Annual report 2013
80
Years
of Innovation
Breville Group Limited
Annual report 2013
Contents:
Chairman’s review
CEO’s review
Strategy and brands
Financial report
Shareholder information
Company information
1
3
5
11
85
87
Annual general meeting
Wednesday 13 November 2013 at 10am
Building 1, Port Air Industrial Estate,
1A Hale Street, Botany, New South Wales, 2019.
Chairman’s review
“The focus on a strategy of product innovation and
global brand management continues to deliver
growth across the international platform”
The 2013 financial year has delivered an 8.2%
increase in net profit after tax. This result, building
on a very strong 2012 performance, was driven by
the strategy of product innovation and design and
leveraging this across multiple geographies.
The board would like to express its sincere
gratitude to John Schmoll who resigned as a
director after 9 years. John’s contribution cannot
be underestimated in his role as chairman for the
past 7 years.
The Group’s growth in revenue and profit has been
achieved against the backdrop of a challenging
worldwide retail environment. Well run businesses
with first class products and deep customer insight
will deliver value for shareholders in all economic
cycles and full credit is due to the Breville team
under Jack Lord’s leadership.
This financial performance, together with the
strong cash position, has enabled the board to
maintain an increase in dividends consistent with
the increase in net profit after tax and demonstrates
the board’s continued confidence in Breville’s
growth potential and commitment to providing
strong returns to shareholders.
Over the last 5 years the Group has delivered strong
shareholder returns. Since 2008, earnings per share
have increased at a compound annual growth rate
(“CAGR”) of 18.3% and dividends per share have
increased by 19.9% over the same period. Our strong
balance sheet provides a solid platform for our
continued push into the UK and other
international markets.
I would like to take this opportunity of welcoming
both Sally Herman (who joined the board on
1 March 2013) and Lawrence Myers (who joined the
board on 1 September 2013) in their capacities as
non-executive directors.
I encourage all shareholders to attend the annual
general meeting in November and join us in
welcoming Sally and Lawrence.
On behalf of all of the directors, I would like
to thank each of Breville’s 500 strong team
members for their commitment and hard work
throughout the year. We would also like to thank
all shareholders, customers and suppliers for their
continued support.
Steven Fisher
Non-executive chairman
Reported EBITDA (full year)
Earnings and dividends per share
s
’
0
0
0
$
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
e
r
a
h
s
r
e
p
s
t
n
e
c
FY08
FY09
FY10
FY11
FY12
FY13
FY08
FY09
FY10
FY11
FY12
FY13
Earnings per share (reported) - basic
Dividends per share
1
Breville Group Limited annual report 2013
Breville Juice Fountains.
Any ingredients, any juicing style.
2
CEO’s review
Financial summary
$ Millions except where indicated
30 June 2013
30 June 2012
Revenue
EBITDA
Net profit after tax
Earnings per share (cents)
Return on equity (%)
486.5
78.9
49.7
38.23
24.7
427.9
72.5
46.0
35.35
25.9
The Breville Group has continued to deliver on
its strategy, with strong revenue growth driving a
record profit in the 2013 financial year.
Group revenue increased by 13.7% to $486.5m.
The strong revenue growth came from the positive
consumer acceptance of our Breville designed and
developed products across multiple geographies.
The group’s ability to innovate in product
development and marketing continues to both
build awareness of our brands internationally and
strengthen our position locally.
Group EBITDA increased by 8.8% to $78.9m and
was driven by the continued growth in revenue
from Breville designed and developed products,
offset by a decline in Keurig commission income
and restructure costs associated with the ending of
the Keurig distribution arrangement in Canada.
Australian revenue showed good growth of 4.9% to
$211.6m and EBITDA increased by 13.4% to $24.2m.
The pleasing performance in Australia was
achieved despite subdued and highly competitive
market conditions. The Breville brand performed
well, with consumers increasingly recognising the
benefits offered in design and performance and
trading up to Breville’s more premium products.
Kambrook also performed strongly, with new
products introduced during the year benefiting
from television advertising in the second half.
The launch of the Breville co-branded Nespresso
range in June 2013, Breville’s first entry into the
growing portioned coffee segment, did not have a
material impact on the year’s result, but places the
company in a strong position to compete in this
growing segment.
The growth in the Group’s International business
continued with revenue increasing by 20.6% to
$272.8m and EBITDA increasing to $58.3m.
The International result, underpinned by continued
revenue growth from new product launches in the
last 18 months and strong juicer sales, was partially
offset by a decrease in commission income from the
Keurig distribution business in Canada.
The strong consumer acceptance of Breville
premium designed and developed products
delivered consistent revenue and earnings
growth in North America, New Zealand and the
International Distributor business. The Group’s
focus on strengthening and broadening its branded
International distributor business delivered
good results in the Asia Pacific and Middle East
geographies.
As part of the Group’s strategy of expanding its
geographic reach, during the year the Group
established a new business in the United
Kingdom. This business, which launched in May
2013, distributes Breville premium designed and
developed products under a new company-owned
brand, Sage™, which is endorsed by internationally
acclaimed chef Heston Blumenthal.
As announced during the year, the Keurig “single
serve” distribution arrangement for Canada will not
extend beyond 30 June 2013, except for servicing
a number of smaller accounts for Keurig for the
remainder of the 2013 calendar year.
The Group’s core strategy of delivering sustainable
growth through its product innovation, brand
management and distribution capabilities across
multiple geographies, includes a number of
initiatives that will assist the Group to address
the loss of income from the Keurig distribution
business in Canada.
Consistent with the intention of building our
brands locally and internationally, the Group
increased its investment in growth driving
marketing activities. The importance of online
consumer research, reviews and communication
continues to increase. The Group continues to
invest in communicating its products’ features
and benefits through traditional and digital media,
including emerging social media channels.
3
Breville Group Limited annual report 2013 CEO’s review continued
The quality and performance of Breville’s products
together with credible endorsements, will be a key
to the Group’s future success, as will the “in-built
marketing” of simply communicating the “best in
class” features and benefits of our products through
traditional and new media.
During the year, the Group has:
With a solid platform in Australia, an increasing
international presence and a strong balance
sheet as an enabler for growth, the Group is well
positioned for the future.
On a personal note, I would like to thank the
board and the entire Breville Group team for their
ongoing support and assistance.
• continued its investment in product
development and marketing with a strong
pipeline of products launching in the middle of
FY14 and beyond;
• entered into the portioned coffee market in
Australia and New Zealand in partnership with
Nespresso;
• appointed Heston Blumenthal as the Group’s
global ambassador;
•
launched into the UK; and
• pursued establishing important alliances with
key industry participants and internationally
recognised “food thinkers”.
Jonathan Lord
Chief executive officer
“Australia’s leading
kitchen appliance brand
has partnered with the
pioneer of premium
portioned coffee”
Appliance Retailer 2013
4
Breville Group Limited annual report 2013
Strategy and brands
The Group’s core strategy is underpinned by the
design and development of the world’s best kitchen
appliances and effectively marketing these globally.
The Group’s main brand is Breville, however, in
different markets, it has a number of other company
owned brands and brand partners that assist in
delivering on the business strategy.
Australia and New Zealand
In Australia and New Zealand, the Group trades
under its company owned brands, Breville,
Kambrook and Ronson, and also distributes a range
of Philips products under a license agreement.
The Breville brand, in line with its global strategy,
is focused on the premium kitchen segment of
the market. In 2013 the Group became a machine
partner with Nestlé Nespresso SA to distribute a
range of Breville co-branded Nespresso machines
in Australia and New Zealand.
The Kambrook and Ronson brands offer a broader
range of products, including kitchen appliances,
irons, vacuums, heating and cooling products, at an
affordable price.
Leveraging off its strong distribution base in the
Australian and New Zealand markets, the Group
also distributes a range of Philips products in the
garment and personal care categories.
North America
In North America, the Group distributes its range of
premium designed and developed products under
the Breville brand through premium channels and
its own online retailing platform.
Europe
In Europe and the United Kingdom, the Breville
brand is not owned or operated by the Breville
Group. Within Europe, the Group has a number of
partners who market Breville’s premium designed
and developed products under their own brands.
During the second half of the financial year,
the Group established a business in the United
Kingdom, marketing and distributing Breville
premium designed and developed products under
a new Group owned brand, Sage™, endorsed by
internationally acclaimed chef Heston Blumenthal.
Rest of the World
In the Asia Pacific region, the Middle East, and
South America, the Group markets its premium
designed and developed products under the
Breville brand using local third party distributors
supplied via its Hong Kong office.
Breville - Thought for food™
During the 2013 financial year, Breville Group
celebrated the 80th anniversary of the
Breville brand.
Starting with Australian made radios in the 30’s
to the five minute washing machine in the 50’s
Breville has always stood for innovation. In 1969,
the Breville small appliance product development
centre was created and in 1974, its first product - the
Breville toasted sandwich maker - was invented,
with more than 400,000 units sold in its first year.
The toasted sandwich maker kick-started a long
list of innovative Breville products developed in
Australia. From the original Kitchen Wizz™ food
processor and High-Wall Wok to the launch of the
world’s first wide feed chute Juicer, Breville became
synonymous with innovation.
In 2000, Breville added to its innovation heritage
with a significant investment in building its design
capabilities, culminating in the 2003 launch of its
premium range of products into the United States
and other international markets. This range has
now expanded to more than 50 Breville designed
and developed premium products.
In 2009, Breville focused its strategy around ‘food
thinking’ and developing ‘best in class’ products for
the kitchen. As a part of this strategy, a new global
brand identity was developed and rolled out across
packaging, point of sale and all other consumer
marketing touch points.
Breville’s strategy of ‘food thinking’ and creativity
continues to gain momentum. The strategy
centres around:
• Deeper understanding of food and the
challenges consumers face
• Protectable innovation
• Superior quality and design
• Increased marketing communication.
In 2013, in line with its strategy of gaining a
deeper understanding of the food world,
renowned chef Heston Blumenthal became
Breville’s global ambassador.
In his ambassadorial role, Heston will be
working closely with Breville’s product
development teams, providing invaluable insights
into the food science necessary to continue to
develop “best in class” products. Heston will also
help to explain the benefits of Breville products in
all forms of marketing communication, across all of
Breville’s markets.
5
Breville Group Limited annual report 2013 “This slicer is
amazing. It’s not only
safe, it’s super stable
for long, even slices
and adjustable for
whatever thickness
you need.”
Widely regarded as the
worlds’ most influential chef.
66
Strategy and brands continued
Sage™ By Heston Blumenthal®
In May 2013, the Group launched a range of 17 of
its premium designed and developed products into
the United Kingdom under a new Group owned
brand called Sage™, which is endorsed by Heston
Blumenthal. The brand identity and positioning of
Sage™ by Heston Blumenthal® is aligned closely
to the new global Breville brand identity and ‘food
thinking’ strategy. The distribution strategy is
also very similar to that of North America, with
distribution through premium retailers including
John Lewis, Lakeland, Amazon, Selfridges, Harrods
and the brand’s own online store.
Kambrook - The Smarter Choice™
Kambrook has become known for quality, durable
products at an affordable price. The ever-expanding
product range encompasses appliances for the
kitchen, living room, laundry and bedroom.
Kambrook continues to highlight the durability
of its appliances and the rigorous testing process
that each new product undergoes. Products are
subjected to extensive laboratory and quality
testing before receiving the Kambrook seal
of approval.
The growing stature of the Kambrook brand has
attracted increasing interest from overseas markets,
with the brand now expanding in New Zealand
and launching in Russia via a brand licensing
arrangement.
The Group continues to invest in product
marketing to build the Kambrook brand, running
its first television campaign for a range of three
Kambrook products in May 2013. The campaign
was a resounding success, driving strong sales of
the three products advertised and raising the profile
of the Kambrook brand.
Philips
Breville Group is the exclusive distributor for
Philips’ personal care and garment care appliances
in Australia and New Zealand. The relationship
with Philips is now in its 13th year and the Group
continues to work collaboratively to grow sales and
market share.
Philips sets the benchmark for innovation and
performance with its flagship shaver range and
it also drives growth in the steam-generator iron
market, with its first of a kind PerfectCare
steam system.
Innovation and product
development
The engine driving the Group’s growth continues to
be investment in product development and a focus
on design and innovation. Breville has deepened
its understanding of food, and how the consumer
interacts with it, applying this to solving problems
in ways that are both valuable to people, and
differentiated from competitors. Breville is actively
protecting this customer value through increased
investment in intellectual property protection,
developing a portfolio of patented innovative
products for future sustainable growth.
People - creativity and food
thinkers
Breville enjoys the benefits of a highly experienced
and talented team across all departments and
geographies. Integrated throughout its food
thinking culture, the passion, creativity and
insight of staff has helped to consistently deliver
world-class innovative products to the brand’s
customers. The team continues to be awarded both
domestically and internationally, with multiple
design awards, and recognition through all media
including print, broadcast and online.
Breville Group invests in the training and education
of its team, building strong, collaborative links with
world experts in food thinking and technology.
To further develop its culture of food thinking,
Breville has initiated a quarterly guest speaker
program to provide all staff with insights from
leading minds within the food industry.
Christina Tosi, the US pastry chef and owner of
Momofuku Milk Bar in New York, was the first in
the series, making time to visit Breville’s offices
in Sydney in October 2012. Tosi shared the story
behind her baking philosophy and popular menu
items, while making her famous Compost Cookies®
using the Breville Scraper Mixer Pro.
More recent guests have included food blogger,
Kate Gibbs - the grand-daughter of Australian icon
Margaret Fulton - and the influential food media
duo of food writer Jill Dupleix and restaurant critic
Terry Durack.
Each visiting speaker receives a tour of Breville
headquarters, including a behind the scenes look at
the extensive design facility. The speaker program
builds valuable relationships between the brand
and the wider food community, both in Australia
and abroad.
7
Breville Group Limited annual report 2013 Did you know that waffle batter
DOUBLES IN SIZE
while cooking?
the Waffle Pro™
4 slice with no-mess moat and Waffle IQ™
8
Strategy and brands continued
People - creativity and food
thinkers continued
Strongly committed to its core values of
creativity, simplicity, insight and excellence in
all departments, Breville recruits, trains, assesses
and rewards employees on this basis. With a
team anchored around these common values,
the business is able to foster a workplace that
stimulates idea generation, a passion for
learning, and the continuous search for new
and better solutions.
Breville advocates diversity in its workforce,
recognising the insight and creativity that it
brings to the business.
Ensuring a safe workplace is another business
commitment, with employees participating
in regular work health and safety audits.
The organisation promotes and encourages
a proactive safety culture.
Sustainability and social
responsibility
The Breville Group is committed to ethical,
responsible and sustainable conduct across the
entire business. It remains determined to build a
culture, through the commitment of its employees,
to reduce the organisation’s impact on the
environment and increase its contribution
to society.
The Group selects suppliers and partners who are
aligned with its social, ethical and sustainability
commitments and is developing a system of regular
audits to ensure ongoing compliance.
Breville is a committed signatory to the Australian
Packaging Covenant and was acknowledged as a
high performing signatory in 2013.
A key goal is to reduce the potential impacts of our
product packaging through careful consideration
of all packaging components, innovative design
and through maintaining ongoing dialogue with
our suppliers and customers. We are proud to
be integrating actions and goals into existing
business systems so that sustainable packaging
considerations become ‘just how we do business’.
Success is being achieved via cross functional
teams working together to implement the
company Sustainable Packaging Policy. A senior
management Steering Committee, chaired by the
chief executive officer, oversees the implementation
of our company action plans.
Early progress is being made to eliminate the
reliance on polystyrene packaging by switching
to lower impact protective materials, and phasing
out other non-essential packaging components.
90% of company packaging has been reviewed
against our Sustainable Packaging Guidelines to
identify improvement opportunities and progress is
monitored via a detailed packaging database, which
has fields to capture all packaging elements.
Breville further strives to reduce company waste
volumes and improve recycling rates and, where
possible, we purchase products that contain
recycled content to help sustain local markets for
waste packaging and other materials diverted
from landfill.
Breville Group in the community
Throughout the last financial year, Breville Group
has contributed to a variety of charitable activities
as a sponsor, product partner and fundraiser.
Breville is a sponsor of the 2013 National
Indigenous Culinary Institute’s program, which
provides three years of training to aspiring
indigenous chefs. With mentoring by some of
Australia’s top chefs, including Neil Perry and
Guillaume Brahimi, the program’s unique on-the-
job training at high profile Australian restaurants
forms part of a contemporary, industry designed
qualification. In line with Breville’s ‘food thinking’
strategy, the sponsorship allows the brand to
develop deeper ties with the food community and
offers opportunities for indigenous Australians with
a passion for food and cooking.
In November 2012, Breville partnered with The
Benevolent Society for Sydney’s first Jaffle Day
event, serving 1,000 jaffles to morning commuters
in the CBD in return for a gold coin donation.
Coinciding with the brand’s 80th birthday, the
initiative raised money for The Benevolent Society’s
Taste Mobile Kitchen program, established to help
school children learn how to make healthy food.
Breville has also supplied a full suite of equipment
to support the charity’s mobile kitchen.
Raising funds for the Sydney Children’s Hospital,
17 staff, including Breville Australia’s general
manager and Group director of design and
innovation, took part in the company’s third Pedal
4 Kids bike ride. Spanning 100km from Gosford to
Randwick, participants raised more than $20,000 for
the charity.
99
Breville Group Limited annual report 2013 Accolades
Australian Design Award
Powerhouse Museum Selection
Housewares Design Award New York
2007
BBL600 Blender
Best In Category
2006
800ES Espresso Machine
2008
BBL800 Blender
2005
800CP Citrus Press
2006
800ES Espresso Machine
2002
JE90 Juice Fountain Juicer
1993
1984
1981
‘Roll-a-wave’ - Hair Curler
‘The Breville’ - Washing Machine
K488 - ‘Super Steam and Spray’ Iron
Best In Industry
2008
BBL800 Blender
Shortlisted
2008
BKC600XL Single Cup Brewer
2006
800GR Grill
2004
SG820 Grill
2012
2011
2010
2007
BDC600 You Brew Drip Coffee
Machine
BFP800 Food Processor
BGR820 Smart Grill
BES400 Espresso Machine
2006
BJE200 Juice Fountain
2005
800CP Citrus Press
2001
Engineering JE90 Juicer
Good Design
2013
2013
2012
2012
2011
2011
2010
2010
2010
BRC600 The Multi Chef
BEF100 The Thermal Pro Grill
BCI600 Smart Scoop Ice Cream
Maker
BES900 Dual Boiler Espresso
Machine
BCG800 Smart Grinder
BTM800 Tea Maker
BEM800 Wizz Planetary Mixer
BOV800 Smart Oven
BES820 Variable Temperature
Kettle
Red Dot Design Award
2013
2013
2012
2012
BEF100 The Thermal Grill Pro
BRC600 The Multi Chef
BDC600XL You Brew
BFP800 Kitchen Wizz Pro
2008
BTA820/840 Toaster
2008
BES400 Espresso Machine
Honourable Mention
2010
BES860 Fresca Espresso Machine
2008
BKT500 ikon Toaster & Kettle
2011
2011
BKE820 Kettle
BBL605 Kinetix Control Blender
2008
2008
2007
2007
BTA800 Professional Series
Toaster
BBL800 Professional Series
Blender
BJE510 ikon Juicer
BBL600 ikon Blender
2006
BKE450 Moda Kettle
2005
2005
2005
CT70 Toaster
SK500 & 550 ikon Kettles
800ES Espresso
2004
800JE Juicer
2004 WC15 Wine Chiller
2003
2003
2003
2001
CBL25/30 Moda Bar Blenders
SG Series Sandwich Presses
EW40 Ultimate Wok
AV4 Hairdryer
iF Design Award
2008
BES820 Espresso Machine
2008
BTA820&840 Professional Toasters
2007
BES820 Espresso Machine
2006
800CP Citrus Press
Gold iF Design Selection
2008
BES820 Espresso Machine
Design Korea ‘Worlds Best Design Show’
Special Selected Product from Australia
2005 WC15 Wine Chiller
2005
800CP Citrus Press
Good Design Award Chicago Anthenaeum
2012
2012
2012
2012
BOV800 Smart Oven
BFP800 Food Processor
BTM800 Tea Maker
BCG800 Smart Grinder
2006
BES400 Espresso Machine
Shopsmart Award
BOV800
Best Toaster Oven
BOV650
Best Toaster Oven
10
IDEA International Design Excellence
Awards
2007 Bronze Award
BBL600 Blender
Home Beautiful Awards
2010
Breville Smart Oven Finalist
2007
Snack ‘n’ Sandwich Toaster Design
Icon
2007
BES400 Espresso Machine Winner
2006
BKE450 Kettle Winner
2003
2002
EW40 Ultimate Wok Finalist
JE90 Juice Fountain Highly
Commended
Consumer reports
2011
Immersion Blender Review
#1 BSB510 Control Grip
2010
Toaster Ovens Review
#2 BOV650
#1 BOV800
House & Garden Style Awards
2010
Tea Maker - Winner Kitchen
Breville Group Limited annual report 2013 Breville Group Limited
Financial report 2013
Contents:
Directors’ report
Corporate governance statement
Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Cash flow statement
Notes to the financial statements
Directors’ declaration
Independent audit report
Auditor’s independence declaration
12
27
32
33
34
35
36
37
81
82
84
11
Breville Group Limited annual report 2013 Directors’ report
The board of directors of Breville Group Limited
(company) has pleasure in submitting its report in
respect of the group for the year ended 30 June 2013.
Board of directors
The names and details of the company’s directors in
office during the year and until the date of this report are
as below. Unless indicated otherwise, directors were in
office for this entire period.
Steven Fisher
Non-executive chairman – appointed chairman 28 May 2013
B.ACC, CA(SA)
Mr Fisher has more than 25 years’ experience in general
management positions in the wholesale consumer
goods industry and is currently chief executive of the
Voyager Group. Prior to entering into the consumer
goods industry Mr Fisher was a practicing chartered
accountant having qualified in South Africa with a
Bachelor of Accounting degree. In addition, Mr Fisher
serves on various private company boards. Mr Fisher
was non-executive director until his appointment as
non-executive chairman on 28 May 2013.
During the last three years he has not served as a
director of any other listed company.
Sally Herman
Non-executive director – appointed 1 March 2013
BA, GAICD
Ms Herman has had a long career in financial services in
both Australia and the United States, including 16 years
with the Westpac Group, running business units in most
operating divisions of the Group. Ms Herman is now a
full-time Sydney based non-executive director on both
commercial and not for profit boards. She is actively
involved in the community, with a particular interest in
education, the arts and disability services and is on the
board of the State Library of NSW Foundation.
During the last three years she has served as a
non-executive director of the following other listed
companies:
• Premier Investments Ltd #
• FSA Group Ltd #
# denotes current directorship
Dean Howell
Non-executive director
FCA, FTIA
Mr Howell has had an extensive career in accounting,
spanning some 40 years, and accordingly has a wealth
of commercial and advisory experience. He was the
former senior partner of a Melbourne firm of chartered
accountants and also served on that firm’s national
and international boards. He is currently a consultant
with Grant Thornton. He is also a director of Peter
MacCallum Cancer Foundation Ltd. Mr Howell is
chairman of the audit and risk committee (A&RC).
During the last three years he has not served as a
director of any other listed company.
Steven Klein
Non-executive director
LLB, B.Com
Mr Klein is a Principal of SBA Law. He has had over
20 years experience acting on behalf of both public
and private companies in merger and acquisition
transactions.
