EMBELTON LIMITED — Interim / Quarterly Report 2021

Feb 18, 2021

==> picture [130 x 18] intentionally omitted <==

Half Yearly Report

EMBELTON LIMITED ABN 51 004 401 496

For Half Year Ended 31 December 2020

	Results for Announcement to the Market
				$A'000
Revenue from ordinary activities Up 2.6% to Profit from ordinary activities after income tax attributable to members Down 10.8% to Net profit for the period attributable to members Down 10.8% to				35,140
				848
				848
Dividends per Share			Franked amount per
		Amount per share
			share at 30% tax
Interim		20.0 cents	20.0 cents
Record date for determining entitlements to dividends			19 March 2021

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 1.

==> picture [130 x 18] intentionally omitted <==

Results for Announcement to the Market (Continued)

NTA Backing Net tangible asset per ordinary share
	Current Period	Previous corresponding period
	8.65	8.45

• For the purpose of determining net tangible assets the carrying value of the right of use asset and the related lease liability have been excluded from the net tangible assets at period end as well as other intangible assets

Dividends a) Dividends per Share Interim - current period - previous corresponding period	Dividends a) Dividends per Share Interim - current period - previous corresponding period
	Dividends per Share Interim - current period - previous corresponding period	Amount per share	Franked amount per share at 30% tax	Amount per share of foreign source dividend
		20.0 cents 20.0 cents	20.0 cents 20.0 cents	0 cents 0 cents

b)	Total Dividends Interim dividend - payable on 9 April 2021 Final June 2020 dividend paid on 9 October 2020	Current Period A$'000	Previous Corresponding Period A$'000
		432 432 864	432 432 864

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 2.

==> picture [130 x 18] intentionally omitted <==

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Half-Year Ended 31 December 2020

	Half Year Ended	Half Year Ended
	31 Dec 2020 ($'000)	31 Dec
Note		2019
		($'000)
Revenue	35,140	34,239
Cost of Sales	(25,501)	(24,902)
Gross Profit	9,639	9,337
Other Income	6	3
Less Expenses:
Manufacturing Expenses	(105)	(94)
Sales and Marketing Expenses	(3,354)	(4,096)
Storage and Distribution Expenses	(1,095)	(709)
Administration and Other Expenses	(3,825)	(3,052)
	1,266	1,389
Profit before income tax expense 2
	(418)	(438)
Income tax expense
	848	951
Net Profit for the period
	-	-
Other comprehensive income for the period
	848	951
Total comprehensive income for theperiod
Profit attributable to:	848
		951
Owners of the company
	-	-
Non-controlling interest
	848
		951
Total comprehensive income
Earnings per share
From continuing operations:
Basic (cents per share)	39.3c	44.1c
Diluted (cents per share)	39.3c	44.1c

The above statement of Profit should be read in conjunction with the accompanying notes.

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 3.

==> picture [130 x 18] intentionally omitted <==

Condensed Consolidated Statement of Financial Position as at 31 December 2020

		31 Dec 2020 ($'000)	30 June
			2020
			($'000)
Current Assets
Cash and cash equivalents		2,703	25
Trade and other receivables		7,832	12,604
Inventories		11,573	12,072
Other		596	156
Total Current Assets		22,704	24,857
Non-Current Assets
Property, plant and equipment		9,237	9,262
Right of use assets		597	450
Intangibles		364	397
Deferred tax assets		945	982
Total Non-Current Assets		11,143	11,091
TOTAL ASSETS		33,847	35,948
Current Liabilities
Trade and other payables		11,565	8,713
Borrowings		-	5,623
Lease liabilities		405	333
Current tax liabilities		732	584
Provisions		1,592	1,489
TotalCurrentLiabilities		14,294	16,742
Non-Current Liabilities
Deferred tax liabilities		71	154
Lease liabilities		227	168
Provisions		268	313
Total Non-Current Liabilities		566	635
TOTAL LIABILITIES		14,860	17,377
NET ASSETS		18,987	18,571
Equity
Issued Capital		1,156 1 17,830	1,156
Reserves			1
Retained earnings			17,414
TOTAL EQUITY		**18,987 **	18,571

The above statement should be read in conjunction with the accompanying notes.

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 4.

