ANNUAL
REPORT
2O15-16
B E L L A M Y ’ S A U S T R A L I A L I M I T E D
This report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A.
CORPORATE DIRECTORY
Principal registered office and
principal administration office
Bellamy’s Australia Limited
115 Cimitiere Street
Launceston TAS 7250
T: (03) 6332 9200
F: (03) 6331 1583
bellamysorganic.com.au
Company Secretary
Brian Green
Location of share registry
LINK Market Services
Level 1, 333 Collins Street
Melbourne VIC 3000
Bellamy’s Australia Limited
ABN 37 124 272 108
ASX Code: BAL
Directors
Rob Woolley
(Chair)
Laura McBain
(Managing Director and
Chief Executive Officer)
Ian Urquhart
(Resigned 30 June 2016)
Michael Wadley
Launa Inman
Patria Mann
Charles Sitch
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Bellamy’s is a long-term growth
story: the opportunity for the
Bellamy’s brand is vast, and our
ambition for continuing growth
is underpinned by a clear vision,
strong brand, depth of category
understanding, supply chain,
and agility.
CONTENTS
Corporate Directory
Inside Cover
Message from the Chair and Managing Director
Company Overview
Review of Operations
Financial Review
Risk Management
Board of Directors
Executive Team
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Financial Statements
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
5
7
9
23
29
30
32
33
37
51
54
55
56
57
58
86
87
89
3
A year of very strong growth
EBIT up 342%
to $54.3m
Revenue up
95% to $245m
China revenues
up 331%
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Message from the Chair
and Managing Director
In the 24 months since our listing in August
to leverage our distribution and manufacturing
on our long term vision to be a leading global
2014, Bellamy’s has delivered two consecutive
relationships.
years of strong and growing profits for our
shareholders. We have done this through our
agility, focus and passion for growing a strong
international organic food and formula brand
from our home in Launceston.
A key to our success has been our ability
to significantly increase organic ingredients
available to us, and convert that to baby
formula through our manufacturing partners.
We have strengthened and developed our
Deep at the heart of Bellamy’s is a fundamental
belief that there are three basics that every
strategic supply, manufacturing and distribution
capabilities, and this includes our agreements
child should have - the love and respect of their
with Fonterra and Tatura Milk Industries. We
parents, a safe and secure home in which to
continue to develop strong relationships with
grow up, and healthy wholesome food to eat.
local and global farmers that can provide quality
Bellamy’s aim is to deliver on the third pillar by
organic ingredients. We have also strategically
offering nutrition for children as it should be:
taken steps to ensure increasing local supply
uncomplicated, simple, organic and safe.
of organic ingredients by working closely with
The shifting consumer mindset towards health
foods, wellbeing and organic sees an increased
understanding of, and demand for, Bellamy’s
organic farming.
Australian farmers to source our ingredients and
support them in the journey of converting to
Sitch.
quality organic products. We have leveraged
Our consumers – parents and their children
this trend by simply adhering to our core
– remain at the heart of our operations. We
business philosophy, continuing to strengthen
are working strategically to communicate
the brand, engaging highly talented and
our understanding of the need for pure,
passionate people into our team, and working
uncomplicated nutrition to new, expectant
with world class organic farmers, manufacturers
and existing parents through the channels
organic baby food and formula company, we
expanded our team over the last 12 months
across various aspects of the business including
production and quality, marketing and logistics.
We strengthened our senior leadership team
with the appointment of Andrew Cohen as Chief
Operations & Strategy Officer, and Katherine
Henry as Executive Director People & Culture.
Having been a Director since inception, Ian
Urquhart retired from the Board at the 30th
of June. Ian played an important role in the
growth and them evolution of the company to
its present listed position. In the second half of
the year we appointed two experienced non-
executive Directors, Patria Mann and Charles
We have laid the groundwork to support our
growth plans into FY17 and beyond. We will
continue to build on the core fundamentals
of our brand, enhancing and surrounding this
with great people, world class manufacturers
and suppliers, and strong distribution focus
in traditional and e-commerce. We look to
continue to build opportunities for Bellamy’s
in new geographies and enhance our offering
with new products. We are excited by the
opportunities that lie ahead and are assured
by the strong foundation we have in place, and
continue to strengthen, to underpin sustainable
long term growth for Bellamy’s.
and suppliers.
In FY16 Bellamy’s earnings before interest and
tax (EBIT) was up 342% to $54.3 million and
revenue grew by 95% to $244.6 million. Our
results are built on the strength of the Bellamy’s
brand and the dedication and passion of the
entire Bellamy’s team, our manufacturers,
suppliers, distributors and retailers.
Bellamy’s aims to be a world leader in organic
infant nutrition.
Expansion into new global markets is a key
pillar of our long term growth strategy and
during the second half of FY16 Bellamy’s began
developing strategic distribution partners in
multiple markets to set the groundwork for
expansion into new countries. We scan new
market opportunities and assess markets
based on size potential, market gap and ability
that resonate with them. We pride ourselves
on the loyalty and trust that we have built with
thousands of parents and Bellamy’s babies.
We truly value the supportive community our
parents are building and we are continually
working to enhance this positive brand
experience. In FY16 our focus on social and
digital media has fostered substantial growth of
We again thank all of those who have supported
an engaged online Bellamy’s community. Our
Bellamy’s in meeting our growth targets. We
Facebook audience alone has increased roughly
are focused on continuing to grow Bellamy’s
45% per cent in 12 months to nearly 90,000.
while supporting the further growth of the
We have seen growth not just in formula but
organic industry in the year ahead.
also in our food range. We are the number one
brand in Australia for baby cereals and pastas,
and the fastest growing brand in ready to eat
baby food pouches.
In order to support our growth and ensure
we have the infrastructure in place to deliver
Rob & Laura
5
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Company Overview
Bellamy’s is an Australian producer, supplier
also available through multiple online retail
We understand parents’ desire to offer their
and marketer of 100% organic baby food and
platforms.
baby formula. Headquartered in Tasmania,
Bellamy’s offers a range of organic food and
formula products for babies and toddlers,
starting with an organic infant formula
suitable from birth. Our products are currently
distributed in Australia, Vietnam, Singapore,
Malaysia, People’s Republic of China, Hong
Kong, and New Zealand. The products are
Our growth story
Operating for 13 years
Bellamy’s has a deep understanding of the
complex organic global supply chain and
children pure, simple, uncomplicated nutrition.
This understanding is at the core of everything
we do, and is a key differentiator of Bellamy’s.
through our strong relationships with key
With a clear vision, strong brand, depth of
suppliers we have been able to promote and
category understanding, strong supply chain,
develop the organic food industry. We work
and agility, Bellamy’s is uniquely placed to
closely with organic farmers, manufacturers and
continue its growth trajectory, deliver its
various supply chain partners to deliver high
products to more parents globally, and grow
quality organic foods for babies and toddlers.
shareholder value.
Aug 2014
Bellamy’s formula manufacturer
(Tatura Milk - TMI) receives China
accreditation
2003
Established in Launceston,
Australia. Producing Australia’s first
organically certified baby food
2012
Established distribution
partnerships in Malaysia
& Vietnam
Nov 2015
Bellamy’s enters strategic
manufacturing arrangements
with Fonterra Australia
2007
Acquired by Tasmanian
Pure Foods Ltd
2011
Sales & distribution
teams established in
China & Singapore
Aug 2014
Bellamy’s Australia Limited (BAL)
listed on the Australian Securities
Exchange
Mar 2016
Admission to
S&P/ASX 200 Index
July 2015
Long term infant formula supply
agreement signed with Bega Cheese
subsidiary, Tatura Milk
7
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Review of Operations
A track record of optimising returns
Bellamy’s Revenue Growth ($m)
Bellamy’s Revenue Growth ($m)
139.5
139.5
105.1
105.1
67.9
67.9
57.4
57.4
26.8
26.8
24.1
24.1
1H14
1H14
2H14
2H14
BAL Revenue ($m)
BAL Revenue ($m)
1H15
1H15
2H15
2H15
1H16
1H16
2H16
2H16
Expon. (BAL Revenue ($m))
Expon. (BAL Revenue ($m))
Bellamy’s EBIT ($m)
Bellamy’s EBIT ($m)
35.1
35.1
AUD
AUD
millions
millions
$160
$160
$140
$140
$120
$120
$100
$100
$80
$80
$60
$60
$40
$40
$20
$20
$0
$0
AUD
AUD
millions
millions
$40
$40
$30
$30
$20
$20
$10
$10
$0
$0
A strong bond with our parents
No business can exist without its customers, but for us,
our customers are arguably more special than most. They
are all mothers and fathers, generally starting out on the
journey of parenthood – with no lessons and no manuals.
We realise that we play a role in that journey of joy and
discovery – and it’s one that has helped shape our brand.
At Bellamy’s, it’s our firm belief that babies everywhere
deserve to start life with three basic necessities: the love
and respect of their parents, the safety and security of a
loving home, and the goodness of wholesome food to eat.
It is this understanding that drives our mission: to produce
wholesome, organic food for babies and infants. We want
parents everywhere to be able to give their children a “Pure
Start to Life”. This one mission drives our entire supply
chain; from the finest organic ingredients sourced, to the
care taken in how our products are made at the highest
possible standards.
It is why we believe our parents have a strong bond and
deeper association with Bellamy’s than with other brands.
This has come through strongly from our information
resource pages and social media engagement. Mothers
and fathers look to us for information and reassurance,
provided simply and concisely, to help them come to their
19.2
19.2
own parenting decisions.
2
2
1H14
1H14
7
7
5.3
5.3
0.9
0.9
1H15
1H15
2H14
2H14
BAL EBIT ($m)
BAL EBIT ($m)
1H16
1H16
2H15
2H15
Expon. (BAL EBIT ($m))
Expon. (BAL EBIT ($m))
2H16
2H16
Bellamy’s social media engagement across key platforms
in Australia continued to outperform all others in the
category. As at 30 June 2016, Bellamy’s was the No. 1
baby food / infant formula brand by number of followers
across multiple platforms including Facebook, Twitter and
Instagram.
In China, we are quickly building a strong following
through social media and our word-of-mouth marketing
activities. The core brand proposition resonates in the
minds of parents in China as a brand offering safety and
trust. Combined with a strong agency presence and
our own on ground team, our digital media programs
will continue to build on the assets we have already
developed there.
Increasing brand awareness is critical to attracting new
mothers to the category.
9
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Review of Operations Continued
Where we play
Overall, distribution has continued to grow in
FY16, as reflected by the 95% growth in net
revenue over the last 12 months. Australia
continues to represent the majority of sales
– 78% in FY16, although a proportion of that
is sales through Australian retailers that make
their way to consumers in China.
Bellamy’s in Australia
In Australia, Bellamy’s products are distributed
in more than 4,400 outlets across major
retailers including Coles, Woolworths, Big W,
Target, Costco, Chemist Warehouse, Terry
White and Amcal.
We have also pushed deeper into independent
supermarkets and pharmacies, which provide
a strong growth channel. For example,
Bellamy’s continues to be the market leader in
Infant Foods in Pharmacy holding more than
50% market share at June 2016 (source: Aztec).
Bellamy’s in China
Bellamy’s recognises the importance of having
a multi-channel distribution strategy in China,
and providing easy access to our products for
parents regardless of their physical location.
This ensures that as the China market evolves,
we can remain agile and adapt to changing
consumer purchasing trends and government
regulations.
Segment revenues
$179m
Group Revenue $245m
Australia revenues
growing at 67%
$62m
China
revenues
growing
at 331%
SEA/Other
$4m
All Brands in Baby,
Toddler & Kids
Website
Facebook
Instagram Twitter
YouTube
1st Bellamy’s Organic
2nd Heinz for Baby
3rd Rafferty’s Garden
1st
3rd
10th
1st
2nd
3rd
1st
-
4th
1st
-
3rd
3rd
2nd
11th
Ranking of social engagement as listed by BrandData for Infant nutrition brands in the Australian marketplace
(branddata.com | August 2016)
Guangdong
Shanghai
Hong Kong
Vietnam
Singapore
Malaysia
Australia
New Zealand
11
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Review of Operations Continued
Over the past 12 months there has been a
continuing shift toward online purchasing of
imported infant formula products through third
party websites such as t-mall.com, jd.com,
and vip.com, with delivery to consumers via
free trade zones in China and local Chinese
providers. Our multi-channel distribution
strategy and strong online presence has
underpinned our growth in China and strongly
positions us to continue growing in this market.
In the offline (bricks and mortar) channel, we
continue to build a focused and sustainable
market presence, particularly in key mother
and baby chain stores. With more than 30
distributors, Bellamy’s products are now
stocked in over 2,000 stores across China,
predominantly in mother and baby chain stores.
In the online channel, we built on our flagship
store’s strong position on Tmall as one of the
top 10 baby formula stores, and launched
platforms on JD, Kaola, NetEase and VIP.
Reflecting our multi-channel distribution
strategy, we also commenced trading directly
with reseller networks during FY16 as part of a
broader strategy to remain flexible to changing
consumer purchasing trends. This has offered
meaningful experiences about parenting and
Over the past seven years, we have built
route to market efficiencies and increased
growth – another way we can engage with
a strong business in China. Our plan is to
brand penetration through the activation of the
Chinese parents.
resellers’ unique consumer networks.
The second half of FY16 saw a number of
Even though we estimate our market share to
regulatory changes announced, aimed at
currently be less than 1% of the overall China
putting in place a clear framework for cross
market, our current market share on online
border e-commerce channels and a broader
continue to maintain our presence across
multiple distribution channels, remain agile and
adapt to changes, while also increasing our
marketing investment to further build our brand
and distribution presence in the country.
channels was around 3% at the end of June.
product registration framework covering both
Bellamy’s in South East Asia
Supporting both online and offline sales
initiatives, we commenced a brand building
domestic and foreign infant formula products
within the Chinese market. Bellamy’s has
In June 2016, we entered into a strategic
distribution partnership to support Bellamy’s
partnership with BabyTree, the largest parenting
been aware of the intentions of the regulatory
continued growth in Singapore and Hong Kong
website in China, to improve Bellamy’s brand
awareness and penetration in China. BabyTree
is specifically aimed at the fast-growing China
maternity and baby industry. The platform
authorities and was able to respond to the
regulatory changes quickly and efficiently.
Having operated in China for over seven years,
we view the regulatory changes announced
offers parents the opportunity to share valuable
positively and believe they will further strengthen
experiences, while also obtaining positive and
Bellamy’s growth opportunities in China.
by leveraging distribution platforms.
In Vietnam, we are working towards improving
Bellamy’s footprint through adopting a direct to
market model that will provide greater control
over distribution of our products.
13
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Review of Operations Continued
Our products
Bellamy’s produces more than 40 Australian-
made and organically certified products
including infant formula, toddler milk, snacks,
cereals, pastas and ready to eat pouches.
Our product range is designed to offer
various entry points to the brand for parents,
whether their baby is breast-fed, formula-
fed or complementary-fed. This is a unique
proposition as there are no other organic
brands in Australia offering a comprehensive
selection of foods, and it is carefully executed
to enhance the brand relevance for our
families.
Our formula products
Bellamy’s infant formula range is the only
certified organic infant formula made in
Australia.
Formula comprises approximately 96% of
Our food products
Bellamy’s sales (increasing from 88% in the
prior period).
Bellamy’s range of cereals, pastas, ready to
serve pouches and healthy snack foods deliver
There are three products within this progressive
on our promise to offer a complete range of
range:
Step 1 Organic Infant formula –
suitable from birth to 12 months
Step 2 Organic Follow-on formula –
suitable from 6 to 12 months
Step 3 Organic Toddler milk drink –
from 12+ months
Bellamy’s produces two variants of each
product – one is made for the Australian and
export markets, while the other is suitable
for China only as it is designed to meet
the different labelling and compositional
requirements in China.
organic food from birth to infant. Sales of non-
formula products have grown by 8% over the
last 12 months.
In the Pharmacy channel Bellamy’s accounts
for more than 50% of baby food sales, and
is the #1 brand in cereal and pastas and
the fastest growing brand in ready to serve
pouches.
We have a substantial opportunity to grow
the penetration of Bellamy’s food range in
Australian supermarkets, by replicating our
strong performance in the Pharmacy channel.
15
Review of Operations Continued
Bellamy’s produces 40 unique Australian made and organic certified products including
infant formula, toddler milk drink, snacks, cereals, pastas and ready to eat pouches.
Product Range
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
17
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Review of Operations Continued
Bellamy’s organic supply
chain is a key strength
The strong relationships we have in place with
organic suppliers and product manufacturers
is key to being able to bring our range of
products to the market in an efficient, timely
and reliable manner. As such, we continue to
invest in upstream suppliers by offering long-
term supply contracts on terms that recognise
the long-term vision and planning required for
sustainable organic food production.
Organic formula production is expanding
The announcement of our agreement with
Fonterra to produce baby formula for Bellamy’s
in December 2015 was an exciting milestone
to ensure continued growth in our baby
formula range. The agreement is a five-year
supply agreement and will substantially lift
volumes in FY17 and beyond.
Tatura Milk Industries (TMI) continues to be a
key manufacturing partner for Bellamy’s. Our
annual production volumes are supported by a
six-year supply agreement signed in July 2015,
and this continues an eight-year relationship
of producing quality infant formula to exacting
standards.
