if,
and only if, all of the following have been demonstrated:
•
•
•
•
The technical feasibility of completing the intangible
asset so that it will be available for use or sale;
The intention to complete the intangible asset and
use or sell it;
The ability to use or sell the intangible asset;
How the intangible asset will generate probable
future economic benefits;
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 29
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
•
•
The availability of adequate technical, financial and
other resources to complete development and to
use or sell the intangible asset; and
The ability to measure reliably the expenditure
attributable to the intangible asset during its
development.
The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the
recognition criteria listed above.
Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment
losses, on the same basis as intangible assets
acquired separately.
The following useful lives are used in the calculation
of amortisation:
Patents
Product Development
Expenditure
10 – 20 years
Units of production
in profit or loss over the period of the borrowings
using the effective interest method. Fees paid on
the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn
down. In this case, the fee is deferred until the draw
down occurs. To the extent there is no evidence that
it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the
facility to which it relates.
Borrowings are removed from the statement of
financial position when the obligation specified in
the contract is discharged, cancelled or expired. The
difference between the carrying amount of a financial
liability that has been extinguished or transferred to
another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed,
is recognised in profit or loss as other income or
finance costs.
Borrowings are classified as current liabilities unless
the Company has an unconditional right to defer
settlement of the liability for at least 12 months after
the reporting period.
Software
10 years
X. PROVISIONS
V. TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at
amortised cost and represent liabilities for goods and
services provided to the Company prior to the end of
the financial year that are unpaid and arise when the
Company becomes obliged to make future payments
in respect of the purchase of these goods and services.
Trade and other payables are presented as current
liabilities unless payment is not due within 12 months.
W. BORROWINGS
Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised
VEEM GYRO VG1000SD IS THE MOST ADVANCED AND
POWERFUL STABILIZER AVAILABLE FOR LARGE SUPER
YACHTS AND COMMERCIAL WORK BOATS.
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that 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. Provisions are not
recognised for future operating losses.
When the Company 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 statement of profit or loss and other
comprehensive income net of any reimbursement.
Provisions are measured at the present value or
management’s best estimate of the expenditure
required to settle the present obligation at the end of
the reporting period.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects the risks specific to the liability.
When discounting is used, the increase in the provision
due to the passage of time is recognised as an
interest expense.
Onerous contracts
Present obligations arising under onerous contracts are
recognised and measured as provisions. An onerous
contract is considered to exist where the Company
has a contract under which the unavoidable costs of
meeting the obligations under the contract exceed
the economic benefits expected to be received from
the contract.
30 |
V E E M LT D
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
Warranties
Provisions for the expected cost of warranty
obligations under local sale of goods legislation are
recognised at the date of sale of the relevant products,
at the Directors’ best estimate of the expenditure
required to settle the Company’s obligation.
Y. EMPLOYEE LEAVE BENEFITS
Wages, salaries, annual leave and sick leave
Liabilities accruing to employees in respect of wages
and salaries, annual leave and sick leave expected to
be settled within 12 months of the balance date are
recognised in other payables in respect of employees’
services up to the balance 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.
Liabilities accruing to employees in respect of wages
and salaries, annual leave, long service leave and sick
leave not expected to be settled within 12 months
of the balance date are recognised in non-current
liabilities in respect of employees’ services up to the
balance date. They are measured as the present
value of the estimated future outflows to be made by
the Company.
Long service leave
The liability for long service leave is recognised in the
provision for employee benefits and measured as the
present value of expected future payments to be made
in respect of services provided by employees up to
the balance date. Consideration is given to expected
future wage and salary levels, experience of employee
departures, and period of service. Expected future
payments are discounted using market yields at the
balance date on national government bonds with terms
to maturity and currencies that match, as closely as
possible, the estimated future cash outflows.
Z. DIVIDENDS
Provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of
the reporting period but not distributed at the end of
the reporting period.
AA. EARNINGS PER SHARE
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 are calculated, where
applicable, as net profit attributable to members of the
parent, adjusted for:
•
•
•
costs of servicing equity (other than dividends)
and preference share dividends;
the after-tax effect of dividends and interest
associated with dilutive potential ordinary shares
that have been recognised as expenses; and
other non-discretionary changes in revenues or
expenses during the period that would result from
the dilution of potential ordinary shares; divided by
the weighted average number of ordinary shares
and dilutive potential ordinary shares, adjusted for
any bonus element.
THE VEEM POWERPLAY DEMONSTRATION VESSEL IN EUROPE
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| 31
NOTE 2: REVENUE AND EXPENSES
Revenue from contracts with customers
Sales revenue
Revenue – point in time
Revenue – over time
Other revenue Government subsidies
Apprentice subsidies
Commissions received
Scrap metal
2019 ($)
2018 ($)
2,582,573
1,064,595
42,358,999
39,632,923
18,415
4,000
945
17,897
-
5,030
557
9,187
44,982,829
40,712,292
During the year, the Company recognised revenue
of $5,365,546 (2018: $9,425,468) in relation to the
prior year’s work in progress. The Company has
progress billings at 30 June 2019 of $7,417,879
(2018: $2,356,643).
The Company has contract assets, being work in
progress (recognised overtime) at 30 June 2019 of
$6,723,472 (2018: $4,670,847).
The Company will recognise revenue from contracts
with customers based on the following performance:
•
•
the completion of the contracted work-scope
following factory acceptance testing in
accordance with contract terms
and conditions and
when applicable, completion of contracted
milestones and transfer of title generally based on:
milestone 1 - material acquisition, and/or
milestone 2 - completion of casting metal pour,
and/or
milestone 3 - factory acceptance testing (FAT)
The majority of customer contracts are from the
private sector and this accounts for approximately
80% of the revenue during FY18/19. Sales to
quasi-government and government instrumentalities
accounted for 13% (2018: 25%) and 16% (2018: 7%)
respectively.