==> picture [130 x 18] intentionally omitted <==

Condensed Consolidated Statement of Cash Flows for the Half-Year Ended 31 December 2020

	Consolidated Entity	Consolidated Entity
	Half Year Ended
	31 Dec 2020 ($'000)	31 Dec
		2019
		($'000)
Cash flows from operating activities
Receipts from customers	44,686	37,872
Payments to suppliers and employees	(35,098)	(35,002)
Interest paid	(30)	(61)
Income taxes paid	(323)	(280)
Net cash provided by operating activities	9,235
		2,529
Cash flows from investing activities
	(286)
Payments for property, plant and equipment		(165)
Proceeds from sale of equipment	6	-
Net cash used in investing activities	(280)	(165)
Cash flows from financing activities
Repayment of borrowings	(5,623)	(1,500)
Repayment of lease liabilities	(222)	(241)
Dividends paid	(432)	(432)
Net cash used in financing activities	(6,277)	(2,173)
NET INCREASE IN CASH AND CASH EQUIVALENTS	2,678
		191
Cash and cash equivalents at beginning of period	25	35
CASH AND CASH EQUIVALENTS AT END OF PERIOD	2,703
		226

The above statement should be read in conjunction with the accompanying notes.

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 5.

==> picture [130 x 18] intentionally omitted <==

Condensed Consolidated Statement of Changes in Equity for the Half-Year Ended 31 December 2020

	for	the Half-Year Ended 31 December 2020
		Issued capital Foreign Curr. Trans. Reserve Retained earnings $’000 $’000 $’000	Total
			$’000
At 1 July 2019		1,156 6 16,120	17,282
Profit for the period		- - 951	951
Dividends paid		- - (432)	(432)
At 31 December 2019		1,156 6 16,639	17,801
Profit for the period		- (5) 1,207	1,202
Dividends paid		- - (432)	(432)
At 30 June 2020		1,156 1 17,414	18,571
Profit for the period		- - 848	848
Dividends paid		- - (432)	(432)
At 31 December 2020		1,156 1 17,830	18,987

The above statement should be read in conjunction with the accompanying notes.

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 6.

==> picture [130 x 18] intentionally omitted <==

Notes to the Condensed Consolidated Financial Statements for the Half-Year Ended 31 December 2020

1. Significant Accounting Policies

Statement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 ‘Interim Financial Reporting’. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 ‘Interim Financial Reporting’. The half-year financial report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report.

Basis of preparation

The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the company’s 2020 annual financial report for the financial year ended 30 June 2020

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period.

New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are relevant to the Group include:

• AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business

• AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material

The adoption of these amendments does not have a material impact on the financial statements of the Group.

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 7.

==> picture [130 x 18] intentionally omitted <==

2. Segment Information

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Managing Director (the chief operating decision maker) in assessing performance and in determining the allocation of resources.

The operating segments are identified by management based on the nature of the services provided. Discrete financial information about each of these operating businesses is reported to the Managing Director on at least a monthly basis.

The reportable segments are based on aggregated operating segments determined by the similarity of the services provided, as these are the sources of the Group’s major risks and have the most effect on the rates of return.

The reportable segments identified are unchanged from those identified previously.

Reportable segments

Commercial Comprises the supply and installation of various building materials and installation on commercial projects Merchandising Comprises the sale of various building materials into all other sectors Manufacturing Manufacturing operations supply to both market segments The following is an analysis of the revenue and results for the half year by reportable segment.

Half-year ended 31 December 2020	Commercial	Merchandising	Manufacturing	Consolidated
	$'000	$'000	$'000	$'000
Total Operating Revenue	21,910	13,684	3,665	39,259
LessEliminationonConsolidation	(536)	-	(3,583)	(4,119)
Total External Operating Revenue	21,374	13,684	82	35,140
Segment result	1,075	303	(34)	1,344
Unallocated Expenses				(78)
Total Operating Profit before Income Tax Expense				1,266
Income Tax Expense				(418)
Profit for the Period				848
Half-year ended 31 December 2019
Total Operating Revenue	19,696	15,523	3,146	38,365
LessEliminationonConsolidation	(1,138)	-	(2,988)	(4,126)
Total External Operating Revenue	18,558	15,523	158	34,239
Segmentresult	866	526	147	1,539
Unallocated Expenses				(150)
Total Operating Profit before Income Tax Expense				1,389
Income Tax Expense				(438)
Profit for the Period				951

Half-year ended 31 December 2019
Total Operating Revenue	19,696	15,523 3,146	38,365
LessEliminationonConsolidation	(1,138)	- (2,988)	(4,126)
Total External Operating Revenue	18,558	15,523 158	34,239
Segmentresult	866	526 147	1,539
		Unallocated Expenses	(150)
Total Operating Profit before Income Tax Expense			1,389
		Income Tax Expense	(438)
		Profit for the Period	951

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 8.