Bellamy’s IMF Production Volume (KTn)
H2 14
H1 15
H2 15
H1 16
H2 16
our supply team has continued to increase
materials to produce the organic ingredients
Organic formula production deliveries from
the availability of organic ingredients in the
destined for our infant formula products. Given
Fonterra started from the first quarter of FY17.
short term and with a longer term view. We
our broad relationships, we have been working
This additional manufacturing capacity has
been matched to our demand requirements
and ingredient availability.
have several initiatives under way that ensure
closely with co-ops and dairies across Europe
the ongoing demand for Bellamy’s baby
to increase our access to existing available
formula will be met, including long-term supply
milk and provide opportunities for farmers to
Across both of the TMI and Fonterra facilities
agreements for key organic ingredients.
convert their farms to organic.
there is an opportunity to grow volumes.
Reflecting Bellamy’s deep understanding of
We continue to explore how we can support
We also continue to facilitate potential
expansion beyond contracted capacities, both
within existing infrastructure and new sites. We
take the view that this will require thoughtful
and practical planning that ensures compliance
with regulations in the countries within which
the organic supply chain, we have continued
conversion of Australian farms to organic
to build access to organic ingredients as
and are confident that our story will serve to
evidenced by the substantial growth in
encourage farmers to take this opportunity.
volumes over the last two years. We now
A small group of farmers in Tasmania is now
have access to more than double the existing
working through plans for conversion to
ingredient pool to meet our medium term
organic milk – this is the starting point for our
we operate both now and into the future.
growth objectives.
The organic milk pool is growing
To support our sales activities and growth,
Bellamy’s sources organic dairy materials from
multiple suppliers in Europe and deploys these
ongoing plans for organic milk
to be developed in Tasmania and Australia
more broadly.
19
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Review of Operations Continued
Our people and
office locations
By most business standards, the Bellamy’s
team is lean and efficient. This is due in part
to choosing experienced committed people
– but for the most part it is choosing people
who are a strong fit with our internal values
and culture – and work towards a higher
purpose to help change the world.
We believe it is our purpose that galvanises
our people. By producing wholesome,
organic food, our people genuinely believe
that they are helping to shape the next
generation’s mindful eating habits. And
in their own small way, they are helping
Bellamy’s create better, healthier lives. It is
this belief that makes our people a mirror
of our brand personality, since our internal
values are also those of our brand.
But we also realise that their commitment to
the business is only one part of the equation:
we also have a commitment to our people.
We aim to give them the opportunity, support
and environment to do the best work of their
careers.
Our focus on people repays the business
through the positive feedback we receive
from our business partners, and our
Bellamy’s users.
The Bellamy’s team is primarily based in
Launceston, with sales teams located in
Sydney, Melbourne, Perth, Brisbane, China
and Singapore. During the year we also
strategic growth in our team. We also have
teams based in our office in Shanghai to
support the China business and in Singapore
to support the South East Asia business.
opened an office in Melbourne to support the
strength of our existing teams.
months has accelerated our people needs
It is expected the Bellamy’s team will
across all aspects of the business in order
continue to grow over FY17 in Australia and
to ensure we have the right platform to grow
Asia to achieve our growth ambitions in
sustainably over the longer term. This has
those markets.
seen the number of employees increase by
50% over FY16 across both Australian and
Asian locations, and also across all facets
of the business, enabling us to build on the
Bellamy’s is a strong advocate for diversity
in the workplace, and 67% of our team are
women. At an executive level, over 33%
of the executive team are women, and
at board level, 50% of the directors are
As part of this growth, we have strengthened
women. Bellamy’s will continue to advocate
Bellamy’s senior leadership team with
for women in senior positions, and aims to
the appointment of a Chief Operations &
foster a culture of diversity in various ways,
Strategy Officer, and an Executive Director
notably through the promotion of people
Bellamy’s rapid growth over the past 12
People & Culture.
from within our organisation to leadership
roles at Bellamy’s.
21
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Financial Review
Exceptional growth in FY16 earnings
Sustainably growing while optimising returns
The table below outlines the key consolidated financial performance indicators for FY16.
Statutory Profit Results
Financial
Year ended
Financial
Year ended
Period
Period
30 June
30 June
Movement
movement
2016
($000)
2015
($000)
Up/Down
up/down
($000)
%
Revenue
EBIT
244,583
125,302
119,281
54,306
12,286
42,020
Profit before income tax expense
54,894
12,981
41,913
Income Tax expense
(16,566)
(3,908)
(12,658)
95%
342%
323%
324%
Net Profit after income tax expense
38,328
9,073
29,255
322%
Underlying Profit Results (1)
For the year ended 30 June 2016
For the year ended 30 June 2015
Bellamy’s has delivered another record year.
We have optimised returns and achieved
exceptional growth in earnings in FY16, with
EBIT up 342% to $54.3 million. With revenue
of $244.8m achieved, this delivered a FY16
EBIT margin of 22.2%.
We have used the growing earnings and
cash flows to commence a business
reinvestment program during H2 FY16 in
order to put in place the building blocks
required – people, infrastructure and
marketing – to drive sustainable growth and
further optimise long term returns.
We will continue our investment program
with FY17 being a year of increasing
sophistication for the business to ensure
we have the right platform in place to drive
sustainable long-term growth. Our plans will
see a further $15-20 million invested into the
business in FY17 to complete this investment
program. This investment will position the
Statutory
Non-
Underlying
Statutory
Non-
Underlying
business for sustainable earnings growth in
Profit
($000)
Recurring
Items
($000)
Profit
($000)
Profit
($000)
Recurring
Items (2)
($000)
Profit
($000)
FY18 and beyond.
Revenue
Bellamy’s receives its revenue primarily from
244,583
125,302
-
125,302
the sale of its products:
54,306
12,286
1,312
13,598
• Directly to consumer operations (principally
Revenue
244,583
EBIT
54,306
Profit before
54,894
income tax
expense
Net Profit
after income
tax expense
38,328
-
-
-
-
54,894
12,981
1,312
14,293
38,328
9,073
918
9,991
(1) Bellamy’s has followed the guidance for underlying profit as issued by the ASIC regulator Guide RG230
‘Disclosing non-IFRS information’. The profit and loss summary with a prior period comparison provided in
the table above, has been sourced from the audited accounts but has not been subject to separate review or
audit. The Directors believe that the presentation of the unaudited non-IFRS profit and loss summary in the
table is useful for users as it reflects the underlying profits of the business.
(2) Non-recurring items in 2015 include $1.3m in relation to obsolete stock from the Ready to Go products.
supermarkets and pharmacies)
• Through distribution agents in offshore
jurisdictions that then on-sell direct to retailers
• Direct to consumers through Bellamy’s
online store and through other e-commerce
platforms, including tmall.com, jd.com. and
vip.com
Revenue is derived for each geographical
market through a combination of these
activities. Bellamy’s sells selected products
in each market depending on the market
regulatory requirements and consumer
preferences.
23
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Financial Review Continued
Group revenue for FY16 was $244.6 million
to increased volume of ingredients as the
e-commerce platform providers. In addition,
which is a 95% increase on FY15, reflecting:
company continues to grow.
we invested more into market research, brand
• Increased brand awareness
As we further build brand awareness,
• Growth across all retailers
ensuring our products are accessible to the
awareness and other brand building initiatives
to support the future growth of the company.
• New distribution points with independent
retailers in the domestic market
• Growth across online distribution channels.
Gross Profits
The gross profit margin for FY16 was 45.7%
compared to 32.9% in FY15, reflecting:
• Change in channel mix, with online channels
delivering higher gross profit margins
• Price rise in the domestic market for infant
formula products, which was implemented
in December 2016, together with the flow-on
effect into our e-commerce flagship store
pricing in China.
broader demographic of customer is also
3. Distribution and selling costs
important. As such, we plan to invest in
appropriate strategic promotional activities
to attract new consumers to our brand (for
example via social media campaigns). The
focus on attracting customers early in the
product lifecycle will enhance our product
annuity and provide greater return on
investment, as parents progress through the
product range at various touchpoints in their
child’s development.
Costs of Doing Business
Bellamy’s utilises third party warehousing
providers and logistics providers for the safe
supply and delivery of products. One of the
outcomes of the sales volume growth we
have achieved are operational efficiencies that
assist us in optimising returns.
During FY16, new warehouses in Hong
Kong and China were contracted to deliver
services to the expanding sales network. The
new warehouses have been necessary to
meet the needs of our multiple e-commerce
Over FY16, we have been able to improve
sales channels and to support our offline
profitability through managing costs while
distribution strategy in China.
This was the first price increase Bellamy’s
growing revenues.
implemented in approximately five years and
1. Employment costs
brought our product more into line with an
This year, we have made a clear and
appropriate price level for premium / organic
purposeful investment in our people and
infant formula products.
The last six months of FY16 also saw us
strengthen Bellamy’s presence in multiple
e-commerce channels with numerous
new relationships commencing on various
platforms directly servicing Chinese
consumers. This influenced the mix of sales
this will continue in FY17. We anticipate the
number of people employed by Bellamy’s
will grow over the next 12 months, however
we will continue to pursue the right balance
between acquiring high quality talent, the
appropriate number of resources and the
Other costs of selling include e-commerce
platform fees and commissions and
merchandising costs. In the next 12 months
Bellamy’s will continue its transition from an
outsourced merchandising model for Australia
to an in-house model. This will further
optimise returns by improving efficiencies
in costs while also improving ranging and
distribution of Bellamy’s products through a
dedicated merchandising force.
costs associated with the growth of our
Overall, distribution and selling costs have
across our channels in FY16.
people.
reduced as a percentage of revenue.
From a product cost perspective, we
2. Marketing costs
are focused on leveraging the benefits of
Marketing spend has increased for the year at
increased production volumes and working
2.9% of revenue (FY15 2.0%). We increased
closely with manufacturers, distributors and
digital marketing over the second half of
suppliers to develop sustainable long-term
FY16 – further developing our web platforms
pricing solutions for the entire supply chain.
across Australia and Asia, increasing our
We recognise the importance of security of
social media presence and increasing our
ingredient supply, and the investment required
e-commerce marketing initiatives through
to achieve this in order to ensure access
strategic partnerships with a number of
Strong growth in
shareholder returns
Building on Bellamy’s performance in FY15
and growth outlook, the company’s share
price continued to rise in FY16. As at 30 June
2016, Bellamy’s share price was $10.20 (30
June 2015: $4.37). This is significant growth
since listing on 5 August 2014 at $1.30.
25
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Financial Review Continued
Reflecting the company’s strong balance sheet
and growth outlook, in February 2016 the
Board declared a fully franked interim dividend
of 4.1 cents per share. A fully franked final
dividend of 7.8 cents per share was declared
by directors on 19 August 2016.
The total dividends paid and declared for FY16
represent a payout ratio of 30% of FY16 profit
Outlook: strong growth
will facilitate business
reinvestment that will
underpin longer term
returns
Bellamy’s remains focused on delivering
sustainable growth in FY17 through:
While the China regulatory environment has
undergone substantial change over the past
six months, we were aware well in advance of
the pending changes and were ready to adapt.
We believe the changes implemented by the
China government are important to ensure safe
products for consumers, and believe we are well
placed to continue to grow as a result of those
after tax.
• Increasing market penetration in Australia to
changes.
Cash from operations and
other sources of cash
Cash balances remained relatively stable over
the period, increasing by $0.3 million, closing
at $32.3 million.
During FY16, the company generated positive
cash flows from operations of $8.9 million.
The primary factor driving this has been strong
sales, a strong debtors’ collection cycle and
improved trading terms with suppliers.
Inventory balances have increased significantly
as a result of the addition of a second
manufacturing partner (Fonterra) and the
ingredients required to support this initiative, as
well as levels of finished goods to support the
current sales rate of the business. Ingredients
on hand at 30 June 2016 comprised
approximately 50% of overall inventory value at
that date.
drive further volume share growth
• Strengthening distribution growth in China
and South East Asia by leveraging online and
offline sales channels
Underpinning the sales and distribution
opportunities in Australia and Asia is a supply
chain team that is firmly focused on growing our
supply of organic ingredients and manufacturing
• Innovating new organic products within the
capacity. Strong forward planning and a
commitment from our supply chain to meet
the high demand for Bellamy’s products has
ensured that not only have we been able to
achieve exceptional growth over FY16, but
we will be able to supply a substantial uplift in
manufacturing volumes over FY17 and beyond.
This underpins our ability to continue to meet the
fast-growing demand for our products globally.
baby category
• Building on our deep understanding of the
complex organic global supply chain through
strong partnerships, open communications,
and arrangements that support mutual growth
to meet our growing supply requirements.
In Australia, the business will continue to
deepen distribution both geographically and
with new retailers. Opportunities for further
growth are focused on increasing our product
ranging across retailers with the full product
suite, and developing new accounts with
smaller retailer and pharmacy groups. In
FY17, new product development will focus on
innovation within existing ranges and products
The investment into our supply chain through
specific to the China market.
the building of raw materials inventory is a
measured and deliberate one. While drawing
on working capital, this strategy is important in
supporting Bellamy’s ability to remain flexible
and responsive to the fast growing market
demand for our products.
Inventory management remains a focus for
us. We are mindful of the business’s cash flow
requirements as it continues to grow, and have
appropriate funding arrangements in place to
meet our requirements.
In China, we are focused on further growing
our multi-channel distribution, and further
developing online and offline distribution of
the Bellamy’s range, with baby formula as the
spearhead.
Having quickly built a top 10 presence on Tmall,
and with the China consumer buying more
and more online, we aim to capture a growing
portion of the e-commerce market through
platforms such as Tmall, JD, VIP, and BabyTree.
27
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Risk Management
Bellamy’s considers the identification,
The company employs a number of measures
consideration to future exchange rates
evaluation and control of risks to the
to minimise the risk in this area including
movements and to ensure a sustainable pricing
business and corporate strategy an important
food safety accreditations, a positive release
solution for both parties.
underpinning to growth.
Bellamy’s continues to mature and refine its
risk management approach. Risks are regularly
monitored, especially those internal and
external risks that could have a material impact
program, substantial independent product
testing through accredited laboratories,
dedicated professional Bellamy’s staff to audit
factories and ingredient suppliers and having
in place appropriate insurances.
on Bellamy’s. The following are considered to
Change in Regulations
In addition, Bellamy’s trades via the t-mall.
com and jd.com global platforms. These
platforms allow Chinese consumers to pay for
their goods in RMB via transaction facilities
operated by the two platforms. Funds collected
are remitted to Bellamy’s in Hong Kong dollars,
and in US dollars. The exchange rate used
by the transaction facilities is reflective of
the spot market price. Bellamy’s will monitor
this transaction basis as the monies traded
increase proportionately to the business.
There is a risk that laws or regulations may
be introduced or amended in Australia, or in
foreign jurisdictions in which Bellamy’s sells
or sources its ingredients and/or products.
Bellamy’s understands the sensitivity of the
organic, baby and food industries. Through
Bellamy’s imports many ingredients and
industry engagement and the appointment
has exposure to USD and EUR movements
of personnel to particularly focus on and
directly where it purchases ingredients on its
understand these regulatory issues in
own behalf and indirectly through purchases
Australian and Asia, Bellamy’s aims to
of finished products where its product
respond efficiently and effectively to changes
manufacturers purchase ingredients on its
in regulation that may impact its business.
behalf.
that enables the business to ensure it
Foreign Exchange
maintains its organic certification. Ingredients
The group has exposure to movements in
and ingredient suppliers are carefully selected
foreign currency exchange rates through:
• Sales to distributors and customers in
foreign currency
• Inventory purchases
In order to hedge against the exposure to
fluctuations in exchange rates associated with
the direct purchase of ingredients by Bellamy’s,
the company enters into forward exchange
contracts (AUD/EUR only at this stage),
which are designated as cash flow hedges.
The company also aims to create natural
• Translations of net investments in foreign
hedges wherever possible. As transactions
subsidiaries denominated in foreign
of this nature are increasing, the business
currencies.
will continue to monitor its foreign exchange
risk management policies and look for best
forecast growth.
During FY16, Bellamy’s sales were
Product Contamination, Recall and
Food Safety
As a producer of food products, Bellamy’s
is subject to a general risk that any product
contamination or product-recall issues
(however caused) may have a material
adverse effect on the company’s brand and
its financial performance.
predominantly transacted in Australian dollars.
practice solutions.
For the internal operations in the entities in
Singapore, Hong Kong and China, all income
and expenses are conducted in local currency.
Consistent with previous financial years, the
Bellamy’s contract with its import agent in
China was conducted in Australian dollars.
Prices were renegotiated in July 2015 with
29
be the material risks to the business and our
approach to managing those risks.
Ingredients and Manufacturing
Bellamy’s Organic maintains its credibility
and brand strength by ensuring all of its
products are certified organic. This requires
Bellamy’s to rely on a complex global organic
supply chain, where ingredients maintain
their organic certification and are available in
sufficient quantities to meet the demands of
the business.
Bellamy’s has a strict quality control system
and managed throughout the organic supply
chain by a dedicated in-house supply chain
and quality team. Bellamy’s has developed
a deep understanding of the complex
organic global supply chain, and has built
strong relationships with key suppliers and
manufacturers with whom Bellamy’s plans for
Board of Directors
Laura McBain
Managing Director and CEO
Laura was appointed as General
Manager of Bellamy’s in 2006,
Chief Executive Officer (“CEO”) in
2011 and Managing Director and
CEO in 2014.