During the last three years he has not served as a
director of any other listed company.
John Schmoll
Non-executive director – resigned 19 August 2013,
effective 1 September 2013
B.Com, FCA, FAICD
Mr Schmoll completed his executive career on his
retirement in 2002 as Chief Financial Officer of Coles
Myer Ltd. Prior to this he held senior corporate and
professional roles in Australia and South Africa including
Arthur Young and Edgars Stores Ltd (South Africa’s
largest apparel and homewares retailer). Since his
retirement he has accepted various non-executive
director positions and undertaken some executive
coaching roles. Accordingly, he brings to Breville over
35 years of experience in finance, investor relations,
information technology and corporate governance,
primarily in the distribution and financial sectors.
During the last three years he has served as a director
of the following other listed companies:
• OrotonGroup Ltd #
• Patties Foods Ltd #
• AWB Limited (March 2005 – December 2010)
# denotes current directorship
Prior to this he was also a non-executive director of
Australian Leisure and Hospitality Limited, Chandler
Macleod Ltd and Golden Circle Ltd. Mr Schmoll was
the non-executive chairman of the company until his
resignation on 28 May 2013.
Samuel Weiss
Non-executive director
AB, Harvard University; MS, Columbia Business
School; FAICD
Mr Weiss has had a long corporate career in the United
States, Europe and Australia with leading consumer
brand companies such as Nike, Gateway Computers
and Sheridan. He devotes considerable time and energy
to education, the arts and disadvantaged communities
through his work as a past president of the Harvard
Club of Australia, president of The Benevolent Society
and as a director of The Sydney Festival. Mr Weiss is
chairman of the people and performance committee.
During the last three years he has served as a director
of the following other listed companies:
iProperty Group Ltd #
• Altium Limited #
•
• OrotonGroup Ltd #
• GLG Corp Limited
# denotes current directorship
12
Breville Group Limited annual report 2013 Company secretaries
The names and details of the company’s company
secretaries in office during the year and until the date of
this report are as below. The company secretaries were
in office for the periods as indicated below.
Mervyn Cohen – appointed 20 November 2012
B.Com, B.Acc, CA
Mr Cohen is a chartered accountant and has over 20
years’ experience in senior financial roles after beginning
his career in Audit and Advisory. Mr Cohen is also Chief
Financial Officer of the company, a position he had held
since October 2006.
Michelle Waters – resigned 20 November 2012
B.Com, CA
Ms Waters is a chartered accountant and has over 7
years’ experience in senior finance roles in print media
production and consumer products companies. Prior
to the senior finance roles, Ms Waters was a practicing
chartered accountant.
Reporting currency and rounding
The financial report is presented in Australian dollars
and all amounts have been rounded to the nearest
thousand dollars ($’000) unless otherwise stated under
the option available to the company under ASIC class
order 98/100. The company is an entity to which the
class order applies.
Performance indicators
Management and the board monitor the financial
performance of the company by measuring actual
results against expectations as developed through an
annual business planning and budgeting process.
Appropriate key performance indicators (KPI’s) are used
to monitor operating performance and management
effectiveness.
Operating and financial review
The operating and financial review has been designed
to enhance the periodic financial reporting and provide
shareholders with additional information regarding
the Group’s operations, financial position, business
strategies and prospects. This review compliments the
financial report and has been prepared in accordance
with the guidance set out in ASIC Regulatory
Guide 247.
Company overview
The Group’s underlying strategy is the design and
development of innovative world class small electrical
kitchen appliances and the effective marketing of these
products across multiple geographies to drive growth in
sales and profits.
In line with this strategy, the Group has:
• built and staffed a world class product development
centre in Sydney;
• continued to invest in its design and development
capabilities;
• maintained an efficient procurement and quality
assurance centre in Hong Kong;
•
increased its investment in growth driving marketing
activities;
• employed experienced marketing and sales
executives in its key markets around the world; and
• maintained an efficient and effective administration
process to support growth initiatives on an
international platform.
Principal activities
During the year, the principal activities of the Group
were the innovation, development, marketing and
distribution of small electrical appliances. In Australia
and New Zealand, the Group trades under its company
owned brands, Breville, Kambrook and Ronson and
also distributes a range of Philips products in the
personal care and garment care categories under a
license agreement with Philips.
In North America, the Group distributes Breville branded
products through premium channels. Up until 30 June
2013, the Group was also the distributor in Canada of
a range of Keurig branded single serve coffee machines
and portioned coffee capsules.
The Group’s Hong Kong office performs the functions of
a group procurement and quality assurance centre and
also, a supplier of primarily Breville designed products
to distributors globally. These distributors are located
outside of the Group’s principal markets of Australia,
New Zealand and North America. The products sold to
distributors located in Europe are sold on a non-Breville
branded basis. The products sold to distributors outside
of Europe, including in the Asia Pacific region, the
Middle East and South America, are Breville branded
products.
During the second half of the financial year, the
company established a business in the UK marketing
and distributing Breville designed products under a new
company owned brand, Sage.
Strategic initiatives
The Group continues to pursue a number of
strategic growth initiatives including establishing
important alliances with key industry participants and
internationally recognised “food thinkers”.
During the current year, the Group:
•
finalised a Global Ambassadorial arrangement with
highly acclaimed chef Heston Blumenthal, which
will see him actively involved in both future product
development and explaining the benefits of Breville
designed products internationally;
13
Breville Group Limited annual report 2013 Directors’ report
continued
Operating and financial review continued
Strategic initiatives continued
•
launched into the UK market under a company
owned brand, Sage, which will be endorsed by
Heston Blumenthal;
• entered into a license agreement with Nestle
Nespresso SA for the distribution of Breville co-
branded Nespresso machines in Australia and New
Zealand; and
• continued to expand its distribution network globally
through the appointment of new Breville distributors.
Group operating results
Segment results
REVENUE
EBITDA
Year to
30 June
2013
$m
2012
$m
%
Change
2013
$m
2012
$m
%
Change
Australia
211.6
201.7
4.9% 24.2
21.3
13.4%
International
272.8
226.2
20.6% 58.3
52.0
12.0%
North America
192.4
152.2
26.4% 38.5
34.7
10.9%
International
Distributors
New Zealand
Other
TOTAL
51.1
29.3
2.1
47.3
26.8
-
8.1% 15.7
13.7
14.1%
9.5%
4.1
3.6
14.8%
(3.6)
(0.8)
486.5
427.9
13.7% 78.9
72.5
8.8%
Minor differences may arise due to rounding
Year to 30 June
2013
$m
2012
$m
%
Change
Australia
Revenue
EBITDA
EBIT
Net profit after
taxation
Earnings per share
EPS (cents)
Return on equity
(%)1
Dividends per
share (cents)
Net cash ($m)
486.5
427.9
13.7%
78.9
71.6
49.7
72.5
65.6
46.0
8.8%
9.2%
8.2%
38.23
35.35
8.1%
24.7%
25.9%
26.0
24.0
8.3%
43.4
47.0
Minor differences may arise due to rounding
1 ROE is calculated based on NPAT for the 12 months ended
30 June 2013 (FY12: 12 months end 30 June 2012) divided
by shareholders’ equity at 30 June.
Revenue of the consolidated entity for the year
was $486.5m which was 13.7% higher than the
consolidated revenue for the previous corresponding
year of $427.9m.
Earnings before interest, tax, depreciation and
amortisation (EBITDA) increased by 8.8% to $78.9m
on the previous corresponding year. This increase was
driven by the continued growth in revenue from Breville
designed and developed products in principal markets
offset by a decline in Keurig commission income and
restructure costs associated with the ending of the
Keurig distribution arrangement in Canada.
The Group’s profit after income tax was $49.7m
representing a 8.2% increase on the previous
corresponding year result of $46.0m.
The basic earnings per share for the consolidated entity
was 38.23 cents per share (2012: 35.35 cents
per share).
Australia: Revenues of $211.6m were 4.9% higher than
the prior corresponding year resulting in an increase in
EBITDA of 13.4% to $24.2m.
The Australian business with its Breville and Kambrook
dual-brand strategy, increased its market share in the
kitchen category and produced a solid performance
in subdued and highly competitive market conditions
characterized by continued strong growth in the
portioned coffee segment and good growth in the
food preparation category (juicers, blenders, food
processors, stick mixers).
The launch of the Breville co-branded Nespresso range
in June 2013, Breville’s first entry into the growing
portioned coffee segment, did not have a material
impact on the year’s result, but places the company in a
strong position to compete in this growing segment.
International
The growth in the Group’s international business
continued with revenue in AUD increasing by 20.6% to
$272.8m (FY12: $226.2m) and EBITDA increasing to
$58.3m (FY12: $52.0m).
North America: Total revenue increased by 26.4% to
$192.4m in AUD resulting in an increase of EBITDA
of 10.9% to $38.5m (FY12: $34.7m). This increase
was underpinned by a 32.1% increase in revenue
from Breville products to $175.3m (FY12: $132.7m).
Commission income (gross income before operating
costs) from the Keurig distribution business in Canada
decreased by 12.3% to $17.1m.
Growth in the Breville brand business continued
especially in core categories supported by the rollout
of new products into key retail channels, accompanied
by broader product ranging and the increasingly strong
activity in the online sector.
While retail conditions remain challenging, strong
targeted marketing campaigns and increased category
presence reinforced the positive response from
consumers to the higher value new products launched
and translated into increases in revenues.
14
Breville Group Limited annual report 2013 Operating and financial review continued
Segment results continued
International continued
The juicing category, which was supported by an
increased investment in marketing spend, was
particularly strong. This category also enjoyed continued
benefit from the juicing documentary Fat, Sick and
Nearly Dead which prominently features Breville juicers.
As announced during the year, the Keurig “single serve”
distribution arrangement for Canada will not extend
beyond 30 June 2013, except for servicing a number
of smaller accounts for Keurig for the remainder of the
2013 calendar year. The cessation of the majority of this
arrangement and the consequent loss of commission
income (gross income before operating costs) of
$17.1m (FY12: $19.5m) has resulted in a restructure of
the Canadian business.
International Distributors: Total revenue in AUD
increased by 8.1% to $51.1m and EBITDA increased by
14.1% to $15.7m (FY12: $13.7m).
The uncertainty in Europe and highly variable purchasing
by European distributors of Breville designed, but not
branded products, was offset by the growth from the
expanded non-European, Breville branded distributors.
The Group continues to focus on strengthening and
broadening its Breville branded distributor network
across the important Asia Pacific and Middle East
geographies and accelerating the launch of Breville
branded products into these markets.
New Zealand: Another solid performance was achieved
in New Zealand with revenue increasing by 9.5% to
$29.3m and EBITDA increasing by 14.8% to $4.1m.
New Zealand continues to benefit from reasonable
market growth and the willingness of consumers to
trade up to higher value Breville designed products. As
is the case in Australia, this segment is now also able
to compete in the growing portioned coffee market
segment with the Breville co-branded Nespresso range
of brewers.
Other: Represents the Group’s shared service facility,
including the Group’s design and development and
global marketing functions. During the current year,
the costs associated with the establishment of the
new UK business, which launched late in the current
financial year and the trading results of that business
from the launch date, were allocated to this segment.
This segment also incurs the amortisation charge on
capitalised product development projects.
New market – United Kingdom
As part of the Group’s strategy of expanding its
geographic reach, during the year the Group
established a new business in the United Kingdom.
This business, which launched in May 2013, distributes
Breville designed and developed products under a new
company-owned brand, Sage, which is endorsed by
internationally acclaimed chef Heston Blumenthal.
The UK business launched with a range of 17 Breville
designed premium flagship products with premium
retailers including John Lewis, Lakeland, Amazon,
Selfridges, House of Fraser, Debenhams, and Harrods.
Advertising and marketing expenses
Consistent with the Group’s intention of building
awareness of our brands locally and internationally,
the Group increased its investment in growth driving
marketing activities. Such activities included the
Ambassadorial arrangement with Heston Blumenthal
and an increased investment in the Group’s principal
markets in the juicing category, associated with the Fat,
Sick and Nearly Dead documentary. The importance of
online consumer research, reviews and communication
continues to increase. The Group continues to invest
in communicating its products’ features and benefits
through traditional and digital media, including emerging
social media channels. In the online world of consumer
reviews, consumer blogs and online sales, the quality
and performance of Breville’s products together with
credible endorsements, will be a key to the Group’s
future success, as will the “in-built” marketing of simply
communicating “best in class” features and benefits
through traditional and new media.
Financial position
The growth in earnings has further strengthened the
Group’s balance sheet providing a solid foundation to
drive future growth, particularly in international markets.
The investment in working capital increased during
the year as a result of growth in the overall business.
The level of inventory at year end increased by
$22.2m compared to the prior year. This increase
was attributable to the ranging of Breville co-branded
Nespresso brewers in Australia and New Zealand,
the base inventory holding of the new UK business,
increased inventory cover to support strong growth in
the juicing category, and also, the overall growth in the
Group, particularly in North America. This increase in
inventory was accompanied by an increase in trade and
other payables of $17.3m.
Trade and other receivables at year end increased by
$17.2m.
The increase in working capital resulted in the Group
having a net cash position at 30 June 2013 of $43.4m
compared to $47.0m at the same time last year.
Operating cash flow for the year was $37.0m
(FY12: $51.1m).
Capital expenditure
The Group continues to invest in efficiency and cost
improvement projects to support a larger and more
geographically diverse business. During the 2014
financial year, the Group will invest in a new leased
distribution centre in Minto, New South Wales, a new
leased head office in Sydney and a Group-wide new
enterprise resource planning system (ERP). It is currently
expected that these new investments will require
approximately $15m of capital expenditure.
15
Breville Group Limited annual report 2013 Directors’ report
continued
Operating and financial review continued
Margin risk
Onerous lease provision
Following the disposal of the Group’s homeware
businesses which began in FY07, the Group created an
onerous lease provision in respect of certain premises’
leases previously occupied by these businesses. The
Group has entered into an agreement to surrender one
of these leases, being the lease which comprises the
majority of the onerous lease provision, by the payment
of a surrender fee of $4.95m. The surrender fee is fully
provided for in the onerous lease provision.
Foreign exchange exposures
The Group operates in a number of countries and is
subject to a number of exchange rate influences on
its earnings.
Firstly, the Group has a transactional exposure as its
product purchases are primarily paid for in US dollars.
In Australia, New Zealand, Canada and more recently
with the launch in the UK, the exchange rate impacts
product costs as the US dollar changes relative to those
currencies. A stronger US dollar will generally have a
negative effect on the Group’s reported earnings in
terms of this transactional exposure.
The Group also has a translational exposure as its
international earnings, a large portion of which are
denominated in US dollars, are translated into Australian
dollars for reporting purposes. A higher US dollar
relative to the Australian dollar will generally have a
positive effect on the Group’s reported earnings in terms
of this translational exposure.
The transactional and translational exposures are
considered to result in a partial natural hedge from a
Group perspective. A weak Australian dollar is likely to
have an adverse impact on the Australian segment’s
earnings (as a result of higher landed costs) but a
positive impact on the translation of non-Australian
dollar denominated results.
Depending upon the timing of expected cashflows,
the Group enters into forward exchange contracts to
mitigate certain net foreign exchange exposures.
Consumer demand risk
Given the Group’s reliance on consumer discretionary
spending, adverse changes to the general economic
and retail landscape and consumer sentiment in the
principal markets in which the Group operates, can
impact its financial results. The Group mitigates this
risk by continued communication with its consumers
to gain greater insight into the changing world of food
and beverage trends and by keeping abreast with global
economic and consumer data and industry trends.
The highly competitive nature of the small domestic
appliance market together with changes in
manufacturing costs, including commodity prices,
could have an impact on the Group’s financial results.
This risk is mitigated by protecting the Group’s
intellectual property, brand building initiatives,
introducing elements of variability into its cost structure
and strengthening its long term supplier relationships.
Group strategies and prospects
The ongoing investment in innovation and an increasing
portfolio of some of the world’s best kitchen products,
provides a strong platform to expand the Group’s
geographic reach and continue to grow global volumes.
Although the economic environment remains uncertain,
our product development and brand management
strengths, the relatively large number of untapped
international markets, and a strong balance sheet, mean
that the Group is well positioned for the future and the
growth opportunities that lie ahead.
Risk management
The company’s risk management is discussed in the
corporate governance statement on page 27.
Dividends
The following dividends have been paid, declared or
recommended since the end of the preceding year.
Final dividends
recommended:
Dividends paid in the year:
Interim FY13 dividend paid
Final FY12 dividend paid
$’000
Cents per
ordinary
share
12.0
15,611
14.0
18,213
11.5
14,961
Significant changes in the state
of affairs
There were no significant changes in the state of affairs
of the consolidated entity that occurred during the year
that have not otherwise been disclosed in this report or
the consolidated financial statements.
16
Breville Group Limited annual report 2013 Directors’ interests
Compensation philosophy
As at the date of this report, the interests of the
directors in the shares or other instruments of Breville
Group Limited were:
S. Fisher
S. Herman
D. Howell
S. Klein
J. Schmoll
S. Weiss
Ordinary
shares
50,288
8,000
100,000
117,189
100,000
121,775
Remuneration report (audited)
This remuneration report outlines the compensation
arrangements in place for directors and executives
(collectively “key management personnel”) of Breville
Group Limited. For the purposes of this report, key
management personnel (KMP) of the group are defined
as those persons having authority and responsibility for
planning, directing and controlling the major activities of
the group, directly or indirectly.
Details of key management personnel
(i) Directors:
S. Fisher
Non-executive chairman (appointed
chairman 28 May 2013)
S. Herman Non-executive director (appointed
1 March 2013)
D. Howell Non-executive director and chairman of
audit and risk committee
S. Klein
Non-executive director
J. Schmoll Non-executive director (resigned as
chairman on 28 May 2013)
S. Weiss
Non-executive director and chairman of
people and performance committee
(ii) Executives:
J. Lord
Group chief executive officer (appointed
group chief executive officer
23 August 2012)
S. Brady
General manager global marketing
M. Cohen Group chief financial officer
C. Dais
Group general manager - business
development and operations (KMP from
28 November 2011)
There were no changes of key management personnel
after the reporting date.
The performance of the company depends, in part,
upon the quality of its directors and executives. The
company must attract, retain, motivate and develop
highly skilled directors and executives in order to secure
the short and long term success of the business so to
enhance shareholder value.
Based on this philosophy, the company’s compensation
strategy and framework embodies two interrelated
outcomes: improved business results and building a
culture of high performance.
The following principles define the compensation
framework:
• Provide competitive rewards (for fixed and variable
compensation) to attract high calibre employees;
• Link reward to sustained growth in shareholder
value from dividends and growth in share price and
the delivery of a consistent return on assets;
• Link rewards with the strategic goals and
performance of the company; and
• Reinforce a competitive business strategy to
deliver organisational success and enhanced
shareholder value.
People and performance committee
The people and performance committee of the board
of directors of the company is responsible for reviewing
and recommending to the board executive and
employee remuneration arrangements and executive
succession as set out in the people and performance
committee charter.
The people and performance committee assesses
the appropriateness of the nature and amount of
compensation of executives and employees on an
annual basis by reference to relevant individual and
company performance and market conditions.
The people and performance committee is responsible
for the engagement of any external compensation
consultants for work on executive remuneration.
Compensation structure
In accordance with best practice corporate governance,
the structure of non-executive director and executive
compensation is separate and distinct.
Non-executive director compensation
Objective
The board seeks to set compensation at a level which
provides the company with the ability to attract and
retain directors of high calibre whilst maintaining a level
commensurate with companies of a similar size
and type.
17
Breville Group Limited annual report 2013 Directors’ report
continued
Remuneration report (audited) continued
Non-executive director compensation
continued
Structure
The Constitution and the ASX Listing Rules specify that
the aggregate compensation of non-executive directors
shall be determined from time to time by general
meeting. The aggregate compensation of $950,000
per year was approved by shareholders at the annual
general meeting held in November 2010.
The compensation of non-executive directors is
reviewed annually. Each director receives a fee for being
a director of the company. An additional fee is also paid
to each director who also acts as chairman of a board
committee. The payment of additional fees for acting as
chairman of a committee recognises the additional time
commitment required by the director to facilitate the
running of the committee.
The compensation of non-executive directors for the
year ended 30 June 2013 is detailed in Table 1 on
page 22 of this report.
Executive compensation
Objective
The company aims to remunerate and reward
executives with a level and mix of compensation
commensurate with their positions and responsibilities
within the company and to:
• Reward executives for company and individual
performance against specific targets set with
reference to business objectives and results;
• Align the interest, focus and performance of the
executives with those of the shareholders;
• Attract, retain and motivate high performing
executives; and
• Ensure total compensation is competitive by
market standards.
Structure
In determining the level and make-up of executive
compensation, the people and performance committee
may engage an external consultant as appropriate, to
provide independent advice detailing market related
levels of compensation. No such external consultants
were engaged for the year ended 30 June 2013. The
group chief executive officer makes recommendations
to the people and performance committee for
consideration.
Employment contracts are entered into with executives.
Details of the contracts are provided on page 21.
Compensation consists of the following key elements:
• Fixed compensation
• Variable compensation
• Short term incentive (STI); and
• Long term incentive (LTI)
The proportion of the fixed compensation and variable
compensation (potential short term and long term
incentives) is established for each executive by the
people and performance committee and approved by
the board.
Table 3 on page 24 of this report details the
components (%) of the compensation of key
management personnel of the group.
Fixed compensation
Objective
Fixed compensation is set to provide a base level of
compensation which is appropriate to the position and
responsibility and is competitive in the market.
Fixed compensation is reviewed annually by the people
and performance committee. The process consists of
reviewing company and individual performance, relevant
comparative market compensation, internal relativities
and, where appropriate, external advice on policies
and practices.
Structure
Executives are given the opportunity to receive their
fixed compensation in a variety of forms including cash
and non-cash benefits.
Variable compensation – short term
incentive (STI)
Objective
The objective of the STI plan is to reward executives
and other employees on the achievement of
company and individual value adding performance
objectives established annually, providing them with
the opportunity to earn over and above their fixed
compensation should the agreed objectives be
achieved. Depending upon their position and seniority
in the organisation, executives and other employees are
eligible for a STI award of between 10-61% of their fixed
or base annual remuneration. The incentive payment is
based on the achievement of financial and non-financial
objectives, with the former dependant upon a multiplier
in accordance with a sliding scale. Objectives for each
participant are determined on an individual basis aligned
to enhance shareholder value.
The principle objectives of the plan are:
• To ensure that the company delivers its primary
financial results and achieves its targets every year
to deliver sustainable performance and continued
organisational growth;
• To achieve business goals through rewarding value
adding individual performance;
• To contribute to the development of a performance
culture across the company; and
• To promote and facilitate the concept of shared
ownership whereby executives and employees who
contribute to the success of the company will also
share in that success.
18
Breville Group Limited annual report 2013 Remuneration report (audited) continued
Structure – performance rights plan
Variable compensation – short term
incentive (STI) continued
Objective continued
The total potential STI available is set at a level to
provide an incentive to the executives and employees to
achieve and exceed personal, financial and operational
targets.
Structure
Actual STI payments are determined on the basis of the
achievement of specific targets and objectives set at
the commencement of the year. Financial performance
targets include net profit before tax. Individual objectives
are aligned to the non-financial components of the
group strategy. The company has predetermined
financial performance benchmarks which must be met
in order to trigger payments under the STI plan and
these are varied on a yearly basis in line with the annual
budgeting process.
