KORVEST LTD — AGM Information 2024

Oct 24, 2024

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ABN 20 007 698 106

CHAIRMAN’S ADDRESS TO SHAREHOLDERS

MANAGING DIRECTOR’S ADDRESS TO SHAREHOLDERS

Delivered at the Annual General Meeting on Friday 25[th] October 2024

Ladies and Gentlemen,

This morning I will be commenting on the 2024 financial year as well as providing an update on our current trading conditions. I’ll then hand over to Chris Hartwig to provide more detail on both last financial year and the year ahead.

FINANCIAL RESULTS

In Financial year 2024 Korvest’s profit after tax was $11.0 million and this was the third consecutive year where profit after tax has met or exceeded $11 million. These last three years represent a significant jump from where the business had historically traded. The FY24 revenue of $102.9 million fell just short of the record revenue of $107.5 million achieved in FY23. This was due to a significant reduction in major project revenue in FY24. However improvement in the day-to-day market mitigated the impact of the reduced major project revenue. The impact on profit of the reduced revenue in FY24 was pleasingly moderated by the business being able to achieve improved margins.

EzyStrut supplied four major projects during FY24 with one completed and two nearing completion during the year. Chris will speak in more detail about the current and future pipeline of major project work.

The Galvanising business performed strongly despite plant volumes remaining unchanged. The lower levels of EzyStrut major project work

resulted in less work for Galvanising, however external tonnes galvanised was a record for the business to make up for the reduced EzyStrut work. Plant profitability improved as a result of the more efficient use of labour along with improved zinc consumption. Energy costs and carbon emissions remain a

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key consideration for the Galvanising business and a focus has been on projects to reduce the amount of gas being consumed. To provide certainty, gas supply is now contracted until December 2027.

We invested a record $4.5 million of capital expenditure in the business during FY24. Almost half of the investment was for projects that provide a new capability or improve productivity and capacity. We intend to continue this program of capital investment and are looking at further opportunities to develop the Kilburn site.

In addition to the reinvestment in the business, we were pleased to increase the final dividend to 40 cents to bring the total dividends related to the FY24 year to 65 cents.

CURRENT YEAR TO DATE AND OUTLOOK

Revenue in the first half of FY25 is expected to be at similar levels to the first half of FY24. However, margins are expected to be lower due to project

phasing and competitive pressure in the day-to-day market, which is likely to impact the comparative first half profit.

I would now like to hand over to Chris Hartwig to provide more detail on last year’s performance and the future.

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Thank you Andrew,

Ladies and Gentlemen, today I will be reflecting on the 2024 financial year and will also provide an update on the current trading conditions and key focus areas for Korvest going forward.

FINANCIAL YEAR 2024

FY24 was another very strong year, consolidating the strong growth achieved in both FY22 and FY23. Before I discuss the financial results, I would like to make a few comments regarding our safety performance and ESG.

FY24 was another improved year in terms of safety performance. The business achieved a 47% reduction in our lost time injury frequency rate following a large reduction in FY23. Significant effort has been invested in leadership training for our frontline supervisors, with the benefits being felt across a number of business activities.

Korvest’s ESG related activities continue to develop in a positive direction. A reduction of 11% for combined Scope 1 and 2 CO2e emissions was achieved, despite the introduction of our own fleet of trucks in the NSW branch. We have continued to focus on emission reduction projects predominantly via gas usage reductions, which are particularly important given the significant price increases Korvest has incurred for gas purchases. In August 2024 we successfully commissioned a heat exchanger to capture waste heat from the main kettle burner flue and use it to heat the pre-treatment baths. It is also planned to upgrade the main kettle gas burners and management system in March 2025, providing significant gas savings.

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We continued donations to staff-nominated not for profit organisations and charities under the Korvest Community Support Program and for the first time awarded the Korvest Mechanical Engineering and Advanced Manufacturing Scholarship in conjunction with UniSA.

As Andrew has already mentioned, FY24 had strong revenue of $102.9 million. This revenue led to a profit after tax of $11.0M, similar to the achievement in FY23. Both years had one-off gains that were reasonably similar in magnitude, being the derecognition of the environmental provision in FY23 and the profit on the NSW sub-lease in FY24.

In the Industrial Products group, the EzyStrut business had another very successful year. Major project work was down significantly compared to FY23. Much of this was due to the phasing of projects, with 3 projects either concluding or being close to completion during the year. At a state level, the results were mixed, with 3 states down and 2 states up, again with major projects being the key factor. Pleasingly, 4 of the 5 states achieved solid revenue growth in the day-to-day segment.

EzyStrut finished FY24 with 1 ongoing infrastructure project and 1 recently awarded infrastructure project that is yet to commence. It is expected at least 2 infrastructure projects will be awarded in FY25 and winning these remains a key priority for the business.

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Steel prices fluctuated in a reasonably controlled band during FY24. Steel prices are closely monitored and purchasing patterns managed carefully to ensure margins are protected. Overseas freight costs spiked and availability tightened as a result of geopolitical tensions.

Overall Capex spend increased during FY24, in part due to timing, with the final payment for the tube laser not occurring until July 2023. In addition, a deposit was paid for a new roll-former due imminently. This new machine will ensure we can improve our delivery on time performance and service additional day-to-day orders. As part of our move to a new facility in NSW, previously outsourced freight to customers has been insourced by purchasing trucks and these have been integrated seamlessly into our NSW operations and improved our service offering.

In the Production group, the Galvanising business performed well, improving both revenue and profitability. External volumes increased to record levels, whereas internal volumes were down, in the main due to product mix in the EzyStrut business. Zinc prices were relatively stable until the final quarter, which saw prices increase significantly. The cost of gas remained high but is partially offset by an external gas levy. The business has been focussed on reducing gas consumption via a number of initiatives, which delivered a reduction of 9% in the amount of gas used in FY24 versus FY23. This will improve further in FY25 via the projects already mentioned above. Gas supply and pricing has been locked in for calendar year 2026 and 2027 at slightly improved levels to those experienced in calendar 2024 and 2025.

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FINANCIAL YEAR 2025 OUTLOOK AND STRATEGY

The day-to-day market has remained reasonably healthy, but with an increased level of competition. Major project activity should improve throughout the financial year due to the commencement of supply on the recently awarded project. The pipeline of data centre work is strong. As already mentioned by Andrew, the lower margin currently experienced in the early part of FY25 and inflationary cost pressures are expected to impact the comparative profit before tax in the first half of FY25.

As previously advised, Korvest has undertaken a review of options for redevelopment of the Kilburn site with the objective of improving productivity, expanding capacity and meeting world’s best practice. The preferred option involves building an additional manufacturing facility on the Kilburn site. At present a planning approval application is currently under consideration by the relevant council.

Thank you for your time, and I will now hand the meeting back to the Chairman.

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