ANNUAL REPORT
2023
VEEM LTD
ACN 008 944 009
CORPORATE INFORMATION
ABN 51 008 944 009
Directors
Brad Miocevich Non-Executive Chairman
Mark Miocevich Managing Director
Ian Barsden
Peter Torre
Michael Bailey
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Company Secretary
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 17, 221 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 (WA Partnership)
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)
Contents
Chairman’s Letter
Directors’ Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholders Information
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VEEM LIMITED 1
CHAIRMAN’S LETTER
CHAIRMAN’S LETTER
VEEM Gyro brand is critical to the adoption of the product across
the large vessel markets.
The commercial boat market and offshore workboats in particular,
are now understanding of the financial benefits of operating with a
gyro, as well as the more obvious comfort and safety factors. This
is driving increased inquiries from this sector and can be seen by
the exclusive agreement we signed recently with Strategic Marine
for supplying our mid-size gyros for their high-tech crew transfer
vessels in Asia.
Dear Shareholders,
It is my great pleasure to present to you VEEM Limited’s 2023
Annual Report. This year VEEM produced a net profit after tax of
$4.1 million on revenue of $59.6 million.
Last year I reported to you that the Company had faced a number
of challenges which the Board firmly believed had been met, learnt
from and permanent changes embedded into our systems and
procedures for the future. It is therefore pleasing to see the FY23
result reflecting these improvements.
I also reported to you last year that we had three new machining
centers arriving and hence expected FY23 to be a very strong
year for propulsion. The machines and associated equipment and
tooling were operational from April and contributed to propeller
revenue being up 23% on FY22. In fact, May and June were record
months for propeller sales and this strength has continued through
July and August 2023.
While we have been making the world’s best high-performance
propellers for years now, we continue to see new ways to grow
the business and improve margins through innovation and
opportunity and I look forward to reporting further growth in this
business next year.
During the year our gyrostabiliser (‘gyro’) team worked with our
customers to get installations and commissioning of the VEEM
gyros completed, thereby ensuring customer satisfaction which will
fuel the product’s reputation. We are acutely aware that building the
2 VEEM LIMITED
Defence continues to be a key area for VEEM with the recurring
Collins Class submarine work and ongoing work with Austal
Ships and others. We are currently applying our highly
specialised foundry and machining skills to the Hunter Class
frigate demonstrator propeller project and see this and the
resulting reputation and accreditations as a driver of further
opportunities locally and globally.
Once again, our core engineering products and services work
was not only a solid contributor to revenue and profit, but also
provides in-house innovation, capability and support for the
marine and defence businesses.
I am very pleased to report that during the year we invested
$9.6 million in capital and development expenditure. The Board
sees this, and the annual investments in continuous improvement
and research and development, as critical to the future
sustainable profitability of VEEM.
With the FY23 results and investments, the Board is excited by
the opportunities to grow the marine products business globally
while continuing to generate reliable profits and cash flow from
the core engineering business.
Finally, I would like to thank all staff and directors for their efforts
in delivering the improved profitability in 2023 and look forward
to the coming years.
Brad Miocevich
Non-Executive Chairman
8 September 2023
CHAIRMAN’S LETTER
VEEM LIMITED 3
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Directors present their report together with the financial
statements of the Company and its controlled entities (‘the Group”)
for the financial year ended 30 June 2023. In order to comply with
the provisions of the Corporations Act 2001, the Directors report
as follows:
DIRECTORS
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.
Mr John Bradley Miocevich B.Comm, FAICD
NON-EXECUTIVE CHAIRMAN
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 past 25 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.
Mr Mark David Miocevich B.App.Sc (Mech Eng) FIE Aust
MANAGING DIRECTOR
Mark has been a director and senior manager of VEEM for over
40 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 Foundry and 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.
4 VEEM LIMITED
Mr Ian Henry Barsden CA
NON-EXECUTIVE DIRECTOR
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 33 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.
Mr Peter Patrick Torre B.Bus (Accounting), CA, AGIA
Independent
NON-EXECUTIVE DIRECTOR
Peter was appointed as a Director of the Company on 12 April
2018. Peter served as Company Secretary of the Company
from September 2016 to November 2019. 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 other public companies listed on the ASX,
and Australian subsidiaries of overseas listed entities. In addition
to his role as Company Secretary, Peter is also Chief Risk Officer
of APM Human Services International Limited.
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 13 September 2021), Volt Power Group Limited
(28 April 2017 to present), Zenith Energy Limited (7 March 2019
to 28 August 2020) and Connexion Telematics Ltd (2 October
2020 to 17 November 2021).
DIRECTORS’ REPORT
Mr Michael Robert Bailey MSc; CEng; MRINA Independent
NON-EXECUTIVE DIRECTOR
Mike brings 50 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. From 2000
to 2022 Mike was 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 previously served as a director of AMC Management (WA)
Pty Ltd, Facility Manager of the Australian Marine Complex -
Common User Facility.
COMPANY SECRETARY
Mr David James Rich BCom, FCA, GAICD, AGIA, Grad.Dip.CSP
CHIEF FINANCIAL OFFICER AND COMPANY SECRETARY
David is an experienced public company CFO and Company
Secretary with over 35 years commercial experience including the
last 25 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.
VEEM LIMITED 5
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
68,135,5931
68,135,5931
53,571
72,711
115,423
(i) Mr Brad Miocevich and Mr Mark Miocevich have a relevant interest in VEEM Corporation Pty Ltd ATF the Miocevich Family Trust which holds 68,135,593 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 Group during the course of the year
were:
•
Production, marketing and sales of propulsion and
stabilisation systems; and
• Manufacturing bespoke engineered products and services
for the marine, defence and mining industries.
6 VEEM LIMITED
REVIEW OF FINANCIAL AND
OPERATING PERFORMANCE
FINANCIAL PERFORMANCE
The Group reported Net Profit After Tax (NPAT) for FY23 of
$4.1 million (2022: $1.3 million) from revenue of $59.6 million
(2022: $54.2 million). Earnings before interest, tax, depreciation
and amortisation (EBITDA) was $9.95 million (2021: $6.1 million).
Cash flow from operations was $6.1 million (2022: $2.5 million).
The revenue increase during the period was driven by large
increases in propeller sales and a large increase in defence
revenue. Propeller sales increased 23% due to increased capacity
available to meet the strong order book. Defence revenue
was significantly higher due to the delivery of the majority of
components for a Collins Class submarine full-cycle docking.
In addition to revenue of $59.6 million, work in progress increased
by $3.9 million showing an overall activity level for the Group of
$63.5 million for FY23.
Net assets increased by $3.2 million to $46.8 million. The Group
held cash on hand of $2.4 million at 30 June 2023 (30 June 2022:
$2.6 million); has an undrawn overdraft facility of $3.4 million and
an undrawn trade loan facility of $0.3 million.
DIRECTORS’ REPORT
FY23 saw a total of $9.6million of investment in plant and
equipment and intangible assets (engineering development)
including:
•
•
•
•
three new propeller machining centres, associated
equipment and tooling
Large 3D printer
Large laser scanner
Product Development including gyro engineering related
to product improvement and a small gyro design
This new equipment started to contribute to improved financial
performance in the last few months of FY23.
Some new equipment related to improving propeller
manufacturing efficiency has been ordered for delivery in 1HFY24.
VEEM spent $2.8 million on formal research and development
projects during FY23 with $1.5 million of this being capitalised.
VEEM will continue to commit to research and development
projects as it sees necessary to remain at the forefront of the
markets in which its products are sold.
VEEM LIMITED 7
DIRECTORS’ REPORT
OPERATIONS
GYROSTABILISERS
In FY23 VEEM sold 7 gyrostabilisers (“gyros”) generating revenue
of $5.0 million. A delay in delivery of one gyro from June to July
2023 worth $0.7 million, meant that sales were slightly lower than
FY22 ($5.5m). The number of gyros sold in FY23 was lower than
FY22 indicating the higher value per gyro sold in FY23. Sales in
the second half of FY23 were double that of the first half.
Orders on hand are currently $11 million including the Strategic
Marine orders per below.
In June VEEM executed an exclusivity agreement with Strategic
Marine for fast crew boats in SE Asia. Under the agreement,
Strategic have committed to purchase a minimum of 12 gyros
over the next three years. This agreement underscores the value
of a gyro in a workboat environment in terms of safety, efficiency,
productivity, operability and financially.
The COVID-induced restrictions and slowdowns that inhibited the
marketing, selling, servicing and ultimately the adoption rates of
this new technology now seem to be largely behind us and FY23
was focussed on marketing and brand-building through three key
areas:
•
•
The first half of FY23 saw VEEM exhibiting at the first
full-scale METSTRADE Show (Marine Equipment Trade
Show) in Amsterdam since 2019. METSTRADE is the
world’s largest exhibition dedicated to showcasing marine
equipment;
During the second half of FY23 VEEM focussed its
marketing spend for its marine products on digital and
social media. As an example see Nautistyles on Instagram
and youtube.
• With freedom to travel, VEEM stepped up customer service
levels through its service technicians visiting customers to
ensure that the gyros were commissioned efficiently and
the customers were satisfied, particularly those who had
been delayed during COVID.
8 VEEM LIMITED
The record number of orders on hand, high rates of qualified
leads, evidence of take-up in the small boat recreational
market (smaller than VEEM’s products) and continual product
development provide confidence that wide adoption of the
technology is occurring and VEEM is the only manufacturer in the
large gyro market with the products to capitalise on this. FY23 saw
a growing level of interest in the large gyrostabilisers across all
markets as well as more informed inquiries from the commercial
workboat sector who are realising the operational and financial
benefits of having a gyrostabiliser on board.
After over a decade of research, development and
commercialisation, VEEM holds the dominant position as the only
major supplier in the large marine gyrostabiliser market, which is
estimated at US$1.1bn for new builds and US$13.5bn for retrofits
(Refer to the ASX release of 12 May 2021 for details). VEEM
continued to invest in the development of its gyro product during
FY23.
Significant capital investment and intellectual expertise
requirements now provide major barriers to entry for competitors
wanting to get into this large market. VEEM is exploiting this by
driving sales growth and taking its robust technology into smaller
frames to compete against smaller marine gyrostabilisers that
have been developed more as recreational products.
PROPULSION
Demand for VEEM’s world-leading fixed pitch propellers continued
to be very strong during the year. VEEM’s propulsion revenue
overall for the year was $24.2 million, an increase of 17% over
FY22, with VEEM’s propellers alone (excluding conquest and shaft
lines) generating $22.2 million – up 23% on FY22.