On an annual basis, after consideration of performance
against the established targets/objectives, incorporating
both company financial targets and individual objectives,
the group chief executive officer recommends to the
people and performance committee an amount, if
any, of the STI payment each executive (excluding the
group chief executive officer) is eligible to receive. This
recommendation, together with a recommendation
by the people and performance committee of an
amount if any, of the STI payment the group chief
executive officer is eligible to receive, is then put to the
board for approval. The group chief executive officer
may also award discretionary bonuses to recognise
and reward key contributions from high performing
employees. All discretionary bonuses are presented
as recommendations to the people and performance
committee and the board for approval.
The aggregate of the annual STI payments available
for executives across the company is subject to the
approval of the people and performance committee and
the board and payments are typically paid in cash. The
minimum amount of the STI payments assuming that
no executives meet their respective targets/objectives
(including company financial targets and individual
objectives) for the 2013 financial year is nil (2012: nil).
Variable compensation – long term
incentive (LTI)
Objective
The objective of the LTI plan is to reward executives and
other employees in a manner that aligns this element of
compensation with the creation of shareholder value.
The LTI plan is only made available to executives
and other employees who are able to influence the
generation of shareholder value and have a direct
impact on the company’s performance against relevant
long term performance hurdles. Depending upon their
position and seniority in the organisation, executives
and other employees are eligible for a LTI award of
between 20-65% of their fixed annual compensation.
LTI grants to executives and other employees
(collectively “participants”) are provided in the form of
performance rights awards issued in accordance with
the Breville Group Limited Performance Rights Plan
(PRP). LTI grants to participants (excluding the group
chief executive officer) are recommended by the group
chief executive officer to the people and performance
committee. This recommendation, together with a
recommendation by the people and performance
committee of a LTI grant to the group chief executive
officer, is then put to the board for approval.
An offer under the PRP grants a participant the right
to a certain number of fully paid ordinary shares in the
company. Upon satisfaction of the performance hurdles,
the right will vest and be convertible into shares.
The company uses time-based and financial-based
hurdles. Earnings per share (EPS) is the financial-based
performance hurdle for the LTI plan. EPS represents the
earnings per share from operations adjusted for non-
trading items. The use of EPS ensures an alignment
between shareholder return and reward for participants.
In addition to the grant of performance rights awards
which are subject to an EPS performance hurdle,
performance rights awards may also be granted in
accordance with the PRP as a retention award where
the performance condition is continued employment
with the company to vesting date.
If the performance hurdle is not met or if the
participant ceases to be employed by the company,
any unvested performance rights will lapse unless
otherwise determined by the board. There are no
cash alternatives. The performance rights cannot be
transferred and are not quoted on the ASX. Holders
of performance rights are not entitled to notice of, or
attend, a meeting of shareholders of the company, or
receive any dividends declared by the company, until
the rights have vested and then converted into shares.
Once allocated, disposal of shares is subject to
restrictions whereby board approval is required to sell
the shares granted within three years of the shares
being allocated to the participant or; if the participant
ceases to be employed by the company, within twelve
months of the date employment ceases; or such other
date as the board determines.
In the event of a takeover bid where the bidder and its
associates become entitled to at least 50% of the voting
shares of the company, any performance rights granted
will vest where the board, in its absolute discretion, is
satisfied that pro rata performance is in line with any
performance condition applicable to those performance
rights. Any performance rights which do not vest will
immediately lapse, unless otherwise determined by
the board.
Other
The number of ordinary shares in the company
which could be acquired by executives and other
employees holding performance rights if all outstanding
performance rights were vested shall not exceed 5% of
the total number of issued shares of the company.
19
Breville Group Limited annual report 2013 Directors’ report
continued
Remuneration report (audited) continued
Variable compensation – long term incentive (LTI) continued
Relationship of rewards to performance
The table below shows the details of LTI plans for which compensation has been included in the remuneration tables
on pages 22 and 23 of this report.
LTI Plan
(for the year
ended)
Performance hurdles/conditions
Performance
rights
June 2010
Issued for nil consideration.
-
- Exercise price is $0.
- Term of three years and there are 2 performance hurdles each representing 50% of the
total number of performance rights:
(a) Base EPS hurdle – to vest, group’s underlying EPS for the year ending
30 June 2012 must be at least 26.50 cents per share.
(b) Stretch EPS hurdle – to vest, the group’s underlying EPS for the year ending
30 June 2012 must be at least 29.00 cents per share.
- 100% vested at 30 June 2013.
Number
outstanding
30 June 2013
(Executive
only)
Number
outstanding
30 June 2012
(Executive
only)
-
151,000
Performance
rights
June 2011
Issued for nil consideration.
-
- Exercise price is $0.
- Term of three years and there are 2 performance hurdles each representing 50% of the
135,000
135,000
total number of performance rights:
(a) Base EPS hurdle – to vest, group’s underlying EPS for the year ending
30 June 2013 must be at least 30.00 cents per share.
(b) Stretch EPS hurdle – to vest, the group’s underlying EPS for the year ending
30 June 2013 must be at least 33.00 cents per share.
- 0% vested at 30 June 2013.
Issued for nil consideration.
-
- Exercise price is $0.
- Term of three years and to vest, the group’s underlying EPS for the year ending
30 June 2013 must be at least 37.00 cents per share.
- 0% vested at 30 June 2013.
47,000
47,000
Performance
rights
June 2012
Issued for nil consideration.
-
- Exercise price is $0.
- Term of three years and there are 2 performance hurdles each representing 50% of the
152,000
152,000
total number of performance rights:
(a) Base EPS hurdle – to vest, group’s underlying EPS for the year ending
30 June 2014 must be at least 33.50 cents per share.
(b) Stretch EPS hurdle – to vest, the group’s underlying EPS for the year ending
30 June 2014 must be at least 36.50 cents per share.
- 0% vested at 30 June 2013.
Issued for nil consideration.
-
- Exercise price is $0.
- Term of up to twenty four months:
(a) 50% of the performance rights to vest, participants must be employed by the
company on 3 December 2012.
(b) 50% of the performance rights to vest, participants must be employed by the
company on 2 December 2013.
- 50% vested at 30 June 2013.
34,500
69,000
Performance
rights
June 2013
Issued for nil consideration.
-
- Exercise price is $0.
- Term of three years and there are 2 performance hurdles each representing 50% of the
156,000
total number of performance rights:
(a) Base EPS hurdle – to vest, group’s underlying EPS for the year ending
30 June 2015 must be at least 43.22 cents per share.
(b) Stretch EPS hurdle – to vest, the group’s underlying EPS for the year ending
30 June 2015 must be at least 47.33 cents per share.
- 0% vested at 30 June 2013.
Issued for nil consideration.
-
- Exercise price is $0.
- Term of 12 months and to vest, the group’s underlying EPS for the year ending
30 June 2013 must be at least 42.00 cents per share.
- 0% vested at 30 June 2013.
37,234^
^ this represents an STI award provided to the CEO following his appointment pursuant to his contract.
-
-
20
Breville Group Limited annual report 2013 Remuneration report (audited) continued
Group performance
The table below shows the performance of the group
over the past five years.
Year ended
Underlying basic earnings per share (cents)
Basic earnings per share (cents)
Total dividends (cents)
Share price at 30 June ($)
Employment contracts
30 June
2009
13.32
9.08
5.50
0.92
30 June
2010
30 June
2011
30 June
2012
30 June
2013
21.98
17.44
11.00
2.14
27.61
24.47
16.50
3.30
35.35
35.35
24.00
4.38
38.23
38.23
26.00
7.06
None of the key management personnel have fixed
term employment contracts. Amounts payable on
termination vary from a minimum statutory entitlement
to a maximum of 12 months based on a calculation of
total fixed remuneration (which includes base salary,
superannuation and allowances (if applicable)). In
accordance with the terms of the performance rights
plan, any performance rights not vested at the date
of termination will be forfeited and shall lapse, unless
otherwise determined by the board.
Prohibition on hedging by key
management personnel
The Group has adopted a policy which prohibits
key management personnel and their closely related
parties from entering into an arrangement that has the
effect of limiting the exposure of a member of the key
management personnel to risk relating to an element of
that member’s compensation. The policy complies with
the requirements of s.206J of the Corporations
Act 2001.
21
Breville Group Limited annual report 2013 Directors’ report
continued
Remuneration report (audited) continued
Remuneration of key management personnel
Table 1: Remuneration for the year ended 30 June 2013
Short-term employee benefits
Post-em-
ployment
benefits
Long-
term
employee
benefits
Share-
based
payment
Salary &
fees
Cash
bonuses
Other
Super-
annuation
Long
service
leave
Per-
formance
rights
Non-executive directors
S. Fisher – chairman (a)
S. Herman (b)
D. Howell
S. Klein (c)
J Schmoll (d)
S. Weiss
$
119,792
34,139
116,055
112,500
177,311
116,055
Sub-total non-executive directors
675,852
Other key management personnel
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
3,073
10,445
-
15,958
10,445
39,921
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
Total
$
119,792
37,212
126,500
112,500
193,269
126,500
715,773
S. Brady
M. Cohen
C. Dais
J. Lord (e)
305,622
103,954
30,000
29,576
5,080
100,079
574,311
373,400
139,024
30,000
25,000
6,035
160,701
734,160
399,124
111,335
725,000
343,390
-
-
-
-
52,373
562,832
25,000
27,527
305,107
1,426,024
Sub-total executive KMP
1,803,146
697,703
60,000
79,576
38,642
618,260
3,297,327
Totals
Note
2,478,998
697,703
60,000
119,497
38,642
618,260
4,013,100
(a) S. Fisher was appointed chairman on 28 May 2013.
(b) S. Herman was appointed a director on 1 March 2013.
(c) S. Klein is a principal of the legal firm SBA Law. His director’s fees (which are subject to GST) were paid to SBA Law and are
shown above net of GST.
(d) J. Schmoll resigned as chairman on 28 May 2013.
(e) Cash bonuses includes $100,000 paid in relation to services performed during J Lord’s tenure as Acting CEO.
22
Breville Group Limited annual report 2013 Remuneration report (audited) continued
Remuneration of key management personnel continued
Table 2: Remuneration for the year ended 30 June 2012
Short-term employee benefits
Post-em-
ployment
benefits
Long-term
employee
benefits
Share-
based
payment
Per-
formance
rights /
options
$
-
-
-
-
-
-
Total
$
191,596
109,501
122,941
105,795
122,941
652,774
Long
service
leave
$
-
-
-
-
-
-
Salary &
fees
Cash
bonuses
$
175,776
107,489
112,790
105,795
112,790
614,640
212,243
$
-
-
-
-
-
-
-
Other
$
Super-
annuation
$
15,820
2,012
10,151
-
10,151
38,134
-
-
-
-
-
-
-
Non-executive directors
J. Schmoll – chairman
S. Fisher
D. Howell
S. Klein (a)
S. Weiss
Sub-total non-executive directors
Other key management personnel
S. Audsley (b)
S. Brady
M. Cohen
C.Dais (c)
J. Lord
18,519
2,670
(139,369)
94,063
296,105
107,065
31,154
28,799
8,250
129,217
600,590
341,057
139,894
31,154
25,000
10,381
190,458
737,944
228,823
61,005
466,002
209,730
-
-
-
-
14,942
304,770
41,940
8,748
263,270
989,690
Sub-total executive KMP
1,544,230
517,694
62,308
114,258
30,049
458,518
2,727,057
Totals
Note
2,158,870
517,694
62,308
152,392
30,049
458,518
3,379,831
(a) S. Klein was a principal of the legal firm SBA Law from 1 August 2011. Up until 30 June 2011, S. Klein was partner of a legal
firm Arnold Bloch Leibler. His director’s fees from 1 August 2011 were paid to SBA Law and prior to that, to Arnold Bloch Leibler.
These fees are subject to GST. The amounts shown above are net of GST.
(b) S. Audsley did not meet the definition of key management personnel after 9 November 2011. Total remuneration reflected is to
9 November 2011. Share-based payment represents reversal of related non-cash expenditure following cessation of employment
and the forfeiture and lapse of unvested performance rights.
(c) C. Dais became key management personnel on 28 November 2011. Total remuneration is reflected from 28 November 2011.
23
Breville Group Limited annual report 2013 Directors’ report
continued
Remuneration report (audited) continued
Remuneration of key management personnel continued
Table 3: Key management personnel compensation mix
Name
Non-executive directors
S. Fisher
S. Herman (b)
D. Howell
S. Klein
J. Schmoll
S. Weiss
Other key management personnel
S. Audsley (c)
S. Brady
M. Cohen
C. Dais (d)
J. Lord
Fixed compensation Short term incentive Long term incentive (a)
2013
2012
2013
2012
2013
2012
100.00% 100.00%
100.00%
-
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
-
100.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
64.47% 60.65%
18.10% 17.83%
17.43%
59.17% 55.23%
18.94% 18.96%
21.89%
70.91% 75.08%
19.78% 20.02%
9.31%
54.52% 52.21%
24.08%
21.19%
21.40%
21.52%
25.81%
4.90%
26.60%
(a) LTI values are based on the accounting value of performance rights.
(b) S. Herman became key management personnel on 1 March 2013.
(c) Total remuneration reflected is to 9 November 2011 when S. Audsley ceased to be key management personnel.
(d) C. Dais became key management personnel on 28 November 2011. Total remuneration is reflected from 28 November 2011.
Table 4: Other key management personnel cash bonuses and share-based compensation
Name
S. Brady
Cash bonuses
Share-based compensation
% Earned
2013
% Forfeited
2013
Year
granted
% Vested
2013
% Forfeited
2013
67.66%
32.34%
2013
2012
2011
2010
2013
2012
2011
2010
2013
2012
2011
2010
2013
2012
2011
2010
-
-
-
100.00%
-
15.18%
-
100.00%
-
-
-
100.00%
-
26.26%
-
100.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
M. Cohen
66.23%
33.77%
C. Dais
63.00%
37.00%
J. Lord
66.23%
33.77%
24
Breville Group Limited annual report 2013 Remuneration report (audited) continued
Performance rights
Table 5: Performance rights granted
The terms and conditions of each grant of performance rights affecting remuneration of key management personnel
in this financial year or future reporting years are as follows:
Grant date *
First
exercise
date
Last
exercise
date
Expiry
date
Exercise
price
22 Dec 10 (a)
3 Sept 12
5 Oct 12
5 Oct 12
22 Dec 10 (b)
2 Sept 13
4 Oct 13
4 Oct 13
20 Apr 11 (c)
2 Sept 13
4 Oct 13
4 Oct 13
12 Oct 11 (d)
1 Sept 14
3 Oct 14
3 Oct 14
23 Dec 11 (e)
3 Dec 12
4 Jan 13
4 Jan 13
23 Dec 11 (f)
2 Dec 13
3 Jan 14
3 Jan 14
2 Oct 12 (g)
3 Sept 15
5 Oct 15
5 Oct 15
2 Oct 12 (h)
3 Oct 13
5 Nov 13
5 Nov 13
2 Oct 12 (i)
2 Oct 12 (j)
3 Oct 14
5 Nov 14
5 Nov 14
2 Sept 13
4 Oct 13
4 Oct 13
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Fair value per
performance
right at grant
date ($)
(Note 27)
Vested and
exercised 30
June 2013
Vested and
exercised 30
June 2012
2.64
2.54
3.32
2.41
2.47
2.33
4.73
5.19
4.95
5.21
100%
-
-
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance rights relating to two financial years were granted in the financial year ended 30 June 2011. For details of performance
rights grants to key management personnel, refer to note 29.
(a) There are two performance hurdles each representing 50% of the total number of performance rights granted - Base EPS (group
underlying EPS for the year ending 30 June 2012 is at least 26.50 cents per share) and Stretch EPS (group underlying EPS for
the year ending 30 June 2012 is at least 29.00 cents per share).
(b) There are two performance hurdles each representing 50% of the total number of performance rights granted - Base EPS (group
underlying EPS for the year ending 30 June 2013 is at least 30.00 cents per share) and Stretch EPS (group underlying EPS for
the year ending 30 June 2013 is at least 33.00 cents per share).
(c) Group underlying EPS for the year ending 30 June 2013 is at least 37.00 cents per share.
(d) There are two performance hurdles each representing 50% of the total number of performance rights granted - Base EPS (group
underlying EPS for the year ending 30 June 2014 is at least 33.50 cents per share) and Stretch EPS (group underlying EPS for
the year ending 30 June 2014 is at least 36.50 cents per share).
(e) Performance condition being that participants must be employed by the company on 3 December 2012.
(f) Performance condition being that participants must be employed by the company on 2 December 2013.
(g) There are two performance hurdles each representing 50% of the total number of performance shares granted – Base EPS (being
the group’s EPS for the year ending 30 June 2015 is at least 43.22 cents per share) and Stretch EPS (being the group’s EPS is at
least 47.33 cents per share).
(h) Performance condition being that participant must be employed on 3 October 2013.
(i) Performance condition being that participant must be employed on 3 October 2014.
(j) Group EPS for the year ending 30 June 2013 is at least 42.00 cents per share.
*
In addition to the EPS performance hurdle, the participant must be employed by the company on the vesting date.
Shares issued on exercise of compensation options
There were no shares issued on exercise of compensation options during the year ended 30 June 2013.
During the year to 30 June 2012, there were 100,000 shares issued on exercise of options held by M. Cohen at an
exercise price of $1.12 per share.
25
Breville Group Limited annual report 2013 Directors’ report
continued
Directors’ meetings
Corporate governance
The number of meetings of directors (including meetings
of committees of directors) held during the year and the
number of meetings attended by each director was as
follows:
In recognising the need for the highest standards of
corporate behaviour and accountability, the directors
of Breville Group Limited support the principles of
good corporate governance. The company’s corporate
governance statement is on page 27.
Full board
Audit & risk
(A&RC)
People and
performance
Share options and performance rights
Number of
meetings
S. Fisher
S. Herman (a)
D. Howell
S. Klein
J. Schmoll
S. Weiss
Note
13
13(b)
4
13
13
13
13
4
3
n/a
4(b)
4
3
4
4
3
-
4
4
4
4(b)
(a) S. Herman is not a member of the audit and risk
committee but was appointed a member of the people and
performance committee during the year.
(b) Designates the current chairman of the board or committee.
Committee membership
As at the date of this report, the company had an audit
and risk committee and a people and performance
committee. The details of the functions and
memberships of the committees are presented in the
corporate governance statement.
Indemnification of directors
and officers
The directors and officers of the company are
indemnified by the company against losses or liabilities
which they may sustain or incur as an officer of the
company in the proper performance of their duties.
During the financial year, the company paid premiums
in respect of contracts to insure the directors and
officers of the company against a liability to the extent
permitted by the Corporations Act 2001. The contract
of insurance prohibits disclosure of the nature of liability
and the amount of the premiums.
Likely developments and expected results
Disclosure of information as to likely developments in
the operations of the consolidated entity and expected
results of those operations would be prejudicial to the
interests of the consolidated entity. Accordingly, such
information has not been included in this report.
Unissued shares
As at the date of this report and the reporting date,
there were nil unissued ordinary shares under options
(2012: nil) and 841,234 potential unissued shares under
performance rights (2012: 727,000). Refer to note 27 of
the financial report for further details of the performance
rights outstanding. Performance right holders do not
have any right, by virtue of the performance right, to
participate in any share issue of the company.
Shares issued as a result of the exercise of options
During the year, nil options were exercised to acquire
fully paid ordinary shares in Breville Group Limited
(2012: 100,000).
Lapse of unvested performance rights
During the year, 131,000 unvested performance rights
lapsed following the cessation of employment of
employees or executives (2012: 598,000).
Auditor’s declaration of independence
Attached is a copy of the auditor’s declaration provided
under section 307C of the Corporations Act 2001 in
relation to the audit for the year ended 30 June 2013.
This auditor’s declaration forms part of this directors’
report.
Non-audit services
During the financial year ended 30 June 2013 the
company’s primary auditor, Ernst & Young Australia did
not provide any non-audit services.
Significant events after year end
No matters or circumstances have arisen since the end
of the year which significantly affected or may affect the
operations of the consolidated entity.
Signed in accordance with a resolution of directors.
Environmental regulations
and performance
The consolidated entity is not involved in any activities
that have a marked influence on the environment within
its area of operation.
Steven Fisher
Non-executive chairman
Sydney
19 August 2013
26
Breville Group Limited annual report 2013 Corporate governance statement
The board of directors is responsible for the corporate
governance practices of the company and is committed
to adhering to the Australian Stock Exchange (‘ASX’)
Corporate Governance Council (‘council’) ‘Corporate
Governance Principles and Recommendations’.
The ASX principles that have been adopted are
outlined below.
The company’s corporate governance practices
throughout the year ended 30 June 2013 were
compliant with the council’s principles and
recommendations, except for those differences
disclosed and explained in this statement.
The following documents are available on the investor
relations, corporate governance section of the
company’s website brevillegroup.com
• selection and appointment of directors
• criteria for assessing independence
• code of conduct
• continuous disclosure policy
• share trading policy
• shareholder communications policy
• board charter
• audit and risk committee charter
• people and performance committee charter
• diversity policy
The term of the current directors as at the date of this annual report are as follows:
Director
Steven Fisher
(chairman)1&2
Sally Herman2
Dean Howell
Steven Klein
John Schmoll1
Samuel Weiss
Appointed Term in office Non-executive
Independent
Last elected
2004
2013
2008
2003
2004
2008
9 years
0 years
5 years
10 years
9 years
5 years
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
No
Yes
Yes
2010
-
2011
2011
2012
2011
1. Following the resignation of Mr John Schmoll as chairman on 28 May 2013, Mr Steven Fisher was appointed chairman.
Mr Schmoll will retire as a director effective from the date that a new independent director is appointed.
2. In accordance with the requirements of the company’s constitution, Mr Fisher and Ms Herman (appointed 1 March 2013)
will seek re-election at the company’s AGM later this year.
Principle 1: Lay solid foundations for
management and oversight
Role of the board and management
The board guides and monitors the business and
affairs of the company on behalf of the shareholders,
by whom it is elected and to whom it is accountable.
The board has adopted formal guidelines for board
operation and membership. These guidelines outline the
roles and responsibilities of the board and its members
and establish the relationship between the board and
management.
The board is responsible for approving the strategic
direction of the company, establishing goals for
management, monitoring the achievement of those
goals and establishing a sound system of risk oversight
and management. The board will regularly review its
performance and the performance of its committees.
Evaluating the performance of key executives
The performance of key executives is reviewed against
specific and measurable qualitative and quantitative
performance criteria and includes:
•
financial measures of the company’s performance;
• development and achievement of strategic
objectives;
• development of management and staff;
• compliance with legislative and company policy
requirements; and
• achievement of key performance indicators.
Performance evaluation
All key executives were subject to a performance review
as described above during the reporting period.
27
Breville Group Limited annual report 2013 Corporate governance statement
continued
Board committees
The board has established the audit and risk committee
and people and performance committee to assist
in the execution of its duties and to allow detailed
consideration of complex issues. The composition of
these committees is shown on page 26.
Nomination committee
During the year ended 30 June 2013, the company
did not have a separately established nomination
committee. All duties and responsibilities typically
delegated to such a committee are the responsibility of
the full board. Although the council’s recommendation
2.4 recommends that a nomination committee can be
a more efficient mechanism for the detailed examination
of selection and appointment practices, particularly in
larger companies, the board does not believe at this
time that any marked efficiencies or enhancements
would be achieved by the creation of a separate
nomination committee.
