Breville Group Limited
Annual Report 2021
Breville Group Limited
Annual report 2021
Contents:
Chairman’s review
CEO’s review
Strategy and brands
Financial report
Shareholder information
Company information
Annual general meeting:
Thursday 11 November 2021 at 10am
Virtual AGM.
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Damson Blue
A rich shade of Damson plums and ripe summer blueberries with a touch of frost.
Damson Blue
A rich shade of Damson plums and ripe summer blueberries with a touch of frost.
Chairman’s review
“An outstanding year for Breville in the face
of unprecedented circumstances”
The 2021 Financial year for the Group saw record
sales of nearly $1.2bn, 39.6% EBIT growth and strong
re-investment into the medium term growth drivers
of the Group.
Breville is fortunate to have our CEO, Jim Clayton,
at the helm, and I would like to acknowledge, and
thank him for his support, leadership, vision and his
extraordinary ability to execute on his strategy.
I have thoroughly enjoyed my journey with Breville,
and, as I pass on the baton, I am confident that the
company is well placed for continued success. Tim
Antonie has been a Director since 2013, and I am very
confident that he will guide the Group from strength
to strength.
Finally I would like to express my appreciation to
my fellow Board colleagues and our shareholders,
customers and suppliers, and of course the
outstanding Breville team across the globe for their
support over the years.
I encourage all shareholders to attend our virtual
annual general meeting (AGM) in November.
With thanks,
Steven Fisher
Non-executive chairman
Total sales revenue of $1.187bn was 24.7% higher than
prior year with the core Global Product segment
growing by 28.7%, or 37.0% on a constant currency
basis, to $984.2m. The Distribution segment revenue
for the year grew 8.4% to $203.5m. Top line growth
was underpinned by the ongoing trend of working
from home and geographic expansion, more than
offsetting some supply constraints late in the year.
Group EBIT for the year of $136.4m represented
a 39.6% increase on the prior year after funding
increased investment into R&D, marketing and our IT
platform and capability.
The Group sustained its geographic expansion,
integrated the Baratza acquisition, and continued to
roll out its technology platform throughout the year
despite COVID-19 interruptions, which is a tribute to
the tenacity and determination of the entire Breville
team.
The Board has approved a full year dividend for
the year of 26.5 cents, in line with the previously
announced decision to reduce the target payout ratio
to 40% on a full year basis to enhance the internal
funding of numerous growth opportunities on a
sustainable basis.
On behalf of the Board, I would like to welcome and
congratulate Jim Clayton on his appointment to the
Board in August.
As for myself, after 17 years on the Board, I have
decided to not seek re-election at the AGM in
November.
I am extremely proud of the team at Breville. They
have built a truly international company, recognised
amongst our peers as one of the leading SDA brands
in the world. The executive team that Jim leads
(across the globe) is world class, and I am sure that
their passion and unity will deliver continued growth
and success as Breville cements its foothold on the
world stage.
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Breville Group Limited annual report 2021 SEA SALTThe diamond white of natural sea salt with a pinch of matte pearl. CEO’s review
“A big thank you to the entire Breville/Sage team for keeping focused
on long-term growth whilst tactically navigating a challenging year”
FY21 EBIT grew 24% over normalised FY20 EBIT1, or
39% over statutory EBIT.
Importantly, in such a busy year, I want to pause and
acknowledge the outstanding contribution of Steve
Fisher, our outgoing Chairperson. Steve has been a
Director for over seventeen years. During his eight
years as Chair, the Group has doubled in size and the
share price has increased 350% - Steve’s fingerprints
are all over this success. I would like to thank Steve
personally for his friendship and guidance over the
nearly six years that I have had the privilege to work
with him, and I know that the entire company joins
me in wishing him continued success, health and
happiness in the future.
Finally a big thank to the entire Breville/Sage
team for another excellent year. I look forward to
continuing our success in FY22.
Jim Clayton
Managing Director and Chief Executive Officer
1 FY20 EBIT and NPAT have been normalised for the
impact of abnormal expenses (doubtful debt provisioning
and IoT platform write down) and abnormal cost savings
(compensation and marketing). Net impact on EBIT of
$12.2m; NPAT $8.8m.
In FY21, Breville Group delivered strong revenue
growth of 24.7%, crossing a milestone of $1bn
revenue during the year. Increased consumer
demand, driven by the need/requirement to work
from home, coupled with our continued geographic
expansion, outweighed logistical challenges and a
weakening USD.
The Global Product segment revenue grew by 28.7%,
or 37.0% in constant currency, with solid growth
across all geographies. On a constant currency basis,
Americas grew by 27.6%, APAC by 37.4%, EMEA by
58.4%. All theatres had a solid performance across the
year, despite supply disruptions driving a restricted
inventory position at the tail end of the 2H21.
Our portfolio is more balanced and robust than it
has ever been. During the period we entered Mexico,
Portugal, Italy and completed our entry into France.
EMEA is now larger than APAC, and together they
match the Americas.
The Distribution segment revenues grew by 8.4%
and it fulfilled its strategic role by delivering an
incremental $2.4m EBIT to reinvest in the Global
Product segment.
Our gross margins improved year-on-year as our
increased average selling price, driven by improved
mix and lower promotional activity, outpaced the
head winds of cost inflation, including increased
manufacturing and shipping costs. As we look to
FY22, inflationary pressures seem set to continue,
and we will take price rises where appropriate to
protect our margins.
Strategically we reinvested gross profits into
enhancing our GTM effectiveness, upweighting our
NPD capability and increasing our technology-based
competitive advantage. We have implemented our
Global IT 2.0 Platform in the Northern Hemisphere
and New Zealand with Australia to be completed
in FY22.
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SEA SALTThe diamond white of natural sea salt with a pinch of matte pearl.Breville Group Limited annual report 2021 SMOKED HICKORY
The smokey grey of hickory firewood with a charred glaze.
SMOKED HICKORY
The smokey grey of hickory firewood with a charred glaze.
Strategy and brands
Breville Group’s primary strategy is the design
and development of the world’s best kitchen
appliances together with expanding distribution
and dynamic marketing on a global scale.
The Breville and Sage brands are at the core of this
strategy, representing the majority of the Group’s
revenues and marketing activities. There are,
however, a number of additional company-owned
brands and brand partners in different geographies
that assist in the delivery of the business strategy.
In line with its global strategy, the Group is focused
on the design, development and sale of Breville-
branded and Sage-branded products supplied in
currently 80 countries to the premium kitchen
segment of the market (‘Global Product’).
Additionally, on October 1, 2020 the Group
completed its acquisition of Seattle based coffee
grinding company, Baratza LLC. Established in
1999, Baratza designs and markets premium coffee
grinders for North America and international
markets. The acquisition is complementary to the
Group’s existing premium coffee business and brings
together two of the world’s leading companies in the
design and global distribution of coffee products.
The Distribution segment sells products that are
distributed pursuant to a license or distribution
agreement, or they are sourced directly from
manufacturers. Products in this business unit may
be sold under a brand owned by Breville® (Breville®,
Kambrook®, Aquaport®, Cli-mate®), or Sage® or
they may be distributed under a third-party brand
(Nespresso®).
North America
In North America, the Group distributes its range of
internally designed and developed kitchen products
under the Breville and Baratza brands through
premium channels and its own direct-to-consumer
e-commerce platform. From the second half of the
2018 financial year, the Breville brand included
a range of Breville co-branded Nespresso coffee
machines as one of Nespresso’s machine partners in
North America.
North American revenues also include a USA based
culinary division –PolyScience, one of the world’s
market leaders in premier sous vide cooking in both
the commercial and professional markets.
Australia and New Zealand
In Australia and New Zealand, the Group primarily
trades under its company owned brands, Breville®,
Kambrook®, Aquaport® and Cli-mate®.
The Kambrook brand extends to categories beyond
the kitchen; offering not just a full range of kitchen
appliances, but also irons, vacuums, heating and
cooling products, all at an affordable price point
without any compromise on quality and performance.
Europe
In the United Kingdom and Europe, the Group
markets and distributes its premium designed
and developed global kitchen products under the
company owned brand, Sage® and Baratza. It is
also a supplier for Sage® branded goods to certain
distributors located throughout Europe and the
Middle East.
In Europe the Breville brand is not owned or
operated by the Breville Group.
Rest of the World
In the Asia Pacific region and the Middle East, the
Group markets its premium designed and developed
kitchen products under the Breville and Sage brands
as well as selected products under the Kambrook
brand in parts of Asia and Africa. Distribution in
these regions is managed using local third-party
distributors supplied via the Group’s Hong Kong
office.
A History of Innovation
On Melbourne Cup day in 1932, two Australian
entrepreneurs, Bill O’Brien and Harry Norville,
combined their surnames together to form the name
‘Breville’ and founded a company manufacturing
radios out of Sydney.
During the 1960’s, Bill’s son John focused the
organisation on solving common kitchen problems
and founded the Breville small appliance research
and development centre, which led to the invention of
the now iconic Breville toasted sandwich maker.
The toasted sandwich maker kick-started a long
list of award-winning innovative Breville products
developed in Australia and distributed throughout
the world. From the original Kitchen Wizz™ food
processor and High-Wall Wok, to the launch of
the world’s first wide feed chute Juicer, Breville
has become synonymous with ground-breaking
innovation in the kitchen.
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Breville Group Limited annual report 2021 Black TruffleAn elegant shade inspired by decadent black truffles in a luxurious velvet coating. Strategy and brands continued
Growth of the Brand
In 2000, Breville embarked on a project to expand
its design and innovation capabilities, building a
much larger internal team that has today become
Australia’s leading product development team. This
investment culminated in the 2003 launch of its
premium range of products into the United States
and other international markets.
In 2009, Breville combined its design and
development capabilities with a more focused
marketing, recruitment and cultural initiative titled
‘Food Thinking’. As a part of this strategy, internal
teams work closely with professional chefs and
consumers to develop insight and an integrated
approach to product development:
• Deeper understanding of food, friction points,
and the challenges consumers face
• Innovation to solve these challenges, protectable
as IP; marketed as “Simple Moments of Brilliance”
• Superior quality and engaging design.
Breville’s ethos of ‘Food Thinking’ and creativity
remains as relevant today as it did then and continues
to gain momentum and win over a new generation
of consumers, driving accelerated innovation and
increased product development. Furthermore, the
Group’s appreciation for food science and culinary
trends has led to the fostering of relationships with
high profile food thinkers, including world renowned
baristas and chefs, some of whom have directly
helped the Group in a product development capacity.
The Consumer at the Core of the
Business
The Group focuses on driving consumer
understanding of, and engagement with, the Group’s
product and proposition. The Group believes that
consumers should be able to produce and enjoy a
perfect result every time, and that they should never
have to settle or compromise just because they are
making it at home. Through ‘Food Thinking’, the
Group provides consumers with ‘Mastery in a Box’
- innovative products which simplify and make the
process of creation more of a pleasure, and the end
result more perfect, each and every time.
At the heart of this proposition lies a passionately-
held belief that consumers should feel empowered
to share these results with those who are most
important to them; their family and friends. After
all, the opportunities to make everyday moments an
occasion exist in the tens of thousands, and Breville
believes that use of its products will help consumers
‘Master Every Moment’ and enjoy life to the fullest
extent.
Sage®
In the United Kingdom and Europe, the Group
distributes its premium designed and developed
products under the Group owned brand, Sage®. The
brand identity and positioning of Sage® is aligned
closely to the global Breville brand identity, ‘Food
Thinking’ approach, and ‘Master Every Moment’
empowerment strategy.
The Sage® distribution strategy is also very similar to
that of Breville in North America, with distribution
limited primarily to premium retailers and its own
direct to consumer e-commerce platform. The Group
continues to invest in engaging marketing activity
for the Sage® brand to drive targeted expansion
and accelerate the brand’s presence in the premium
channel across Europe, the United Kingdom and the
Middle East.
Additionally, since 2017, the Group also works with
distribution partners who have decided to take
advantage of the Group’s investment in the Sage®
brand in their territories. Countries such as Denmark,
Sweden, Norway, Finland, Estonia, Lithuania, Latvia,
Czech Republic and Slovakia, amongst others, were
the first to transition.
Kambrook®
Kambrook® has become known for quality, durable
products at an affordable price point. 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. To help emphasise that aspect of the
brand, a new logo incorporating the “infinity symbol”
in place of the two letter “o”s in the Kambrook® name
was introduced during FY17 and continues to find
some success and recognition in the marketplace as a
mark for quality assurance.
PolyScience®
The PolyScience® brand (culinary division) is
distributed around the world under one the following
two names as locally relevant;
1) Breville | Polyscience and 2) Sage | Polyscience.
The PolyScience culinary division includes the
world’s premier immersion cooking circulators
(for sous vide cooking), as well as various specialty
cooking accessories such as the Smoking Gun™
(for rapid food smoking), the Control Freak™ (for
precision cooktop applications) vacuum sealers, cold
plates and vacuum evaporations systems.
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Black TruffleAn elegant shade inspired by decadent black truffles in a luxurious velvet coating.Breville Group Limited annual report 2021 royal champagne
A golden shade of crisp champagne with a hint of glistening honey.
royal champagne
A golden shade of crisp champagne with a hint of glistening honey.
Strategy and brands continued
Breville Group invests in the training and education
of its team; building strong, collaborative links with
world experts in food thinking and technology. The
Group is also involved in several consumer facing
and chef liaison activities.
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.
During the 2021 financial year, the Group continued
to grow its highly talented and experienced team,
bringing on board additional experience and
expertise, particularly in the areas of marketing,
product design, research and development, IT and
logistics.
Processes built for the future
With an aligned calendar setting process, within
both Breville itself and its external manufacturing
and retail channel partners, the Group seeks to
fully leverage an increasing number of new product
introductions to continue to drive its business and
iconic brands forward.
By ensuring that the ‘go-to-market’ process is aligned
functionally, regionally and with its external partners,
the Group launches product, with impact, across a
number of markets under the global distribution
footprint in order to ensure that the Group will
reap the full potential of its innovation and design
excellence.
The Group has established this process in the 2019
financial year, and has continued to build off its initial
impact and success, most recently with the successful
global introduction of the Bambino espresso
machine, and the Fast Slow Go cooker.
ChefSteps.com
In July 2019, the Group completed the acquisition
of ChefSteps, incorporating both the connected
IoT Joule sous vide immersion circulator, as well
as taking over the ChefSteps.com web property.
The Joule immersion circulator has been fully
incorporated into the Breville brand through the
introduction of a new version of the product, and the
website property has been re-invogorated, and a new
editorial product placed behind a paywall, Studio
Pass, was successfully introduced by the team in
2020.
Baratza.
As noted, the Group completed the acquisition of
Baratza LLC in October of 2020. It is distributed
globally, and will unlock dynamic revenue synergies
for both businesses through a shared passion for
innovation and an unwavering commitment to
enhancing the consumer experience.
Innovation and product
development
The core driving the Group’s growth continues to be
investment in product development and a focus on
design and innovation. Breville has further 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 actively protects this customer value through
increased investment in intellectual property
protection and via the development of a portfolio of
patented innovative products for future sustainable
growth.
People – creative food thinkers
Breville enjoys the benefits of highly experienced
talent across all departments and geographies.
Integrated throughout its food thinking culture, the
passion, creativity and insight of staff has helped to
consistently bring world class innovative products
to consumers around the world. The team continues
to be awarded both domestically and internationally,
with multiple design awards, and recognition through
mainstream media.
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Breville Group Limited annual report 2021 Accolades
2019 BTM700 the Tea Maker Compact
2019 BBL920 the Super Q
2018 BES880 the Barista Touch
2017 BES990 the Oracle Touch
2017 BFS800 the Steam Zone
2016 CMC800 Control Freak Cooker
Red Dot Design Award - Best of the
Best
2017 BNE800 Creatista Plus
Red Dot Design Award
2020 BJB815 the 3x Bluicer Pro
2016 BEM825 the Bakery Boss
2020 BNE900 the Creatista Pro
IDSA Design Award – USA
IDEA International Design
Excellence Awards
Silver Award
2019 BES878 the Barista Pro
2015 BMO700 Quick Touch
2020 CSV750/700 Hydro Pro
2017 BES990 the Oracle Touch
Microwave
2015 BCP600 Citrus Press
2015 BBL405 the Kinetix Twist
2014 BES980 the Oracle Espresso
2013 BSG1974 the Original ‘74
Immersion Circulator
2020 BMO870/850 3 in 1 Combi
Wave / Smooth Wave
2019 BES500 the Bambino Plus
2019 BES878 the Barista Pro
2012 BDC600 You-Brew Drip Coffee
2019 BTM700 the Tea Maker Compact
Machine
2019 BBL920 the Super Q
2011
BFP800 Food Processor
2019 BPZ800 the Smart Oven
BEST IN CATEGORY - Domestic
Appliances
2016 BSM600 the Smoking Gun
2019 BPZ800 the Smart Oven
Pizzaiolo
2019 BES878 the Barista Pro
2019 BES500 the Bambino Plus
2018 BDC450 the Precision Brewer
Thermal
Pizzaiolo
2018 BES880 the Barista Touch
2018 BDC450 the Precision Brewer
Thermal
2018 BJE830 the Juice Fountain Cold
XL
2018 BFP820 the Kitchen Wizz Peel
and Dice
2017 BES990 the Oracle Touch
2017 BSG600 the Perfect Press
2017 BFS800 the Steam Zone
2017 BSM600 the Smoking Gun
2017 BOV900 the Smart Oven Air
2017 BTA735 the Toast Select Luxe
2018 BJE830 the Juice Fountain Cold
2017 BKE735 the Soft Top Luxe
Bronze Award
2019 BTM700 the Tea Maker Compact
2019 BOV860the Smart Oven Air Fryer
2017 BES990 the Oracle Touch
2017 BNE800 Creatista Plus
2017 BSM600 the Smoking Gun
2014 BES980 the Oracle Espresso
2013 BES900 Dual Boiler Espresso
Finalists
2021 BJB815 the 3x Bluicer Pro
2021 CSV750/700 Hydro Pro
Immersion Circulator
2021 BMO870/850 3 in 1 Combi Wave /
Smooth Wave
2019 BPZ800 the Smart Oven Pizzaiolo
2019 BES500 the Bambino Plus
2018 BES880 the Barista Touch
2018 BDC450 the Precision Brewer
Thermal
2018 BJE830 the Juice Fountain Cold XL
2018 BFP820 the Kitchen Wizz Peel and
Dice
XL
2018 BNE500 Creatista Uno
2017 BOV900 the Smart Oven Air
2017 BTA735 the Toast Select Luxe
2017 BNE800 Creatista Plus
2016 CMC800 Control Freak Cooker
2017 BOV900 the Smart Oven Air
2016 BEM825 the Bakery Boss
2016 Thermal Pro Cookware
2014 BWM640 the Smart Waffle
2014 BTA720/730 the Lift and Look Pro
2016 BPB620 Boss To Go Personal
2013 BFP800 Kitchen Wizz Food
Blender
Processor
2016 BPB620 Boss To Go Personal
2015 BMO700 Quick Touch
Blender
Microwave
2014 BBL910 the Boss Superblender
2015 BCP600 Citrus Press
2013 BRC600 the Multi Chef
2014 BES980 the Oracle Espresso
2013 BEF100 the Thermal Pro Grill
2014 BMO734 the Quick Touch
2012 BCI600 Smart Scoop Ice Cream
2014 BTA720/730 the Lift and Look
Maker
Pro
2012 BES900 Dual Boiler Espresso
2014 BWM640 the Smart Waffle
Machine
2011
2011
BCG800 Smart Grinder
BTM800 Tea Maker
2013 BEF100 the Thermal Grill Pro
2013 BRC600 the Multi Chef
2012 BDC600XL You-Brew Drip
Coffee Machine
2012 BFP800 Kitchen Wizz Pro
Honourable Mention
2013 BBL605 Kinetix Control Blender
2011
BKE820 Kettle Honourable
Mention
2013 BBL 605 Kinetix Control Blender
2013 BDC600 You-Brew Drip Coffee
Machine
Good Design Award Chicago Anthenaeum
2019 BOV860the Smart Oven Air Fryer
2019 BES878 the Barista Pro
2019 BTM700 the Tea Maker Compact
2019 BBL920 the Super Q Blender
2019 BPZ800 the Smart Oven Pizzaiolo
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Breville Group Limited annual report 2021 Breville Group Limited 2021
Contents:
Directors’ report
Corporate governance statement
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the financial statements
Directors’ declaration
Auditor’s independence declaration
Independent auditor’s report
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59
64
65
66
67
68
69
110
111
112
The financial report covers the consolidated entity comprising
Breville Group Limited and its subsidiaries (company or Group)
on pages 64 to 110.
