ANNUAl RePORt
2020
veem ltd
ACN 008 944 009
veem limited | 1
DIRECTORS’ REPORT 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
JOINT COMPANY SECRETARIES
Tracy Caudwell
David Rich
REGISTERED OFFICE
22 Baile Road
CANNING VALE WA 6155
Telephone:
+ 61 8 9455 9355
PRINCIPAL PLACE OF BUSINESS
22 Baile Road
Canning Vale, WA 6155
Telephone:
+ 61 8 9455 9355
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)
2 | veem limited
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
Additional Shareholder information
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4
6
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21
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66
veem limited | 3
DIRECTORS’ REPORT CHAiRmAN’S letteR
Market acceptance of the gyrostabilizers has continued
apace with orders now being received from almost every
major superyacht builder in Europe. Progress has also
been made in the commercial workboat/supply/crew
transfer vessel market with Damen Ships second order of
a VG1000SD being for offshore oilfield contractor Naviera
Integral. We are confident that the rate of takeup will
continue to accelerate as users and owners experience
the benefits of the additional stabilization – both through
personal enjoyment for superyacht users and commercial
returns for offshore vessel operators.
Figure 2: MV Anemelie has a VG120 gyro installed
I am proud to report that VEEM’s propellers remain the
world’s leading brand with the major boat builders in
Europe and North America supplying VEEM props as
standard. We will continue to push innovation of this
product into the future.
Our defence business was again a solid contributor
to profit and the $9 million submarine contract won in
March 2020 will contribute strongly to revenue and sales in
2021. VEEM is well positioned to be a major contributor of
sovereign capability to the defence industry under the federal
government’s current strong push for increased Australian
content on defence projects.
It is with great pride that I present the 2020 Annual
Report for VEEM Ltd. It is particularly pleasing that VEEM
was able take some important steps forward and maintain
its profitability in 2020 while operating under the local and
global shadow of COVID-19.
Our staff, contractors, management and Board all
responded rapidly and effectively when the pandemic hit
and I am pleased to report that there were no positive
tests within the Company. Lockdowns in Europe and the
USA impacted orders and sales in April and May and our
supply chain also experienced some temporary delays
during this period. By 30 June 2020 all customers and
suppliers around the world were open and operating with
longer freight times being the only remaining impact.
Operationally we are now running at pre-COVID-19 levels
or better.
We remain vigilant in monitoring domestic and world
developments and potential impacts of the pandemic.
Our revolutionary gyrostabilizer business took several
key steps forward during 2020 as sales of gyrostabilizers
tripled to $4.8 million. The new gyrostabilzer facility was
officially opened by the Minister for Defence, the Hon Linda
Reynolds in March, and by 30 June was fully operational
for the assembly and testing of all model sizes. This
timing proved to be astute as in the first six weeks of the
new financial year we received orders for $4.1 million of
new gyrostabiizers.
Figure 1: Pictured Mark Miocevich (left) and Brad Miocevich (right) next
to the first ever built VEEM Gyro VG1000SD
Our engineering team completed the first build and sale
of the VG1000SD gyrostabiizer for Damen Ships. This is
quite a feat of engineering, being the largest operating
marine gyrostabilizer in the world with angular momentum
of 520 kN.m. Damen Ships have since ordered a second
VG1000SD and a third order has also been received from
a private owner.
4 | veem limited
DIRECTORS’ REPORT
While our engineering products and services business
may not seem as attractive as our disruptive marine
products, it remains a solid contributor to profit. Just
as important is the fact that the foundry and precision
machining capability provides in-house support for
the marine and defence businesses, including ongoing
innovation.
Figure 3: The most powerful marine gyrostabilizer in the world.
VEEM’S VG1000SD is suitable for large Super Yachts, commercial
workboats and defence vessels
On the financial side, it is a testament to the diversity of our
business that VEEM was able to generate normalised EBITDA
and profit in line with the prior year. The slowdown in April
and May meant we were eligible for the Federal Government’s
JobKeeper program, and this has helped put VEEM in a
strong position to grow all areas of its business in 2021 and
beyond. The Board decided not to include the JobKeeper
receipts as part of the dividend calculation, instead choosing
to apply the funds towards growth, including employment,
and to hold as a buffer against
future COVID-19 uncertainty.
Finally, I would like to thank all staff and Directors for
their efforts during the year and congratulate them on
the progress made.
Brad Miocevich
Non-Executive Chairman
Figure 4: VEEM is manufacturing brake components for Thales’
Hawkei vehicles
veem limited | 5
DIRECTORS’ REPORT
diReCtORS’
RePORt
DIRECTORS
NON-EXECUTIVE
CHAIRMAN
Mr John Bradley Miocevich
B.Comm, FAICD
The Directors present their report together with the
financial statements of the Company for the financial
year ended 30 June 2020. 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.
Figure 5: VEEM’s demonstration and test vessel “VEEM PowerPlay”
circumnavigated Australia during the year visiting marinas and ship-
yards as well as thoroughly testing the VG120 gyro
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 22 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 31 years. Commencing as Production Director
from 1983 and until 1995 he was responsible for the
implementation of the Quality Assurance systems in 1987,
the integration of S&S Foundry & Engineering into the
company in 1989, and defining the Company management
model based on the Australian Business Excellence
framework guideline in 1994. 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.
6 | veem limited
DIRECTORS’ REPORT
FINANCE AND ADMINISTRATION
MANAGER AND 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 32
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.
CHIEF FINANCIAL OFFICER AND JOINT
COMPANY SECRETARY
Mr David James Rich
BCom, FCA, GAICD, AGIA,
Grad.Dip.CSP
Appointed 18 November 2019
David is an experienced public company CFO and
Company Secretary with over 30 years commercial
experience including the last 22 years as CFO of ASX
listed companies. Over his career David has worked in
senior management for companies within the technology,
manufacturing and oil and gas industries involving
international interests and operations including in
Australia, Europe, Asia, Africa and the USA.
NON- EXECUTIVE
DIRECTOR
Mr Ian Henry Barsden
CA
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 32 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
Mr Peter Patrick Torre
B.Bus (Accounting), CA, AGIA
Peter was appointed 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.
Peter served as Company Secretary of the Company
from September 2016 to November 2019. In the 3 years
immediately before the end of the financial year, Peter
has served as a Director of Mineral Commodities Ltd
(1 April 2010 to present), Volt Power Group Limited
(28 April 2017 to present) and Zenith Energy Limited
(7 March 2019 to 28 August 2020).
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Mr Michael Robert Bailey
MSc; CEng; MRINA
Mike brings 46 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 financials 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.
Figure 6: Princess Yachts
veem limited | 7
DIRECTORS’ REPORT
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.
Directors
John Bradley Miocevich
Mark David Miocevich
Ian Henry Barsden
Peter Patrick Torre
Michael Robert Bailey
FULLY PAID ORDINARY SHARES
Number
80,000,0001
80,000,0001
53,571
60,000
90,000
(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.
Figure 7: VEEM PropPuller, the latest innovation provides a simplified
installation and removal process with our own spring design
8 | veem limited
DIRECTORS’ REPORT FINANCIAL PERFORMANCE
The Company reported Net Profit After Tax (NPAT) for FY2020 of $2.5 million (2019: $2.5 million) underpinned by
revenue of $44.4 million (2019: $45.0 million). There were two significant items in the 2020 result that were not part of
the comparative 2019 result – the impact of AASB 16 Leases accounting changes and the JobKeeper subsidy (refer table
below). In order to make the two years comparable, the effects of AASB 16 and JobKeeper have been reversed to arrive at
a 2020 “normalised” profit which is then comparable to 2019. The negative effect of AASB 16 in 2020 of $0.5 million will
diminish over the next four years and then become a positive adjustment for the last five years of the lease term increasing
to a positive impact on statutory profit during the last year of the lease of approximately $0.5 million.
The Company is pleased to report the following key metrics for the financial year 2020:
Revenue
EBITDA
FY20 $
Statutory Result
44,368,072
AASB 16
Entries
-
JobKeeper
FY20 $
Normalised Result
Restated*
FY19 $
-
44,368,072
44,960,414
7,506,527
(1,562,153)
(1,517,250)
4,427,124
4,390,600
Profit before tax
3,239,764
495,354
(1,517,250)
2,217,868
2,141,870
NPAT
2,470,261
495,354
(1,100,006)
1,865,609
2,554,705
EPS (cents)
1.90
0.38
(0.84)
1.44
1.97
*Certain amounts shown here do not correspond to the 2019 financial statements and reflect adjustments made –
refer to Note 24 of the 2020 financial statements.
On a comparable “normalised” basis, the Company delivered EBITDA of $4.4 million, the same as 2019 and profit before
tax of $2.2 million, an increase of $0.1 million on $0.6 million less sales. The increase in gyrostabilizer sales to $4.8 million
(2019: $1.6 million) more than offset the fall in propulsion sales. In the defence business, an increase in sales of marine
ride control fins offset the fall in revenue due to the delay on the submarine maintenance contract to the 2021 financial year.
A higher income tax expense in 2020 due a significantly lower research and development claim pushed the net profit after
tax down to $1.9 million from $2.5 million in 2019.
Net assets increased by $1.7 million to $32.6 million with
a build-up in work in progress resulting from material
purchases and work completed on the ASC submarine
component contract ahead of deliveries and invoicing
commencing in August 2020. The adoption of AASB 16
reduced net assets by $0.6 million.
Advertising and marketing costs were $387,125 (2019:
$946,608), down significantly on the prior year. 2019
expenses included significantly more costs associated with
the promotion of the Company’s gyrostabilizer range within
the global ship building industry, including one-off costs
associated with the Company’s test vessel and travel. For
2020, additional sales staff were employed to affect the
phase change in marketing from proof of concept by way
of demonstration, to technical sales.