Installation and commissioning of three new propeller machining
centres and associated equipment and tooling was completed
in April 2023 with May and June recording record months for
propeller sales due to the increased production levels. These
three new machines followed the addition of two new machines
in FY22 with overall capacity increasing by over 80% since
December 2021.
In addition to the machining centres and associated equipment,
VEEM has also invested in a large 3D printer, large laser scanner
and process improvement to bring further efficiencies to the
propeller manufacturing process. Further equipment is on order
for 1HFY24.
VEEM continues to develop its processes and pursue new
initiatives and opportunities in relation to the propeller business
where it can leverage its reputation and client base as the
premium product in the market for high-speed, high-performance
propellers. Part of VEEM’s research and development focus is to
continually increase the automation of the propeller process which
not only reduces time and cost but also, notably in the current
environment, reduces the requirement for highly skilled labour as
capacity expands.
FY23 saw a more stable cost environment than FY21 and FY22
with some increases in raw materials and labour that were able to
be passed through to customers by way of quarterly price reviews.
DEFENCE
ENGINEERING PRODUCTS AND SERVICES
DIRECTORS’ REPORT
The majority of VEEM’s traditional engineering business is in the
manufacture of foundry-led, precision engineered products. This
comprises both the manufacture of customer’s designs and the
sale and manufacture of VEEM’s own hollow bar product (includes
forever pipe). Demand generally for foundry-led, precision
engineered products was strong throughout FY23 and remains so.
Revenue from VEEM’s hollow bar product for FY23 was
$6.2 million which is an 11% increase over FY22 due to strong
demand and increased capacity. During the second half of FY23
delivery commenced for Latrobe Magnesium’s Latrobe Valley
Stage 1 Demonstration Plant which will continue over the next
three years.
The balance of revenue from engineering products and services
was $7.3 million, down 13% from FY22 due primarily to lack of
labour hours available to complete orders. May and June saw
increased hours worked through a number of initiatives to improve
recruitment and retention of staff and this is expected to continue
through FY24.
VEEM continues to be a reliable, local source of highly
sophisticated critical components for the Collins Class
submarines. Revenue from the submarine program was
$12.3 million for FY23 which is up 72% on FY22 due to the
delivery of the majority components for a full-cycle docking
program in FY23.
Overall defence revenue was $17.0 million, up 19% on FY22.
Orders have been received for the next FCD which will mean
production of these will occur through FY24.
VEEM is currently working on the Hunter Class Frigate Program
(HCFP) demonstrator program for BAE Systems Australia. The
value of the demonstrator contract is $1.7 million, with successful
completion of the task by Q2 2024 ensuring VEEM qualifies as a
supplier to the HCFP. VEEM is one of only two suppliers globally to
be able to produce this level of precision.
Success with this project and subsequent high-level defence
supplier qualification is expected to lead to further Australian
defence work as well as the potential to export equipment for other
naval shipbuilding programs around the world, including other
Type 26 frigate programs.
VEEM also continues to be awarded contracts for numerous other
defence projects including army vehicles and naval projects such
as patrol boats (eg. Austal’s Evolved Cape Class Patrol Boats).
VEEM continues to monitor developments with AUKUS and
other defence initiatives to ensure it is in the best position to win
its share of the local precision manufacturing work programs.
BAE systems is the prime contractor for the new British AUKUS
submarines which are to be used as the template for the new
Australian subs.
VEEM LIMITED 9
DIRECTORS’ REPORT
OUTLOOK
The Board is pleased to report that the FY23 financial result was
a clear step up from FY22 in terms of revenue and profit, even
though there were still challenges around labour capacity.
VEEM invested significantly in capital equipment and research
and development during the year as well as implementing a
number of labour initiatives. These factors saw material increases
in propeller production and revenue specifically and in productive
hours more broadly in May and June 2023. These increases have
continued into FY24.
Several new managers were also put in place during FY23 and the
Board is confident that VEEM is set for another step up in results
in FY24.
Defence revenue is expected to remain strong through FY24 with
deliveries commencing under the next Collins Class submarine
full cycle docking program. Other defence work for a number of
different prime contractors, including Austal, is also expected to
continue with the building of patrol boats and other platforms.
VEEM will continue to deliver on the Hunter demonstrator
program and will pursue other options to leverage the high-level
qualifications achieved with BAE/Kongsberg/Navy to supply other
defence programs including overseas T26 programs.
VEEM is also active and well positioned to take advantage of
further defence work opportunities that may arise out of AUKUS
and other defence programs with BAE being the prime contractor
for the British AUKUS submarine - the base model for Australia’s
new submarines.
The outlook for VEEM’s large marine gyrostabiliser product
remains positive with VEEM holding the dominant position as
the only major supplier in the large marine gyrostabiliser market
estimated at US$1.1bn for new builds and US$13.5bn for retrofits
(current fleet).
Demand for the traditional foundry-led engineering products
and services is expected to continue. This includes growth in
VEEM’s hollow bar product including deliveries to the Latrobe
Magnesium’s Latrobe Valley Stage 1 Demonstration Plant
throughout FY24.
The agreement with Strategic Marine noted above highlights the
commercial market for gyrostabilisers is becoming better educated
at the operational, HSE and commercial benefits of gyros for crew
transfers. Continued investments into marketing, smaller models
and further development of the current large gyro range will lead to
significant revenue growth and profits in coming years.
VEEM’s propellers continue to be the premium product in the
fixed pitch propeller market globally. Orders on hand, customer
feedback and industry reports all lead VEEM to expect the global
demand for VEEM’s propellers to remain strong.
The increase in production late in FY23 has continued to date
and is expected to continue. Margins are protected against
cost increases by regular pricing reviews and there is some
new equipment on order which is expected to further increase
efficiencies and margins.
VEEM is currently assessing the potential for further expansion of
VEEM’s propulsion business in several areas.
VEEM will continue to focus heavily on recruitment, maintenance
and growth of labour resources through a number of initiatives in
order to ensure it has the capacity to deliver growth. In terms of
cost increases, VEEM has in place systems to ensure that cost
increases and other factors such as exchange rates are identified
as early as possible and incorporated into pricing in order to
protect margins for all products.
During the year VEEM continued to contribute its knowledge of
induction heating technology in a project with a local Perth liver
surgeon to progress construction of a small prototype for the
treatment of liver cancer. VEEM expects to conduct further trials in
the coming months. Success would be a significant step toward
a treatment for a disease that claims an estimated million lives a
year globally. Although outside its core business, VEEM is proud
to be able to use its knowledge and experience to help humanity
overcome this disease.
10 VEEM LIMITED
DIRECTORS’ REPORT
STRATEGY
VEEM’s strategy and focus is to become the global market leader
in the provision of gyrostabilisation to superyachts and large
commercial craft while growing its position as a premier supplier
of world leading fixed pitch propeller technology.
VEEM will also continue to manufacture bespoke specialised
engineered products and services for the marine, defence,
resources and other industries.
LIKELY DEVELOPMENTS AND
EXPECTED RESULTS
The Group will continue with its strategy as set out above.
ENVIRONMENTAL LEGISLATION
The Group is not subject to any significant environmental
legislation.
KEY RISKS
DIVIDENDS
VEEM’s ongoing business performance is subject to a number of
risks. The key risks identified are:
Changes in the market demand for VEEM’s products or services.
This includes the impact of changing global economic conditions
in markets such as the recreational marine market which is a
major consumer of VEEM’s propellers. VEEM monitors its markets
for indicators of any change and devises plans to respond.
VEEM proactively works to keep its products at the forefront of its
markets both technically and price-wise.
Rising input costs such as raw materials and labour impacting
margins. VEEM has in place systems to ensure that cost increases
and other factors such as exchange rates are identified as early as
possible and incorporated into pricing in order to protect margins
for all products.
Availability of labour in Western Australia impacting capacity.
VEEM has in place a number of initiatives to manage this risk.
The rate of adoption of the Company’s large marine gyrostabiliser
technology impacting revenue and profit growth. VEEM is working
to maximise the adoption of its gyrostabiliser technology through
marketing, pricing and after-sales attention.
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 Group to the date
of this report.
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 Group, the results of those operations,
or state of affairs of the Group in future financial years apart from
those listed below:
On 23 August 2023 the Company declared an unfranked ordinary
dividend of $692,169 representing $0.0051 per share.
Dividends paid to members during the financial year were as
follows:
•
•
A final ordinary dividend of $285,000 was paid on
21 September 2022 in relation to the 2022 financial year.
An interim ordinary dividend of $542,878 was paid on
19 April 2023.
Since the end of the financial year the Directors have
recommended the payment of a final unfranked ordinary dividend
of $692,169 ($0.0051 per share) to be paid on or around 20
September 2023. The recommendation is based on 30% of the net
profit after tax less the interim dividend of $542,878 already paid.
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 2023. 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.
VEEM LIMITED 11
DIRECTORS’ REPORT
KEY MANAGEMENT PERSONNEL
REMUNERATION PHILOSOPHY
The Key Management Personnel set out below were the only key
management personnel of the Group during or since the end of
the financial year.
The performance of the Group depends upon the quality of
the Directors and executives. The philosophy of the Group in
determining remuneration levels is to set competitive remuneration
packages to attract and retain high calibre employees.
Directors
REMUNERATION COMMITTEE
John Bradley Miocevich Chairman (Non-Executive)
Mark David Miocevich
Managing Director
Ian Henry Barsden
Non-Executive Director
Peter Patrick Torre
Independent Non-Executive Director
Michael Robert Bailey
Independent Non-Executive Director
Executives
David James Rich
The Group 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.
Chief Financial Officer and Company
Secretary
REMUNERATION STRUCTURE
Brett Wayne Silich
Global Commercial Manager
(Ceased 13 January 2023)
Trevor Raman
Operations Manager
(Appointed 10 April 2023)
David James Wood
Global Commercial Manager
(Appointed 27 March 2023)
The named persons held their current positions for the whole of the
financial year and to the date of this report unless otherwise stated.
In accordance with best practice corporate governance, the
structure of non-executive Director and executive remuneration is
separate and distinct.
USE OF REMUNERATION CONSULTANTS
Independent external advice is sought from remuneration
consultants as required. A Benchmarking Report has previously
been secured to ensure the level of remuneration for the Group’s
Managing Director was in line with market and commensurate with
the role being undertaken. Changes to the Managing Director’s
remuneration resulting from the review were made in July 2021.