Prior to joining Bellamy’s, Laura
practised as an accountant
specialising in the areas of
providing business advisory and
taxation services.
Laura holds a Bachelor of
Commerce and in 2013 completed
the IMD Leadership Challenge. In
2013, Laura was named the Telstra
Tasmanian Business Woman of the
Year and she went on to be named
the Telstra Australian Business
Woman of the Year for 2013
(Private and Corporate).
Rob Woolley
Independent Non-executive
Chair
Member of the Remuneration
and Nomination Committee
Member of the Audit
and Risk Committee
Rob was appointed as Chair on
the formation of the Company
in 2007.
Rob is Chair of TasFoods Limited
and was previously a Board
member and Chair of Tandou
Limited. He was also Managing
Director of Webster Limited
and prior to that role a partner
for approximately twenty years
in Deloitte including senior
management roles in that firm.
Rob has also served on various
Government Boards and
committees.
Rob holds a Bachelor of
Economics, is a Fellow of the
Institute of Chartered Accountants,
and a member of the Institute of
Company Directors.
Ian Urquhart
Independent Non-executive
Director
Member of the Remuneration and
Nomination Committee (resigned
22 April 2016)
Michael Wadley
Independent Non-executive
Director
Chair of the Remuneration and
Nomination Committee (resigned
22 April 2016)
Member of the Audit and Risk
Committee (resigned 22 April
2016)
Ian resigned as an Independent
Non-executive Director of
Bellamy’s Australia Ltd on
30 June 2016
Ian was appointed as a non-
executive director and the
Company Secretary on the
formation of the Company in
2007. He resigned as Company
Secretary in June 2014.
Ian was a Chief Financial Officer
and director of the PGA Group Pty
Ltd for over thirty years and taught
finance and accounting at Monash
University.
Ian has a Bachelor of Commerce,
a Masters in Administration and is
a Certified Practising Accountant
(CPA).
Member of the Audit and Risk
Committee
Michael was appointed a
Non-executive Director in 2014
and has been based in Shanghai
over 15 years
Michael is a principal at Wadley
Consulting Shanghai Co. Ltd,
and has served three terms on
the Board of Directors of the
Australian Chamber of Commerce
in Shanghai and previously headed
up the China practice groups of
two national Australian law firms.
He is a committee member of the
Australian China Business Council,
Queensland, and a Fellow of the
Australian Institute of Company
Directors.
Michael holds a Bachelor of
Laws from Queensland University
of Technology, and is admitted
to practice the Supreme Court
of Queensland, the High and
Federal Courts of Australia, and
is registered as a foreign lawyer in
China and Hong Kong.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Patria Mann
Independent Non-executive
Director
Chair of Audit and Risk Committee
(appointed 22 April 2016)
Charles Sitch
Independent Non-executive
Director
Member of the Remuneration
and Nomination Committee
(appointed 22 April 2016)
Patria was appointed a Non-
executive Director on 10 March
2016. Patria is an experienced
non-executive Director who is
currently on the boards of Event
Hospitality and Entertainment
Charles was appointed a Non-
executive Director on 10 March
2016. Charles is currently a
Director of Spark Limited (formerly
Telecom New Zealand Limited),
(formerly Amalgamated Holdings),
and Apiam Animal Health
Ridley Corporation, Allianz Australia
and Perpetual Superannuation.
Patria was formerly a Partner at
KPMG. She holds a Bachelor of
Limited. He is also Chairman of
the Robin Boyd Foundation and
Board Member of Trinity College
(Melbourne).
Economics (University of Sydney),
Charles was previously a Director
is an associate of the Institute
of Chartered Accountants and a
Fellow of the Australian Institute of
Company Directors.
of the global management
consulting firm McKinsey & Co for
24 years. Charles has a Bachelor
of Law / Commerce from the
University of Melbourne, an MBA
from Columbia Business School,
and is a Graduate of the Australian
Institute of Company Directors.
Launa Inman
Independent Non-executive
Director
Member of the Audit and
Risk Committee
(resigned 22 April 2016)
Chair of the Remuneration
and Nomination Committee
(appointed 22 April 2016)
Launa was appointed as a Non-
executive director of the company
in February 2015. Launa brings
to the board extensive experience
in retailing, marketing (including
digital technology and social
media), finance and logistics.
Launa is a director of the
Commonwealth Bank of Australia,
Super Retail Group Limited,
and Precinct Properties New
Zealand Limited and a member
of the boards of the Alannah and
Madeline Foundation and Virgin
Australia Melbourne Fashion
Festival. Her diverse experience
includes terms as Managing
Director and CEO of Billabong
International (May 2012 to August
2013), Managing Director of Target
Australia Pty Ltd (2005 to 2011)
and Managing Director of Office
Works (2004 to 2005).
Launa’s qualifications include:
MCom, University of South Africa
(UNISA), BCom (Hons) (UNISA),
BCom (Economics & Accounting)
(UNISA). She is a member of the
Australian Institute of Company
Directors and has completed
the Wharton Business School
executive program.
31
Executive Team
Shona Ollington
Chief Financial Officer
Andrew Cohen
Chief Operations
and Strategy Officer
Brian Green
Company Secretary
Shona was appointed as Chief
Andrew was appointed as COO
Brian was appointed Company
Financial Officer (“CFO”) in August
and Chief Strategy Officer in June
Secretary in June 2014, he had
2014. Prior to joining Bellamy’s
2016. Andrew brings extensive
been performing the role of the
Shona enjoyed a 16 year career
experience in grocery, retail and
Chief Financial Officer (“CFO”) of
at KPMG (Director since 2011)
FMCG, including successful and
Bellamy’s Organic since 2007.
specialising in business advisory,
extensive China go-to-market
Brian’s extensive management
taxation, business restructuring
experience in vitamins, infant
accounting experience has been
and business valuation. Shona
formula and dairy.
is also an advisor to the Board
of the University of Tasmania
Academy Gallery. Shona holds a
Master of Applied Finance (Kaplan
Professional), is a Fellow of the
Taxation Institute of Australia
(TIA), has a Graduate Diploma
of Financial Planning (Securities
Institute of Australia), and is
a Member of the Institute of
Chartered Accountants in Australia
(ICAA). Shona holds a Bachelor
of Commerce with majors in
Prior to joining Bellamy’s, Andrew
worked as a Partner with Bain
& Company where he held a
leadership role in Consumer
Products and Retail practice. With
over 10 years’ retail and FMCG
experience in management and
consulting roles, Andrew has
worked with multiple high profile
companies to capitalise on the
greatest opportunities in the
sector and delivering strategies to
accelerate growth across multiple
Accounting & Human Resource
platforms.
Management.
Andrew holds a Bachelor of
Commerce and Arts, University
of Melbourne, and completed an
MBA, Cambridge University (Dux).
gained through working as a
management accountant for
a wide variety of businesses,
including many agribusinesses.
Brian has also practised as an
accountant in the areas of tax
and business advisory work for a
number of organisations including
Deloitte Touche Tohmatsu. Brian
is currently a Director of JR Green
Pty Ltd (property management)
and BRG Management Pty Ltd
(accounting services). Brian holds
a Bachelor of Business Accounting
and is a Member of the Institute of
Chartered Accountants (ICAA) and
is a past recipient of its Tasmanian
PY Award.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Directors’ Report
The directors present their report on the consolidated entity consisting of Bellamy’s
Australia Limited and the entities it controlled at the end of, or during, the year ended
30 June 2016. Throughout the report, the consolidated entity is referred to as the Group.
1. Information about the directors
1.2 Directorships of other listed companies
1.1 Names and particulars
The names and particulars of the directors in
office at any time during or since the end of the
financial year are:
Rob Woolley
Independent Non-executive Chair
Laura McBain
Managing Director and CEO
Ian Urquhart
Independent Non-executive Director
Michael Wadley
Independent Non-executive Director
Launa Inman
Independent Non-executive Director
At the date of this report, Directorships of other listed companies held by directors in the 3 years
immediately before the date of this report are as follows:
Director
Company
Robert Woolley
TasFoods Limited
Tandou Limited
Launa Inman
Commonwealth Bank Limited
Billabong International Limited
Precinct Properties Pty New Zealand
Super Retail Group Limited
Period of directorship
Since September 2015
2011 - 2015
Since 2011
2012 - 2013
Since October 2015
Since November 2015
Patria Mann
Ridley Corporation Limited
Since 2013
Event Hospitality & Entertainment Limited
Charles Sitch
Spark New Zealand Limited
Apiam Animal Health Limited
Since 2011
Since 2015
1.3 Director shareholdings
The following table sets out each director’s
1.4 Directors’ Meetings
Patria Mann
relevant interest in Bellamy’s shares and
The number of Directors’ meetings held and
Independent Non-executive Director
Charles Sitch
Independent Non-executive Director
The above named directors held office for the
whole of the financial year and since the end of
the financial year except for:
• Patria Mann – appointed 10 March 2016
• Charles Sitch – appointed 10 March 2016
• Ian Urquhart – resigned 30 June 2016
See more information about the Board of Directors on
pages 30 and 31.
options as at the date of this report.
the number of meetings attended during the
Fully paid
ordinary
Share
shares
options
financial year were:
Board of Directors
Director
No.
No.
Attended
Held
Robert Woolley
452,277
Nil
Laura McBain
1,165,376
1,356,795
Ian Urquhart
1,000,000
Michael Wadley
Launa Inman
Patria Mann
Charles Sitch
Nil
26,020
4,000
Nil
Nil
Nil
Nil
Nil
Nil
During FY2016 530,918 options were issued
to Laura McBain under the Long Term
Incentive Plan (LTIP) for senior executives
of the Company. Refer to the note 8 of the
Remuneration Report for further details.
Directors
Robert Woolley
Laura McBain
Ian Urquhart1
Michael Wadley
Launa Inman
Patria Mann2
Charles Sitch2
A
13
13
11
13
13
5
5
B
13
13
13
13
13
5
5
A Number of meetings attended during the year
B Number of meetings held during the time the
Directors held office during the year.
1 Resigned as Non-Executive Director of the Board
on 30 June 2016
2 Since appointment on 10 March 2016
33
Directors’ Report Continued
Attendances at the Audit & Risk Committee and the Remuneration & Nominations Committee meetings during the financial year were as follows:
Directors
Robert Woolley
Ian Urquhart1
Michael Wadley2
Launa Inman3
Patria Mann4
Charles Sitch5
Audit and Risk Committee
Nominations Committee
Remuneration and
Attended A
Held B
Attended A
Held B
7
7
7
6
1
7
7
7
7
1
N/A
N/A
9
6
5
9
N/A
3
9
9
5
9
N/A
3
A Number of meetings attended during the year.
B Number of meetings held during the time the Directors held office during the year.
1 Resigned as the Chair of the Audit and Risk Committee as of 22 April 2016.
2 Resigned as Chair and Member of the Remuneration and Nominations Committee as of 22 April 2016.
3 Appointed as the Chair of the Remuneration and Nominations Committee as of 22 April 2016.
4 Appointed as the Chair of the Audit and Risk Committee as of 22 April 2016.
5 Appointed as a Member of the Remuneration and Nominations Committee as of 22 April 2016.
2. Share options granted to directors and senior management
On 23 December 2015, in accordance with the employee Long Term Incentive Plan (as approved by the shareholders at the annual general meeting
on 20 October 2015), the company issued 896,632 conditional vesting options to the managing director and other senior management as part of
their remuneration.
The exercise price for the 2016 grant options is $4.97; however the options can only be exercised if specific performance hurdles are met. These
options expire five years after the date of the grant which should be no later than 23 December 2020.
The holders of these options do not have the right, by virtue of the option to participate in any share issue or interest issue of the company or of any
other related body corporate.
On 30 June 2016 a further grant of options was made to Andrew Cohen under the Long Term Incentive Plan.
The details of grant of options are set out below:
Directors and senior management
No. of options granted
FY2016
No. of options granted
30 June 2016
Total No. of ordinary
shares under option
Laura McBain
Shona Ollington
Andrew Cohen
Other executives
530,918
112,000
-
253,714
896,632
-
-
689,950
-
689,950
1,356,795
328,793
689,950
253,714
2,629,252
Further details about share based payments to directors and key management personnel are included in the Remuneration Report.
3. Company Secretary
Mr B Green, Chartered Accountant, held the position of Company Secretary of Bellamy’s Australia Limited at the end of the financial year. He joined
Bellamy’s Australia Limited in 2007 and previously held the position of CFO. He was appointed as Company Secretary in 2014.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
4. Corporate Governance
results of those operations in future financial
the year ended 30 June 2016.
The Board endorses the ASX Corporate
Governance Council recommendations, 3rd
edition. The Group has taken the opportunity
to disclose its 2016 Corporate Governance
Statement in the Governance tab on the
website at bellamysaustralia.com.au.
As required, the Group has also lodged the
2016 Corporate Governance Statement with
the ASX.
5. Principal activities
The principal activities of the group during the
course of the financial year were the supply,
sale and distribution of organic food and
formula products for babies and toddlers.
There were no significant changes to the
principal activities during the year.
6. Review of operations
A comprehensive review of operations is set
out in the in the front section of this Annual
Report under Review of Operations.
years has not been included in this report as the
disclosure of the information is likely to result in
unreasonable prejudice to the Group.
9. Environmental regulations
The Group’s operations are not regulated by
any significant environmental regulation under
a law of the Commonwealth or of a State or
Territory.
10. Dividends
On 19 August 2016, the Directors declared
a fully franked final dividend of 7.8 cents per
share for the financial year ended 30 June
2016 (2015: 2.86 cents per share).
In respect of the half year ended 31 December
2016, an interim dividend of 4.10 cents per
share (2015: Nil) franked to 100% at 30%
corporate income tax rate was paid to the
holders of fully paid ordinary shares on 26
February 2016.
12.2 Statutory auditors
For the year ended 30 June 2016
PricewaterhouseCoopers (“PWC”) acted as
the Groups’ external auditor. A representative
from PWC will be available to the Annual
General Meeting to answer shareholder
questions about the conduct of the audit and
the preparation and content of the 2016 audit
report.
12.3 Non-audit services
Details of amounts paid or payable to the
auditor for non-audit services provided during
the year are outlined in note 32 to the financial
statements.
The board of directors has considered the
position and, in accordance with written advice
provided by resolution of the Audit and Risk
Committee, is satisfied that the provision
of non-audit services, during the year, by
the auditor (or by another person or firm on
11. Indemnification and insurance of
the auditor’s behalf) is compatible with the
Changes in the state of affairs
officers and auditors
There have been no significant changes in the
During the financial year, the company paid
general standard of independence for auditors
imposed by the Corporations Act 2001.
state of affairs of the group during the financial
a premium in respect of a contract insuring
The directors are of the opinion that the
year.
7. Events since the end of the
financial year
No matters or circumstances have arisen since
30 June 2016, which have significantly affected
the group’s operations, results or state of
affairs, or may do so in future financial years.
secretary or executive officer to the extent
permitted by the Corporations Act 2001. The
contract of insurance prohibits disclosure of
the nature of the liability and the amount of the
the directors of the company, the Company
services as disclosed in note 31 to the financial
Secretary and all executive officers of the
statements do not compromise the external
company and of any related body corporate
auditor’s independence, based on advice
against a liability incurred as such a director,
received from the Audit and Risk Committee,
8. Future developments
premium.
The Group will continue to pursue its strategic
business growth objectives through its
sustainable growth model focusing on:
• premium quality,
• innovation;
The company has not otherwise, during or
since the end of the financial year, except to the
extent permitted by law, indemnified or agreed
to indemnify an officer or auditor of the company
or of any related body corporate against a liability
• strengthening its brand awareness and
diversification of its sales channels; and
12. Audit
• continuing to build on its sustainable
operating platform through enhancement of
its internal systems and operating processes.
Further information about likely developments
in the operations of the group and the expected
incurred as such an officer or auditor.
13. Rounding of amounts
The company is a company of the kind
referred to in ASIC Corporations (Rounding
in Financials/Directors’ Reports) Instrument
12.1 Independence declaration
A copy of the auditor’s independence
2016/191, dated 24 March 2016, and in
declaration as required under section 307C of
the Corporations Act 2001 is set out on page
51 and forms part of the Directors report for
accordance with that Corporations Instrument
amounts in the directors’ report and the
financial statements are rounded off to the
nearest thousand dollars, unless otherwise
indicated.
35
for the following reasons:
• all non-audit services have been reviewed
and ratified by the Audit and Risk Committee
to ensure that they do not impact the
impartiality and objectivity of the auditor; and
• none of the non-audit services undermine
the general principles relating to auditor
independence as set out in APES 110 Code
of Ethics for Professional Accountants.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Remuneration Report
Message from the Chair of the Remuneration and Nomination Committee
Dear Shareholders,
The Board of Bellamy’s Australia Ltd
(“Bellamy’s” or the “Company”) is pleased to
present Bellamy’s Remuneration Report for the
2015/16 financial year (FY16).
This year, Bellamy’s continues to deliver
solid growth and financial returns for its
shareholders, continuing the trend of the
last 5 years and particularly since listing
24 months ago.
The Bellamy’s Board believes that critical to
delivering its short term business objectives
and long term strategic ambitions for
continued growth and expansion is the
remuneration strategy. It should embrace the
company’s high performance, ambitious and
entrepreneurial culture to continue to deliver
performance for our shareholders.