With the funds received as a result of VEEM qualifying for
JobKeeper and positive early cash flows on other projects,
VEEM had a healthy cash balance of $3.6 million as at 30
June 2020.
In April 2020, VEEM completed its annual review of
banking facilities with ANZ. The overdraft and Commercial
Facility were kept on existing terms with the overdraft
interest rate reducing by 2.88% and the Commercial
Facility maturity date extending two years to 1 July 2023,
with a slight rate increase.
veem limited | 9
Figure 8: VEEM supplies components for the Collins Class submarine
maintenance program.
DIRECTORS’ REPORT OPERATIONS
During the year significant progress was made on all
aspects of the Company’s gyrostabilizer business. Firstly,
enquiries, leads, orders and sales improved with 2020
sales of $4.8 million, three times the level of the 2019
year. As can be seen in the graph above, this increase was
steady over the first and second half of the 2020 financial
year and has continued with new orders of $4.1 million
being received in the first six weeks of the 2021 financial
year.
Secondly, the Company completed and sold its first
VG1000SD gyrostabilizer to one of the world’s leading
shipbuilders, Damen Shipyards. This was a significant
milestone for several reasons. The VG1000SD is the first
of VEEM’s large frame gyrostabilizers and rounds out the
three frame sizes that VEEM targeted to be its product
offering into the “large gyro” segment of the marine
market. Weighing in at 20 tonnes and having an angular
momentum of 520 kN.m, when installed this will be
the largest operating marine gyrostabilizer in the world.
Damen is one of the largest shipbuilders of vessels in
the range best suited to VEEM’s gyrostabilizer range and
ordered the VG1000SD after sea trials in 2018. Damen
have since ordered a second VG1000SD for one of their
FCS5009 vessels with the end user being Naviera Integral,
marking the first sale of VEEM’s gyrostabilizers into the
commercial offshore supply vessel market.
10 | veem limited
Figure 9: Damen FCS5009 vessel
DIRECTORS’ REPORT DEFENCE
Once again, the manufacturing of highly specialised marine
ride control fins for Austal Ships was a strong contributor to
sales and gross profit. Sales of submarine components was
down for the year due to the delay of the refit contract for
the Collins Class submarines. This $9 million contract was
eventually awarded by ASC in March 2020 with first deliveries
due in August 2020. Work was undertaken on this contract in
the 2020 financial year contributing to the work in progress
balance at 30 June 2020.
VEEM’s other defence work was steady throughout FY2020,
with potential for further work as the federal government
seeks to increase Australia’s sovereign capability through
increased requirements for Australian content in its defence
contracts. VEEM’s local manufacturing capability and track
record positions the Company well to capitalise on the
government initiatives in this area.
Figure 11: VEEM Forever Pipe
ENGINEERING PRODUCTS
AND SERVICES
Engineering products and services fluctuated during the
year and saw a downturn in April when COVID-19 was at its
most impactful in Western Australia. Local demand has now
returned. Of note was the increase in interest in VEEM’s
“forever pipe”, a bimetal, centrifugally cast hollow bar,
with the Company receiving its first overseas orders during
the year.
It is important to note that while this part of the business
is not a high-growth area for VEEM, it provides a reliable
ongoing cash flow and the engineering skills and capacity
maintained by the Company are utilised in the marine
propulsion, stabilization and defence areas of the business.
This domestic capability also provides VEEM with the ability
to manufacture a number of components in-house should
there be supply chain issues.
veem limited | 11
Figure 10: Senator The Hon Linda Reynolds, Minister of Defence,
at the official opening of VEEM Gyrostabilizer facility
Finally, the Company completed its 4,000 m2 gyrostabilizer
assembly facility in Canning Vale, Western Australia during
the year with the Hon. Linda Reynolds, Minister for Defence
officially opening the building in March 2020. The facility has
dedicated production lines and test facilities for each frame
size and VEEM is confident that the facility could generate
up to $100m per year of gyrostabilizers at full capacity.
The acceleration of gyrostabilizer orders into FY2021
validates the Company’s decision to expand production
capacity during FY2020.
PROPULSION
Propeller and shaftline sales were $14 million, down 10%
(2019: $16 million). This was due in part to the impact
of COVID-19 in April in particular (see below) and some
machine downtime early in the year. Orders and sales
have returned to normal levels and the factory is operating
at efficient levels with gross profits in line with budget
expectations.
VEEM continues to maintain its position as the
manufacturer of world-leading propellers. VEEM propellers
are sold worldwide to premium boatbuilders and the
Company expects this to continue as it continues to improve
its product offering and generate internal efficiencies that
allow the pricing to stay competitive.
The Company is also continuing to develop and market its
shaftline offering with sales up on the prior year. Work will
continue on both the product and the marketing in FY2021
as VEEM seeks to establish its shaftlines as a premium
option for boatbuilders.
DIRECTORS’ REPORT COVID-19
OUTLOOK
Early in the course of the COVID-19 pandemic, VEEM
implemented enhanced hygiene measures and eliminated
travel and other unnecessary exposures of staff to potential
infection while maintaining full capacity at its Canning
Vale facilities. A COVID-19 response team was contracted
to provide ongoing cleaning, temperature testing and
monitoring of distancing while the facilities continued
operating. The response team continued through to 30 June
2020 when it was deemed no longer necessary in line with
general easing of restrictions in Western Australia. VEEM
had no positive tests recorded for COVID-19 and limited
interruptions to its normal working conditions. Appropriate
health measures continue in place across the Company and
remain a key priority.
During April 2020 the majority of the boat builders that buy
VEEM’s propellers were closed due to government lockdowns
in Europe and the USA. This resulted in quotes and orders
falling sharply in April. One large gyrostabilizer order due for
delivery in April 2020 was deferred and is due for delivery
before 31 December 2020. Quotes for VEEM’s domestic
engineering/mining products and services were also
impacted in April 2020.
The fall in revenue in April 2020 was sufficient for VEEM
to qualify for the federal government’s JobKeeper payments
which resulted in an additional $1.5 million in income for
the year ended 30 June 2020.
As of today, all of the boat builders in Europe and the
USA are back open and ordering propellers. Domestic
engineering/mining has improved from the April lows,
but is still down compared to 2019.
VEEM’s defence business was already contracted for and
was not negatively impacted.
VEEM has also been impacted somewhat by the effect
that COVID-19 has had on freight. VEEM utilises air and
sea freight for both receiving materials from overseas and
delivering sales goods to overseas customers. Sea freight
had some impacts on deliveries in April and May, but has
since returned to reliable, albeit extended schedules. Air
freight did incur disruptions for the Company’s deliveries
to North America in particular, but as orders were well down,
this didn’t have a material impact and has now returned to
a reliable schedule.
Some key components from overseas in our supply chain
did incur delays early in the timeline of the pandemic,
however production and delivery from our suppliers mostly
returned to pre-COVID-19 schedules toward the end of the
financial year.
VEEM remains vigilant in monitoring the national and
global progression of COVID-19 and potential impacts
on all aspects of business. VEEM is aware that the
operating environment could change rapidly having
a material impact on profitability and cash flow.
12 | veem limited
VEEM sees a very positive outlook for all areas of its
business. Significantly, the orders for VEEM’s gyros have
been increasing at a rapid rate. This adoption of the
gyrostabilizer technology on larger vessels is expected to
continue with shipbuilders offering a VEEM gyrostabilizer
as an option and end-users increasing their demand for
the enhanced experience that a more stable vessel provides.
The superyacht market take-up of the product is expected
to increase rapidly as more vessels with gyrostabilizers join
the global fleet and word spreads as to the effectiveness of
the stabilization.
Figure 12: VEEM propulsion and shaft line system for the 65m ISA Classic
Super Yacht in Italy
The commercial market has been slower to adopt the
technology, however through manufacturers like Damen,
the crew transfer and offshore supply vessel markets are
now being provided with real examples of how the additional
stabilization can enhance the commercial argument for
installing a gyrostabilizer through more operating days and
safer, more efficient operation. We expect the take up of
gyrostabilizers on commercial vessels to increase through
FY2021 and beyond.
Although VEEM has one of its gyrostabilizers installed on
a fisheries patrol vessel, the wide use of gyrostabilization
for defence vessels, although well supported by operational
enhancement and force multiplication arguments, is
expected to mature over a longer period of time due to the
conservative nature of this industry. VEEM will continue to
educate the defence industry on the product with a longer-
term view to wide-spread take-up.
The propulsion business is expected to continue to grow,
both organically for propellers and through new product
innovation with shaftlines. Propulsion is an area of innovation
for VEEM with a focus on finding further ways to make the
world-leading propellers more efficiently which will allow
VEEM to continue to offer the premium product at
reasonable prices while maintaining gross margins.
DIRECTORS’ REPORT
diReCtORS’ RePORt
FY2021 will be a solid year for defence with the bulk of
the $9 million submarine component contract with ASC
being delivered. VEEM continues to win defence-related
contracts where casting and precision engineering is
required and this is expected to grow, particularly when
the government’s increased drive for local content on naval
vessels in particular bears fruit.
VEEM’s engineering products and services business
continues to bid on work across the country where utilisation
of the Company’s foundry and precision machining capability
enables VEEM to provide specialist solutions for customers.
VEEM’s forever pipe is an example of this and is expected
to increase its presence in overseas markets. VEEM is
continuing to innovate to improve its product offering in
this area. In addition to this, maintaining the engineering
capability also supports the marine and defence businesses.
SIGNIFICANT EVENTS AFTER BALANCE DATE
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 apart from those listed below:
1. On 31 August 2020 the Company declared an unfranked
ordinary dividend of $291,883 representing $0.00225
per share.