Using the abovementioned Benchmarking Report as a guide, in
September 2021 the Board increased the remuneration of the
Non- Executive Directors by 8%. The Non-Executive Directors had
not had an increase in remuneration since the IPO in 2016 and the
8% represents the CPI increase from the IPO to 30 June 2021.
12 VEEM LIMITED
DIRECTORS’ REPORT
PERFORMANCE RIGHTS AND OPTIONS PLAN
The Company issued 150,000 Performance Rights under its
performance rights and option plan to its Chief Financial Officer,
Mr David Rich in July 2021. At 30 June 2023 these were the only
performance rights on issue and there were no other performance
rights granted or cancelled during the year. The issue was
undertaken under the Company’s placement capacity pursuant
to ASX Listing Rule 7.1 given the Plan is yet to be approved by
shareholders of the Company. The key terms of the Performance
Rights issued are as follows:
•
•
•
•
•
50,000 Performance Rights which vest on 12 months from
date of issue and upon the 30-day Volume Weighted Share
Price of the Company being $1.50 or above at any time up
to expiry.
50,000 Performance Rights which vest on 24 months from
date of issue and upon the 30-day Volume Weighted Share
Price of the Company being $2.00 or above at any time up
to expiry.
50,000 Performance Rights which vest on 36 months from
date of issue and upon the 30-day Volume Weighted Share
Price of the Company being $2.50 or above at any time up
to expiry.
All Performance Rights have an accelerated vesting
condition on a change of control event at any time up
to expiry.
All Performance Rights expire 3 years and 1 month from
date of issue, being 14 August 2024.
NON-EXECUTIVE DIRECTOR
REMUNERATION
The Board seeks to set aggregate remuneration at a level that
provides the Group 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 $400,000.
The amount of aggregate remuneration sought to be approved by
shareholders and the manner in which it is apportioned amongst
Directors is reviewed annually leading up to the Company’s
Annual General Meeting. The Board considers advice from
external shareholders as well as the fees paid to non-executive
Directors of comparable companies when undertaking the annual
review process.
Each Director receives a fee for being a Director of the Company.
Given there are no committees currently in place, no additional
fees are paid.
SENIOR MANAGER AND EXECUTIVE
DIRECTOR REMUNERATION
Remuneration consisted of reasonable fixed remuneration and a
performance rights and option plan during the year.
FIXED REMUNERATION
Fixed remuneration is reviewed annually by the Board. The
process consists of a review of relevant comparative remuneration
in the market and internally and, where appropriate, external
advice on policies and practices. The Board has access to
external, independent advice where necessary.
Senior managers are given the opportunity to receive their fixed
(primary) remuneration in a variety of forms including cash and
fringe benefits such as motor vehicles and expense payment
plans. It is intended that the manner of payment chosen will be
optimal for the recipient without creating undue cost for the Group.
The fixed remuneration component is detailed in Key Management
Personnel remuneration tables for the years ended 30 June 2023
and 30 June 2022.
VEEM LIMITED 13
DIRECTORS’ REPORT
2022 ANNUAL GENERAL MEETING
The Remuneration Report for the year ended 30 June 2022 was approved by in excess of 99% of shareholder votes cast.
PERFORMANCE ON SHAREHOLDER WEALTH
In considering the Group’s performance and benefits for shareholder wealth, the Board have regarded the following indices in respect of
the current and previous four financial years:
EPS (cents per share)
Dividends (cents per share)
Net profit ($k)
Share price ($)
2023
3.03
0.91
4,112
0.40
2022
0.93
0.43
1,266
0.38
2021
3.78
0.66
4,911
1.33
2020
1.90
0.57
2,470
0.40
2019
1.97
0.41
2,555
0.53
EMPLOYMENT CONTRACTS
Details of employment contracts with executive KMP as at the date of this report:
NAME
TERM OF AGREEMENT AND TERMINATION PROVISIONS
BASE SALARY
M. Miocevich
Managing Director
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: $522,708 per annum
plus minimum statutory
superannuation
D. Rich
Chief Financial
Officer
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: $358,135 per annum
plus minimum statutory
superannuation
TERMINATION
BENEFIT
3 Months salary
3 Months salary.
12 months salary
in the event of a
change of control
and diminution in
duties.
T. Raman
Operations
Manager
This agreement has no set term.
Termination of the agreement is 1 months’ notice by the
Executive or the Company and includes a 12 month restraint
of trade.
Base: $302,500 per annum
plus minimum statutory
superannuation
None
D. Wood
Global Commercial
Manager
This agreement has no set term.
Termination of the agreement is 1 months’ notice by the
Executive or the Company and includes a 12 month restraint
of trade.
Base: $260,000 per annum
plus minimum statutory super-
annuation
None
Executive remuneration consisted of fixed and variable remuneration during the year to 30 June 2023. The Group continues to assess the
structure of executive remuneration to ensure it appropriately incentivises key management.
14 VEEM LIMITED
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Key Management Personnel remuneration for the years ended 30 June 2023 and 30 June 2022:
Short-term employee benefits
Post-
employment
benefits
Long-
term
benefits
Share
based
payments
Relative proportions of
remuneration of KMP that
are linked to performance
DIRECTORS’ REPORT
Salary & fees Bonus
Non-
monetary
benefits
Other Superannuation
30 June 2023
$
$
$
$
$
Fixed
remunera-
tion
Remuneration
linked to
performance
%
%
Total
$
Directors
Bradley
Miocevich
123,529
Mark Miocevich
512,271
Ian Barsden
Peter Torre
Michael Bailey
Total Director
remuneration
Executive
David Rich
Brett Silich*
Trevor Raman**
David Wood***
Total Executive
remuneration
61,991
68,500
61,991
828,282
350,138
207,038
66,432
65,000
688,608
Total
1,516,890
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long
service
leave
$
-
$
-
12,970
136,499
100%
25,292
11,294
-
548,857
6,509
-
6,509
-
-
-
51,280
11,294
-
-
-
-
68,500
68,500
68,500
890,856
25,292
14,657
5,862
6,323
6,832
44,100
426,362
-
5,175
1,083
-
-
-
221,695
77,469
72,406
52,134
13,090
44,100
797,932
103,414
24,384
44,100 1,688,788
100%
100%
100%
100%
90%
100%
100%
100%
-
-
-
-
-
10%
-
-
-
Short-term employee benefits
Post-
employment
benefits
Long
term
benefits
Share
based
pay-
ments
Relative proportions of
remuneration of KMP that
are linked to performance
Salary & fees Bonus
Non-
monetary
benefits
Other Superannuation
Long
service
leave
Share
options
$
$
$
$
$
30 June 2022
Directors
Bradley
Miocevich
Mark Miocevich
Ian Barsden
Peter Torre
Michael Bailey
Total Director
remuneration
Executive
David Rich
Brett Silich
Total Executive
remuneration
118,182
492,532
59,090
65,000
59,090
793,894
334,656
305,556
640,212
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
16,553
-
-
-
11,818
23,568
5,909
-
5,909
47,204
16,553
Fixed remu-
neration
Remuneration
linked to
performance
%
%
Total
$
130,000
100%
100%
100%
100%
100%
532,653
64,999
65,000
64,999
857,651
-
-
-
-
-
$
-
-
-
-
-
-
23,568
23,568
5,640
2,735
24,722
-
388,586
331,859
94%
100%
6%
-
47,136
8,375
24,722
720,445
Total
1,434,106
-
-
-
94,340
24,928
24.722
1,578,096
Mr B Silich ceased being an employee on 13 January 2023.
*
** Mr T Raman was employed for the full year. The remuneration shown is only since Mr Raman became a KMP when appointed Operations Manager on 10 April 2023.
*** Mr D Wood was appointed on 27 March 2023.
VEEM LIMITED 15
DIRECTORS’ REPORT
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 2023
Number
Number
Number
Number
Number
Number
Directors
Bradley Miocevich*
68,135,593
Mark Miocevich*
68,135,593
Ian Barsden
Peter Torre
Michael Bailey
Executive
David Rich
Brett Silich**
Trevor Raman***
David Wood***
53,571
72,711
115,423
216,316
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68,135,593
68,135,593
53,571
72,711
115,423
216,316
-
-
-
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 2022
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
Brett Silich
53,571
60,000
90,000
210,916
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,864,407)
68,135,5931
(11,864,407)
68,135,5931
-
12,711
25,423
53,571
72,711
115,423
5,400
216,316
-
-
*
Mr Brad Miocevich and Mr Mark Miocevich have a relevant interest in VEEM Corporation Pty Ltd ATF the Miocevich Family Trust which holds 68,135,593 fully paid ordinary
shares in the Company.
** As at date of cessation
*** Beginning balance is at date of appointment
The Group has two lease agreements with Voyka Pty Ltd, an entity controlled by an entity related to Mr Mark Miocevich and Mr Brad
Miocevich. The Group pays Voyka Pty Ltd current monthly rent of $165,674 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.
PERFORMANCE RIGHTS
During the year there existed 150,000 performance rights issued to David Rich in a prior period as remuneration.
There are no other KMP option or performance right holdings and none issued during the year.
END OF REMUNERATION REPORT
16 VEEM LIMITED
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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:
13
Meetings Held
Eligible to Attend
Meetings Attended
DIRECTORS’ REPORT
Number of meetings attended:
John Bradley Miocevich
Mark David Miocevich
Ian Henry Barsden
Peter Patrick Torre
Michael Robert Bailey
13
13
13
13
13
13
13
11
13
13
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 23
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 15 and forms part
of this Directors’ report for the year ended 30 June 2023.
Signed in accordance with a resolution of the Directors.