The geographic distribution of sales for the FY18/19
was approximately 59% (2018: 68%) derived within
Australia and the remaining 41% (2018: 32%) were
derived predominantly from the USA, UK, Italy and NZ.
Contracts are received and executed generally within
12 months and hence are considered short term
contracts. Period contracts (those that extend greater
than 1 year) with customers are executed by discrete
purchase orders for required shipments and hence still
fall within the definition for short term contracts.
All sales are generated by direct contract with
customers. Sales agents are utilised in Europe and USA
to introduce enquiries and leads and contracts are then
established direct with the buyer. Where distributors
are utilised the entity purchases and contracts directly
with VEEM Ltd.
OTHER INCOME
Foreign exchange gains/ (losses) (net)
2019 ($)
(18,861)
(18,861)
2018 ($)
(352,517)
(352,517)
32 |
V E E M LT D
NOTE 2: REVENUE AND EXPENSES (CONT’D)
OTHER EXPENSES
Insurance
Advertising and marketing
Travel
Bank Charges
Safety and first aid
Motor vehicle expenses
Accounting and secretarial
Telephone expenses
Employee related expenses
Legal expenses
Loss/(profit) on disposal property, plant and equipment
Share registry expenses
Other general expenses
NOTE 3: INCOME TAX
Income tax recognised in profit or loss
The major components of tax expense are:
2019 ($)
280,332
946,608
232,855
144,809
68,620
89,094
137,360
49,403
172,060
1,254
4,804
22,930
185,613
2,335,742
2018 ($)
291,747
821,911
281,560
136,739
70,905
161,600
165,352
63,341
74,707
45,966
(13,788)
20,371
152,532
2,272,943
Current tax expense/(benefit)
Deferred tax expense/(benefit) relating to the origination and
reversal of temporary differences
2019 ($)
42,500
(131,426)
2018 ($)
(60,457)
211,810
Total tax (benefit)/expense
(88,926)
151,353
The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax
expense in the financial statements as follows:
Accounting profit before income tax
Income tax expense calculated at 27.5%
Tax effect of amounts which are not deductible/(taxable) in
calculating taxable income:
• Prior year overprovision of income tax
• Effect of expenses that are not deductible in determining
taxable profit
• Effect of concessions – research and development
Income tax (benefit)/expense reported in the statement of profit or
loss and other comprehensive income
2019 ($)
2,141,870
589,014
2018 ($)
2,908,271
872,481
(664,040)
(66,485)
13,861
(27,761)
(88,926)
3,226
(657,869)
151,353
The tax rate used in the above reconciliation is the corporate tax rate of 27.5% payable by Australian corporate
entities on taxable profits under Australian tax law. There has been no change in this tax rate since the previous
reporting period.
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| 33
NOTE 3: INCOME TAX (CONT’D)
CURRENT TAX RECEIVABLES COMPRISE:
Income tax receivable/(payable)
DEFERRED TAX ASSETS COMPRISE:
Annual leave payable
Provision for long service leave
Accrued expenses
Unrealised foreign exchange (gain) / loss
Black hole expenditure and borrowing costs
Unclaimed research and development concessions
DEFERRED TAX LIABILITIES COMPRISE:
Depreciable property, plant and equipment
Patents
Accrued revenue
2019 ($)
538,515
2018 ($)
1,016,048
2019 ($)
312,138
281,292
73,450
11,754
184,014
711,522
2018 ($)
312,912
352,971
59,850
3,469
307,481
-
1,574,170
1,036,683
2019 ($)
1,223,560
64,666
96,329
2018 ($)
894,844
83,650
-
1,384,555
978,494
VG120SD INSTALLED IN A SMALL ALUMINIUM SURVEY VESSEL OPERATING IN NORTH SEA.
34 |
V E E M LT D
NOTE 3: INCOME TAX (CONT’D)
RECONCILIATION OF DEFERRED TAX ASSETS/ (LIABILITIES):
30 June 2019
Accrued expenses
Annual leave payable
OPENING
BALANCE
$
CHANGE IN
TAX RATE
$
CHARGED
TO INCOME
$
CLOSING
BALANCE
$
59,850
(4,987)
18,587
73,450
312,912
(26,076)
25,302
312,138
Provision for long service leave
352,971
(29,414)
(42,265)
281,292
Property, plant and equipment
(894,844)
74,570
(403,286)
(1,223,560)
Unrealised foreign exchange (gain) / loss
3,469
(289)
8,574
11,754
Black hole expenditure and borrowing costs
307,481
(25,623)
(97,844)
184,014
Patents
(83,650)
6,971
12,013
(64,666)
Unclaimed research and development concessions
Accrued revenue
-
-
-
-
711,522
711,522
(96,329)
(96,329)
58,189
(4,848)
136,274
189,615
30 June 2018
Accrued expenses
Annual leave payable
Provision for long service leave
Property, plant and equipment
OPENING
BALANCE
$
CHARGED
TO INCOME
$
CLOSING
BALANCE
$
54,522
307,226
5,328
5,686
59,850
312,912
329,595
23,376
352,971
(676,523)
(218,321)
(894,844)
Unrealised foreign exchange (gain) / loss
(6,445)
9,914
3,469
Black hole expenditure and borrowing costs
346,373
(38,892)
307,481
Patents
(84,749)
1,099
(83,650)
269,999
(211,810)
58,189
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| 35
NOTE 4: SEGMENT REPORTING
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker. The chief operating
decision maker, who is responsible for allocating
resources and assessing performance of the operating
segments, has been identified as the Board of Directors
of VEEM Ltd.
