December 2016: Appendix 4D

Appendix 4D Korvest Ltd ABN 20 007 698 106 Half-Year Financial Report 31 December 2016

Appendix 4D Half-Year Financial Report

Results for announcement to the market: $A'000

Revenues Net loss after tax for the period attributable to members	Down 22.1% Up 1,074.0%	to to	21,285 (1,033)
Dividends	Amount per security	Franked amount per security
Interim dividend (#)	10.0¢	10.0¢
- current reporting period
- previous corresponding period	10.0¢	10.0¢
# Interim dividend proposed in respect of the current reporting period. The financial effect of this dividend will be recognised in the next reporting period.
Record date for determining entitlements to the dividend	24 February 2017
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 2016 annual financial 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 2016 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:

Graeme Ambery Billings BCom, FCA, MAICD Age 60

Chairman - appointed 18 December 2014 Independent Non-Executive Director Director G.U.D. Holdings Limited

Director Clover Corporation Limited Chairman Azure Healthcare Ltd Director Domacom Ltd

A Director since May 2013

Gary Nigel Francis BSc. HON. (Civil), MAICD

Age 61

Independent Non-Executive Director Chairman of Remuneration Committee A Director since February 2014

Gerard Patrick Hutchinson MBA, MBL, MSc(IS), BEc, MA (research), FCA, FAICD, FAIM Age 48

Independent Non-Executive Director - appointed 19 November 2014 Chairman of Audit Committee

Former Managing Director AusGroup Limited A Director since November 2014

Andrew William Stobart B. Eng (Hons), Grad Dip Bus Admin, GAICD Age 62

Independent Non-Executive Director - appointed 1 August 2016

Alexander Henrik Wilhelm Kachellek BSc. CENG, MIET, FAICD Age 63

Managing Director

A Director since June 2007 Chairman Austmine Ltd

Steven John William McGregor BA (Acc), CA, AGIA, ACIS Age 45

Finance Director

A Director since January 2009 Company Secretary since April 2008

Peter Brodribb F.I.E (Aust) Age 72

Non-Independent Non-Executive Director - Retired on 28 July 2016 A Director since 1984

Result

The (loss) / profit for the half-year attributable to the members of the Company was:

31 Dec 16 (1,033)	31 Dec 15 (88)
(1,033)	(88)

In thousands of AUD

(Loss) / Profit after income tax expense

Net (loss) / profit attributable to members of the Company

Other Ratios

Net tangible asset (NTA) backing	31 Dec 16	31 Dec 15
Net tangible assets per ordinary share	$2.77	$3.00
Loss before tax / revenue	(6.8)%	(0.5)%
Loss after tax / equity interests	(3.4)%	(0.3)%

Review of Operations

Revenue from trading operations for the half-year decreased by 22.1% to $21.3 million. Day-to-day and project work remained subdued during the period however the completion of the major portion of the large LNG project in the second half of FY16 was the dominant factor in the reduced revenue during the first half.

Industrial Products

The EzyStrut business suffered from the lack of major project work during the period. Most geographical regions experienced reduced activity levels compared to the prior comparative period (PCP). The exception to this was the NSW market where revenue improved in line with the increased infrastructure activity in that market.

Domestic markets currently have excess capacity and as a result orders are aggressively targeted by numerous competitors. This has resulted in a decline in margins compared to the PCP.

For the past few years international markets in South East Asia have been pursued to mitigate the impact of declining domestic markets. Late in the period this strategy was reviewed and it was decided to substantially reduce cost associated with this focus. Costs associated with this strategy were approximately $400k in the first half and these costs will not be repeated in the second half.

The Power Step and Titan Technologies businesses reported their best combined result for a half year under Korvest's ownership. This was principally as a result of a sizeable Power Step order that was supplied in the first quarter.

Production

The Galvanising business continues to suffer from low plant volumes and in overall terms the tonnes processed through the plant deteriorated during the first half to the lowest levels for over a decade. During the first half there was some modest improvement in external tonnes however this was more than offset by a sharp reduction in internal tonnes. Surplus capacity in the SA and Victorian markets has increased competition for the galvanising business and resulted in pricing pressures. In addition margins have come under pressure from the cost of zinc increasing over the period.

Dividends

The Directors announced a fully franked interim dividend of 10.0 cents per share.

The Dividend Reinvestment Plan (DRP) will operate for the interim dividend with the issue price calculated at a 2.5% discount to the volume weighted average market price for the period from 23 February 2017 to 1 March 2017. The dividend will be paid on 10 March 2017 and the record date is 24 February 2017.

Events Subsequent to Reporting Date

Events subsequent to the reporting date are included in Note 14 of the Condensed Notes to the Interim Financial Report.

There are a number of domestic infrastructure projects expected to commence supply in the second half of FY 2017 which will result in increased activity in markets serviced by Korvest. Korvest is well placed to benefit from the increased activity levels. This improved level of activity coupled with a lower cost base attributed to the international business activity is expected to result in a return to profitability in the second half.

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 2016.

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 25th day of January 2017.

Signed in accordance with a resolution of the Directors:

GA Billings AHW Kachellek

Director Director