The Corporate governance statement and Directors’ report is
unaudited (except for the remuneration report) and does not form
part of the financial report.
13
Breville Group Limited annual report 2021 Directors’ report
The Board of Breville Group Limited (company) has
pleasure in submitting its report in respect of the Group
for the year ended 30 June 2021.
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 chairperson : B.ACC, CA(SA)
Mr Fisher has more than 30 years’ experience in general
management positions in the wholesale consumer
goods industry and was the former chief executive of
the Voyager Group. Prior to entering into the consumer
goods industry Mr Fisher was a practising chartered
accountant having qualified in South Africa with a
Bachelor of Accounting degree.
During the last four years he has served as a director of
the following other listed companies:
• Laybuy Holdings Ltd #
• Reject Shop Limited #
# denotes current directorship
Timothy Antonie
Non-executive director : BEcon
Mr Antonie has more than 20 years’ experience in
investment banking and formerly held positions of
Managing Director from 2004 to 2008 and Senior
Advisor in 2009 at UBS Investment Banking, with
particular focus on large scale mergers and acquisitions
and capital raisings in the Australian retail, consumer,
media and entertainment sectors. Mr Antonie is
currently a principal of Stratford Advisory Group
providing independent financial advice to Australian
and international corporations. He holds a Bachelor of
Economics degree from Monash University and qualified
as a Chartered Accountant with Price Waterhouse.
During the last four years he has served as a non-
executive director of the following other listed
companies:
• Netwealth Group Limited #
• Premier Investments Limited #
• Village Roadshow Limited
# denotes current directorship
Peter Cowan
Non-executive director
Mr Cowan has more than 30 years’ experience in
leading and building globally respected organisations
and brands in the FMCG sector. He served as both
Chairperson of the Board and CEO in key developing
markets for Unilever and has held Managing Director
roles at Lion Nathan and New Zealand Dairy Board
(Fonterra). Mr Cowan also held Regional Vice President
positions at Alberto Culver and Johnson & Johnson.
During the last four years he has not served as a
director of any other listed company.
Sally Herman
Non-executive director : BA, GAICD
Ms Herman is an experienced non-executive director
sitting on public and private Boards in financial services,
retailing, property and consumer goods. She 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 actively involved
in the community, with a particular interest in education,
the arts and social justice. She is a member of Chief
Executive Women.
During the last four years she has served as a
non-executive director of the following other listed
companies:
• E&P Financial Group Limited #
•
Irongate Funds Management Limited (the
responsible entity for Irongate Property Fund I and
Irongate Property Fund II) #
• Premier Investments Limited #
• Suncorp Group Limited #
# denotes current directorship
Dean Howell
Non-executive director : FCA, CTA
Mr Howell has had an extensive career in accounting,
spanning over 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.
During the last four years he has not served as a
director of any other listed company.
Lawrence Myers
Non-executive director : B.Acct, CA, CTA
Mr Myers has over 20 years’ experience as a practising
Chartered Accountant. He is the Managing Director
and founder of MBP Advisory Pty Limited, a high-end
Sydney firm of Chartered Accountants. Mr Myers sits on
numerous private company and not-for-profit Boards,
including the Foundation Board of the Art Gallery of
New South Wales and acts as a trusted advisor and
mentor on business and financial matters. He is a
registered auditor and his specialist areas of practice
include business and corporate advisory as well as
mergers and acquisitions. Mr Myers is Chairperson
of the audit and risk committee (A&RC) and is the
company’s lead independent director.
During the last four years he has served as a director of
the following other listed companies:
• VGI Partners Asian Investments Limited #
• VGI Partners Global Investments Limited #
# denotes current directorship
14
Breville Group Limited annual report 2021 Board of directors continued
Operating and financial review
Kate Wright
Non-executive director : BA
Ms Wright has more than 30 years’ experience in the
consumer industry across Australia, the South Pacific
and the USA. Her career has spanned manufacturing
operations, sales, marketing, human resources and
general management within the consumer sector. Ms
Wright has held the positions of Managing Director,
Australia and South Pacific region at Philip Morris
from 2001 to 2004 and Head of Korn Ferry Australia’s
Consumer and Retail Practice from 2005 to 2016.
Ms Wright holds a Bachelor of Arts degree from the
University of New South Wales. Ms Wright is chair of the
people, performance, remuneration and nominations
committee (PPRNC).
During the last four years she has not served as a
director of any other listed company.
Company secretaries
The names and details of the company secretaries in
office during the year and until the date of this report
are as below. Unless indicated otherwise, the company
secretaries were in office for this entire period.
Sasha Kitto
LLB, FCA
Ms Kitto is a chartered accountant and has over 20
years’ experience as a practising chartered accountant
and in senior finance roles.
Craig Robinson
BA, ACMA
Mr Robinson is a Chartered Management Accountant
with over 25 years’ commercial finance experience. He
has worked in FMCG, Medical Diagnostics and Sales
Service industries in the UK, Australia, Switzerland and
the USA.
Reporting currency and rounding
The prelimary final 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 Corporations (Rounding in Financial/Directors
Reports) Instrument 2016/191. The company is an
entity to which the instrument applies.
Performance indicators
Management and the Board monitor the financial
performance of the Group 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.
The operating and financial review has been designed
to enhance the periodic financial reporting and provide
shareholders and other stakeholders with additional
information regarding the Group’s operations, financial
position, business strategies and prospects. This
review complements the financial report and has been
prepared in accordance with the guidance set out in
ASIC Regulatory Guide 247.
Company overview and principal activities
The Group’s principal activities, and underlying strategy,
remains the design and development of innovative
world class, small electrical kitchen appliances and the
effective marketing of these products across the globe
to drive sustainable growth in sales and profits.
In line with this strategy, the Group has:
• A strong, competitive and growing product portfolio
with proven success across the globe;
• An innovative, committed, high-quality team;
• A research and development (R&D) culture that
focuses on consumer results, sustainability and
emerging food and beverage technologies;
• A strategic marketing capability supporting new
product launches and building brand awareness;
• A corporate IT platform rolling out globally to bring
speed and competitive advantage;
• A track record of successfully expanding into new
geographies;
• A track record of successfully integrating
acquisitions; and,
• A strong balance sheet that provides a platform to
take advantage of future opportunities.
During the year, the Group has continued to execute
its acceleration program, delivering NPD (new product
development), enhancing our digital marketing offense,
further rolling out the Global IT platform, and acquiring
Baratza (a leading premium coffee grinder business) in
September 2020.
The Group operates a global centralised business
structure with two business segments and three
geographic theatres as described below:
• The Global product segment sells premium
products designed and developed by Breville that
may be sold directly or through third parties and
may be branded Breville®, Sage®, Baratza® or
other Group owned brands.
• The Distribution segment sells products that
are designed and developed by a third party
and are distributed pursuant to a license or
distribution agreement or are sourced directly from
manufacturers. Products in this business unit may
be sold under a brand owned by the Group (e.g.
Breville®, Kambrook®), or may be distributed
under a third-party brand (e.g. Nespresso®).
15
Breville Group Limited annual report 2021 Directors’ report
continued
Operating and financial review continued
Company overview and principal activities
continued
During FY21 the Group announced a reorganisation
of four prior geographic groupings into three theatres
which execute the sales, distribution and business
development functions in each geography. The theatres
are supported by centralised functions including product
development, marketing, operations, IT, finance and HR.
•
•
•
In Asia Pacific (APAC), the Group principally trades
under its company owned brands, Breville®,
Baratza®, Kambrook® and also distributes
products under a machine partnership with
Nespresso® and Nestlé® Dolce Gusto®.
In the Americas, the Group markets and distributes
Breville®, Baratza® and Polyscience® branded
products and distributes Nespresso® products,
under a machine partnership.
In Europe, Middle East and Africa (EMEA), the
Group markets and distributes Breville® designed
products under the company owned brands,
Sage® and Baratza®. The region also supplies
Sage® branded goods to certain distributors
located in Europe and the Middle East.
Group operating results
AUDm1 3
Revenue
EBITDA
EBIT
NPAT
Normalised EBIT2
Normalised NPAT2
Normalised EPS2
(cents)
Dividend per share -
ordinary (cents)
Franked (%)
Net cash ($m)
FY21
FY20
%
Growth
1,187.7
952.2
24.7%
163.3
136.4
91.0
120.1
36.0%
97.7
63.9
39.6%
42.3%
136.4
109.9
24.1%
91.0
72.7
25.1%
65.8
55.6
18.3%
26.5
100%
129.9
41.0 (35.4)%
60%
128.5
• Record sales of nearly $1.2bn with another year of
growth on a strong prior year.
• WFH (working from home) conditions and
successful geographic expansion (France, Portugal,
Italy and Mexico) offsetting the impact of intermittent
supply challenges.
• Global Product segment sales growth of 37.0% in
constant currency (pcp 20.1%).
• Gross margins improving to 34.8% (pcp 33.7%)
with higher average prices, boosted by premium mix
and lower promotional activity, outpacing input cost
inflation.
• Operating leverage reinvested into the medium-
term growth drivers of R&D, marketing and IT with
total investment increasing by $49m or 43%. Core
overheads were well contained.
• Growth over statutory EBIT was 39.6%. EBIT
growth rate (over normalised FY20) accelerated to
24.1% (16.2% in pcp).
• Full year dividend of 26.5c cents per share (100%
franked) reflects the previously announced revised
target payout ratio of 40% to enhance internal
funding of growth opportunities.
• High net cash reflects working capital temporarily
below normal or equilibrium level.
1 Minor differences may arise due to rounding.
2 FY20 EBIT, NPAT and EPS shown normalised for impact
of abnormal expenses (doubtful debt provisioning and
IoT platform write down) and abnormal cost savings
(compensation and marketing). Net impact on EBIT $12.2m;
NPAT $8.8m; EPS 6.8c.
3 FY21 and FY20 reflects the impact of the new IFRIC agenda
decision on configuration and customisation costs in cloud
computing arrangements (“SaaS accounting”). This has
decreased FY21 EBITDA by $10.3m (FY20: $6.5m) and EBIT
by $6.1m (FY20: $3.2m).
16
Breville Group Limited annual report 2021 Operating and financial review continued
Segment results
AUDm1
Global Product
% Growth in
constant currency
Distribution
TOTAL
FY21
984.2
37.0%
203.5
1,187.7
Revenue
EBIT
EBIT Margin (%)
FY20 % Growth
764.4
28.7%
FY21
111.1
FY202 % Growth
87.0
27.7%
FY21
11.3%
FY202
11.4%
20.1%
187.8
952.2
8.4%
24.7%
25.3
136.4
22.9
109.9
10.6%
24.1%
12.4%
11.5%
12.2%
11.5%
Global product segment revenue growth – reported and constant currency
AUDm1
Americas
EMEA
APAC
TOTAL
Global Product Segment Revenue
FY21
493.0
257.0
234.2
984.2
FY20
422.3
170.0
172.1
764.4
% Growth
% in constant
currency
16.7%
51.2%
36.1%
28.7%
27.6%
58.4%
37.4%
37.0%
1 Minor differences may arise due to rounding.
2 FY20 EBIT, NPAT and EPS shown normalised for impact of abnormal expenses (doubtful debt provisioning and IoT platform write
down) and abnormal cost savings (compensation and marketing). Net impact on EBIT $12.2m; NPAT $8.8m; EPS 6.8c.
Global product segment
The Global Product segment revenue grew by 28.7%
to $984.2m (FY20: $764.4m). In constant currency,
revenue grew 37.0% (FY20: 20.1%) driven by the
relevance of our products to a working-from-home
environment and continued geographic expansion.
All geographies delivered a solid performance across
the year, although supply chain disruptions drove a
restricted inventory position at the tail end of 2H21.
In the Americas, the Group delivered 27.6% constant
currency growth with bricks and mortar retailers largely
open by the end of the period, but disrupted during the
year. The Americas posted growth comfortably above
the long-term average for the geography, despite being
inventory constrained at the tail end of the year. We also
entered Mexico in the 4th quarter.
In EMEA, despite on/off retail lock down disruption,
the region performed well, delivering 58.4% growth.
UK sales were strong across the year and mainland
Europe posted continued growth in both new and
existing markets. Our entry into France was completed
in Q1, and Portugal and Italy were added in Q4. In dollar
terms, EMEA’s global segment growth outstripped both
the Americas and APAC.
APAC achieved good 2H growth (+24.3%) after
a remarkable 1H (+49.7%). Retail stayed largely
accessible to consumers throughout the period, and
the region was supported by nimble supply chain
management with inventory levels almost restored to
normal by the end of the period.
The Global product segment EBIT for the year was
$111.1m (FY20: $87.0m), representing a +27.7%
increase, with the EBIT margin largely unchanged
despite absorbing significantly increased investment into
marketing R&D and IT capabilities.
Distribution segment
The Distribution segment fulfilled its strategic role by
delivering an incremental $2.4m in EBIT for investment
into the Global segment. Double-digit sales growth in
“Breville Local”, including the Breville Air™ range, was
partially offset by single-digit growth in Kambrook and
Nespresso.
FY20 normalised results and FY21 accounting
changes
No normalisation of results has been made in FY21. In
2H20, as the COVID-19 pandemic emerged, the Group
incurred significant abnormal expenses and equally,
made some sizable abnormal cost savings. In our FY20
results presentation, we looked through these abnormal
pluses and minuses to report a normalised EBIT of
$113.1m compared to our reported statutory EBIT of
$100.9m.
In FY21, the Group implemented the recent accounting
policy change related to SaaS (software as a service)
capitalisation. The Group also adopted an accounting
change in estimate to the amortisation period of
capitalised product development costs (moving to a
range of 3-5 years, which better reflects the life span of
our new products launched across a global market, and
is in line with key peers, rather than using the previous
flat 3 years).
17
Breville Group Limited annual report 2021 Directors’ report
continued
Operating and financial review continued
Segment results continued
The impacts of the accounting changes were partly
offsetting at the EBIT level in FY21 (net negative
EBIT impact of $(3.0)m). The adoption of a revised
accounting policy requires prior years to be restated
on a comparable basis so statutory and normalised
FY20 EBIT were reduced by $(3.2)m. Adoption of the
revised accounting estimate has not been applied
retrospectively.
Details of the impact of the accounting adjustments is
included in the relevant notes to the accounts.
Group EBIT Summary
FY21
FY20
%
Growth
EBIT pre impact of
accounting changes
139.4
100.9
38.1%
Impact of SaaS accounting
policy change1
(6.1)
(3.2)
Impact of NPD
amortisation accounting
estimate change2
3.1
Statutory EBIT reported
136.4
97.7
39.6%
Abnormal Doubtful Debt
Provision3
Abnormal IOT Impairment4
Abnormal Compensation
cut FY205
Abnormal Marketing cut
FY206
13.6
9.6
(7.7)
(3.3)
Normalised FY20 EBIT
136.4
109.9
24.1%
1 Impact of SaaS accounting policy change increased the
amount of IT implementation costs that are expensed in
year, as opposed to capitalised, and also reduced related
amortisation costs. FY21 EBITDA impact $(10.3) and
EBIT $(6.1)m. FY20 EBITDA impact $(6.5) impact and
EBIT $(3.2)m.
2 Impact of accounting estimate change related to the
amortisation of capitalised product development costs.
Amortisation period moved to a range of 3-5 years from a flat
3 years. The policy is now in line with key peers and remains
prudent with most products staying in market for at least 5
years from the initial country launch. The impact on FY21 has
been to reduce amortisation and increase EBIT by $3.1m.
3 In Q420 a step change in the Group doubtful debt provision
was taken to reflect heightened credit risk with retailers
weakened by changes in consumer patterns and physical
lock downs as well as reduced availability of credit insurance.
4 In Q420 a one-off impairment charge arose as a result of
strategic decision to move to a standards-based IoT platform
and to write off development work on our proprietary IoT
platform.
5 In Q420 temporary compensation reductions were
implemented. Base salaries were reduced by an average of
20% in May and June 2020. The FY20 STI scheme was also
suspended. These employee cost savings were considered
abnormal.
6 In Q420 in response to uncertainty in the COVID-19
environment, marketing spend was reduced. Spend would
normally grow at least in line with gross profit. The $3.3m
add back reflects specific abnormal cuts made in April-June
2020.
Financial position
The Group’s total working capital position ($160.2m)
as at 30 June 2021 was largely flat year-on-year (pcp
$161.9m) despite strong sales growth that would
normally have seen a build in working capital. Lower
than target inventory cover and suppressed receivables
at the end of the year saw working capital finish
approximately $80m below an estimated “equilibrium”
or normal level.
Inventory levels recovered towards the end of the year
to $216.7m (pcp $153.7m); however over a third of this
reported inventory was still goods in transit, with in-
warehouse inventory only recovering 10% from the low
position of June 2020.
Net receivables ($119.3m) were below pcp ($156.1m)
with an excellent improvement in collections and debtor
days across the group, coupled with a weakening USD
and constrained deliveries at the tail end of the second
half, caused by disruptions in the supply chain (Suez
Canal, Covid-related closure of the Yantian port and
inbound port delays).
The moderate inventory increase and receivables
decrease, combined with payables growing in line with
the business, resulted in a flat working capital position
year-on-year.
Intangibles of $229.8m increased $85.8m over the
pcp reflecting the Baratza acquisition ($81.6m) and the
ongoing investment in new product development.
The Group’s ROE remains healthy at 19.7% (FY20:
17.9%).
Net cash
Net cash at 30 June 2021 was $129.9m and largely flat
year-on-year (pcp $128.5m). Strong cash flow before
acquisitions, despite good sales growth, reflects the
below equilibrium working capital outlined above.
The Group is planning for a significant rebuild in working
capital and cash outflow in FY22 as it transitions back
to an equilibrium state. Adequate debt facilities are in
place for this planned rebuild.
Dividends
A final dividend of 13.5 cents per share (100% franked)
has been declared (FY20: 20.5 cents, 60% franked)
bringing the total dividends for the year to 26.5 cents
per share.
The dividend reflects the previously announced decision
to reduce the target payout ratio from 70% of EPS to
40% on a full year basis to enhance internal funding of
numerous growth opportunities on a sustainable basis.
The final dividend will have a record date of 15
September 2021 and will be payable on 7 October 2021.
18
Breville Group Limited annual report 2021 Operating and financial review continued
Material business risks
The material business risks that may impact the achievement of the Group’s strategy and its financial prospects are
summarised below, together with key actions intended to mitigate these risks.
Risk
Nature of risk
Key actions to mitigate risk
Product
development
and
innovation
risk
Insufficient or ineffective investment
in product development and
innovation, and inadequate
communication of the innovative
range to customers and consumers
may result in loss of competitive
advantage.
Supply and
input cost
risk
Pressures on manufacturing and
transport costs may arise from
high demand for consumer goods
combined with sporadic COVID-19
disruptions to the supply chain
adding cost pressures to the
Group.
Availability of components and
geographic concentration of supply
may risk supply interruptions with
loss of sales and profits.
Demand
pattern risk
There is risk of temporary volatility
in the growth trajectory of the
company as the COVID-19
pandemic unfolds adding risk
to accurate demand forecasting
and potential over purchasing
of inventory leading to excess
inventory and interest costs. There
is also a risk of reputational risk
with investors and profit risk if sales
expectations are not met.
Strategic reallocation of funds to increase investment in
product development and marketing functions and their
associated resources and technology.
Securing of world class leadership for product development
and go to market functions.
Investment in IT development to enhance delivery of
connected products.
The Group retains the target of investing at least 12%
of annual Group revenue in marketing and new product
development.
Input cost inflation is monitored by SKU and supplier in
both USD and landed currency. Contracted shipping rates
are secured where possible. Market by market pricing
opportunities are modelled and implemented to negate input
inflation where possible.
Active management of the Group’s intellectual property
arising from product development, protects uniqueness of
range and combined with enhanced marketing, supports
premium margins.
Core S&OP process gives long forward visibility to suppliers
to ensure that required components are secured.
Breville uses multiple manufacturers where possible to de-
risk dependence on single suppliers and establishes long
term partnerships to manage short term cost fluctuations.
The Group’s product offering has proved relevant to the WFH
(working from home) environment facing much of the world.
The increasingly balanced global sales footprint of the Group
mitigates the impact of temporary disruption in a specific
region on the Group results. Moreover, the substantial online
channel partially mitigates against disruption to bricks-and-
mortar retail operations
The Group is committed to tactically buying inventory to
serve upside forecasts in first half of year and then pulling
back on orders to right size inventory in the second half as
needed. This approach is supported by adequate working
capital debt facilities to call on as needed. As inventory
is neither seasonal, nor perishable, the risk of stock
obsolescence is limited.