2. The strong growth in the gyrostabilizer business has
continued with new orders of $4.1 million being received
in the first six weeks of the 2021 financial year. This
compares favourably to the total gyrostabilizer sales for
FY2020 of $4.8 million.
LIKELY DEVELOPMENTS AND
EXPECTED RESULTS
The Company will continue with its strategy as set out
above and in its Prospectus lodged with the ASX on 24
October 2016.
ENVIRONMENTAL LEGISLATION
The Company is not subject to any significant
environmental legislation.
Figure 13: Oceanline Yachts
DIVIDENDS
The outlook remains, as previously mentioned, subject to
the future impacts of the COVID-19 pandemic.
STRATEGY
VEEM’s strategy and focus remain as set out in its 2016
prospectus. That is to become a market leader in the
provision of gyrostabilization to superyachts and commercial
craft while growing its position as a premier supplier of
world leading fixed pitch propeller technology.
VEEM also manufactures bespoke products and services for
the marine, defence and mining and energy industries.
Dividends paid to members during the financial year were
as follows:
• A final ordinary dividend of $474,500 was paid on 27
September 2019.
• An interim ordinary dividend of $267,800 was paid on
24 April 2020.
Since the end of the financial year the Directors have
recommended the payment of a final unfranked ordinary
dividend of $291,883 to be paid on or around 25 September
2020. The recommendation is based on 30% of the
normalised profit after tax of $1,865,609 as set out above,
being $559,683, less the interim dividend of $267,800
already paid.
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.
veem limited | 13
DIRECTORS’ REPORT
diReCtORS’ RePORt
INDEMNIFICATION AND INSURANCE OF
DIRECTORS AND OFFICERS
The Company has agreed to indemnify all the Directors of
the Company and the Chief Financial Officer for any liabilities
to another person (other than the Company or related body
corporate) that may arise from their position as Directors or
officers of the Company and its controlled entities, except
where the liability arises out of conduct involving a lack of
good faith.
During the financial year the Company paid a premium in
respect of a contract ensuring 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.
REMUNERATION REPORT - AUDITED
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 2020. 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 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 Key Management Personnel are 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
Executive
David James Rich
Chief Financial Officer
and Company Secretary
(Appointed 18
November 2019)
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.
14 | veem limited
DIRECTORS’ REPORT 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.
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 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
diReCtORS’ RePORt
SENIOR MANAGER AND EXECUTIVE
DIRECTOR REMUNERATION
Remuneration consists of reasonable fixed remuneration only.
FIXED REMUNERATION
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 2020 and 30 June
2019 tables.
The Board has not used any independent remuneration
consultants during the year ended 30 June 2020.
2019 ANNUAL GENERAL MEETING
NON-EXECUTIVE DIRECTOR
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 $400,000.
The amount of aggregate remuneration sought to be
approved by shareholders and the manner in which it is
apportioned amongst Directors is reviewed annually leading
up to the Company’s Annual General Meeting. The Board
considers advice from external shareholders as well as
the fees paid to non-executive Directors of comparable
companies when undertaking the annual review process.
Each Director receives a fee for being a Director of the
Company. Given there are no committees currently in
place, no additional fees are paid.
The Remuneration Report for the year ended 30 June 2019
was approved by in excess of 75% of shareholders at the
Annual General Meeting.
Figure 14: First ever 48” diameter VEEMSUPERYACHT series 6 blade
propeller with patented Interceptor strips
veem limited | 15
DIRECTORS’ REPORT PERFORMANCE ON SHAREHOLDER WEALTH
In considering the Company’s performance and benefits for shareholder wealth, the Board have regarded the following indices
in respect of the current and previous four financial years:
EPS (cents per share)
Dividends (cents per share)
Net profit ($)
Share price ($)
2020
1.90
0.57
Restated*
2019
Restated*
2018
1.97
0.41
1.67
1.61
2017
3.21
3.08
2,470,261
2,554,705
2,170,717
3,848,750
0.40
0.53
0.47
0.64
*Certain amounts shown here do not correspond to the 2018 and 2019 financial statements and reflect adjustments made – refer to Note 24
of the 2020 financial statements. Note the dividend and share price information has not been restated.
EMPLOYMENT CONTRACTS
Details of employment contracts with executive KMP: Agreements with M. Miocevich (date of commencement 1 September
2016) and D. Rich (date of commencement 18 November 2019).
Name
M. Miocevich
Term of agreement and
termination provisions
This agreement has no set term.
Termination of the agreement is 1 months’
notice by the Executive or 3 months’ notice
by the Company and includes a 6 month
restraint of trade.
Base salary including
superannuation
Base: $385,000
per annum plus
$23,915 superannuation
Termination
benefit
3 Months salary
D. Rich
This agreement has no set term.
Termination of the agreement is 1 months’
notice by the Executive or the Company and
includes a 6 month restraint of trade.
Base: $280,000
per annum plus
$21,003 superannuation
3 Months salary
Executive remuneration at this stage consists only of fixed remuneration. The remuneration 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.
16 | veem limited
DIRECTORS’ REPORT
$
-
$
-
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Short-term
employee
benefits
Post-
employment
benefits
Long
term
benefits
Share
based
payments
Relative proportions of
remuneration of KMP that are
linked to performance
Salary &
fees
Bonus
Non-
monetary
benefits
Other
Superannu-
ation
Long
service
leave
Share
options
Total
Fixed
remuneration
Remuneration
linked to
performance
30 June 2020
Directors
$
$
$
$
$
$
$
%
%
Bradley Miocevich*
166,575
Mark Miocevich
385,000
Ian Barsden
Peter Torre
54,794
60,000
Michael Bailey
54,794
Total Director
remuneration
721,163
Executive
David Rich**
173,467
Total
894,630
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,825
- 182,400
100%
23,915
6,416
- 415,331
100%
5,206
-
5,206
-
-
-
-
-
-
60,000
100%
60,000
100%
60,000
100%
50,152
6,416
- 777,731
11,765
2,891
- 188,123
100%
61,917
9,307
- 965,854
*Mr B Miocevich received an additional $10,400 per month between 1 January 2020 and 30 June 2020 for services provided in relation to the
direct project management of an engineering project. This additional work was approved in advance by the Board.
**Mr D Rich commenced on 18 November 2019.
Short-term
employee
benefits
Post-
employment
benefits
Long
term
benefits
Share
based
payments
Relative proportions of
remuneration of KMP that are
linked to performance
Salary &
fees
Bonus
Non-
monetary
benefits
Other
Superannu-
ation
Long
service
leave
Share
options
Total
Fixed
remunera-
tion
Remuneration
linked to
performance
30 June 2019
$
$
$
$
$
$
$
%
%
Directors
Bradley Miocevich
111,696
Mark Miocevich
391,268
Ian Barsden
Peter Torre
55,848
60,000
Michael Bailey
60,000
Total Director
remuneration
678,812
-
-
-
-
-
-
- 5,636
10,611
- 127,943
100%
-
-
-
-
-
-
-
-
24,618
6,520
- 422,406
100%
5,306
-
-
-
-
-
-
-
-
61,154
100%
60,000
100%
60,000
100%
- 5,636
40,535
6,520
- 731,503
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 2020 or 2019.
veem limited | 17
-
-
-
-
-
-
-
-
-
-
-
DIRECTORS’ REPORT diReCtORS’ RePORt
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
compensation
Received on
exercise of options
Net change
other
Balance at end
of year
Balance held
nominally
30 June 2020
Number
Number
Number
Number
Number
Number
Directors
Bradley Miocevich
80,000,0001
Mark Miocevich
80,000,0001
Ian Barsden
Peter Torre
Michael Bailey
Executive
David Rich
53,571
60,000
75,000
62,3012
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000
80,000,0001
80,000,0001
53,571
60,000
90,000
148,615
210,916
Balance at
beginning of year
Granted as
compensation
Received on
exercise of options
Net change
other
Balance at end
of year
Balance held
nominally
30 June 2019
Number
Number
Number
Number
Number
Number
Directors
Bradley Miocevich
80,000,0001
Mark Miocevich
80,000,0001
Ian Barsden
Peter Torre
Michael Bailey
50,000
60,000
-
-
-
-
-
-
-
-
-
-
-
-
-
80,000,0001
80,000,0001
3,571
-
75,000
53,571
60,000
75,000
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.
2. This is the shareholding of Mr David Rich when he commenced on 18 November 2019.
The Company has two lease agreements with Voyka Pty Ltd, an entity controlled by an entity related to Mr Mark Miocevich and Mr Brad
Miocevich. The Company pays Voyka Pty Ltd current monthly rent of $142,472 monthly excluding GST which is exclusive of any outgoings
including rates, taxes, insurance premiums and maintenance costs. The leases end in 2029 and are on commercial terms.
-
-
-
-
-
-
-
-
-
-
-
END OF REMUNERATION REPORT
18 | veem limited
DIRECTORS’ REPORT diReCtORS’ RePORt
DIRECTORS’ MEETINGS
The number of meetings of Directors held during the year and the number of meetings attended by each Director were as
follows:
Number of 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
13
13
13
13
13
13
13
12
13
13
12
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 22 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 20 and forms part of this Directors’ report for the year ended 30 June 2020.
Signed in accordance with a resolution of the Directors.