Evaluating the performance of the board
There is no formal review process of the performance
of the board, its committees and individual directors.
Currently, the chairman informally assesses the
performance of committees and individual directors and
their contribution to board affairs.
Principle 3: Promote ethical and
responsible decision-making
Code of conduct
The board has formally adopted a code of conduct
(“code”) for all employees (including directors). The
code aims at maintaining the highest ethical standards,
corporate behaviour and accountability across the
group. These obligations are also consistent with the
duties imposed on directors by the Corporations Act.
In addition, directors are obliged to be independent
in judgement and to ensure that all reasonable steps
are taken to be satisfied as to the soundness of board
decisions.
Diversity policy
The company is an equal opportunity employer and
values differences such as gender, age, culture,
disability, ethnicity and lifestyle choices. The company’s
diversity policy aims to ensure a corporate culture that
supports workplace diversity whilst providing access to
equal opportunities at work based on merit. This policy
is available on the company’s website at the investor
relations, corporate governance section and is subject
to periodic review by, and may be changed by resolution
of the Board. The policy has no contractual effect.
Principle 2: Structure the board to add
value
Board composition
The company’s constitution states that there must be
a minimum of three directors and contains detailed
provisions concerning the tenure of directors. The board
currently comprises six non-executive directors. The
directors’ report, on page 12, outlines the relevant skills,
experience and expertise held by each director in office
at the date of this report.
Director independence
In considering whether a director is independent, the
board refers to the company’s “Criteria for assessing
independence of directors” which is consistent with
the council’s recommendations. Independent directors
of the company are those that are not involved in the
day-to-day management of the company and are free
from any real or reasonably perceived business or
other relationship that could materially interfere with the
exercise of their unfettered and independent judgement.
In accordance with the definition of independence
above, and the materiality thresholds outlined in the
company’s policy ‘Criteria for assessing independence
of directors’, it is the board’s view that Mr Dean Howell,
Mr John Schmoll and Mr Samuel Weiss are independent
directors. The following directors are not independent
directors:
• Mr Steven Fisher (non-executive director, chairman)
is employed by an entity associated with a
substantial shareholder of the company;
• Ms Sally Herman (non-executive director) is a non-
executive director of Premier Investments Ltd, a
substantial shareholder of the company; and
• Mr Steven Klein (non-executive director) is a
principal of SBA Law which is a professional adviser
to the company.
Regardless of whether directors are defined as
independent, all directors are expected to bring
independent views and judgement to board
deliberations.
Independence
Of the six directors, three are considered not to be
independent for the reasons noted above.
Material personal interest requirement
The Corporations Act provides that unless agreed by
the board, where any director has a material personal
interest in a matter, the director will not be permitted to
be present during discussions, or to vote on the matter.
Access to independent advice
There are procedures in place to enable directors, in
connection with their duties and responsibilities as
directors, to seek independent professional advice at
the expense of the company. Prior written approval of
the chairman is required, which will not be
unreasonably withheld.
28
Breville Group Limited annual report 2013 Principle 3: Promote ethical and
responsible decision-making continued
Diversity policy objectives
The objectives set by the board in accordance with the
diversity policy and progress towards achieving them
are:
• Representation of women trained in recruitment and
selection panels: Progress was made in Australia
during the year with further women being trained;
•
Issuing the company equal opportunity statement
to recruiting agencies: This continued in Australia
during the year;
• Explicit requirement of recruiting agencies to provide
a gender balance of suitable, qualified, shortlisted
candidates for interview: This initiative achieved
further progress during the year;
• Promoting a safe workplace free from harassment
or discrimination of any kind: Training and education
programs which included topics on harassment,
bullying, victimisation and discrimination were
conducted in Australia and North America during
the year;
• Enhancing the gender balance of women in career
development for those in senior and managerial
roles; and
• Continue flexible working arrangements where
operationally appropriate.
The proportion of women employees in the company
and the current targets are as follows:
Women on the
board
Women in
senior roles
Women in
company
30 June
2012
30 June
2013
Target by
June 2015
0%
17%
29%
22%
25%
30%
53%
50%
50%
To assist the board in fulfilling its responsibilities in
relation to diversity, the implementation of these
objectives is overseen by the people and performance
committee.
The people and performance committee shall:
•
•
report to the board at least annually, on the
company’s progress in achieving the objectives set
for achieving gender diversity;
regularly oversee a review of the relative proportion
of women across the company and their relative
positions; and
• consider other initiatives to promote diversity in
the workplace.
Workplace equality
In accordance with the requirements of the Workplace
Gender Equality Act 2012 (Act), Breville Pty Limited
lodged its annual compliance report with the Workplace
Gender Equality Agency. This report is available on the
company’s website.
Principle 4: Safeguard integrity in
financial reporting
Audit and risk committee
The board has an audit and risk committee (A&RC),
which operates under a charter approved by the board.
It is the board’s responsibility to ensure that an effective
internal control framework exists within the consolidated
entity. This includes internal controls to deal with both
the effectiveness and efficiency of significant business
processes, the safeguarding of assets, the maintenance
of proper accounting records and the reliability of
financial information. The board has delegated the
responsibility for the establishment and maintenance of
a framework of internal control and ethical standards of
the company to the A&RC.
Among its responsibilities, the A&RC:
• ensures that company accounting policies and
practices are in accordance with current and
emerging accounting standards;
•
•
reviews all accounts of the group to be publicly
released;
recommends to the board the appointment and
remuneration of the external auditors;
•
reviews the scope of external audits;
• assesses the performance and independence of the
external auditors, including procedures governing
partner rotation;
•
reviews corporate governance practices; and
• monitors and assesses the systems for internal
compliance and control, legal compliance and risk
management.
Composition of committee
The current members of the A&RC are:
• Mr Dean Howell (chairman)
• Mr Steven Fisher
• Mr Steven Klein
• Mr John Schmoll
• Mr Samuel Weiss
The directors’ report, on page 26, outlines the number
of A&RC meetings held during the year and the names
of the attendees at those meetings. It also outlines the
qualifications of A&RC members on page 12.
29
Breville Group Limited annual report 2013 Corporate governance statement
continued
Principle 7: Recognise and manage risk
The company is committed to the identification,
monitoring and management of risks associated with
its business activities including financial, operational,
compliance, ethical conduct, brand and product quality
risks. The company has embedded in its management
and reporting systems a number of risk management
controls. These include:
• guidelines and limits for approval of capital
expenditure;
• policies and procedures for the management of
financial risk and treasury operations including
exposures to foreign currencies and movements in
interest rates;
• annual budgeting and monthly reporting systems
for all businesses which enable the monitoring
of progress against performance targets and the
evaluation of trends;
• policies and procedures which enable management
of the company’s material business risks;
•
formal strategic planning sessions; and
• presentation of periodic reports to the board and the
A&RC identifying items that represent a potential risk
and the manner in which these are being managed
and responded to.
Management is ultimately responsible to the board for
the system of internal control and risk management and
has reported to the board as to the effectiveness of the
company’s management of its material business risks.
The A&RC assists the board in monitoring this function.
In accordance with the council’s recommendation
7.3 the group chief executive officer and group chief
financial officer provided the board with a written
declaration confirming that the declaration provided in
accordance with section 295A of the Corporations Act
is founded on a sound system of risk management and
internal control and that the system operated effectively
in all material respects.
Principle 4: Safeguard integrity in
financial reporting continued
The group chief executive officer; company secretary;
group chief financial officer; the external auditors and
any other persons considered appropriate may attend
meetings of the A&RC by invitation. The committee
also meets from time to time with the external auditors
independent of management.
In accordance with the council’s recommendation 4.2,
the A&RC is structured so that it:
• comprises only non-executive directors;
• comprises a majority of independent directors;
•
is chaired by an independent chair, who is not chair
of the board; and
• has at least three members.
The majority of the A&RC is considered to be
independent as at the date of this report, although of
the five committee members, Mr Steven Fisher and Mr
Steven Klein are considered not to be independent for
the reasons noted above.
Principle 5: Make timely and balanced
disclosure
The company’s continuous disclosure policy complies
with the council’s recommendation 5.1. This policy
is available on the company’s website at the investor
relations, corporate governance section.
Principle 6: Respect the rights of
shareholders
Communication policy
The company is committed to providing all shareholders
with comprehensive, timely and equal access to
information about its activities to enable them to
make informed investment decisions. The company’s
shareholder communication policy is available on the
company’s website at the investor relations, corporate
governance section.
Electronic communication
The company’s website displays recent ASX
announcements and contains information about
the company.
Briefings
The company keeps a record of briefings held with
investors and analysts, including a record of those
present and the time and place of the meeting.
30
Breville Group Limited annual report 2013 Principle 8: Remunerate fairly and
responsibly
People and performance committee
The board has a people and performance committee,
comprising the following directors:
• Mr Samuel Weiss (chairman)
• Mr Steven Fisher
• Ms Sally Herman
• Mr Dean Howell
• Mr Steven Klein
• Mr John Schmoll
In accordance with the council’s recommendation 8.1,
the people and performance committee comprises:
• an independent chairman; and
• at least three members.
Although Mr Steven Fisher, Ms Sally Herman and
Mr Steven Klein are considered not to be independent
for the reasons noted above, all committee members
are expected to bring independent views and
judgement to committee deliberations.
For details on the number of meetings of the people
and performance committee held during the year and
the attendees at those meetings, refer to the directors’
report on page 26.
Remuneration disclosure
For details of the company’s remuneration philosophy
and framework, and the remuneration received by
directors and executives in the current period, please
refer to the remuneration report contained in the
directors’ report on pages 17 to 25.
31
Breville Group Limited annual report 2013 Income statement
for the year ended 30 June 2013
Revenue
Cost of sales
Gross profit
Other income
Employee benefits expenses
Restructure costs (net)
Premises, lease & utilities expenses
Advertising and marketing expenses
Other expenses
Earnings before interest, tax, depreciation & amortisation
(EBITDA)
Depreciation & amortisation expense
Earnings before interest and tax (EBIT)
Finance costs
Finance income
Profit before income tax
Income tax expense
Net profit after income tax for the year attributable to
members of Breville Group Limited
Earnings per share for profit attributable to the ordinary
equity holders of Breville Group Limited:
- basic earnings per share
- diluted earnings per share
The accompanying notes form an integral part of this income statement.
Note
2(a)
2(b)
2(c)
2(f)
2(d)
2(g)
2(g)
3
4
4
30 June 2013
$’000
30 June 2012
$’000
486,547
(308,405)
178,142
967
(50,850)
(801)
(10,735)
(23,021)
(14,838)
78,864
(7,252)
71,612
(1,656)
1,328
71,284
427,940
(267,304)
160,636
449
(46,966)
-
(11,836)
(16,817)
(12,999)
72,467
(6,887)
65,580
(1,998)
1,085
64,667
(21,552)
(18,685)
49,732
45,982
Cents
Cents
38.23
38.23
35.35
35.35
32
Breville Group Limited annual report 2013 Statement of comprehensive income
for the year ended 30 June 2013
Note
30 June 2013
$’000
30 June 2012
$’000
Net profit after income tax for the year
49,732
45,982
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Foreign currency translation differences
Net change in fair value of cash flow hedges
Income tax on other comprehensive income/(loss) and other
items taken directly to equity
Other comprehensive income for the year, net of income tax
20(a)
20(c)
3
5,279
1,627
871
7,777
956
3,236
(616)
3,576
Total comprehensive income for the year attributable to
members of Breville Group Limited
57,509
49,558
The accompanying notes form an integral part of this statement of comprehensive income.
33
Breville Group Limited annual report 2013 Statement of financial position
as at 30 June 2013
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax assets
Other assets
Total current assets
Non-current assets
Plant and equipment
Deferred tax assets
Intangible assets – other
Intangible assets – goodwill
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Other payables
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Equity attributable to equity holders of the parent
Issued capital
Reserves
Retained earnings
Total equity
Note
30 June 2013
$’000
30 June 2012
$’000
6
7
8
9
3
10
11
3
12
13
15
16
3
17
18
16
3
17
19
20
21
68,130
90,770
83,751
2,110
804
2,833
248,398
3,739
14,090
47,663
24,558
90,050
53,095
73,579
61,596
479
476
3,298
192,523
3,875
12,462
45,298
24,558
86,193
338,448
278,716
80,931
13,630
9,102
14,376
13
118,052
616
11,070
5,882
1,632
19,200
137,252
201,196
138,368
(7,165)
69,993
201,196
63,679
57
9,580
7,120
17
80,453
-
6,019
6,251
8,581
20,851
101,304
177,412
138,760
(14,783)
53,435
177,412
The accompanying notes form an integral part of this statement of financial position.
34
Breville Group Limited annual report 2013 Statement of changes in equity
for the year ended 30 June 2013
At 1 July 2011
Foreign currency translation reserve
Cash flow hedges
Income tax on items taken directly
to equity
Net income recognised directly
in equity
Profit for the year
Total recognised income for
the year
Dividends paid
Issue of ordinary shares – exercise
of options
Ordinary shares acquired by the
Trustee of the Breville Group
Performance Share Plan Trust
Transferred to participants of the
performance rights plan
Share-based payments
At 30 June 2012
Foreign currency translation reserve
Cash flow hedges
Income tax on items taken directly
to equity
Net income recognised directly
in equity
Profit for the year
Total recognised income for
the year
Dividends paid
Ordinary shares acquired by the
Trustee of the Breville Group
Performance Share Plan Trust
Transferred to participants of the
performance rights plan
Share-based payments
At 30 June 2013
Note
20(a)
20(c)
3
5(a)
19(a)
19(b)
19(b)
20(b)
20(a)
20(c)
3
5(a)
19(b)
19(b)
20(b)
Issued
capital
$’000
Reserves
$’000
Retained
earnings
$’000
Total
equity
$’000
135,642
(14,886)
32,822
153,578
-
-
-
-
-
-
-
112
(1,290)
4,296
-
956
3,236
(616)
3,576
-
-
-
-
956
3,236
(616)
3,576
-
45,982
45,982
3,576
45,982
49,558
-
-
-
(4,296)
823
(25,369)
(25,369)
-
-
-
-
112
(1,290)
-
823
138,760
(14,783)
53,435
177,412
-
-
-
-
-
-
-
(1,883)
1,491
-
138,368
5,279
1,627
871
7,777
-
-
-
-
5,279
1,627
871
7,777
-
49,732
49,732
7,777
49,732
57,509
-
-
(1,491)
1,332
(7,165)
(33,174)
(33,174)
-
-
-
69,993
(1,883)
-
1,332
201,196
The accompanying notes form an integral part of this statement of changes in equity.
35
Breville Group Limited annual report 2013 Cash flow statement
for the year ended 30 June 2013
Note
30 June 2013
$’000
30 June 2012
$’000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Finance costs paid
Income tax paid
Finance income received
Net cash flows from operating activities
6(b)
Cash flows used in investing activities
Purchase of plant and equipment
Proceeds from sale of plant and equipment
Purchase of intangible assets
Net cash flows used in investing activities
Cash flows used in financing activities
Net proceeds of borrowings
Proceeds from issue of shares
Irretrievable cash contributions paid to the Trustee of the Breville
Group Performance Share Plan Trust to acquire ordinary shares
Equity dividends paid
Net cash flows used in financing activities
19(a)
19(b)
5(a)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Net foreign exchange difference
Cash and cash equivalents at end of the year
6(a)
The accompanying notes form an integral part of this cash flow statement.
633,869
(574,924)
(1,656)
(21,661)
1,328
36,956
(1,007)
63
(8,187)
(9,131)
17,677
-
(1,883)
(33,174)
(17,380)
10,445
53,082
3,023
66,550
576,021
(510,309)
(1,998)
(13,587)
984
51,111
(745)
23
(4,297)
(5,019)
5,839
112
(1,290)
(25,369)
(20,708)
25,384
27,564
134
53,082
36
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 1. Summary of significant accounting policies
Breville Group Limited is a for profit company limited by
shares incorporated in Australia. Breville Group Limited
shares are quoted on the Australian Stock Exchange.
This financial report covers the consolidated entity
comprising Breville Group Limited and its subsidiaries
(company or group).
A description of the group’s operations and of its
principal activities is included in the operating and
financial review in the directors’ report on pages 13 to
16. The directors’ report is unaudited (except for the
remuneration report) and does not form part of the
financial report.
(a) Basis of preparation
The financial report is a general-purpose financial
report, which has been prepared in accordance with
the requirements of the Corporations Act 2001 and
Australian Accounting Standards.
The financial report has also been prepared on a
historical cost basis, except for derivative financial
instruments which have been measured at fair value.
The financial report is presented in Australian dollars
and all values are rounded to the nearest thousand
dollars ($’000) unless otherwise stated under the option
available to the company under ASIC class order
98/100. The company is an entity to which the class
order applies.
(b) Statement of compliance
The financial report complies with Australian Accounting
Standards as issued by the Australian Accounting
Standards Board and International Financial Reporting
Standards (IFRS) as issued by the International
Accounting Standards Board.
Australian Accounting Standards and Interpretations
that have recently been issued or amended but are not
yet effective have not been adopted by the group for the
annual reporting period ended 30 June 2013.
The amendments to standards and interpretations not
yet adopted are not expected to have a material impact
on the group in the period of initial application.
(c) Basis of consolidation
The consolidated financial statements comprise the
financial statements of Breville Group Limited and its
subsidiaries as at 30 June each year.
Subsidiaries are all those entities over which the group
has the power to govern the financial and operating
policies so as to obtain benefits from their activities. The
existence and effect of potential voting rights that are
currently exercisable or convertible are considered when
assessing whether the group controls another entity.
The financial statements of subsidiaries are prepared for
the same reporting period, using consistent accounting
policies.
In preparing the consolidated financial statements, all
inter-group balances and transactions, income and
expenses and profit and loss resulting from intra-group
transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on
which control is obtained by the group and cease to
be consolidated from the date on which control is
transferred out of the group.
The acquisition of subsidiaries is accounted for using
the purchase method of accounting. The purchase
method of accounting involves allocating the cost of
the business combination to the fair value of assets
acquired and the liabilities and contingent liabilities
assumed at the date of acquisition.
(d) Significant accounting judgements,
estimates and assumptions
The carrying amounts of certain assets and liabilities are
often determined based on estimates and assumptions
of future events. The key estimates and assumptions
that have a significant risk of causing a material
adjustment to the carrying amounts of certain assets
and liabilities within the next annual reporting period are:
Impairment of goodwill & intangibles with
indefinite useful lives
The group determines whether goodwill and intangibles
with indefinite useful lives are impaired at least on
an annual basis. This requires an estimation of the
recoverable amount of the cash generating units to
which the goodwill and intangibles with indefinite
useful lives are allocated. The assumptions used in
this estimation of recoverable amount and the carrying
amount of goodwill and intangibles with indefinite useful
lives are discussed in note 14.
Share-based payment transactions
The group measures the cost of equity-settled
transactions with employees by reference to the fair
value of the equity instruments at the date at which they
are granted. The fair value is determined by an external
valuer using either the Black-Scholes or binomial option
pricing model, using the assumptions detailed in
note 27.
Onerous lease provision
The onerous lease provision represents the present
value of the future lease payments that the consolidated
entity is presently obligated to make in respect of
onerous lease contracts under non-cancellable
operating lease agreements, less revenue expected
to be earned on the lease including estimated future
sub-lease revenue, where applicable. The calculation of
this provision requires various assumptions associated
with the sub-letting of the premises. The related carrying
amounts are disclosed in note 17.
37
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 1. Summary of significant accounting policies continued
(d) Significant accounting judgements,
estimates and assumptions continued
Taxes
Uncertainties exist with respect to the interpretation
of complex tax regulations, changes in tax laws, and
the amount and timing of future taxable income. Given
the wide range of international business relationships
and the long-term nature and complexity of existing
contractual agreements, differences arising between
the actual results and the assumptions made, or future
changes to such assumptions, could necessitate
future adjustments to tax income and expense already
recorded. The group establishes provisions, based on
reasonable estimates, for possible consequences of
audits by the tax authorities of the respective countries
in which it operates. The amount of such provisions
is based on various factors, such as experience of
previous tax audits and differing interpretations of tax
regulations by the taxable entity and the responsible tax
authority. Such differences of interpretation may arise
on a wide variety of issues depending on the conditions
prevailing in the respective group company’s domicile.
As the group assesses the probability for litigation and
subsequent cash outflow with respect to taxes as
remote, no contingent liability has been recognised.
Deferred tax assets are recognised for all unused tax
losses to the extent that it is probable that taxable
profit will be available against which the losses can be
utilised. Significant management judgement is required
to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and
the level of future taxable profits together with future tax
planning strategies.
Warranty and faulty goods
Provision for warranty and faulty goods is recognised at
the date of sale of the relevant products, at the group’s
best estimate of the expenditure required to settle the
group’s liability. Factors that could impact the estimated
claim information include the success of the group’s
productivity and quality initiatives, as well as parts
and labour costs. The related carrying amounts are
disclosed in note 17.
Provision for make-good
The provision for make-good represents the value of
expected future payments to be made in respect of
restoration of leased premises under contracts that
have clauses potentially requiring these premises to
be restored to their original condition at the conclusion
of the lease. The estimate may vary as a result of
negotiations between the parties at the end of the lease
term. The related carrying amounts are disclosed in
note 17.
(e) Business combinations
All identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination
are measured initially at their fair values at the
acquisition date, irrespective of the extent of any
minority interest. The excess of the cost of the business
combination over the net fair value of the group’s share
of the identifiable net assets acquired is recognised as
goodwill. Any transaction costs incurred in connection
with a business combination are expensed as incurred.
(f) Operating segments
An operating segment is a component of the group that
engages in business activities from which it may earn
revenues and incur expenses, including certain inter-
group revenues and expenses, whose operating results
are regularly reviewed by the entity’s chief operating
decision maker to make decisions about resources to
be allocated to the segment and assess its performance
and for which discrete financial information is available.
Operating segments have been identified based on the
information provided to the chief operating decision
makers being the group chief executive officer and
board of directors.
Operating segments that meet the quantitative criteria
as prescribed by AASB 8 Operating Segments are
reported separately. However, an operating segment
that does not meet the quantitative criteria is still
reported separately where information about the
segment would be useful to the users of the financial
report.
(g) Foreign currency translation
(i) Functional and presentation currency
Both the functional and presentation currency of
Breville Group Limited and its Australian subsidiaries
are Australian dollars (AUD or A$). Each entity in the
group determines its own functional currency and items
included in the financial statements of each entity are
measured using that functional currency.
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded
in the functional currency at the exchange rates
ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the
balance sheet date.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial
transaction. Non-monetary items measured at fair value
in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
38
Breville Group Limited annual report 2013 Note 1. Summary of significant accounting policies continued
(g) Foreign currency translation continued
(i) Trade and other receivables
(ii) Transactions and balances continued
The functional currency of the foreign subsidiaries
is either:
• USD - United States dollars (Breville Holdings USA,
Inc. and Breville USA, Inc.);
• HKD - Hong Kong dollars (HWI International
Limited, Gannet Holdings Limited and Breville
Export Limited);
• CAD - Canadian dollars (HWI Canada, Inc.,
Holdings HWI Canada, Inc. and Anglo-Canadian
Housewares, L.P.);
• NZD - New Zealand dollars (Breville New Zealand
Limited);
• GBP - British pounds (BRG Appliances Limited);
and
• RMB - Chinese Renminbi (Breville Services
(Shenzhen) Company Limited).