Weekly sell-out monitoring by SKU and customer allows
informed adjustments in terms of both promotional program
and inventory purchases in advance of sell-in impacts.
Rolling forecasting of annual CM$ delivery allows contraction
and expansion of expenses as need to protect profit delivery
within a specific year.
19
Breville Group Limited annual report 2021 Directors’ report
continued
Operating and financial review continued
Material business risks continued
Climate
risk and
sustainability
Key stakeholders – employees,
customers, investors and society
increasingly expect Breville to both
enhance and communicate its
ESG strategy and activities. Failure
to do so could result in a loss of
engagement, reputation and sales
and the overall sustainability of the
business model.
Cyber
security risk
Breaches of cyber security is a
growing global risk as the volume
and sophistication of threat has
increased partially from the broad-
based working from home reality.
Risks include:
• Unauthorised access to
data/information leading to
reputational damage and/or risk
of litigation.
• Malicious attacks that result in
outages and service and sales
disruption.
• Ransom demands with direct
financial consequence to the
business.
• Failure to comply with regulatory
standards risks financial fines
or restrictions to conduct
business.
• Business interruption and
availability of systems following
a breach (disaster recovery).
Using a LCA (life cycle analysis) to identify the cradle-to-
grave impact of Breville’s activities and products, the group
is prioritising materials usage and power consumption/
efficiency during product life cycle as the key areas of climate
impact.
As well as these priority issues, consumer priorities such as
sustainable packaging and product repairability will also be
pursued.
The Group is committed to enhancing its disclosures and
reporting of progress and is a signatory to the Task Force on
Climate-related Financial Disclosures (TCDC).
Community engagement including Breville’s first RAP
(Reconciliation Action Plan) are well advanced.
Board ownership of the sustainability agenda has been
enhanced via the establishment of the Board Sustainability
Subcommittee.
The technology services team has strengthened our cyber
security and privacy programs in FY21 within an overall
security framework. Including:
• Deployment of modern IT infrastructure with latest
security defences including integration with a security
information and event management solution.
• Penetration testing to test vulnerabilities and response
times and enhanced 24x7x365 incident management
process.
• Staff mandatory multi-factor authentication and phishing
training.
•
Increased use of cloud computing.
Breville has a cyber insurance policy in place. No claims
have been made to date.
20
Breville Group Limited annual report 2021 Operating and financial review continued
Material business risks continued
Health and
safety risk
Poor WHS and well-being practices
can impact both the motivation and
engagement of employees with an
impact on business performance
as well as exposing the Group to
reputational and financial risk via
litigation and fines.
Inherent in producing and selling
kitchen appliances is also the risk
of poor-quality products harming
consumers with a safety and
reputational impact as well as
financial risk from lost sales and
damages.
The Board receives and reviews OHS statistics and incidents
on a monthly basis to ensure top-down ownership of this
risk. A dedicated OHS officer was appointed in 2020 to
ensure a heightened focus on this risk.
Breville has an outsourced business model for manufacturing
and distribution. In terms of COVID-19 risk management, a
comprehensive work from home approach, supported by
OHS guidelines was established on a territory-by-territory
basis.
Technological enhancements were made by providing all
staff with necessary IT equipment and implementing the
use of Zoom, Teams, Slack and e-mails to ensure work
would continue without disruption in the work from home
environment.
In recognition of the strain that lockdowns, and sustained
working from home, can place on our employees’ mental
and physical wellbeing, Breville provided employees with a
range of activities and support programs.
Breville has extensive compliance processes in place
to ensure its products are safe and exceed regulatory
standards in our various markets. Rigorous safety
standards are a critical element in our approach to product
development. Post design the Group maintains a zero-
tolerance Pre-Shipment Inspection (PSI) program for all
products before they leave the factory. Protocols are in place
for rapid reaction to any reported in-use consumer event
including product recalls. Breville has not had to issue a
product recall since 7 November 2016.
Appropriate product and public liability insurance is in place.
Group strategic acceleration program
update
During FY21, the Group has continued to progress its
acceleration program, the impacts of which have helped
drive the FY21 operational and financial performance.
Through FY17-20 the Group moved from specific new
product development innovation, or Food Thinking,
to the commercialisation of a range within a category
or Category Thinking. During FY21, the Group has
started to move up the curve to Solution Thinking.
Solution Thinking seeks to provide not only a product,
but whatever other components (product, software, or
service) are required to enable consumers to achieve
the end results they are seeking.
The Joule Sous Vide, acquired as part of the ChefSteps
acquisition, is the Group’s first integrated solution
offering. The Joule Oven Air Fryer Pro will be the next
solution offering – to be launched in FY22 - leveraging
the outstanding content development capabilities
acquired with ChefSteps, as well as existing Breville
content.
Our innovative product range is supported by increased
investment in Go-To-Market initiatives and specifically
our digital offense including PR, brand communications,
website enhancements and the creation of world class
digital assets and content.
In terms of geographic expansion, we finished the
expansion into France in Q1 21 and entered Italy,
Portugal and Mexico in Q4 21. As the Group continues
to make progress on its strategy of unifying EMEA
under the Sage® brand, the Middle East is transitioning
from the Breville® brand to the Sage® brand allowing
distributors to draw from the European warehouse
rather than Hong Kong. Of note is that in FY21, in the
Global product segment, EMEA was bigger than APAC
and together EMEA and APAC matched the Americas.
The Group has made significant progress, and
investment, during FY21 in delivering its centralised,
scalable global IT platform to support accelerated
growth. The platform is live in the Northern hemisphere
and New Zealand, and will next be rolled out to
Australia. The platform includes sales and operational
planning; a product information management (PIM)
system; a CRM system; an ERP; customer EDI
interfaces; and a point-of-sale information module as
well as various analytical capabilities. It allows efficient
and effective management of the current business and
critically facilitates rapid growth whether it be via organic
development, new country entry, or by the successful
absorption of acquisitions.
Investment in the acceleration platform was increased in
FY21 with an incremental $49m (vs FY20) or 43% being
invested in R&D, marketing, and IT.
21
Breville Group Limited annual report 2021 Directors’ report
continued
Operating and financial review continued
ESG report
Our commitment to sustainability
The Group is committed to ethical, responsible, and
sustainable conduct across the business. The decisions
we make are guided by this commitment, which
extends to respecting the long-term interests of our
stakeholders – including employees, shareholders,
suppliers, regulators, local communities, and the
environment.
The following section outlines the activities we have
undertaken this year in response to the Environmental,
Social and Governance issues that matter most to
our business. These activities demonstrate significant
progress in our own understanding of these issues,
as well as how we disclose ESG information to our
stakeholders.
While we acknowledge there is more work to be
done, the progress we have made in FY21 provides a
foundation for further enhancements to our sustainability
strategy, performance and governance in the months
and years ahead.
Environmental
1. Climate Action
Social
4. Product Stewardship
Governance
8. Structure
1.1 Greenhouse gas emissions
4.1 Product safety
1.2 Climate risks & opportunities
(TCFD)
2. Energy Conservation
2.1 Product lifecycle analysis
4.2 Product recall
5. Ethical Sourcing
5.1 Ethical procurement (incl. vendor
audits)
9. Policies
8.1 Internal ESG reporting
mechanisms
8.2 Board independence
8.3 Board diversity
2.2 Energy efficiency
5.2 Human rights & modern slavery
9.1 Anti-bribery & corruption
3. Recycling
6. Employee Wellbeing
3.1 Sustainable packaging
6.1 Diversity & inclusion
9.2 Cyber security & data privacy
9.3 Other policies
6.2 Health & safety
6.3 Talent attraction & retention
7. Community Relations
7.1 Reconciliation action plan
7.2 Community engagement
3.2 End-of-life
3.3 Waste diversion
3.4 Food recycling
Environmental
1.Climate Action
1.1 Greenhouse Gas Emissions
Much of our emissions footprint1 is produced from
activities not owned or controlled by Breville, such as
manufacturing, third-party logistics and, importantly,
electricity used by our products in consumers’ hands or
“use-phase” emissions. Our priority is now to develop a
comprehensive picture of our emissions profile.
Breville does not currently fully measure its greenhouse
gas emissions but is working to remedy this gap in
FY22, starting with emissions from our own operations
(Scope 1 and 2) and our partner manufacturers
(Scope 3).
22
Estimating Scope 3 “use-phase” emissions after the
sale of our products is a challenging but important
step in addressing our total emissions footprint. The
“use-phase” emissions will vary with both frequency
of use and the electricity source in the country where
the product is operated. Whilst we acknowledge
this measurement challenge, we are committed to
continuing to improve the energy efficiency of our
products and thus effectively reduce “use-phase”
emissions from today’s baseline. The goal of this
measurement and estimation is to establish a baseline
of current emissions. This will ensure we can set
credible emissions targets to measure our progress.
Breville expects to be in a position to set emissions
targets in FY22.
1 Measured in kilograms of carbon dioxide equivalent (kg CO2 eq).
Breville Group Limited annual report 2021 Operating and financial review continued
ESG report continued
1.2 Climate risks and opportunities (TCFD)
We are also addressing the growing climate risks
and opportunities that confront our business by
implementing the recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD). Breville
has now signed up as a supporter of TCFD. This report
represents the first public statement we have made to
that effect.
What is the TCFD?
In 2017, Task Force on Climate-related Financial
Disclosure (TCFD) released climate-related financial
disclosure recommendations designed to help
companies promote more informed investment, credit
and underwriting decisions and enable stakeholders to
better understand the financial system’s exposure to
climate-related risks.
Why is Breville aligning with this framework?
• Climate risks and opportunities impact the type of
products we design and produce
• Consumer expectations are rapidly changing,
creating opportunities for growth
• We want to better understand the impacts of
climate change on our business
We are taking a phased approach to identifying and
managing our climate risk. That means focusing on
having the right policies and procedures in place to
develop our strategic response to material risks and
opportunities.
Our strategy
Goal: Disclose the actual and potential impacts
of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial
planning where such information is material.
Breville’s primary strategy is the design and
development of the world’s best small kitchen
appliances together with expanding distribution and
dynamic marketing on a global scale. This strategy
relies on our ability to provide consumers with innovative
products that simplify and improve their lives. In doing
so, we also have an opportunity to address climate
change as a business.
As a first step in understanding our climate impact,
Breville engaged with the Sustainable Manufacturing
and Life Cycle Engineering Research Group at UNSW
to conduct a Life Cycle Assessment (LCA) on one of our
best-selling coffee machines, the Breville Barista Touch
(BES880).
This involved assessing the emissions profile of the
materials used in its production, the production process,
transport, household usage and end-of-life disposal.
UNSW conducted a cradle-to-grave assessment (not
just cradle-to-gate), to provide us with a comprehensive
emissions profile to guide future mitigation efforts.
The assessment showed that, based on certain
use case scenarios, the materials used in the
coffee machine (such as components made from
polycarbonate and stainless steel), as well as the energy
used by the appliance during operation, accounted
for around 85 percent of its climate change impact.
Production, packaging, transport, and end-of-life had
important, but smaller footprints, in these scenarios.
Impact on 2021 strategic decision making
In light of these findings, we are increasing our focus
on materials selection in the design process, as well as
improving the energy efficiency of our products when in
use. As mentioned above (page 22), this will require us
to estimate our Scope 3 emissions, which we intend to
do from FY22 onwards.
For now, informed by the results of the LCA, we are
focusing on addressing two priority areas: the selection
and usage of materials in the design process and
improving energy efficiency post-purchase. Both areas
present climate risks and opportunities for Breville
over the short, medium, and long term (see Risk
Management).
This analysis informs our new product development
(NPD), which is a core part of our growth strategy.
We have already made good progress in designing,
engineering, and providing our customers with more
energy efficient options (see Energy Efficiency on page
27). Moreover, our design and engineering teams are
increasingly optimising the strength and weight of the
materials used in our components, and examining
opportunities to reduce material consumption.
Risk management
Goal: Disclose how the organisation identifies,
assesses, and manages climate-related risks.
Breville has a thorough risk mapping process that
manages all risks for the Group, including climate
risk. High, medium, and other risks are identified and
addressed through mitigation measures in our Group
risk matrix and risk register.
The matrix and risk register are informed by two key inputs:
1. We gather input from a variety of sources across
territories and functions to identify business risks
and general sustainability risks, including climate-
related risks. Sources include regulatory and
advisory bodies, internal employee engagement
tools, consumer panels, peer observation, industry
collaboration and retailer interactions. Initiatives
such as the product LCA (see page 27), also inform
the process.
2. These risks are then prioritised through a top-down
review by the CEO, CFO and Board.
In 2020, Environmental, Social and Governance (ESG)
risks were elevated in our Group risk register and
management process. Climate change is an amplifier
for several of our material business risks. As such, we
recognise the potential impacts of climate change as
financially material. These risks – and what we are doing
to address them – are categorised in alignment with the
TCFD recommendations, as outlined below:
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Operating and financial review continued
ESG report continued
1.2 Climate risks and opportunities (TCFD) continued
Type of risk
Description of risk
Risk mitigation measures
Opportunities
Visibility on our broad-
ranging sustainability agenda
(including specific climate
actions) is an opportunity
in terms of our brand’s
attractiveness to consumers
and the Group to employees.
Potential financial impact
• Sustained or increased
sales
•
Increased access to
capital due to higher ESG
investor ratings
• Benefits to employee
satisfaction resulting in
lower turnover and higher
productivity
TCFD category:
Transition –
reputation risk
Internal
assessment:
High
Business area:
Strategic
Timeframe:
Ongoing
ESG - Initiatives and
reporting
There is a risk that Breville
will not meet consumer,
employee, and investor
expectations for increased
climate responsibility and
disclosure.
Potential financial impact
• Reduced sales arising
from reputational impact
Across the business, we are
focusing on upgrading our
disclosure to better reflect
our existing progress
and transparently
communicating this to
market. For example, this
year, we have become
a TCFD supporter and
aligned our disclosure with
this framework to establish
a structured approach to
climate-related disclosure.
• Reduced employee
attraction and retention
Our response to the elevation
of this risk also includes:
• Reduction in capital
availability
Environment
•
Identifying design
opportunities for lower
material usage in
production
• Developing focus on
product reliability and
repairability of Breville
products as well as
availability of spare
parts. This is enhanced
by learnings from the
newly acquired Baratza
business and range.
• Optimising our products’
energy use via design,
e.g. ThermoJet
Social
• Responded to employee
and other stakeholder
interests through a
broad-based agenda
including LCA study,
sustainable packaging
initiatives and waste
saving initiatives in our
offices.
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1.2 Climate risks and opportunities (TCFD) continued
Type of risk
Description of risk
Risk mitigation measures
Opportunities
New product development is
core to our business strategy.
As such, we have an
opportunity to innovate and
develop new low-emission
products to improve our
competitive position and
capitalise on shifting
consumer and producer
preferences.
Existing examples include
our Food Recycler
(FoodCycler) and ThermoJet
heater technology.
Potential financial impact
•
Increased demand for
goods and services due
to shift in consumer
preferences
Opportunity to establish even
higher forward visibility in
production and distribution
processes
Potential financial impact
•
Increased reliability of
supply chain and ability
to operate under various
conditions
TCFD category:
Transition – market
risk
Internal
assessment:
High
Business area:
Strategic
Timeframe:
FY21
TCFD category:
Physical – chronic
risk
Internal
assessment:
High risk
Business area:
Operational
Timeframe:
FY22 ongoing
Innovation and
technological advantage
In our competitive market,
there is a risk from a
technology perspective
(product development and
e-commerce, etc.) in the
transition to a low carbon
economy.
In FY21, a lifecycle
assessment identified two
focus areas relevant to this
risk: materials and energy
use during ownership.
Potential financial impact
• Reduced revenue from
losing our premium point
of differentiation and
ultimately losing market
share
• Research and
development (R&D)
expenditures in new and
alternative technologies
Supply risks
Parts and materials
shortages can impact our
ability to source finished
goods. Chronic climate
risks like drought heighten
this supply chain risk,
particularly in certain critical
geographies.
Potential financial impact
• Reduced revenues from
lower sales/output
•
Increased insurance
premiums and potential
for reduced availability of
insurance on assets in
“high-risk” location
Governance – Additional
internal resources are in
place to govern key ESG
initiatives, and a Sustainability
sub-committee of the Board
has been established to
coordinate our climate and
broad-based sustainability
agenda.
R&D spending – As a
primary risk mitigant the
quantum of investment in
R&D has been increased
year-on-year over the last five
years to create a sustainable
business model likely to
deliver the required rate of
innovation.
Product pipeline – The
established Breville new
product development (NPD)
process uses an innovation
funnel to progress projects.
At the business case stage,
the attractiveness of the
product from a sustainability
viewpoint increasingly
informs sales estimates and
the commercial assessment
of the project.
Operations and logistics
(including S&OP, Inventory
planners etc.) teams are
working to give forward
demand visibility to suppliers
to secure parts and materials
well in advance to protect
against interruptions.
Supplier evaluation –
Climate emissions form part
of manufacturing partner
evaluation. This evaluation is
based on a SMETA 4-Pillar
Audit process where we
aim to complete 10-12
comprehensive audits per
annum. For greater visibility
of our supply chain we have
become Sedex members,
which affords us access to a
larger number of audits.
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1.2 Climate risks and opportunities (TCFD) continued
Type of risk
Description of risk
Risk mitigation measures
Opportunities
Build our climate resilience
by conducting a scenario
analysis to better manage
associated risks.
Potential financial impact
•
•
Increased market
valuation through
resilience planning
(e.g., manufacturing
infrastructure)
Increased reliability of
supply chain and ability
to operate under various
conditions
TCFD category:
Physical – acute
risk
Internal
assessment:
Medium risk
Business area:
Operational
Timeframe:
Ongoing
Business interruption
This business risk is
associated with the ability
of a business unit to restart
after a disruptive event
such as climate-amplified
extreme weather events (fire,
flood/water damage, major
earthquake), which may
result in structural collapse of
buildings, etc.
In most regions inventory
is held in a single location,
heightening the potential
disruption of an event.
Potential financial impact
• Reduced revenue from
decreased production
capacity or lost stock
•
Increased capital costs
(e.g., damage to facilities)
Diverse operations –
increased geographic spread
provides a hedge against
unexpected disruption in one
territory.
Supply planning – We
hold inventory in territory,
and our retail partners hold
stock, providing some extra
insurance against disruption
to supply impacting
consumer sales.
Disaster response – a
formal Disaster Recovery
Plan has been established by
Group IT
Business interruption
insurance
Due diligence – the
buildings, sprinkler and fire
extinguishers/blankets at our
sites are regularly inspected
and maintenance performed
as required at all key sites.
Supplier sites are reviewed
as part of supplier audit
program.
Climate governance
Goal: Disclose the organisation’s governance
around climate-related risks and opportunities.
The Board’s Audit & Risk Sub-Committee formally
oversees all risks and opportunities facing the Group,
and climate change was explicitly added to Breville’s
material risks register in FY20.
Given the importance of the sustainability agenda
the Board has established a Board Sustainability
Sub-Committee directly responsible for leading and
co-ordinating current and emerging ESG risks and
opportunities within the Group. The sub-committee
is chaired by Peter Cowan, independent non-
executive director and ex-country Chairman of FMCG
multinational, Unilever – a leader in sustainable business
practices.
The Board Sustainability Sub-Committee is responsible
for co-ordinating, encouraging and prioritising initiatives
from the company Sustainability Committee, the
Diversity and Inclusion Committee, the Reconciliation
Action Plan (RAP) Committee, as well as initiatives
driven by business functions including quality, design,
engineering, HR and WHS.
Board
Board Sustainability Sub-Committee
Health
and Safety
Initiatives
WHS and staff
well being
Climate
Initiatives
Societal
Initiatives
Sustainability
Committee,
Product
Safety, Quality,
Engineering,
Insurance and
Continuity
Planning
Diversity &
Inclusion
Committee,
RAP
Committee,
HR, Community
initiatives
Metrics and targets
Goal: Disclose the metrics and targets used to
assess and manage relevant climate-related risks
and opportunities where such information is
material.
See carbon emissions section on page 22.
Based on our lifecycle analysis, we have identified
most of our climate change impact is through materials
used in production and through Scope 3 “use-phase”
emissions (kg CO2 eq) as highlighted in the graphic
below. We expect to set emissions targets in FY22 to
address this impact.