The changes to remuneration introduced
by the board in FY15 and adopted by
shareholders at our last AGM have enabled
the board to grow and serve our shareholders.
In March 2016 Bellamy’s appointed two
new Non-executive Directors, Patria Mann
and Charles Sitch. Both appointments
strengthen the Board diversity and depth.
The appointment of Patria Mann means that
50% of Bellamy’s board are women, and as a
leading company providing organic nutrition
solutions to families, Bellamy’s actively
promotes and advocates diversity in the
workplace.
Bellamy’s Board saw the retirement of
longstanding director, Ian Urquhart, on 30th
June 2016 after having held a role as director
since Bellamy’s inception in 2007.
A continued focus of the business is to build
the leadership and executive team. During
FY16, Bellamy’s appointed Katherine Henry
as Executive Director People & Culture and
Andrew Cohen as Chief Operations & Strategy
Officer. These appointments build the strength
and diversity of Bellamy’s leadership as the
business continues to grow.
In a rapidly expanding and growing business,
it is necessary to regularly review policies
and practices. We, therefore, intend to
undertake a review during FY17 to establish
a remuneration strategy and framework that
aligns with Bellamy’s business and growth
strategy. There will be a focus on the mix
of fixed versus variable remuneration and
measures and targets for both the short term
and long-term incentive plans. With strong
share price growth, it is especially important
that any reward for executives under the
long-term incentive plan is clearly linked to
business performance and our shareholders’
expectations.
On behalf of the Committee, I recommend the
Report to you.
Launa Inman
Chair - Remuneration and Nomination
Committee
37
Remuneration Report Continued
Details of senior executive remuneration for FY16 prepared in accordance with statutory obligations and accounting standards, are contained in
section 8 of this Report.
The remuneration calculations in the table in section 8 are based on the Accounting Standards principle of ‘accrual accounting’ and, consequently
do not necessarily reflect the amount of compensation an executive actually realised in a particular year.
To supplement the required disclosure we have included the additional table below which shows the actual compensation realised by the senior
executives who were key management personnel at the end of FY16. The amounts disclosed below are considered more helpful for shareholders as
it reflects the senior executives ‘actual pay’ in FY16. It is important to note that the STI and LTI amounts are amounts earned based on performance
during FY16 that vested and/or were paid in FY17.
Name
Laura McBain
Shona Ollington
Andrew Cohen5
Total
Fixed
(including
super) $
Other
benefits1
$
STI2
$
LTI3 & 4
$
$597,469
$33,572
$393,011
$297,658
$9,023
$0
$0
$197,736
$0
$904,150
$33,572
$590,747
Total
$
$1,024,052
$495,394
$9,023
$1,528,469
$0
$0
$0
$0
1. Other benefits paid to Laura McBain relate to reportable fringe benefits provided during FY16 of $33,572.
2. This amount includes the actual FY15 STI payments and the approved FY16 STI amounts.
3. No options under the Bellamy’s LTI plan vested during FY16.
4. As part of the IPO the CEO was granted 953,000 options, and as disclosed in the 2015 remuneration report 100% of these options vested and the CEO exercised
them in full. As details of this one off grant were disclosed in 2015 remuneration report they have not been disclosed in this table.
5. Andrew Cohen commenced employment with the Company on 27 June 2016.
Remuneration report (audited)
The Board of Bellamy’s is committed to ensuring that our remuneration practices and policies drives a culture of performance and ensures
executives are rewarded for the delivery of results and the achievement of Bellamy’s short-term financial objectives and long-term business strategy
and ultimately delivering value for our shareholders.
This report outlines the remuneration framework and outcomes of Bellamy’s, for key management personnel for the year ended 30th June 2016. It
also enables our investors to understand:
• The costs and benefits associated with Bellamy’s remuneration practices and policies; and
• The link between Bellamy’s performance and the remuneration paid to the CEO and executives.
This report has been prepared in accordance with section 300A of the Corporations Act 2001 (Cth).
The Report is divided into the following sections:
Key section
1. Key management personnel
2. Role of the Remuneration & Nomination Committee
3. Engagement of remuneration consultants
4. Remuneration policy & strategic direction
5. Executive contracts
6. Non-executive Directors’ remuneration structure
7. Relationship between remuneration policy and company performance
8. Remuneration Tables – Directors and KMP Executives
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Page
39
39
39
40
45
45
46
47
1 Key management personnel
The term key management personnel (“KMP”) refers to those persons having the authority
3
Engagement of
remuneration consultants
and responsibility for planning, directing and controlling the activities of the Consolidated entity
The Remuneration & Nomination
(“Group”), directly or indirectly and includes any director of the Group (whether executive or
Committee periodically engages
otherwise).
The KMP of Bellamy’s for the year ended 30 June 2016 were:
Non-executive Directors
Robert Woolley
Role
Chair
Ian Urquhart (Resigned 30th June 2016)
Non-executive Director
independent external consultants to advise
and assess the remuneration of the Chair,
Non-executive Directors, CEO and those
executives reporting to the CEO.
During FY16, the Remuneration &
Nomination Committee engaged Egan
Associates Pty Ltd (“Egan Associates”) as
Michael Wadley
Launa Inman
Non-executive Director
a remuneration consultant.
Non-executive Director
Patria Mann (Appointed 10th March 2016)
Non-executive Director
Charles Sitch (Appointed 10th March 2016)
Non-executive Director
KMP - Executive Director
Laura McBain
KMP Executives
Shona Ollington
Andrew Cohen (Appointed 27th June 2016)
Managing Director and CEO
Chief Financial Officer
Chief Operations &
Strategy Officer
2 Role of the Remuneration & Nomination Committee
The role of the Remuneration & Nomination Committee is to assist the Board by ensuring
that Bellamy’s:
• has coherent and appropriate remuneration policies and practices which enable Bellamy’s
to attract and retain non-executive directors and executives who will create value for
shareholders;
• fairly and responsibly remunerates non-executive directors and executives having regard to
In selecting the remuneration consultant,
the Remuneration & Nomination
Committee considered potential conflicts
of interest and required the consultant’s
independence from management as
part of their terms of engagement.
Egan Associates were asked to provide
a remuneration recommendation in
relation to the KMPs remuneration. The
recommendations were provided to,
and discussed with the Chair of the
Remuneration & Nomination Committee.
Egan Associates has confirmed in
writing to the Chair of the Remuneration
& Nomination Committee that their
recommendations were made free from
any undue influence by the Group’s KMP.
Considering the above factors, the Board
is therefore satisfied that remuneration
advice provided was free from undue
influence by any of the Company’s senior
the performance of Bellamy’s, the performance of the executives and the general market
management.
environment;
• has polices to evaluate the performance and composition of the Board, individual directors
and executives on an annual basis with a view to ensuring that Bellamy’s has a Board that
can properly discharge its responsibilities and duties;
• has adequate succession plans in place (including for the recruitment or appointment of
non-executive directors and executives); and
• has policies and procedures that are effective to attract, motivate and retain appropriately
skilled employees that meet Bellamy’s needs and are consistent with Bellamy’s strategic
goals and human resource objectives.
Further information about remuneration structures and the relationship between remuneration
policy and Company performance is set out below.
The Remuneration & Nomination Committee has a Charter which outlines the terms of
reference under which it operates. It is available online at www.bellamysaustralia.com.au.
Bellamy’s paid $53,937 (including
GST) to Egan Associates in
respect of remuneration advice and
recommendations for NED fees, CEO
and senior executive reward levels and
arrangements, and the Bellamy’s long term
incentive plan (including the valuation of
options).
39
Remuneration Report Continued
4
Remuneration policy
& strategic direction
Bellamy’s remuneration policy aims to
attract and retain the best available people
to run and manage Bellamy’s and align
their interests with our shareholders.
The Board is committed to having a
remuneration policy that rewards, and
retains executives, for achieving our
business objectives and delivering
shareholder returns.
In the case of executives, by providing a
fixed remuneration component together
with specific short-term and long-term
incentives based on key performance
areas affecting Bellamy’s financial results,
Bellamy’s seeks to create alignment
between the interests of executives and
shareholders.
In the case of non-executive directors,
their remuneration does not contain
performance-based or ‘at risk’
components. Non-executive directors
are paid fees and are encouraged to hold
shares in Bellamy’s.
As advised to shareholders in the
FY15 remuneration report, the Board
has committed to revisit incentive
arrangements to ensure the right
hurdles are in place as the company
continues to grow. Accordingly,
a further review of Bellamy’s
remuneration framework will be
undertaken in FY17.
4.1 Executive remuneration structure
Executives’ total remuneration package may be comprised of the following elements:
• Total Fixed Remuneration (base salary + superannuation)
• At-Risk Remuneration:
• Short Term Incentive (“STI”)
• Long Term Incentive (“LTI”)
Currently Bellamy’s uses base salary for the purposes of calculating STI and/or LTI amounts.
In FY17 Bellamy’s will move to a fixed remuneration approach for the purposes of calculating
STI and/or LTI amounts.
The relative weighting of fixed and variable components for target performance is set
according to the scope of the executive’s role.
The ‘at-risk’ component for the CEO and those executives reporting to her (including KMP
executives) ranges from 20% to 110% of base salary, with an average of 60%. For the KMP
the ‘at risk’ components are as follows:
KMP - Executive Director
Laura McBain
KMP Executives
Shona Ollington
Andrew Cohen
Short Term
Short Term
Incentive
(At-Target)1
Incentive
(Stretch)2
Long Term
Incentive3
30%
50%
80%
30%
30%
50%
50%
35%
60%
1. The short-term incentive is the total payment at-target as a % of base salary.
2. KMP executives’ STIs have a stretch component that is designed to encourage above at-target
performance as a % of base salary.
3. The long-term incentive refers to the value, of any grant as a % of base salary.
The mix of each component as a percentage of the KMP’s base salary is shown in the graph
below with a detailed description of each element discussed in more detail below.
Remuneration Mix
Laura McBain
48%
14%
38%
Shona Ollington
Andrew Cohen
61%
53%
18%
21%
16%
31%
0%
25%
50%
75%
100%
Fixed
STI
LTI
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
4.2 Fixed remuneration
4.3 Short term incentive arrangements
The remuneration for executives includes
The Bellamy’s short-term incentive plan rewards the executives for performance against a
a fixed component comprised of base
pre-determined scorecard of measures linked to Bellamy’s short-term business performance
salary and employer superannuation
for 12 months, together with individual performance. The specific performance measures
contributions. To ensure that fixed
may vary from year to year depending on the business’s objectives, but are chosen on the
remuneration for Bellamy’s executives
basis that they will increase financial performance, market share, and shareholder returns.
remains competitive and it is reviewed
regularly by the Remuneration &
Nomination Committee with reference
to individual performance and relevant
comparative remuneration in the market.
Executive remuneration levels are
market-aligned by comparison to similar
roles in ASX-listed companies that
have comparable market capitalisation,
revenues, and financial metrics relevant to
the executive’s role, skills and experience.
As disclosed in the FY15 remuneration
report, a review of the CEO’s and CFO’s
fixed remuneration was undertaken
during FY15 and the Board approved a
remuneration increase for the CEO and
CFO for FY16.
Effective from 1 July 2015, Laura McBain’s
fixed remuneration was increased to
$600,000 (inclusive of superannuation), an
88% increase, and Shona Ollington’s fixed
remuneration was increased to $299,308
(inclusive of superannuation), a 50.2%
increase.
In approving this increase, the
Remuneration & Nomination Committee
and the Board sought independent advice
and were satisfied that the increase was
necessary to ensure that the Company’s
remuneration levels are aligned with the
market.
Details of KMP executives’ total fixed
remuneration for the year ended 30 June
2016 (and 30 June 2015) can be found in
the ‘Remuneration Tables’ section of this
report.
Bellamy’s adopted the following STI structure for FY16.
What is the
STI plan?
An annual incentive plan under which participants are eligible to
receive an annual award if they satisfy challenging operational,
strategic and individual performance targets.
Formal KPIs are notified to participants at the beginning of each year.
1 July to 30 June.
What is the
performance
period
Are both target
Yes. STI opportunities are set as a percentage of executive base
and stretch
performance
conditions
imposed?
salary, with a target opportunity and a maximum opportunity to
encourage stretch performance.
This ensures that target and stretch performance are rewarded.
What are the
Performance is measured against:
KPIs?
• Financial Group performance;
• Financial Business Unit performance
•
Non-Financial KPIs relevant to the individual’s role and
responsibilities. The STI plan applies beyond KMP.
Why were the
KPIs chosen?
A combination of financial and non-financial KPIs have been chosen
because the Board believes that there should be a balance between
short term financial measures and more strategic non-financial
measures to support further growth.
How are the
Financial KPIs are assessed quantitatively against predetermined
KPIs measured
targets.
(and why was
this method
chosen)?
Performance against non-financial KPIs relevant to the individual’s
role and responsibilities is assessed annually as part of the broader
performance review process for executives.
The Board believes the STI provides the right measures and
appropriately challenging targets for participants.
As cash
The STI plan is designed to encourage and reward high performance.
It puts a significant proportion of the executives’ remuneration at-risk
against targets linked to the Company’s performance objectives
and therefore supports the alignment between the interests of the
executive, Bellamy’s and our shareholders.
How is the
STI delivered?
Why does the
Board consider
the STI plan
an appropriate
incentive?
41
%
16.0%
%
17.3%
%
8.0%
%
KMP Executives
Shona Ollington
2016
Remuneration Report Continued
4.3 Short term incentive arrangements continued
Details of those KMP executives’ who received an STI payment for the year ended 30 June 2015 and 30 June 2016, the proportion to be
received for at-target and stretch performance, achieved STI, and the amount forfeited, is shown in the tables below.
For the year ended 30th June 2016 STI amounts indicated below are subject to an annual review and payable subsequent to 30 June 2016
upon ratification and recommendation by the Remuneration & Nomination Committee and approval by the Board.
2015
STI $
At-Target
KMP - Executive Director
$
STI $
Stretch
$
% At-Target
% Stretch
% Stretch
STI Achieved
STI Achieved
STI Achieved
STI Forfeited
$
%
%
Laura McBain
90,000
150,000
126,000
140.0%
84.0%
$
$
$
%
%
54,000
90,000
74,400
137.8%
82.7%
STI $
At-Target
% At-Target
% Stretch
% Stretch
STI Achieved
STI Achieved
STI Achieved
STI Forfeited
STI $
Stretch
$
KMP - Executive Director
$
$
%
%
Laura McBain
174,208
290,346
267,011
153.3%
92.0%
KMP Executives
$
$
$
%
%
Shona Ollington
84,000
140,000
123,336
146.8%
88.1%
11.9%
4.4 Long term incentive arrangements and the employee share option plan
LTIs are delivered in the form of options under the employee share option plan (“ESOP”).
The granting of options under the ESOP is considered an effective means of motivating, retaining and attracting high quality employees and
aligning executives’ interests with those of shareholders. All options issued have an exercise price and only become valuable to the extent that
the share price rises above the exercise price.
Option grants will be subject to the ESOP rules and other regulatory requirements, including the ASX Listing Rules. It is envisaged that the ESOP
will form an integral part the of Bellamy’s LTI arrangements.
The terms and conditions that applied to the FY16 grant of options are set out below.
What are options?
An option to acquire a fully paid ordinary share in the Company (subject to payment of an exercise price), that
will only vest and become exercisable if performance hurdles are satisfied.
Do senior executives pay
Options are granted as part of remuneration and therefore there is no payment provided in connection with a
for options?
grant.
However, senior executives are required to pay an exercise price to exercise the options and receive shares,
unless the company operates a cash equivalent amount in lieu.
What is the performance
The FY16 grant was divided into two tranches. The performance period that applies to each tranche is set
period?
out below.
% of grant
Performance measure
Relevant performance period
Tranche 1
Tranche 2
50%
50%
Earnings per share
1/07/2015 – 30/06/2018
Share price growth
1/07/2015 – 30/06/2018
Vesting of both tranches will occur on or after 1 September 2018 subject to the Board determining that the
applicable performance hurdles have been met. After vesting, the options will be exercisable from the date
the Company issues a vesting notice for the Options (or any later date specified in the vesting notice).
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
What are the performance
hurdles and why were they
chosen?
How does the EPS
performance hurdle work?
As set out above, the first tranche of the grant is subject to an earnings per share (“EPS”) performance hurdle,
and the second tranche is subject to a share price growth (“SPG”) performance hurdle.
The EPS Hurdle is based on the absolute and compound annual growth in the Company’s earnings per
share over the relevant performance period. An EPS hurdle has been chosen as it provides evidence of the
Company’s growth in earnings. It is a hurdle that directly correlates to improved shareholder value.
The SPG Hurdle is based on the Company’s share price growth on a compound basis performance over the
relevant performance period. A SPG hurdle has been chosen as it is directly linked to the Company’s share
price growth and therefore the increase in value created for shareholders.
Further details on the hurdles are set out below.
The EPS performance hurdle is subject to the measurement of the Company’s average annual growth in EPS.
It is intended that EPS for each relevant financial year will be calculated as net profit attributable to
shareholders for that financial year, adjusted to exclude the costs of servicing equity (other than dividends),
divided by the weighted average number of ordinary shares, adjusted for any bonus elements.
Threshold vesting of options commences at 12% compound annual growth over the applicable performance
period. Full vesting occurs for compound annual growth in EPS at levels consistent with outperformance.