Mark David Miocevich
Managing Director
Perth, 31 August 2020
veem limited | 19
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of VEEM Ltd for the year ended 30 June 2020,
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
31 August 2020
N G Neill
Partner
20 | veem limited
Page 14
DIRECTORS’ REPORT
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2020
Continuing operations
Revenue
Government subsidies
Foreign exchange losses (net)
Change in inventories of finished goods and work in progress
Raw materials and consumables purchases
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)/benefit
Notes
2
2
2
3
2020 ($)
Restated*
2019 ($)
44,368,072
1,574,528
(34,111)
(184,725)
(16,499,237)
(17,214,112)
(3,394,935)
(1,545,466)
(1,117,472)
(871,828)
(1,840,950)
3,239,764
(769,503)
44,960,414
22,415
(18,861)
3,205,821
(19,179,742)
(18,543,108)
(1,752,992)
(1,332,546)
(2,388,051)
(495,738)
(2,335,742)
2,141,870
412,835
Net profit for the year
2,470,261
2,554,705
Other comprehensive income, net of income tax
-
-
Total comprehensive income for the year
2,470,261
2,554,705
Basic earnings per share (cents per share)
5
1.90
1.97
The accompanying notes form part of these financial statements
*Certain amounts shown here do not correspond to the 2019 financial statements and reflect adjustments made –
refer to Note 24.
veem limited | 21
FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
2020 ($)
Restated*
2019 ($)
Notes
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
Right-of-use-asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Provisions
Lease liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Lease 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
17
16
15
3
17
16
18
3,618,166
9,471,613
8,239,066
1,093,899
1,162,575
23,585,319
13,649,662
1,590,945
13,326,680
13,657,103
42,224,390
65,809,709
5,400,652
1,896,831
1,107,730
1,218,474
9,623,687
7,016,666
3,595,700
100,929
12,909,950
23,623,245
33,246,932
2,874,087
6,857,362
11,038,548
1,004,793
1,701,091
23,475,881
12,944,012
1,863,309
12,730,774
-
27,538,095
51,013,976
6,767,045
1,798,075
1,022,878
-
9,587,998
7,415,705
3,098,562
-
-
10,514,267
20,102,265
32,562,777
30,911,711
5,140,616
27,422,161
32,562,777
5,140,616
25,771,095
30,911,711
The accompanying notes form part of these financial statements
*Certain amounts shown here do not correspond to the 2019 financial statements and reflect adjustments made – refer to
Note 24.
22 | veem limited
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Balance at 1 July 2018 (Restated*)
Profit for the year (Restated*)
Other comprehensive income, net of income tax
Total comprehensive income for the year
Dividend paid
Balance as at 30 June 2019 (Restated*)
Adjustment on initial application of AASB16
Balance as at 30 June 2019 post initial adoption of
AASB16
Profit for the year
Other comprehensive income, net of income tax
Total comprehensive income for the year
Dividend paid
Balance as at 30 June 2020
Notes
6
1
6
The accompanying notes form part of these financial statements
Issued
capital
($)
Retained
earnings
($)
Total
equity
($)
5,140,616
23,749,390
28,890,006
-
-
-
-
2,554,705
2,554,705
-
-
2,554,705
2,554,705
(533,000)
(533,000)
5,140,616
25,771,095
30,911,711
-
(76,895)
(76,895)
5,140,616
25,694,200
30,834,816
-
-
-
-
2,470,261
2,470,261
-
-
2,470,261
2,470,261
(742,300)
(742,300)
5,140,616
27,422,161
32,562,777
*Certain amounts shown here do not correspond to the 2019 financial statements and reflect adjustments made –
refer to Note 24.
veem limited | 23
FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Government subsidies received
Interest paid
Income tax refunds received
GST paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Proceeds from sale of property, plant and equipment
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Payment of lease liabilities
Net cash (outflow) from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the year
The accompanying notes form part of these financial statements.
Notes
2020 ($)
2019 ($)
45,540,638
(39,159,807)
992,000
(871,828)
538,515
(1,076,793)
5,962,725
(1,607,609)
(964,457)
-
(2,572,066)
1,000,000
(1,876,069)
(742,300)
(1,053,284)
(2,671,653)
719,006
2,874,087
25,073
3,618,166
50,168,613
(40,811,130)
-
(495,738)
435,033
(840,812)
8,455,966
(201,524)
(881,902)
18,865
(1,064,561)
1,000,000
(4,659,577)
(533,000)
-
(4,192,577)
3,198,828
(324,741)
-
2,874,087
7
7
24 | veem limited
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 THE REVISED STANDARDS
Standards and Interpretations applicable to 30 June 2020
In the year ended 30 June 2020, 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 period
beginning on or after 1 July 2019. Those that have a material impact on the Company are set out below.
AASB 16 leases
Change in accounting policy
AASB 16 Leases supersedes AASB 117 Leases. The Company has adopted AASB 16 from 1 July 2019, which has resulted
in changes in the classification, measurement and recognition of leases. The changes result in almost all leases where the
Company is the lessee being recognised on the Statement of Financial Position and removes the former distinction between
‘operating’ and ‘finance’ leases. The new standard requires recognition of a right-of-use asset (the leased item) and a
financial liability (to pay rentals). The exceptions are short-term leases and leases of low value assets.
The Company has adopted AASB 16 using the retrospective approach under which the reclassifications and the
adjustments arising from the new leasing rules are recognised in the opening Statement of Financial Position on 1 July 2019.
Under this approach, the retained earnings are adjusted for the initial impact of application, and comparatives have not been
restated.
The Company leases various premises, plant and equipment. Prior to 1 July 2019, leases were classified as operating leases.
Payments made under operating leases were charged to profit or loss on a straight-line basis over the period
of the lease.
From 1 July 2019, where the Company is a lessee, the Company recognises a right-of-use asset and a corresponding liability
at the date that the lease asset is available for use by the Company (i.e. commencement date). Each lease payment is
allocated between the liability and the finance cost. The finance cost is charged to profit or loss over the lease period so as to
produce a consistent period rate of interest on the remaining balance of the liability for each period.
The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date,
discounted using the rate implied in the lease. If this rate is not readily determinable, the Company uses its incremental
borrowing rate.
veem limited | 25
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Lease payments included in the initial measurement if the lease liability consist of:
•
•
Fixed lease payments less any lease incentives receivable;
Variable lease payments that depend on an index or rate, initially measured using the index or rate at commencement
date;
Any amounts expected to be payable by the Company under residual value guarantees;
The exercise price of purchase options, if the Company is reasonably certain to exercise the options; and
Termination penalties of the lease term reflect the exercise of an option to terminate the lease.
•
•
•
Extension options are included in a number of property leases across the Company. In determining the lease term,
management considers all facts and circumstances that create an economic incentive to exercise an extension option.
Extension options are only included in the lease term if, at commencement date, it is reasonably certain that the
options will be exercised.
Subsequent to initial recognition, the lease liability is measured by increasing the carrying amount to reflect interest
on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments
made. The lease liability is remeasured (with a corresponding adjustment to the right-of-use asset)
whenever there is a change in the lease term (including assessments relating to extension and termination options), lease
payments due to changes in an index or rate or expected payments under guaranteed residual values.
Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before
commencement date, less any lease incentives received and any initial direct costs. These right-of-use assets
are subsequently measured at cost less accumulated depreciation and impairment losses.
Where the terms of a lease require the Company to restore the underlying asset, or the Company has an obligation to
dismantle and remove a leased asset, a provision is recognised and measured in accordance with AASB 137. To the extent
that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset.
Right-of-use assets are depreciated on a straight-line basis over the term of the lease (or the useful life of the leased asset if
this is shorter). Depreciation starts on commencement date of the lease.
Where leases have a term of less than 12 months or relate to low value assets, the Company has applied the optional
exemptions to not capitalise these leases and instead account for the lease expense on a straight-line basis over the lease
term.
The impact on the accounting policies, financial performance and financial position of the Company from the
adoption of AASB 16 is detailed below.
Impact on adoption of AASB 16
On adoption of AASB 16, the Company recognised lease liabilities in relation to leases, which had previously been classified
as operating leases under the principles of AASB 117. These liabilities were measured at the present value
of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 July 2019. The weighted
average lessee's incremental borrowing rate applied to lease liabilities on 1 July 2019 was 3.45%.
On initial application, right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of
the make good provision.
In the Statement of Cash Flows, the Company has recognised cash payments for the principal portion of the lease liability
within financing activities, cash payments for the interest portion of the lease liability as interest paid within operating
activities and short-term lease payments and payments for lease of low-value assets within operating activities.
The adoption of AASB 16 resulted in the recognition of right-of-use assets of $15,205,743, a make good provision of
$100,929 and lease liabilities of $15,181,708 in respect of all operating leases, other than short-term leases and
leases of low-value assets.
The net impact on retained earnings on 1 July 2019 was $76,895.
26 | veem limited
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Practical expedients applied
In applying AASB 16 for the first time, the Company has used the following practical expedients permitted by
the standard:
•
•
•
The use of a single discount rate to a portfolio of leases with similar characteristics.
The exclusion of initial direct costs for the measurement of the right-of-use-asset at the date of initial application.
The use of hindsight in determining the lease term where the contract contains options to extend or terminate.
Reconciliation of operating lease commitments previously disclosed and lease liabilities on 1 July 2019
Below is a reconciliation of total operating lease commitments as at 30 June 2019, as disclosed in the annual
financial statements for the year ended 30 June 2019, and the lease liabilities recognised on 1 July 2019:
Lease liabilities
Operating lease commitments disclosed as at 30 June 2019
Discounted using the lessee’s incremental borrowing rate at the date of initial application
Lease liabilities as at 1 July 2019
$
16,394,700
(1,212,992)
15,181,708
Other than the above, there is no material impact of the new and revised Standards and Interpretations on the Company.
New Standards and Interpretations in issue not yet adopted
The Directors have also reviewed all of the new and revised Standards and Interpretations in issue not yet adopted
for the year ended 30 June 2020. As a result of this review, the Directors have determined that there is no material
impact of the Standard and Interpretations in issue not yet adopted on the Company and, therefore, no change is
necessary to its accounting policies.