26
Breville Group Limited annual report 2021 Operating and financial review continued
ESG report continued
2. Energy conservation
2.1 Product Lifecycle Analysis
In addition to informing our response to climate risk,
the lifecycle analysis recently conducted on the Breville
Barista Touch is helping us develop an evidence-based
sustainability strategy. The following graphic reveals five
key findings:
Transport 1
EOL 7
Process 22
Electricity 66
Materials 78
i
.
v
u
q
e
2
O
C
g
K
180
160
140
120
100
80
60
40
20
0
Source: University of New South Wales
•
the product’s materials contribute 45 percent of its
climate change impact;
• energy in usage by the consumer “use-phase”
emissions potentially contribute 38 percent;
•
•
•
the production process contributes 13 percent;
the product’s end-of-life disposal contributes 4
percent; and,
transport from factory to market contributes less
than 1% of the climate impact.
Within the materials impact category, appliance
materials accounted for 94 percent of climate
change impact, with only 6 percent from packaging.
However, issues such as packaging and broader
circular economy initiatives are still important to our
stakeholders, including customers and employees, and
will be pursued.
The Life Cycle Analysis confirms that our predominant
focus should be on reducing key material usage, notably
plastics and metals in the design and construction of
our products, but Breville also remains committed to
reducing the environmental footprint and sustainability
of our packaging.
Our design and engineering teams are increasingly
optimising the strength and weight of the materials
used in our components, examining for opportunities
to reduce material consumption, using Finite Element
Analysis (FEA), Computational Fluid Dynamics (CFD),
Design for Manufacturing studies (DFM), as well as
Failure Mode and Affect Analysis tools (FMEA).
We are also introducing a ‘serviceability index’, which is
a scoring system to enable our engineers to measure
how easily our products can be repaired. The aim is to
engineer repairability and reliability into every product
(instead of replacement), as a practical way of ingraining
sustainability into the new product development
process. One way we do this is by planning for spare
part availability. When spare parts are not available,
however, the consumer gets a replacement unit.
Finally, these initiatives to extend the product life and
improve the reliability of our appliances are supported
by our ongoing efforts to increase customer satisfaction
in our products. This is aimed at minimising customer
returns by delivering the best experience possible.
2.2 Energy efficiency
Enhancing energy efficiency in the “use-phase’ is a key
ESG priority.
We assess our energy performance through the use
of Swiss Energy Ratings across our leading manual
espresso machine range. We apply the Swiss Energy
Rating label in Switzerland and internally apply this
rating system across all 220v-240v markets.
In terms of key energy saving initiatives, Breville is proud
to have pioneered the ThermoJet heating system in its
espresso machines. A global first, the innovation uses
a printed thick film heater to heat water and generate
steam. It scores an A rating in Swiss Energy Ratings
for energy savings compared to a B or C rating for
thermoblocks and a D rating for boilers. ThermoJet
heaters are over seven times more efficient than dual
boiler products, and more than three times more
efficient than thermocoil alternatives. Breville used
approximately 700,000 of these ThermoJet heaters
in FY21 and will increasingly leverage this technology
across the whole espresso range over time.
All Breville products are designed to comply with the
EuP (Energy using Products) requirements set by the
European Union. This means that products without a
screen must use half a watt or less in stand-by mode.
Products with a screen must use one watt or less in
stand-by mode and switch off before a maximum of 30
minutes (this applies in most but not all global regions).
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2.2 Energy efficiency continued
For non-EU and UK regions, Breville also voluntarily
tests its products against the European Union’s
Ecodesign Directive (Directive 2009/125/EC), which
sets ecological requirements for energy use. We’ve
committed to this testing regime, in part, because the
‘star rating’ for energy efficiency only applies to large
appliances under the Greenhouse and Energy Minimum
Standards (GEMS) Act 2012, and large appliances don’t
feature in our current product range.
In terms of energy usage at our headquarters in
Alexandria, Sydney, we optimised light sensors in
FY21 to turn off sooner after no activity – a saving of
approximately 11 tonnes of carbon dioxide per annum.
We are applying to install rooftop solar on the premises,
which we plan to complete in FY22.
3. Recycling
3.1 Sustainable packaging
While packaging materials only constitute 6 percent
of our materials climate change impact, we remain
committed to improving the sustainability of our
packaging. This is demonstrated by our decade-long
relationship with the Australian Packaging Covenant
Organisation (APCO).
As an APCO signatory, we have entered into a voluntary
agreement between government and industry to reduce
the potential impact of products, packaging, and
warehouse operations on the environment.
In FY21, Breville completed a packaging audit on all
products available for sale in Australia. The audit is
under review to determine where improvements can
be made. Sustainable packaging targets and initiatives
include:
• all packaging to be reusable, recyclable or
compostable by 2025 (an APCO target);
•
•
•
•
removal of cello glaze from Breville gift boxes;
removal of expanded polystyrene (EPS) from
consumer packaging by July 2022 (a target set by
the National Plastics Plan 2021);
removal of non-essential packaging;
replacing plastic packaging with sustainable
alternatives; and,
• a broader redesign of Breville’s approach to
packaging, with sustainability and customer
experience front of mind.
Case study: Baratza’s beautiful brown box
Traditional packaging is designed around plastics,
polystyrene, and glossy retail boxes that require extra
protection during shipping. ‘Beauty’ comes at the
expense of our shared environment.
Baratza is breaking from the trend. With the release of
a new grinder in September 2021, we are moving on
from separate retail and shipping boxes to a ‘one box’
design. Along with reducing cardboard, the new design
removes plastic padding and prioritises eco-friendly
materials overall – all while making sure the grinder
arrives safe and sound. Isn’t that beautiful? “We care
about our impact on the planet and are taking steps
to reduce our impact,” says Carla Mokin, Head of
International Operations, Quality Team Lead, Baratza.
“We know we are not perfect. But we are not done”.
Breville finalised the acquisition of coffee grinder
specialist Baratza in September 2020. Established in
1999, Baratza designs and markets premium coffee
grinders for the North American and international
markets, with a focus on sustainable product design
and packaging.
3.2 End-of-life
Breville is supporting a move away from planned
obsolescence within the appliances industry; a
consumption model that prioritises product replacement
over repairability.
In recognition of the need for urgent change, our
design and engineering processes are finding new
opportunities to extend product life and increase
opportunity for repair. Breville’s ‘serviceability index’
(see page 27) is one of the key programs we now have
in place to extend the product life of our appliances
and reduce waste. We’re also looking to introduce a
program where customers can recycle air and water
filters.
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3.2 End-of-life continued
Baratza’s ‘don’t dump it, fix it’ program, in which
grinders are explicitly designed to be repairable,
complements Breville’s existing efforts. With regular
cleaning, maintenance, repair, and even rebuilds, our
grinders can give an accurate result for many years.
Parts are readily available, and customers can follow
instructional videos on YouTube.
Case study: ‘Don’t dump it, fix it’
Twenty years ago, when co-owner and product
visionary Kyle Anderson set out to design Baratza’s first
proprietary grinder, user serviceability was a priority. At
the time, Baratza was thinking more about longevity
and user experience than strictly environmental
impact. Today, with sustainability at the forefront of the
conversation, this design approach has been a major
driver of success.
The Baratza motto of ‘Don’t dump it, fix it’ is not just
a catchy tagline. Our grinders are designed from the
ground up to be user repairable and to last a lifetime
with regular maintenance and occasional repairs. Parts
are engineered to be accessible and affordable to
encourage repair. This intentional design is the key to
preventing Baratza grinders from ending up in landfill.
People are often surprised at why a company would
spend so much effort extending the life of their
products. By the end of the conversation all agree (and
see) that the best way to encourage people to buy
another Baratza grinder is to maximize the value of
ownership.
We do this by doing all we can to keep our grinders in
service for many years to come. When people decide to
upgrade or buy a second grinder, we want to make sure
it is not because their old Baratza grinder died; rather,
they are choosing to place their trust and dollars in a
company that stands behind their products long after
the customer walks out the door.
3.3 Waste diversion
All recyclable waste streams generated at our Sydney
headquarters and R&D centre (except general waste)
are diverted from landfill. This means that our co-
mingled recycling, organic, paper and cardboard,
e-waste, and expanded polystyrene (EPS) waste
is being disposed of in a sustainable way. The only
technically recyclable waste stream that we do not
currently recycle is soft plastics, and this is under review
for a solution in FY22.
During FY21, Breville produced a total of 28.08 tonnes
of waste, 13.42 tonnes of which was recycled (a
waste diversion rate of 47.78 percent). This marked
an improvement on FY20, which saw a total of 49.66
tonnes of waste produced and 22.47 tonnes recycled
(a diversion rate of 45.24 percent). It is likely that
this reduction was partly due to the transition of our
Alexandria employees to remote work during this
period.
Figure 1. Total waste produced at Alexandria, Sydney head office, engineering and design centre
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3.4 Food recycling
Social
4. Product stewardship
4.1 Product safety
Breville is concerned about the serious problem of food
waste in many of its developed markets and has been
developing solutions to address this important issue.
Our FoodCycler, for example, reduces food scraps into
odourless EcoChips. With its low energy requirements
and quiet operation, the product is affordable and
designed for indoor use.
Breville has extensive compliance processes in place
to ensure its products are safe and compliant with
all labelling requirements. In addition to fulfilling all
compliance and regulatory standards on product safety
in our various markets, we implement additional safety
requirements that exceed our legislative obligations.
This means our products are safer than the average
small domestic kitchen appliance.
Rigorous safety standards are a critical
marker of our approach to product
development. For instance, we use the
European Union’s Rapid Exchange of
Information System (RAPEX) analysis to
estimate ‘severity of harm’ and the related
‘probability of occurrence of harm’. This
allows us to better understand the impact of
product failures on our customer base.
The Group also maintains a Pre-Shipment
Inspection (PSI) program for all products
before they leave the factory. A zero-
tolerance approach to quality and safety
within the PSI program gives us a high
degree of confidence that the products
shipped and sold to customers are free from
safety-related defects.
For any alleged injury sustained through the
use of one of our products, we follow the
ACCC guidelines for mandatory reporting,
as well as equivalent bodies in our other
markets. If our customer care team receives
a claim that a product has caused an injury
requiring third party medical treatment, we
lodge it with the ACCC within two days of
notification.
If later investigations show that treatment did
not result from product failure, we contact
the ACCC, and the report is rescinded.
Product failures caused by the manufacturing
process or components are treated on a
case-by-case basis. If a pattern is identified,
we contact the regulator that issued the
approval certificate or the ACCC to discuss
further.
4.2 Product recall
Breville has not issued a product recall since
7 November 2016. Previous product recalls
remain online and can be viewed at:
• https://kambrook.com.au/pages/recall
• https://www.breville.com/au/en/support/Recall.html
• https://www.productsafety.gov.au/recalls
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5. Ethical sourcing
5.1 Ethical procurement (including vendor audits)
The Group conducts its business in a socially
responsible manner. This includes upholding
consistently high ethical standards in our procurement
decisions and processes. Our Ethical Sourcing Policy
sets out the minimum requirements and expectations
with which all vendors and sub-contractors must
comply. In addition, they must observe all local and
international labour and employment laws.
Breville commissions external auditors to perform
ethical trade audits on its direct suppliers. These audits
cover four pillars: labour standards, health and safety,
the environment and business ethics. In 2018, we set
a target to increase the number of audits performed
annually from 5 to 10 by 2023. In FY21, we audited 12
suppliers.
The severity of any non-compliance, and hence the
rating of the vendor, is reviewed by our Quality function.
Vendors who do not meet our internal ‘baseline’
standard are placed into a ‘below standard’ category
and actively monitored until the non-compliance is
addressed. Breville will sever the relationship if the non-
compliance in question requires zero tolerance, or if the
vendor shows an unwillingness to comply.
Attaining Sedex membership in January 2020 has
provided us with more visibility over current and
potential suppliers. We now have access to any
audit performed by the organisation, whether we
commissioned it or not. Out of our 95 current suppliers,
70 (74 percent) are connected to the Sedex platform.
This means that suppliers representing 95 percent of
our supplier spend have performed a self-assessment,
which we can access.
5.2 Human rights & modern slavery
Breville respects and upholds the Universal Declaration
of Human Rights through sound business activities.
Our suppliers, bound by our Ethical Sourcing Policy, are
required to do likewise to partner with us. This includes
upholding the following human rights in their operations:
•
•
•
•
•
freedom from discrimination
freedom from slavery or servitude
freedom of movement
freedom of expression
freedom of thought
The Group’s Code of Conduct (for employees) is
animated by the same principles. In addition, Breville
is bound by the requirements of the Australian Modern
Slavery Act 2018 (Cth), the United Kingdom’s Modern
Slavery Act (2015) and the California Transparency in
Supply Chain Act 2010. Our 2021 Modern Slavery Act
Statement, which is published on our website and the
government platform, outlines the actions we are taking
to address modern slavery and human trafficking risks
in our operations and supply chains.
6. Employee wellbeing
6.1 Diversity and Inclusion (D&I)
Breville’s approach to D&I is guided by its Diversity &
Inclusion Charter. The Charter was recently drafted
under the guidance of our 50-strong Diversity &
Inclusion Committee, which proudly represents diversity
in all its forms. This includes, but is not limited to,
diversity of gender, age, origin, race, cultural heritage,
language, sexual orientation, and location.
We recognise the moral imperative of supporting
a diverse and inclusive workforce. But we are also
convinced that financial benefits accrue from a
business culture that is open-minded and accepting.
For example, employee diversity means our business
is more likely to understand the needs of a diverse
customer base. Nurturing and promoting talent,
irrespective of background, increases the likelihood
of the company retaining and attracting the best
employees, who benefit from feeling valued and
supported. Diverse organisations are also more
innovative and more likely to experiment and embrace
failure in pursuit of new ideas.
Like most businesses in FY21, Breville refined its
policies to encourage more flexible work arrangements.
Working from home was adopted, as needed, to allow
the business to operate through pandemic-induced
lockdowns, and to protect the personal safety of our
employees and their families.
Breville complies with the (Australian) Workplace Gender
Equality Act, which requires the submission of an
annual report on gender diversity practices and metrics.
In FY21, our Board remained at 29 percent female
representation and the percentage of women across the
organisation remained at 45 percent. The percentage of
women in managerial roles increased from 32 percent in
FY20 to 36 percent. Within senior and executive roles,
the percentage of women increased from 30% in FY20
to 35% percent.
6.2 Health & safety
Ensuring a safe workplace is foundational to our
ongoing success as a business, and we strive for
continuous improvement and consistency in our safety
practices. A Group Health, Safety and Environment
(HSE) Manager oversees our global HSE systems,
procedures and compliance. In addition, a Workplace
Health & Safety Committee (WHSC) routinely reviews
the Group’s health and safety standards, rules and
procedures, providing updates as needed. The Board
receives monthly updates on key incidents and safety
initiatives as well as safety KPIs.
To protect our people, the majority of Breville’s global
offices closed at various times in FY21 in response
to COVID-19 outbreaks. In recognition of the strain
that lockdowns placed on our employees’ mental and
physical wellbeing, we introduced a range of activities to
ensure they remain engaged with the business and their
colleagues. Most of these activities were undertaken
globally. They included:
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6.2 Health & safety continued
• Fitness – a virtual Olympics was coordinated for
employees in our EMEA teams to encourage
physical exercise. Preferential membership prices
were also negotiated with local gyms in Australia,
and Breville encouraged employees to participate in
STEPtember.
• Online classes – over 20 sessions of yoga,
meditation and mindfulness were scheduled
throughout the work week.
• Mental Health sessions – covered key topics like
resilience, managing remote working and men’s
& women’s health issues. Separate discussions
coincided with RUOK Day in Australia.
• Employee Counselling Support – offered via
Benestar, our global employee assistance provider.
This support was extended to cover all Breville
markets in FY21.
• Social activities – online drinks and live music
sessions, trivia competitions and online cooking,
cocktail, healthy eating, and herb gardening classes
for employees.
• Flexible Work Policy – to smooth the transition
back to office-working, we introduced flexible
work options to allow greater choice around work
locations and hours.
• Paid Parental Leave – Breville introduced 12 week
paid parental leave in countries where this is not
provided by the state.
In FY21, Breville employees worked 1,611,798 hours.
There were two recordable injuries in that time, both
occurring in Australia. One was a restricted work injury
from a car accident, and the other was a lost time injury
from manual handling.
6.3 Talent attraction & retention
Breville remains one of the largest employers of
industrial designers in Australia. To ensure that we
continue to attract these and other key professionals,
we offer career development opportunities within a
nurturing yet challenging work environment. The Breville
team continues to be acknowledged, both domestically
and internationally, through the receipt of multiple design
awards and public recognition.
Strongly committed to our core values of creativity,
simplicity, insight, and excellence across our business,
we strive to foster a learning culture that stimulates idea
generation, a passion for learning, and the continuous
search for new and better solutions.
These values are reflected in the pride and commitment
that Breville employees invariably demonstrate in their
work. An online employee survey tool, which provides
real-time tracking on employee engagement, showed
in FY21 that Breville exceeded its industry benchmark
for engagement (eNPS), including strong overall
engagement scores as well as ambassadorship and
relationship scores.
Tracking these metrics and feedback comments on
a weekly basis has allowed managers to target the
specific areas of focus for future initiatives, which
will improve the engagement and ultimately the
performance of our employees and our company.
7. Community relations
7.1 Reconciliation action plan (RAP)
As an iconic Australian brand that embraces the best of
modern design and food culture, Breville acknowledges
a responsibility to consider millennia of Aboriginal
and Torres Strait Islander food traditions, as well as
the evolving contribution Aboriginal and Torres Strait
Islander food cultures make to contemporary Australian
life.
With our core purpose of food thinking in mind, we
want to empower Aboriginal and Torres Strait Islander
peoples through deeper collaboration and engagement
with First Nations communities, culture, and knowledge.
That’s why the Group was excited to begin its
reconciliation journey in FY21, with the submission of its
first Reconciliation Action Plan.
Breville’s aim is to develop an inclusive program
capable of catalysing positive change for Indigenous
peoples. Importantly, the program will focus on creating
meaningful outcomes and shy away from superficial
gestures. The RAP is currently with Reconciliation
Australia for approval. Once approved (we will make
any adjustments as necessary), we have an ambitious
supporting agenda already in place for FY22 and
beyond. This includes:
•
formalising our Reconciliation Working Group
Charter;
• establishing an experienced RAP advisory panel
with Indigenous elders, who are best placed to liaise
with the community to solicit a wide variety of First
Nations perspectives;
• building new ways of engaging and educating our
employees in Aboriginal and Torres Strait Islander
culture;
• creating the right funding and resourcing model to
support our RAP initiatives; and,
• establishing new job pathways (including training,
scholarships, and partnerships) to deliver greater
Indigenous employment opportunities (one of our
principal RAP goals).
One major initiative already underway is the sponsorship
of the National Indigenous Culinary Institute (NICI) – a
non-profit apprenticeship program offering elite training
and employment for aspiring Aboriginal and Torres Strait
Islander chefs. Breville covers the financial requirements
of the program as well as training, employment
opportunities and catering at internal and external
company events. Other initiatives include staff education
sessions on native foods at the National Centre of
Indigenous Excellence, and an annual program of
events and guest speakers to mark NAIDOC and
National Reconciliation Week.
This is just the beginning. We look forward to sharing
more on our commitment to Indigenous empowerment
and national reconciliation in FY22.
32
Breville Group Limited annual report 2021 Operating and financial review continued
ESG report continued
7.2 Community engagement
Breville recognises that the health of the communities
we serve is directly correlated to our ongoing viability
and success as a business. In FY21, we partnered with
various not-for-profits on a range of initiatives designed
to make our communities fairer, kinder, and stronger.
Projects included:
• Steptember Program – a month long program
which encouraged employees to exercise each day,
with proceeds going to the Cerebral Palsy Alliance
(Breville matched donations made by employees).
• National Reconciliation Week – celebrations
included a morning tea at Alexandria with young
chefs from the National Indigenous Culinary Institute
(NICI), who demonstrated how native ingredients
are used in cooking. Attendees took home plants
purchased from IndigiGrow – a local Aboriginal
Enterprise specialising in Australian bushfoods and
environmental services.
• Heritage Awareness Months (US & Canada) –
information provided to employees each month
to celebrate and acknowledge the contribution of
various ethnic and traditionally marginalised groups
to American and Canadian history.
• Australian Rural Fire Service – Breville matched
donations to the RFS made by employees and
made its own donation.
•
International Women’s Day – an online global
event was held across all time zones to recognise
and celebrate the achievements of women and
to discuss what still needs to be done to forge a
gender equal world.