As at the reporting date the assets and liabilities of these
foreign subsidiaries are translated into the presentation
currency of Breville Group Limited. They are translated
at the rate of exchange ruling at the balance sheet
date and the income statements are translated at the
weighted average exchange rates for the year.
The exchange differences arising on the retranslation of
the financial statements of foreign subsidiaries are taken
directly to a separate component of equity. On disposal
of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign
operation is recognised in the income statement.
(iii) Disposal of foreign operations
In some instances companies in the Breville Group
provide intra group funding to other group entities by
way of permanent equity loans. In these instances any
foreign exchange movements are recognised in equity
(foreign currency translation reserve) as these equity
loans are considered to form part of the net investment
in the subsidiary.
(h) Cash and cash equivalents
Cash and cash equivalents in the balance sheet
comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or
less that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of
changes in value.
Bank overdrafts are shown within borrowings in current
liabilities on the balance sheet.
For the purposes of the cash flow statement, cash and
cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
Trade receivables, which generally have 30-60
day terms, are initially recognised at fair value and
subsequently measured at amortised cost.
Bad debts are written off when incurred. An allowance
for uncollectible receivables is established when there
is objective evidence that the group will not be able to
collect all amounts due. The amount of the allowance is
recognised in the income statement.
(j) Inventories
Inventories are valued at the lower of cost and net
realisable value.
The cost of inventories comprises all costs of purchase,
costs of conversion and other costs incurred in bringing
the inventories to their present location and condition.
This includes the transfer from equity of gains and
losses on qualifying cash flow hedges of purchases of
finished goods.
Costs are assigned to individual items of inventory on a
weighted average cost basis.
Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs
necessary to make the sale.
(k) Derivative financial instruments and
hedging
The group may use derivative financial instruments
such as forward exchange contracts, foreign exchange
option contracts and interest rate swaps to hedge its
risks associated with foreign currency and interest rate
fluctuations. Such derivative financial instruments are
initially recognised at fair value on the date on which a
derivative contract is entered into and are subsequently
remeasured to fair value. Derivatives are carried as
assets when their fair value is positive and as liabilities
when their fair value is negative.
Any gains or losses arising from changes in the fair
value of derivatives, except for those that qualify for
hedge accounting, are taken directly to the income
statement for the year.
The fair value of forward exchange contracts and foreign
exchange option contracts are calculated by reference
to current forward exchange rates for contracts with
similar maturity profiles and where applicable exercise
prices. The fair value of interest rate swap contracts is
determined by reference to market values for similar
instruments.
For the purposes of hedge accounting, hedges are
classified as cash flow hedges when they hedge
exposure to variability in cash flows that is attributable
either to a particular risk associated with a recognised
asset or liability or to a forecast transaction.
39
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 1. Summary of significant accounting policies continued
(k) Derivative financial instruments and
hedging continued
At the inception of a hedge relationship, the group
formally designates and documents the hedge
relationship to which the group wishes to apply hedge
accounting and the risk management objective and
strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the
hedged item or transaction, the nature of the risk being
hedged and how the entity will assess the hedging
instrument’s effectiveness in offsetting the exposure to
changes in the hedged item’s cash flows attributable to
the hedged risk. Such hedges are expected to be highly
effective in achieving offsetting changes in cash flows
and are assessed on an ongoing basis to determine
that they actually have been highly effective throughout
the financial reporting periods for which they were
designated.
When accounting for foreign exchange option contracts,
the intrinsic value of the option is the only component
subject to the hedging relationship. The time value of
money is excluded from the hedge relationship.
Hedges that meet the strict criteria for hedge
accounting are accounted for as follows:
Cash flow hedges
Cash flow hedges are hedges of the group’s exposure
to variability in cash flows that is attributable to a
particular risk associated with a recognised asset or
liability or a highly probable forecast transaction and that
could affect profit or loss. The effective portion of the
gain or loss on the hedging instrument is recognised
directly in equity, while the ineffective portion is
recognised in income statement.
Amounts taken to equity are transferred to the income
statement when the hedged transaction affects profit
or loss, such as when hedged income or expenses are
recognised or when a forecast purchase occurs. When
the hedged item is the cost of a non-financial asset or
liability, the amounts taken to equity are transferred to
the initial carrying amount of the non-financial asset
or liability.
If the forecast transaction is no longer expected to
occur, amounts previously recognised in equity are
transferred to the income statement. If the hedging
instrument expires or is sold, terminated or exercised
without replacement or rollover, or if its designation as
a hedge is revoked, amounts previously recognised
in equity remain in equity until the forecast transaction
occurs. If the related transaction is not expected to
occur, the amount is taken to the income statement.
(l) Plant and equipment
Plant and equipment is stated at cost less accumulated
depreciation and any accumulated impairment losses.
Depreciation on plant and equipment is calculated on
a straight line basis over the estimated useful life of
between 2 and 10 years.
The assets’ residual values, useful lives and amortisation
methods are reviewed, and adjusted if appropriate, at
each year end.
An item of plant and equipment is derecognised upon
disposal or when no further future economic benefits
are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset at
the time of derecognition) is included in the income
statement in the year in which they arise.
(m) Intangible assets - goodwill
Goodwill acquired in a business combination is initially
measured at cost, being the excess of the cost of
the business combination over the group’s interest in
the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill
acquired in a business combination shall, from the
acquisition date, be allocated to each of the group’s
cash generating units, or groups of cash generating
units, that are expected to benefit from the synergies of
the combination, irrespective of whether other assets
or liabilities of the group are assigned to those units or
groups of units. Each unit or group of units to which
the goodwill is so allocated represents the lowest level
within the group at which the goodwill is monitored for
internal management purposes.
Impairment is determined by assessing the recoverable
amount of the cash generating unit to which the
goodwill relates. When the recoverable amount of a
cash generating unit is less than the carrying amount,
an impairment loss is recognised. When goodwill forms
part of a cash generating unit and an operation within
that unit is disposed of, the goodwill associated with
the operation disposed of is included in the carrying
amount of the operation when determining the gain or
loss on disposal of the operation. Goodwill disposed of
in this manner is measured based on the relative values
of the operation disposed of and the portion of the cash
generating unit retained.
A hedge of the foreign currency risk of a firm
commitment is accounted for as a cash flow hedge.
Impairment losses recognised for goodwill are not
subsequently reversed.
40
Breville Group Limited annual report 2013 Note 1. Summary of significant accounting policies continued
(n) Intangible assets - other
Intangible assets acquired separately or in a business
combination are initially measured at cost. The cost of
an intangible asset acquired in a business combination
is its fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at
cost less any accumulated amortisation and any
accumulated impairment losses. Internally generated
intangible assets, excluding capitalised development
costs, are not capitalised and expenditure is charged
against profits in the year in which the expenditure is
incurred.
The useful lives of intangible assets are assessed to be
either finite or indefinite.
Intangible assets with finite lives are amortised over
the useful life and assessed for impairment whenever
there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life
are reviewed at least at each year end. Changes in
the expected useful life or the expected pattern of
consumption of future economic benefits embodied
in the asset are accounted for by changing the
amortisation period or method, as appropriate, which
is a change in accounting estimate. The amortisation
expense on intangible assets with finite lives is
recognised in the income statement in the expense
category consistent with the function of the
intangible asset.
Intangible assets with indefinite useful lives are tested
for impairment annually either individually or at the
cash generating unit level. Such intangibles are not
amortised. The useful life of an intangible asset with
an indefinite life is reviewed each reporting period to
determine whether indefinite life assessment continues
to be supportable. If not, the change in the useful life
assessment from indefinite to finite is accounted for
as a change in an accounting estimate and is thus
accounted for on a prospective basis.
Research and development costs
Research costs are expensed as incurred. An intangible
asset arising from development expenditure on an
internal project is recognised only when the group can
demonstrate the technical feasibility of completing the
intangible asset so that it will be available for use or
sale, its intention to complete and its ability to use or sell
the asset, how the asset will generate future economic
benefits, the availability of resources to complete the
development and the ability to measure reliably the
expenditure attributable to the intangible asset during
its development.
Following the initial recognition of the development
expenditure, the cost model is applied requiring the
asset to be carried at cost less any accumulated
amortisation and accumulated impairment losses. Any
expenditure so capitalised is amortised over the period
of expected benefits from the related project.
The carrying value of an intangible asset arising from
development expenditure is tested for impairment
annually or more frequently when an indication of
impairment arises during the reporting period.
A summary of the policies applied to the group’s
intangible assets is as follows:
Brand names
Internally generated or
Acquired
Useful lives
Acquired
Indefinite
Amortisation method used No amortisation
Impairment test
Annually and more
frequently when an
indication of impairment
exists.
Computer software
Internally generated or
Acquired
Acquired
Useful lives
Finite
Amortisation method used Amortised over the useful
life, not exceeding 3
years, on a straight line
basis.
When an indication of
impairment exists. The
amortisation method is
reviewed at each year
end.
Internally generated
Impairment test
Development costs
Internally generated or
Acquired
Useful lives
Finite
Amortisation method used Amortised over the period
Impairment test
of expected future sales,
not exceeding 3 years,
from the related project on
a straight line basis.
Annually and more
frequently when an
indication of impairment
exists. The amortisation
method is reviewed at
each year end.
Gains or losses arising from derecognition of an
intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of
the asset and are recognised in the income statement
when the asset is derecognised.
41
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 1. Summary of significant accounting policies continued
(o) Impairment of non-financial assets
other than goodwill
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 tested 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. 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 inflows
that are largely independent of the cash inflows from
other assets or groups of assets (cash generating
units). Non-financial assets other than goodwill that
suffered impairment are tested for possible reversal
of the impairment whenever events or changes in
circumstances indicate that the impairment may
have reversed.
(p) Investments and other financial assets
Financial assets in the scope of AASB 139 Financial
Instruments: Recognition and Measurement are
classified as either financial assets at fair value through
profit or loss, loans and receivables or held-to-maturity
investments, as appropriate. When financial assets are
recognised initially, they are measured at fair value, plus,
in the case of investments not at fair value through the
income statement, directly attributable transactions
costs. The group determines the classification of its
financial assets after initial recognition and, when
allowed and appropriate, re-evaluates this designation
at each year end.
All regular way purchases and sales of financial assets
are recognised on the trade date i.e. the date that
the group commits to purchase the asset. Regular
way purchases or sales are purchases or sales of
financial assets under contracts that require delivery of
the assets within the period established generally by
regulation or convention in the marketplace.
(i) Financial assets at fair value through the
income statement
Financial assets classified as held for trading are
included in the category ‘financial assets at fair value
through the income statement’. Financial assets are
classified as held for trading if they are acquired for the
purpose of selling in the near term. Derivatives are also
classified as held for trading unless they are designated
as effective hedging instruments. Gains or losses on
investments held for trading are recognised in the
income statement.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or
determinable payments and fixed maturity are classified
as held-to-maturity when the group has the positive
intention and ability to hold to maturity. Investments
intended to be held for an undefined period are not
included in this classification. Investments that are
intended to be held-to-maturity, such as bonds, are
subsequently measured at amortised cost. This cost
is computed as the amount initially recognised minus
principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any
difference between the initially recognised amount
and the maturity amount. This calculation includes all
fees and points paid or received between parties to
the contract that are an integral part of the effective
interest rate, transaction costs and all other premiums
and discounts. For investments carried at amortised
cost, gains and losses are recognised in the income
statement when the investments are derecognised or
impaired, as well as through the amortisation process.
(iii) Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market. Such assets are
carried at amortised cost using the effective interest
method. Gains and losses are recognised in the
income statement when the loans and receivables
are derecognised or impaired, as well as through the
amortisation process.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative
financial assets that are designated as available-for-
sale or are not classified as any of the three preceding
categories. After initial recognition available-for-sale
investments are measured at fair value with gains or
losses being recognised as a separate component of
equity until the investment is derecognised or until the
investment is determined to be impaired, at which time
the cumulative gain or loss previously reported in equity
is recognised in the income statement.
The fair value of investments that are actively traded in
organised financial markets is determined by reference
to quoted market bid prices at the close of business
on the balance sheet date. For investments with no
active market, fair value is determined using valuation
techniques. Such techniques include using recent arm’s
length market transactions; reference to the current
market value of another instrument that is substantially
the same; discounted cash flow analysis and option
pricing models.
42
Breville Group Limited annual report 2013 Note 1. Summary of significant accounting policies continued
(q) Trade and other payables
Trade and other payables are carried at amortised
cost. They represent liabilities for goods and services
provided to the group prior to the end of the year that
are unpaid and arise when the group becomes obliged
to make future payments in respect of the purchase of
these goods and services. The amounts are unsecured
and are usually paid within 30 days of recognition.
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12 months
of the reporting date are recognised in trade and
other payables in respect of employees’ services
up to the reporting date. They are measured at the
amounts expected to be paid when the liabilities are
settled. Liabilities for non-accumulating sick leave are
recognised when the leave is taken and are measured
at the rates paid or payable.
Contributions to the defined contribution fund are
recognised as an expense as they become payable.
(r) Share-based payment transactions
Equity settled transactions
The group provides benefits to employees (including
key management personnel) in the form of share-based
payments, whereby employees render services in
exchange for shares or rights over shares (equity-settled
transactions). Refer to note 27 for details.
The charge to the income statement for the period is
the cumulative amount as calculated above less the
amounts already charged in previous periods. There is a
corresponding entry to equity.
Until an award has vested, any amounts recorded are
contingent and will be adjusted if more or fewer awards
vest than were originally anticipated to do so. Any
award subject to a market condition is considered to
vest irrespective of whether or not that market condition
is fulfilled, provided that all other conditions are satisfied.
If the terms of an equity-settled award are modified, as
a minimum an expense is recognised as if the terms had
not been modified. An additional expense is recognised
for any modification that increases the total fair value of
the share-based payment arrangement, or is otherwise
beneficial to the employee, as measured at the date of
modification.
If an equity-settled award is cancelled, it is treated as
if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised
immediately. However, if a new award is substituted for
the cancelled award and designated as a replacement
award on the date that it is granted, the cancelled and
new award are treated as if they were a modification
of the original award, as described in the previous
paragraph.
The dilutive effect, if any, of outstanding options is
reflected as additional share dilution in the computation
of diluted earnings per share (see note 4).
(s) Provisions
The cost of these equity-settled transactions with
employees is measured by reference to the fair value
of the equity instruments at the date at which they are
granted. The fair value has been determined by an
external valuer using a Black Scholes or binomial model,
further details of which are given in note 27.
Provisions are recognised when the group has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of
the amount of the obligation.
In valuing equity-settled transactions, no account
is taken of any performance conditions, other than
conditions linked to the price of the shares of Breville
Group Limited (market conditions), if applicable.
The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity, over
the period in which the performance and/or service
conditions are fulfilled (the vesting period), ending on
the date on which the relevant employees become fully
entitled to the award (the vesting date).
At each subsequent reporting date until vesting, the
cumulative charge to the income statement is the
product of (i) the grant date fair value of the award;
(ii) the current best estimate of the number of awards
that will vest, taking into account such factors as the
likelihood of employee turnover during the vesting
period and the likelihood of non-market performance
conditions being met; and (iii) the expired portion of the
vesting period.
Where the group expects some or all of a provision
to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a
separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision
is presented in the income statement net of any
reimbursement.
Provisions are measured as the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the balance sheet
date. If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects the risks specific to the liability. Where
discounting is used, the increase in the provision due to
the passage of time is recognised as a finance cost.
43
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 1. Summary of significant accounting policies continued
(s) Provisions continued
Onerous contracts
(u) Contributed equity
(i) Ordinary shares
An onerous contract is considered to exist when the
group has a contract under which the unavoidable
cost of meeting the contractual obligations exceed
the economic benefits estimated to be received.
Present obligations arising under onerous contracts are
recognised as a provision to the extent that the present
obligation exceeds the economic benefit estimated to
be received.
Warranties and faulty goods
Provision for warranty and faulty goods are recognised
at the date of sale of the relevant products, at the
group’s best estimate of the expenditure required to
settle the group’s liability.
Employee leave benefits - long service leave
The liability for long service leave is recognised as
a provision and measured as the present value of
expected future payments to be made in respect of
services provided by employees up to the reporting
date. Consideration is given to the expected future
wage and salary levels, experience of employee
departures and periods of service. Expected future
payments are discounted using appropriate market
yields at the reporting date to estimate the future
cash outflows.
Provision for restructure
The provision for restructure represents the value of
expected future payments to be made in respect of
business restructuring.
Provision for make-good
The provision for make-good represents the value of
expected future payments to be made in respect of
restoration of leased premises under contracts that
have clauses potentially requiring these premises to
be restored to their original condition at the conclusion
of the lease. The estimate may vary as a result of
negotiations between the parties at the end of the
lease term.
(t) Borrowings
All borrowings, including cash advance facilities, are
initially recognised at the fair value of the consideration
received less directly attributable transaction costs.
After initial recognition, borrowings, including cash
advance facilities, are subsequently measured at
amortised cost using the effective interest method.
Gains and losses are recognised in the income
statement when the liabilities are derecognised.
Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement of
the liability for at least 12 months after the balance
sheet date.
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from the proceeds.
(ii) Ordinary shares held by the Breville Group
Performance Share Plan Trust
Ordinary shares held by the Breville Group Performance
Share Plan Trust in order to fulfil its obligations under
the Breville Group Limited Performance Rights Plan are
deducted from equity. No gain or loss is recognised in
the income statement on the purchase of the group’s
equity instruments by the Breville Group Performance
Share Plan Trust.
(v) Revenue recognition
Revenue is recognised at the fair value of the
consideration received or receivable to the extent it is
probable that the economic benefits will flow to the
group and the revenue can be reliably measured. The
following specific recognition criteria must also be met
before revenue is recognised:
(i) Sale of goods
Revenue is recognised when the significant risks and
rewards of ownership of the goods have passed to the
buyer and can be measured reliably. Risks and rewards
are considered passed to the buyer at the earlier of
delivery of the goods or the transfer of legal title to the
buyer. Revenue is measured at the fair value of the
consideration received or receivable, net of returns,
allowances, trade discounts and volume rebates.
(ii) Commission income
Where an agency relationship exists, the amount
included in revenue represents the commission received
or receivable.
(iii) Finance revenue
Revenue is recognised as interest accrues using the
effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating
the interest income over the relevant period using the
effective interest, which is the rate that exactly discounts
estimated future cash receipts through the expected life
of the financial asset to the net carrying amount of the
financial asset.
(iv) Dividends
Revenue is recognised when the group’s right to receive
the payment is established.
(w) Borrowing costs
Borrowing costs are recognised as an expense
when incurred.
44
Breville Group Limited annual report 2013 Note 1. Summary of significant accounting policies continued
(x) Leases
The determination of whether an arrangement is or
contains a lease is based on the substance of the
arrangement and requires an assessment of whether
the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement
conveys a right to use the asset.
(i) Group as a lessee
Operating lease payments are recognised as an
expense in the income statement on a straight line basis
over the lease term. Any lease incentives are recognised
in the income statement as an integral part of the total
lease expense.
(ii) Group as a lessor
In some instances the group sub leases surplus
operating lease space. Rentals received under sub
leases are recognised as a reduction in operating lease
expense. Future rentals to be received under non-
cancellable sub leases are disclosed in note 24.
(y) Income tax and other taxes
(i) Current tax
Current tax assets and liabilities for the current and prior
periods are measured at the amounts expected to be
recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the
balance sheet date.
(ii) Deferred tax
Deferred income tax is provided on all temporary
differences between the tax bases of assets/liabilities
and their carrying amounts at balance sheet date for
financial reporting purposes.
Deferred income tax liabilities are recognised for all
taxable temporary differences except:
• when the deferred income tax liability arises from the
initial recognition of goodwill or of an asset or liability
in a transaction that is not a business combination
and that, at the time of the transaction, affects
neither the accounting profit nor taxable profit or
loss; or
• when the taxable temporary difference is associated
with investments in subsidiaries and the timing of
the reversal of the temporary difference can be
controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences and
the carry-forward of unused tax assets and unused tax
losses can be utilised, except:
• when the deferred income tax asset relating to
the deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting nor taxable profit or loss; or
• when the deductible temporary difference is
associated with investments in subsidiaries in
which case a deferred tax asset is only recognised
to the extent that it is probable that the temporary
difference will reverse in the foreseeable future and
taxable profit will be available against which the
temporary differences can be utilised.
The carrying amount of deferred income tax assets is
reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are
reassessed at each balance sheet date and are
recognised to the extent that it has become probable
that future taxable profit will allow the deferred tax asset
to be recovered.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Income taxes in relation to items recognised directly in
equity are recognised in equity and not in the income
statement.
Deferred tax assets and deferred tax liabilities are offset
only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred
tax assets and liabilities relate to the same taxable entity
and the same taxation authority.
(iii) Tax consolidation legislation
Breville Group Limited and its wholly-owned Australian
resident controlled entities (excluding the Breville Group
Performance Share Plan Trust) have implemented the
tax consolidated legislation as of 1 July 2003.
The head entity, Breville Group Limited and the
controlled entities in the tax consolidated group
continue 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 stand alone tax payer in its own right.
In addition to its own current and deferred tax amounts,
Breville Group Limited also recognises:
(a) 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; and
(b) assets or liabilities arising for Breville Group Limited
under the tax funding agreement as amounts
receivable from or payable to other entities
in the group.
45
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 1. Summary of significant accounting policies continued
(y) Income tax and other taxes continued
(iii) Tax consolidation legislation continued
(ab) New accounting standards and
interpretations
(i) Changes to accounting policy and disclosures
The accounting policies adopted are consistent with
those of the previous financial year. From 1 July 2012,
the Breville Group applied amendments in AASB 2011-9
Amendments to Australian Accounting Standards -
Presentation of Items of Other Comprehensive Income.
The change relates only to disclosures. Other new
standards that are applicable for the first time at
30 June 2013, did not affect Breville Group’s
accounting policies or any of the amounts
recognised in the financial statements.
(ii) Accounting Standards and Interpretations
issued but not yet effective
Relevant accounting standards that have been issued
but are not yet effective are outlined below:
Title
Summary
AASB 10
Consolidated
Financial
Statements
New control
model for
consolidation
AASB
11 Joint
arrangements
Assessment
of joint
control
Application
Date
Impact on
Group
01/01/13
None
01/01/13
None
AASB 12
Disclosure of
Interests in
Other Entities
Disclosure of
investments
01/01/13
None
AASB 13
Fair Value
Measurement
Fair value of
assets and
liabilities
01/01/13
None
AASB 119
Employee
Benefits
Accounting
for employee
benefits
01/01/13
Limited, the
group is still
assessing
the impact
of these
amendments
The Group does not expect to adopt the new standards
before their operative date. They would be first applied
in the financial statements for the annual reporting
period ending 30 June 2014.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as
amounts receivable from or payable to other entities in
the group.
(iv) Other taxes
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST) or value
added tax (VAT) except:
• where the GST/VAT incurred on the purchase of
goods and services is not recoverable from the
taxation authority, in which case the GST/VAT is
recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable;
and
•
receivables and payables, which are stated with the
applicable amount of GST/VAT included.
The net amount of GST/VAT recoverable/payable is
included in receivables/payables in the statement of
financial position.
Cash flows are included in the cash flow statement on
a gross basis and the GST/VAT component of cash
flows arising from investing and financing activities are
classified as operating cash flows.
Commitments and contingencies are disclosed net of
recoverable/payable GST/VAT.