The Board has determined the operating segments
based on the reports reviewed by the Board of
Directors that are used to make strategic decisions.
The entity does not have any operational segments
with discrete financial information.
The Board of Directors review internal management
reports on a monthly basis that are consistent with
the information provided in the statement of profit
or loss and other comprehensive income, statement
of financial position and statement of cash flows.
As a result no reconciliation is required because the
information as presented is what is used by the Board
to make strategic decisions.
The Company has two customers where the revenue
from those customers was in excess of 10% of the
Company’s revenue. Customer A generated 15.4%
(2018: 25.4%). Customer B generated 14.1% (2018:
7.4%) of the Company’s revenue for the year.
The total sales revenue for VEEM Ltd for FY2019
was $44,941,572. This can be broken down into the
following major sales categories. Engineering Services
the mining and industrial engineering manufacture and
service portion of the business and sales for FY2019
were $14,418,810. Propulsion and stabilization consists
of the manufacture of new propellers, shaft lines,
gyro stabilizers and fin stabilizers. The sales in this
category were $24,206,692. Defence related sales for
FY2019 totalled $13,233,331 with $6,917,259 of those
sales being both within the defence and propulsion/
stabilization category.
NOTE 5: EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share
There are no diluted earnings per share.
Basic earnings per share
2019
2018
Cents per share
Cents per share
1.72
2.12
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share
is as follows:
Earnings
Earnings from continuing operations
2,230,796
2,756,918
2019 ($)
2018 ($)
Weighted average number of ordinary shares for the purpose of
basic earnings per share
2019
Number
2018
Number
130,000,000
130,000,000
36 |
V E E M LT D
NOTE 6: DIVIDENDS
Fully franked dividends paid
Fully unfranked dividends paid
Total dividends paid
Balance of franking account at period end adjusted for franking
credits arising from the payment of provision for income tax and
dividends recognised as receivables, franking debits arising from
payment of proposed dividends and franking credits that may be
prevented from distribution in a subsequent financial year.
The tax rate at which paid dividends have been franked is 27.5% (2018: 30%).
NOTE 7: CASH AND CASH EQUIVALENTS
Cash at bank
Cash on hand
2019 ($)
533,000
-
2018 ($)
2,086,500
-
533,000
2,086,500
2019 ($)
1,193,530
2018 ($)
913,949
2019 ($)
2,873,287
800
2,874,087
2018 ($)
303,408
1,300
304,708
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Reconciliation to the Statement of Cash Flows:
For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand and at bank
and investments in money market instruments, net of outstanding bank overdrafts.
Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related items in the
statement of financial position as follows:
Cash and cash equivalents
Bank overdraft (Note 14)
2019 ($)
2,874,087
-
2,874,087
2018 ($)
304,708
(629,449)
(324,741)
Non-cash financing and investing activities
The Company purchased assets with a value of $131,985 which were financed through hire purchase.
Cash balances not available for use
All cash balances are available for use.
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 37
NOTE 7: CASH AND CASH EQUIVALENTS (CONT’D)
Reconciliation of profit for the year to net cash flows from operating activities
Net profit for the year
Depreciation and amortisation expense
(Profit)/loss on sale or disposal of non-current assets, property,
plant & equipment
Provision for employee leave benefits
Foreign exchange loss
(Increase)/decrease in assets:
Trade and other receivables
Inventories
Increase/(decrease) in liabilities:
Trade and other payables
Current and deferred tax
GST payable
2019 ($)
2,230,796
1,752,992
4,804
(153,691)
18,862
2018 ($)
2,756,918
1,607,638
(13,788)
77,920
352,517
1,926,625
2,313,716
(1,433,360)
(4,923,121)
27,405
346,107
(11,650)
1,468,363
(1,177,669)
(160,381)
Net cash inflow/(outflow) from operating activities
8,455,966
(1,444,963)
Changes in liabilities arising from financing activities
BANK LOANS
($)
HIRE
PURCHASE
LIABILITY
($)
TOTAL
($)
Balance as at 1 July 2017
3,500,000
4,242,946
7,742,946
Net cash from (used in) financing activities
6,000,000
(1,120,438)
4,879,562
Acquisition of plant and equipment by means of hire purchase
-
118,864
118,864
Balance as at 30 June 2018
9,500,000
3,241,372
12,741,372
Net cash from (used in) financing activities
(2,500,000)
(1,159,577)
(3,659,577)
Acquisition of plant and equipment by means of hire purchase
-
131,985
131,985
Balance as at 30 June 2019
7,000,000
2,213,780
9,213,780
NOTE 8: TRADE AND OTHER RECEIVABLES
Trade receivables (i)
GST recoverable
Other receivables
2019 ($)
6,177,832
201,086
478,444
2018 ($)
8,596,812
178,572
98,277
6,857,362
8,873,661
i.
the average credit period on sales of goods and rendering of services is 15-60 days
38 |
V E E M LT D
NOTE 8: TRADE AND OTHER RECEIVABLES (CONT’D)
Aging of past due but not impaired
60 – 90 days
90 – 120 days
Total
2019 ($)
679,805
497,943
1,177,748
2018 ($)
449,797
210,924
660,721
Expected credit losses
The Company applies the AASB 9 simplified model of
recognising lifetime expected credit losses for all trade
receivables as these items do not have a significant
financing component.