Mark David Miocevich
Managing Director
Perth, 23 August 2023
VEEM LIMITED 17
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of VEEM Ltd for the year ended 30 June
2023, 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
23 August 2023
N G Neill
Partner
Page 15
18 VEEM LIMITED
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Notes
2023 ($)
2022 ($)
Continuing operations
Revenue
Government subsidies
Foreign exchange losses (net)
Changes in inventories of finished goods and work in progress
Raw materials and consumables purchases
Employee benefits expense
Depreciation and amortisation expense
Repairs and maintenance expenses
Occupancy expense
Borrowing costs expense
Other expenses
Profit before income tax expense
Income tax expense
Net profit for the year
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
Cash flow hedges – effective portion of changes in fair value
Foreign operations – foreign currency translation reserve difference
Items that will not be reclassified to profit or loss
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive income for the year
Earnings per share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2
2
2
3
5
5
59,579,944
54,262,635
795,196
(6,720)
245,576
(91,675)
5,409,765
4,429,302
(27,348,315)
(26,639,867)
(23,210,799)
(21,395,091)
(4,082,386)
(4,021,791)
(1,507,645)
(1,633,690)
(1,308,740)
(1,199,207)
(985,646)
(651,219)
(2,448,459)
(1,905,129)
4,886,195
(773,987)
4,112,208
1,399,844
(134,005)
1,265,839
(109,796)
1,218
(108,578)
-
(108,578)
-
-
-
-
-
4,003,630
1,265,839
3.03
3.03
0.93
0.93
The above Statement of Profit or Loss and Other Comprehensive invoice should be read in conjunction with the accompanying notes.
VEEM LIMITED 19
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Notes
2023 ($)
2022 ($)
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 – current
Provisions
Derivative liability
Lease liabilities - current
Total current liabilities
Non-current liabilities
Borrowings – non current
Deferred tax liabilities
Provisions
Lease liabilities – non current
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Retained earnings
Total equity
7
8
9
10
3
11
3
12
13
14
15
17
20
16
15
3
17
16
18
19
2,421,112
10,112,724
20,937,448
1,335,003
205,603
35,011,890
21,340,215
4,268,401
21,021,524
9,861,752
56,491,892
91,503,782
6,399,378
4,632,155
3,933,864
169,521
1,650,942
16,785,860
10,508,404
7,906,485
100,929
9,380,242
27,896,060
44,681,920
46,821,862
11,509,613
(39,756)
35,352,005
46,821,862
2,632,302
10,069,085
17,592,930
1,192,863
182,610
31,669,790
17,089,330
2,856,829
18,053,058
11,132,417
49,131,634
80,801,424
5,726,268
1,387,397
3,792,001
192,682
1,491,012
12,589,360
8,121,339
5,720,922
100,929
10,666,864
24,610,054
37,199,414
43,602,010
11,509,613
24,722
32,067,675
43,602,010
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
20 VEEM LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Note
Issued Capital
$
Reserves
$
FINANCIAL STATEMENTS
Retained
earnings
$
Total
$
31,481,836
36,622,452
1,265,839
1,265,839
-
-
1,265,839
1,265,839
-
-
-
6,749,000
(380,003)
24,722
5,140,616
-
-
-
6,749,000
(380,003)
-
-
-
-
-
-
-
-
24,722
-
(680,000)
(680,000)
11,509,613
24,722
32,067,675
43,602,010
-
-
-
-
-
-
4,112,208
4,112,208
(108,578)
-
(108,578)
(108,578)
4,112,208
4,003,630
44,100
-
44,100
-
(827,878)
(827,878)
At 1 July 2021
Profit for the year
Other comprehensive income, net of income
tax
Total comprehensive income for the year
Shares issued during the year
Share issue costs
Share-based payment expense recognised
Dividends paid
6
Balance at 30 June 2022
Profit for the year
Other comprehensive income, net of income
tax
Total comprehensive income for the year
Share-based payment expense recognised
Dividends paid
6
Balance at 30 June 2023
11,509,613
(39,756)
35,352,005
46,821,862
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
VEEM LIMITED 21
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Government subsidies received
Other receipts
Interest paid
Interest received
Income tax received / (paid)
Net GST received
Notes
2023 ($)
2022 ($)
60,505,046
55,125,341
(54,282,497)
(53,130,011)
795,196
44,860
245,576
-
(985,646)
(651,219)
419
(58,942)
100,795
28,789
242,023
658,764
Net cash flows provided by operating activities
7
6,119,231
2,519,263
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
(1,773,107)
(1,907,826)
(3,413,045)
(3,038,385)
Proceeds from sale of property, plant and equipment
-
122,615
Net cash flows used in investing activities
(5,186,152)
(4,823,596)
Cash flows from financing activities
Repayment of borrowings
Dividends paid
Net proceeds from issue of shares
Payments of lease liabilities
Proceeds from borrowings
Repayment of hire purchase liabilities
Net cash flows (used in) / provided by financing activities
Net (decrease) / 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
6
7
7
7
(1,200,000)
(1,100,000)
(827,878)
-
(680,000)
6,368,997
(1,504,517)
(1,317,782)
3,692,141
(1,327,412)
(1,167,666)
(234,587)
2,632,302
23,397
-
(685,138)
2,586,077
281,744
2,233,076
117,482
2,421,112
2,632,302
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
22 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PREPARATION
These financial statements are consolidated general purpose financial statements of VEEM Ltd (“the Company”) and its controlled entities
(“the Group”), 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 Group is a for-profit entity.
The financial statements have been prepared on a historical cost basis except for where applicable derivative financial instruments.
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 domestic and global markets.
The Group’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 2023
In the year ended 30 June 2023, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the
AASB that are relevant to the Group and effective for the reporting period beginning on or after 1 July 2022. As a result of this review, the
Directors have determined that there is no material impact of the Standard and Interpretations issued on the Group and, therefore, no
change is necessary to its accounting policies.
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 2023. 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 Group and, therefore, no change is necessary to its accounting policies.
No other new standards, amendments to standards or interpretations are expected to affect the Group’s financial statements.
(c) STATEMENT OF COMPLIANCE
The financial report was authorised for issue by the Board of VEEM Ltd on 23 August 2023.
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.
Leases
The Group 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 the Group 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.
VEEM LIMITED 23
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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.
The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, the
Group makes an estimate of the asset’s recoverable amount, being the higher of its fair value less costs to sell and its value in use. The
value in use requires an estimation of the recoverable amount of the cash generating units to the assets are allocated. There were no
indicators of impairment during the financial year.
(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. The functional currency of VEEM Marine (Europe)
B.V is Euro.
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.
As at the balance date the assets and liabilities of the subsidiaries are translated into the presentation currency of VEEM Ltd at the rate
of exchange ruling at the balance date and its statement of profit or loss and other comprehensive income is translated at the average
exchange rate for the year.
The exchange differences arising on the translation are taken directly to the foreign currency translation reserve in equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is
recognised in profit 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.
24 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Point in time recognition - sale of goods – propulsion & stabilisation
Revenue is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:
•
•
•
•
•
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group 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 Group; 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 & stabilisation
and defence
In determining whether performance obligations are satisfied over time the Group 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.
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 Group 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
Group 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) LEASES
Where the Group is a lessee, the Group recognises a right-of-use asset and a corresponding liability at the date which the lease asset is
available for use by the Group (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 Group uses its incremental borrowing rate. Lease payments
included in the initial measurement of 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 Group under residual value guarantees;
The exercise price of purchase options, if the Group is reasonably certain to exercise the options; and
Termination penalties of the lease term reflects the exercise of an option to terminate the lease.
VEEM LIMITED 25
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Extension options are included in a number of property leases across the Group. 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 Group to restore the underlying asset, or the Group 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 Group 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.
(j)
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.
26 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) 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.
(l)
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS
The Group 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 Group 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.
(m) 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.
(n) 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 90 days after the month in which they are arise.
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 Group will not be able to collect all
amounts due according to the original contractual terms.
Factors considered by the Group 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 Group. 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.
VEEM LIMITED 27
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o) INVENTORIES
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 Group’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.
(p) 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 Group of similar financial assets) is de-recognised when:
the rights to receive cash flows from the asset have expired;
•
the Group 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 Group 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 Group 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 Group’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 Group 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 Group’s continuing involvement is the amount of the transferred asset that the Group 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 Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option
exercise price.
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.
(q) 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.
28 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
(r) 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.
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
10 – 20 years
Product Development Expenditure
Units of production
Software
Right-of-use assets
10 years
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.
VEEM LIMITED 29
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 Group 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 Group 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.
(s) TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group
prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the
purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within
12 months.
(t) 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 Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
(u) PROVISIONS
Provisions are recognised when the Group 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 Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in
the 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 Group 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 Group’s obligation.
Commissioning Costs
Provisions for the expected cost of commissioning gyrostabilisers are recognised where the sale is inclusive of commissioning.
30 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Annual leave
The liability for annual leave is measured as the value of the expected future payments to be made in respect of services provided by
employees up to the balance date.
Long service leave
The liability for long service leave is 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.
(v) 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.
(w) 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), 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);
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.
(x) DERIVATIVE FINANCIAL INSTRUMENTS
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their
fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as
a hedging instrument, and if so, the nature of the item being hedged.
Cash flow hedges:
Cash flow hedges are used to cover the Group’s exposure to variability in cash flows that is attributable to particular risks associated
with a recognised asset or liability or a firm commitment which could affect profit or loss. The effective portion of the gain or loss on the
hedging instrument is recognised in other comprehensive income through the cash flow hedges reserve in equity, whilst the ineffective
portion is recognised in profit or loss. Amounts taken to equity are transferred out of equity and included in the measurement of the hedged
transaction when the forecast transaction occurs.
Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively to ensure that each hedge is highly
effective and continues to be designated as a cash flow hedge. If the forecast transaction is no longer expected to occur, the amounts
recognised in equity are transferred to profit or loss.
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the hedge becomes ineffective and is
no longer a designated hedge, the amounts previously recognised in equity remain in equity until the forecast transaction occurs.
The Group subsequently measures derivative financial instruments at fair value. Gains and losses on derivative financial instruments that do
not qualify for hedge accounting are recognised in the Profit and Loss for the period.
Amounts recognised in equity are reclassified from reserves into the cost of the underlying transaction and recognised in the Profit and
Loss when the underlying transactions affects the Profit and Loss. The ineffective portion of any change in the fair value of the instrument is
recognised in the Profit and Loss immediately. Where a derivative financial instrument is designated as a fair value hedge changes in the
fair value of the underlying asset or liability attributable to the hedge risk, and gains and losses on the derivative financial instrument are
recognised in the Profit and Loss for the period.
VEEM LIMITED 31
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(y) BASIS OF CONSOLIDATION
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
A list of controlled entities is contained in Note 22 to the financial statements.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as
well as their results for the year then ended.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss and other
comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. The acquisition
method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and
other comprehensive income, statement of changes in equity and statement of financial position respectively.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying
amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the
subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration
paid or received is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other
comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained
earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of.