No other new standards, amendments to standards or interpretations are expected to affect the Company's financial
statements.
C. STATEMENT OF COMPLIANCE
The financial report was authorised for issue by the Board of VEEM Ltd on 31 August 2020.
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 JUDGMENTS AND KEY ESTIMATES
The preparation of the financial report requires management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may
differ from these estimates.
veem limited | 27
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Leases
The Company has leases for the main warehouse and related facilities, an office and production building.
The lease liabilities are secured by the related underlying assets. In applying AASB16 for the first time,
the Company has used the following practical expedients:
The use of a single discount rate to a portfolio of leases with similar characteristics.
The exclusion of initial direct costs for the measurement of the right-of-use-asset at the date of initial
application.
The use of hindsight in determining the lease term where the contract contains options to extend or
terminate.
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 for are any indicators that these costs
may be impaired or whether the amortisation rate needs to be accelerated.
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.
28 | veem limited
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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 are retranslated at the rate of
exchange ruling at the balance date.
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.
veem limited | 29
FINANCIAL STATEMENTS
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. Government grants are presented as other income in the statement of
profit or loss and other comprehensive income.
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 were classified as finance leases whenever the terms of the lease transfered substantially all the risks and rewards of
ownership to the lessee.
Assets held under finance leases were 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 was included in the
statement of financial position as a finance lease obligation.
Lease payments were 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 were charged directly against income, unless they
were directly attributable to qualifying assets, in which case they were capitalised in accordance with the general policy on
borrowing costs, refer Note 1(i).
30 | veem limited
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Finance lease assets were depreciated on a straight-line basis over the estimated useful life of the asset.
Old Policy
Prior to 1 January 2019, leases were classified as finance leases or operating leases. Payments made under operating leases
were charged to profit or loss on a straight-line basis over the period of the lease.
New Policy
From 1 January 2019, where the Company is a lessee, the Company recognises a right-of-use asset and a corresponding
liability at the date which the lease asset is available for use by the Company (i.e. commencement date). Each lease payment
is allocated between the liability and the finance cost. The finance cost is charged to profit or loss over the lease period so as
to produce a consistent period rate of interest on the remaining balance of the liability for each period.
The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date,
discounted using the rate implied in the lease. If this rate is not readily determinable, the Company uses its incremental
borrowing rate. Lease payments included in the initial measurement if the lease liability consist of:
•
•
•
•
•
Fixed lease payments less any lease incentives receivable;
Variable lease payments that depend on an index or rate, initially measured using the index or rate at commencement
date;
Any amounts expected to be payable by the Company under residual value guarantees;
The exercise price pf purchase options, if the Company is reasonably certain to exercise the options; and
Termination penalties of the lease term reflects the exercise of an option to terminate the lease.
Extension options are included in a number of property leases across the Company. In determining the lease term,
management considers all facts and circumstances that create an economic incentive to exercise an extension option.
Extension options are only included in the lease term if, at commencement date, it is reasonably certain that the options will
be exercised.
Subsequent to initial recognition, the lease liability is measured by increasing the carrying amount to reflect interest on the
lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The lease liability is remeasured (with a corresponding adjustment to the right-of-use asset) whenever there is a change in the
lease term (including assessments relating to extension and termination options), lease payments due to changes in an index
or rate, or expected payments under guaranteed residual values.
Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before
commencement date, less any lease incentives received and any initial direct costs. These right-of-use assets are
subsequently measured at cost less accumulated depreciation and impairment losses.
Where the terms of a lease require the Company to restore the underlying asset, or the Company has an obligation to
dismantle and remove a leased asset, a provision is recognised and measured in accordance with AASB 137. To the extent
that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset.
Right-of-use assets are depreciated on a straight-line basis over the term of the lease (or the useful life of the leased asset if
this is shorter). Depreciation starts on commencement date of the lease.
Where leases have a term of less than 12 months or relate to low value assets, the Company has applied the optional
exemptions to not capitalise these leases and instead account for the lease expense on a straight-line basis over the lease
term.
The impact on the accounting policies, financial performance and financial position of the Company from the adoption of
AASB 16 is detailed at (b) above.
veem limited | 31
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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.
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.
32 | veem limited
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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 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.
veem limited | 33
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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 uncollectible 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)
(ii)
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.
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.
34 | veem limited
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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)
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.
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.
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.
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.
veem limited | 35
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Financial assets 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.
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon de-recognition of the asset.
R. DERECOGNITION OF FINANCIAL ASSETS AND 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 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.
36 | veem limited
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Financial liabilities
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 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.
T. PROPERTY, PLANT AND EQUIPMENT
Plant and equipment are 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.
veem limited | 37
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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.
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;
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.
38 | veem limited
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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
Software
10 – 20 years
Units of production
10 years
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the Company expects to obtain ownership of the leased asset
at the end of the lease term, the depreciation is over its estimated useful life. Right-of-use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The Company has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
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 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.
veem limited | 39
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
X. PROVISIONS
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.
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.
Lease restoration provision
A provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision
includes future cost estimates associated with the end of the lease term. The calculation of this provision requires
assumptions such as application of end dates and cost estimates. The provision recognised for each site is periodically
reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for
sites are recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the
provision that exceed the carrying amount of the asset will be recognised in profit or loss.
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.
40 | veem limited
FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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.
veem limited | 41
FINANCIAL STATEMENTS
NOTE 2: REVENUE AND EXPENSES
Revenue from contracts with customers
Sales revenue
•
•
Revenue – point in time
Revenue – over time
Other revenue
•
•
Commissions received
Scrap metal
Government subsidies
•
•
•
•
JobKeeper subsidy
Cashflow boost subsidy (COVID-19)
Apprentice subsidies
Government subsidies
2020 ($)
2019 ($)
4,322,844
40,033,292
44,356,136
1,035
10,901
44,368,072
1,517,250
50,000
4,778
2,500
1,574,528
2,582,573
42,358,999
44,941,572
945
17,897
44,960,414
-
-
4,000
18,415
22,415
During the year, the Company recognised revenue of $8,257,380 (2019: $5,365,546) in relation to the prior
year’s work in progress. The Company has progress billings at 30 June 2020 of $11,565,195 (2019: $7,417,879).
The Company has contract assets, being work in progress (recognised over time) at 30 June 2020 of $9,592,427
(2019: $6,723,472).
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 68% of the
revenue during FY2020. Sales to quasi-government and government instrumentalities accounted for 10%
(2019: 13%) and 22% (2019: 16%) respectively.
The geographic distribution of sales for FY2020 was approximately 64% (2019: 59%) derived within Australia
and the remaining 36% (2019: 41%) were derived predominantly from the USA, UK, Italy and NZ.
42 | veem limited
FINANCIAL STATEMENTS
NOTE 2: REVENUE AND EXPENSES
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.
The majority of sales are generated by direct contracts with customers. Sales agents are utilised in Europe and
USA (gyrostabilizers only) to introduce enquiries and leads and contracts are then established directly with the
buyer. Distributors are utilised for propeller sales in the USA and Australia, where distributors purchase from
and contract directly with VEEM Ltd.
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 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:
Current tax expense/(benefit)
Deferred tax expense/(benefit) relating to the origination and reversal of temporary
differences
Total tax expense/(benefit)
2020 ($)
2019 ($)
343,857
387,125
166,998
86,990
83,540
92,916
165,405
53,804
102,164
5,863
-
22,382
329,906
1,840,950
280,332
946,608
232,855
144,809
68,620
89,094
137,360
49,403
172,060
1,254
4,804
22,930
185,613
2,335,742
2020 ($)
Restated
2019 ($)
-
42,500
769,503
769,503
(455,335)
(412,835)
veem limited | 43
FINANCIAL STATEMENTS
NOTE 3: INCOME TAX (cont’d)
The prima facie income tax expense on pre-tax accounting profit from operations
reconciles to the income tax expense in the financial statements as follows:
Accounting profit before income tax
Income tax expense calculated at 27.5%
Tax effect of amounts which are not deductible/(taxable)
in calculating taxable income:
2020 ($)
Restated
2019 ($)
3,239,764
2,141,870
890,935
589,014
•
•
•
•
Prior year overprovision of income tax
Change in tax rate
-
-
62,415
170,824
Effect of expenses that are not deductible in determining
taxable profit
941,448
1,596,880
Effect of concessions – research and development
(1,062,880)
(2,831,968)
Income tax (benefit)/expense reported in the statement of profit or loss
and other comprehensive income
769,503
(412,835)
The tax rate used in the above reconciliation is the corporate tax rate of 27.5% payable by Australian corporate
entities on taxable profits under Australian tax law. There has been no change in this tax rate since the previous
reporting period.
