December 2021: Appendix 4D

Appendix 4D

Half-Year Financial Report

Appendix 4D

Korvest Ltd

ABN 20 007 698 106

Half-Year Financial Report

31 December 2021

Results for announcement to the market:				$A'000
Revenues from ordinary activities	Up	58.2%	to	51,580
Net profit after tax for the period attributable to	Up	148.2%	to	7,036
members
Dividends	Amount per	Franked amount
security	per security
Proposed interim dividend (#)
- current reporting period		25.0¢		25.0¢
- previous corresponding period		15.0¢		15.0¢
Paid final dividend (##)
- current reporting period		20.0¢		20.0¢
- previous corresponding period		13.0¢		13.0¢
# Interim dividend proposed in respect of the current reporting period. The financial effect
of this dividend will be recognised in the next reporting period.
## Final dividend is paid during the first-half reporting period and relates to the second
half of the prior financial year
Record date for determining entitlements to
18 February 2022
the dividend
Brief explanation of any of the figures reported above and short details of any bonus or
cash issue or other item(s) of importance not previously released to the market:
Refer Directors' report on pages 2 to 4 of this financial report.

This financial report is all the half-year information provided to the Australian Stock Exchange under listing rule 4.2A. The report also satisfies the half-year reporting requirements of the Corporations Act 2001.

This half-year financial report should be read in conjunction with the 2021 annual financial report.

Korvest Ltd

Directors' Report

The Directors present their report together with the financial report of Korvest Ltd ("the Company") and its subsidiaries ("the Group") for the half-year ended 31 December 2021 and the auditor's review report thereon.

Directors

The Directors of the Company at any time during or since the end of the half-year are:

Andrew Stobart B. Eng (Hons), Grad Dip Bus Admin, GAICD

Chairman - appointed 31 August 2021

Independent Non-Executive Director

A Director since August 2016

Former Executive Chairman Nexans Olex Australia & New Zealand

Chris Hartwig BA(Acc), MAICD

Managing Director

Appointed 28 February 2018

Director Galvanising Association of Australia

Gary Francis BSc. (Hons) (Civil), MAICD

Independent Non-Executive Director

Chairman of Remuneration Committee

A Director since February 2014

Gerard Hutchinson MBA, MBL, MSc(IS), BEc, MA (research), FCA, FAICD, FAIM Independent Non-Executive Director

Chairman of Audit Committee

Chief Financial Officer for Elegancia Group A Director since November 2014

Therese Ryan LLB, GAICD

Independent Non-Executive Director - appointed 1 September 2021

Director Bapcor Limited

Steven McGregor BA (Acc), FCA, AGIA, ACG

Finance Director

A Director since January 2009

Company Secretary since April 2008

Graeme Billings BCom, FCA, MAICD

Chairman - appointed 18 September 2014

Independent Non-Executive Director

A Director since May 2013

Retired as Director and Chairman 31 August 2021

Result

The profit for the half-year attributable to the members of the Company was:

		31 Dec 21	31 Dec 20
In thousands of AUD
Profit after income tax expense	7,036	2,835
Net profit attributable to owners of the Company		7,036	2,835

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Korvest Ltd

Directors' Report

Other Ratios
	31 Dec 21	31 Dec 20
Net tangible asset (NTA) backing
Net tangible assets per ordinary share	$3.08	$2.65
Profit before tax / revenue (excluding JobKeeper)	18.8%	6.9%
Profit before tax / total revenue (including JobKeeper)	18.8%	11.9%
Profit after tax / equity interests	17.2%	8.3%

Review of Operations

Revenue from trading operations increased by 58.2% to $51.6 million primarily as a result of a concentration of large project work in the Industrial Products segment. In August, the Power Step and Titan Technologies businesses were sold realising a pre-tax profit on sale of $0.74 million net of selling costs.

COVID-19

The Group did experience some COVID-related impacts during the first half. The most significant impact has been the disruptions to global supply chains that have been widely reported. For Korvest this has meant delayed overseas shipments together with very significant increases in the freight cost to import goods.

In January 2022 we are now seeing workforce disruptions as staff are required to isolate as either COVID cases or close contacts of a COVID case.

Industrial Products

The EzyStrut business had a very strong first half. This business generally supplies either one or two major projects at any given time however, in the current half, four major projects were supplied. As a result, the contribution from major projects was higher compared to the PCP. Furthermore, the small project and day- to-day market also improved when compared to the PCP with all states experiencing improved revenue. It should be noted that significant input cost increases (steel and freight) required EzyStrut to pass these onto customers via price rises and these have also contributed to the increase in revenue.

Inventory increased during the first half due to a combination of higher raw material costs, projects items and increased holdings to mitigate COVID-19 related supply chain risks.

Production

The Galvanising business also had a very strong half with overall volumes almost reaching the record level for the last decade. Galvanising benefited from the strong EzyStrut trading as all of the EzyStrut major projects utilise galvanised product. This resulted in record internal tonnes for the half. External tonnes were marginally below the levels that have been achieved in recent halves although the average sell price was higher than it was in the PCP. Price rises to customers were required to counteract the cost of zinc which. increased by 23% in Australian dollar terms during the half.

Dividends

On 21st January 2022 the Directors announced a fully franked interim dividend of 25.0 cents per share.

The Dividend Reinvestment Plan (DRP) will not operate for the interim dividend. The dividend will be paid on 4 March 2022 and the record date is 18 February 2022.

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Korvest Ltd

Directors' Report

Events Subsequent to Reporting Date

No matter or circumstance has occurred subsequent to 31 December 2021 that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent years.

2022 Outlook

Korvest begins the second half with a strong order book of major infrastructure project work. However, it is not expected that project work in the second half will match the record levels delivered in the first half. The small project and day-to-day markets are expected to maintain recent activity levels. Considering these factors, prior to the potential impacts of COVID-19 mentioned below, it is expected that the second half result will be more comparable with 2H FY21 than with 1H FY22.

The significant unknown is what the impact of the COVID-19 pandemic will be on Korvest's operations and customer base over the remainder of the financial year. Like most other businesses, Korvest has experienced workforce disruption in January with workers being unable to attend work due to contracting COVID-19 or being a close contact. It is not possible to estimate the impact on trading over the next 3-6 months that any ongoing workforce disruptions will have.

From a longer term perspective, the infrastructure pipeline for the next 3-5 years remains strong. Therefore, Korvest's market opportunities remain strong over that period.

Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001

The lead auditor's independence declaration is set out on page 5 and forms part of the Directors' report for the half-year ended 31 December 2021.

Rounding Off

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 and in accordance with that Instrument, amounts in the financial report and Directors' report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Dated at Kilburn this 21st day of January 2022.

Signed in accordance with a resolution of the Directors:

1. Stobart Chairman

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Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001

To the Directors of Korvest Ltd

I declare that, to the best of my knowledge and belief, in relation to the review of Korvest Ltd for the half- year ended 31 December 2021 there have been:

1. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and
2. no contraventions of any applicable code of professional conduct in relation to the review.

KPMG	Paul Cenko
	Partner
	Adelaide
	21 January 2022

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