==> picture [130 x 18] intentionally omitted <==

Notes to the Condensed Consolidated Financial Statements for the Half-Year Ended 31 December 2020 (cont’d)

3. Dividends

3.	Dividends
		Half Year Ended
		2020	2019
		$'000	$'000
	Recognised amounts
	Fully paid ordinary shares
	Final dividend of 20.0 cents per share (2019 – 20.0 cents)	432	432
		432	432
	Unrecognised amounts
	Fully paid ordinary shares
	Interim dividend of 20.0 cents per share (2019 – 20 cents)	432	432

On 27 January 2021, the directors declared a fully franked interim dividend of 20 cents per share to the holders of fully paid ordinary shares in respect of the half-year ended 31 December 2020, to be paid to the shareholders on 09 April 2021. This dividend has not been included as a liability on these financial statements.

4. Contingencies and commitments

There have been no changes in contingent liabilities, contingent assets or commitments since the last annual reporting date 30 June 2020.

6. Subsequent events

There has not been any matter or circumstance occurring subsequent to the end of the half- year that has significantly affected, or may significantly affect, the operations of the company, the results of those operations, or the state of affairs of the company in future financial years.

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 9.

==> picture [130 x 18] intentionally omitted <==

EMBELTON LIMITED and its Controlled Entities

Directors' Report

Your Directors present their report on the consolidated entity of Embelton Limited and controlled entities for the half-year ended 31 December 2020.

In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

The Directors in office during and since the end of the half-year are:

Mr G R Embelton (Chairman) Mr J R Baldwin (Non-executive Director) Mr M S Crabb (Non-executive Director) Mr J J Embelton (Managing Director)

Review of Operations

Contracts awarded to the Group prior to the pandemic, predominantly for large supply and installation projects, enabled revenue to be maintained during the period. However, the many challenges arising from Covid, especially the constant but unpredictable interruptions to contract works, impaired operating margins and adversely affected first half earnings.

And although the pipeline of further awarded work that has yet to commence remains solid, Covid related building delays are likely to affect the performance of the Group during the second half of this financial year. As such, cost management and continued diversification of the revenue model will remain an important focus.

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 10.

==> picture [130 x 18] intentionally omitted <==

Auditor’s Independence Declaration

A copy of the independence declaration by the auditor under Section 307C is included on page 13.

Rounding off of amounts

The company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the directors’ report and the half-year financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of directors made pursuant to s.306(3) of the Corporations Act 2001.

On behalf of the Directors

==> picture [116 x 51] intentionally omitted <==

J J Embelton Director Melbourne, 19 February 2021

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 11.

==> picture [130 x 18] intentionally omitted <==

Declaration by Directors

The Directors declare that:

1. in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

2. in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 , including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.

This declaration is made in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act 2001 .

On behalf of the Directors

==> picture [116 x 51] intentionally omitted <==

J J Embelton Director

Melbourne, 19 February 2021

Embelton Limited and Controlled Entities – Half Yearly Report to 31 December 2020

Page 12.

==> picture [142 x 28] intentionally omitted <==

Deloitte Touche Tohmatsu ABN 74 490 121 060

477 Collins Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

DX: 111

Tel: +61 (0) 3 9671 7000 Fax: +61 (03) 9671 7001 www.deloitte.com.au

19 February 2021

The Board of Directors Embelton Limited 147-149 Bakers Road COBURG VIC 3058

Dear Board Members

Embelton Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Embelton Limited.

As lead audit partner for the review of the financial statements of Embelton Limited for the financial halfyear ended 31 December 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(ii) any applicable code of professional conduct in relation to the review.

Yours sincerely

==> picture [127 x 24] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

==> picture [64 x 43] intentionally omitted <==

Craig Bryan Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte Organisation.

Page 13.

Deloitte Touche Tohmatsu ABN 74 490 121 060

==> picture [140 x 27] intentionally omitted <==

477 Collins Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

DX: 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (03) 9671 7001 www.deloitte.com.au

Independent Auditor’s Review Report to the Members of Embelton Limited

We have reviewed the half-year financial report of Embelton Limited (the “Company”), which comprises the condensed consolidated statement of financial position as at 31 December 2020, the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of cash flows and the condensed consolidated statement of changes in equity for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration as set out on pages 3 to 9 and 12.

Based on our review, which is not an audit, we have not become aware of any matter than makes us believe that the half-year financial report of the Company is not in accordance with the Corporations Act 2001, including:

• (a) giving a true and fair view of the Company’s financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Half-year Financial Report section of our report. We are independent of the Company in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s AOES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Directors’ Responsibilities for the Half-year Financial Report

The directors of the Company are responsible for the preparation of the half-year 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 half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Review of the Half-year Financial Report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Company’s financial position as at 31 December 2020 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Asia Pacific Limited and the Deloitte Organisation.

Page 14.

==> picture [98 x 19] intentionally omitted <==

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

==> picture [126 x 24] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

==> picture [64 x 43] intentionally omitted <==

Craig Bryan Partner Chartered Accountants Melbourne, 19 February 2021

Page 15.