32 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTE 2: REVENUE AND EXPENSES
Revenue from contracts with customers
Sales revenue
•
•
Revenue – point in time
Revenue – over time
Other revenue
Government Subsidies
•
Apprentice subsidies
• Government subsidies – Manufacturing Modernisation Fund
NOTES TO FINANCIAL STATEMENTS
2023 ($)
2022 ($)
5,922,960
53,612,125
59,535,085
44,859
6,377,977
47,819,268
54,197,245
65,390
59,579,944
54,262,635
261,442
533,754
795,196
186,165
59,411
245,576
During the year, the Group recognised revenue of $7,808,886 (2022: $9,603,509) in relation to the prior year’s work in progress. The Group
has progress billings at 30 June 2023 of $7,704,738 (2022: $6,690,719), refer to Note 9.
The Group has contract assets, being work in progress (recognised over time) at 30 June 2023 of $7,774,193
(2022: $6,339,411).
The Group recognises 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 accounted for approximately 79% (2022: 86%) of the revenue during
FY2023. Sales to government instrumentalities accounted for 21% (2022: 13%). Sales to quasi-government instrumentalities accounted for
nil% (2022: 1%).
The geographic distribution of sales for FY2023 was approximately 61% (2021: 60%) derived from customers within Australia and the
remaining 39% (2021: 40%) were derived predominantly from customers in the USA, Sweden, UK, Italy, Turkey, Netherlands
and Singapore.
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. During the year sales agents were utilised in Europe, MENA,
Hong Kong and Southern China, Turkey and South America (gyrostabilisers only) to introduce enquiries and leads. Contracts are then
established directly between VEEM Ltd and the customer. Distributors are utilised for propeller sales in the USA, France, Costa Rica and
Australia, where the distributors purchase from and contract directly with VEEM Ltd.
VEEM LIMITED 33
NOTE 2: REVENUE AND EXPENSES (continued)
Other expenses
Insurance
Advertising and marketing
Bank Charges
Accounting and secretarial
Non-executive director fees
Share based payments
Profit on disposal property, plant and equipment
Other general expenses
NOTE 3: INCOME TAX
Income tax recognised in profit or loss
The major components of tax expense are:
Current tax expense
Deferred tax expense relating to the origination and reversal of temporary differences
Total tax expense
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:
2023 ($)
527,981
564,182
68,163
280,920
341,999
44,100
-
621,114
2022 ($)
480,001
303,559
62,543
246,302
331,498
24,722
(13,447)
469,951
2,448,459
1,905,129
2023 ($)
2022 ($)
(419,051)
(142,233)
1,193,038
773,987
276,238
134,005
Accounting profit before income tax
4,886,195
1,399,844
Income tax expense calculated at FY2023: 30% (FY2022: 30%)
1,465,859
419,953
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
•
•
•
Prior year (over)/under provision of income tax
Effect of expenses that are not deductible in determining taxable profit
(5,969)
396,848
285,145
482,475
Effect of concessions – research and development
(1,082,751)
(1,053,568)
Income tax (benefit)/expense reported in the statement of profit or loss and other
comprehensive income
773,987
134,005
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities with turnover greater
than $50 million on taxable profits under Australian tax law.
Current tax receivables comprise:
2023 ($)
2022 ($)
Income tax receivable/(payable)
205,603
182,610
34 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTE 3: INCOME TAX (continued)
Deferred tax assets comprise:
Annual leave payable
Provisions
Accrued expenses
Unrealised foreign exchange loss
Black hole expenditure and borrowing costs
Timing difference between Right of Use assets and Lease liabilities
Loss carried forward
Unclaimed research and development concessions
Deferred tax liabilities comprise:
Depreciable property, plant and equipment
Patents
Reconciliation of deferred tax assets / (liabilities):
30 June 2023
Accrued expenses
Annual leave payable
Provisions
NOTES TO FINANCIAL STATEMENTS
636,900
545,509
125,185
24,287
42
381,108
419,051
589,496
372,455
284,007
48,924
187
337,916
170,276
2,136,319
1,053,568
4,268,401
2,856,829
7,880,387
5,721,283
26,098
(361)
7,906,485
5,720,922
Opening Balance
Charged to
income
Closing
balance
($)
($)
($)
284,007
(158,822)
125,185
589,496
47,404
636,900
372,455
173,054
545,509
Property, plant and equipment
(5,721,283)
(2,159,104)
(7,880,387)
Unrealised foreign exchange (gain) / loss
48,924
(24,637)
24,287
Black hole expenditure and borrowing costs
Patents
Losses carried forward
187
361
(145)
42
(26,459)
(26,098)
170,276
248,775
419,051
Unclaimed research and development concessions
1,053,568
1,082,751
2,136,319
Timing difference between Right of Use assets and Lease liabilities
337,916
43,192
381,108
(2,864,093)
(773,991)
(3,638,084)
VEEM LIMITED 35
NOTE 3: INCOME TAX (continued)
30 June 2022
Accrued expenses
Annual leave payable
Provisions
Opening Balance
Charged to
income
Closing
balance
($)
($)
($)
159,902
124,105
284,007
537,134
356,223
52,362
16,232
589,496
372,455
Property, plant and equipment
(4,113,886)
(1,607,397)
(5,721,283)
Unrealised foreign exchange (gain) / loss
(11,409)
60,333
48,924
Black hole expenditure and borrowing costs
Patents
Losses carried forward
Unclaimed research and development concessions
Timing difference between Right of Use assets and
Lease liabilities
813
(626)
(15,341)
15,702
187
361
-
-
170,276
170,276
1,053,568
1,053,568
258,947
78,969
337,916
(2,827,617)
(36,476)
(2,864,093)
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 Group has two customers where the revenue from those customers was in excess of 10% of the Group’s revenue. Customer A
generated 21% (2022: 13%) and Customer B generated 10% (2021: 12%) of the Group’s revenue for the year.
Although the Group is managed as a single business segment, sales revenue of $59,535,085 (2022: $54,197,245) can be broken down
into the following sales categories. Propulsion and stabilisation consists of the manufacture of new propellers, shaft lines, gyrostabilisers
and marine ride control fins. The sales in this category were $32,928,922 (2022: $30,782,724). Defence related sales for FY2023 totalled
$16,985,405 (2022: $14,333,519) with $3,888,217 (2022: $4,916,592) of those sales being both within the defence and propulsion/
stabilisation categories. Sales of engineering products and services (non-defence) for FY2023 were $13,508,974 (2022: $13,997,595).
NOTE 5: EARNINGS PER SHARE
Basic and diluted earnings per share
Basic earnings per share
Diluted earnings per share
2023
2022
Cents per share
Cents per share
3.03
3.03
0.93
0.93
The 150,000 performance rights on issue as at 30 June 2023 (2022: 150,000) are anti-dilutive and therefore diluted loss per share was the
same as basic loss per share.
36 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
NOTE 5: EARNING PER SHARE (continued)
Basic earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows:
Earnings
Earnings from continuing operations
4,112,208
1,265,839
Weighted average number of ordinary shares for the purpose of basic earnings per share
135,719,452
135,719,452
Number
Number
2023 ($)
2022 ($)
NOTE 6: DIVIDENDS
Fully franked dividends paid
Unfranked dividends paid
Total dividends paid
2023 ($)
2022 ($)
-
827,878
827,878
-
680,000
680,000
Balance of franking account at period end adjusted for franking credits arising from the
payment of provision for income tax and dividends recognised as receivables, franking
debits arising from payment of proposed dividends and franking credits may be prevented
from distribution in a subsequent financial year.
-
-
NOTE 7: CASH AND CASH EQUIVALENTS
Cash at bank
Cash on hand
2023 ($)
2022 ($)
2,420,312
2,631,502
800
800
2,421,112
2,632,302
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.
Non-cash financing and investing activities
The Group purchased assets with a value of $4,467,094 (2022: $4,123,136) which were financed through hire purchase.
Cash balances not available for use
All cash balances are available for use.
VEEM LIMITED 37
NOTE 7: CASH AND CASH EQUIVALENTS (continued)
Reconciliation of profit for the year to net cash flows from operating activities
Net profit for the year
Adjusted for non-cash items
2023 ($)
2022 ($)
4,112,208
1,265,839
Depreciation and amortisation expense
4,082,386
4,021,791
Profit on disposal of property, plant & equipment
Foreign exchange (gain)/loss
Share based payments
Changes in operating assets and liabilities
Trade and other receivables
Inventories (includes change in progress billings)
Trade and other payables
Provisions
Current and deferred tax
GST payable
-
(13,447)
6,720
44,100
(117,485)
24,722
(43,639)
987,858
(3,648,515)
(4,600,749)
520,645
141,862
750,999
152,465
496,837
(63,328)
376,029
141,196
Net cash inflow from operating activities
6,119,231
2,519,263
Changes in liabilities arising from financing activities
Bank loans ($)
Hire Purchase
liability ($)
Lease liability ($)
Total ($)
Balance as at 30 June 2021
6,500,000
670,738
12,870,693
20,041,431
Net cash from (used in) financing activities
(1,100,000)
(685,138)
(1,317,782)
(3,102,920)
Remeasurement of lease liability
Acquisition of plant and equipment by means of hire
purchase
-
-
-
604,965
604,965
4,123,136
-
4,123,136
Balance as at 30 June 2022
5,400,000
4,108,736
12,157,876
21,666,612
Net cash from/(used in) financing activities
2,492,141
(1,327,412)
(1,504,517)
(339,788)
Acquisition of plant and equipment by means of
hire purchase
Remeasurement of lease liabilities
-
-
4,467,094
-
4,467,094
-
377,825
377,825
Balance as at 30 June 2023
7,892,141
7,248,418
11,031,184
26,171,743
38 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTE 8: TRADE AND OTHER RECEIVABLES
Trade receivables (a)
Other receivables
NOTES TO FINANCIAL STATEMENTS
2023 ($)
2022 ($)
10,058,505
10,042,180
54,219
26,905
10,112,724
10,069,085
(a) the credit period on sales of goods and rendering of services is 15-90 days after the month in which they are arise.
Aging of past due but not impaired
60 – 90 days
90 – 120 days
Total
Expected credit losses
2023 ($)
48,275
110,211
158,486
2022 ($)
107,464
114,727
222,191
The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do
not have a significant financing component.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit
risk characteristics. They have been grouped based on the days past due and also according to the geographical location of customers.
The expected loss rates are based on the payment profile for sales over the past 48 months before 30 June 2023 and 30 June 2022
respectively as well as the corresponding historical credit losses during that period. The historical rates are adjusted to reflect current and
forwarding looking macroeconomic factors affecting the customer’s ability to settle the amount outstanding.
Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the
invoice date and failure to engage with the Company on alternative payment arrangements are considered indicators of low reasonable
expectation of recovery.
Where commercially sensible and available, VEEM Ltd takes out credit insurance against its overseas receivables.
On the above basis, a provision for expected credit losses as at 30 June 2023 is not required as it is not material to the financial statements
(30 June 2022: Nil).
NOTE 9: INVENTORIES
Work in progress – over time
Work in progress – point in time
Less: progress billings
Goods for resale, raw materials and stores
2023 ($)
2022 ($)
7,774,193
6,339,411
5,194,972
2,710,818
12,969,165
9,050,229
(7,704,738)
(6,690,719)
5,264,427
2,359,510
15,673,021
15,233,420
20,937,448
17,592,930
During the year, the Group recognised revenue of $7,808,886 (2021: $9,603,509) in relation to the prior years’ work in progress.
VEEM LIMITED 39
NOTE 10: OTHER ASSETS
Prepayments
Suppliers paid in advance
2023 ($)
503,455
831,548
2022 ($)
446,057
746,806
1,335,003
1,192,863
NOTE 11: PROPERTY, PLANT AND EQUIPMENT
Plant and
Equipment
Motor Vehicles
Capital Work in
Progress
Computer
Equipment
($)
($)
($)
($)
Total
($)
As at 30 June 2022
Cost
42,801,525
662,767
1,121,444
1,785,906
46,371,642
Accumulated depreciation
(27,247,133)
(516,704)
-
(1,518,475)
(29,282,312)
Closing carrying amount
15,554,392
146,063
1,121,444
267,431
17,089,330
Year ended 30 June 2023
Opening carrying amount
15,554,392
146,063
1,121,444
267,431
17,089,330
Additions
Transfers
4,428,120
2,499,761
-
-
1,775,696
36,386
6,240,202
(2,499,761)
-
-
Depreciation charge
(1,864,972)
(21,291)
-
(103,054)
(1,989,317)
Closing carrying amount
20,617,301
124,772
397,379
200,763
21,340,215
As at 30 June 2023
Cost
49,729,406
662,767
397,379
1,822,292
52,611,844
Accumulated Depreciation
(29,112,105)
(537,995)
-
(1,621,529)
(31,271,629)
Carrying amount
20,617,301
124,772
397,379
200,763
21,340,215
40 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTE 12: INTANGIBLE ASSETS
As at 30 June 2022
Cost
Accumulated amortisation
Closing carrying amount
Year ended 30 June 2023
Opening carrying amount
Net additions
Amortisation charge
NOTES TO FINANCIAL STATEMENTS
Other Intellectual
Property
Product
Development
($)
($)
Total
($)
956,395
19,722,319
(712,721)
(1,912,935)
20,678,714
(2,625,656)
243,674
17,809,384
18,053,058
243,674
17,809,384
18,053,058
152,875
3,260,171
(161,025)
(283,555)
3,413,046
(444,580)
Closing carrying amount
235,524
20,786,000
21,021,524
As at 30 June 2023
Cost
Accumulated amortisation
Carrying amount
No impairment loss was recognised in the 2023 financial year (2022: $Nil).
NOTE 13: RIGHT-OF-USE ASSETS
1,109,269
22,982,490
(873,745)
(2,196,490)
24,091,759
(3,070,235)
235,524
20,786,000
21,021,524
As at 30 June 2023
Cost
Accumulated depreciation
Carrying amount
As at 30 June 2022
Cost
Accumulated depreciation
Carrying amount
Premises
$
Total
$
16,469,189
16,469,189
(6,607,437)
(6,607,437)
9,861,752
9,861,752
16,091,362
16,091,362
(4,958,945)
(4,958,945)
11,132,417
11,132,417
VEEM LIMITED 41
NOTE 13: RIGHT-OF-USE ASSETS (continued)
Opening balance
Remeasurement of lease liability (a)
Depreciation
Closing balance
2023 ($)
2022 ($)
11,132,417
12,108,464
377,825
604,965
(1,648,490)
(1,581,012)
9,861,752
11,132,417
(a)
From 30 June 2022, the Group leased an additional 207 square metres with additional high-capacity concrete hardstand of 540
square metres at its leased premises at 22 Baile Road, Canning Vale at the same rate as its current lease, this resulted in an
increase in the lease liability and right of use asset of $604,965 in the 2022 financial year. All other terms of the lease remained
the same. A rent review during the 2023 financial year required a re-measurement of the lease liability which resulted in an increase
in the lease liability and right of use asset of $377,825.
NOTE 14: TRADE AND OTHER PAYABLES (CURRENT)
Trade payables (a)
Net GST payable
Other creditors
2023 ($)
4,878,254
336,349
1,184,775
6,399,378
2022 ($)
4,411,999
188,884
1,125,385
5,726,268
(a)
Trade payables are non-interest bearing and are normally settled on 30-day terms.
Information regarding the interest rate, foreign exchange and liquidity risk exposure is set out in Note 20.
42 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS
NOTE 15: BORROWINGS
Current
Floating rate loan facility (a)
Trade Loan Facility (b)
Hire purchase liability
Less: Unexpired charges
Non-current
Loan facility – Daily Rate (c)
Hire purchase liability
Less: Unexpired charges
NOTES TO FINANCIAL STATEMENTS
2023 ($)
2022 ($)
1,200,000
1,692,141
2,114,353
(374,339)
4,632,155
5,000,000
6,081,057
(572,653)
10,508,404
400,000
-
1,112,917
(125,520)
1,387,397
5,000,000
3,301,915
(180,576)
8,121,339
(a) The Group has a Floating Rate Loan Facility with a limit of $1,200,000. The Loan Facility is repayable by 1 July 2024. $100,000 of
principal is payable each calendar month with any 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 1.30% per annum is charged monthly and
a line fee of 0.50% per annum of the Facility Limit is payable quarterly in arrears. The interest rate is currently at 5.47% (June 2022:
1.88% on Commercial facility). The facility is reviewed on an annual basis. At 30 June 2023, the Group had nil (2022: $2,000,000)
available in undrawn committed borrowing facilities under the Loan Facility in respect of which all conditions precedent had been met.
(b) The Group entered into a trade loan facility during the financial year to support it’s import trade arrangements. The facility has a limit of
$2,000,000 and each drawdown is repayable in 150 days. Interest is at the base rate plus 1.25% per annum. A line fee of 0.75% per
annum of the Facility Limit is payable quarterly in arrears.
(c) The Group has a Loan Facility – Daily Rate with a limit of $5,000,000. The Loan Facility is repayable on the termination date of 1
October 2024. Interest at the base rate plus 1.65% per annum is charged and paid monthly. The interest rate is currently at 5.84%
(June 2022: 3.55%). The facility is fully drawn and is reviewed on an annual basis.
(d) The Group has an Overdraft Facility with a limit of $3,400,000. Interest at the base rate plus 2.60% per annum is charged monthly.
A line fee of 0.50% per annum of the Facility Limit is payable quarterly in arrears. The facility is reviewed on an annual basis. At
30 June 2023, the Group had available $3,400,000 of undrawn overdraft facilities (June 2023: $3,400,000). In addition, there is an
Electronic Payments Facility with a limit of $300,000. At 30 June 2023, the Group had available $300,000 under this facility (June 2022:
$300,000).
The facilities are secured by a registered first mortgage over the assets and undertakings of the Group. The Group complied with all
banking covenants during the financial year.
VEEM LIMITED 43
NOTE 15: BORROWINGS (continued)
Financing facilities available
At balance date, the following financing facilities had been negotiated and were available:
Total facilities
• Overdraft facility
•
•
•
•
•
Loan facility – Daily Rate
Trade Loan Facility
Electronic payments facility
Floating rate loan facility
Commercial card facility
Facilities used at balance date
• Overdraft facility
•
•
•
•
•
Loan facility – Daily Rate
Trade Loan Facility
Electronic payments facility
Floating rate loan facility
Commercial card facility
Facilities unused at balance date
• Overdraft facility
•
•
•
•
•
Loan facility – Daily Rate
Trade Loan Facility
Electronic payments facility
Floating rate loan facility
Commercial card facility
Total facilities
•
•
Facilities used at balance date
Facilities unused at balance date
2023 ($)
2022 ($)
3,400,000
5,000,000
2,000,000
300,000
1,200,000
50,000
3,400,000
5,000,000
-
300,000
2,400,000
50,000
11,950,000
11,150,000
-
5,000,000
1,692,141
-
1,200,000
-
7,892,141
-
5,000,000
-
-
400,000
-
5,400,000
3,400,000
3,400,000
-
307,859
300,000
-
50,000
4,057,859
7,892,141
4,057,859
-
-
300,000
2,000,000
50,000
5,750,000
5,400,000
5,750,000
11,950,000
11,150,000
The carrying value of plant and equipment held under hire purchase contracts at 30 June 2023 is $8,531,525 (2022: $4,108,737). Additions
during the year include $4,467,094 (2022: $4,123,136) of plant and equipment held under hire purchase contracts.
44 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS NOTE 16: LEASE LIABILITIES
30 June 2023
Current liabilities
Non-current liabilities
30 June 2022
Current liabilities
Non-current liabilities
Reconciliation
Balance at 1 July 2021
Principal repayments
Remeasurement of lease liability (a)
Balance at 30 June 2022
Principal repayments
Remeasurement of lease liability (a)
Closing balance 30 June 2023
The average lease term to expiry is 6 years.
NOTES TO FINANCIAL STATEMENTS
Premises
$
1,650,942
9,380,242
Total
$
1,650,942
9,380,242
11,031,184
11,031,184
Premises
$
1,491,012
10,666,864
12,157,876
Premises
$
12,870,693
(1,317,782)
604,965
12,157,876
(1,504,517)
377,825
Total
$
1,491,012
10,666,864
12,157,876
Total
$
12,870,693
(1,317,782)
604,965
12,157,876
(1,504,517)
377,825
11,031,184
11,031,184
(a) From 30 June 2022, the Group leased an additional 207 square metres with additional high-capacity concrete hardstand of 540
square metres at its leased premises at 22 Baile Road, Canning Vale at the same rate as its current lease, this resulted in an increase
in the lease liability and right of use asset of $604,965 in the 2022 financial year. All other terms of the lease remained the same.