Current tax receivables comprise:
Income tax receivable/(payable)
1,162,575
1,701,091
2020 ($)
Restated
2019 ($)
Deferred tax assets comprise:
Annual leave payable
Provision for long service leave
Provision for restoration
Accrued expenses
Unrealised foreign exchange (gain) / loss
Black hole expenditure and borrowing costs
Timing difference between Right of Use assets and Lease liabilities
Unclaimed research and development concessions
Deferred tax liabilities comprise:
Depreciable property, plant and equipment
Patents
Accrued revenue
44 | veem limited
379,294
304,626
27,755
88,618
(6,296)
86,489
157,369
553,090
1,590,945
312,138
281,292
-
73,450
5,471
184,014
-
1,006,944
1,863,309
3,563,643
32,057
-
3,595,700
2,937,567
64,666
96,329
3,098,562
FINANCIAL STATEMENTS
NOTE 3: INCOME TAX (cont’d)
Reconciliation of deferred tax assets/ (liabilities):
30 June 2020
Accrued expenses
Annual leave payable
Provision for long service leave
Property, plant and equipment
Unrealised foreign exchange (gain) / loss
Black hole expenditure and borrowing costs
Patents
Unclaimed research and development concessions
Accrued revenue
Provision for restoration
Timing difference between Right of Use assets and
Lease liabilities
Opening
balance
Charged
to income
Closing
balance
($)
73,450
312,138
281,292
(2,937,567)
5,471
184,014
(64,666)
1,006,944
(96,329)
-
($)
15,168
67,156
23,334
(626,076)
(11,767)
(97,525)
32,609
(453,854)
96,329
27,755
($)
88,618
379,294
304,626
(3,563,643)
(6,296)
86,489
(32,057)
553,090
-
27,755
-
(1,235,253)
157,369
(769,502)
157,369
(2,004,755)
30 June 2019 (Restated)
Accrued expenses
Annual leave payable
Provision for long service leave
Property, plant and equipment
Unrealised foreign exchange (gain) / loss
Black hole expenditure and borrowing costs
Patents
Unclaimed research and development concessions
Accrued revenue
Opening
balance
Change
in tax rate
Charged to
income
Closing
balance
($)
59,850
312,912
352,971
(3,000,180)
(1,534)
307,481
(83,650)
404,042
-
(1,648,108)
($)
(4,987)
(26,076)
(29,414)
250,015
(61)
(25,623)
6,971
-
-
170,825
($)
18,587
25,302
(42,265)
(187,402)
7,066
(97,844)
12,013
602,902
(96,329)
242,030
($)
73,450
312,138
281,292
(2,937,567)
5,471
184,014
(64,666)
1,006,944
(96,329)
(1,235,253)
veem limited | 45
FINANCIAL STATEMENTS
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 22% (2019: 15%). Customer B generated 10% (2019: 14%) of the Company’s
revenue for the year.
The total sales revenue for VEEM Ltd for FY2020 was $44,356,136. This can be broken down into the following
major sales categories. Propulsion and stabilization consists of the manufacture of new propellers, shaft lines,
gyrostabilizers and marine ride control fins. The sales in this category were $28,462,028. Defence related sales
for FY2020 totalled $13,902,203 with $9,595,257 of those sales being both within the defence and propulsion/stabilization
categories. Sales of engineering products and services for FY2020 were $11,587,162.
NOTE 5: EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share
There are no diluted earnings per share.
Basic earnings per share
Restated
2019
Cents per share Cents per share
1.97
2020
1.90
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings
per share is as follows:
2020 ($)
Restated
2019 ($)
Earnings
Earnings from continuing operations
2,470,261
2,554,705
Weighted average number of ordinary shares for the
purpose of basic earnings per share
2020
Number
2019
Number
130,000,000
130,000,000
46 | veem limited
FINANCIAL STATEMENTS
NOTE 6: DIVIDENDS
Fully franked dividends paid
Fully unfranked dividends paid
Total dividends paid
Balance of franking account at period end adjusted for franking credits
arising from the payment of provision for income tax and dividends recognised as
receivables, franking debits arising from payment of
proposed dividends and franking credits that may be prevented from distribution
in a subsequent financial year.
The tax rate at which paid dividends have been franked is 27.5% (2019: 27.5%).
NOTE 7: CASH AND CASH EQUIVALENTS
Cash at bank
Cash on hand
2020 ($)
2019 ($)
742,300
-
742,300
533,000
-
533,000
-
1,193,530
2020 ($)
2019 ($)
3,617,366
2,873,287
800
800
3,618,166
2,874,087
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Reconciliation to the statement of cash flows:
For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand and at bank and
investments in money market instruments, net of outstanding bank overdrafts.
Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related items in the statement
of financial position as follows:
2020 ($)
2019 ($)
Cash and cash equivalents
3,618,166
2,874,087
Non-cash financing and investing activities
The Company purchased assets with a value of $575,786 which were financed through hire purchase.
Cash balances not available for use
All cash balances are available for use.
veem limited | 47
FINANCIAL STATEMENTS
NOTE 7: CASH AND CASH EQUIVALENTS (cont’d)
Reconciliation of profit for the year to net cash flows from operating activities
Net profit for the year
Depreciation and amortisation expense
Loss on sale or disposal of non-current assets, property, plant & equipment
Provision for employee leave benefits
Foreign exchange loss
(Increase)/decrease in assets:
Trade and other receivables
Inventories
Increase/(decrease) in liabilities:
Trade and other payables
Current and deferred tax
GST payable
Net cash inflow from operating activities
2020 ($)
2,470,261
3,394,935
-
84,852
34,111
Restated
2019 ($)
2,554,705
1,752,992
4,804
(153,691)
18,862
(2,686,075)
2,799,482
1,926,625
2,313,716
(1,364,146)
1,308,018
(78,713)
5,962,725
27,405
22,198
(11,650)
8,455,966
Changes in liabilities arising from financing activities
Balance as at 30 June 2018
Net cash from (used in) financing activities
Acquisition of plant and equipment by means of hire
purchase
Balance as at 30 June 2019
Net cash from (used in) financing activities
Lease liability recognised on adoption of AASB 16
Acquisition of plant and equipment by means of hire
purchase
Balance as at 30 June 2020
Bank loans ($)
9,500,000
(2,500,000)
Hire Purchase
liability ($)
3,241,372
(1,159,577)
-
131,985
7,000,000
2,213,780
Lease liability ($)
Total ($)
- 12,741,372
- (3,659,577)
-
-
131,985
9,213,780
400,000
-
(1,276,069)
-
(1,053,284) (1,929,353)
15,181,708 15,181,708
-
575,786
7,400,000
1,513,497
575,786
14,128,424 23,041,921
-
48 | veem limited
FINANCIAL STATEMENTS
NOTE 8: TRADE AND OTHER RECEIVABLES
Trade receivables (i)
GST recoverable
Other receivables
Government Covid-19 Stimulus (JobKeeper)
(i)
the average credit period on sales of goods and rendering of services is 15-60 days
Aging of past due but not impaired
60 – 90 days
90 – 120 days
Total
Expected credit losses
2020 ($)
2019 ($)
8,664,713
218,368
13,282
575,250
9,471,613
6,177,832
201,086
478,444
-
6,857,362
2020 ($)
2019 ($)
331,671
109,979
441,650
679,805
497,943
1,177,748
The Company applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade
receivables as these items do not have a significant financing component.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they
possess shared credit risk characteristics. They have been grouped based on the days past due and also according to the
geographical location of customers.
The expected loss rates are based on the payment profile for sales over the past 48 months before 30 June 2020
and 30 June 2019 respectively as well as the corresponding historical credit losses during that period. The historical rates
are adjusted to reflect current and forwarding looking macroeconomic factors affecting the customer’s ability to settle the
amount outstanding.
Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 180
days from the invoice date and failure to engage with the Company on alternative payment arrangements are considered
indicators of low reasonable expectation of recovery.
Where commercially sensible and available, VEEM Limited takes out credit insurance against its overseas receivables.
On the above basis, a provision for expected credit losses as at 30 June 2020 is not required as it is not material to
the financial statements (30 June 2019:Nil).
veem limited | 49
FINANCIAL STATEMENTS
NOTE 9: INVENTORIES
Work in progress – over time
Work in progress – point in time
Less: progress billings
Goods for resale, raw materials and stores
2020 ($)
2019 ($)
9,592,427
786,039
(11,565,195)
(1,186,729)
9,425,795
6,723,472
1,833,131
(7,417,879)
1,138,724
9,899,824
8,239,066
11,038,548
There were no inventory write-downs charged to cost of sales during the year (2019 $Nil).
During the year, the Company recognised revenue of $9,127,147 (2019: $5,365,546) 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 $5,557,322 (2019 $1,151,192). The total impact to profit or loss of write downs
to net realisable value is $314,989 (2019 $85,022).
NOTE 10: OTHER ASSETS
Prepayments
Supplies paid in advance
NOTE 11: PROPERTY, PLANT AND EQUIPMENT
2020 ($)
2019 ($)
537,261
556,638
1,093,899
442,044
562,749
1,004,793
Plant and
Equipment
Motor
Vehicles
Capital Work
in Progress
Computer
Equipment
Total
($)
($)
($)
($)
($)
35,416,129
(22,888,108)
12,528,021
595,057
(462,506)
132,551
111,637
-
111,637
1,455,678
(1,283,875)
171,803
37,578,501
(24,634,489)
12,944,012
12,528,021
1,888,664
-
131,746
(1,398,673)
13,149,758
132,551
65,663
-
-
(28,793)
169,421
111,637
128,995
(40,608)
(131,746)
-
68,278
171,803
140,681
-
-
(50,279)
262,205
12,944,012
2,224,003
(40,608)
-
(1,477,745)
13,649,662
37,436,529
(24,286,771)
13,149,758
660,720
(491,299)
169,421
68,278
-
68,278
1,596,359
(1,334,154)
262,205
39,761,886
(26,112,224)
13,649,662
As at 30 June 2019
Cost
Accumulated depreciation
Closing carrying amount
Year ended 30 June 2020
Opening carrying amount
Additions
Disposals
Transfers
Depreciation charge
Closing carrying amount
As at 30 June 2020
Cost
Accumulated Depreciation
Carrying amount
50 | veem limited
FINANCIAL STATEMENTS
NOTE 12: INTANGIBLE ASSETS
As at 30 June 2019
Cost
Accumulated amortisation
Closing carrying amount
Year ended 30 June 2020
Opening carrying amount
Net additions
Transfers to
Amortisation charge
Closing carrying amount
As at 30 June 2020
Cost
Accumulated amortisation
Carrying amount
Other Intellectual
Property
Product
Development
($)
($)
Total
($)
863,732
(179,321)
684,411
12,971,718
(925,355)
12,046,363
13,835,450
(1,104,676)
12,730,774
684,411
41,273
-
(181,832)
543,852
12,046,363
1,255,392
(332,208)
(186,719)
12,782,828
12,730,774
1,296,665
(332,208)
(368,551)
13,326,680
905,005
(361,153)
543,852
13,894,902
(1,112,074)
12,782,828
14,799,907
(1,473,227)
13,326,680
No impairment loss was recognised in the 2020 financial year (2019: $Nil).