In measuring the expected credit losses, the trade
receivables have been assessed on a collective basis
as they possess shared credit risk characteristics.
They have been grouped based on the days past
due and also according to the geographical location
of customers.
The expected loss rates are based on the payment
profile for sales over the past 48 months before 30
June 2019 and 30 June 2018 respectively as well
as the corresponding historical credit losses during
that period. The historical rates are adjusted to reflect
current and forwarding looking macroeconomic
factors affecting the customer’s ability to settle the
amount outstanding.
Trade receivables are written off when there is no
reasonable expectation of recovery. Failure to make
payments within 180 days from the invoice date and
failure to engage with the Company on alternative
payment arrangement is considered indicators of no
reasonable expectation of recovery.
On the above basis, a provision for expected credit
losses as at 30 June 2019 and 30 June 2018 is not
required as it is not material to the financial statements.
NOTE 9: INVENTORIES
Work in progress – over time
Work in progress – point in time
Less: progress billings
Goods for resale, raw materials and stores
2019 ($)
6,723,472
1,833,131
2018 ($)
4,670,847
1,151,358
(7,417,879)
(2,356,643)
1,138,724
9,899,824
3,465,562
9,886,702
11,038,548
13,352,264
Inventory write-downs charged to cost of sales totalled $Nil (2018 $9,425,468).
During the year, the Company recognised revenue of $5,365,546 (2018: $9,425,468) in relation to the prior years’
work in progress.
Included in goods for resale, raw materials and stores inventories are inventories carried at net realisable value with
a carrying value of $1,151,192 (2018 $7,754,225). The total impact to profit or loss of write downs to net realisable
value is $85,022 (2018 $33,098).
NOTE 10: OTHER ASSETS
Prepayments
Supplies paid in advance
2019 ($)
442,044
562,749
1,004,793
2018 ($)
391,637
500,968
892,605
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| 39
NOTE 11: PROPERTY, PLANT AND EQUIPMENT
PLANT AND
EQUIPMENT
($)
MOTOR
VEHICLES
($)
CAPITAL WORK
IN PROGRESS
($)
COMPUTER
EQUIPMENT
($)
TOTAL
($)
As at 30 June 2018
Cost
35,207,615
547,376
271,234
1,424,000
37,450,225
Accumulated depreciation
(21,443,994)
(459,734)
-
(1,233,411)
(23,137,139)
Closing carrying amount
13,763,621
87,642
271,234
190,589
14,313,086
Year ended 30 June 2019
Opening carrying amount
13,763,621
Additions
Disposals
Transfers
188,349
-
21,630
87,642
82,035
(5,713)
271,234
31,447
(17,945)
-
(173,099)
190,589
14,313,086
31,678
333,509
-
-
(23,658)
(151,469)
Depreciation charge
(1,445,579)
Closing carrying amount
12,528,021
(31,413)
132,551
-
(50,464)
(1,527,456)
111,637
171,803
12,944,012
As at 30 June 2019
Cost
35,416,129
595,057
111,637
1,455,678
37,578,501
Accumulated Depreciation
(22,888,108)
(462,506)
-
(1,283,875)
(24,634,489)
Carrying amount
12,528,021
132,551
111,637
171,803
12,944,012
NOTE 12: INTANGIBLE ASSETS
OTHER
INTELLECTUAL
PROPERTY
($)
PRODUCT
DEVELOPMENT
($)
As at 30 June 2018
Cost
Accumulated amortisation
Closing carrying amount
Year ended 30 June 2019
Opening carrying amount
Net additions
Transfers
Amortisation charge
Closing carrying amount
As at 30 June 2019
Cost
Accumulated amortisation
Carrying amount
677,554
(35,595)
641,959
641,959
31,378
154,800
(143,726)
684,411
863,732
(179,321)
684,411
TOTAL
($)
12,802,090
(879,140)
11,922,950
12,124,536
(843,545)
11,280,991
11,280,991
11,922,950
850,513
(3,331)
(81,810)
12,046,363
881,891
151,469
(225,536)
12,730,774
12,971,718
(925,355)
12,046,363
13,835,450
(1,104,676)
12,730,774
No impairment loss was recognised in the 2019 financial year (2018: $Nil).
40 |
V E E M LT D
NOTE 13: TRADE AND OTHER PAYABLES (CURRENT)
Trade payables (i)
Annual leave payable
GST Payable
Other creditors
2019 ($)
4,862,946
1,135,046
317,175
451,878
2018 ($)
4,672,674
1,043,041
306,311
687,888
6,767,045
6,709,914
(i) Trade payables are non-interest bearing and are normally settled on 30-day terms.
Information regarding the interest rate, foreign exchange and liquidity risk exposure is set out in Note 17.
NOTE 14: BORROWINGS
Current
Bank overdraft (a)
Commercial facility (a)
Hire purchase liability
Less: Unexpired charges
Non-current
Commercial facility (a)
Hire purchase liability
Less: Unexpired charges
2019 ($)
2018 ($)
-
600,000
1,284,880
(86,805)
1,798,075
6,400,000
1,046,117
(30,412)
7,415,705
629,449
3,500,000
1,263,072
(133,142)
5,259,379
6,000,000
2,203,093
(91,651)
8,111,442
(a) The bank overdraft and commercial facility are secured by a registered first mortgage over the assets and
undertakings of the Company.