• Australia’s Biggest Morning Tea – an event to
support the Cancer Council raise vital funds for
people affected by cancer.
Governance
8. Structures
8.1 Internal ESG reporting mechanisms
Given the importance of the sustainability agenda,
the Board has established a Board Sustainability
sub-committee directly responsible for leading and
co-ordinating current and emerging ESG risks and
opportunities within the Group. The sub-committee
is chaired by Peter Cowan, independent non-
executive director and ex-country Chairman of FMCG
multinational, Unilever – a leader in sustainable business
practices.
The Board Sustainability sub-committee is responsible
for co-ordinating, encouraging and prioritising initiatives
from the company Sustainability Committee, the
Diversity and Inclusion Committee, the Reconciliation
Action Plan (RAP) Committee as well as initiatives
driven by business functions including quality, design,
engineering, HR and WHS.
8.2 Board independence
Breville maintains a majority independent Board. In
FY21, the Board comprised of seven non-executive
directors, four of whom were independent. The
Chairman Steve Fisher is classed as non-independent
due to his historical affiliation with a major shareholder.
Lawrence Myers is the lead independent director and
chairs the Audit & Risk Committee. For an outline of the
relevant skills, experience and expertise held by each
director in office at the time of writing, please refer to
pages 14 and 15.
33
Breville Group Limited annual report 2021 Directors’ report
continued
Operating and financial review continued
ESG report continued
8.2 Board independence continued
Dean Howell is considered an independent director,
despite his thirteen-year Board tenure. In Breville’s
view, Mr Howell’s tenure is mitigated by the fact that
the current management team has been in place for
approximately six years, which is seven years after Mr
Howell took up his Board role, and Mr Howell’s track-
record of independent and impartial decision-making.
8.3 Board diversity
In FY21, two of seven Board members (29%) were
women (Sally Herman and Kate Wright). Breville
will continue to look for opportunities to promote a
diverse and inclusive Board and senior leadership
team, including with respect to gender, background,
professional experience, and geographic location.
9. Policies
9.1 Anti-bribery & corruption
Honesty, integrity, and trust are considered integral to
the Group ethos, its products, and its brands. Conduct
associated with bribery and corruption is inconsistent
with these values. Accordingly, the Group adopts a
‘zero tolerance’ approach in relation to these matters.
The Group has an anti-bribery policy which,
in conjunction with the code of conduct and
whistleblowing policy, sets out the responsibilities of
all the Group’s employees (including contractors) and
directors regarding dealing with outside parties.
The policy prohibits all personnel in all jurisdictions in
which the company operates or conducts commercial
activities from engaging in any activity that constitutes
bribery or corruption and other improper inducements
and/or payments.
To ensure that these values and the policy are properly
adhered to, the Group has appointed an Anti-Bribery
Compliance Officer who is responsible for monitoring
the application of this policy.
On the security front, penetration testing was
undertaken as part of an annual security assessment
process by the technology services provider NTT. This
involved probing our data centres and websites without
forewarning. Our security team identified the attack
within two hours, which is considered to be at the more
responsive end of observed response times.
External experts also reviewed the Azure Enterprise
Cloud Environment which our systems rely upon and
carried out follow-up remediation as needed. Breville’s
integration with Azure Sentinel, Microsoft’s security
information and event management solution, is now
complete. We have also implemented comprehensive
vulnerability coverage through tenable.io. All staff have
completed mandatory multi-factor authentication
training.
With respect to personal data, we have completed
the selection of a privacy and data mapping platform,
with adoption scheduled for the first half of FY22. This
platform, provided by leading service provider OneTrust,
will allow for the more efficient capture and processing
of data, and reduce the compliance burden associated
with meeting multiple privacy obligations around the
world.
Breville has a robust cyber insurance policy in place. No
claims have been made to date.
9.3 Other policies
The following documents are available in the corporate
governance section of the company’s website (www.
brevillegroup.com)
• Audit & Risk Committee Charter
• Board Charter
• Anti-Bribery & Corruption Policy
• Diversity Policy
• Share Trading Policy
• Code of Conduct
• People, Performance, Remuneration and
Nominations Committee Charter
• Continuous Disclosure Policy
9.2 Cyber security & data privacy
• Selection and Appointment of Directors
The mass adoption of working from home has
enhanced prospects for cyber criminals, who have
enjoyed more potential vulnerabilities to exploit. With
cyber crime for profit at an all-time high, Breville has
responded to this heightened threat environment by
ramping up investment in its cybersecurity capabilities.
Specifically, the Technology Services team has
strengthened our cyber security and privacy programs
in FY21 with the aim of mitigating threats before they
arise. The work remains ongoing and will culminate
in the formal adoption of a security framework in the
second half of FY22.
• Criteria for Assessing Independence of Directors
• Shareholder Communications Policy
• Workplace Gender Equality Agency Report
• Ethical Sourcing Policy
• Modern Slavery Act Statement
• Sustainability Policy
• Whistle-blower Protection Policy
• Diversity and Inclusion Charter (to be published in
1H 22)
• Reconciliation Action Plan (to be published in 1H 22)
34
Breville Group Limited annual report 2021 Risk management
Directors’ interests
The company’s risk management approach is discussed
in the corporate governance statement on page 59.
As at the date of this report, the interests of the
directors in the shares or other instruments of Breville
Group Limited were:
Dividends
The following dividends have been paid, declared or
recommended since the end of the preceding year.
S. Fisher
T. Antonie
P. Cowan
$’000
S. Herman
Cents per
ordinary
share
D. Howell
L. Myers
K. Wright
Final FY21 dividend
recommended:
Dividends paid in the year:
Interim FY21 dividend paid
Final FY20 dividend paid
13.5
18,757
13.0
20.5
18,062
28,078
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.
Annual general meeting (AGM) and
director nominations
The Group currently plans to hold its Annual General
Meeting (AGM) virtually on 11 November 2021.
In accordance with our constitution and ASX
requirements, the closing date for the receipt of Director
Nominations from persons wishing to be considered for
election is 16 September 2021 (40 business days prior
to AGM).
Should the nomination of a person for election be
made by a Director, the closing date for the receipt of
nomination is 21 October 2021 (15 business days prior
to AGM).
Ordinary
shares
130,000
43,791
10,968
42,484
140,000
100,000
21,764
35
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited)
Section 1 Introduction and Overview
Section 2 Remuneration Approach and FY21 Outcomes
Section 3 Key Management Personnel
Table 1
KMP details
Section 4 Remuneration Framework
Table 2
Actual Remuneration mix
Section 5 Linking Remuneration to Performance
Table 3
Five Year Group Performance
Section 6 Executive Remuneration – detailed elements
Table 4
Fixed Deferred Remuneration Included in Remuneration tables 6 & 7
Table 5
LTI plans Included in the Remuneration tables 6 & 7
Section 7 Non-Executive Director Remuneration
Section 8 Statutory Remuneration Tables
Table 6 & 7 KMP Remuneration FY21 and FY20
Table 8
KMP STI Cash Bonuses and LTI Performance Rights Vesting
Table 9
KMP Shareholdings
Table 10 KMP Performance Rights Granted and Fair Value
Table 11
KMP Fixed Deferred Remuneration Rights Granted and Fair value
Table 12 KMP Performance Rights Held
Section 9 Peer Group Appendix
Table 13 ASX200 Consumer Staples, Consumer Discretionary and Industrials Peer Group used for
Relative TSR Measurement
1. Introduction and overview
The Directors are pleased to present the Group’s remuneration report for the financial year ended 30 June 2021,
which has been prepared in accordance with section 300A of the Corporations Act 2001 and has been audited by
PricewaterhouseCoopers as required by section 308(3c) of the Corporations Act 2001.
The report sets out the Group’s remuneration strategy, framework and compensation arrangements in place for
the Key Management Personnel (KMP), defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of the Group. The report also sets out the link between performance and
remuneration outcomes for FY21.
This report is made in the context of a strong FY21 performance, delivered against general economic uncertainty,
as well as sustained multi-year performance driven by Jim Clayton and his team that has delivered a 30% CAGR
(Compound Annual Growth Rate) share price appreciation, an 18.3% CAGR sales growth and a 14.6% CAGR EBIT
growth over the last 4 years.
FY21 Performance Highlights
• Sales increased to $1,187.7m
+ 24.7% growth with 18.3% CAGR over the last 4 years
• EBIT increased to $136.4m
+ 24.1% growth over normalised FY20, 14.6% CAGR over the last 4 years
• Share price increased to $29.87 + 31.2% growth with 30% CAGR over the last 4 years
• One-year TSR
+ 32.6%
36
Breville Group Limited annual report 2021
Remuneration report (audited) continued
1. Introduction and overview continued
FY20 Salary reductions and bonus suspension
In Q4 FY20, in the face of great economic and performance uncertainty, the Group implemented across the company
salary reductions and prudently suspended the FY20 STI bonus scheme despite a strong company performance and
targets being exceeded on a normalised basis.
In FY21, after a number of months of continued strong performance, the Board took a series of steps to recognise
and reward this performance. Firstly, salaries were restored to normal levels effective 1st July 2020. Secondly, in
October 2020, the Board exercised discretion to authorise the repayment of the FY20 salary reductions. Thirdly, in
December 2020, the Board exercised further discretion to award a payment representing 50% of potential award
under the suspended FY20 STI scheme. These one-off discretionary repayments boosted reported remuneration in
FY21 and clearly will not repeat in FY22.
CEO remuneration
The CEO’s remuneration package is designed to reward, motivate and retain a high performing international CEO.
Jim Clayton has been with the Group for 6 years as CEO and has delivered sustained strong business growth and
shareholder returns throughout that period. In assessing the appropriate remuneration for the CEO, comparisons
are, and will be made, with packages of CEOs in Australia, USA and Europe in fast growing and globally orientated
companies.
Over the last four years the CEO’s package has steadily moved towards a more variable, share-based and longer-
term at-risk remuneration rather than fixed short-term cash-based rewards. This aligns reward with longer term
sustained performance and shareholder return. This trend continued in FY21 with a further tranche of deferred
remuneration share rights (service period running until August 2025) and an annual LTI grant with face value of 125%
of base remuneration (with performance criteria and a service period running until August 2024) being issued to the
CEO. Based on FY21 performance criteria the CEO was awarded 100% of his potential STI. As detailed above, a
discretionary payment was made in lieu of salary and bonus forgone in FY20.
On a reported basis, as shown in tables 6 and 7, the CEO’s reported package was $3.61m, an increase of $1.30m
or 56%. The reported increase is however largely led by one-off factors
• Discretionary payment in lieu of FY20 salary cut and suspended bonus $0.41m or +18%;
• 100% STI payout against zero in the prior year +$0.71m or +31%; and,
•
Increase in accounting value of SBP rights in the form of LTI and deferred Remuneration +$0.1m or +6%.
The CEOs remuneration will be subject to on going review and benchmarking in FY22 to ensure that it is appropriate
to reward and retain a global CEO with Jim Clayton’s experience and track record of delivery for Breville shareholders.
As of 30 June 2021 Mr Clayton held 427,650 unvested share rights, subject to various performance and service
criteria that may vest in his favour in the future with potential value of $12.8m (based on 30 June 2021 share price
of $29.87). Any proposed new performance or deferred remuneration rights to be issued to the CEO in FY22 will be
issued subject to shareholder approval at the AGM in November 2021.
Other Execs: KMPs
In FY21, other KMP Executives also received a discretionary payment in lieu of FY20 salary reductions and 50% of
the FY20 suspended STI. The FY21 STI was awarded at 100% of potential given the above hurdle performance of
the Group.
A deferred remuneration share rights scheme similar to the CEO scheme will be introduced in FY22 for KMPs to
encourage retention amongst this high performing team and to increase the weight of share-based and longer-term
at risk remuneration within packages to align with shareholder interests.
Non-Executive Directors
In order to attract and retain directors of a high calibre, whilst being commensurate with growing international
companies of a similar size and type, a directors’ fee increase was implemented in January 2021. Total aggregate
remuneration remains below the shareholder approved limit of $1,400,000 agreed at the AGM in November 2016.
An extension of this aggregate remuneration limit to $1,800,000 will be proposed to shareholders for approval at the
AGM in November 2021 to provide future flexibility to attract high calibre, international directors.
37
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
2. Overview remuneration approach and FY21 outcomes
Against this backdrop the following remuneration arrangements were approved and implemented for the year.
Remuneration
Component
Fixed Cash
Remuneration
Fixed deferred
remuneration
share rights
Purpose & Execution
FY21 Outcomes
• There was no base salary increase for
the CEO or Executive KMPs in FY21
• Salary reductions implemented in
FY20 were discretionally repaid in
FY21
The following grant was made to the
CEO in FY21:
• Grant: of 22,311 share rights which
will vest when, and if, the service
period 26 Aug 2024 – 25 Aug 2025 is
completed
• The grant has a face value at issue
of $500k
The grants form part of the CEO’s short-
term employment benefits shown in
table 6 with the value shown calculated
according to AASB 2, which attribute
some of the value of future service
periods to the current year even though
the grant lapses if the future employment
period is not completed.
•
In FY21 76,467 rights vested in
favour of the CEO on completion of
the relevant service period.
A similar scheme will be introduced for
other Executive KMPs in FY22 and will be
detailed in the FY22 remuneration report.
Aims to provide competitive salary, including
superannuation and non-monetary benefits, to attract
and retain a high performing team.
Fixed cash remuneration is reviewed annually, with
outside assistance where needed, and set with
reference to: -
• Size and complexity of role
• Market benchmarks (relevant international and
domestic peers)
• Experience, skills and competencies
Delivers fixed deferred remuneration to the executive
in the form of SBP that aligns the executive’s interests
with shareholders’ by increasing individual potential
shareholdings in the Group. Supports the retention of
high performing international executives.
As part of their fixed remuneration the executive may
receive grants of deferred share rights vesting, and
exercisable, when employment services for a specific
period have been delivered
• One share right entitles the executive to one fully
paid ordinary share on vesting and exercise
• No consideration is payable by the executive
on granting or exercise of the share rights as
the rights satisfy part of the executive’s base
remuneration
• All unvested rights lapse if the specific service
period is not commenced by the executive
• No disposal restrictions apply to the shares
received when the rights have vested
The number of rights granted is calculated as a
deferred salary amount divided by the relevant share
price at the time that the grant is agreed. This aligns
the executive’s and shareholders’ interest in sustained
share price appreciation.
The Board believes that this instrument may prove
particularly attractive as an incentive and retention
tool in times of uncertainty and increased share price
volatility.
38
Breville Group Limited annual report 2021 Remuneration report (audited) continued
2. Overview remuneration approach and FY21 outcomes continued
Remuneration
Component
Purpose & Execution
FY21 Outcomes
Short term
incentives
(STI)
Aims to reward and incentivise executives for
overachieving in-year stretch company targets and is
paid in cash each year.
The CEO has a maximum STI opportunity of 50% of
Base Remuneration (fixed cash remuneration plus
fixed deferred remuneration), other KMPs 35% and
other staff are in a range of 5-35%.
A maximum Group STI pool is calculated as the
sum of maximum STI opportunities set for each
participant.
A stretch EBIT target is set by the Board in advance
of the financial year. No bonus pool is awarded until
this pre-STI EBIT is exceeded. As pre-STI EBIT
exceeds the pre-STI target, the STI pool is funded
until the maximum pool is reached.
The pool is distributed based on each individual’s
maximum opportunity % and the achievement
of targets that include Group EBIT, divisional
performance, and, in some cases, personal targets.
Individual targets include geographic and category
performance, NPD sales, key project delivery,
health and safety performance and product quality
measures.
•
•
In FY20 the STI scheme was
suspended as part of cost cutting
during a period of increased
uncertainty. On a discretionary basis
this was paid out at 50% of potential
during 1H FY21.
In FY21 the scheme was at Board
discretion, but at the beginning of
FY21 a stretch EBIT target of $128m
was approved representing 15% EBIT
growth and matching consensus in
October 2020.
• This stretch EBIT target was
•
comfortably exceeded, and on
this basis, and on the Board’s
assessment of the Group’s
performance during FY21, the STI
pool was filled and awarded at 100%
of potential.
In recognition of the Group reaching
the milestone of $1bn sales, a one-
off share gift of 50 ordinary shares
(with a face value $1,364) was made
to all employees in May 2021. The
executive KMPs also received this
award. The platform and process
used to implement the gift globally
may facilitate the introduction of
an Employee Share Purchase Plan
(ESPP) in future periods.
39
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
2. Overview remuneration approach and FY21 outcomes continued
Remuneration
Component
Long term
incentives
(LTI)
Purpose & Execution
FY21 Outcomes
In Year grants
•
In FY21 the CEO received an LTI
performance rights grant of 125% of
Base Remuneration in line with FY20.
• Other KMP’s received a grant of
65% of fixed remuneration with other
managers in a range from 10-50%.
In-Year LTI vesting
• During FY21 97,000 rights vested in
the CEO’s favour under the below
schemes, and 72,400 rights vested in
favour of the other KMPs.
2017 Performance rights
• 31,100 shares vested to the CEO and
24,000 to other KMPs as part of third
tranche of the 2017 performance-
based grant. 100% of the potential
rights in the tranche vested based on
4-year positive TSR of 242% which
was above the 75th percentile of the
peer Group.
2018 Performance rights
• 31,700 shares vested to the CEO
and 16,500 to other KMPs as part
of the second tranche of the 2018
performance-based grant. 100%
of the potential rights in the tranche
vested based on 3-year positive TSR
of 132% which was above the 75th
percentile of the peer Group.
2019 Performance rights
• 34,200 shares vested to the CEO
and 31,900 to other KMPs as part
of the first tranche of the 2019
performance-based grant. 100%
of the potential rights in the tranche
vested based on 2-year positive TSR
of 102% which was above the 75th
percentile of the peer Group.
Aims to reward and incentivise executives to deliver
sustained shareholder value.
Annual performance right grants are made to the
CEO, KMPs and other managers based on a % of
their Base Remuneration. The number of rights issued
is based on the value of shares in the company using
a 20 trading day trailing volume weighted average
price (VWAP) up to date of financial year end.
LTI as a percentage of Base Remuneration ranges
from 10% up to 65% for KMPs and 125% for the
CEO.
The way the scheme operates has evolved:
In FY18-20
• The grants were split into 3 equal tranches with 2,
3 and 4-years performance periods giving a three-
year average,
• A gate of absolute positive TSR was set.
•
If this gate is met, then the % vesting is
determined on relative TSR achieved against
a peer Group of approximately 60 companies
within the ASX200 Consumer Staples, Consumer
Discretionary and Industrials indices (the peer
group appendix is shown in Table 13).
• Grants vest on the following scale
- 0% vests below 50% TSR relative percentile
- 50% vests at 50% TSR relative percentile
- Rising in a straight line to 100% at 75% relative
- TSR percentile.
• After vesting the shares are subject to a two-year
trading lock.
In FY21
• One single tranche with 3 year performance
period
• Minimum and Stretch 3 year absolute TSR target
• 0% vests below minimum TSR
• 50% vests at minimum TSR
• Rising in a straight line to 100% at stretch
• No trading lock
The scheme was redesigned in light of an expected
period of extreme trading volatility and stock market
dislocation making relative TSR difficult to use in an
environment of COVID-19 winners and losers. An
absolute TSR target was considered more likely to
properly incentivise the team during this unusual
period. Board discretion is likely to be used to
properly judge team performance against the actual
trading environment.
The absolute TSR targets as well as relative TSR
ranking will be retrospectively disclosed in the Rem
report of the year of vesting. In the case of the FY21
scheme that would be in the FY24 remuneration
report.
40
Breville Group Limited annual report 2021 Remuneration report (audited) continued
2. Overview remuneration approach and FY21 outcomes continued
Remuneration
Component
Non-executive
director fees
Purpose & Execution
FY21 Outcomes
Aims to attract, reward and retain high calibre
Directors suitable for a fast-growing international
business.
Each Director receives a fee or base remuneration
as a Director of the Group with an additional fee
for acting as Chairperson or Chairperson of a
Board committee recognising the additional time
commitment required.
• Non-Executive Director remuneration is reviewed
annually within the aggregate remuneration pool
of $1,400,000 approved by the AGM held in
November 2016.
• An increase of this aggregate remuneration pool
to $1,800,000 to allow the Group to attract high
calibre international directors, will be proposed for
shareholder approval at the AGM In November
2021
Non-executive directors took a 40% cut
in fees in May and June 2020 as part of
company-wide salary reductions. There
has been no discretionary repayment of
this cut.