NOTE 13: RIGHT-OF-USE ASSETS
30 June 2020
Recognised on 1 July 2019 on adoption of AASB 16
Depreciation expense
Closing carrying amount
As at 30 June 2020
Cost
Accumulated depreciation
Carrying amount
NOTE 14: TRADE AND OTHER PAYABLES (CURRENT)
Trade payables (i)
Annual leave payable
GST payable
Other creditors
Premises
$
Total
$
15,205,743
(1,548,640)
13,657,103
15,205,743
(1,548,640)
13,657,103
Premises
$
Total
$
15,486,397
15,486,397
(1,829,294)
(1,829,294)
13,657,103
13,657,103
2020 ($)
2019 ($)
3,081,871
1,379,248
255,745
683,788
5,400,652
4,862,946
1,135,046
317,175
451,878
6,767,045
(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.
veem limited | 51
FINANCIAL STATEMENTS
NOTE 15: BORROWINGS
Current
Commercial facility (a)
Hire purchase liability
Less: Unexpired charges
Non-current
Commercial facility (a)
Hire purchase liability
Less: Unexpired charges
2020 ($)
2019 ($)
900,000
1,041,420
(44,589)
1,896,831
6,500,000
553,270
(36,604)
7,016,666
600,000
1,284,880
(86,805)
1,798,075
6,400,000
1,046,117
(30,412)
7,415,705
(a) The Company has a Commercial Facility with a limit of $7,400,000. The Commercial Facility is repayable by 1 July 2023.
$50,000 of principal is payable monthly until 31 December 2020, thereafter $100,000 of principal is payable each calendar
month with the remaining facility amount owing payable on the expiry date. The loan facility is reduced by the principal
component of each repayment. Interest at the base rate plus 1.95% 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 1.89% (June 2019: 2.77%).
The facility is reviewed on an annual basis. At 30 June 2020, the Company had no (2019: $1,000,000) available undrawn
committed borrowing facilities under the Commercial Facility 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 2020, 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 2020, the
Company had available $300,000 under this facility. The Company complied with all banking covenants during the financial
year.
The bank overdraft and commercial facility are secured by a registered first mortgage over the assets and undertakings of the
Company.
52 | veem limited
FINANCIAL STATEMENTS
NOTE 15: BORROWINGS (cont’d)
Financing facilities available
At balance date, the following financing facilities had been negotiated and were available:
Total facilities
• Overdraft Facility
•
•
•
Commercial Facility
Electronic Payments Facility
Commercial Card Facility
Facilities used at balance date
• Overdraft Facility
•
•
Commercial Facility
Commercial Card Facility
Facilities unused at balance date
• Overdraft Facility
•
•
•
Commercial Facility
Electronic Payments Facility
Commercial Card Facility
Total facilities
•
•
Facilities used at balance date
Facilities unused at balance date
2020 ($)
2019 ($)
3,400,000
7,400,000
300,000
50,000
11,150,000
-
7,400,000
47,226
7,447,226
3,400,000
-
300,000
2,774
3,702,774
3,400,000
8,000,000
300,000
50,000
11,750,000
-
7,000,000
37,004
7,037,004
3,400,000
1,000,000
300,000
12,996
4,712,996
7,447,226
3,702,774
11,150,000
7,037,004
4,712,996
11,750,000
The carrying value of plant and equipment held under hire purchase contracts at 30 June 2020 is
$4,073,063 (2019: $3,856,541). Additions during the year include $575,786 (2019: $131,985) of plant
and equipment held under hire purchase contracts.
NOTE 16: LEASE LIABILITIES
30 JUNE 2020
Current liabilities
Non-current liabilities
Reconciliation
Recognised on 1 July 2019 on adoption of AASB 16
Principal repayments
Closing balance
AASB 16 has been adopted during the period, refer note 1(b) for details.
The average lease term to expiry is 9 years.
Premises
($)
1,218,474
12,909,950
14,128,424
Total
($)
1,218,474
12,909,950
14,128,424
Premises
($)
Total
($)
15,181,708
(1,053,284)
14,128,424
15,181,708
(1,053,284)
14,128,424
veem limited | 53
FINANCIAL STATEMENTS
NOTE 16: LEASE LIABILITIES (cont’d)
Underlying assets serve as security for the related lease liabilities. A maturity analysis of future minimum lease payments is
presented below:
Lease payments due
30 June 2020
Lease payments
Interest
Net present values
<1 year
($)
1,725,397
(506,923)
1,218,474
1-5 years
($)
7,226,680
(1,399,051)
5,827,629
>5 years
($)
7,533,794
(451,473)
7,082,321
Total
($)
16,485,871
(2,357,447)
14,128,424
Total cash outflow relating to leases for the period ended 30 June 2020 was $1,562,153 of which $1,053,285
related to principal payments, $508,868 related to interest.
NOTE 17: PROVISIONS
Employee benefits (i)
Balance at beginning of year
Net movements
Balance at the end of year - Current
2020 ($)
2019 ($)
1,022,878
84,852
1,107,730
1,176,569
(153,691)
1,022,878
(i)
The provision for employee benefits represents long service leave entitlements accrued.
Provision for Restoration
Balance at beginning of year
Net movements
Balance at the end of the year - Non-current
NOTE 18: ISSUED CAPITAL
130,000,000 (2019: 130,000,000) Ordinary shares
issued and fully paid
-
100,929
100,929
-
-
-
2020 ($)
2019 ($)
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.
There were no movements in ordinary shares on issue during the year (2019:Nil)
54 | veem limited
FINANCIAL STATEMENTS
NOTE 18: ISSUED CAPITAL (cont’d)
Share options
The Company has a share-based payment Incentive Option Scheme which provides that the Board of the
Company may, 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)
(ii)
(iii)
(iv)
The Eligible Participant’ s length of service with the Company;
The contribution made by the Eligible Participant to the Company;
The potential contribution of the Eligible Participant to the Company; or
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.
NOTE 19: 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
Hire purchase liability
Lease liability
2020 ($)
2019 ($)
3,618,166
9,471,613
5,400,652
7,400,000
1,513,497
14,128,424
2,874,087
6,857,362
6,767,045
7,000,000
2,213,780
-
Financial risk management objectives
The Company is exposed to market risks (including foreign currency risk, fair value risk and interest rate risk),
credit risk and liquidity risk.
veem limited | 55
FINANCIAL STATEMENTS
NOTE 19: FINANCIAL INSTRUMENTS (cont’d)
Foreign currency risk management
The Company undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. A large portion of the USD and GBP exposures are reduced by the Company’s operations
having a natural hedge with materials purchased and sold in the same currency, with the major
exposure being to the US Dollar exchange rate. The Company’s exposure is to US Dollar (USD), Euro (EUR),
and Great British Pound (GBP) debtors and creditors currency fluctuations.
USD
•
•
EUR
•
•
GBP
•
•
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
Cash ($)
Receivables ($)
Payable ($)
Total Asset
/(Liability) ($)
789,005
373,141
229,953
1,365,670
1,162,146
(58,107)
58,107
1,595,623
(79,781)
79,781
51,079
350,564
437,911
(36,268)
(1,813)
1,813
The Company’s sensitivity to foreign exchange has not changed significantly from the prior year. As all
gyrostabilizer sales are in USD, and only part of the costs provides a natural hedge, the exposure to USD
will increase in line with gyrostabilizer revenue increases.
As explained above, the Company’s activities expose it primarily to the financial risk of changes in foreign
currency exchange rates.
To negate some of this risk the Company has embarked on a global supply program for 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 and consumable products used in production and stock items.
The Company also considers forward contracts and other derivative financial instruments as a way to manage
currency risk. At 30 June 2020 there were no forward contracts in place (2019:Nil).
The Company also manages market risk generally 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 risk on financial assets and financial liabilities are detailed in the
interest rate risk sensitivity analysis section of this note.
56 | veem limited
FINANCIAL STATEMENTS
NOTE 19: FINANCIAL INSTRUMENTS (cont’d)
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 reporting period. A 50 basis point increase or decrease has been used when reporting sensitivity
to interest rate risk as this represents management’s assessment of the change in interest rates.
If interest rates had been 50 basis points higher or lower throughout the year, and all other variables were held constant, the
Company’s net profit would increase by $4,401 and decrease by $4,401 (2019: $4,401) respectively.
This is completely 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 that a 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 readily 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.
Where commercially sensible and available, VEEM Ltd takes out credit insurance against its overseas receivables.
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 15 is a listing of additional undrawn facilities
that the Company has at its disposal as part of its management of liquidity risk.
veem limited | 57
FINANCIAL STATEMENTS
NOTE 19: 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.