The Company has a Commercial Facility with a limit of $8,000,000. The Commercial Facility is repayable by 1
July 2021. $50,000 of principal is payable monthly for the first 18 calendar months of the Commercial Facility,
thereafter $100,000 of principal is payable each calendar month with the remaining facility amount owing payable
on the termination date. The loan facility is reduced by the principal component of each repayment. Interest at
the base rate plus 1.75% per annum is charged monthly and a line fee of 0.75% per annum of the Facility Limit is
payable quarterly in arrears. The interest rate is currently at 2.77% (June 2018: 3.56%). The facility is reviewed
on an annual basis. At 30 June 2019, the Company had available $1,000,000 (2018: $1,596,150) of undrawn
committed borrowing facilities in respect of which all conditions precedent had been met.
The Company has an Overdraft Facility with a limit of $3,400,000. Interest at the base rate less 0.75% per annum
is charged monthly. The facility is reviewed on an annual basis. At 30 June 2019, the Company had available
$3,400,000 of undrawn overdraft facilities. In addition, there is an Electronic Payments Facility with a limit of
$300,000. At 30 June 2019, the Company had available $300,000 under this facility. The Company complied with
all banking covenants during the financial year.
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 41
NOTE 14: BORROWINGS (CONT’D)
Financing facilities available
At balance date, the following financing facilities had been negotiated and were available:
Total facilities
Overdraft Facility
Commercial Facility
Multi Option Facility
Electronic Payments facility
Commercial Card Facility
Facilities used at balance date
Overdraft Facility
Commercial Facility
Commercial Card Facility
Facilities unused at balance date
Overdraft Facility
Commercial Facility
Multi Option Facility
Electronic Payments facility
Commercial Card Facility
Total facilities
Facilities used at balance date
Facilities unused at balance date
2019 ($)
2018 ($)
3,400,000
8,000,000
-
-
-
11,400,000
300,000
50,000
300,000
50,000
11,750,000
11,750,000
-
629,449
7,000,000
9,500,000
37,004
24,401
7,037,004
10,153,850
3,400,000
1,000,000
-
300,000
12,996
4,712,996
-
-
1,270,551
300,000
25,599
1,596,150
7,037,004
4,712,996
10,153,850
1,596,150
11,750,000
11,750,000
The carrying value of plant and equipment held under hire purchase contracts at 30 June 2019 is $3,856,541
(2018: $3,957,223). Additions during the year include $131,985 (2017: $118,864 of plant and equipment held under
hire purchase contracts).
42 |
V E E M LT D
NOTE 15: PROVISIONS
Balance at beginning of year
Net movements
Balance at the end of year
Current
Non-current
2019
EMPLOYEE
BENEFITS (i)
$
1,176,569
(153,691)
1,022,878
1,022,878
-
2018
EMPLOYEE
BENEFITS (i)
$
1,098,649
77,920
1,176,569
1,176,569
-
(i) The provision for employee benefits represents long service leave entitlements accrued.
NOTE 16: ISSUED CAPITAL
2019 ($)
2018 ($)
130,000,000 (2018: 130,000,000) Ordinary shares issued and fully paid
5,140,616
5,140,616
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Movements in ordinary shares on issue
Opening balance
Closing balance
Share options
YEAR TO 30 JUNE 2019
YEAR TO 30 JUNE 2018
No.
$
No.
$
130,000,000
5,140,616
130,000,000
5,140,616
130,000,000
5,140,616
130,000,000
5,140,616
The Company has a share-based payment Incentive Option Scheme which provides that the Board of the
Company, from time to time, in its absolute discretion, make an offer to any Eligible Participant to apply for
Options, upon the terms set out in the Incentive Option Plan and upon such additional terms and conditions as the
Board determined.
In exercising that discretion, the Board may have regard to the following (without limitation):
(i) The Eligible Participant length of service with the Company
(ii) The contribution made by the Eligible Participant to the Company
(iii) The potential contribution of the Eligible Participant to the Company; or
(iv) Any other matter the Board considers relevant.
No options to subscribe for the Company's shares have been granted during the period. There are no options on
issue at balance date.
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 43
NOTE 17: FINANCIAL INSTRUMENTS
Capital risk management
The Company manages its capital to ensure it will be able to continue as a going concern while maximising the
return to stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Company consists of debt, cash and cash equivalents and equity attributable to equity
holders of the Company, comprising issued capital and retained earnings.
The Company is not subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as
tax, dividends and general administrative outgoings.
Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital
and the risks associated with each class of capital.
Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings – Bill Facility
Borrowings – Bank overdraft
Hire purchase liability
2019 ($)
2018 ($)
2,874,087
6,857,362
304,708
8,793,661
6,767,045
7,000,000
-
2,213,780
6,709,914
9,500,000
629,449
3,241,372
Financial risk management objectives
The Company is exposed to market risk (including currency risk, fair value, risk and interest), credit risk, liquidity risk
and cash flow interest rate risk.
Foreign currency risk management
The Company undertakes certain transactions denominated in foreign currencies, hence exposures to exchange
rate fluctuations arise. This is managed by the Company’s operations having a natural hedge with materials
purchased and sold at prices fixed at the prevailing rate. The Company therefore has limited exposure to US Dollar
(USD), Euro (EUR), and Great British Pound (GBP) debtors and creditors currency fluctuations.
CASH
($)
RECEIVABLES
($)
PAYABLE
($)
USD
950,255
924,151
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
EUR
445,271
206,547
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
TOTAL ASSET
/(LIABILITY)
($)
1,874,406
(93,720)
93,720
651,818
(32,591)
32,591
GBP
7,411
789,319
1,137,075
(340,345)
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
44 |
(90,587)
90,587
V E E M LT D
NOTE 17: FINANCIAL INSTRUMENTS (CONT’D)
The Company’s sensitivity to foreign exchange has not
changed significantly from the prior year.