Director fees were increased in FY21
effective from the 1 January 2021:
• Main Board Chairman Fee: increased
to $350,000 p.a. inclusive of
superannuation from $300,000.
• Main Board Member Fee: increased
to $145,000 pa inclusive of
superannuation from $123,500.
• Sub-Committee Chair Fee:
Maintained at $30,000 pa inclusive of
superannuation.
• The total fees paid in FY21 of
$1,184,349 represents 85% of the
shareholder approved aggregate
remuneration of $1,400,000.
3. Key management personnel
KMPs are the persons with authority and responsibility for planning, directing and controlling the activities of the
Group and comprise the Directors of the Group and the Executives listed below.
All KMPs served for a full year in FY21.
Table 1: Key management personnel (KMP)
Name
Position
Term as KMP
Non-Executive Directors
Steven Fisher
Tim Antonie
Peter Cowan
Sally Herman
Dean Howell
Non-Executive Chairperson
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (a),(b)
Lawrence Myers
Non-Executive Director (c),(b)
Kate Wright
Executives
Jim Clayton
Scott Brady
Non-Executive Director (a),(d)
Group Chief Executive Officer
Global Product Officer
Martin Nicholas
Group Chief Financial Officer
Mark Payne
Cliff Torng
Chief Operating Officer
Global Go-to-Market Officer
(a) Member of Audit and Risk Committee
(b) Member of People, Performance, Remuneration and Nominations Committee
(c) Chair of Audit and Risk Committee
(d) Chair of People, Performance, Remuneration and Nominations Committee
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
41
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
4. Remuneration framework
The People, Performance, Remuneration and Nominations Committee (PPRNC) of the Board reviews and
recommends executive and employee remuneration arrangements within an annually reviewed framework that is
designed to support the achievement of strategic goals, sustainable financial performance and sustained growth in
shareholder value.
From time to time the committee may engage external remuneration consultants to assist with this review but none
were engaged in FY21.
Key principles that guide the remuneration framework include:
Fair and competitive
Simple
Provide appropriate rewards to attract and retain high calibre employees for an
international and growing business. Market benchmarks are used and include domestic
and international peers depending on the role being evaluated and location of the role
Clear, visible and calculable reward linked to sustained company performance and
shareholder value creation. Wherever possible executives will be aware of the status of
their incentive achievement mid-period
Aligned to strategy
Reward linked to achievement of strategic goals and sustainable performance of the
company
Shareholder aligned
Reward explicitly linked to short and long-term shareholder value creation
Sustained delivery
Reward balanced to optimise long, medium and short term, performance
In implementing its remuneration framework and ensuring proper oversight the committee:
• Designs compensation to motivate and retain a high performing global CEO and executive team in line with
shareholder interests
• Encourages increasing level of executive shareholdings
• Aligns interest of shareholders and executives via increasing SBP payments
• Retrospectively discloses performance hurdles and calculation of award and payments made to ensure
transparency
• Encourages increased variabilisation of pay linked to short and long-term performance
• Limits executive termination packages to less than 12 months’ pay plus accrued leave
• Rewards sustained long-term performance, not just single year peak performance
• Utilises measurable, shareholder relevant targets
• Retains Board discretion over level of award
In establishing the remuneration arrangements each year, the Board specifically reviews the proportion of the fixed
compensation and variable compensation (potential short-term and long-term incentives) that the executives are
achieving. The Board aims to ensure the appropriate mix of fixed to variable remuneration, and specifically share-
based and longer-term performance related, remuneration.
The actual remuneration mix for FY21 and FY20 is shown in table 2 below. The percentages are distorted by the
suspension of FY20 STI scheme and the discretionary payments made in FY21, but the year-on-year comparison still
clearly shows an increase in the weight of variable and share-based, at risk compensation.
FY22 will see the balance of other executives remuneration begin to move from fixed cash remuneration with the
introduction of a deferred remuneration rights scheme for key executives.
Table 2: Actual Remuneration Mix of CEO and other KMPs for FY21 compared to FY20
CEO FY21
CEO FY20
Other Execs FY21
Other Execs FY20
28%
18%
30%
40%
56%
33%
0%
0%
27%
24%
27%
17%
81%
0%
0%
19%
Fixed Cash Remuneration
(guaranteed)
Fixed Deferred Remuneration
Rights (At risk)
STI cash
(At risk)
LTI Rights
(At risk)
42
Breville Group Limited annual report 2021 Remuneration report (audited) continued
4. Remuneration framework continued
• Contracts – Employment contracts are entered with executives designed to attract and retain the employees
whilst safeguarding the Group’s interests. None of the KMPs have fixed-term contracts. Amounts payable on
termination vary from a minimum statutory entitlement to a maximum of 12 months of fixed pay plus accrued
leave balances. In accordance with the terms of the LTI performance rights plan any performance rights not
vested at the date of termination will be forfeited and will lapse, unless otherwise determined by the Board. Rights
under the fixed deferred remuneration scheme will lapse on resignation but will be pro-rated for time served in the
case of termination without cause.
• Hedging prohibited – The Group has a policy that prohibits KMPs and their closely related parties from entering
into an arrangement that has the effect of limiting the exposure 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.
• Measurement – The PPRNC is responsible for assessing performance against KPIs and determining the STI
and LTI to be awarded. To assist in this assessment, the committee receives detailed reports on performance
from management which are based on independently verifiable data. From time to time the committee may also
engage external remuneration consultants to assist with this review. An external specialist is always used to
calculate and report on TSR and relative TSR performance against a peer group for use in LTI evaluation. In the
event of fraudulent or dishonest misconduct, the Board reserves the right to deem any unvested rights to have
lapsed.
5. Linking remuneration to performance
The Group’s remuneration principles and framework aims to align executive remuneration to the Group’s strategic
and business objectives, sustained business performance and the creation of sustainable shareholder value.
The key measures that are applied to Executive KMP incentive plans – EBIT and TSR – are both measurable,
verifiable and well aligned to shareholder value creation.
EBIT – Earnings before interest and tax (EBIT) is a well-recognised measure of the Group’s performance and ability to
generate cash to fund growth and distribute dividends. It is well defined and measurable.
• The STI pool is only funded when a stretch EBIT target, set by the Board at the beginning of the year, is delivered
• Board discretion may be used in deciding an STI award if an unusual environment eventuates, but performance
against a stretch target would still be monitored
• EBIT is preferred to EBITDA given the strategic importance of investment in new product development and
associated amortisation costs
• TSR – Total Shareholder Return is a measure of share price appreciation, and dividends paid, expressed as a %
of the opening share price. The Group measures both its own absolute TSR and its relative TSR which compares
the company against an index of approximately 60 peers within the S&P/ASX200 Consumer Staples, Consumer
Discretionary and Industrials indices.
• Executives are rewarded by a vesting of performance rights into shares based on meeting a target TSR or
achieving a relative ranking against peers measured over a three year period. This aligns management and
shareholder interests.
Table 3 below shows the Group’s sales, profit and share price performance over the last 5 years.
The measures shown are consistent with the measures used in determining the variable amounts of remuneration to
be awarded to executives. There is a strong alignment between executive reward and shareholder return as seen in
the below table.
43
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
5. Linking remuneration to performance continued
Table 3: Five Year Group Performance ($m)
Year ended
Group Revenue
Revenue Growth
Group EBIT
EBIT Growth
NPAT
Earnings per share (cents)
EPS Growth
Total dividends per share (cents)
Share price at 30 June ($)
Share Price Change
One Year TSR
Average STI as % Maximum Opportunity
Percentage of Executive LTI
performance rights that vested
related to schemes maturing in the year
30 June
2017
605.7
5.1%
79.0
7.2%
53.8
41.4
7.2%
30.5
10.45
39.5%
43.5%
39.7%
30 June
2018
30 June
2019
30 June
2020
30 June
2021
652.3
7.7%
86.9
10.0%
58.5
45.0
8.7%
33.0
11.62
11.2%
14.2%
78.0%
760.0
17.5%
97.3
12.0%
67.4
51.8
15.2%
37.0
16.36
40.8%
43.8%
76.0%
952.2
25.3%
97.7
0.4%
63.9
48.8
(5.8)%
41.0
22.76
39.3%
41.5%
0%1
1,187.7
24.7%
136.4
39.6%
91.0
65.8
34.8%
26.5
29.87
31.2%
32.6%
100%
100%
100%
100%
100%
100%
1
FY20 STI scheme was suspended as part of cost cutting measures implemented in April-June 2020 in the face of extreme
business uncertainty. A discretionary payout of 50% was subsequently made in 1H 2021.
• The Group FY21 STI plan was based on Board discretion, given the uncertainty over the COVID-19 impact at the
beginning of the financial year.
• A stretch EBIT target of $128m was also monitored representing 15% growth on normalised FY20 EBIT and 30%
on statutory FY20 EBIT. $128m was in line with consensus at the beginning of FY21. Actual EBIT of $136.4m
comfortably exceeded $128m having absorbed the STI pool payout.
• The Group’s annual FY22 STI plan has a stretch financial EBIT target based on growth on Group EBIT for FY22,
which will be retrospectively disclosed as a part of the FY22 remuneration report.
• The FY21 LTI scheme performance rights have absolute TSR performance hurdles to determine vesting %.
These absolute TSR targets, actual TSR achieved by the company and associated rights vesting in FY24 will be
retrospectively disclosed as part of the FY24 remuneration report.
6. Executive remuneration - detailed elements
There are four key components in executive remuneration
i) Fixed Cash Remuneration
ii) Fixed Deferred Remuneration in Rights
iii) Short Term Performance Incentive
iv) Long Term Performance Incentive
i) Fixed cash remuneration
Executives receive their fixed cash remuneration in cash or other non-cash benefits. Fixed cash remuneration is
reviewed annually by the PPRNC, or on role change. The committee reviews company and individual performance,
relevant comparative market compensation, considers internal relativities and, where appropriate, external advice on
policies and practices. Breville increasingly competes in a global market for talent and employs both Australian and
international executives; thus, the Group benchmarks both domestically, and internationally, when reviewing suitability
of remuneration.
Details of fixed cash remuneration by KMPs is shown in the remuneration tables 6 and 7.
FY20 saw a company-wide salary reduction in May and June reducing reported fixed cash remuneration. A
discretionary payment in October 2020 effectively refunded this amount to employees including KMPs.
44
Breville Group Limited annual report 2021 Remuneration report (audited) continued
6. Executive remuneration - detailed elements continued
ii) Fixed deferred remuneration in share rights
Fixed remuneration may also be delivered by way of a deferred grant of share rights. These rights will vest, and
are exercisable, at the completion of a specific period of employment service. The rights automatically lapse if the
executive resigns before the vesting date, or is terminated with cause, and vest, on a pro rata basis, if the executive is
terminated without cause.
Details of fixed deferred remuneration share rights grants for which compensation is included in the remuneration
tables 4, 6 and 7 are shown in table 11. Under AASB 2 accounting, although the share rights relate to future specific
periods of employment, some of the cost is recognised in the current period.
Table 4: Fixed Deferred Remuneration included in Remuneration tables 6 and 7
Fixed Deferred
Remuneration –
share rights year
of issue
Conditions
Issue Price
Number
outstanding
30 June
2021
Number
outstanding
30 June
2020
FY18
FY20
FY21
•
Issued for nil consideration
• Exercise price is $0.
• Participant (Jim Clayton) must be
employed by the company on 30 June
2020.
• 100% vested at 30 June 2021 as vesting
date is 31 August 2020.
•
Issued for nil consideration
• Exercise price is $0.
• Participant (Jim Clayton) must complete
the service period between:
16,467 rights: 26 August 2019 –
25 August 2020.
29,940 rights: 26 August 2020 –
25 August 2021
29,940 rights: 26 August 2021 –
25 August 2022.
29,940 rights: 26 August 2022 –
25 August 2023.
29,940 rights: 26 August 2023 –
25 August 2024.
• 12% vested at 30 June 2021.
* In line with AASB2, fair value was based on VWAP
for H1 FY20.
•
Issued for nil consideration
• Exercise price is $0.
• Participant (Jim Clayton) must complete the
service period between:
22,311 rights: 26 August 2020 –
25 August 2025.
• 0% vested at 30 June 2021 as vesting date is
25 August 2025.
$10.12
-
60,000
$16.70
119,760
136,227
$22.41
22,311
-
45
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
6. Executive remuneration - detailed elements continued
iii) Short term performance incentives (STI)
The Group operates an annual STI program available to executives and other employees and awards a cash
incentive subject to the attainment of clearly defined business targets.
Who participates?
Executives and other employees
How is STI
delivered?
Cash
What is the STI
opportunity?
Executives and other employees are eligible for an annual maximum incentive of between
5% and 50% of fixed cash remuneration.
What are the
performance
conditions for each
financial year?
How is performance
assessed?
The STI rewards executives and other employees for their contribution to achievement of
Group financial outcomes.
The total Group incentive payment is based on the achievement of a stretch target pre-
bonus EBIT set by the Board. No STI pool is awarded or bonus payable to any employee
until this pre-STI EBIT is exceeded. As pre-STI EBIT exceeds the target, the STI pool is
funded until the maximum is reached.
Actual STI payments are awarded to each executive or employee depending on the extent
to which the STI pool is funded, their maximum % achievable and the delivery of divisional
and individual targets.
After measurement and audit of Group EBIT
•
•
the PPRNC recommends the amount of STI to be paid to the Group CEO for Board
approval; and
for the other executives and employees, PPRNC will seek recommendations on total
and individual pay outs from the Group Chief Executive Officer based on Group EBIT,
divisional profits and, in some cases, personal targets.
Also paid in FY21 were the following discretionary amounts.
Discretionary FY20 STI recognition
During the uncertainty during the 30 June 2020 reporting period the FY 20 STI scheme was prudently suspended
despite a strong company performance in a difficult environment and target being exceeded on a normalised basis.
In October 2020 after 6 months of continued strong performance during the pandemic, the Board at its discretion,
awarded a 50% payout for the FY20 STI. This is shown as a discretionary payment in FY21.
Also included in the balance is a discretionary payment of 50 shares at a share price of $26.96 (face value
$1,348) which was part of a company-wide recognition of the Group reaching the milestone of $1bn sales made
to all employees in May 2021. The executive KMPs also received this award. This amount is included under the
discretionary award heading in table 6.
iv) Long term performance incentives (LTI)
The Group operates an LTI scheme with an annual grant of LTI share rights that vest in the future reliant on sustained
shareholder value creation. The objective of the LTI plan is to reward and incentivise executives in a manner that
aligns with sustainable long-term value creation.
Who participates?
The LTI plan is made available to executives who are able to influence the generation of
shareholder value and have a direct impact on the company’s performance against long-
term performance hurdles.
How is LTI
delivered?
What is the LTI
opportunity?
LTI grants to participants (excluding the CEO) are recommended by the CEO to the
PPRNC. This recommendation, together with a recommendation by the PPRNC of an LTI
grant to the CEO, is then put to the Board for approval.
Upon satisfaction of the performance hurdles, the performance rights will vest and convert
into fully paid ordinary shares in the company.
Depending upon their position and seniority in the organisation, executives and other
employees are eligible for an annual LTI award of between 10% - 125% of their Base
Remuneration.
46
Breville Group Limited annual report 2021 Remuneration report (audited) continued
6. Executive remuneration - detailed elements continued
iv) Long term performance incentives (LTI) continued
What are the
performance
hurdles for the FY21
LTI grant?
For the FY 21 grant absolute TSR hurdles with minimum and stretch thresholds have been
set.
The grant has a performance period of 3 years.
The vesting schedule is as follows:
The Group (BRG) TSR performance
ranking relative to peer group
Proportion of performance rights that
will vest
Below minimum TSR hurdle
Meets minimum TSR hurdle
0%
50%
Between minimum and stretch hurdle
Pro rata between 50% and 100%, based
on the relative TSR performance
Above stretch hurdle
100%
As detailed above the proposed FY21 scheme has been redesigned to reflect current
and expected expected turbulence in stock price performances given the impact of the
COVID-19 pandemic and therefore has adopted an absolute, rather than a relative, TSR
target. For information, the relative TSR performance will still be measured for the FY21
grant. Both absolute minimum and threshold targets and relative TSR will be disclosed for
the FY21 scheme in the FY24 Remuneration report.
How is performance
assessed?
TSR performance is calculated by an independent external adviser at the end of each
performance period. Table 12 provides details of the KMP performance rights granted
under the FY21 plan.
Please refer to Section 9: Appendix (table 13) for Peer Group of S&P/ASX200 in the
Consumer Staples, Consumer Discretionary and Industrials sectors.
When does the FY21
LTI vest?
The performance rights will vest over a period of three years and will vest on the 29 August
2023.
How are grants
treated on
termination?
Are there
restrictions
on disposal of
performance shares
following the vesting
and exercise of FY21
performance rights?
Do participants
receive dividends
on unvested
performance rights?
What happens if
there is a change of
control?
All outstanding unvested performance rights automatically lapse upon an executive
ceasing to be employed by the Group unless otherwise determined by the Board.
To make the scheme globally tax efficient, there are no explicit disposal restrictions after
vesting, notwithstanding that any trading in shares is at all times subject to the company’s
share trading policy.
Participants do not receive distributions or dividends on unvested performance rights.
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 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.
47
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
6. Executive remuneration - detailed elements continued
Table 5: LTI plans for which compensation is included in the remuneration tables 6 & 7
LTI Plan for
the year
ended
FY17
Performance
based LTI
rights
June 2017
FY18
Performance
based LTI
rights
June 2018
FY19
Performance
based LTI
rights
June 2019
Performance hurdles/conditions
Issued for nil consideration.
- Exercise price is $0.
- Term of two to four years with vesting as follows, each
representing 33% of the total number of performance rights:
(a) Total shareholder return (TSR) from 30 June 2016 to
30 June 2018 applying both an Absolute Test and a
Relative Test.
(b) Total shareholder return (TSR) from 30 June 2016 to
30 June 2019 applying both an Absolute Test and a
Relative Test.
(c) Total shareholder return (TSR) from 30 June 2016 to
30 June 2020 applying both an Absolute Test and a
Relative Test.
100% vested (165,600 shares) as at 30 June 2021 (22,500
lapsed1).
Issued for nil consideration.
- Exercise price is $0.
- Term of two to four years with vesting as follows, each
representing 33% of the total number of performance rights:
(a) Total shareholder return (TSR) from 30 June 2017 to
30 June 2019 applying both an Absolute Test and a
Relative Test.
(b) Total shareholder return (TSR) from 30 June 2017 to
30 June 2020 applying both an Absolute Test and a
Relative Test.
(c) Total shareholder return (TSR) from 30 June 2017 to
30 June 2021 applying both an Absolute Test and a
Relative Test.
67% vested (96,700 shares) as at 30 June 2021 (nil lapsed).
Issued for nil consideration.
- Exercise price is $0.
- Term of two to four years with vesting as follows, each
representing 33% of the total number of performance rights:
(a) Total shareholder return (TSR) from 30 June 2018 to
30 June 2020 applying both an Absolute Test and a
Relative Test.
(b) Total shareholder return (TSR) from 30 June 2018 to
30 June 2021 applying both an Absolute Test and a
Relative Test.
(c) Total shareholder return (TSR) from 30 June 2018 to
30 June 2022 applying both an Absolute Test and a
Relative Test.
33% vested (66,100 shares) as at 30 June 2021 (nil lapsed).
Fair value per
performance
right at Grant
date $
Number
outstanding
30 June 2021
(Executive
only)
Number
outstanding
30 June 2020
(Executive
only)
-
55,100
$3.43
$3.49
$3.51
$7.05
$6.81
$6.68
$7.07
$6.81
$6.58
48,200
96,400
131,600
197,700
48
Breville Group Limited annual report 2021 Remuneration report (audited) continued
6. Executive Remuneration - detailed elements continued
Table 5: LTI plans for which compensation is included in the remuneration tables 6 & 7 continued
LTI Plan for
the year
ended
FY20
Performance
based LTI
rights
June 2020
FY21
Performance
based LTI
rights
June 2021
Performance hurdles/conditions
Issued for nil consideration.
- Exercise price is $0.
-
Term of two to four years with vesting as follows, each
representing 33% of the total number of performance rights:
(a) Total shareholder return (TSR) from 30 June 2019 to
30 June 2021 applying both an Absolute Test and a
Relative Test.
(b) Total shareholder return (TSR) from 30 June 2019 to
30 June 2022 applying both an Absolute Test and a
Relative Test.
(c) Total shareholder return (TSR) from 30 June 2019 to
30 June 2023 applying both an Absolute Test and a
Relative Test.