30 June 2020
Non-interest bearing – Trade and other payables
Fixed interest rate – Hire purchase liabilities
Fixed interest rate – Lease liabilities
Variable interest rate – Bill facility and bank overdraft
30 June 2019
Non-interest bearing - Trade and other payables
Fixed interest rate – Hire purchase liabilities
Variable interest rate – Bill facility and bank overdraft
Fair value measurement
1 year or less
1–5 years
5+ years
$
-
-
7,082,321
-
7,082,321
%
4.4
3.45
1.89
%
4.4
2.77
$
5,400,652
1,041,420
1,218,474
900,000
8,560,546
1 year or less
$
6,767,045
1,284,880
600,000
8,651,925
$
-
553,270
5,827,659
6,500,000
12,880,929
1–5 years
$
-
1,046,117
6,400,000
7,446,117
The Directors consider that the carrying value of the financial assets and liabilities as recognised in the financial statements
approximate their fair values.
NOTE 20: COMMITMENT AND CONTINGENCIES
Hire purchase commitments
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.
Future minimum payments under hire purchase contracts together with the present value of the net minimum
contract payments are as follows:
Hire purchase commitments payable
- within one year
- after one year but not more than five years
Minimum hire purchase payments
Less: Unexpired charges
Present value of net minimum lease payments
Represented by:
Current
Non-current
Capital commitments
At 30 June 2020 the Company had $128,034 of capital commitments (2019: $Nil).
2020 ($)
2019 ($)
1,041,420
553,270
1,594,690
(81,193)
1,513,497
996,831
516,666
1,513,497
1,284,880
1,046,117
2,330,997
(117,217)
2,213,780
1,198,075
1,015,705
2,213,780
58 | veem limited
FINANCIAL STATEMENTS
NOTE 21: RELATED PARTY DISCLOSURE
The Company’s related parties include key management personnel and their related entities as described below.
The aggregate compensation for Directors and other key management personnel of the Company are set out below:
Short-term employee benefits
Other long-term benefits
Key management personnel transactions
2020 ($)
2019 ($)
894,631
71,223
965,854
684,448
47,055
731,503
The Company has two lease agreements with Voyka Pty Ltd, an entity controlled by an entity related to Mr Mark Miocevich
and Mr Brad Miocevich. The Company pays Voyka Pty Ltd current monthly rent of $142,472 monthly excluding GST which is
exclusive of any outgoings including rates, taxes, insurance premiums and maintenance
costs. The leases end in 2029 and are on commercial terms.
There was one related party of Mr Mark Miocevich and one of Mr Brad Miocevich employed in the business
during the year, both on normal commercial terms. Lumos Marketing, which is owned by a related party of
Mr Mark Miocevich, provided $47,408 of marketing services to the Company on normal commercial terms.
NOTE 22: AUDITOR’S REMUNERATION
The auditor of VEEM Limited is HLB Mann Judd.
Audit or review of the financial statements
Tax compliance services
NOTE 23: SUBSEQUENT EVENTS
2020 ($)
2019 ($)
65,975
30,200
96,175
79,040
23,950
102,990
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 apart from those listed below:
1. On 31 August 2020 the Company declared an unfranked ordinary dividend of $291,883 representing
$0.00225 per share.
2. The strong growth in the gyrostabilizer business has continued with new orders of $4.1 million being
received in the first six weeks of the 2021 financial year. This compares favourably to the total gyrostabilizer
sales for FY2020 of $4.8 million.
veem limited | 59
FINANCIAL STATEMENTS
NOTE 24: RESTATEMENT OF COMPARATIVE FIGURES
During the year the Company identified an error in prior years’ tax returns and tax effect accounting relating
to capitalised research and development which is expected to result in a refund of tax and additional carried
forward tax offsets. The adjustments have had a cumulative impact on the Company’s financial position and
reported results for prior years as set out below:
Statement of profit or loss and other comprehensive income*
Income tax benefit/(expense)
Total comprehensive income for the year
Basic earnings per share (cents per share)
Statement of financial position
Current tax assets
Deferred tax assets
Total assets
Deferred tax liabilities
Total liabilities
Net assets
Retained earnings
Total equity
Consolidated 2019 ($)
As Previously
Reported
Adjustments
As Restated
88,926
2,230,796
1.72
323,909
323,909
0.25
412,835
2,554,705
1.97
538,515
1,574,170
1,162,576
289,139
1,701,091
1,863,309
49,562,261
1,451,715
51,013,976
1,384,555
1,714,007
3,098,562
18,388,258
31,174,003
26,033,387
31,174,003
1,714,007
(262,292)
(262,292)
(262,292)
20,102,265
30,911,711
25,771,095
30,911,711
*Adjustments to the statement of profit or loss and other comprehensive income relate to 2019 only.
Consolidated 2018 ($)
As Previously
Reported
Adjustments
As Restated
(151,353)
2,756,918
2.12
(586,201)
(586,201)
(0.45)
(737,554)
2,170,717
1.67
1,016,048
1,036,683
1,162,576
356,559
2,178,624
1,393,242
51,712,005
1,519,135
53,231,140
978,494
2,105,336
3,083,830
22,235,798
2,105,336
24,341,134
29,476,207
24,335,591
29,476,207
(586,201)
(586,201)
(586,201)
28,890,006
23,749,390
28,890,006
Statement of profit or loss and other comprehensive income
Income tax benefit/(expense)
Total comprehensive income for the year
Basic earnings per share (cents per share)
Statement of financial position
Current tax assets
Deferred tax assets
Total assets
Deferred tax liabilities
Total liabilities
Net assets
Retained earnings
Total equity
60 | veem limited
FINANCIAL STATEMENTS
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 2020 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.
c.
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
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 2020.
This declaration is signed in accordance with a resolution of the Board of Directors.
Mark David Miocevich
Managing Director
Dated this 31 August 2020
veem limited | 61
FINANCIAL STATEMENTS
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 2020, 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 2020 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.
We have determined the matters described below to be the key audit matters to be communicated
in our report.
62 | veem limited
Page 49
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.
The development expenditure of $12.783
million is considered to be a key audit matter,
given the size of the balance, the gyroscopic
stabilizer market being relatively new and
immature, as well as the specific criteria that
have to be met for capitalisation.
In addition, determining whether there is any
of
indication
requires
management
judgment and assumptions
which are affected by future market or
economic developments.
impairment
Our procedures included but were not limited to
the following:
- We assessed the recognition criteria for this
intangible asset by challenging
the key
assumptions used and estimates made in
including
capitalising development costs,
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 business
rationale for projects and performing reviews
for indicators of impairment;
- We assessed the adequacy of the Company’s
disclosures in the financial report; and
- We ensured management applied an
appropriate
and
amortisation period to this finite life intangible.
amortisation method
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 with
obligations
recognised over time.
performance
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 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
to complex and
contract
judgemental revenue recognition and the
direct impact on profit.
leading
life,
- We assessed 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
the
contract
allocation of the transaction price, and when
to recognise revenue, either at a point in time,
or over time;
that may arise,
liabilities
recognition, we
- For a sample of contracts designated for over
time
the
methodology and accuracy of recognising
profit at the stage of completion at balance
date;
assessed
- We substantiated revenue transactions on a
sample basis by agreeing the transaction to
the customer’s contract, purchase order,
invoice, delivery docket, customer
sales
certification report, and bank receipt, where
relevant;
- We tested the appropriateness of progress
claims on a sample basis; and
- We assessed the adequacy of the Company’s
disclosures in the financial report.
Page 50
veem limited | 63
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 2020, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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
-
64 | veem limited
Page 51
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 2020.
In our opinion, the Remuneration Report of VEEM Ltd for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
31 August 2020
N G Neill
Partner
Page 52
veem limited | 65
ADDITIONAL SHAREHOLDER INFORMATION
Additional information required by the Australian Securities Exchange Ltd Listing Rules and not disclosed elsewhere in this
report. This information is current as at 14 September 2020.
Twenty largest shareholders
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
13
13
16
17
18
19
19
VEEM CORPORATION PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
BOND STREET CUSTODIANS LIMITED
UBS NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
BOND STREET CUSTODIANS LIMITED
ANACACIA PTY LTD
BOND STREET CUSTODIANS LIMITED
BNP PARIBAS NOMINEES PTY LTD
BOND STREET CUSTODIANS LIMITED
BOND STREET CUSTODIANS LIMITED
BOND STREET CUSTODIANS LIMITED
MRS SABRINA CHANG
ACRES HOLDINGS PTY LTD
REDBROOK NOMINEES PTY LTD
BLACK MAGIC ENTERPRISES PTY LTD
MR GRAEME JOHN MEDHURST
Totals: Top 20 holders of ordinary fully paid shares
Total Remaining Holders Balance
Total Shares on Issue
Units
80,000,000
10,389,675
9,576,461
4,076,994
3,879,766
3,417,473
2,135,607
1,853,907
1,041,670
600,000
520,850
422,849
312,510
312,510
312,510
300,000
285,000
275,000
250,000
250,000
120,212,782
9,787,218
130,000,000
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
57
120
66
162
35
440
Units
34,951
339,704
570,565
6,416,459
122,638,321
130,000,000
% Units
61.54
7.99
7.37
3.14
2.98
2.63
1.64
1.43
0.80
0.46
0.40
0.33
0.24
0.24
0.24
0.23
0.22
0.21
0.19
0.19
92.47
7.53
% Units
0.03
0.26
0.44
4.94
94.34
-0.01
100.00
66 | veem limited
shareholders
SHAReHOldeRS
MARKETABLE PARCELS
Number of shareholders holding less than a marketable parcel of ordinary shares is 61.
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
Perennial Value Management Limited
61.54% of the issued ordinary shares
14.93% 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 2020 Corporate Governance Statement is available on the Company’s website at www.veem.com.au.
veem limited | 67
22 Baile Rd,
Canning Vale WA 6155
Telephone: +61 8 9455 9355
Email:
Website:
veem@veem.com.au
www.veem.com.au
/veem_ltd
@ veemltd
68 | veem limited
DIRECTORS’ REPORT