The Company’s activities expose it primarily to the
financial risks of changes in foreign currency exchange
rates and exchange rates.
To negate some of this risk the Company has embarked
on a global supply program the procurement of all
appropriate goods that form part of its manufactured
products. This includes but is not limited to the supply
of sub components, individual parts consumable
products used in production and stock items.
The Company also manages market risk by
keeping abreast of factors affecting its market on
a continual basis. Business improvement practices
continually evolve.
Interest rate risk management
The Company is exposed to interest rate risk as it
borrows funds at both fixed and floating interest rates.
The risk is managed by the Company by maintaining
an appropriate mix between fixed and floating
rate borrowings
The Company’s exposures to interest rate on financial
assets and financial liabilities are detailed in the liquidity
risk management section of this note.
Interest rate risk sensitivity analysis
The sensitivity analyses below have been determined
based on the exposure to interest rates for
non-derivative instruments at the balance date and
the stipulated change taking place at the beginning of
the financial year and held constant throughout the
THE NEW VEEMSCAN 2000 WILL SCAN PROPELLERS
UP TO 80 INCH.
reporting period. A 50 basis point increase or decrease
has been used when reporting interest rate risk which
represents management’s assessment of the change
in interest rates.
At balance date, if interest rates had been 50 basis
points higher or lower and all other variables were held
constant, the Company’s net profit would increase by
$4,401 and decrease by $4,401 (2018:$3,562). This
is mainly attributable to the Company’s exposure to
interest rates on its variable rate borrowings.
The Company’s sensitivity to interest rates has
increased during the current period mainly due to the
increase in variable rate debt instruments.
Credit risk management
Credit risk refers to the risk the counterparty will
default on its contractual obligations resulting in
financial loss to the Company. The Company has
adopted a policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral
where appropriate, as a means of mitigating the risk
of financial loss from defaults. The Company only
transacts with entities that are rated the equivalent
of investment grade and above. This information
is supplied by independent rating agencies where
available and, if not available, the Company uses
publicly available financial information and its own
trading record to rate its major customers. The
Company’s exposure and the credit ratings of its
counterparties are continuously monitored and the
aggregate value of transactions concluded is spread
amongst approved counterparties. Credit exposure is
controlled by counterparty limits that are reviewed and
approved by management annually.
The Company does not have any significant credit risk
exposure to any single counterparty or any group of
counterparties having similar characteristics. The credit
risk on liquid funds and derivative financial instruments
is limited because the counterparties are banks with
high credit ratings assigned by international credit
rating agencies.
The carrying amount of financial assets recorded in the
financial statements, net of any allowance for losses,
represents the Company’s maximum exposure to
credit risk without taking account of the value of any
collateral obtained.
Liquidity risk management
Ultimate responsibility for liquidity risk management
rests with the Board of Directors, who have built an
appropriate liquidity risk management framework for
the management of the Company’s short, medium
and long-term funding and liquidity management
requirements. The Company manages liquidity risk by
maintaining adequate reserves, banking facilities and
reserve borrowing facilities by continuously monitoring
forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.
Included in note 14 is a listing of additional undrawn
facilities that the Company has at its disposal to further
reduce liquidity risk.
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 45
NOTE 17: FINANCIAL INSTRUMENTS (CONT’D)
The following table details the Company’s expected contractual maturity for its non-derivative financial liabilities.
These have been drawn up based on undiscounted contractual maturities of the financial liabilities based on the
earliest date the Company can be required to repay. The tables include both interest and principal cash flows.
WEIGHTED AVERAGE INTEREST RATE
30 June 2019
Non-interest bearing – Trade and other payables
Fixed interest rate – Hire purchase liabilities
Variable interest rate – Bill facility and bank overdraft
1 year or less
1–5 years
5+ years
%
4.4
2.77
$
6,767,045
$
-
1,284,880
1,046,117
600,000
6,400,000
8,651,925
7,446,117
$
-
-
-
-
WEIGHTED AVERAGE INTEREST RATE
1 year or less
1–5 years
5+ years
30 June 2018
%
$
Non-interest bearing - Trade and other payables
6,709,915
$
-
Fixed interest rate – Hire purchase liabilities
4.4
1,263,072
2,203,093
Variable interest rate – Bill facility and bank overdraft
3.56
4,423,058
6,162,307
12,396,045
8,365,400
$
-
-
-
-
Fair value measurement
The Directors consider that the carrying value of the financial assets and liabilities as recognised in the financial
statements approximate their fair values.
NOTE 18: COMMITMENTS AND CONTINGENCIES
Operating lease commitments – Company as lessee
The Company has commitments for operating leases. During the year, the Company extended the commercial
lease on its premises for a further 10 years. The Company has the option to extend the lease beyond this term for
another 15 years in increments of five year terms. During the year, the Company entered into a new commercial
lease for additional premises for a 10 year period. The Company has the option to extend the lease beyond this
term for another 15 years in increments of five year terms. At balance date, these premises were not yet available
for use.
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2019 are as follows:
(a) Operating lease commitments
• within one year
• after one year but not more than 5 years
• longer than 5 years
2019 ($)
2018 ($)
1,669,470
6,677,880
8,047,350
1,165,273
-
-
16,394,700
1,165,273
Hire purchase commitments - Company as lessee
The Company has hire purchase contracts for various items of plant and machinery. These contracts have terms
of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entity that
holds the lease.