Company’s EPS
Less than 12%
12%
% of options that will vest in Tranche 1
Nil
20%
Above 12% but less than maximum
Between 20% and 100%, as determined on a pro-rata,
At or above maximum
100%
straight line basis
The levels of EPS CAGR required to attract full vesting of the options under the Board approved long-term
plan are commercially sensitive and, therefore, will not be disclosed at this time. The applicable EPS CAGR
targets will be, however, disclosed on a retrospective basis in the Remuneration Report following the end of
the performance period to ensure transparency for shareholders.
How does the SPG
For tranche 2, the percentage of the options that vest and become exercisable, if any, will be determined over
performance hurdle work?
the relevant performance period by reference to the following vesting schedule:
Company’s SPG
Less than 12%
12%
% of options that will vest in Tranche 2
Nil
20%
Above 12% but less than 18%
Between 20% and 100%, as determined on a pro-rata, straight
At or above 18%
line basis
100%
The Board has determined that the opening share price to be used for the purpose of the SPG Hurdle is
$6.27. This has been set by reference to the average broker consensus share price target determined after
the announcement of the Company’s full year financial results for FY15.
43
Remuneration Report Continued
Process for assessing
performance conditions
The EPS performance hurdle is assessed based on the Company’s audited financial statements. This method
of measurement was chosen as the use of financial statements ensures the integrity of the measure and
alignment with the true financial performance of the Company.
The Board has determined that the SPG performance hurdle will be assessed based on the growth in the
Company’s share price from $6.27 over the relevant performance period.
The Board believes the LTI provides the right measures and appropriately challenging targets for participants.
No voting rights or entitlements to dividends are attached to the options.
$4.97
The Board determined the exercise price with consideration to the 10 day VWAP (5 days pre the release of
the annual results on 21st August 2015 and 5 days post).
What are the rights
attaching to the options?
What is the exercise
price and how was it
determined?
When do the options
23rd December 2021.
expire?
What happens on
If a participant ceases to be employed due to termination for cause, all options held will lapse with effect from
cessation of employment?
the date of cessation.
If a participant ceases to be employed for any other reason, then a pro rata proportion of any unvested
options held, calculated by reference to the proportion of the total performance period that has elapsed as at
the date of cessation, will be tested based on performance against the relevant hurdles to that date.
Any options that vest based on performance against the hurdles will vest immediately. All other options will
lapse.
What happens on a
change of control?
In the event of a takeover bid or other transaction that in the Board’s opinion would result in a change of
control, the Board has the discretion to determine that some or all of a participant’s unvested options will vest.
If a change of control event occurs before the Board has exercised its discretion, then a pro-rata proportion
of unvested options equal to the portion of the total performance period that has elapsed will be tested based
on performance against the hurdles to that date.
Any options that vest based on performance against the hurdles will vest immediately. All other options will
lapse.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
5 Executive contracts
The remuneration and other terms of employment for the executives are covered in formal
6
Non-executive directors’
remuneration structure
employment contracts that have no fixed terms. Bellamy’s may terminate an executive
Bellamy’s remuneration policy for non-
immediately for cause, in which case the executive is not entitled to any payment other than
executive directors aims to ensure that
the value of total fixed remuneration (and accrued entitlements) up to the termination date.
Bellamy’s can attract and retain suitably
Notice
Notice
Period by
Period by
Name
Bellamy’s
Executive
Termination / Redundancy Payment
KMP - Executive Director
qualified and experienced directors having
regard to:
• the level of fees paid to non-executive
directors of other comparable Australian
listed companies;
Laura McBain
6 months
6 months
The Company has discretion to make a
• the growing size and complexity of
payment in lieu of all or part of the notice
Bellamy’s operations;
period.
If the CEO’s employment is terminated in
circumstances where there has been a
fundamental change to her role, or if she
is made redundant then she is entitled
to a severance payment equivalent to 12
months’ salary.
KMP Executives
Shona Ollington
6 months
6 months
The Company has discretion to make a
• the responsibilities and work
requirements of Board members; and
• the skills and diversity of Board
members.
6.1 Current fee levels and fee pool
Under the ASX Listing Rules, the total
amount paid to all non-executive
directors in any financial year must not
exceed the amount fixed in a general
payment in lieu of all or part of the notice
meeting of the Company. This amount
period.
If the CFO is made redundant or her
employment is terminated in circumstances
where there has been a fundamental
change to her role, she is entitled to a
severance payment that varies depending
on her length of service. The payment
will range between 12 months’ salary
and 6 months’ salary and will include any
applicable pay in lieu of notice.
Andrew Cohen
6 months
6 months
The Company has discretion to make a
payment in lieu of all or part of the notice
period.
If the CO&SO is made redundant or his
employment is terminated in circumstances
where there has been a fundamental
change to his role, he is entitled to a
is currently $1,000,000 as determined
by Shareholders at an Annual General
Meeting held on 20th October 2015.
For FY16, non-executive directors’ annual
base fees were $82,125 each. The
Chair of the Board Committees (Audit &
Risk Committee and the Remuneration
& Nomination Committee) received an
additional annual fee of $6,570 and
Committee members received a fee of
$3,285. The Chairman of the Board
received a fee of $219,000 and no extra
fees for membership of Committees.
These amounts were inclusive of any
superannuation entitlements that any
Group company is required to make in
respect of the payment.
severance payment that varies depending
Directors may also be reimbursed for travel
on his length of service. The payment
will range between 12 months’ salary
and 6 months’ salary and will include any
applicable pay in lieu of notice.
and other expenses incurred in attending
to Bellamy’s affairs.
Non-executive directors may be paid
such additional or special remuneration
as the non-executive directors’ decide
is appropriate where a director performs
extra work or services.
45
Remuneration Report Continued
There are no retirement benefit schemes
The following table shows the relationship between KMP executives’ at-risk remuneration and
for directors other than statutory
Bellamy’s financial performance:
superannuation contributions, and non-
executive directors’ remuneration must not
Financial Year Ended 30 June
2016
2015
include a commission on, or a percentage
Revenue ($000)
of, the profits or income of Bellamy’s.
A review of the structure of the non-
executive directors’ fees will be undertaken
EBIT ($000)
EBIT Growth
in FY17 as part of the overall review of
Share price at start of year
the Bellamy’s remuneration strategy &
framework.
7
Relationship between remuneration
policy and company performance
Share price at end of year
Share price growth
Interim dividend (cents per share)
The Board recognises that each executive
Final dividend/distribution (cents per share)
$244,583
$125,302
$54,306
$12,286
342%
$4.37
$10.21
134%
4.1
7.8
11.9
39.8
497%
$1.30
$4.37
236%
0.00
2.86
2.86
9.8
needs a significant portion of their
remuneration to be at-risk and be linked to
Bellamy’s annual business objectives and
actual performance.
Remuneration is linked to performance by:
•
Requiring a proportion of the
executives remuneration to vary
with the short-term and long-term
performance of Bellamy’s;
•
Setting clear expectations on target
and stretch performance objectives
required for STI payments to ensure
quality results; and
•
Assessment of long-term performance
through multiple measures to provide
a complete picture of Bellamy’s
performance and the increase in
shareholder value.
Total dividend/distribution (cents per share)
Basic EPS (cents per share)
Average STI payout as a % at-target for eligible KMP
executives1
150.05%
138.89%
The following graph shows the Bellamy’s share price movement since 5th August 2014 (the
day Bellamy’s was admitted to the ASX Official List): $1.30 to $10.21 as at 30th June 2016
(784%).
Closing share price movement to 30th June 2016
$18.00
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00
05 A ug 14
05 N ov 14
05 F eb 15
05 M ay 15
05 A ug 15
05 N ov 15
05 F eb 16
05 M ay 16
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Remuneration Tables – Directors and KMP Executives
Details of the nature and amount of each element of the remuneration and shareholdings of the KMP of the consolidated entity are set out in the
following tables.
Table A: Remuneration for key management personnel for the year ended 30th June 2016
Short Term Employee Benefits
Benefits
Payments
Post-employment
Share Based
2
t
n
e
m
y
a
P
I
T
S
$
y
r
a
t
e
n
o
m
-
n
o
N
$
s
t
fi
e
n
e
b
n
o
i
t
a
u
n
n
a
r
e
p
u
S
t
n
e
m
y
o
p
m
e
l
m
r
e
t
g
n
o
L
s
t
fi
e
n
e
b
$
$
s
e
r
a
h
S
$
3
s
n
o
i
t
p
O
$
1
s
e
e
F
/
y
r
a
a
S
l
r
a
e
Y
Non-executive Directors
$
Robert Woolley
2016
200,000
2015
130,000
Ian Urquhart
Michael Wadley
Launa Inman
Patria Mann
Charles Sitch
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
84,000
62,500
84,000
64,554
81,000
22,001
24,437
0
23,860
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
19,000
12,350
7,980
5,937
7,980
6,133
7,695
2,090
2,322
0
2,267
0
0
0
0
0
0
0
0
0
0
0
0
0
l
d
e
t
a
e
R
e
c
n
a
m
r
o
f
r
e
P
l
a
t
o
T
$
%
0
0
0
0
0
0
0
0
0
0
0
0
219,000
142,350
91,980
68,437
91,980
70,687
88,695
24,091
26,759
0
26,127
0
-
-
-
-
-
-
-
-
-
-
-
KMP - Executive Director
Laura McBain
2016
578,533
267,011
33,572
18,936
51,723
2015
287,675
126,000
12,324
25,115
15,746
KMP - Executives
Shona Ollington
2016
279,231
123,336
Andrew Cohen
2015
155,769
74,400
2016
2015
8,241
0
0
0
0
0
0
0
18,427
14,798
782
0
440
0
0
0
293,757
1,243,532
45%
248,018
714,878
52%
58,777
480,211
38%
3,576
248,543
31%
5,733
14,756
39%
0
0
0%
1. The fees for P Mann and C Sitch represent those fees earned but not paid until after 30th June 2016.
2. The amounts shown for STI relates to the actual payments for FY15 and the approved amounts for FY16.
3. The fair value of performance rights as at the date of their grant has been determined in accordance with AASB 2 Share-based Payment.
The amount shown is the amortised expense for FY16.
47
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Remuneration Report Continued
Share based payments
Table B: Details of share based payments granted as compensation to senior executives during the current financial year are set out below:
KMP - Executive Director
Laura McBain1
KMP Executives
Shona Ollington1
Andrew Cohen2
Year
2016
2015
2016
2015
2016
2015
Option
Series
Number
Value of
Options
Number
Grant Date
Granted
Granted $
Vested
Percentage
of Grant
Forfeited
FY16 Grant
23-Dec-15
530,918
464,554
FY15 Grant
29-Jun-15
825,877
240,000
FY16 Grant
23-Dec-15
FY15 Grant
29-Jun-15
112,000
216,793
98,000
63,000
FY16 Grant
30-Jun-16
689,950
1,275,000
FY15 Grant
n/a
0
0
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
1. The value of the options are calculated at the grant date and are amortised over the period from grant date to the vesting date for purposes of accounting and KMP
remuneration reporting. For L. McBain and S. Ollington the fair value of each option at the grant date for the FY15 grant was $2.31 and for the FY16 grant was $1.04.
2. The options granted to A. Cohen consist of 3 grants. The grants were made on 1st July 2016 and were as follows:
i. A grant of 37,575 as a sign-on offer with a vesting date of 30th June 2017, nil exercise price and a fair value of each option at the grant date of $1.21;
ii. A grant of 369,125 based on the offer made to other KMP as part of the FY15 Grant with a vesting date of 30th June 2017, an exercise price of $9.98 and
a fair value of each option at the grant date of $1.21; and
iii. A grant of 283,250 based on the offer made to other KMP as part of the FY16 Grant with a vesting date of 30th June 2018, an exercise price of $9.98 and
a fair value of each option at the grant date of $1.58.
Loans to KMP and other transactions of KMP and their personally related entities
Neither Bellamy’s nor any other Group company:
• has outstanding loans with KMP; or
• was party to any other transactions with KMP (including their personally related entities).
Options over shares in Bellamy’s Australia Limited
Table C: Shows the movements during FY16 in the options over shares in the Company held, directly, indirectly or beneficially, by each KMP,
including their related parties.
KMP - Executive Director
Laura McBain
KMP Executives
Shona Ollington
Andrew Cohen
Options
held at
Granted as
Vested in
during the
Options
Exercised
Start of
remuneration
Year
Year
in FY16
FY16 and
exercisable1
reporting
Forfeited in
held at End
period
FY16
of Year
2016
2015
2016
2015
2016
2015
1,779,210
530,918
953,333
(953,333)
953,333
825,877
216,793
0
0
0
112,000
216,793
689,950
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,356,795
1,779,210
328,793
216,793
689,950
0
1) The 953,333 options that vested and were exercisable in FY16 relate to the one-off grant made to the Managing Director and CEO as part of a short term
incentive disclosed in the 2014 remuneration report. The options had an exercise price of $1.00 and the fair value of each option at the grant date was $0.29.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Fully paid ordinary shares of Bellamy’s Australia Limited
Table D: Shows the movement during FY16 in the shares of Bellamy’s held, directly, indirectly or beneficially, by each KMP, including their related
parties is as follows:
Non-executive Directors
Robert Woolley
Ian Urquhart
Michael Wadley
Launa Inman
Patria Mann
Charles Sitch
KMP - Executive Director
Laura McBain
KMP Executives
Shona Ollington
Andrew Cohen3
Year
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Shares held at
Start of Year
Net other
changes (1) & (2)
Shares held at
End of Year
No.
No.
1,335,739
(883,462)
452,277
3,080,438
(1,744,699)
1,335,739
2,500,000
(1,500,000)
1,000,000
3,727,089
(1,227,089)
2,500,000
0
0
22,000
0
0
0
0
0
1,565,376
1,565,376
0
0
13,750
0
0
0
4,020
22,000
4,000
0
0
0
0
0
26,020
22,000
4,000
0
0
0
(400,000)
1,165,376
0
0
0
0
0
1,565,376
0
0
13,750
0
1. As disclosed in the 2015 remuneration report the CEO was granted 953,333 options (no other KMP executives received a grant). The Board has determined that
100% of the options granted to the CEO would vest as a result of the achievement of an NPAT of $9.073m for FY15. Accordingly, the options granted to the CEO
became fully exercisable and the CEO exercised these options in full shortly after the release of the FY15 results and sold the shares.
2. There were no shares held nominally by KMP as at 30 June 2016 and as at the date of this report.
3. These shares were acquired by A Cohen before he commenced employment with Bellamy’s on 27th June 2016.
Signed in accordance with a resolution of the Board of Directors.
Robert G. Woolley
Laura McBain
CHAIR
CEO and Managing Director
Dated at Launceston this 19th day of August 2016
49
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Bellamy's Australia Limited for the year ended 30 June 2016, I declare
that to the best of my knowledge and belief, there have been:
1.
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2.
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Bellamy's Australia Limited and the entities it controlled during the
period.
Alison Tait
Partner
PricewaterhouseCoopers
Melbourne
19 August 2016
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
51
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
Financials
Consolidated Statement of Profit and Loss and Other
Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
HOW NUMBERS ARE CALCULATED
Segment information
Shareholder returns
Profit and loss information
Financial assets & financial liabilities
Non- financial assets & liabilities
Issued Capital
RISK
Critical estimates, judgements and errors
Financial risk management
GROUP STRUCTURE
Parent entity supplementary information
Subsidiaries
UNRECOGNISED ITEMS
Contingent liabilities and contingent assets
OTHER INFORMATION
Related party transactions
Auditor’s remuneration
Share based payments
Deed of cross guarantee
Summary of significant accounting policies
Directors’ Declaration
Independent Auditor’s Report
54
55
56
57
58
59
60
61
63
64
69
72
72
72
75
75
76
76
76
77
77
78
79
80
80
86
87
53
BELLAMY’S AUSTRALIA LIMITED
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2016
Note
5
5
6(a)
2016
$000
2015
$000
244,583
125,302
(132,855)
(84,095)
111,728
41,207
522
397
(28,510)
(10,433)
(6,969)
(11,725)
(307)
-
(15,191)
(5,606)
(2,509)
(5,298)
(447)
(267)
54,306
12,286
6(b)
588
695
54,894
12,981
7
3
(16,566)
38,328
(3,908)
9,073
(565)
-
(599)
37,164
(146)
8,927
39.8
38.6
9.8
9.5
Revenue
Cost of sales
Gross Profit
Other income
Direct costs (distribution costs)
Employee costs
Marketing & promotion costs
Administrative costs
Depreciation, amortisation
IPO transaction costs
Earnings before net interest and tax (EBIT)
Net interest revenue
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income (net of tax)
Items that may be reclassified to profit and loss in future periods
Changes in the fair value of cash flow hedges
Income tax relating to these items
Exchange differences arising from translation of wholly owned foreign entities
Total comprehensive income for the year
Earning/s per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
The accompanying notes form part of these financial statements.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Consolidated Statement of Financial Position
For the year ended 30 June 2016
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Financial assets at fair value through profit or loss
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total Non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Provisions
Derivatives
Current tax liabilities
Total Current Liabilities
Non-current liabilities
Borrowings
Provisions
Total Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
The accompanying notes form part of these financial statements.