0% vested as at 30 June 2021 (nil lapsed).
Issued for nil consideration.
- Exercise price is $0.
-
Term of three years with vesting applying Absolute Test of
total shareholder return (TSR) from 30 June 2020 to 30 June
2023.
Fair value per
performance
right at Grant
date $
Number
outstanding
30 June 2021
(Executive
only)
Number
outstanding
30 June 2020
(Executive
only)
193,500
193,500
$6.51
$6.81
$7.06
147,632
-
0% vested as at 30 June 2021 (nil lapsed).
$14.69
1 Performance-based LTI rights lapsed for June 2017 relate to resignation of M. Cohen on 17 November 2017.
7. Non-executive director remuneration
In accordance with best practice corporate governance, the structure of non-executive director and executive
remuneration is separate and distinct. The Board seeks to set non-executive director remuneration at a suitable level
to attract and retain high calibre directors whilst being commensurate with growing international companies of a
similar size and type.
The remuneration 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 chairperson of a Board committee
recognising the additional time commitment required by the director to facilitate the running of the committee.
Directors’ fees were reduced by 40% during the months of May and June 2020 as part of the Group-wide temporary
salary cuts. This deduction was not repaid. Directors’ fees were subject to an increase effective from the 1st January
2021:
• Main Board Chairman Fee: increased from $300,000 to $350,000 p.a. inclusive of superannuation.
• Main Board Member Fee: increased from $123,500 to $145,000 pa inclusive of superannuation.
• Sub-Committee Chair Fee: Maintained at $30,000 pa inclusive of superannuation.
The Group’s constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive
directors shall be determined from time to time by general meeting. The aggregate remuneration of $1,400,000 per
year was approved by shareholders at the annual general meeting held in November 2016.
The remuneration of non-executive directors for the year ended 30 June 2021 is detailed in Table 6 on page 50 with
the total fees paid of $1,184,349 representing 85% of this approved aggregate remuneration.
An increase of this aggregate remuneration limit to $1,800,000 to allow the Group to attract high calibre international
directors, will be proposed for shareholder approval at the AGM In November 2021.
49
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
8. Statutory Remuneration Tables
Table 6: KMP Remuneration for the year ended 30 June 2021 (FY21)
The following tables 6 and 7 set out the statutory KMP remuneration disclosures, prepared in accordance with the
Corporations Act 2001 and Australian Accounting Standards. No termination benefits were paid in FY21.
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Remuneration report (audited) continued
8. Statutory Remuneration Tables continued
Table 7: KMP Remuneration for the year ended 30 June 2020 (FY20)
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51
Breville Group Limited annual report 2021
Directors’ report
continued
Remuneration report (audited) continued
8. Statutory Remuneration Tables continued
Table 8: KMP STI cash bonuses awards in FY21 and FY20 and LTI performance rights vesting in FY21
Name
J. Clayton
S. Brady
M. Nicholas
M. Payne
C. Torng
STI Cash bonuses
Financial Year
% Earned % Forfeited
Share-based LTI performance base
compensation vesting in FY21
Financial Year
Granted
% Vested % Forfeited
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
100.0%
0.0%1
100.0%
0.0%1
100.0%
0.0%1
100.0%
0.0%1
100.0%
0.0%1
0.0%
100.0%
0.0%
100.0%
0.0%
100.0%
0.0%
100.0%
0.0%
100.0%
2019
2018
2017
2019
2018
2017
2019
2019
2018
2017
2019
2018
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1 In November 2020 a discretionary bonus equivalent to 50% of the potential STI bonus for FY20 was awarded and paid to
participating employees.
Table 9: KMP shareholdings
Ordinary shares held* in Breville Group Limited (number)
30 June 2021
Balance at
1 July 2020
On exercise of
rights
Net change other (a)
Balance at
30 June 2021
Directors
S. Fisher
P. Cowan
T. Antonie
S. Herman
D. Howell
L. Myers
K. Wright
Other KMP
J. Clayton
S. Brady
M. Nicholas
M. Payne
C. Torng
Total (b)
127,764
10,968
43,791
42,484
139,264
100,000
21,764
335,264
326,351
32,835
50,015
120,800
1,351,300
-
-
-
-
-
-
-
173,467
21,900
8,300
21,800
20,400
245,867
2,236
-
-
-
736
-
-
(328,288)
(176,535)
50
(10,470)
(21,415)
130,000
10,968
43,791
42,484
140,000
100,000
21,764
180,443
171,716
41,185
61,345
119,785
(533,686)
1,063,481
* Held directly, indirectly or beneficially.
(a) All equity transactions with key management personnel 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) 1% of total share capital is owned by KMPs (1% in FY20)
52
Breville Group Limited annual report 2021 Remuneration report (audited) continued
8. Statutory Remuneration Tables continued
Table 9: KMP shareholdings continued
Ordinary shares held* in Breville Group Limited (number)
30 June 2020
Balance at
1 July 2019
On exercise of
performance rights
Net change other
Balance at
30 June 2020
Directors
S. Fisher
P. Cowan
T. Antonie
S. Herman
D. Howell
L. Myers
K. Wright
Other KMP
J. Clayton
S. Brady
M. Nicholas
M. Payne
C. Torng
Total
118,000
5,000
36,349
36,000
127,500
250,000
20,000
260,700
398,067
20,578
30,485
59,485
1,362,164
-
-
-
-
-
-
-
72,800
22,065
-
19,530
61,315
175,710
9,764
5,968
7,442
6,484
11,764
(150,000)
1,764
1,764
(93,781)
12,257
-
-
127,764
10,968
43,791
42,484
139,264
100,000
21,764
335,264
326,351
32,835
50,015
120,800
(186,574)
1,351,300
Table 10: KMP 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:
FY17 Performance based
FY17 Performance based
FY18 Performance based
FY18 Performance based
FY18 Performance based
FY19 Performance based
FY19 Performance based
FY19 Performance based
FY20 Performance based
FY20 Performance based
FY20 Performance based
FY21 Performance based
Grant Date
9 Aug 16 (a)*
9 Aug 16 (a)*
13 Nov 17 (b)*
13 Nov 17 (b)*
13 Nov 17 (b)*
11 Sep 18 (c)*
11 Sep 18 (c)*
11 Sep 18 (c)*
11 Oct 19 (d)*
11 Oct 19 (d)*
11 Oct 19 (d)*
7 Sep 20 (e)*
First
exercise
date
Last
exercise
date
Expiry
Date
Exercise
price
Fair value per
performance
right at grant
date ($) (Note 18)
Vested and
exercised
in FY21
Number
of Rights
29 Aug 19
3 Oct 19
3 Oct 19
31 Aug 20
2 Oct 20
2 Oct 20
29 Aug 19
1 Oct 19
1 Oct 19
28 Aug 20
1 Oct 20
1 Oct 20
27 Aug 21
1 Oct 21
1 Oct 21
28 Aug 20
1 Oct 20
1 Oct 20
27 Aug 21
1 Oct 21
1 Oct 21
29 Aug 22
3 Oct 22
3 Oct 22
28 Aug 20
1 Oct 21
1 Oct 21
27 Aug 21
3 Oct 22
3 Oct 22
29 Aug 22
2 Oct 23
2 Oct 23
29 Aug 23
1 Oct 23
1 Oct 23
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
3.49
3.51
7.05
6.81
6.68
7.07
6.81
6.58
6.51
6.81
7.06
Yes
Yes
Yes
Yes
55,100
55,100
48,500
48,200
48,200
Yes
66,100
65,900
65,700
64,600
64,450
64,450
14.69
147,632
* In addition to the TSR performance hurdle, the participant must be employed by the company on the vesting date.
53
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
8. Statutory Remuneration Tables continued
Table 10: KMP Performance rights granted continued
(a) There are three equal tranches to be tested at 30 June 2018, 30 June 2019 and 30 June 2020 all with a total shareholder return
hurdle (TSR) applying an absolute test and a relative test. One tranche remains to be tested at 30 June 2020.
(b) There are three equal tranches to be tested at 30 June 2019, 30 June 2020 and 30 June 2021 all with a total shareholder return
hurdle (TSR) applying an absolute test and a relative test. Two tranches remain to be tested at 30 June 2020 and 30 June 2021
respectively.
(c) There are three equal tranches to be tested at 30 June 2020, 30 June 2021 and 30 June 2022 all with a total shareholder return
hurdle (TSR) applying an absolute test and a relative test.
(d) There are three equal tranches to be tested at 30 June 2021, 30 June 2022 and 30 June 2023 all with a total shareholder return
hurdle (TSR) applying an absolute test and a relative test.
(e) One tranche with a total shareholder return hurdle (TSR) applying an absolute test.
Table 11: Fixed deferred remuneration share rights holding of KMPs
The terms and conditions of each grant of share rights issues as fixed deferred remuneration affecting remuneration
of KMPs in this financial year or future reporting years are as follows:
Grant Date
13 Nov 17 (a)
29 Jan 20 (b)*
29 Jan 20 (c)*
29 Jan 20 (d)*
29 Jan 20 (e)*
29 Jan 20 (f)*
7 Sep 20 (g)
First
exercise
date
Last
exercise
date
Expiry
Date
Exercise
price
Fair value at
grant date ($)
(Note 18)
Number of
rights
Vested and
exercised 30
June 2021
31-Aug-20
1-Oct-20
1-Oct-20
25-Aug-20
1-Oct-20
1-Oct-20
25-Aug-21
1-Oct-21
1-Oct-21
25-Aug-22
3-Oct-22
3-Oct-22
25-Aug-23
2-Oct-23
2-Oct-23
25-Aug-24
1-Oct-24
1-Oct-24
25-Aug-25
3-Oct-25
3-Oct-25
0.00
0.00
0.00
0.00
0.00
0.00
0.00
10.12
60,000
16.70
16,467
16.70
29,940
16.70
29,940
16.70
29,940
16.70
29,940
19.60
22,311
Yes
Yes
-
-
-
-
-
Number of
rights
60,000
16,467
-
-
-
-
-
* material terms and conditions of the grant were agreed in January 2020.
(a) Participant, in this case the CEO must be employed by the company on 30 June 2020 for the rights to vest.
(b) Participant, in this case the CEO, must complete the service period between 26 August 2019 – 25 August 2020 for the rights to vest.
(c) Participant, in this case the CEO, must complete the service period between 26 August 2020 – 25 August 2021 for the rights to vest.
(d) Participant, in this case the CEO, must complete the service period between 26 August 2021 – 25 August 2022 for the rights to vest.
(e) Participant, in this case the CEO, must complete the service period between 26 August 2022 – 25 August 2023 for the rights to vest.
(f) Participant, in this case the CEO, must complete the service period between 26 August 2023 – 25 August 2024 for the rights to vest.
(g) Participant, in this case the CEO, must complete the service period between 26 August 2024 – 25 August 2025 for the rights to vest.
54
Breville Group Limited annual report 2021 Remuneration report (audited) continued
8. Statutory Remuneration Tables continued
Table 12: Performance rights holdings of KMP
30 June 2021
Other key
management
personnel
J. Clayton
S. Brady
M. Nicholas
M. Payne
C. Torng
Balance
30 June 2020
Granted as
remuneration (a)
Vested and
exercised
Other (b)
Balance
30 June 2021
301,700
67,900
47,200
64,100
61,800
542,700
80,879
17,403
16,678
16,574
16,098
147,632
(97,000)
(21,900)
(8,300)
(21,800)
(20,400)
(169,400)
-
-
-
-
-
-
285,579
63,403
55,578
58,874
57,498
520,932
(a) Performance awards granted during the year are subject to TSR performance hurdles and/or remaining in employment until date
of vesting.
(b) Includes forfeitures and lapses.
30 June 2020
Other key
management
personnel
J. Clayton
S. Brady
M. Nicholas
M. Payne
C. Torng
Balance
30 June 2019
Granted as
remuneration (a)
Vested and
exercised
Other (b)
Balance
30 June 2020
269,700
66,565
24,800
62,330
101,515
524,910
104,800
23,400
22,400
21,300
21,600
193,500
(72,800)
(22,065)
-
(19,530)
(61,315)
(175,710)
-
-
-
-
-
-
301,700
67,900
47,200
64,100
61,800
542,700
(a) Performance awards granted during the year are subject to TSR performance hurdles and/or remaining in employment until date
of vesting.
(b) Includes forfeitures and lapses.
55
Breville Group Limited annual report 2021 Directors’ report
continued
Remuneration report (audited) continued
9. Peer Group Appendix
Table 13: Bloomberg ASX200 Consumer Staples, Consumer Discretionary
and Industrials Peer Group used for Relative TSR Measurement
Code Company
Sector
Code Company
Sector
TPG
NEC
TPG Telecom Ltd
Communication Services
CWN
Crown Resorts Ltd
Consumer Discretionary
Nine Entertainment Co
Holdings Ltd
Communication Services
SGR
Star Entertainment Grp
Ltd/The
Consumer Discretionary
UWL
Uniti Group Ltd
Communication Services
KGN
Kogan.com Ltd
Consumer Discretionary
REA
TLS
REA Group Ltd
Communication Services
Telstra Corp Ltd
Communication Services
NWS
News Corp
Communication Services
DHG
Domain Holdings Australia
Ltd
Communication Services
ALL
SKC
Aristocrat Leisure Ltd
Consumer Discretionary
SKYCITY Entertainment
Group Ltd
Consumer Discretionary
CGC
Costa Group Holdings Ltd Consumer Staples
ELD
Elders Ltd
Consumer Staples
CAR
carsales.com Ltd
Communication Services
GNC
GrainCorp Ltd
Consumer Staples
CNU
Chorus Ltd
Communication Services
A2M
a2 Milk Co Ltd/The
Consumer Staples
SEK
SPK
DMP
SEEK Ltd
Communication Services
EDV
Spark New Zealand Ltd
Communication Services
Domino's Pizza
Enterprises Ltd
Consumer Discretionary
Endeavour Group Ltd/
Australia
Consumer Staples
BKL
Blackmores Ltd
Consumer Staples
COL
Coles Group Ltd
Consumer Staples
GEM G8 Education Ltd
Consumer Discretionary
BGA
Bega Cheese Ltd
Consumer Staples
BAP
Bapcor Ltd
Consumer Discretionary
ING
Inghams Group Ltd
Consumer Staples
PBH
PointsBet Holdings Ltd
Consumer Discretionary
WOW Woolworths Group Ltd
Consumer Staples
FLT
Flight Centre Travel Group
Ltd
Consumer Discretionary
UMG
United Malt Grp Ltd
Consumer Staples
MTS
Metcash Ltd
Consumer Staples
TWE
Treasury Wine Estates Ltd Consumer Staples
PMV
Premier Investments Ltd
Consumer Discretionary
APE
ARB
IEL
Eagers Automotive Ltd
Consumer Discretionary
ARB Corp Ltd
Consumer Discretionary
SOL
Washington H Soul
Pattinson & Co Ltd
IDP Education Ltd
Consumer Discretionary
WHC Whitehaven Coal Ltd
GUD
GUD Holdings Ltd
Consumer Discretionary
BPT
Beach Energy Ltd
JBH
JB Hi-Fi Ltd
Consumer Discretionary
OSH
Oil Search Ltd
Energy
Energy
Energy
Energy
Energy
Tabcorp Holdings Ltd
Consumer Discretionary
CGF
Challenger Ltd
Ampol Ltd
ALD
VEA
Viva Energy Group Ltd
Energy
STO
Santos Ltd
WOR Worley Ltd
Energy
Energy
WPL Woodside Petroleum Ltd
Energy
JHG
Janus Henderson Group
PLC
Financials
Pendal Group Ltd
Medibank Pvt Ltd
Financials
Financials
Financials
Virgin Money UK PLC
Financials
AUB Group Ltd
Financials
PDL
MPL
VUK
AUB
BRG
Breville Group Ltd
Consumer Discretionary
HVN
SUL
RBL
IVC
Harvey Norman Holdings
Ltd
Consumer Discretionary
Super Retail Group Ltd
Consumer Discretionary
Redbubble Ltd
Consumer Discretionary
InvoCare Ltd
Consumer Discretionary
WEB Webjet Ltd
Consumer Discretionary
TAH
CTD
Corporate Travel
Management Ltd
Consumer Discretionary
WES Wesfarmers Ltd
Consumer Discretionary
CKF
Collins Foods Ltd
Consumer Discretionary
56
Breville Group Limited annual report 2021 Indemnification of directors and
officers
The directors and officers of the company are
indemnified by the company against losses or liabilities
that 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 future developments and
expected results
Disclosure of information as to likely future
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.
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. The Group’s commitment
to sustainability including environmental initiatives is
outlined in pages 22-34 of the Directors’ Report.
Corporate governance
In recognising the need for the highest standards of
corporate behaviour and accountability, the Directors
support the principles of good corporate governance.
The company’s corporate governance statement is on
page 59.
Directors’ meetings
The number of meetings of directors (including meetings
of committees of directors) held during the year and
the number of Board meetings attended by each
director or by each committee member, in the case of
the audit and risk committee (A&RC) and the people,
performance, remuneration and nominations committee
(PPRNC), was as follows:
Full board
Audit & risk
(A&RC)
People,
performance,
remuneration
& nominations
(PPR&NC)
Number of
meetings
S. Fisher
T. Antonie
P. Cowan
S. Herman
D. Howell
L. Myers
K. Wright
Notes
12
12 (b)
12
12
12
12
12
12
5
5 (a)
5 (a)
5 (a)
5 (a)
5
5 (b)
5
4
4 (a)
4 (a)
4 (a))
4 (a)
4
4
4 (b)
(a) Not a member of the relevant committee but they are invited
to attend the committee meeting .
(b) Designates the current chairperson of the Board or
committee.
Committee membership
As of the date of this report, the company had an audit
and risk committee (A&RC) and a people, performance,
remuneration and nominations committee (PPRNC) and
a newly formed sustainability committee. The details of
the functions and memberships of the committees are
presented in the corporate governance statement.
• The current members, as at the date of this report,
of the A&RC are L. Myers (chairperson), D. Howell
and K. Wright.
• The current members, as at the date of this report,
of the PPRNC are K. Wright (chairperson), D. Howell
and L. Myers.
All Chairs and members of the above committees are
independent.
The sustainability committee is chaired by P. Cowan
(independent non-executive director) with K. Wright and
S. Herman and a number of key executives as the initial
committee members.
All Board Members may attend A&RC and PPRNC and
sustainability committee meetings by standing invitation.
57
Breville Group Limited annual report 2021 In accordance with the recommendation from the audit
and risk committee of the company, the directors are
satisfied that the provision of the non-audit services
during the year is compatible with the general standard
of independence imposed by the Corporations Act.
Also, in accordance with the recommendation from
the audit and risk committee, the directors are satisfied
that the nature and scope of each type of non-audit
service provided means that auditor independence was
not compromised. The auditors have also provided the
audit and risk committee with a report confirming that,
in their professional judgement, they have maintained
their independence in accordance with the firm’s
requirements, the provisions of APES 110 Code of
Ethics for Professional Accountants and the applicable
provisions of the Corporations Act.
Significant events after year end
Breville Group announced to the ASX on 17 August
2021 a number of Board changes. These changes are
detailed in that announcement and will be reflected in
next year’s Directors’ Report.
No other matters or circumstances have arisen since
the end of the year that significantly affected or may
affect the operations of the consolidated entity.
Signed in accordance with a resolution of directors.
Steven Fisher
Non-executive Chairperson
Sydney
17 August 2021
Directors’ report
continued
Performance rights
Unissued shares
As of the date of this report there were 1,388,145
potential unissued shares under the performance rights
and fixed deferred remuneration share rights schemes
(2020: 1,380,127). Refer to note 18 of the financial
report for further details of the performance rights
outstanding and fixed deferred remuneration share
rights. Neither performance right holders, nor fixed
deferred remuneration share rights holders, have any
right, by virtue of the performance right, to participate in
any share issue of the company.
Lapse of unvested performance rights
During the year 1,954 unvested performance rights
lapsed following the cessation of employment of
employees or executives and no unvested performance
rights lapsed as a result of performance hurdles not
being met. (2020: 7,600 unvested performance rights
lapsed following the cessation of employment of
employees or executives and no unvested performance
rights lapsed as a result of performance hurdles not
being met).
Auditor’s declaration of independence
Attached on page 111 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 2021. This auditor’s declaration
forms part of this directors’ report.