(z) Earnings per share
Basic earnings per share is calculated as net profit
attributable to members of the parent, adjusted to
exclude any costs of servicing equity (other than
dividends), divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit or
loss attributable to members of the parent, adjusted for:
• cost of servicing equity (other than dividends);
•
the after tax effect of dividends and interest
associated with dilutive potential ordinary shares
that have been recognised as expenses; and
• other non-discretionary changes in revenues or
expenses during the period that would result from
the dilution of potential ordinary shares;
divided by the weighted average number of ordinary
shares and dilutive potential ordinary shares, adjusted
for any bonus element.
(aa) Comparatives
Where necessary, comparatives have been reclassified
and repositioned for consistency with current year
disclosures.
46
Breville Group Limited annual report 2013 Note
30 June 2013
$’000
30 June 2012
$’000
Note 2. Revenue and expenses
(a) Revenue
Sale of goods
Commission income
Total revenue
(b) Cost of sales
Costs of inventories recognised as an expense [includes write-
down of inventory to net realisable value (note 8)]
Costs of delivering goods to customers
Warranty provision
Total cost of sales
(c) Other income
Other income
Total other income
(d) Depreciation and amortisation expense
Depreciation – plant and equipment
Amortisation – computer software
Amortisation – development costs
Total depreciation and amortisation expense
11
12(b)
2(h)
(e) Lease payments and other expenses included
in income statement
Included in premises, lease & utilities expenses:
• Minimum lease payments – operating lease (excludes onerous
leases)
Included in other income/expenses:
• Net (profit)/loss on disposal of plant and equipment
• Doubtful debts charge/(reversal)
• Bad debts written off
• Net foreign exchange loss/(gain)
• Other product related costs
(f) Employee benefits expenses
Wages & salaries, leave and other employee related benefits
Defined contribution plan expense
Share-based payments expense
Total employee benefits expenses
469,476
17,071
486,547
272,121
19,809
16,475
308,405
967
967
2,127
235
4,890
7,252
408,476
19,464
427,940
237,016
17,234
13,054
267,304
449
449
2,170
241
4,476
6,887
8,235
8,983
(7)
124
-
113
2,339
47,518
2,000
1,332
50,850
494
(157)
402
(182)
1,727
44,097
2,046
823
46,966
47
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note
30 June 2013
$’000
30 June 2012
$’000
Note 2. Revenue and expenses continued
(g) Finance costs/(income)
Finance costs paid or payable on borrowings and bank overdrafts:
- interest
- other borrowing costs
Finance costs
Finance revenue
Interest rate swap gain
Total net finance costs
(h) Research and development costs
Amortisation of previously capitalised development costs included
in amortisation expense
2(d)
Research and development costs charged directly to the income
statement
Total research and development costs
Note 3. Income tax
The major components of income tax expense are:
Income statement
Current income tax
Current income tax charge
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to the origination and reversal of temporary differences
Total income tax expense reported in the income statement
Statement of changes in equity
Deferred income tax related to items charged or credited
directly to equity
Foreign currency translation differences
Employee equity benefits reserve
Net gain/(loss) on revaluation of cash flow hedges
Income tax (benefit)/expense reported in equity
A reconciliation between tax expense and the product of
accounting profit before income tax multiplied by the parent
entity’s applicable income tax rate is as follows:
Profit before income tax
At the parent entity’s statutory income tax rate of 30% (2012: 30%)
• adjustments in respect of current income tax of previous years
• effect of different rates of tax on overseas income
• expenditure not allowable for income tax purposes
• other
571
1,085
1,656
(1,328)
-
328
4,890
7,554
12,444
22,757
(20)
(1,185)
21,552
(592)
(683)
404
(871)
71,284
21,385
(20)
(606)
636
157
412
1,586
1,998
(984)
(101)
913
4,476
6,613
11,089
20,075
(156)
(1,234)
18,685
(197)
(276)
1,089
616
64,667
19,400
(156)
(719)
203
(43)
Income tax expense reported in the income statement
21,552
18,685
48
Breville Group Limited annual report 2013 Note 3. Income tax continued
Deferred income tax
Deferred income tax at 30 June relates to the
following:
Deferred tax liabilities
Brand names
Development costs
Foreign currency translation reserve
Gross deferred income tax liabilities
Deferred tax assets
Losses available for offset against future taxable
income
Provisions and accruals
Unrealised foreign exchange gains and losses
Employee benefits
Revaluation of inventories
Cash flow hedge reserve
Employee equity benefits reserve
Other
Gross deferred income tax assets
Deferred tax income/(expense)
Current income tax
Current tax asset
Current tax liabilities
Statement of financial
position
Income statement
30 June 2013
$’000
30 June 2012
$’000
30 June 2013
$’000
30 June 2012
$’000
1,875
3,852
155
5,882
180
7,779
-
3,517
678
(647)
1,428
1,155
14,090
1,875
3,957
419
6,251
-
7,686
(85)
2,831
748
(157)
404
1,035
12,462
-
105
-
180
93
85
686
(70)
118
522
(534)
-
15
-
-
(80)
55
981
244
50
(233)
202
1,185
1,234
30 June 2013
$’000
30 June 2012
$’000
804
9,102
476
9,580
At 30 June 2013, there is no recognised or unrecognised deferred income tax liability (2012: $nil) for taxes that would
be payable on the unremitted earnings of certain of the group’s subsidiaries, as the group has no current intention of
distributing existing retained earnings in jurisdictions where liability for additional taxation exists should such amounts
be remitted.
49
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 3. Income tax continued
Tax consolidation
Breville Group Limited and its 100% owned Australian resident subsidiaries (excluding the Breville Group Performance
Share Plan Trust) have formed a tax consolidated group with effect from 1 July 2003.
The head entity, Breville Group Limited, and each subsidiary in the tax consolidated group are required 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 stand alone tax payer in its own right.
In addition to its own current and deferred tax amounts, Breville Group Limited also recognises:
(a) 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; and
(b) assets or liabilities arising for Breville Group Limited under the tax funding agreement as amounts receivable from
or payable to other entities in the group.
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement
supports the calculation of current tax liabilities (and assets) and deferred tax assets/liabilities on a stand-alone
basis. Calculation is performed in accordance with AASB 112 Income Tax. The allocation of taxes under the tax
funding agreement is recognised as an increase/decrease in the subsidiaries’ intercompany accounts with the tax
consolidated group head company, Breville Group Limited.
No amounts have been recognised in the financial statements in respect of the tax sharing agreement should the
head entity default on its tax payment obligations on the basis that the possibility of default is remote.
30 June 2013
$’000
30 June 2012
$’000
Note 4. Earnings per share
The following reflects the income and share data used in the basic and
diluted earnings per share computations:
Earnings used in calculating basic and diluted earnings per share:
Net profit attributable to ordinary equity holders of Breville Group
Limited
49,732
45,982
Thousands
Thousands
Weighted average number of shares:
Weighted average number of ordinary shares for basic earnings
per share
130,095
130,077
Effect of dilution:
• share options
-
12
Weighted average number of ordinary shares adjusted for the effect
of dilution
130,095
130,089
Weighted average number of exercised, forfeited or expired
potential ordinary shares included in diluted earnings per share
-
12
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change
the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of
completion of these financial statements.
50
Breville Group Limited annual report 2013 Note
30 June 2013
$’000
30 June 2012
$’000
(i)
(i)
Note 5. Dividends
(a) Dividends on ordinary shares declared and paid during
the year:
Final franked dividend for the year ending 30 June 2012 of
11.5 cents per share (2012: final fully franked dividend for
2011 of 7.0 cents per share)
• Paid in cash
Final dividend
Partially franked interim dividend for the year ending 30
June 2013 of 14.0 cents per share (9.5 cents franked)
(2012: fully franked interim dividend for 2012 of 12.5 cents
per share)
• Paid in cash
Interim dividend
Total partially franked dividends declared and paid during
the year of 25.5 cents per share (21.0 cents franked)
(2012: fully franked 19.5 cents per share)
(i) Total dividends paid in cash
Total dividends
(b) Dividends on ordinary shares proposed and not
recognised as a liability:
Final fully franked dividend for 2013 of 12.0 cents per share
(2012: final fully franked dividend of 11.5 cents per share)
(c) Franking credit balance
The amount of franking credits in the parent available for the
subsequent year are:
• franking account balance as at the end of the year at 30%
(2012: 30%)
• franking credits that will arise from the payment of income tax
payable as at the end of the year
The amount of franking credits in the parent available for future
reporting periods:
• impact on the franking account of dividends proposed or
declared before the financial report was authorised for issue
but not recognised as distribution to equity holders during the
period
Total franking credit balance
The tax rate at which dividends are franked is 30% (2012: 30%).
14,961
14,961
9,107
9,107
18,213
18,213
16,262
16,262
33,174
33,174
25,369
25,369
15,611
14,961
2,022
6,914
8,936
1,674
5,550
7,224
(6,691)
2,245
(6,412)
812
51
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 6. Cash and cash equivalents
Cash at bank and on hand
(a)
68,130
53,095
Note
30 June 2013
$’000
30 June 2012
$’000
Notes:
(a) Cash at bank earns interest at floating rates based on daily
bank deposit rates.
(b) At 30 June 2013, the Group had available $30,128,000 (2012:
$28,424,000) of undrawn committed borrowing facilities in
respect of which all conditions precedent had been met.
(c) The fair value of cash and cash equivalents is $68,130,000
(2012: $53,095,000).
(a) Reconciliation of cash flow statement:
For the purposes of the cash flow statement, cash and cash
equivalents comprise the following at 30 June:
Cash and cash equivalents
Bank overdraft
Total cash and cash equivalents, net
16
68,130
(1,580)
66,550
53,095
(13)
53,082
(b) Reconciliation of net profit after tax for the
year to net cash flows from operating activities
Net profit for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Net (gain)/loss on disposal of plant and equipment
Net fair value change on derivatives
Foreign exchange losses/(gains)
Changes in assets and liabilities:
(Increase)/decrease in:
Trade and other receivables
Inventories
Prepayments
Other current assets
Non-current assets
Increase/(decrease) in:
Current liabilities
Non-current liabilities
Net cash flows from operating activities
(c) Disclosure of financing facilities
Refer to note 16.
52
49,732
45,982
7,252
1,332
(7)
(8)
113
(13,890)
(19,310)
659
(385)
(997)
19,580
(7,115)
36,956
6,887
823
494
(101)
(182)
(5,372)
(3,174)
(1,783)
1,131
(1,217)
7,196
427
51,111
Breville Group Limited annual report 2013 Note 7. Trade and other receivables
Current
Trade receivables
Allowance for uncollectible receivables
Trade receivables, net
Other receivables
Total current trade and other receivables
Note
30 June 2013
$’000
30 June 2012
$’000
(a)
(b)
88,865
(291)
88,574
2,196
90,770
73,659
(470)
73,189
390
73,579
Notes:
(a) Trade receivables are non-interest bearing and are generally on 30-60 day terms. An allowance for uncollectible
receivables is made when there is objective evidence on a case by case basis that a trade receivable is impaired.
A charge of $124,000 (2012: $157,000 reversal) has been recognised by the group as an expense in ‘other
expenses’ for the current year for specific debtors for which such evidence exists. The amount of the allowance/
impairment loss has been measured as the difference between the carrying amount of the trade receivables and
the estimated future cash flows expected to be received from the relevant debtors.
Movements in the allowances for uncollectible receivables are as follows:
Balance at beginning of year
Charge/(reversal) for the year
Net foreign exchange
Amounts utilised
Balance at end of year
30 June 2013
$’000
30 June 2012
$’000
470
124
20
(323)
291
614
(157)
2
11
470
At 30 June 2013 an ageing analysis of those trade receivables which are past due but not impaired are as follows:
1 – 30 days overdue
31 – 60 days overdue
61+ days overdue
Total past due but not impaired
30 June 2013
$’000
30 June 2012
$’000
8,682
149
8
8,839
18,624
262
10
18,896
Trade receivables past due but not impaired amount to $8,839,000 (2012: $18,896,000). Of this balance,
$6,851,000 (2012: $15,565,000) is covered by insurance to be used in the event of default of payment. In all
instances each operating unit has been in contact with the relevant debtor and is satisfied that payment will be
received in full.
(b) Non-trade other receivables are non-interest bearing and have repayment terms between 30 and 60 days.
Balances within other receivables do not contain impaired assets and are not past due. It is expected that these
balances will be received when due.
The carrying value and estimated net fair values of the trade and other receivables is assumed to approximate
their fair value, being the amount at which the asset could be exchanged between willing parties.
Details regarding the effective interest rate and credit risk of current receivables are disclosed in note 23.
53
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note
30 June 2013
$’000
30 June 2012
$’000
Note 8. Inventories
Finished goods (at lower of cost and net realisable value)
(a)
Stock in transit (at cost)
Total inventories
Notes:
68,036
15,715
83,751
50,093
11,503
61,596
(a) Total net finished goods provision movements recognised in the income statement totalled a $595,000 expense (2012:
$304,000 expense) for the group. This net expense (2012: expense) is included in the cost of inventories line in the cost
of sales.
Note 9. Other financial assets
Derivative assets
Forward exchange contracts – cash flow hedges
Total other financial assets
Notes:
Note
30 June 2013
$’000
30 June 2012
$’000
2,110
2,110
479
479
Derivative assets represent the fair value receivable arising from forward exchange contracts disclosed in note 18.
Note
30 June 2013
$’000
30 June 2012
$’000
Note 10. Other assets
Insurance claim receivable
Prepayments
Total other assets
Note 11. Plant and equipment
At the beginning of the year
At cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
At the end of the year
At cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
(i) Reconciliation of the carrying amount
Carrying amount at the beginning of year
Additions
Disposals
Depreciation
Net exchange difference
Carrying amount at the end of year
54
-
2,833
2,833
30,948
(27,073)
3,875
25,896
(22,157)
3,739
3,875
1,901
(56)
(2,127)
146
3,739
1,777
1,521
3,298
30,213
(25,117)
5,096
30,948
(27,073)
3,875
5,096
1,454
(517)
(2,170)
12
3,875
(i)
(i)
2(d)
Breville Group Limited annual report 2013 Note 12. Intangible assets – other
Development costs
Computer software
Brand names
Total intangible assets - other
Notes:
Note
30 June 2013
$’000
30 June 2012
$’000
(a)
(b)
(c)
12,840
3,020
31,803
47,663
13,190
305
31,803
45,298
Development costs are internally generated and have been capitalised at cost. This intangible asset has been assessed as having
a finite life and is amortised using the straight line method over a maximum period of 3 years. If an impairment indication arises, the
recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the
carrying amount.
Computer software is purchased computer software that has been capitalised into other intangible assets at cost.
Brand names include intangible assets acquired through previous business combinations. These intangible assets have been
determined to have indefinite useful lives as the economic benefits which are obtained from them are expected to be ongoing. The
cost model is utilised for their measurement. These assets were tested for impairment as at 30 June 2013 (see note 14).
Note
30 June 2013
$’000
30 June 2012
$’000
(a) Development costs
At the beginning of the year
At cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
At the end of the year
At cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
(i) Reconciliation of the carrying amount
Carrying amount at the beginning of year
Additions – internal development
Amortisation
Carrying amount at the end of year
(b) Computer software
At the beginning of the year
At cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
At the end of the year
At cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
31,843
(18,653)
13,190
36,383
(23,543)
12,840
13,190
4,540
(4,890)
12,840
3,695
(3,390)
305
5,631
(2,611)
3,020
27,418
(14,176)
13,242
31,843
(18,653)
13,190
13,242
4,424
(4,476)
13,190
3,481
(3,109)
372
3,695
(3,390)
305
(i)
(i)
2(d)
(i)
(i)
55
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 12. Intangible assets – other continued
(b) Computer software continued
(i) Reconciliation of the carrying amount
Carrying amount at the beginning of year
Additions
Amortisation
Net exchange difference
Carrying amount at the end of year
(c) Brand names
At the beginning and at the end of the year
Net carrying amount
Note 13. Intangible assets – goodwill
At the beginning and at the end of the year
Net carrying amount
Note
30 June 2013
$’000
30 June 2012
$’000
2(d)
305
2,943
(235)
7
3,020
372
170
(241)
4
305
31,803
31,803
24,558
24,558
56
Breville Group Limited annual report 2013
Note 14. Impairment testing of goodwill and intangibles with indefinite lives
Goodwill and brand names acquired through business combinations have been allocated to cash generating units for
impairment testing as follows:
• Breville Group Limited
• Breville Pty Limited
• North America Distribution
• New Zealand Distribution
•
International Distributors
In all cases the recoverable amount of the individual cash generating unit has been determined based on a value in
use calculation using cash flow projections based on financial budgets approved by the Board.
The discount rate applied to cash flow projections is 13.4% (2012: 16.6%). Cash flows beyond the approved 30 June
2013 budgets are extrapolated using a 2% growth rate (2012: 2.0%), which is the same as the long-term average
growth rate for the wholesale consumer products industry generally.
Management has performed sensitivity testing by cash generating unit (CGU), based on assessing the effect of
changes in revenue growth rates as well as discount rates. Management consider any reasonable likely combination
of changes in these key assumptions would not result in the carrying value of the goodwill exceeding the recoverable
amount.
Note
30 June 2013
$’000
30 June 2012
$’000
Carrying amount of goodwill and brand names
allocated to each of the cash generating units
Breville Group Limited
- brand names with indefinite useful lives
Breville Pty Limited
- goodwill
- brand names with indefinite useful lives
North America Distribution
- goodwill
New Zealand Distribution
- goodwill
International Distributors
- goodwill
All cash generating units
- goodwill
- brand names with indefinite useful lives
Total carrying amount of goodwill and brand names
13
12(c)
13,800
13,800
20,277
18,003
38,280
20,277
18,003
38,280
1,764
1,764
276
276
2,241
56,361
24,558
31,803
56,361
2,241
56,361
24,558
31,803
56,361
Key assumptions used in value in use calculations for the cash generating units for 30 June 2013 and
30 June 2012
The following describes each key assumption on which management has based its cash flow projections when
determining the value in use of the cash generating units.
• Budgeted gross margins – the basis used to determine the value assigned to the budgeted gross margins is
based on past performance and expectations for the future.
• Bond rates – the yield on a ten-year government bond rate at the beginning of the budgeted year is used.
57
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 15. Trade and other payables
Current
Trade payables – unsecured
Employee benefits
Total current trade and other payables
Note
30 June 2013
$’000
30 June 2012
$’000
(a)
28
76,574
4,357
80,931
59,929
3,750
63,679
Terms and conditions relating to the above financial instruments:
(a) Trade payables are non-interest bearing and are normally settled on 30 day terms.
The carrying value and estimated net fair values of the trade and other payables is assumed to approximate their
fair value, being the amount at which the liability could be settled in a current transaction between willing parties.
Details regarding interest rate, foreign exchange and liquidity risk exposure are disclosed in note 23.
Note 16. Borrowings
Current
Bank overdrafts – on demand
Other loans:
- Cash advance facilities
- Term loan
Total current borrowings
Non-current
Other loans:
- Cash advance facilities
- Term loan
Total non-current borrowings
Terms and conditions
Note
30 June 2013
$’000
30 June 2012
$’000
6(a)
1,580
11,998
52
13,630
10,943
127
11,070
13
-
44
57
5,859
160
6,019
The group operates under one primary facility with Australia and New Zealand Banking Group Limited (ANZ) enabling
all jurisdictions to borrow under one global facility. The facility agreement has a number of financial covenants all of
which have been fully complied with as at the years ended 30 June 2013 and 30 June 2012.
The Australia and New Zealand financing facilities are secured by a first ranking fixed and floating registered charge
(or general security for Breville New Zealand Limited), over all the assets and undertakings of Thebe International Pty
Limited, Breville Pty Limited, Breville Holdings Pty Limited, Breville R&D Pty Limited and Breville New Zealand Limited
and are guaranteed by Breville Group Limited. The Hong Kong facility is secured via a security agreement over
the assets and undertakings of HWI International Limited. The day to day Canadian transactional banking facilities
(HSBC) are secured by a standby letter of credit from ANZ (NY). Breville Group Limited has issued a corporate
guarantee in favour of the local bank (HSBC) which provides the day to day US transactional banking facilities. A
security agreement in favour of ANZ is in existence over the assets and undertakings of Breville USA, Inc.
Borrowings may include Australian dollar, US dollar, Canadian dollar, British pounds and New Zealand dollar
denominated amounts.
Fair value
The carrying value and estimated net fair values of the borrowings held with banks is assumed to approximate their
fair value, being the amount at which the liability could be settled in a current transaction between willing parties.
Details regarding interest rate, foreign exchange and liquidity risk are disclosed in notes 18 and 23.
58
Breville Group Limited annual report 2013 Note
30 June 2013
$’000
30 June 2012
$’000
Note 16. Borrowings continued
Financing facilities available
At reporting date, the following financial facilities have been
negotiated and were available to the group:
Facilities used at the reporting date
Facilities unused at the reporting date
Total facilities
(a) Facilities used at the reporting date:
- Non-current cash advance facilities
- Current cash advance facilities
- Trade finance facilities
- Overdraft facilities
- Business transactions facilities
- Indemnity/guarantee facilities
- Documentary credit facilities
Facilities used as at reporting date
(b) Facilities unused at the reporting date:
- Non-current cash advance facilities
- Current cash advance facilities
- Trade finance facilities
- Overdraft facilities
- Business transactions facilities
- Indemnity/guarantee facilities
- Documentary credit facilities
Facilities unused as at reporting date
(c) Total facilities:
- Non-current cash advance facilities
- Current cash advance facilities
- Trade finance facilities
- Overdraft facilities
- Business transactions facilities
- Indemnity/guarantee facilities
- Documentary credit facilities
Total facilities
Seasonal facility
(a)
(b)
(c)
27,967
34,859
62,826
10,943
11,998
-
1,580
497
2,093
856
27,967
5,200
11,805
2,080
11,043
497
713
3,521
34,859
16,143
23,803
2,080
12,623
994
2,806
4,377
62,826
8,764
32,170
40,934
5,859
-
-
13
488
1,756
648
8,764
8,709
4,395
2,882
12,438
488
-
3,258
32,170
14,568
4,395
2,882
12,451
976
1,756
3,906
40,934
Under the primary facility with ANZ, the group also has a seasonal facility available between October 2013 - January
2014 (2012: October 2012 – January 2013) of $10,000,000 (2012: $26,000,000) and a seasonal facility available
between October 2013 and March 2014 of $7,113,154 (2012: $nil). These facilities are under the same terms and
conditions as described above.
Borrowings may include Australian dollar, US dollar, Canadian dollar, British pounds and New Zealand dollar
denominated amounts.
