Korvest : Annual Report 2021

Annual Report

Korvest Ltd

and controlled entities

(ABN 20 007 698 106)

30 June 2021

Table of Contents
DIRECTORS' REPORT ..............................................................................................................................................................	3
REMUNERATION REPORT - AUDITED.....................................................................................................................................	9
5 YEAR SUMMARY ...............................................................................................................................................................	20
FINANCIAL STATEMENTS......................................................................................................................................................	21
ASX ADDITIONAL INFORMATION .........................................................................................................................................	64

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Korvest Ltd

Directors' report

The directors present their report together with the consolidated financial statements of the Group comprising of Korvest Ltd ('the Company') and its subsidiaries for the financial year ended 30 June 2021 and the auditor's report thereon.

DIRECTORS

The directors of the Company at any time during or since the end of the financial year are:

Name, qualifications and	Experience, special responsibilities and other
independence status	directorships
Graeme Billings	Appointed Chairman 18 September 2014
BCom FCA MAICD	A Director since May 2013
Chairman	Mr Billings retired from PricewaterhouseCoopers in
	2011 after 34 years where he was a senior partner in
	the assurance practice.
	Chairman G.U.D. Holdings Limited
	Director Clover Corporation Limited
	Chairman Austco Healthcare Ltd
	Member of Audit and Remuneration Committees
Chris Hartwig	A Director since 28 February 2018
BA(Acc), MAICD	Mr Hartwig has held a number of senior roles in the
Managing Director	steel and electrical manufacturing industries.
	Director Galvanising Association of Australia
Gerard Hutchinson	A Director since November 2014
MBA, MBL, MSc(IS), BEc, MA	Mr Hutchinson has held roles of Chief Financial Officer
(Research), FCA, FAICD, FAIM	and Managing Director in a range of large and publicly-
Independent Non-Executive	listed businesses across the construction, engineering
Director	sectors. He is currently Chief Financial Officer for
	Elegancia Group.
	Chairman of Audit Committee and member of
	Remuneration Committee
Gary Francis	A Director since February 2014
BSc. (Hons) (Civil), MAICD	Mr Francis has worked in the construction industry at
Independent Non-Executive	Senior Manager or Director level in Australia and Asia.
Director	Chairman of Remuneration Committee and member of
	Audit Committee
Andrew Stobart	A Director since August 2016
B. Eng (Hons), Grad Dip Bus Admin,	Former Chairman Nexans Olex Australia & New
GAICD	Zealand
Independent Non-Executive	Member of Audit and Remuneration Committees
Director
Steven McGregor	Company Secretary since April 2008
BA(Acc), FCA, AGIA, ACG	Appointed as Finance Director 1 January 2009
Finance Director	Mr McGregor previously held the role of Chief
	Operating Officer and Company Secretary for an
	unlisted public company. Prior to that he spent 9 years
	in the assurance division of KPMG.

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Korvest Ltd

Directors' Report

For the year ended 30 June 2021

COMPANY SECRETARY

Mr Steven J W McGregor FCA, AGIA, ACG, BA(Acc) was appointed to the position of company secretary in April 2008. Mr McGregor previously held the role of Chief Operating Officer and Company Secretary with an unlisted public company for seven years.

RETIREMENT AND RE-ELECTIONS

In accordance with the Constitution, Gerard Hutchinson retires from the Board at the forthcoming Annual General Meeting on 22 October 2021 and offers himself for re-election.

DIRECTORS' MEETINGS

The number of directors' meetings, including meetings of committees of directors, and number of meetings attended by each of the directors of the Company during the financial year are:

Director		Board		Audit	Remuneration	Nomination
	Committee	Committee	Committee
	A	B	A	B	A	B	A	B
Mr G Billings	14	14	4	4	3	3	2	2
Mr G Francis	14	14	4	4	3	3	2	2
Mr G Hutchinson	14	14	4	4	3	3	2	2
Mr A Stobart	14	14	4	4	3	3	2	2
Mr C Hartwig	14	14	-	-	-	-	-	-
Mr S McGregor	14	14	-	-	-	-	-	-

A = Number of meetings attended

B = Total number of meetings available for attendance

FINANCIAL RESULTS

The revenue from trading activities for the year ended 30 June 2021 (FY21) was $69.786m, up 10.6% on the previous year. This improvement was due to a significant increase in activity in the second half of the year after the first half revenue was 9.7% down on the prior year. As a result of trading conditions in May 2020, compared to May 2019, the Group qualified for the Government JobKeeper subsidy for the period from May to September 2020 with $1.864m of income from this subsidy included in the FY21 result following on from the $1.059m that was included in the FY20 result. More details on the impact and response to COVID-19 are provided in the review of operations on page 6. The Group recorded a profit after tax of $6.054m compared to $4.027m in the previous year.

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Korvest Ltd

Directors' Report

For the year ended 30 June 2021

DIVIDENDS

The directors announced a fully franked final dividend of 20.0 cents per share (2020: 13.0 cents per share) following an interim

dividend of 15.0 cents per share at the half year (2020: 15.0 cents per share). The Dividend Reinvestment Plan (DRP) will remain suspended for the final dividend. The dividend will be paid on 3 September 2021 with a record date of 20 August 2021.

A summary of dividends paid or declared by the Company to members since the end of the previous financial year were:

		Total
	Cents per	amount	Franked/
	share	$'000	unfranked	Date of payment
Declared and paid during the year 2021
Interim 2021 ordinary	15.0	1,699	Fully franked	5	March 2021
Final 2020 ordinary	13.0	1,470	Fully franked	4	September 2020
Total amount		3,169

Franked dividends declared and paid during the year were franked at the rate of 30 per cent.

Declared after end of year

After the reporting date the following dividends were proposed by the directors. The dividends have not been provided for and there are no income tax consequences to the Company.

Final ordinary	20.0	2,268	Fully franked	3 September 2021
Total amount		2,268

The financial effect of these dividends has not been brought to account in the financial statements for the year ended 30 June 2021 and will be recognised in subsequent financial reports.

	Note	Total
		amount
		$'000
Dividends have been dealt with in the financial
report as:
Dividends	18	3,169
Dividends - subsequent to 30 June 2021	18	2,268

PRINCIPAL ACTIVITIES, STRATEGY AND FUTURE PERFORMANCE

The principal activities of the Group consist of hot dip galvanising, sheet metal fabrication, manufacture of cable and pipe support systems and fittings, design and assembly of access systems for large mobile equipment and sale, repair and rental of high torque tools.

The Group is comprised of the Industrial Products Group which includes the EzyStrut, Power Step and Titan Technologies businesses and the Production Group which includes the Korvest Galvanisers business.

Korvest's businesses service a number of major markets including infrastructure, commercial, utilities, mining, food processing, oil & gas, power stations, health and industrial segments.

Demand from the infrastructure sector has been increasing over recent years and this continued throughout FY21. Road and rail tunnels, primarily on the East Coast, is where the bulk of the infrastructure activity is occurring. One major project was supplied through FY21 and will continue into FY22. Late in the year, supply commenced on two further major infrastructure projects which will continue during FY22. As a result of the unprecedented levels of large project work, coupled with a buoyant general market, Korvest enters FY22 with record levels of work on hand.

To ensure that Korvest is able to supply the significant market opportunities over the forthcoming years, investment will continue to be focussed on improvements to factory capacity and capability. This will build on a range of productivity initiatives that have been undertaken over recent years.

Korvest has a long history of paying franked dividends. The target dividend payout ratio range is 65-90% of after tax profits.

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