Note
2016
$000
2015
$000
21(a)
8
11
9
10
16
12
13
18
14
15
17
23
18
15
17
19
20
32,295
33,887
67,752
500
283
4,475
32,035
20,867
17,148
-
217
407
139,192
70,674
1,105
1,704
1,500
4,309
143,501
617
104
775
1,496
72,170
48,373
19,109
113
328
807
10,495
60,116
18
146
164
60,280
83,221
40,216
2,829
40,176
83,221
108
179
-
3,664
23,060
130
69
199
23,259
48,911
39,655
340
8,916
48,911
55
BELLAMY’S AUSTRALIA LIMITED
Consolidated Statement of Changes in Equity
For the year ended 30 June 2016
Foreign
currency
Cashflow
Share based
translation
hedge
reserve
reserve
$000
$000
payment
reserve
$000
Retained
earnings
$000
Total
$000
-
-
-
-
-
-
-
-
-
-
(565)
(565)
-
-
-
-
6
-
-
-
-
-
493
499
499
-
-
-
-
-
3,268
-
3,767
(157)
15,592
9,073
-
9,073
-
-
-
9,073
(146)
8,927
23,899
-
493
8,916
48,911
8,916
48,911
38,328
(385)
37,943
-
(6,683)
-
-
38,328
(1,164)
37,164
561
(6,683)
3,268
-
40,176
83,221
Balance as at 1 July 2014
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Issued
capital
$000
15,756
-
-
-
Issue of shares (net of transaction costs)
23,899
Dividends
Share based payments
-
-
(13)
-
(146)
(146)
-
-
-
Balance as at 30 June 2015
39,655
(159)
Balance as at 1 July 2015
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Issue of shares (net of transaction costs
Dividends
Share based payments
Other transfers
39,655
-
-
-
561
-
-
-
(159)
-
(214)
(214)
-
-
-
-
Balance as at 30 June 2016
40,216
(373)
(565)
The accompanying notes form part of these financial statements.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
Cash flows from operating activities
Cash receipts from customers
Cash payments to suppliers and employees
Cash generated from operations
Interest received
Dividends received
Other revenue
Interest paid
Income taxes paid
Note
2016
$000
2015
$000
231,092
123,418
(214,416)
(119,160)
16,676
598
5
38
(10)
(8,412)
8,895
1
(752)
(1,651)
(2,402)
561
(107)
-
(6,684)
(6,230)
263
32,035
(3)
4,258
745
4
-
(31)
(236)
4,740
-
(267)
(120)
(387)
23,425
(217)
40
-
23,248
27,601
4,434
-
Net cash inflow operating activities
21 (b)
Cash flows from investing activities
Proceeds sale property plant & equipment
Purchases of property, plant & equipment
Purchases of intangibles
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds share issue
Repayment of borrowings
Proceeds from borrowings
Dividends paid
Net cash out flow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes
Cash and cash equivalents at the end of the financial year
21 (a)
32,295
32,035
The accompanying notes form part of these financial statements.
57
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
These are the consolidated financial statements of Bellamy’s Australia Limited and its subsidiaries. A list of all subsidiaries is included in Note 25.
The financial statements are presented in the Australian currency.
The notes are set out in the following main sections:
How numbers are calculated: provides a breakdown of those individual line items in the financial statements that the directors consider most
relevant in the context of the operations of the group, or where there have been significant changes that required specific explanations.
Risk: discusses the group’s exposure to various financial risks and what the group does to manage these risks.
Group structure: explains significant aspects of the group structure
Unrecognised items: provides information about items that are not recognised in the financial statements
Other information: includes information that is not directly related to specific line items in the financial statements, including: related party
transactions and share-based payments. Other information also includes significant accounting policies applied in the preparation of these financial
statements.
HOW NUMBERS ARE CALCULATED
1 Significant changes in the current reporting period
No significant matters or circumstances arose in the current year which significantly affected or may significantly affect the operations of the
group, the results of those operations, or the state of affairs of the Group in future financial years.
For a detailed discussion of the group’s performance and financial position, please refer to our operating and financial review on pages 9 to 27.
Changes in accounting policy since the most recent interim financial report
During the current year, the Group elected to early adopt AASB 9 ‘Financial Instruments’. AASB 9 contains guidance on hedge accounting that
replaces the existing requirements of AASB 139 ‘Financial Instruments: Recognition and Measurement’. AASB 9 introduces changes to hedge
effectiveness and eligibility requirements to align more closely with an entity’s risk management framework.
•
As a result of early adoption of AASB 9, there has been no material impact on amounts reported in these financial statements; however
application of this standard has resulted in additional disclosures which are incorporated in Note 23.
•
The changes were adopted retrospectively with no impact on retained earnings in the current or previous financial years or interim financial
reports.
2 Segment information
a) Description of segments
Operating segments are determined in accordance with AASB 8 Operating Segments. To identify the operating segments of the business
management has considered the business from both a product and geographical perspective, as well as considering the way information is
reported to management and the Board.
Segment revenues are derived from the sale and distribution of organic branded formula and food products to babies and toddlers.
Management has determined that there are three operating segments based on geographical location. The revenue for geographical segments
is determined by the location of the retailer/customer in respect of direct sales.
i) Australia – revenues derived from sales to retailers within Australia
ii) China / Hong Kong – revenue derived from sales to Chinese distributors and online sales from third party websites to Chinese customers.
iii) Other / South East Asia – sales to other distributors and retailers, predominantly in South East Asia.
Management primarily uses a measure of earnings before interest and tax (EBIT) to assess the performance of the operating segments.
Total assets and liabilities are measured in a manner consistent with that in the financial statements. These assets are allocated based on the
operations of the segment and physical location of the asset
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
2 Segment Information continued
b) Segment disclosures
a. Segment reporting
External sales
Other revenue
Segment Revenue
Segment EBIT
Other/South
Australia
China/Hong Kong
East Asia
Consolidated
2016
$’000
2015
$’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
2016
$’000
2015
$’000
178,629
107,045
62,144
14,137
3,809
4,119
244,583
125,302
(311)
15
(206)
297
215
634
(302)
946
178,318
107,060
61,938
14,435
4,025
4,753
244,281
126,248
35,628
13,009
20,873
416
340
685
56,842
14,110
Unallocated corporate expenses
Group EBIT
Net financing (costs)/revenue
Profit before tax from continuing
operations
-
-
-
-
-
-
-
-
-
-
-
-
Total segment assets
91,089
37,343
17,463
Total segment liabilities
46,931
19,744
1,352
Other disclosures
-
-
-
-
1,099
2,540
Depreciation, amortisation &
249
436
39
9
-
-
-
-
1,154
90
2
-
-
-
-
(2,537)
(1,823)
54,306
12,286
588
695
54,894
12,981
918
489
109,706
39,360
48,373
22,773
2
290
447
impairments
Income tax
15,082
3,868
1,738
Acquisition of segment assets
719
252
25
103
7
(255)
8
(63)
16,566
3,908
8
752
267
b.
Reconciliation of segment
assets and liabilities
2016
$0
2015
$0
2016
$0
2015
2016
$0
$0
2015
$0
2016
$0
2015
$0
Australia
China/Hong Kong
East Asia
Consolidated
Other/South
Segment assets
Unallocated
Cash and cash equivalents
Deferred tax assets (net)
Total assets
Segment liabilities
Unallocated
Provisions (employee benefits)
Borrowings
Derivatives
Current tax liabilities
Total liabilities
91,089
37,343
17,463
1,099
1,154
918
109,706
39,360
46,931
19,744
1,352
2,540
90
489
48,373
22,773
32,295
32,035
1,500
775
143,501
72,170
474
131
807
10,495
248
238
-
-
60,280
23,259
59
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
SHAREHOLDER RETURNS
3 Earnings per share
Basic earnings per share (a)
Diluted earnings per share (b)
(a) Basic earnings per share
2016
cents
39.8
38.6
2015
cents
9.8
9.5
The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders of $38,328,000 (2015: $9,073,000)
and the weighted average number of shares outstanding of 96,350,131 (2015: 92,534,639)
(b) Diluted earnings per share
The calculation of diluted earnings per share is based on the weighted average number of shares outstanding of 96,656,397 and
unexercised employee options of 3,035,662 (2015:3,355,746).
4 Dividends to Shareholders
On 19 August 2016, the Directors declared a fully franked dividend of 7.80 cents per share). Dividends of 2.86 cents per share were paid during
the previous financial year.
In respect of the financial year ended 30 June 2016, an interim dividend of 4.10 cents per share (2015: Nil) franked to 100% at 30% corporate
income tax rate was paid to the holders of fully paid ordinary shares on 26 February 2016.
As at 30 June 2016, the level of 30% franking credits available to shareholders on a tax paid basis were $14,095,000 (2015: $4,566,000). The
franking credits available are based on the balance of the dividend franking account in the prior year tax return adjusted in relation to the current
income tax liabilities for the year ended 30 June 2016. The ability to utilise franking credits is dependent upon the ability to declare dividends.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
PROFIT AND LOSS INFORMATION
This note provides further information about individual line items in the profit and loss statement
5 Revenue
Revenue from continuing operations
Other income
Grants received
Dividends received
Fair value increment/(decrement) – financial assets
Gain/(loss) on disposal of assets
Commissions received
Sundry income
Total other income
Revenue recognition
Measurement of revenue
2016
$000
2015
$000
244,583
125,302
39
5
66
(8)
353
67
522
-
4
(27)
(4)
382
42
397
Revenue is measured at fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates
allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the
market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue.
Timing of recognition
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of
ownership of the goods and the cessation of all involvement in those goods.
Interest revenue is reported under the heading of net finance costs and recognised using the effective interest rate method.
Grant income is recognised as income when the grant becomes receivable.
All revenue is stated net of the amount of goods and services tax (GST).
Note
2016
$000
2015
$000
6 Expenses
a. Employee benefits
Wages, salaries, bonuses
Superannuation
Other employee related expenses
b. Net finance revenue/(costs) (unrelated parties)
Interest revenue
Interest expense – financial liabilities
c. Other expenses from continuing operations
Depreciation – property, plant & equipment
Amortisation and impairment of product development costs
12(b)
Amortation of software
Write-off obsolete stock
IPO transaction costs
6,528
332
3,573
10,433
598
(10)
588
256
36
17
657
-
4,193
324
1,088
5,606
745
(50)
695
203
244
-
1,312
267
61
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
7
Income tax expense
a) Amounts recognised in profit or loss:
Current tax expense
Deferred tax expense / (benefit)
Adjustments for current tax of prior periods
Total income tax expense / (benefit)
b) Numerical reconciliation between tax expense and profit before tax.
Profit before tax from continuing operations
Prima facie tax payable at 30% (2015:30%)
Non deductible expenditure
Other
Effect of different overseas tax rates
Impact of Controlled Foreign Company Rules
R&D benefits
Losses not previously recognised
Tax effect of inter-entity eliminations
Total income tax expense / (benefit)
Weighted average effective tax rates
2016
$000
2015
$000
14,482
2,084
-
4,020
(112)
-
16,566
3,908
54,894
16,468
6
(51)
(1,571)
1,714
-
-
-
12,981
3,894
3
-
36
-
(4)
6
(27)
16,566
30%
3,908
30%
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
FINANCIAL ASSETS & FINANCIAL LIABILITIES
8 Trade and other receivables
Current
Trade debtors (a)
Loss allowance provision
Other debtors
2016
$000
2015
$000
33,582
20,343
(60)
-
33,522
20,343
365
524
33,887
20,867
a) Accounting for trade receivables
The average number of days outstanding for trade debtors is approximately 30 days. Interest is not charged on overdue balances. Less than
1% of the balance is past 60 days overdue with all balances considered to be recoverable. Collectability of trade receivables is reviewed
on an ongoing basis and written off by reducing the carrying value when known to be uncollectable. The impairment amount is recognised
within administrative costs.
b) Credit risk
The company applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of the
lifetime expected loss provision for all trade receivables. The loss allowance provision as at 30 June 2016 is determined as follows:
2016
Expected loss rate
Gross carrying amount
Loss allowance provision
Closing loss allowance as at 30 June 2015
Opening loss allowance as at 1 July 2015
Increase in loss allowance recognised in profit or loss
during the period
As at 30 June 2016
More than
More than
More than
Current
30 days
60 days
120 days
$000
$000
$000
$000
Total
$000
-
15,138
-
-
136
-
-
-
-
33,582
60
0.3%
18,308
60
$000
0
0
60
60
The gross carrying amount of trade receivables is $33.6million (2015: $20.3million).
During the period, the company made no write offs of trade receivables that it did not expect to receive future cash flows from and made no
recoveries from collection of cash flows previously written off.
63
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
9 Other financial assets
Current
USD held in trust
10 Financial assets at fair value through profit and loss
Current
Listed equity securities
Listed equity securities
The shares are held for trading and are designated as financial assets at fair value through profit and loss.
Changes in fair value are included in the statement of comprehensive income under the heading of other income.
The fair value increased by $66,500 (2015: decreased by $27,000).
NON-FINANCIAL ASSETS & LIABILITIES
11 Inventories
Current assets
Raw materials & stores at cost
Goods in transit
Finished goods at cost
Inventories are measured at lower of cost and net realisable value
12 Property, plant and equipment
a) Carrying amounts
Plant and Equipment
At cost
Accumulated depreciation
Leasehold Improvements
At cost
Accumulated depreciation
Total Property Plant & Equipment
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
2016
$000
2015
$000
500
500
283
283
-
-
217
217
20,726
11,917
35,109
67,752
3,117
-
14,031
17,148
1,238
(452)
786
564
(245)
319
1,105
903
(327)
576
212
(171)
41
617
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
12 Property, plant and equipment continued
b) Reconciliation of carrying amount
Balance as at 1 July 2014
Additions
Disposals
Depreciation expense
Balance as at 30 June 2015
Balance as at 1 July 2015
Additions
Disposals
Depreciation expense
Balance as at 30 June 2016
Plant &
Leasehold
equipment
improvements
Total
$000
503
184
-
(111)
576
576
400
(8)
(182)
786
50
83
-
(92)
41
41
352
-
(74)
319
553
267
-
(203)
617
617
752
(8)
(256)
1,105
Non-current assets pledged as security
Plant and equipment pledged as security for asset purchase liabilities has a written down value of $103,000 (2015: $123,000).
13 Intangible assets
Product development costs
Cost
Accumulated amortisation and impairment
Software
Cost
Accumulated amortisation
Total intangibles
2016
$000
2015
$000
1,555
(36)
1,519
202
(17)
185
348
(244)
104
-
-
-
1,704
104
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when
the project is expected to deliver future economic benefits and those benefits can be reliably measured.
Product development costs will be amortised over 3 years, or where the product line is discontinued, the balance is written off during that
financial period.
14 Trade and other payables
Current
Trade payables
Sundry payables and accrued expenses
Payables are unsecured and are usually paid for 30 days from end of month.
2016
$000
2015
$000
42,359
6,014
48,373
17,016
2,093
19,109
65
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
15 Borrowings
Current
Secured liabilities
Asset purchase liabilities (a)
Total current borrowings
Non-Current
Secured liabilities
Asset purchase liabilities (a)
Total non-current borrowings
Total borrowings
2016
$000
2015
$000
113
113
18
18
131
108
108
130
130
238
Additional information on finance facilities available
(a) The asset purchase liabilities are secured by underlying assets carried at $103,000 (2015: $123,000).
Bank accepted letter of credits are provided from time to time in relation to export sale orders and are secured by the underlying receivable
balance.
Recognised fair value measurements
Fair value hierarchy
To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the
three levels prescribed under the accounting standards. An explanation of each level follows underneath the table.
Recurring fair value measurements as at 30 June 2016
Notes
Level 1
Level 2
Level 3
Total
Financial Assets
Financial assets at FVPL
Australian listed equity securities
Total Financial Assets
Financial Liabilities
Derivatives used for hedging
Foreign exchange contracts
Total Financial Liabilities
10
19
283
283
-
-
-
-
807
807
Recurring fair value measurements as at 30 June 2015
Notes
Level 1
Level 2
Level 3
Financial assets at FVPL
Australian listed equity securities
Total Financial Assets
Financial Liabilities
Derivatives used for hedging
Foreign exchange contracts
Total Financial Liabilities
10
217
217
-
-
-
-
-
-
-
-
-
-
-
-
-
-
283
283
807
807
Total
217
217
-
-
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
15 Borrowings continued
There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.
The group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The
quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise
the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for
unlisted equity securities.
Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
• the use of quoted market prices or dealer quotes for similar instruments
• the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date
16 Other assets
Current
Prepayments
Prepayments include payments for purchases of raw materials prior to ownership passing to the group.
17 Provisions
Current
Employee entitlements
Non-Current
Employee entitlements
2016
$000
2015
$000
4,475
407
328
146
474
179
69
248
67
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
18 Tax
Current asset / (liability)
Current tax asset
Income tax payable
Deferred tax balances recognised
Temporary differences relating to income
Temporary differences relating to spending
Inventories
Other liabilities
Employee entitlements
Foreign exchange (losses)
Overseas operating losses
Share based payments
Capital raising costs (equity)
Net deferred tax balances recognised
Represented by
Deferred tax assets
Deferred tax liabilities
Movement in recognised deferred tax balances
Opening balance
Recognised in income
Recognised in equity
Deferred tax assets not recognised
Australian Tax Consolidated Group
Tax losses: capital
Temporary differences : revenue
2016
$000
2015
$000
-
-
10,495
3,664
-
314
196
661
141
40
290
189
330
1,500
2,109
(609)
1,500
774
(2,075)
2,801
1,500
201
-
-
181
(18)
70
(177)
124
148
447
775
1,016
(241)
775
186
117
472
775
201
-
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future
taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
19 Issued capital
a) Fully paid ordinary shares
96,656,397 (2015: 95,000,392)
Fully paid ordinary shares carry one vote per share and carry a right to dividends.