59
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note
30 June 2013
$’000
30 June 2012
$’000
Note 17. Provisions
Current
Warranty and faulty goods
Employee benefits – long service
Restructure provision
Provision for make good
Onerous lease contracts
Total current provisions
Non-current
Employee benefits – long service
Provision for make-good
Onerous lease contracts
Total non-current provisions
28
(a)
28
(a)
6,243
1,502
1,112
396
5,123
14,376
1,308
-
324
1,632
Warranty
and faulty
goods
$’000
Employee
benefits -
long service
$’000
Provision for
restructure
$’000
Provision
for make-
good
$’000
Onerous
lease
contracts
$’000
4,495
1,597
-
-
1,028
7,120
880
935
6,766
8,581
Total
$’000
(a) Movement in provisions
Carrying amount at the beginning of the year:
Current
Non-current
Total
4,495
-
4,495
1,597
880
2,477
-
-
-
-
935
935
1,028
6,766
7,794
7,120
8,581
15,701
Movement in provisions during the year:
Additional provisions made in
the year
Amounts utilised /reversed
during the year
Reclassified to other creditors
(lease incentive)
Net exchange differences
Net movement
16,475
442
1,112
-
(231)
17,798
(15,090)
(124)
(539)
(1,529)
(17,282)
-
363
1,748
-
-
(615)
28
(615)
406
307
1,112
(539)
(2,347)
-
-
-
Carrying amount at the end of the year:
Current
Non-current
Total
6,243
-
6,243
Warranty and faulty goods
1,112
-
1,112
396
-
396
5,123
324
14,376
1,632
5,447
16,008
-
15
333
1,502
1,308
2,810
A provision for warranty and faulty goods represents the present value of the best estimate of the future sacrifice
of economic benefits expected that will be required for warranty and faulty goods claims on products sold. This
estimate is based on the historical trends experienced on the level of repairs and returns. It is expected that these
costs will be incurred in the next year. Assumptions used to calculate the provision for warranty and faulty goods
were based on the level of warranty and faulty goods claims experienced during the last year.
60
Breville Group Limited annual report 2013
Note 17. Provisions continued
Employee benefits – long service
The provision for employee benefits represents the present value of expected future payments to be made in respect
of services provided by employees up to the reporting date. Consideration is given to the expected future wage and
salary levels, experience of employee departures and periods of service. Expected future payments are discounted
using appropriate market yields at the reporting date to estimate the future cash outflows.
Provision for restructure
The provision for restructure represents the value of expected future payments to be made in respect of the
restructure of the Canadian business unit following the cessation of the Keurig distribution agreement in Canada.
Provision for make-good
The provision for make-good represents the value of expected future payments to be made in respect of restoration
of leased premises under contracts that have clauses potentially requiring these premises to be restored to their
original condition at the conclusion of the lease. The estimate may vary as a result of negotiations between the parties
at the end of the lease term.
Onerous lease contracts
The provision for onerous lease contracts represents the present value of the future lease payments that the
consolidated entity is presently obligated to make in respect of onerous lease contracts under non-cancellable
operating lease agreements, less revenue expected to be earned on the lease including estimated future sub-lease
revenue, where applicable. The estimate may vary as a result of changes in the utilisation of the leased premises and
sub-lease arrangements where applicable.
Note
30 June 2013
$’000
30 June 2012
$’000
Note 18. Other financial liabilities
Derivative liabilities
Forward exchange contracts – cash flow hedges
(i)
Total other financial liabilities
Instruments used by the group
13
13
17
17
Derivative financial instruments are used by the group in the normal course of business in order to hedge exposures
to fluctuations in interest and foreign exchange rates.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on
observable market data.
The fair value of all derivative assets and liabilities have been determined under Level 2.
61
Breville Group Limited annual report 2013
Notes to the financial statements
for the year ended 30 June 2013
Note 18. Other financial liabilities continued
(i) Forward exchange contracts - cash flow hedges
The majority of the group’s inventory purchases from suppliers are denominated in US dollars (US$). In order to
manage exchange rate movements and to manage the inventory costing process, the group has entered into forward
exchange contracts to purchase US$. These contracts are hedging highly probable forecasted purchases and highly
probable forecasted payments and they are timed to mature when settlement of purchases or the payments are
scheduled to be made.
The cash flows are expected to occur between 0-12 months from 1 July 2013 (2012: 0-5 months) and the cost of
sales and where applicable the sale of goods within the income statement will be affected in the next financial year as
the inventory is sold or the payments are made. At balance date, the details of outstanding contracts are:
30 June 2013
30 June 2012
Average
exchange
rate
A$’000
Average
exchange
rate
A$’000
Buy US$ / Sell Australian $
Buy US$ - maturity 0-12 months (2012: 0-5 months)
30,631
0.9549
13,184
1.0349
Buy US$ / Sell New Zealand $
Buy US$ - maturity 0-5 months (2012: 0-5 months)
2,494
0.8149
2,832
0.8072
Buy US$ / Sell Canadian $
Buy US$ - maturity 0-5 months (2012: 0-5 months)
8,514
0.9772
24,414
0.9898
Buy US$ / Sell British £
Buy US$ - maturity 0-5 months (2012: 0 months)
3,095
1.5161
-
-
The cash flow hedges of the forecast purchases and forecast payments are considered to be highly effective and any
gain or loss on the contracts is taken directly to equity. Where the contracts are hedging highly probable forecasted
inventory purchases, when the inventory is received the amount recognised in equity is adjusted to the inventory
account in the balance sheet. Where the contracts are hedging highly probable forecasted payments, when the
payments are made the amount recognised in equity is adjusted to the income statement. During the year $257,000
(2012: $3,122,000) was charged to inventory and $1,370,000 was credited (2012: $993,000) to equity in respect of
the group.
62
Breville Group Limited annual report 2013 Note
30 June 2013
$’000
30 June 2012
$’000
Note 19. Issued capital
Ordinary shares – authorised, issued and fully paid
Ordinary shares – held by the Breville Group Performance Share
Plan Trust
Total contributed equity
(a)
(b)
140,050
140,050
(1,682)
138,368
(1,290)
138,760
Ordinary shares are held by the Breville Group Performance Share Plan Trust in order to fulfil its obligations under the
Breville Group Limited Performance Rights Plan. The ordinary shares held by the Breville Group Performance Share
Plan Trust are yet to be allocated to LTI participants. They will be allocated to participants once performance rights
vest and they are exercised. The ordinary shares held by the Breville Group Performance Share Plan Trust have the
right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds
from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. The ordinary
shares held by the Breville Group Performance Share Plan Trust entitle their holder to one vote, either in person or by
proxy, at a meeting of the company. Details are provided in note 25(b) and note 27.
30 June 2013
30 June 2012
Note
Number of
shares
$’000
Number of
shares
$’000
(a) Movements in ordinary
issued shares:
Beginning of the year
130,095,322
140,050
129,995,322
139,938
Movements during the year
Exercise of options - cash
End of the year
(i)
-
-
100,000
112
130,095,322
140,050
130,095,322
140,050
(i) During the year nil options were exercised (2012: 100,000) resulting in the issue of ordinary shares. The average value placed
on these issues was $ nil per share (2012: $1.12). Details are provided in note 27.
63
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
30 June 2013
30 June 2012
Note
Number of
shares
$’000
Number of
shares
$’000
Note 19. Issued capital continued
(b) Movements in ordinary
shares held by the Breville Group
Performance Share Plan Trust:
Beginning of the year
(303,000)
(1,290)
(1,282,000)
(4,296)
Movements during the year
Transferred to participants of the Breville
Group Limited Performance Rights Plan
Ordinary shares acquired by the Breville
Group Performance Share Plan Trust
during the year - cash
End of the year
(i)
(ii)
337,500
1,491
1,282,000
4,296
(283,500)
(249,000)
(1,883)
(1,682)
(303,000)
(303,000)
(1,290)
(1,290)
(i) During the year the Trustee of the Breville Group Performance Share Plan Trust transferred 337,500 ordinary company shares
(2012: 1,282,000) to participants in order to fulfil its obligations under the Breville Group Limited Performance Rights Plan.
(ii) During the year the Trustee of the Breville Group Performance Share Plan Trust acquired 283,500 ordinary shares (2012:
303,000) in order to fulfil its obligations under the Breville Group Limited Performance Rights Plan. The average value placed on
these acquisitions was $6.64 per share (2012: $4.26). Details are provided in note 25(b) and note 27.
(c) Performance rights over ordinary shares:
The company has a share-based payment performance rights scheme under which rights to subscribe for the
company’s shares have been granted to certain executives and other employees (refer note 27). At the end of
the year (excluding the 283,500 ordinary shares held by the Breville Group Performance Share Plan Trust (2012:
303,000), there were 841,234 (2012: 727,000) potential unissued ordinary shares in respect of performance rights
that were outstanding.
64
Breville Group Limited annual report 2013 Note 20. Reserves
Foreign currency translation reserve
Employee equity benefits reserve
Cash flow hedge reserve
Total reserves
(a) Movement in foreign currency translation reserve
Balance at beginning of year
Currency translation differences
Tax effect of foreign currency translation reserve
Balance at end of year
(b) Movement in employee equity benefits reserve
Balance at beginning of year
Share-based payments expense
Transferred to participants of the performance rights plan
Tax effect of employee equity benefits reserve
Balance at end of year
(c) Movement in cash flow hedge reserve
Balance at beginning of year
Net gains on cash flow hedges
Tax effect of net (gains) on cash flow hedges
Balance at end of year
Nature and purpose of reserves
Foreign currency translation reserve
Note
30 June 2013
$’000
30 June 2012
$’000
(a)
(b)
(c)
(9,022)
377
1,480
(7,165)
(14,893)
5,279
592
(9,022)
(147)
1,332
(1,491)
683
377
257
1,627
(404)
1,480
(14,893)
(147)
257
(14,783)
(16,046)
956
197
(14,893)
3,050
823
(4,296)
276
(147)
(1,890)
3,236
(1,089)
257
This reserve is used to record exchange differences arising from the translation of the financial statements of foreign
subsidiaries.
Employee equity benefits reserve
This reserve is used to record the value of equity benefits provided to employees as part of their remuneration. Refer
to note 27 for further details of these plans.
Cash flow hedge reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined
to be an effective hedge.
65
Breville Group Limited annual report 2013
Notes to the financial statements
for the year ended 30 June 2013
Note
30 June 2013
$’000
30 June 2012
$’000
Note 21. Retained earnings
Balance at beginning of the year
53,435
32,822
Net profit for the year attributable to members of Breville Group
Limited
Dividends
Balance at end of the year
Note 22. Operating segments
5(a)
49,732
(33,174)
69,993
45,982
(25,369)
53,435
The group has identified its operating segments based on the internal reports that are reviewed by the chief operating
decision makers (group chief executive officer and board of directors) in assessing performance and in determining
the allocation of resources.
The Australia Distribution, North America Distribution and New Zealand Distribution operating segments distribute
primarily small electrical appliances to retail customers in their geographical locations. The International Distributors
operating segment distributes primarily small electrical appliances to distributors in international locations.
Other is not an operating segment and comprises the short term incentive plan and group’s shared service facility,
including the group’s design and development, global marketing and supply chain functions. During the current year,
the costs associated with the establishment of the new UK business which launched late in the current financial year
and the trading results of that business from the launch date, were also allocated to this segment.
The accounting policies of the operating segments are the same as those described in note 1.
Transfer prices between operating segments are set at arm’s length basis in a manner similar to transactions with
third parties. The segment revenue and segment result include certain transfers between operating segments. Those
transfers are eliminated on consolidation.
Segment profit before income tax excludes certain transfer prices and includes an allocation of head office costs.
The following tables present the revenue and profit information regarding operating segments for the years ended
30 June 2013 and 30 June 2012.
Year ended 30 June 2013
Revenue
Sale of goods
Commission income
Inter-segment revenue
Australia
Distribution
$’000
North
America
Distribution
$’000
New
Zealand
Distribution
$’000
International
Distributors
$’000
Other
$’000
Total
$’000
211,641
175,299
29,312
51,106
2,118
469,476
-
250
17,071
-
-
-
-
7,179
58,285
-
22,696
24,814
Total segment revenue
211,891
192,370
29,312
Inter-segment elimination
Total consolidated revenues
Segment results
EBITDA
24,186
38,479
4,110
15,688
Depreciation & amortisation
(931)
(600)
(20)
(8)
17,071
30,125
516,672
(30,125)
486,547
78,864
(7,252)
71,612
1,328
(1,656)
(3,599)
(5,693)
(9,292)
22
(315)
EBIT
Finance revenue
Finance costs
23,255
37,879
4,090
15,680
1,159
(179)
40
(898)
98
(139)
4,049
9
(125)
15,564
(9,585)
71,284
Profit before income tax
24,235
37,021
Other segment information
Capital expenditure
843
262
5
3
788
1,901
66
Breville Group Limited annual report 2013 Note 22. Operating segments continued
Australia
Distribution
$’000
North
America
Distribution
$’000
New Zealand
Distribution
$’000
International
Distributors
$’000
201,726
132,705
26,768
47,277
-
231
19,464
-
-
-
-
5,980
53,257
Other
$’000
Total
$’000
-
-
19,987
19,987
408,476
19,464
26,198
454,138
(26,198)
427,940
Year ended 30 June 2012
Revenue
Sale of goods
Commission income
Inter-segment revenue
Inter-segment elimination
Total consolidated revenues
Segment results
EBITDA
Total segment revenue
201,957
152,169
26,768
21,325
34,702
3,579
13,745
(884)
72,467
Depreciation & amortisation
(1,195)
(439)
(20)
(11)
EBIT
Finance revenue
Finance costs
20,130
34,263
3,559
13,734
831
(909)
67
(763)
85
(175)
1
(151)
(5,222)
(6,106)
101
-
(6,887)
65,580
1,085
(1,998)
Profit before income tax
20,052
33,567
3,469
13,584
(6,005)
64,667
Other segment information
Capital expenditure
387
77
3
9
978
1,454
67
Breville Group Limited annual report 2013
Notes to the financial statements
for the year ended 30 June 2013
Note 23. Financial risk management objectives and policies
The group’s principal financial instruments, other than derivatives, comprises cash advances, bank overdrafts, cash
at bank and short-term deposits.
The main purpose of these financial instruments is to raise finance for the group’s operations. The group has
various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from
its operations. The group also enters into derivative transactions, including forward exchange contracts and at
times, foreign exchange option contracts and interest rate swaps. The purpose is to manage the interest rate and
currency risks arising from the group’s business operations and its sources of finance. It is the group’s policy that no
speculative trading in derivatives shall be undertaken. The main risks arising from the group’s financial instruments are
cash flow interest rate risk, foreign currency risk and credit risk. The board reviews and agrees policies for managing
each of these risks and they are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.
The fair value of the forward exchange contracts is estimated using market observable inputs. The fair values of these
financial instruments are disclosed in notes 9 and 18.
Interest rate risk
The group is exposed to interest rate risk on its borrowings, cash balances and derivative financial instruments. The
group’s policy is to manage its interest rate risk using a mix of fixed and variable rate debt. Historically, fixed rate debt
was achieved through the use of interest rate swaps in which the group agrees to exchange, at specified intervals,
the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional
principal amount. Cash advance facilities have short term fixed interest rates with maturities ranging between 1 and 3
months, therefore within the financial year they are exposed to interest rate risk.
At 30 June 2013, the group has the following exposure to interest rate risk:
Cash at bank
Bank overdraft – on demand
Cash advance facilities
Term loan
Net exposure
30 June 2013
$’000
68,130
(1,580)
(22,941)
(179)
43,430
30 June 2012
$’000
53,095
(13)
(5,859)
(204)
47,019
At 30 June 2013, 0% of the group’s borrowings (2012: 0%) are at a fixed rate of interest. The remaining 100% (2012:
100%) is exposed to floating rates. On a principal net receivable of $43,430,000 (2012: $47,019,000), at an average
payable rate including margin of 2.5% (2012: 2.1%) and average receivable rate of 2.3% (2012: 2.1%), an increment
of 0.5% in the market rates would result in a decrease in finance costs of $421,000 (2012: $247,000), conversely a
decrement of 0.5% in the market rates would result in an increase in finance costs of $333,000 (2012: $296,000).
The group’s net exposure to interest rate risk calculated as at 30 June 2013 is not representative of its exposure
during the financial year due to seasonality in the volume of sales such that financial performance is historically
weighted in favour of the half to 31 December. This seasonality results in a higher level of receivable and inventory
balances and a consequent increase in working capital requirements. All of the group’s borrowings during the year
(2012 average borrowings: 100%) are at a floating rate of interest. On an average principal net receivable during the
year of $35,688,000 (2012: $41,002,000), at an average payable rate including margin of 2.5% (2012: 2.1%) and
average receivable rate of 2.3% (2012: 2.1%), an increment of 0.5% in the market rates would result in a decrease
in finance costs of $178,000 (2012: $205,000), conversely a decrement of 0.5% in the market rates would result in a
decrease in finance costs of $152,000 (2012: $164,000).
68
Breville Group Limited annual report 2013
Note 23. Financial risk management objectives and policies continued
Foreign currency risk
The group undertakes certain transactions denominated in foreign currently and is exposed to foreign exchange rate
fluctuations. Such exposure arises primarily from purchases of inventory by a business unit in currencies other than
the unit’s functional currency (purchases are predominately US dollar denominated). Other foreign exchange risk only
arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that
is not the entity’s functional currency.
To hedge exposure arising from the purchase of inventories or payments in currencies other than the business
unit’s functional currency, a combination of forward exchange contracts and foreign exchange option contracts may
be utilised. At inception these hedge contracts are designated as cash flow hedges to hedge the exposure to the
variability in cash flows arising as a result of movements in exchange rates below contracted exchange rates for
options and for movements above or below a contracted exchange rate for forward exchange contracts.
Also, as a result of the group’s investment in its overseas operations, the group’s balance sheet can be affected
significantly by movements in the exchange rates of the jurisdictions it operates within.
At 30 June 2013, the group has the following financial assets and liabilities exposed to foreign currency risk:
Cash at bank
Trade and other receivables
Trade and other payables
Other financial assets – derivative assets
Other financial liabilities – derivative liabilities
Net exposure
30 June 2013
$’000
30 June 2012
$’000
(37)
3,286
(3,264)
2,110
(13)
2,082
66
1,022
(449)
479
(17)
1,101
At 30 June 2013, the group had hedged 50% (2012: 57%) of its foreign currency purchases extending to June 2014
(2012: November 2012). The remaining 50% (2012: 43%) is exposed to foreign exchange risk.
Of the total net exposure above, an increment of 10% in the foreign exchange rates would result in a decrease in
other expenses of $1,500 (2012: $58,000). A decrement of 10% in the foreign exchange rates would result in an
increase in other expenses of $1,700 (2012: $71,000).
In respect of net derivative assets and liabilities above, being the fair value of forward exchange contracts designated
as cash flow hedges, a decrease of 10% in the US dollar exchange rate against local currencies, all other variables
held constant, would result in an increase in equity of $5,164,000 (2012: $4,512,000). Conversely, an increase
of 10% in the US dollar exchange rate against local currencies, all other variables held constant, would result in a
decrease in equity of $4,225,000 (2012: $3,692,000).
Capital management
The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and
to sustain future development of the business.
The board seeks to maintain a balance between the higher returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound capital position. The board monitors the group’s
gearing ratio and compliance with debt covenants on a regular basis. The group’s gearing ratio at 30 June 2013
and 30 June 2012 is nil due to the group being in a net cash position. The gearing ratio is defined as group net
borrowings divided by capital employed (net borrowings plus shareholders’ equity).
69
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 23. Financial risk management objectives and policies continued
Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The credit
risk on financial assets, excluding investments, of the group that has been recognised on the balance sheet is the
carrying value amount, net of any uncollectible receivables.
The group trades only with recognised, creditworthy third parties. It is the group’s policy that all customers who wish
to trade on credit terms are subject to credit verification procedures. In certain instances, where deemed appropriate,
receivable insurance is acquired to offset the group’s exposure to credit risk.
In addition, receivable balances are monitored on an ongoing basis with the result that the group’s exposure to bad
debts is not significant. There are no significant concentrations of credit risk across the group.
With respect to credit risk arising from the other financial assets of the group, which comprise cash and cash
equivalents and certain derivative instruments, the group’s exposure to credit risk arises from default of the counter
party with a maximum exposure equal to the carrying amount of these instruments. These counter parties are large
multi-national banks.
Since the group trades only with recognised third parties, there is no requirement for collateral.
Liquidity risk
The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash
advances and bank overdrafts. The group’s bank facilities carry between a one and two year term in Australia, USA,
Canada and the UK. As at 30 June 2013, 45% of the group’s borrowings will mature in greater than one year (2012:
99%) and 55% (2012: 1%) in less than one year.
Management monitors rolling forecasts of the group’s liquidity reserve on the basis of expected cash flows. See note
16 for details of available facilities.
At 30 June 2013, the remaining contractual maturities of the group’s financial liabilities are:
Less than 1 year
Between 1 and 5 years
Total financial liabilities
30 June 2013
$’000
30 June 2012
$’000
94,596
11,686
106,282
63,852
6,043
69,895
The table below analyses the group’s remaining contractual maturities by the type of financial liability. The amounts
disclosed are the contractual undiscounted cash flows.
30 June 2013
Less than
1 year
$’000
Between 1
and 5 years
$’000
80,931
13,652
13
616
11,070
-
30 June 2012
Less than
1 year
$’000
Between 1
and 5 years
$’000
63,679
156
17
-
6,043
-
Total
$’000
81,547
24,722
13
Total
$’000
63,679
6,199
17
Trade and other payables
Borrowings
Other financial liabilities
Total
94,596
11,686
106,282
63,852
6,043
69,895
Contractual maturities disclosed in the tables above include contracted interest payments. Total borrowings disclosed
in note 16 exclude such contracted interest payments.
70
Breville Group Limited annual report 2013
Note 24. Commitments and contingencies
Operating lease commitments – group as lessee
Operating leases are entered into mainly as a means of acquiring access to commercial property and storage facilities
and the use of minor items of plant and equipment. Rental payments are generally fixed; however certain property
leases contain a rental inflation escalation clause, an agreed rental percentage increase clause, a market rental review
clause or a mix of these clauses over the term of the operating lease.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Within one year
After one year but not later than five years
More than five years
Total future minimum rentals payable
30 June 2013
$’000
30 June 2012
$’000
11,824
22,206
-
34,030
10,186
25,097
2,745
38,028
Contingent rentals are determined with reference to known existing rental payments and known rental increases
during the existing term of each operating lease.
No purchase options exist in relation to operating leases and no operating lease contains restrictions on financing or
other leasing activities. Certain property leases contain renewal option clauses.
Operating lease commitments receivable – group as lessor
The group has entered into commercial property leases for certain surplus office and warehouse space. Rental
charges under operating leases with sub lease tenants are generally fixed; however certain property leases contain a
rental inflation escalation clause, an agreed rental percentage increase clause, a market rental review clause or a mix
of these clauses over the term of the operating lease.
Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:
Within one year
After one year but not later than five years
More than five years
Total future minimum rentals receivable
Contingencies
30 June 2013
$’000
30 June 2012
$’000
1,787
4,346
-
6,133
1,718
6,083
50
7,851
Indemnity agreements have been entered into with certain officers of the group in respect of expenses and liabilities
they incur in their official capacities. No monetary limit applies to these agreements and no known obligations have
emerged as a result of these agreements.
Cross guarantees given by Breville Group Limited, Thebe International Pty Limited, Breville Holdings Pty Limited and
Breville Pty Limited are described in note 25(a).
Breville Group Limited has issued a corporate guarantee in favour of the local bank (HSBC) which provides the day to
day US transactional banking facilities.
71
Breville Group Limited annual report 2013
Notes to the financial statements
for the year ended 30 June 2013
Note 25. Related party disclosure
The consolidated financial statements include the financial statements of Breville Group Limited and the subsidiaries
listed in the following table.
Legal entity
Thebe International Pty Limited
Investments not held directly by Breville Group Limited:
Breville Holdings Pty Limited
Breville Pty Limited
Breville R&D Pty Limited
Breville Group Performance Share Plan Trust
Breville New Zealand Limited
HWI International Limited
Gannet Holdings Limited
HWI Export Limited
Breville Services (Shenzhen) Company Limited
Breville Holdings USA, Inc. (formerly Thebe
International, Inc.)