46 |
V E E M LT D
NOTE 18: COMMITMENTS AND CONTINGENCIES (CONT’D)
Future minimum lease payments under hire purchase contracts together with the present value of the net
minimum lease payments are as follows:
(b) Hire purchase commitments payable
- within one year
- after one year but not more than five years
- longer than five years
Minimum hire purchase payments
Less: Unexpired charges
Present value of net minimum lease payments
Represented by:
Current
Non-current
Capital commitments
2019 ($)
2018 ($)
1,284,880
1,046,117
-
1,263,072
2,203,093
-
2,330,997
3,466,165
(117,217)
2,213,780
1,198,075
1,015,705
2,213,780
(224,793)
3,241,372
1,129,931
2,111,441
3,241,372
At 30 June 2019 the Company has no capital commitments (2018: $Nil).
NOTE 19: RELATED PARTY DISCLOSURE
The Company’s related parties include key management personnel and their related entities as described below.
The aggregate compensation for Directors and other key management personnel of the Company are set out below:
Short-term employee benefits
Other long-term benefits
2019 ($)
684,448
47,055
731,503
2018 ($)
634,169
46,734
680,903
Key management personnel transactions
The Company has entered into a lease agreement with Voyka Pty Ltd, an entity controlled and related to
Mr Mark Miocevich and Mr Brad Miocevich. The Company paid Voyka Pty Ltd monthly rent of $115,307 from
July 2018 to March 2019 and $110,000 from April 2019 to June 2019 including GST, totalling $1,367,763 for the
twelve months to 30 June 2018. The rent is exclusive of any outgoings including rates, taxes, insurance premiums
and maintenance costs. The lease was made on commercial terms. During the year, the Company extended this
lease for a further ten years with rent charged of $110,000 a month, including GST.
During the year, the Company signed a new lease with Voyka Pty Ltd for new premises for a period of ten years
with rent charged of $43,035 a month, including GST.
N OT E S TO T H E F I N A N C I A L S TAT E M E N T S
| 47
NOTE 20: AUDITOR’S REMUNERATION
The auditor of VEEM Limited is HLB Mann Judd.
Audit or review of the financial statements
Tax compliance services
2019 ($)
79,040
23,950
102,990
2018 ($)
89,500
31,700
121,200
NOTE 21: SUBSEQUENT EVENTS
Subsequent to the end of year an ordinary dividend of $474,500 franked to 27.5% has been declared.
Other than the above, no matters or circumstances have arisen since the end of the financial year which have
significantly affected or may significantly affect the operating of the Company, the results of those operations, or
state of affairs of the Company in future financial years.
48 |
V E E M LT D
VEEM'S FIRST UNIT OF THE VEEMSCAN2000 CURRENTLY IN
AMERICA FOR AN INITIAL DISTRIBUTOR'S PRODUCT TESTING.
DIRECTORS’ DECLARATION
1.
In the opinion of the Directors of VEEM Limited (the ‘Company’):
a. the accompanying financial statements and notes are in accordance with the
Corporations Act 2001 including:
i.
ii.
giving a true and fair view of the Company’s financial position as at 30 June 2019 and of its
performance for the year then ended; and
complying with Australian Accounting Standards, the Corporations Regulations 2001, professional
reporting requirements and other mandatory requirements.
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
c. the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
2. This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2019.
This declaration is signed in accordance with a resolution of the board of Directors.
MARK DAVID MIOCEVICH
Managing Director
Dated this 29 day of August 2019
AU D I TO R ’ S I N D E P E N D E N C E D E C L A R AT I O N
C O M PA N Y S U M M A RY | 49
INDEPENDENT AUDITOR’S REPORT
To the members of VEEM Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of VEEM Ltd (“the Company”) which comprises the statement
of financial position as at 30 June 2019, the statement of profit or loss and other comprehensive
income, the statement of changes in equity and the statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies, and
the Directors’ declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the
Corporations Act 2001, including:
a)
giving a true and fair view of the Company’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; 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 Company 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.
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
Carrying amount of the intangible asset
(product development expenditure)
Note 12 of the financial report
The Company has an intangible asset in relation
to capitalised expenditure on the development of
gyroscopic stabilizers.
Our procedures included but were not limited to
the following:
50 | I N V E S T I GAT I N G AC C O U N TA N T S R E P O RT
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V E E M LT D
INDEPENDENT AUDITOR’S REPORT
To the members of VEEM Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of VEEM Ltd (“the Company”) which comprises the statement
of financial position as at 30 June 2019, the statement of profit or loss and other comprehensive
income, the statement of changes in equity and the statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies, and
the Directors’ declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the
Corporations Act 2001, including:
a)
giving a true and fair view of the Company’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; 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 Company 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.
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
Carrying amount of the intangible asset
(product development expenditure)
Note 12 of the financial report
The Company has an intangible asset in relation
Our procedures included but were not limited to
to capitalised expenditure on the development of
the following:
gyroscopic stabilizers.
Key Audit Matter
How our audit addressed the key audit matter
Carrying amount of the intangible asset
(product development expenditure)
Note 12 of the financial report
The development expenditure of $12.046 million
is considered to be a key audit matter, given the
size of
the gyroscopic stabilizer
market being relatively new and immature, as
well as the specific criteria that have to be met for
capitalisation.
the balance,
In addition, determining whether there is any
indication of impairment requires management
judgement and assumptions which are affected
by future market or economic developments.