Movements in fully paid ordinary shares
Balance 1 July 2014
5 August 2014 – share issue
Balance 30 June 2015
Balance 1 July 2015
Share issue
Balance 30 June 2016
2016
$000
2015
$000
40,216
39,655
Number
of shares
‘000
Share
capital
$000
70,000
25,000
95,000
95,000
1,656
96,656
15,756
23,899
39,655
39,655
561
40,216
b) Share options granted under the Company’s employee share option plan
On 3 September 2015, 1,633,962 options granted to executives and employees on 26 June 2014 were exercised and converted to ordinary
shares of the Company. 293,333 options of this original grant were forfeited as a result of an eligible employee ceasing employment with the
Company, and a further 272,705 options were foregone as result of cashless exercise.
On 23 March 2016, as a result of the Dividend Reinvestment Plan, 22,043 shares were issued at a price of $10.80.
The number of ordinary shares on issue is now 96,656,397 (2015: 95,000,392).
As at 30 June 2016, executives and employees held options over 2,629,252 (2015: 3,355,748) ordinary shares of the Company.
The holders of these options do not have the right, by virtue of the option to participate in any share issue or interest issue of the company
or of any other related body corporate.
Until they are exercised, the options carry no rights to dividends and no voting rights.
c) Dividends not recognised at the end of the reporting period
On 19 August 2016 the Directors declared a dividend of 7.80 (2015: 2.86) cents per fully paid ordinary share, fully franked based on tax paid
at 30%. The aggregate amount of the proposed dividend expected to be paid on 26 September 2016 out of retained earnings at 30 June
2016, but not recognised as a liability at year end is $7.54 million.
d) Capital Management
Management and the board of directors monitor the capital of the group in order to maintain a prudent debt to equity ratio, provide the
shareholders with adequate returns and ensure that the group can effectively fund the operations in line with business growth objectives.
The group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. At balance date there
were no externally imposed capital requirements.
69
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
Management effectively manages the group’s capital by assessing the group’s risk and adjusting its capital structure in response to changes
in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.
The net debt to cash position as at the end of the reporting period is as follows:
Total borrowings
Less cash and cash equivalents
Net debt / (cash)
20 Reserves (net of income tax)
Foreign currency translation reserve
Share based payments reserve
Cash flow hedge reserve
Foreign currency translation reserve
Balance at the beginning of the year
Exchange differences arising on translating net assets of foreign operations
Income tax effect
Balance at the end of the year
Exchange differences relating to the translation of the results and net assets of the group’s foreign operations
are recognised directly in other comprehensive income and are accumulated in the foreign currency translation
reserve.
Share based payments reserve
Balance at the beginning of the year
Arising on share based payments
Income tax effect
Balance at the end of the year
The reserve relates to share options granted by the Company to its employees under its Employee Share Option
Plan. Further details are provided in note 32.
Cash flow hedge reserve
Balance at the beginning of the year
Arising from changes in fair value of hedging instruments
Income tax effect
Balance at the end of the year
2016
$000
2015
$000
131
238
(32,295)
(32,035)
(32,164)
(31,797)
(373)
3,767
(565)
2,829
(159)
(214)
-
(373)
499
3,268
-
3,767
-
(807)
242
(565)
(159)
499
-
340
(13)
(146)
-
(159)
6
493
-
499
-
-
-
-
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the cash flow
hedge reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value basis from the inception of the
hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, within Other income (expenses).
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
21 Additional cash flow information
a) Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in
banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash
equivalents at the end of the financial year as shown in the cash flow statement is reconciled to the related
items in the statement of financial position as follows:
b) Reconciliation of profit for the period to net cash flows from operating activities
Reconciliation of profit for the year to net cash from operating activities
Profit after tax
Adjust for non-cash items
Depreciation
Amortisation
Loss on sale – plant and equipment
Financial assets – fair value through profit or loss
Unrealised gains
Interest on asset purchase
Share based payments
Movements in working capital
(Increase)/decrease in trade receivables
(Increase)/decrease in inventories
(Increase)/decrease in other assets
(Increase)/decrease in net tax assets
(Decrease)/increase in trade payables
(Decrease)/increase in provisions
Net cash from operating activities
During the year there were no reportable non-cash financing and non-cash investing activities.
2016
$000
2015
$000
32,295
32,035
38,328
9,073
256
51
8
66
(1,196)
10
3,268
(13,020)
(54,135)
(537)
6,106
29,264
426
8,895
447
-
-
27
(146)
19
493
(14,424)
(9,412)
2,289
3,672
12,595
106
4,740
71
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
RISK
22 Critical estimates, judgements and errors
There are no critical estimates or judgements other than the capitalisation of product development costs. The accounting for product
development costs are outlined in Note 13. At 30 June 2016 there is $1,519,000 (2015: $104,000) of capitalised costs.
23 Financial risk management
a) Financial risk management policies
The group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable and loans to subsidiaries.
b) Financial risk exposures
The group is exposed to liquidity and credit risks with limited exposure to interest rate, foreign exchange and equity price risk.
Liquidity risk
Liquidity risk is managed by maintaining sufficient cash and monitoring forecast cash flows.
At the end of the reporting period, the group did not have access to any undrawn borrowing facilities, however, is in the process of obtaining
a financing facility in order fund future working capital, as required.
The group’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets
necessary to meet these.
Fixed
Fixed
Interest
Interest
Weighted
Average
Interest
Rate
%
Floating
Interest
Rate
$000
Rate
Mature
within 1
Year
$000
Rate
Mature
Non
later than
interest
1 Year
bearing
$000
$000
Total
2016
$000
Consolidated Group 2016
Financial assets
Cash and cash equivalents
2.6%
17,140
Receivables
Financial assets at fair value through profit or loss
Total financial assets
Financial Liabilities
Trade payables
Derivative
Borrowings
Total financial liabilities
Net financial assets
-
-
17,140
-
-
-
-
17,140
6.5%
-
-
-
-
-
-
(113)
(113)
(113)
-
-
-
-
-
-
(18)
(18)
(18)
15,155
33,887
283
32,295
33,887
283
49,325
66,465
(48,373)
(48,373)
(807)
-
(807)
(131)
(49,180)
(49,311)
145
17,154
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
Fixed
Fixed
Interest
Interest
Weighted
Average
Interest
Rate
%
Floating
Interest
Rate
$000
Rate
Mature
within 1
Year
$000
Rate
Mature
Non
later than
interest
1 Year
bearing
$000
$000
Total
2015
$000
Consolidated Group 2015
Financial assets
Cash and cash equivalents
4.7%
32,035
Receivables
Shares in Australian listed entities at fair value
Total financial assets
Financial Liabilities
Trade payables
Borrowings
Total financial liabilities
Net financial assets
Credit risk
-
-
32,035
-
-
-
32,035
8.8%
-
-
-
-
-
-
-
-
-
-
(108)
(108)
(108)
(130)
(130)
(130)
-
20,867
217
32,035
20,867
217
21,084
53,119
(19,109)
(19,109)
-
(238)
(19,109)
(19,347)
1,975
33,772
Credit risk arises from exposure to customers and deposits with financial institutions. Management monitors credit risk by actively assessing
and rating quality and liquidity of counter parties, through a combination of obtaining external credit ratings, credit checks and past
experience. Individual risk limits are set in accordance with the group’s Credit Policy. The compliance with credit limits by customers is
regularly monitored by management.
For some trade receivables the group obtains security in the form of directors guarantees, or letters of credit which can be called upon if the
counterparty is in default under the terms of the agreement.
Interest rate risk
Due to low debt to equity ratios the group has limited exposure to interest rate risk. As at 30 June 2016, the total borrowings were $131,000
under fixed interest borrowing arrangements.
Foreign exchange risk
The group has exposure to movements in foreign currency exchange rates through:
• Sales to distributors and customers in foreign currency
• Anticipated purchases of inventory
• Translations of net investments in foreign subsidiaries denominated in foreign currencies
Bellamy’s Australia Ltd’s functional currency is Australian dollars. For the internal operations in the entities in Singapore, Hong Kong and
China, all income and expenses are conducted in local currency.
The group imports ingredients to meet demand, and has exposure to USD and EUR movements directly where it purchases ingredients on
its own behalf and indirectly through purchases of finished products where the group’s product manufacturers purchase ingredients on its
behalf.
In order to hedge against the exposure to fluctuations in exchange rates associated with the highly probable purchase of ingredients, the
group enters into forward exchange contracts, which are designated as cash flow hedges.
Exposure of overseas debtors to foreign exchange risk is minimal as these transactions are primarily denominated in AUD.
73
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
23 Financial risk management continued
b) Financial risk exposures continued
Forward exchange contracts
The Board’s risk management policy is to hedge 25% - 100% of anticipated foreign currency cash flows within the next twelve months
(mainly inventory purchases) in EUR, subject to a review of the cost of implementing each hedge.
At balance date, details of the significant outstanding forward exchange contracts, stated in Australian dollar equivalents are:
Average
Foreign currency
Contract value
Mark to
Mark to
exchange rate
(in foreign currency)
(AUD)
market assets
market liabilities
2016
2015
2016
$000
2015
$000
2016
$000
2015
$000
2016
$000
2015
$000
2016
$000
2015
$000
Hedging Imports:
Maturing within 12
months
Buy Euro
0.6544
-
28,683
-
43,826
-
122
-
(930)
-
At the reporting date, the net amount of unrealised losses under forward exchange contracts hedging anticipated purchases of inventory is
$0.8 million. The hedge relationships are all assessed as highly effective with insignificant hedge ineffectiveness and the movement of $0.8
million has been recognised in the hedging reserve.
Derivative financial instruments – foreign exchange forward
contracts
30 June 2016
$000
30 June 2015
$000
Carrying amount
Notional amount
Maturity date
Hedge ratio
Change in fair value of outstanding hedging instruments since 1 July
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate for the year (including forward points)
$807
$43,966
July 2016 – December 2016
1:1*
$79
($79)
0.6533
-
-
-
-
-
-
-
* The foreign exchange forward contracts are denominated in the same currency as the highly probable future inventory purchases (EUR), therefore the hedge
ratio is 1:1.
Foreign currency exposures arising on translation of net investments in foreign subsidiaries are predominantly unhedged.
Equity price risk
The Group has equity price risk as a result of its listed equity investment holdings valued at fair value through profit and loss $283,000 (2015:
$216,500). Fair value of listed equity investments is determined with reference to quoted ASX bid prices. A 10% movement in equity prices
would impact the carrying value of the listed investments and profit before tax by $28,000 (2015: $22,000).
c) Categories of financial instruments
Other than equity investments classified at fair value through profit and loss classified under the heading of current financial assets, all the
nature and categories of all other financial instruments are apparent from the face of the Statement of Financial Position.
d) Carrying value of financial assets and financial liabilities
The carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements are considered to
approximate their fair values.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
GROUP STRUCTURE
24 Parent entity supplementary information
The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian
Accounting Standards.
Statement of Financial Position
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained earnings
Total Equity
Statement of Profit or Loss and Other Comprehensive Income
Total profit / (loss)
Total comprehensive income
Guarantees
Contingent liabilities
Contractual commitments
2016
$000
2015
$000
52,202
39,460
530
612
52,732
40,072
8,654
3,732
-
8,654
44,078
40,216
3,767
95
-
3,732
36,340
39,655
499
(3,814)
44,078
36,340
10,592
10,592
-
-
-
7
7
-
-
-
75
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
25 Subsidiaries
Name
Bellamy’s Organic Australia Pty Ltd
Bellamy’s Kitchen Pty Ltd
Yum Mum Pty Ltd
Bellamy’s Organic (Hong Kong) Company Ltd
Bellamy’s Organic (South East Asia) Pte Ltd
Bellamy’s Food Trading (Shanghai) Co Ltd
Place of
Ownership %
Principal
incorporation and
activity
operation
2016
2015
(a)
(b)
(b)
(a)
(a)
(a)
Australia
Australia
Australia
Hong Kong
Singapore (c)
China (c)
100
100
100
100
100
100
100
100
100
100
100
100
a) Sale and distribution of organic food and formula products for babies and toddlers
b) Non-operating
c)
These entities were incorporated during the 2014 year and currently their respective financial reporting periods are not synchronised with the parent entity. The
financial reporting year ends with respect to these entities are:
- Bellamy’s Organic (Hong Kong) Company Ltd 31 December
- Bellamy’s Organic (South East Asia) Pte Ltd
- Bellamy’s Food Trading (Shanghai) Co Ltd
31 March
31 December
UNRECOGNISED ITEMS
26 Contingent liabilities and contingent assets
As at the date of this report the Group is not aware of any reportable contingent liabilities or contingent assets.
27 Commitments for expenditure
There are no known commitments for expenditure (2015: $Nil)
-
-
2016
$000
2015
$000
28 Operating lease arrangements
Non-cancellable operating lease commitments
Not later than 1 year
Later than one year and not later than 5 years
Later than 5 years
Operating lease commitments primarily relate to office leasing arrangements.
258
501
-
759
156
72
-
228
29 Events Occurring After Reporting Period
No matters or circumstances have arisen since the end of the year which significantly affected or may significantly affect the operations of the group,
the results of those operations, or the state of affairs of the group in future financial year.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
OTHER INFORMATION
30 Related party transactions
a) Parent entities
The parent entity within the group is Bellamy’s Australia Limited.
b) Subsidiaries
A list of subsidiaries is provided in note 24
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other
parties unless otherwise stated.
Balances and transactions between the Company and its controlled entities, which are related parties of the Company, have been eliminated
on consolidation and are not disclosed in this note. Details of transactions between the group and other related parties are disclosed below.
Transactions between related parties are executed on normal commercial terms and conditions no more favourable than those available to
other parties unless otherwise stated.
c) Transactions with related parties
Key management personnel compensation
The key management personnel compensation included in ‘employee costs’ (see note 6) is as follows:
Short term benefits
Post-employment benefits
Other long term benefits
Termination benefits
Share based payments
2016
$000
1,058
37
52
-
359
1,506
2015
$000
696
40
16
-
251
1,003
Individual Directors and executive compensation disclosures
Information regarding individual Directors and key management personnel compensation and some equity instruments disclosures as
required by the Corporations Regulations 2M.3.03 is provided in the Remuneration Report section of the Directors’ Report on pages 37 to
49.
Apart from the details disclosed in this note, no Director has entered into a material contract with the Company or Group since the end of
the previous financial year and there were no material contracts involving Directors’ interests existing at year end.
There were no loans outstanding at reporting date between the Company and the group and key management personnel.
Other key management personnel transactions with the company or its controlled entities
From time to time, key management personnel of the Company or its controlled entities, or their related entities, may purchase goods from
the group. These purchases are on the same terms and conditions as those entered into by other group employees or customers and are
trivial or domestic in nature.
77
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
30 Related party transactions continued
Shareholdings
The number of ordinary shares held in Bellamy’s Australia Limited as at the date of this report and as at the end of the reporting period, by
each key management person, including their related parties, are as follows:
Non-executive Directors:
R Woolley
I Urquhart2
M Wadley
L Inman
P Mann1
C Sitch 1
Executives
L McBain
S Ollington
A. Cohen
1 Appointed 10 March 2016
2 Resigned 30 June 2016
Options over ordinary shares
Movement
Balance at
1 July 2015
during year
30 June 2016
No.
No.
No.
1,335,739
(883,462)
452,277
2,500,000
(1,500,000)
1,000,000
-
22,000
-
-
-
4,020
4,000
-
-
26,020
4,000
-
1,565,376
(400,000)
1,165,376
-
13,750
-
-
-
13,750
The number of options over Bellamy’s Australia Limited ordinary shares held as at the date of this report and as at the end of the reporting
period, by each key management person, including their related parties are set out below.
2016
Executives
L McBain
S Ollington
A Cohen
Granted as
Vested in
Exercised
Balance at
remuneration
FY2015 and
during the
Forfeited
Held as at
1 July 2015
in FY2016
exercisable
reporting period
in FY2016
30 June 2016
1,779,210
216,793
-
530,918
112,000
689,950
953,333
953,333
-
-
-
-
-
-
-
1,356,795
328,793
689,950
No directors hold options over ordinary shares.
31 Auditor’s Remuneration
a) Auditor of the parent entity
Audit of the financial statements
Other audit, tax and compliance related services
Total paid to PricewaterhouseCoopers
b) Auditors of the wholly owned overseas subsidiaries
Audit of the financial statements
Other tax and compliance services
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
2016
$
2015
$
132,000
14,000
146,000
155,000
-
155,000
80,000
6,000
86,000
26,000
18,000
44,000
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
32 Share based payments
a) Employee Option Plan
The Managing Director and other senior management held, as part of their remuneration, conditional vesting options over 3,035,662 (2015:
3,355,748) ordinary shares of the Company comprising the 2015 grant which was made on 29 June 2015, the current year grant which was
made on 23 December 2015, and a subsequent grant on 30 June 2016.
FY2015 grant
The exercise price for the FY2015 grant of options is $1.30. The options can only be exercised if specific performance hurdles are met.