A rent review during the 2023 financial year required a re-measurement of the lease liability which resulted in an increase in the lease
liability and right of use asset of $377,825.
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 2023
<1 year
1-5 years
>5 years
$
$
$
Total
$
Net present values
Interest
Lease payments
1,650,942
7,599,123
1,781,119
11,031,184
354,633
801,694
28,248
1,184,575
2,005,575
8,400,817
1,809,367
12,215,759
Total cash outflow relating to leases for the period ended 30 June 2023 was $1,903,900 (2022: $1,742,958) of which $1,504,517
(2022: $1,317,782) related to principal payments and $399,383 (2022: $425,176) related to interest.
VEEM LIMITED 45
NOTE 17: PROVISIONS
Current
Annual Leave
Long service leave
Warranty
Commissioning
Non-Current
Lease restoration
Employee benefits (a)
Balance at beginning of year
Net movements
Balance at the end of year - Current
(a) The provision for employee benefits represents annual and long service leave
entitlements accrued.
Provision for warranty
Balance at beginning of year
Net movements
Balance at the end of the year - Current
Provision for commissioning
Balance at beginning of year
Net movements
Balance at the end of the year - Current
Provision for restoration
Balance at beginning of year
Net movements
Balance at the end of the year - Non-current
46 VEEM LIMITED
2023 ($)
2022 ($)
2,123,000
1,270,205
361,699
178,960
1,964,988
1,138,060
590,497
98,456
3,933,864
3,792,001
100,929
100,929
100,929
100,929
3,103,048
2,928,507
290,157
174,541
3,393,205
3,103,048
590,497
(228,798)
361,699
98,456
80,504
178,960
707,931
(117,434)
590,497
53,206
45,250
98,456
100,929
100,929
-
-
100,929
100,929
NOTES TO FINANCIAL STATEMENTS NOTES TO FINANCIAL STATEMENTS
NOTE 18: ISSUED CAPITAL
a) Issued and paid up capital
2023 ($)
2022 ($)
135,719,452 (2022: 135,719,452) Ordinary shares issued and fully paid
11,509,613
11,509,613
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.
b) Movements in ordinary shares on issue
Movements in ordinary shares on issue
Opening balance
Issue of shares
Closing balance
NOTE 19: RESERVES
Share based payment reserve
Cash flow hedge reserve
Foreign currency translation reserve
Share based payment reserve
Year to 30 June 2023
Year to 30 June 2022
No.
$
No.
$
135,719,452
11,509,613
130,000,000
5,140,616
-
-
5,719,452
6,368,997
135,719,452
11,509,613
135,719,452
11,509,613
2023 ($)
68,822
(109,796)
1,218
(39,756)
2022 ($)
24,722
-
-
24,722
The share based payments reserve is used to record the value of equity instruments issued to Directors, employees and qualifying
contractors as part of their remuneration.
During the year the Group had a share-based payment Performance Rights and Options Plan which provided that the Board of the Group
may, from time to time, in its absolute discretion, make an offer to any Eligible Participant to apply for Performance Rights or Options, upon
the terms set out in the Performance Rights and Options Plan and upon such additional terms and conditions as the Board determined.
In exercising that discretion, the Board may have regard to the following (without limitation):
(i) The Eligible Participant’ s length of service with the Group;
(ii) The contribution made by the Eligible Participant to the Group;
(iii) The potential contribution of the Eligible Participant to the Group; or
VEEM LIMITED 47
NOTE 19: RESERVES (continued)
(iv) Any other matter the Board considers relevant.
The share-based payment reserve comprises the cumulative share-based payment expense recognised in the Statement of Profit or Loss
and Other Comprehensive Income in relation to equity-settled options and share rights issued but not yet exercised.
The fair value of share rights subject to a market condition is determined at grant date using a trinomial valuation model. The values
calculated do not take into account the probability of rights being forfeited prior to vesting, as VEEM Ltd revises its estimate of the number
of share rights expected to be eligible to vest at each reporting date.
Grant date
Vesting
date
Expiry date Beneficiary
Balance at
1 July 2022
Granted
during
period
Exercised
during period
Balance 30
June 2023
Forfeited
/ lapsed
during
period
6 Jul 2021
6 Jul 2022
14 Aug 2024
D Rich
50,000
6 Jul 2021
6 Jul 2023
14 Aug 2024
D Rich
50,000
6 Jul 2021
6 Jul 2024
14 Aug 2024
D Rich
50,000
-
-
-
-
-
-
-
-
-
50,000
50,000
50,000
The share rights will vest on or after the vesting date upon the 30-day Volume Weighted Share Price of the company being $1.50, $2.00,
$2.50 for tranches 1-3 respectively provided the beneficiary is still employed by the Group. All share rights have an accelerated vesting
condition on a change of control event at any time up to expiry.
Valuation assumptions
Tranche 1
Tranche 2
Tranche 3
Valuation Date
6-Jul-21
6-Jul-21
6-Jul-21
Spot Price ($)
Exercise Price ($)
$1.34
nil
Expected future volatility (%)
50.14%
Risk free rate (%)
Dividend yield (%)
Fair value per right
0.19%
1%
$0.632
$1.34
nil
50.14%
0.19%
1%
$0.49
$1.34
nil
50.14%
0.19%
1%
$0.382
The total value of the vesting expense for these performance options is $75,176 and a vesting expense of $44,100 (was recorded for
30 June 2023 (2022: $24,722) with the balance vesting in remaining vesting periods.
Cash flow hedge reserve
This reserve records the portion of the gain or loss on hedging instruments in cash flow hedges that are determined to be effective hedges.
Foreign currency translation reserve
This reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
48 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
NOTE 20: FINANCIAL INSTRUMENTS
Capital risk management
The Group manages its capital to ensure it will be able to continue as a going concern while maximising the return to stakeholders through
the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, cash and cash equivalents and equity attributable to equity holders of the Group,
comprising issued capital and retained earnings.
The Group is not subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, dividends and
general administrative outgoings.
Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated
with each class of capital.
Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Floating rate loan facility
Trade loan facility
Loan facility – Daily Rate
Hire purchase liability
Lease liability
Derivative liability
2023 ($)
2022 ($)
2,421,112
2,632,302
10,112,724
10,069,085
6,399,378
1,200,000
1,692,141
5,000,000
7,248,418
5,726,268
400,000
-
5,000,000
4,108,736
11,031,184
12,157,876
169,521
192,682
Financial risk management objectives
The Group is exposed to market risks (including foreign currency risk, fair value risk and interest rate risk), credit risk and liquidity risk.
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The
Group’s main exposures are to US Dollar (USD), Euro (EUR), and Great British Pound (GBP) currency fluctuations impacting cash on hand,
debtors and creditors. VEEM has a global supply program and a large portion of the USD and GBP exposures are reduced by the Group’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.
Propeller sales are denominated 37% in USD (2022: 46%), 11% in GBP (2022: 12%) and 10% in EUR (2022: 12%) hence increases in
propeller sales will increase exposure to exchange rate movements. As all gyrostabiliser sales are in USD, and only part of the costs
provides a natural hedge, the exposure to USD will increase in line with gyrostabiliser revenue increases.
The Board has adopted a policy of hedging net foreign currency exposures using forward contracts. As at 30 June 2023 there were forward
exchange contracts in place for USD 3,732,250; EUR 400,000 and GBP 230,000 (30 June 2022: USD 3,655,453, EUR 105,000 and GBP
42,350). For fair value hedges, any gain or loss from ineffective hedging instruments at fair value is adjusted against the carrying amount of
the hedged item and recognised in profit or loss. There is a derivative liability of $169,521 (30 June 2022: $192,682) recorded in relation to
these forward exchange contracts recorded at fair value, the fair value is a Level 2 input in the fair value hierarchy.
VEEM LIMITED 49
NOTE 20: FINANCIAL INSTRUMENTS (continued)
USD
•
•
EUR
•
•
GBP
•
•
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
Impact of a 5% increase to profit or loss
Impact of a 5% decrease to profit or loss
Cash ($)
Receivables ($)
Payable ($)
Total Asset
/(Liability) ($)
608,702
1,395,158
(255,662)
1,748,198
34,303
473,677
(58,125)
(87,410)
87,410
449,855
(22,493)
22,493
112,823
657,599
(1,182,120)
(411,698)
20,585
(20,585)
The Group 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 Group is exposed to interest rate risk as it borrows funds at both fixed and floating interest rates. The risk is managed by the Group by
maintaining an appropriate mix between fixed and floating rate borrowings.
The Group’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.
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 100
basis point (2022: 100 basis points) increase or decrease has been used to assess the sensitivity to interest rate risk as this represents
management’s assessment of the potential change in interest rates.
If interest rates had been 100 basis points higher or lower throughout the year, and all other variables were held constant, the Group’s net
profit would increase by $78,921 and decrease by $78,921 (2022: $58,800) respectively. This is attributable to the Group’s exposure to
interest rates on its variable rate borrowings.
The Group’s sensitivity to interest rates on its variable rate debt instruments has reduced as the level of variable rate debt has reduced
since 30 June 2022. Interest rates on Hire Purchase agreements are fixed for the term of the agreement. New Hire Purchase agreements
entered into during the year were at higher interest rates that the prior year reflecting the increase in interest rate over the year.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group has adopted a policy of only dealing with creditworthy counterparties, and obtaining sufficient collateral or credit insurance where
appropriate, as a means of mitigating the risk of financial loss from defaults. The Group conducts due diligence on all counterparties before
extending them credit including utilising information supplied by independent rating agencies where readily available and, if not available,
the Group uses publicly available financial information.
The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions
concluded is spread amongst approved counterparties where appropriate. Credit exposure is controlled by counterparty limits that are
reviewed and approved by management annually.
The Group 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 and selected
Australian receivables.
The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Group’s
maximum exposure to credit risk without taking account of the value of any collateral obtained.
50 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS
NOTE 20: FINANCIAL INSTRUMENTS (continued)
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 Group’s short, medium and long-term funding and liquidity management requirements.
The Group 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 Group has at its disposal as part of its management of liquidity risk.
NOTES TO FINANCIAL STATEMENTS
The following table details the Group’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 Group can be required to repay. The
tables include both interest and principal cash flows.