Revenue recognition
Note 2 of the financial report
The Company has two distinct categories of
revenue being
revenue with performance
obligations recognised at a point in time and
revenue
obligations
recognised over time.
performance
with
We focused on this area as a key audit matter
due to the number and type of estimation events
that may occur over the course of a contract life,
leading to complex and judgemental revenue
recognition and the direct impact on profit.
- We assessed the recognition criteria for this
intangible asset by challenging the key
assumptions used and estimates made in
capitalising development costs, including
management’s assessment of the stage of
the project in the development phase and
the accuracy of costs included;
- We considered management’s assessment
of whether any indicators of impairment
were present by understanding
the
for projects and
business
performing
indicators of
for
impairment;
- We assessed
rationale
reviews
the adequacy of
Company’s disclosures in
report; and
the
the
financial
- We ensured management applied an
appropriate amortisation method and
amortisation period
life
intangible.
finite
this
to
Our procedures included but were not limited to
the following:
- We examined and tested the Company’s
key controls over revenue and related work-
in-progress;
- We read and considered a sample of the
Company’s key contracts to determine if we
concurred with management’s assessment
of performance obligations, the transaction
price and any contract liabilities that may
arise, the allocation of the transaction price,
and when to recognise revenue, either at a
point in time, or over time;
For a sample of contracts designated for
over time recognition, we assessed the
methodology and accuracy of recognising
profit at the stage of completion at balance
date;
-
- We substantiated revenue transactions on a
sample basis by agreeing the transaction to
the customer’s contract, purchase order,
sales invoice, delivery docket, customer
certification report, and bank receipt, where
relevant;
- We tested the appropriateness of progress
claims on a sample basis; and
- We assessed
Company’s disclosures
report.
the adequacy of
in
the
financial
the
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(cid:3)
P R O S P E C T U S
I N V E S T I GAT I N G AC C O U N TA N T S R E P O RT | 51
Page 46
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 Company’s annual report for the year ended 30 June 2019, but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly 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 ability of the
Company 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 Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our 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 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
-
-
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
52 | I N V E S T I GAT I N G AC C O U N TA N T S R E P O RT
V E E M LT D
Page 47
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 Company’s annual report for the year ended 30 June 2019, but
does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly 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 ability of the
Company 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 Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our 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 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
-
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with the Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the remuneration report
We have audited the Remuneration Report included within the Directors’ report for the year ended
30 June 2019.
In our opinion, the Remuneration Report of VEEM Ltd for the year ended 30 June 2019 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.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
29 August 2019
Norman Neill
Partner
Page 47
Page 48
P R O S P E C T U S
I N V E S T I GAT I N G AC C O U N TA N T S R E P O RT | 53
TWENTY LARGEST SHAREHOLDERS
Additional information required by the Australian Securities Exchange Ltd Listing Rules and not disclosed
elsewhere in this report. This information is current as at 21 September 2019.
RANK NAME
UNITS % OF UNITS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
15
17
18
19
20
VEEM CORPORATION PTY LTD
80,000,000
61.54
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
UBS NOMINEES PTY LTD
11,143,860
9,853,353
8,661,207
3,417,473
CITICORP NOMINEES PTY LIMITED
2,595,000
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
ANACACIA CAPITAL
CITICORP NOMINEES PTY LIMITED
MR ALEXANDER PAUL CHANG
ACRES HOLDINGS PTY LTD
REDBROOK NOMINEES PTY LTD
MR DAVID ANDREW SLOBOM + MRS LINDA JANE SLOBOM
MISS AMY-JOY ABURN HARKEN
MR GEORGE CHARLES RILEY
BT PORTFOLIO SERVICES LIMITED
TURNER FUTURE FUND PTY LIMITED
CATHER PTY LTD
MR PINO JOSEPH YOZZI + MRS EVELYN EDITH YOZZI
2,467,123
1,853,907
600,000
591,996
300,000
285,000
275,000
205,126
165,000
165,000
150,000
147,526
125,000
121,000
8.57
7.58
6.66
2.63
2.00
1.90
1.43
0.46
0.46
0.23
0.22
0.21
0.16
0.13
0.13
0.12
0.11
0.10
0.09
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)
Total Remaining Holders Balance
123,122,571
6,877,429
94.71
5.29
Distribution of equity security holders
RANGE
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Rounding
Total
TOTAL HOLDERS
52
121
60
155
25
UNITS
32,128
332,710
522,838
5,429,906
123,682,418
% OF ISSUED
CAPITAL
0.02
0.26
0.40
4.18
95.14
0.01
413
130,000,000
100.00
54 |
V E E M LT D
MARKETABLE PARCELS
Number of shareholders holding less than a marketable parcel of ordinary shares is 31.
VOTING RIGHTS
Every ordinary shareholder present in person or by proxy at meetings of shareholders shall have one vote for
every share held.
Option holders have the right to attend meetings but have no voting rights until the options are exercised.
SUBSTANTIAL SHAREHOLDERS
The following shareholders are considered substantial shareholders:
VEEM Corporation Pty Ltd ATF The Miocevich Family Trust
61.54% of the issued ordinary shares
OOF Holdings Limited
12.324% of the issued ordinary shares
Celeste Funds Management Limited
5.72% of the issued ordinary shares
RESTRICTED SECURITIES
There are no restricted securities.
SHARE BUY BACKS
There is no current on market share buyback.
CORPORATE GOVERNANCE STATEMENT
The Company’s 2019 Corporate Governance Statement is available on the Company’s website at
www.veem.com.au.
| 55
22 Baile Rd,
Canning Vale WA 6155
Telephone: +61 8 9455 9355
+61 8 9455 9333
Facsimile:
Email:
Website:
veem@veem.com.au
www.veem.com.au