Refer to the remuneration report on pages 37 to 49 for detail regarding the performance hurdles. These options expire four years after the
date of the grant, which should be no later than 29 June 2019.
FY2016 grant
The exercise price for the FY2016 grant of options is $4.97. The options can only be exercised if specific performance hurdles are met.
Refer to the remuneration report on pages 37 to 49 for detail regarding the performance hurdles. These options expire five years after the
grant date, which should be no later than 23 December 2020.
Additional grant on 30 June 2016
A subsequent grant of 689,950 options was made on 30 June 2016. The options were granted under the LTI plan.
b) Other movements
During the current financial year the initial FY2014 grant options were exercised.
With regard to the previous financial year there were no options exercised, however 293,333 options were forfeited as a result of an eligible
employee ceasing employment with the company.
c) Fair value of options granted during the year
The fair value of the options granted during the year was $2.31, $1.22 and $1.58 respectively.
d) Expenses arising from share based payment transactions
The value of options granted to key management personnel are amortised over the period from the grant date to the vesting date for
accounting purposes. Share based payments expense in relation to key management personnel for the year is as follows:
Name
L McBain
L McBain
L McBain
Shona Ollington
Shona Ollington
Andrew Cohen
Total
Option series
Grant date
No. of options
expense $
Share based
payment
FY2014 Grant
FY2015 Grant
FY2016 Grant
FY2015 Grant
FY2016 Grant
FY2016 Grant
26/6/2014
29/6/2015
23/12/2015
29/6/2015
23/12/2015
30/6/2016
953,333
825,877
530,918
216,793
112,000
689,950
40,000
101,000
153,000
27,000
32,000
6,000
359,000
79
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
33 Deed of cross guarantee
Bellamy’s Australia Limited and Bellamy’s Organic Pty Ltd executed a deed of cross guarantee on 16 February 2015 under which each
company guarantees the debts of the other. By entering into the deed, the wholly owned subsidiaries have been relieved from the requirement
to prepare a financial report and Directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments
Commission. The above companies represent a “Closed Group” for the purposes of the Class Order, and as there are no other parties to the
deed of cross guarantee that are controlled by Bellamy’s Australia Limited, they also represent the “extended closed Group”.
34 Summary of significant accounting policies
Reporting entity
Bellamy’s Australia is a listed public company incorporated in Australia. The address of the principal place of business and registered office are
as follows:
115 Cimitiere Street
Launceston
Tasmania 7250
The entity’s principal activities are the sale and distribution of organic food and formula products for babies and toddlers.
The consolidated financial statements and notes represent those of Bellamy’s Australia Limited and Controlled Entity (the “Consolidated Group”
or “Group”).
The separate financial statements of the parent entity, Bellamy Australia Limited, have not been presented within this financial report as permitted
by the Corporations Act 2001.
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting
of Bellamy’s Australia Limited and its subsidiaries.
Basis of preparation
These consolidated general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Bellamy’s Australia Limited is a for-profit
entity for the purpose of preparing the financial statements.
The financial statements were authorised for issue on 19 August 2016 by the directors of the company.
The amounts presented in the financial statements have been rounded to the nearest thousand dollar.
The directors have elected under s.334(5) of the Corporations Act 2001 to apply Accounting Standard AASB 9 (December 2014) ‘Financial
Instruments’ for this financial year, even though the Standard is not required to be applied until annual reporting periods beginning on or after 1
January 2018.
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2015.
AASB 15 replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation
13 Customer Loyalty Programmes. The new standard is based on the principle that revenue is recognised when control of a good or service
transfers to a customer. The notion of control under AASB 15 replaces the existing notion of risks and rewards under current accounting
standards. The standard is applicable from 1 January 2018 with early adoption permitted.
The consolidated entity is currently assessing the potential impact of the new standard upon the consolidated entity’s revenue recognition policy
and at this stage is unable to estimate the financial impact on adopting the standard.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial
assets, financial assets and liabilities.
Compliance with IFRS
The consolidated financial statements of the Bellamy’s Australia Limited group also comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
34 Summary of significant accounting policies continued
a) Principles of consolidation
i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Bellamy’s Australia Limited (‘company’
or ‘parent entity’) as at 30 June 2016 and the results of all subsidiaries for the year then ended. Bellamy’s Australia Limited and its
subsidiaries together are referred to in this financial report as the group or the consolidated entity.
Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating
policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date
that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
b) Income tax
The income tax expense for the financial reporting period comprises current income tax expense (income) and deferred tax expense
(income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates
enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be
paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the financial year as well
unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates
to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax
deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future
taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets
and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the
reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a
legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities where it is intended that the net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are
expected to be recovered or settled.
Bellamy’s and its wholly owned Australian controlled entities have implemented the tax consolidation legislation. Bellamy’s, as the head entity
in the tax consolidated group and its wholly owned Australian controlled entities continues to account for their own current and deferred tax
amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own
right. In addition to its own current and deferred tax amounts, Bellamy’s also recognises the current tax liabilities (or assets) and the deferred
tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or
liabilities arising under the tax funding agreement with the tax consolidated entities are recognised as amounts receivable from or payable to
other entities in the Group.
81
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
34 Summary of significant accounting policies continued
c) Foreign currency translation
Items included in the Financial Information of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Australian
dollars, which is the functional and presentation currency of the Group.
Transactions in foreign currencies are converted at the exchange rates in effect at the dates of each transaction. Amounts payable to or by
the Group in foreign currencies have been translated into Australian currency at the exchange rates ruling on balance date. Gains and losses
arising from fluctuations in exchange rates on monetary assets and liabilities are included in the income statement in the period in which the
exchange rates change, except when deferred in equity as qualifying cash flow hedges.
d) Employee expenses and entitlements
Provision is made for employee expenses arising to the end of the reporting period. Employee expenses that are expected to be settled
within one year have been measured at the amounts expected to be paid when the liability is settled. Employee expenses payable later
than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining
the liability, consideration is given to employee wage increases and the probability that the employee may satisfy any vesting requirements.
Those cash flows are discounted using market yields on Australian corporate bond rates with terms to maturity that match the expected
timing of cash flows attributable to employee expenses.
Provision has been made in the accounts for benefits accruing to employees up to balance date, such as annual leave, long service
leave and bonuses. No provision is made for non-vesting sick leave as the anticipated pattern of future sick leave taken indicates that
accumulated non-vesting leave will never be paid. Annual leave provisions are measured at their nominal amounts using the remuneration
rates expected to apply at the time of settlement and are classified in other payables. Long service leave provisions are measured as the
present value of expected future payments to be made in respect of services provided by employees up to reporting date.
Expected future payments are discounted using market yields at reporting date on Australian corporate bonds with terms to maturity that
match estimated future cash outflows.
All on-costs, including superannuation, payroll tax, workers’ compensation premiums and fringe benefits tax are included in the
determination of provisions.
e) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the
statement of financial position.
f) Borrowings
Loan facilities are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over
the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities, which are not incremental costs relating to the actual drawdown of the facility, are
capitalised and amortised on a straight line basis over the term of the facility.
g)
Receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less any provision for doubtful debts.
Trade receivables are generally due for settlement based upon trading terms negotiated with customers. Sales to export distributors are
generally receivable before shipment or secured by letter of credit for longer periods. Sales to domestic customers are generally receivable
approximately 45 days from invoice.
For trade receivables, the company applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which
requires the use of the lifetime loss provision for all trade receivables. Any credit losses are written off to Administrative Costs in the profit and
loss.
h)
Inventories
Inventories are measured at the lower of cost and net realisable value. Net realisable value represents the estimated selling price for
inventories less all estimated costs of completion and costs necessary to make the sale.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements Continued
For the year ended 30 June 2016
34 Summary of significant accounting policies continued
i)
Impairment of assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently
if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash generating units).
j) Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value, less where applicable, any accumulated depreciation or
amortisation.
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated
impairment
The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount
from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the
assets’ employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining
recoverable amounts.
Depreciation
The depreciable amount of all fixed assets, excluding freehold land, is depreciated on a straight line basis over the asset’s useful life to the
consolidated group commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
• IT Hardware
• Motor Vehicles
• Furniture and fittings
Useful life
4 years
8 Years
10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the
profit and loss statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred
to retained earnings.
k) Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the
minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other long-term payables. Finance
lease payments are allocated between interest expense and reduction of lease liability over the term of the lease. The interest expense is
determined by applying the interest rate implicit in the lease to the outstanding lease liability at the beginning of each lease payment period.
Finance leased assets are depreciated on a straight-line basis over the shorter of the asset’s estimated useful life and the lease term.
Where the risks and rewards of ownership are retained by the lessor, leased assets are classified as operating leases and are not capitalised.
Rental payments are charged to the income statement on a straight line basis over the period of the lease.
83
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
34 Summary of significant accounting policies continued
l) Accounts payable
These amounts represent liabilities for goods provided prior to the end of the reporting period and which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition.
m) Provisions
Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it is probable that
an outflow of economic benefits will result and that outflow can be reliably measured.
n) Financial Instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added
to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or
loss.
Financial assets classified at fair value through profit and loss
From time to time the group may hold listed investments for the purposes of trading, such investments are classified at fair value though
profit and loss. These investments are measured at fair value with changes in carrying amount being included in profit or loss. Fair value is
determined with reference to ASX quoted bid prices.
o) Goods and Services Tax (GST)
Revenues, expense and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from
the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an
item of an expense. Receivables and payables in the balance sheet are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities,
which are disclosed as operating cash flows.
p) Share based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity
instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in
note 21. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over
the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At
the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the
revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to the equity-settled employee benefits reserve.
q) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the new share issue are shown in equity as a deduction, net
of tax, from the proceeds.
r) Comparative figures
When required by the Accounting Standards, comparative figures are adjusted to conform to changes in presentation for the current
financial year.
In the event that the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its
financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in addition to the
minimum comparative financial statements is presented.
Comparative information is reclassified where appropriate to enhance comparability and provide more appropriate information to users.
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Notes to the Financial Statements
For the year ended 30 June 2016
34 Summary of significant accounting policies continued
s) Adoption of new and revised Accounting Standards
In the current year, the Group has applied an amendment to AASBs issued by the Australian Accounting Standards Board (AASB) that is
mandatorily effective for an accounting period that begins on or after 1 July 2015, and therefore relevant for the current year end.
AASB 2015-3 ‘Amendments to Australian Accounting
This amendment completes the withdrawal of references to AASB 1031
Standards arising from the Withdrawal of AASB 1031
in all Australian Accounting Standards and Interpretations, allowing that
Materiality’
Standard to effectively be withdrawn.
The application of this amendment does not have any material impact on the disclosures or the amounts recognised in the Group’s
consolidated financial statements.
t) New Accounting Standards for application in future periods
The table below lists the standards and amendments to standards that were available for early adoption and were applicable to the Group.
The reported results and financial position of the Group are not expected to change on adoption of any of the amendments to current
standards listed below as they do not result in any significant changes to the Group’s existing accounting policies.
The Group does not intend on adopting the following new standards or amendments before their mandatory effective dates.
Standard / Interpretation
AASB 15: ‘Revenue from Contracts with Customers’,
and associated Amending Standards
AASB 16: ‘Leases’
AASB 2014-4 ‘Amendments to Australian Accounting Standards
– Clarification of Acceptable Methods of Depreciation and Amortisation’
Effective for annual
Expected to be
reporting periods
initially applied in
beginning on or
the financial year
after
ending
1 January 2018
20 June 2019
1 January 2019
30 June 2020
1 January 2016
30 June 2017
AASB 2015-1 ‘Amendments to Australian Accounting Standards
1 January 2016
30 June 2017
– Annual Improvements to Australian Accounting Standards 2012-2014 Cycle’
AASB 2015-2 ‘Amendments to Australian Accounting Standards
1 January 2016
30 June 2017
– Disclosure Initiative: Amendments to AASB 101’
AASB 2016-1 ‘Amendments to Australian Accounting Standards
1 January 2017
30 June 2018
– Recognition of Deferred Tax Assets for Unrealised Losses’
AASB 2016-2 ‘Amendments to Australian Accounting Standards
1 January 2017
30 June 2018
– Disclosure Initiative: Amendments to AASB 107’
u) Rounding 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 financial statements
are rounded off to the nearest thousand dollars, unless otherwise indicated.
85
BELLAMY’S AUSTRALIA LIMITED
Directors’ Declaration
For the year ended 30 June 2016
In the directors’ opinion:
(a) The financial statements and notes set out on pages 54 to 85 are in accordance with the Corporations Act 2001, including:
i.
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements,
and
ii.
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its performance for the financial year
ended on that date, and
(b) 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
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in
Note 25 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in Note 33.
Note 34 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
The directors have been given the declarations by the CEO and Managing Director and the Chief Financial Officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Robert G. Woolley
CHAIR
Laura McBain
CEO and Managing Director
Dated at Launceston this 19th day of August 2016
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Independent Auditor’s Report
For the year ended 30 June 2016
Independent auditor’s report to the members of Bellamy's
Australia Limited
Report on the financial report
We have audited the accompanying financial report of Bellamy's Australia Limited (the company),
which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of changes in
equity and consolidated statement of cash flows for the year ended on that date, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration for Bellamy's
Australia Limited (the consolidated entity). The consolidated entity comprises the company and the
entities it controlled at year’s end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the 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
financial report that is free from material misstatement, whether due to fraud or error. In Note 34, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the consolidated
entity’s preparation and fair presentation of the financial report in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Continued next page
87
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
BELLAMY’S AUSTRALIA LIMITED
Independent Auditor’s Report
For the year ended 30 June 2016
Auditor’s opinion
In our opinion:
(a)
the financial report of Bellamy's Australia Limited is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity's financial position as at 30 June
2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
(b)
the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note 34.
Report on the Remuneration Report
We have audited the remuneration report included in pages 37 to 49 of the directors’ report for the
year ended 30 June 2016. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Bellamy's Australia Limited for the year ended 30 June
2016 complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Alison Tait
Partner
Melbourne
19 August 2016
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
BELLAMY’S AUSTRALIA LIMITED
Shareholder Information
For the year ended 30 June 2016
Bellamy’s Australia Limited and controlled entities
The following additional information is provided in accordance with the ASX Listing Rules as at 31 July 2016.
Number of holders of equity securities
Ordinary share capital
96,656,397 shares are held by 19,268 shareholders. At a general meeting, every shareholder present in person or by proxy, attorney or
representative has one vote on a show of hands, on a poll, one vote for each fully paid share held.
Unlisted options over ordinary share capital
A total of 2,345,712 options are held by 7 individual option holders. 1,449,081 options relate to the FY2015 grant, which were granted on 29 June
2015 pursuant to the Long Term Incentive Plan (LTIP). 896,632 options relate to the FY2016 grant, which were granted on 23 December 2015
pursuant to the Long Term Incentive Plan (LTIP). The options do not carry any voting rights.
Distribution of holders of equity securities
Number of equity securities held
1 to 1000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Total
Substantial shareholders
Name
The Black Prince Private Foundation
JP Morgan Nominees
HSBC Custody Nominees
Quality Life Pty Ltd
National Nominees Limited
Ordinary shares
No. of holders
No. of shares
% of shares
11,298
6,453
877
504
39
5,296,561
15,086,895
6,490,353
11,521,625
58,260,983
96,656,397
5.48
15.61
6.71
11.92
60.28
Number of
% of voting
ordinary shares
power advised
14,000,000
9,307,249
7,392,624
7,155,415
5,499,461
14.48
9.63
7.65
7.40
5.69
89
BELLAMY’S AUSTRALIA LIMITED
Shareholder Information Continued
For the year ended 30 June 2016
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
20
20
BLACK PRINCE PRIVATE FOUNDATION
JP MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
QUALITY LIFE PTY LTD
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
VERMILION 21 PTY LTD
KRISAMI INVESTMENTS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3
SANDHURST TRUSTEES LTD
SUETONE PTY LTD
WARBONT NOMINEES PTY LTD
MRKAT PTY LTD
BUDUVA PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR NORMAN SURTEES
AMP LIFE LIMITED
DR KUI LIM CHONG & MRS JOCELYN ELIZABETH CHONG
MR WEI CHEN
NILCOY PTY LTD
BNP PARIBAS NOMINEES PTY LTD
Total
Total remaining holders balance
TOTAL
Number of ordinary
shares held
% of capital held
14,000,000
14.48
9,307,249
7,392,624
7,155,415
5,499,461
3,799,842
1,390,984
1,165,376
1,000,000
923,851
665,115
625,000
572,037
452,277
400,000
276,479
250,000
228,370
200,949
200,000
200,000
200,000
55,905,029
40,751,368
96,656,397
9.63
7.65
7.40
5.69
3.93
1.44
1.21
1.03
0.96
0.69
0.65
0.59
0.47
0.41
0.29
0.26
0.24
0.21
0.21
0.21
0.21
57.84
42.16
100.00
BELLAMY’S AUSTRALIA LIMITED ANNUAL REPORT 2015-16
91
Bellamy’s Australia Limited
ABN 37 124 272 108
ASX Code: BAL
Principal registered office
Bellamy’s Australia Limited
115 Cimitiere Street
Launceston TAS 7250
T: (03) 6332 9200
F: (03) 6331 1583
bellamysorganic.com.au
Company Secretary
Mr Brian Green
Location of share registry
Link Market Services Limited
Level 1, 333 Collins Street
Melbourne VIC 3000