KORVEST LTD — Annual Report 2023

Jul 23, 2023

2023 Results Chris Hartwig and Steven McGregor

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Cable & Pipe Supports

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Introduction to Korvest

• Korvest (ASX:KOV) is headquartered in South Australia and provides cable and pipe supports and galvanising services

• • Listed in September 1970

• Korvest has sales offices and warehouses in Adelaide, Melbourne, Sydney, Brisbane and Perth, with distributors in Darwin, Townsville, Hobart and New Zealand

• Manufacturing, fabrication and galvanising in Adelaide

• Overseas supply chain provides make vs buy flexibility

• Sell to a wide variety of industry sectors

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Headline Numbers

June 23 June 22 % Change

Sales	$107.48m	$99.22m	8.3%
EBIT	$16.08m	$16.00m	0.5%
NPAT	$11.18m	$11.34m	(1.4%)
Operating cash flow	$14.94m	$3.99m	274.4%
EPS	96.7c	99.0c	(2.3%)
Dividend per share	60c	60c	-

Profit After Tax

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8,000 7,036
6,662
7,000
6,000
5,000 4,300 4,515
4,000 3,219
2,835
3,000
2,000
1,000
0
FY21 1H FY21 2H FY22 1H FY22 2H FY23 1H FY23 2H
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• Record annual EBIT

• $560k non-recurring benefit from derecognition of site restoration provision

• Profit on sale of PSA/TT in 1H FY22 ($740k EBIT)

• Record operating cash generated

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Industrial Products

June 23 June 22 % Change

Sales $97.71m $91.13m 7.2% EBIT $14.49m $14.80m (2.1%) EBIT % 14.8% 16.2%

Trading Update

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• 6 major projects supplied during the year

• 3 major projects completed during year

• 3 major projects ongoing into FY24

• Overall project revenue lower in FY23

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•
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• Day-to-day activity improved

• Margins held despite input cost increases

• Higher domestic freight costs

• Increased staffing costs to attract/retain staff

• Infrastructure pipeline remains strong

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Production Services

Services
	June 23	June 22	% Change
Sales	$9.78m	$7.86m	24.4%
EBIT	$1.65m	$1.29m	27.9%
EBIT %	16.9%	16.4%

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Galvanising volume
FY19 FY20 FY21 FY22 FY23
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Trading Update

• Moderate external volume growth

• • Internal volume reduced with lower EzyStrut project work

• Sell prices increased to offset input cost increases

• Cost of Zinc higher in FY23

• New gas rates from 1 Jan 23, 2H costs 72% higher than 1H

External Internal

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Key initiatives

Automation

• Robotic Ladder Weld Cell received significant mechanical and programming upgrades and has now reached handover, output now at improved levels

• Optical tray checking now operational

• Additional automation projects ongoing

Operational & cost optimisation

• Tube laser has landed in Australia, commissioning early in 1H

• Gas reduction projects ongoing. Long lead time components ordered

• Options for site redevelopment being explored

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Balance Sheet

ASSETS $m June 2023 June 2022 June 2021

Cash & Investments	9.2	3.8	7.0
Receivables	18.9	16.9	14.2
Inventories	16.8	20.5	12.4
Property, Plant & Equipment	20.4	19.2	16.6
Right-of-use Asset	4.9	5.2	6.1
Other	0.5	0.3	0.2
Total Assets	70.7	65.9	56.5
LIABILITIES
Payables	(9.7)	(9.2)	(8.5)
Lease Liabilities	(5.2)	(5.5)	(6.2)
Other Liabilities	(6.8)	(7.4)	(5.9)
Total Liabilities	(21.7)	(22.1)	(20.6)
NET ASSETS	49.0	43.8	35.9

Record cash balance

Increase due to strong May/June 2023 sales

Reducing post COVID

Land & Buildings revalued up by $814k June 23 & $1.9m June 22

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Dividends

	FY 2023	FY 2022	FY 2021	FY 2020	FY 2019
Interim	25c	25c	15c	15c	9c
Final Dividend	35c	35c	20c	13c	13c
Total Dividend	60c	60c	35c	28c	22c
Franking	100%	100%	100%	100%	100%

DRP suspended for final dividend

Key Dates Record Date: 18 August 2023 Payment Date: 6 September 2023

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Outlook

• Major infrastructure projects will continue to be supplied throughout FY24

• 3 current projects continue into FY24

• Day-to-day and project markets expected to remain strong subject to broader economic conditions

• Working capital levels steady

• Gas contracted for calendar 2024 and 2025 at similar levels to current pricing

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Company Overview

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Industrial Products

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• Cable and pipe supports

• Market leader in cable supports

• Manufacturing facility in Kilburn, SA

• Overseas supply chain

• Sells to EPCMs, Wholesalers, and direct to project contractors

• Local manufacture allows quick response time and ability to manufacture specials – a differentiator to overseas competition

• National sales and warehouse network

• Vertical integration with Korvest Galvanisers

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Production Services

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• Longest galvanising kettle in Australia (14m)

• South Australia’s only centrifuge plant (national market)

• Predominantly structural work for SA projects or fabrications

• In-house work for EzyStrut

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Industrial Products

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Australia’s leading range of cable & pipe supports. www.ezystrut.com.au

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Quick turnaround galvanising of the largest, smallest, and most complex construction members. www.korvestgalvanisers.com.au

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