Breville USA, Inc. (formerly Metro/Thebe, Inc.)
Holding HWI Canada, Inc
HWI Canada, Inc
Anglo-Canadian Housewares, L.P.
BRG Appliances Limited
Country of
incorporation Note
30 June 2013
%
30 June 2012
%
Equity interest
(a)
(a)
(a)
(b)
Australia
Australia
Australia
Australia
Australia
New Zealand
Hong Kong
Hong Kong
Hong Kong
China
USA
USA
Canada
Canada
Canada
UK
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
-
100
100
100
100
100
-
Breville Group Limited, a company incorporated in Australia is the ultimate parent of the group.
(a) Entities subject to class order relief
Pursuant to class order 98/1418, relief has been granted to Thebe International Pty Limited, Breville Pty Limited and
Breville Holdings Pty Limited from the Corporations Act 2001 requirements for preparation, audit and lodgement of
their financial reports.
As a condition of the class order, Breville Group Limited and Thebe International Pty Limited entered into a Deed of
Cross Guarantee on 4 November 1999. This deed was subsequently assumed by Breville Pty Limited and Breville
Holdings Pty Limited under an assumption deed dated 19 December 2001. The effect of the deed is that Breville
Group Limited has guaranteed to pay any deficiency in the event of winding up of either controlled entity or if they do
not meet their obligations under the terms of overdrafts, loans, leases or other liabilities subject to the guarantee. The
controlled entities have also given a similar guarantee in the event that Breville Group Limited is wound up or if it does
not meet its obligation under the terms of overdrafts, loans, leases or other liabilities subject to the guarantee.
The entities comprising the class order “closed group” are Breville Group Limited, Thebe International Pty Limited,
Breville Pty Limited and Breville Holdings Pty Limited. The consolidated statement of financial position and income
statement of the entities that are members of the “closed group” are detailed in notes 25(i) and 25(ii).
(b) Breville Group Performance Share Plan Trust
A trust fund has been established with the appointment of an independent Trustee. The trust will be funded by funds
irretrievably contributed to it by the company and the Trustee will then use these funds to either subscribe for a new
issue of shares in the company or purchase shares on the ASX in order to fulfil its obligations under the Breville Group
Limited Performance Rights Plan.
The trust does not form part of the Breville Group Limited Australian tax consolidation group.
During the financial year ended 30 June 2013, the Trustee acquired 283,500 company shares (2012: 303,000). The
average value placed on these acquisitions was $6.64 per share (2012: $4.26).
72
Breville Group Limited annual report 2013 Note
30 June 2013
$’000
30 June 2012
$’000
Note 25. Related party disclosure continued
(i) Consolidated statement of financial position
for class order closed group
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other assets
Total current assets
Non-current assets
Other financial assets
Plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Accounts payable
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
33,884
48,366
44,776
1,712
534
21,867
47,990
37,095
241
243
129,272
107,436
27,225
5,571
55,203
8,616
96,615
32,750
2,762
55,650
8,458
99,620
225,887
207,056
43,042
-
6,914
11,325
61,281
588
5,882
1,291
7,761
69,042
39,020
13
5,550
4,732
49,315
-
6,251
7,141
13,392
62,707
156,845
144,349
25(ii)
138,369
(2,870)
21,346
156,845
138,760
(5,094)
10,683
144,349
73
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note
30 June 2013
$’000
30 June 2012
$’000
Note 25. Related party disclosure continued
(ii) Consolidated income statement for class order
closed group
Profit from ordinary activities before income tax expense
Income tax expense relating to ordinary activities
Net profit
Accumulated profits/(losses) at the beginning of the year
Dividends paid or reinvested
Accumulated profits at the end of the year
25(i)
(a) Ultimate controlling entity
The ultimate controlling entity of the group in Australia is Breville Group Limited.
(b) Wholly owned group transactions
60,130
(16,293)
43,837
10,683
(33,174)
21,346
45,453
(13,523)
31,930
4,122
(25,369)
10,683
During the financial period, loans were advanced and repayments received on inter-group accounts with subsidiaries
in the wholly owned group. These transactions were undertaken on commercial terms and conditions.
(c) Key management personnel
Details relating to key management personnel, including remuneration paid, are included in note 29.
30 June 2013
$’000
30 June 2012
$’000
Note 26. Parent entity information
As at and throughout the financial year ended 30 June 2013 the parent
company of the group was Breville Group Limited.
Results of the parent entity
Profit of the parent entity
Total comprehensive income of the parent entity
Financial position of the parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Equity attributable to the equity holders of the parent
Issued capital
Employee equity benefits reserve
Retained earnings
Total shareholders’ equity
34,510
34,510
25,756
25,756
74,792
147,869
(6,914)
(6,914)
140,955
68,379
145,037
(5,552)
(5,552)
139,485
138,368
138,759
377
2,210
(147)
873
140,955
139,485
74
Breville Group Limited annual report 2013 Note 26. Parent entity information continued
Contingencies
The parent company has guaranteed under the terms of an ASIC class order any deficiency of funds if Thebe
International Pty Limited, Breville Pty Limited and Breville Holdings Pty Limited are wound up. No such deficiency
currently exists.
The parent company has issued a corporate guarantee in favour of the local bank in the US (HSBC) which provides
the day to day US transactional banking facilities.
Note 27. Share-based payment plans
Performance rights plan
Under the performance rights plan participants are issued with performance rights over the ordinary shares of Breville
Group Limited issued in accordance with the Breville Group Limited Performance Rights Plan (PRP).
An offer under the PRP grants a participant the right to a certain number of fully paid ordinary shares in the company.
Upon satisfaction of the performance hurdle, the right will vest and be convertible into shares. The company uses
time-based and financial-based hurdles. Earnings per share (EPS) is the financial-based performance hurdle for the
LTI plan. EPS represents the earnings per share from operations adjusted for non-trading items. The use of EPS
ensures an alignment between shareholder return and reward for participants.
In addition to the grant of performance rights awards which are subject to an EPS performance hurdle, performance
rights awards also may be granted in accordance with the PRP as a retention award where the performance
condition is continued employment with the company to vesting date.
If the performance hurdle is not met or if the participant ceases to be employed by the company, any unvested
performance rights will lapse unless otherwise determined by the board. There are no cash alternatives. The
performance rights cannot be transferred and are not quoted on the ASX. Holders of performance rights are not
entitled to notice of, or attend, a meeting of shareholders of the company, or receive any dividends declared by the
company, until the rights have vested and then converted into shares.
Once allocated, disposal of shares is subject to restrictions whereby board approval is required to sell the shares
granted within three years of the shares being allocated to the participant or; if the participant ceases to be employed
by the company, within twelve months of the date employment ceases; or such other date as the board determines.
In the event of a takeover bid where the bidder and its associates become entitled to at least 50% of the voting
shares of the company, any performance rights granted will vest where the board, in its absolute discretion, is
satisfied that pro rata performance is in line with any performance condition applicable to those performance rights.
Any performance rights which do not vest will immediately lapse, unless otherwise determined by the board.
At 30 June 2013 there are 1,124,734 (2012: 1,030,000) performance rights outstanding under this plan.
75
Breville Group Limited annual report 2013
Notes to the financial statements
for the year ended 30 June 2013
Note 27. Share-based payment plans continued
Options and performance rights granted under the second senior executive option plan
and the performance rights plan
The expense recognised in the income statement in relation to share-based payments is disclosed in note 2(f).
There were no options outstanding at the end of the year (2012: nil).
The following table illustrates the number and weighted average exercise prices (“WAEP”) of and movements in
performance rights issued during the year:
30 June 2013
30 June 2012
Number of
performance
rights
Note
Number of
options /
performance
rights
WAEP
WAEP
Outstanding at the beginning of the year
1,030,000
0.0000
2,421,000
0.0463
Performance rights granted during
the year
Performance rights exercised
during the year
Performance rights forfeited during
the year
Outstanding at the end of the year
(a)
1,124,734
Exercisable at the end of the year
-
Notes
(a) The outstanding balance as at 30 June 2013 is represented by:
563,234
0.0000
589,000
0.0000
(337,500)
0.0000
(1,382,000)
0.0810
(131,000)
0.0000
0.0000
-
(598,000)
1,030,000
-
0.0000
0.0000
-
Number of
performance rights
Note *
Grant date
Vesting date
Expiry date
WAEP $
Fair value at
grant date ($)
127,000
122,000
47,000
165,000
157,000
34,500
177,500
177,500
40,000
40,000
37,234
1,124,734
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
22 Dec 10
22 Dec 10
20 Apr 11
12 Oct 11
12 Oct 11
2 Sep 13
2 Sep 13
2 Sep 13
1 Sep 14
1 Sep 14
23 Dec 11
2 Dec 13
02 Oct 12
3 Sept 15
02 Oct 12
3 Sept 15
02 Oct 12
02 Oct 12
3 Oct 13
3 Oct 14
02 Oct 12
2 Sept 13
4 Oct 13
4 Oct 13
4 Oct 13
3 Oct 14
3 Oct 14
3 Jan 14
5 Oct 15
5 Oct 15
5 Nov 13
5 Nov 14
4 Oct 13
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
2.54
2.54
3.32
2.41
2.41
2.33
4.73
4.73
5.19
4.95
5.21
(i) These performance rights vest if the group’s underlying EPS for the year ending 30 June 2013 is at least 30.00 cents per share.
(ii) These performance rights vest if the group’s underlying EPS for the year ending 30 June 2013 is at least 33.00 cents per share.
(iii) These performance rights vest if the group’s underlying EPS for the year ending 30 June 2013 is at least 37.00 cents per share.
(iv) These performance rights vest if the group’s underlying EPS for the year ending 30 June 2014 is at least 33.50 cents per share.
(v) These performance rights vest if the group’s underlying EPS for the year ending 30 June 2014 is at least 36.50 cents per share.
(vi) Performance condition is that the participants must be employed by the company on 2 December 2013.
(vii) These performance rights vest if the group’s underlying EPS for the year ending 30 June 2015 is at least 43.22 cents per share
(viii) These performance rights vest if the group’s underlying EPS for the year ending 30 June 2015 is at least 47.33 cents per share
76
Breville Group Limited annual report 2013 Note 27. Share-based payment plans continued
(ix) Performance condition being that the participants must be employed by the company on 3 October 2013
(x) Performance condition being that the participants must be employed by the company on 3 October 2014
(xi) These performance rights vest if the group’s underlying EPS for the year ending 30 June 2013 is at least 42.00 cents per share
*
In addition to the EPS performance hurdle, the participant must be employed by the company on the vesting date.
The average remaining contractual life for the performance rights outstanding at 30 June 2013 is between 1 and 3
years (2012: 1 and 3 years).
The exercise price for performance rights outstanding at the end of the year was $0.00. (2012: $nil).
There were no options outstanding at the end of the year (2012: nil).
The weighted average fair value of performance rights granted during the year was $4.84 (2012: $2.41).
The fair value of the equity-settled share options and performance rights granted under the second senior executive
option plan and the performance rights plan respectively, is estimated as at the date of grant using either a binomial
or Black-Scholes option-pricing model, taking into account the terms and conditions upon which the options and
performance rights were granted.
The following table lists the inputs to the model used for the grants during the year ended 30 June 2013 and
30 June 2012:
30 June 2013
30 June 2012
(Black-
Scholes)
(Black-
Scholes)
(Black-
Scholes)
(Black-
Scholes)
(Black-
Scholes)
(Black-
Scholes)
(Black-
Scholes)
2 Oct 12
2 Oct 12
2 Oct 12
2 Oct 12
12 Oct 11
23 Dec 11
23 Dec 11
3 Oct 14
3 Oct 12
30 Jun 13
30 Jun 15
30 Jun 14
30 Jun 13
30 Jun 14
5.00
35.00
35.00
5.00
35.00
35.00
5.00
35.00
35.00
5.00
35.00
35.00
5.00
35.00
35.00
6.00
35.00
35.00
6.00
35.00
35.00
2.40
2.57
2.57
2.38
3.68
3.54
3.35
2.0 years
1.0 years
1.0 years
2.9 years
2.9 years
1.0 year
2.0 years
0.00
0.00
0.00
0.00
0.00
0.00
0.00
5.74
5.74
5.74
5.74
2.77
2.75
2.75
Grant date
Year ending
Dividend yield (%)
Expected volatility (%)
Historical volatility (%)
Risk-free interest rate
(%)
Expected life of
performance right
(years)
Performance right
exercise price ($)
Weighted average
share price at grant
date ($)
The expected life of the performance rights is based on historical data and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of
future trends, which may also not necessarily be the actual outcome. No other features of performance rights granted
were incorporated into the measurement of fair value.
Note 28. Employee benefits
The aggregate employee benefit liability is comprised of:
Trade and other payables (current)
Provisions – long service (current)
Provisions – long service (non-current)
Total employee benefits
Note
30 June 2013
$’000
30 June 2012
$’000
15
17
17
4,357
1,502
1,308
7,167
3,750
1,597
880
6,227
77
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 29. Key management personnel
(a) Compensation of key management personnel
Compensation by category: key management personnel
Short-term
Post employment
Other long-term
Share-based payment
Total
Note
30 June 2013
$’000
30 June 2012
$’000
(i)
3,237
119
39
618
4,013
2,739
152
30
459
3,380
(i) This includes defined contribution plans expense of $119,000 (2012: $152,000).
(b) Performance rights and options holdings of key management personnel
30 June 2013
Executives
S. Brady
M. Cohen
C. Dais
J. Lord
Total
30 June 2012
Executives
S. Audsley (d)
S. Brady
M. Cohen
C. Dais (e)
J. Lord
Total
Balance
30 June 2012
Granted as
remuneration (a)
Vested and
exercised
Other (b)
Balance
30 June 2013
117,000
168,000
31,000
238,000
554,000
20,000
24,000
22,000
127,234
193,234
(43,000)
(56,500)
-
(86,000)
(185,500)
-
-
-
-
-
94,000
135,500
53,000
279,234
561,734
Balance
30 June 2011
Granted as
remuneration (c)
Vested and
exercised
Other (b)
Balance
30 June 2012
506,000
245,000
391,000
-
233,000
1,375,000
81,000
35,000
56,000
31,000
99,000
(274,000)
(163,000)
(279,000)
-
(94,000)
(313,000)
-
-
-
-
302,000
(810,000)
(313,000)
-
117,000
168,000
31,000
238,000
554,000
(a) All performance awards granted during the year are subject to EPS performance hurdles and remaining in employment until date
of vesting.
(b) Includes lapses and forfeitures.
(c) Save for a tranche of performance rights granted to J. Lord (52,000) and M. Cohen (17,000) where the performance hurdle is
time-based, all performance awards granted during the year to 30 June 2012, were subject to EPS performance hurdles.
(d) S. Audsley did not meet the definition of key management personnel after 9 November 2011.
(e) C. Dais became key management personnel on 28 November 2011.
Refer note 27 and remuneration report (contained within the directors’ report designated as audited) for details on the
above options and performance rights.
78
Breville Group Limited annual report 2013 Note 29. Key management personnel continued
(c) Shareholdings of key management personnel
Ordinary shares held* in Breville Group Limited (number)
30 June 2013
Balance at
1 July 2012
Granted as
remuneration
On exercise of
performance
rights
Net change
other (a)
Balance at
30 June 2013
Directors
S. Fisher
S. Herman
D. Howell
S. Klein
J. Schmoll
S. Weiss
Executives
S. Brady
C. Dais
M. Cohen
J. Lord
Total
30 June 2012
Directors
S. Fisher
D. Howell
S. Klein
J. Schmoll
S. Weiss
Executives
S. Audsley (b)
S. Brady
M. Cohen
J. Lord
Total
50,288
-
100,000
117,189
100,000
121,775
300,645
-
279,000
134,000
1,202,897
-
-
-
-
-
-
-
-
-
-
-
Balance at
1 July 2011
Granted as
remuneration
50,288
85,000
117,189
82,294
80,775
102,133
137,645
30,000
40,000
725,324
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,000
-
-
-
-
50,288
8,000
100,000
117,189
100,000
121,775
43,000
(66,913)
276,732
-
56,500
86,000
185,500
On exercise
of options/
performance
rights
-
-
-
-
-
274,000
163,000
279,000
94,000
810,000
-
(30,000)
-
-
305,500
220,000
(88,913)
1,299,484
Net change
other (a)
Balance at
30 June 2012
-
15,000
-
17,706
41,000
(376,133)
-
(30,000)
-
50,288
100,000
117,189
100,000
121,775
-
300,645
279,000
134,000
(332,427)
1,202,897
* Held directly, indirectly or beneficially.
(a) All equity transactions with key management personnel other than those arising from the exercise of remuneration options have
been entered into under terms and conditions no more favourable than those the group would have adopted if dealing at arm’s
length.
(b) S. Audsley did not meet the definition of key management personnel after 9 November 2011.
79
Breville Group Limited annual report 2013 Notes to the financial statements
for the year ended 30 June 2013
Note 29. Key management personnel continued
(d) Other transactions and balances with key management personnel and their related
parties
Services
Mr Klein is a principal of SBA Law and his director’s fees are paid to SBA Law. These fees are subject to GST.
Fees totalling $336,514 (inclusive of GST), including Mr Klein’s director’s fees, were invoiced by SBA Law during the
current financial year (2012: $184,138). These fees were all on arm’s length terms.
Total amounts recognised at the reporting date in relation to other transactions and balances with key management
personnel:
Liabilities
Current liabilities
Total liabilities
Revenues & expenses
Employee expenses (director’s fees)
Professional fees
Total expenses
The amounts shown above are GST exclusive.
Note 30. Auditor’s remuneration
Amounts received or due and receivable from the entity
and any other entity in the consolidated entity:
Ernst & Young Australia – primary auditors
- an audit or review of the financial report
Ernst & Young Australia’s affiliates – primary auditors
- an audit or review of the financial report
Total auditor’s remuneration
Note 31. Significant events after year end
30 June 2013
$’000
30 June 2012
$’000
21
21
113
193
306
21
21
97
71
168
30 June 2013
$
30 June 2012
$
335,000
319,000
217,500
552,500
205,000
524,000
No matters or circumstances have arisen since the end of the year which significantly affected or may affect the
operations of the consolidated entity.
The financial report of Breville Group Limited for the year ended 30 June 2013 was authorised for issue in accordance
with a resolution of the directors on 19 August 2013.
80
Breville Group Limited annual report 2013 Directors’ declaration
In accordance with a resolution of the directors of Breville Group Limited, I state that:
1. In the opinion of the directors:
(a) the financial report and the additional disclosures included in the directors’ report designated as audited, of
the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its
performance for the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; 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.
2. This declaration has been made after receiving the declarations required to be made to the directors in
accordance with sections 295A of the Corporations Act 2001 for the year ended 30 June 2013.
3. In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the
members of the closed group identified in note 25(a) 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.
4. The financial report complies with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
On behalf of the board
Steven Fisher
Non-executive chairman
Sydney
19 August 2013
81
Breville Group Limited annual report 2013 Independent audit report
Independent auditor’s report to the members of Breville Group Limited
Report on the financial report
We have audited the accompanying financial report of Breville Group Limited (the “Company”), which
comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement
of comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors’ declaration of the consolidated entity comprising the
company and the entities it controlled at the 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 controls as the directors determine are necessary to enable the preparation of the financial report
that is free from material misstatement, whether due to fraud or error. In Note 1, 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 about 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 judgment, 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 controls relevant to the 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 controls. 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. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy
of which is included in the directors’ report.
82
Breville Group Limited annual report 2013 Independent audit report continued
Opinion
In our opinion:
a. the financial report of Breville Group Limited is in accordance with the Corporations Act 2001,
including:
i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its
performance for the year ended on that date; and
ii
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Report on the remuneration report
We have audited the Remuneration Report included in pages 17 to 25 of the directors’ report for the year
ended 30 June 2013. 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.
Opinion
In our opinion, the Remuneration Report of Breville Group Limited for the year ended 30 June 2013,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
P S Barnard
Partner
19 August 2013
83
Breville Group Limited annual report 2013 Auditor’s independence declaration
Auditor’s Independence Declaration to the Directors of Breville Group Limited
In relation to our audit of the financial report of Breville Group Limited for the financial year ended
30 June 2013, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
P S Barnard
Partner
19 August 2013
84
Breville Group Limited annual report 2013 Shareholder information
Substantial shareholders as at 5 September 2013
The following information is extracted from the company’s register of substantial shareholder notices:
Name
S. Lew Custodians Pty Limited
Matthews International Capital Management, LLC
Bennelong Funds Management Group Pty Ltd
Number of
ordinary shares
% of issued
ordinary shares
39,297,151
9,386,565
8,195,738
30.21%
7.21%
6.32%
Distribution of shareholdings as at 5 September 2013
Size of holding
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total shareholders
Number of ordinary shareholders with less than a marketable parcel
Voting rights
All ordinary shares issued by Breville Group Limited carry one vote per share without restriction.
Ordinary
shareholders
1,175
1,800
427
320
32
3,754
80
85
Breville Group Limited annual report 2013 Shareholder information continued
Twenty largest shareholders as at 5 September 2013
Name
Premier Investments Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
Citicorp Nominees Pty Limited
Dancetown Pty Ltd
JP Morgan Nominees Australia Limited
Lew Family Investments Pty Ltd
Citicorp Nominees Pty Limited
Lew Family Investments Ltd
S L Nominees Pty Ltd
Josseck Pty Limited
Nofusa Pty Limited
HSBC Custody Nominees (Australia) Limited
Share Direct Nominees Pty Ltd
AMP Life Limited
Warbont Nominees Pty Ltd
Buttonwood Nominees Pty Ltd
Quotidian No 2 Pty Ltd
Total
Shares
33,452,910
21,804,647
14,462,252
10,947,871
7,619,942
7,190,213
3,000,000
2,465,673
1,891,461
1,811,879
1,535,718
711,667
675,567
650,000
517,807
502,000
408,441
382,485
381,286
300,000
% IC
25.71%
16.76%
11.12%
8.42%
5.86%
5.53%
2.31%
1.90%
1.45%
1.39%
1.18%
0.55%
0.52%
0.50%
0.40%
0.39%
0.31%
0.29%
0.29%
0.23%
110,711,819
85.10%
86
Breville Group Limited annual report 2013 ABN
Breville Group Limited ABN 90 086 933 431
Share register
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Enquiries within Australia: (02) 8280 7111
Enquiries outside Australia: (+61 2) 8280 7111
Website: linkmarketservices.com.au
Auditors
Ernst & Young
680 George Street
Sydney NSW 2000
Bankers
Australia and New Zealand Banking Group Limited
20 Martin Place
Sydney NSW 2000
Company information
Directors
Steven Fisher
Non-executive chairman
Sally Herman
Non-executive director
Dean Howell
Non-executive director
Steven Klein
Non-executive director
Lawrence Myers
Non-executive director – appointed 19 August 2013,
effective 1 September 2013
Samuel Weiss
Non-executive director
Company secretary
Mervyn Cohen
Registered office and principal place of
business
Building 2
Port Air Industrial Estate
1A Hale Street
Botany NSW 2019
Telephone (+61 2) 9384 8100
Company websites
brevillegroup.com
breville.com
kambrook.com.au
sageappliances.co.uk
87
Breville Group Limited annual report 2013 This report is printed on Impact: an FSC certified stock made from 100% post consumer waste
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Nordic Swan accredittion.
Design: Buzzsaw cut-through branding. Print: Hogan Print
88
Breville Group Limited annual report 2013 breville.com
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