1 year or less
1–5 years
5+ years
30 June 2023
%
$
Non-interest bearing – Trade and other payables
6,399,378
$
-
Fixed interest rate – Hire purchase liabilities
6.22
1,740,014
5,508,404
Fixed interest rate – Lease liabilities
3.45
1,650,942
9,380,242
Loan facility – Daily Rate
Trade Loan Facility
Floating rate loan facility
5.84
6.54
5.47
-
5,000,000
1,692,141
1,200,000
-
-
12,682,475
19,888,646
$
-
-
-
-
-
-
-
1 year or less
1–5 years
5+ years
30 June 2022
%
$
Non-interest bearing – Trade and other payables
5,726,268
$
-
Fixed interest rate – Hire purchase liabilities
Fixed interest rate – Lease liabilities
Loan Facility – Daily Rate
Variable interest rate – Bill facility and bank overdraft
3.59
3.45
3.35
1.88
$
-
-
1,112,917
3,301,915
1,887,175
7,975,552
3,837,241
-
5,000,000
400,000
-
-
-
9,126,360
16,277,467
3,837,241
Fair value measurement
The directors consider that the carrying value of the financial assets and liabilities as recognised in the financial statements approximate
their fair values.
Hire purchase commitments
The Group 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.
VEEM LIMITED 51
NOTES TO FINANCIAL STATEMENTS
NOTE 20: FINANCIAL INSTRUMENTS (continued)
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
2023 ($)
2022 ($)
2,114,353
6,081,057
8,195,410
(946,992)
7,248,418
1,740,014
5,508,404
7,248,418
1,112,917
3,301,915
4,414,832
(306,096)
4,108,736
987,397
3,121,339
4,108,736
At 30 June 2023 the Group had $786,453 of capital commitments (2022: $4,038,050).
NOTE 21: RELATED PARTY DISCLOSURE
The Group’s related parties include key management personnel and their related entities as described below. The aggregate compensation
for Directors and other key management personnel of the Group are set out below:
Short-term employee benefits
Long term benefits
Share based payments
2023 ($)
1,516,890
127,798
44,100
1,688,788
2022 ($)
1,434,106
119,268
24,722
1,578,096
Key management personnel transactions
The Group has two lease agreements with Voyka Pty Ltd, an entity controlled by an entity related to Mr Mark Miocevich and Mr Brad
Miocevich. The Group pays Voyka Pty Ltd current monthly rent of $165,674 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.
During the year Mr Mark Miocevich purchased goods and services worth $57,016 (2022: $25,672). An entity related to Mr Brad Miocevich
provided services of $2,898 (2022: nil) and purchased goods and services worth $1,964 (2022:nil). All these orders were on normal
commercial terms
Lumos Marketing, which is owned by a related party of Mr Mark Miocevich, provided $77,969 (2022: $100,620) of marketing services to the
Group on normal commercial terms.
52 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS
NOTE 22: SUBSIDIARIES AND JOINT VENTURES
Name of subsidiary / joint
venture
Principal activity
Place of incorporation
and operation
Proportion of ownership interest and
voting power held by the Group
Microtherm Pty Ltd
Research and development of
induction heating technology in the
treatment of liver cancer.
Australia
2023
50%
2022
50%
VEEM Marine (Europe) B.V.
Marketing, sales and after-sales
service of marine propulsion and
stabilisation products and systems
Netherlands and Europe
100%
100%
Microtherm Pty Ltd did not have any transactions during the financial year or balances at 30 June 2023 and has not been consolidated with
work on the project, conducted within the parent entity.
NOTE 23: AUDITOR’S REMUNERATION
The auditor of VEEM Limited is HLB Mann Judd.
Audit or review of the financial statements
Tax compliance services
Other services
2023 ($)
2022 ($)
100,356
19,850
-
120,206
85,731
32,550
-
118,281
Other services provided by network firms of the auditor
HLB Den Hartog
4,549
12,535
NOTE 24: SUBSEQUENT EVENTS
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 Group, the results of those operations, or state of affairs of the Group in future financial years apart from those listed below:
1.
On 23 August 2023 the Company declared an unfranked ordinary dividend of $692,169 representing $0.0051 per share.
VEEM LIMITED 53
NOTES TO FINANCIAL STATEMENTS
NOTE 25: CONTINGENCIES
The Group has no material contingent liabilities or assets as at 30 June 2023 (2022: $Nil).
NOTE 26: PARENT ENTITY INFORMATION
Information relating to VEEM Limited, the parent entity, is detailed below:
ASSETS
Current
Non-current
Total assets
LIABILITIES
Current
Non-current
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Retained earnings
Total equity
INCOME
Net profit after tax
Total comprehensive income
54 VEEM LIMITED
2023 ($)
2022 ($)
35,078,875
56,558,594
91,637,469
16,821,777
27,963,843
44,785,620
31,669,790
49,131,634
80,801,424
12,589,360
24,610,054
37,199,414
46,851,849
43,602,010
11,509,613
(40,974)
35,383,210
46,851,849
4,143,413
4,036,059
11,509,613
24,722
32,067,675
43,602,010
1,265,839
1,265,839
DIRECTORS’ DECLARATION
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. giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the year then ended;
and
ii. 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 2023.
This declaration is signed in accordance with a resolution of the board of Directors.
Mark David Miocevich
MANAGING DIRECTOR
Dated this 23 August 2023
VEEM LIMITED 55
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”) and its controlled entities (“the Group”),
which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity
and the consolidated 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 Group is in accordance with the Corporations Act
2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2023 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 Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (“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.
Page 50
56 VEEM LIMITED
NOTES TO FINANCIAL STATEMENTS
FINANCIAL REPORT
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 Group has an intangible asset in relation to
capitalised expenditure on the development of
gyroscopic stabilizers (“gyrostabilizer”).
The development expenditure of $20.8 million is
considered to be a key audit matter, given the
size of the balance, as well as the specific criteria
that have to be met for capitalisation.
Additionally, determining whether there is any
indication of impairment requires management
judgement and assumptions which are affected
by future market or economic developments.
Revenue recognition
Note 2 of the financial report
The Group has two distinct categories of revenue
being revenue with performance obligations
recognised at a point in time and revenue with
performance obligations recognised over time.
We focused on this area as a key audit matter
due to the number and type of estimation events
that may occur over the course of a contract life,
leading to complex and judgemental revenue
recognition and the direct impact on profit.
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 ensured management applied an
and
appropriate
amortisation period to this finite life intangible;
and
amortisation method
- We assessed the adequacy of the Group’s
disclosures in the financial report.
Our procedures included but were not limited to the
following:
- We examined and tested the Group’s key
controls over revenue and related work-in-
progress;
- We assessed a sample of the Group’s key
contracts to determine if we concurred with
management’s assessment of performance
obligations, the transaction price and any
contract liabilities that may arise, the allocation
of the transaction price, and when to recognise
revenue, either at a point in time, or over time;
For a sample of contracts designated for over
time
the
methodology and accuracy of recognising
profit at the stage of completion at balance
date;
recognition, we
assessed
-
- We substantiated revenue transactions on a
sample basis by agreeing the transaction to the
customer’s contract, purchase order, sales
invoice, delivery docket, customer certification
report, and bank receipt, where relevant;
- We tested the appropriateness of progress
claims on a sample basis; and
- We assessed the adequacy of the Group’s
disclosures in the financial report.
Page 51
VEEM LIMITED 57
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2023, 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 Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with 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 Group’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 Group’s ability to continue as a going concern. If we
Page 52
58 VEEM LIMITED
FINANCIAL REPORT INDEPENDENT AUDITOR’S REPORT
FINANCIAL REPORT
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group 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, actions taken to eliminate threats
or safeguards applied.
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
2023.
In our opinion, the Remuneration Report of VEEM Ltd for the year ended 30 June 2023 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
23 August 2023
N G Neill
Partner
Page 53
VEEM LIMITED 59
SHAREHOLDERS INFORMATION
SHAREHOLDERS 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 8 September 2023.
Twenty Largest Shareholders
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
VEEM CORPORATION PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BOND STREET CUSTODIANS LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
UBS NOMINEES PTY LTD
BOND STREET CUSTODIANS LIMITED
VELKOV FUNDS MANAGEMENT PTY LTD
BOND STREET CUSTODIANS LIMITED
BOND STREET CUSTODIANS LIMITED
BNP PARIBAS NOMINEES PTY LTD
WEEWAC PTY LTD
BOND STREET CUSTODIANS LIMITED
ACRES HOLDINGS PTY LTD
REDBROOK NOMINEES PTY LTD
BOND STREET CUSTODIANS LIMITED
MR GRAEME JOHN MEDHURST
MR ALEXANDER PAUL CHANG
BOND STREET CUSTODIANS LIMITED
FRIDAY INVESTMENTS PTY LTD
Totals: Top 20 holders of Ordinary Fully Paid Shares (Total)
Total Remaining Holders Balance
Total Shares on Issue
Units
% Units
68,135,593
23,141,750
8,200,000
4,524,490
3,865,571
2,791,285
650,000
600,000
540,000
500,000
473,553
421,000
350,000
335,000
325,000
312,510
260,000
250,000
242,495
235,000
116,153,247
19,566,205
135,719,452
50.20
17.05
6.04
3.33
2.85
2.06
0.48
0.44
0.40
0.37
0.35
0.31
0.26
0.25
0.24
0.23
0.19
0.18
0.18
0.17
85.58
14.42
Marketable Parcels
Number of shareholders holding less than a marketable parcel of ordinary shares is 153.
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 and Rights holders have no voting rights until the options or rights are exercised.
60 VEEM LIMITED
SHAREHOLDERS INFORMATION
Substantial shareholders
The following shareholders are considered substantial shareholders:
•
•
•
VEEM Corporation Pty Ltd ATF The Miocevich Family Trust
50.20% of the issued ordinary shares
Perennial Value Management Limited
14.95% of the issued ordinary shares
Salter Brothers Emerging Companies Limited
5.64% of the issued ordinary shares
Restricted securities
There are no restricted securities.
Options and performance Rights
There are no options on issue. Performance rights on issues are as disclosed in note 19 of the financial report.
Share buy backs
There is no current on-market share buyback.
Corporate Governance Statement
The Company’s 2023 Corporate Governance Statement is available on the Company’s website at www.veem.com.au.
Distribution of of equity security holders
Range
Total holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
300
588
238
372
48
Units
190,330
1,682,051
1,880,168
11,406,098
120,560,805
Total
1,546
135,719,452
% Units
0.14
1.24
1.39
8.40
88.83
100.00
VEEM LIMITED 61
SHAREHOLDERS INFORMATION
62 VEEM LIMITED
VEEM LTD
ACN 008 944 009
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