Non-audit services
During the financial year ended 30 June 2021 the
company’s auditor, PricewaterhouseCoopers,
provided non-audit services to Breville Group
entities. Details of the amounts paid to the auditor
PricewaterhouseCoopers for the provision of non-audit
services during the year ended 30 June 2021 are set
out in note 20 on page 106. These services primarily
relate to tax compliance and advisory services.
The increase in the Group’s audit fee between FY20
to FY21 is reflective of additional procedures and
audit effort required over the expanded European and
Mexican geographies as well as the partial roll out of a
new ERP.
For FY21, the ratio between audit and non-audit fees is
1.1 to 1.0.
A portion of the non-audit fees associated with
taxation and accounting advisory services in FY21 are
non-recurring in nature relating to VAT consulting in
Europe, the Baratza acquisition and immigration and
visa support. The group has re-tendered its US tax
compliance work and will move this away from PwC
in FY22, which will reduce the spend on non-audit
services with PwC.
58
Breville Group Limited annual report 2021 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 Securities
Exchange (‘ASX’) Corporate Governance Council
(‘council’) ‘Corporate Governance Principles and
Recommendations (4th Edition)’.
The ASX principles that have been adopted are outlined
below.
The company’s corporate governance practices
throughout the year ended 30 June 2021 were
compliant with the council’s principles and
recommendations, except for those differences
disclosed and explained in this statement.
The following documents are available in the
corporate governance section of the company’s
website brevillegroup.com
• Audit and risk committee charter
• Board charter
• Anti-bribery and corruption
• Modern slavery policy
• Diversity policy
• Share trading policy
• Code of conduct
• People, performance, remuneration and
nominations committee charter
• Continuous disclosure policy
• Selection and appointment of directors
• Criteria for assessing independence of directors
• Shareholder communications policy
• Workplace gender equality agency report
• Ethical sourcing policy
Board skills matrix
The skills, diversity and term in office of the current directors as of the date of this report are as follows:
Director
Appointed Term in office Qualifications Non-executive Independent Last elected
Steven Fisher
(Chairperson)
Timothy Antonie
Peter Cowan
Sally Herman
Dean Howell
Lawrence Myers
Kate Wright
2004
2013
2018
2013
2008
2013
2016
17 years
B.ACC, CA (SA)
7 years
3 years
8 years
13 years
BEcon
Other
BA, GAICD
FCA, CTA
7 years
B.Acct, CA, CTA
5 years
BA
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
No
Yes
Yes
Yes
2018
2020
2018
2019
2020
2018
2019
The Board has a wide range of skills which are
necessary for the effective management of the business
including in the following areas:
Principle 1: Lay solid foundations for
management and oversight
• Corporate strategy and executive leadership
Role of the Board and management
• Multinational businesses
• Marketing
• Consumer goods
• Risk management
• Banking Compliance and governance
• Accounting, tax, reporting, and financial analysis
• Mergers, acquisitions and capital raisings
• Human resources and executive remuneration
•
Investor relations.
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.
The respective roles and responsibilities of the Board
and management are outlined further in the Board
charter.
59
Breville Group Limited annual report 2021 Corporate governance statement
continued
Principle 1: Lay solid foundations for
management and oversight continued
Appointment of Board members
A detailed process is undertaken for the appointment
of new Board members, including appropriate checks
as to background, history and any potential conflicts of
interest.
As at the date of this annual report, all Directors
have a written agreement outlining their roles and
responsibilities. New directors receive a comprehensive
briefing package prior to their appointment.
Company secretaries
The company secretaries are directly accountable to the
Board on all matters relating to the proper functioning of
the Board.
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 in the corporate
governance section and is subject to periodic review,
and may be changed by resolution of, the Board. The
policy has no contractual effect.
Diversity policy objectives
The objectives set by the Board in accordance with the
diversity policy and progress towards achieving them,
including gender balance are:
• Representation of women trained in recruitment
and selection panels: Ongoing progress was made
during the year with additional women being trained;
•
Issuing the company’s equal opportunity statement
to recruiting agencies: This continued during the
year;
• Explicit requirement of recruiting agencies to provide
a gender balance of suitable, qualified, shortlisted
candidates for interview: This initiative continued to
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 during the year;
• Enhancing the gender balance in career
development in senior and managerial roles; and
• Continue flexible working arrangements where
operationally appropriate.
• A target gender balance of at least 40% of either
gender in managerial and executive roles and
approximately 30% for the Board.
The proportion of women employees in the company at
30 June 2021 is shown in the following table:
Women on the Board1
Women in senior executive roles2
Women in managerial roles3
Women in company
30 June
2021
30 June
2020
29%
35%
36%
45%
29%
30%
32%
45%
1 The number of women on the Board remained at 2.
2 Senior and executive roles is comprised of all executive staff
reporting to the CEO and their direct reports.
3 Managerial roles include all executive, senior and
management roles.
To assist the Board in fulfilling its responsibilities in
relation to diversity, the implementation of these
objectives is overseen by PPRNC. The 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 at the corporate governance
section.
Evaluating the performance of the Board
The Chairperson is responsible for evaluating the
Board’s performance by way of an annual internal
assessment. Each director provides written feedback in
relation to the performance of the Board and directors
against a set of agreed criteria. This feedback is
reported by the Chairperson to the Board following
the assessment. This performance assessment was
completed by the Chairperson during the year.
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 an annual
performance review with their direct manager during the
reporting period.
60
Breville Group Limited annual report 2021 Principle 2: Structure the Board to add
value
• Ms Sally Herman (non-executive director) is a non-
executive director of Premier Investments Ltd, a
substantial shareholder of the company.
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 seven non-executive directors.
The Directors’ report, on pages 14 and 15, outlines the
relevant skills, experience and expertise held by each
Director in office at the date of this report. The Board
annually assesses if there is a need for its existing
Directors to undertake professional development to
ensure they perform their role effectively.
In accordance with good corporate governance, where
the Chairperson of the Board is not an independent
director, the Board considers it to be useful and
appropriate to designate an independent director to
serve in a lead capacity to co-ordinate the activities of
the other independent directors, including acting as
principal liaison between the independent directors and
the Chairperson and representing the Board as the lead
independent director when the Chairperson is unable to
do so because of his non-independent status.
As Mr. Fisher is not an independent director, the Board
has appointed Mr. Myers as its lead independent
director.
Director independence
In considering whether a director is independent, the
Board refers to the company’s “Criteria for assessing
independence of directors” at the corporate governance
section of the company’s website, 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. Peter Cowan,
Mr. Dean Howell, Mr. Lawrence Myers and Ms. Kate
Wright are independent directors. Mr. Dean Howell’s
independence was explicitly reviewed in light of his
tenure with the Group, and this was reconfirmed given
his track record of independent opinion and action
and the fact that the executive team was substantially
changed over the last 6 years so Mr. Howell’s tenure
working with this current leadership is no longer than
most of the Board.
The following directors are not classified independent
directors:
• Mr Steven Fisher (non-executive Chairperson)
ceased his employment by an entity associated with
a substantial shareholder of the company during
FY19.
• Mr Timothy Antonie (non-executive director) is a
non-executive director of Premier Investments Ltd, a
substantial shareholder of the company; and
Regardless of whether directors are defined as
independent, all directors are expected to bring
independent views and judgement to Board
deliberations.
The majority of the Board members are independent
directors.
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 Chairperson is required, which will not be
unreasonably withheld.
Board committees
The Board has established the audit and risk
committee and people, performance, remuneration and
nominations 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 62 and comprises only independent directors.
The Board has recently established a sustainability sub-
committee to assist in the management of the complex
risks and opportunities related to sustainability. The
committee is chaired by a non-executive director and
has both non-executive and executive membership.
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. The company is currently working on
refreshing formal communication on the alignment of its
values to its key strategic objectives, during FY22.
The Group has an anti-bribery and corruption policy
which, in conjunction with the code of conduct and
whistleblowing policy, sets out the responsibilities of
all the Group’s employees (including contractors) and
directors regarding dealing with outside parties.
61
Breville Group Limited annual report 2021 Corporate governance statement
continued
Principle 3: Promote ethical and
responsible decision making continued
The policy prohibits all personnel in all jurisdictions in
which the company operates or conducts commercial
activities from engaging in any activity that constitutes
bribery or corruption and other improper inducements
and/or payments.To ensure that these values and the
policy are properly adhered to, the Group has appointed
an Anti-Bribery Compliance Officer who is responsible
for monitoring the application of this policy. Breaches of
the whistleblower and anti-bribery and corruption policy
are reported to the Board via the Group CFO.
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 monitoring and maintaining the
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;
• monitors and assesses the systems for internal
compliance and control, legal compliance and risk
management including operational and strategic
risks; and
•
reviews and carries out an annual assessment of the
company’s risk management framework.
Composition of committee
The members of the A&RC as at the date of this
report are:
• Mr Lawrence Myers (Chairperson)
• Mr Dean Howell
• Ms Kate Wright
The directors’ report, on page 57, outlines the number
of A&RC meetings held during the year and the
member’s attendance at those meetings. It also
outlines the qualifications of A&RC members on
pages 14 and 15.
Board members, group CEO, company secretaries,
group CFO; 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;
•
is chaired by an independent chair, who is not chair
of the Board; and
• has at least three members, in Breville’s case, all of
whom are independent directors.
In accordance with the council’s recommendation 4.2
the group CEO and group CFO 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.
Periodic disclosures which are not subject to external
audit are reviewed and presented to the Board for
approval and are subject to rigorous internal review prior
to publication.
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 corporate,
corporate governance section.
Materials used for investor and analyst briefings
purposes are made public via ASX announcements.
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 corporate, corporate
governance section.
The company communicates to its shareholders via
our Share Registry notification of meetings and how to
participate, with required notice. The notice of meeting
describes how to vote and participate in the AGM.
Substantive resolutions are accessible to all security
holders via its share registrar’s platform, which takes an
electronic and mail-in poll of votes.
62
Breville Group Limited annual report 2021 Principle 6: Respect the rights of
shareholders continued
Electronic communication
The company’s website displays recent ASX
announcements and contains information about the
company.
Shareholders can elect to receive communications from
the company’s share registry electronically, which also
gives shareholders the opportunity to manage their
account details and holdings electronically. Shareholders
are also able to send communications to the company
and receive responses to these communications
electronically.
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.
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 that enable the monitoring of
progress against performance targets and the
evaluation of trends;
• policies and procedures that 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 of the company’s approach to risk
management and its assessment there of identifying
items that represent a potential risk and the manner
in which these are being managed and responded
to.
The company does not have an internal audit function
and 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.
During the year ended 30 June 2021, the company did
not have a separately established risk committee with
the duties and responsibilities typically delegated to
such a committee undertaken by the A&RC.
The Group’s exposure to economic, environmental
and social sustainability risks, together with how these
risks are managed, are detailed in the Operating and
Financial Review section of the Directors’ report.
Principle 8: Remunerate fairly and
responsibly
People, performance, remuneration and
nominations committee
The PPRNC is responsible for overseeing the
remuneration and nomination of both key executive, and
non-executive Board roles as well as the remuneration
strategy for the group.
The PPRNC is composed of the following directors as
of the date of this report:
• Ms Kate Wright (Chairperson)
• Mr Dean Howell
• Mr Lawrence Myers
In accordance with the council’s recommendation 8.1,
the PPR&NC comprises:
• an independent chairperson; and
• at least three members, in Breville’s case all of
whom are independent
The PPRNC is considered to be independent as of the
date of this report.
For details on the number of meetings of the PPRNC
held during the year and the members’ attendance at
those meetings, refer to the directors’ report on page
57.
The company’s policies for participants in equity-based
remuneration schemes are published on its website.
Key management personnel and associates are
prohibited from entering into transactions with options,
hedging arrangements or other derivative products. All
trading activity by KMPs, and their associates, in relation
to the company’s shares, requires formal sign off by the
Company Secretary and Chairman.
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 36 to 56.
63
Breville Group Limited annual report 2021 Consolidated income statement
for the year ended 30 June 2021
Revenue
Cost of sales
Gross profit
Other income
Employee benefits expenses
Premises & utilities expenses
Advertising and marketing expenses
Doubtful debt expense
Other expenses
Earnings before interest, tax, depreciation & amortisation
(EBITDA)
Depreciation & amortisation expense
Earnings before interest & 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
Consolidated
30 June 2021
30 June 2020
Restated*
$’000
$’000
1,187,659
(773,991)
413,668
284
(117,833)
(12,344)
(66,428)
(1,517)
(52,532)
952,244
(631,684)
320,560
294
(89,213)
(12,646)
(35,053)
(13,757)
(50,130)
163,298
120,055
(26,868)
136,430
(9,157)
130
127,403
(22,338)
97,717
(8,368)
192
89,541
(36,435)
(25,595)
90,968
63,946
Cents
Cents
65.8
65.2
48.8
48.8
Note
3(a)
3(b)
3(e)
6
3(d)
3(c)
3(f)
3(f)
4
12
12
The accompanying notes form an integral part of this consolidated income statement.
*Refer to Note 1 for description and impact of restatement.
64
Breville Group Limited annual report 2021 Consolidated statement of comprehensive
income for the year ended 30 June 2021
Note
Net profit after income tax for the year
Other comprehensive income
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
4
Other comprehensive income for the year,
net of income tax
Consolidated
30 June 2021
30 June 2020
Restated*
$’000
90,968
(14,742)
488
4,370
(9,884)
$’000
63,946
(2,346)
(325)
2,733
62
Total comprehensive income for the year attributable to
members of Breville Group Limited
81,084
64,008
The accompanying notes form an integral part of this consolidated statement of comprehensive income.
*Refer to Note 1 for description and impact of restatement.
65
Breville Group Limited annual report 2021 Consolidated statement of financial
position as at 30 June 2021
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Current tax assets
Total current assets
Non-current assets
Plant and equipment
Deferred tax assets
Right-of-use assets
Intangible assets
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Other payables
Borrowings
Lease liabilities
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
Consolidated
30 June 2021
30 June 2020
Restated*
Note
$’000
$’000
5
6
7
15
4
8
4
22
9
15
6
22
4
6
15
6
14
22
4
6
13
13
129,907
119,335
216,670
2,625
4,927
473,464
14,434
17,426
33,186
229,804
2,326
297,176
770,640
175,796
7,210
11,861
23,592
626
219,085
12,194
-
31,506
61
1,309
45,070
264,155
506,485
309,615
(14,537)
211,407
506,485
128,457
156,106
153,734
2,243
2,788
443,328
13,541
14,768
17,198
144,012
-
189,519
632,847
147,891
7,382
5,014
20,214
1,016
181,517
15,499
-
16,964
2,724
1,060
36,247
217,764
415,083
246,445
2,059
166,579
415,083
The accompanying notes form an integral part of this consolidated statement of financial position.
*Refer to Note 1 for description and impact of restatement.
66
Breville Group Limited annual report 2021 Consolidated statement of changes in
equity for the year ended 30 June 2021
Consolidated
2020
At 1 July 2020 (Restated*)
Foreign currency translation reserve
Cash flow hedges
Income tax on items taken directly to
equity
Total other comprehensive income
for the year
Profit for the year
Total comprehensive (loss)/income
for the year
Dividends paid
Ordinary shares issued for Performance
Rights Plan (LTI) and Fixed Deferred
Remuneration Plan, net of transaction
costs and tax
Ordinary shares issued to underwriters,
net of transactions costs and tax, and
participants of the DRP
Ordinary shares issued net of
transaction costs and tax, on
acquisition of Baratza
Ordinary shares acquired by the Trustee
of the Breville Group Performance
Share Plan (LTI)
Transferred to participants of the
performance rights plan (LTI)
Share-based payments
At 30 June 2021
2020
At 1 July 2019 (Original)
Adjustment due to change in
accounting standard (AASB 16)
Accounting Policy change - SaaS
At 1 July 2019*
Foreign currency translation reserve
Cash flow hedges
Income tax on items taken directly to
equity
Total other comprehensive income
for the year
Profit for the year*
Total comprehensive (loss)/income
for the year*
Dividends paid
Ordinary shares issued, net of
transaction costs and tax
Ordinary shares acquired by the Trustee
of the Breville Group Performance
Share Plan (LTI)
Transferred to participants of the
performance rights plan (LTI)
Share-based payments
At 30 June 2020
Note
Issued
capital
$’000
246,445
-
-
-
-
-
-
-
4
11
13(a)
11,659
13(a)
27,971
9
23,540
13(b)
(11,206)
13(b)
11,206
-
140,050
-
-
-
-
-
-
-
4
11
13(a)
106,395
13(b)
(5,496)
13(b)
5,496
-
Foreign
currency
translation
reserve
$’000
Employee
equity
benefits
reserve
$’000
Cash flow
hedge
reserve
$’000
2,921
(14,742)
-
-
(1,721)
-
-
859
-
488
4,517
(147)
(14,742)
4,517
-
-
(14,742)
4,517
341
-
341
-
-
-
-
-
-
-
-
-
-
-
-
-
(453)
-
-
-
(11,206)
4,947
(3,916)
-
-
-
(5,496)
2,940
(1,721)
5,267
(2,346)
-
-
-
-
-
(325)
2,635
98
(2,346)
2,635
-
-
(2,346)
2,635
(227)
-
(227)
Retained
earnings
$’000
166,579
-
-
-
-
90,968
90,968
(46,140)
-
-
-
-
-
-
Total
equity
$’000
415,083
(14,742)
488
4,370
(9,884)
90,968
81,084
(46,140)
11,206
27,971
23,540
(11,206)
-
4,947
-
-
-
-
(2,346)
(325)
2,733
62
63,946
63,946
63,946
(50,849)
64,008
(50,849)
-
-
-
-
106,395
(5,496)
-
2,940
-
-
-
-
-
-
-
-
-
-
-
-
309,615
(11,821)
1,200
211,407
506,485
140,050
5,267
(1,800)
1,086
165,732
310,335
22(d)
-
-
-
-
(3,188)
(9,062)
(3,188)
(9,062)
(1,800)
1,086
153,482
298,085
246,445
2,921
859
166,579
415,083
The accompanying notes form an integral part of this consolidated statement of changes in equity.
*Refer to Note 1 for description and impact of restatement.
67
Breville Group Limited annual report 2021 Consolidated cash flow statement
for the year ended 30 June 2021
Consolidated
30 June 2021
30 June 2020
Restated*
Note
$’000
$’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
5(a)
Cash flows used in investing activities
Purchase of plant and equipment
Proceeds from sale of plant and equipment
Development of intangible assets
Cash consideration paid on acquisition of business
Net cash flows used in investing activities
Cash flows used in financing activities
Proceeds from issue of shares net of transaction costs
13(a)
Proceeds from borrowings
Repayment of borrowings
Proceeds from ordinary shares issued to underwriters of Dividend
Reinvestment Plan (DRP)
11(a)
Equity dividends paid
Principal elements of lease payments
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Net foreign exchange difference
1,314,512
(1,148,624)
(8,351)
(33,400)
130
124,267
(6,827)
57
(24,288)
(60,636)
(91,694)
-
56,547
(57,902)
27,607
(45,630)
(7,479)
(26,857)
5,716
128,457
(4,266)
1,004,785
(843,246)
(6,973)
(28,930)
192
125,828
(7,004)
126
(24,905)
(14,289)
(46,072)
100,722
202,604
(253,704)
-
(50,849)
(7,325)
(8,552)
71,204
57,129
124
Cash and cash equivalents at end of the year
5(a)
129,907
128,457
The accompanying notes form an integral part of this consolidated cash flow statement.
*Refer to Note 1 for description and impact of restatement.
68
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Key numbers
1 Summary of significant accounting policies
2 Operating segments
3 Revenue and expenses
4
Income tax
5 Cash and cash equivalents
6 Receivables, payables and provisions
7
Inventories
8 Non-current assets – plant and equipment
9 Non-current assets – intangible assets
10
Impairment testing of goodwill and intangibles with indefinite lives
Capital management
11 Dividends
12 Earnings per share
13
Issued capital and reserves
14 Borrowings
15
Financial risk management
Group structure
16
Interests in other entities
17 Parent entity information
Other
18 Share-based payments
19 Related party transactions
20 Auditor’s remuneration
21 Contingencies
22
Leases
23 Significant events after year end
24 Other accounting policies
69
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Key numbers
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 Securities
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 15 to
34. 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 and non-current other payables, 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 Corporations
(Rounding in Financial/Directors Reports) Instrument
2016/191. The company is an entity to which the class
order applies.
Where necessary, comparatives have been reclassified
and repositioned for consistency with current year
disclosures.
(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.
(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 control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability
to affect those returns through its power to direct
the activities of the entity. 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 10.
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 the Monte-Carlo or Black-Scholes option pricing
model, using the assumptions detailed in note 18.
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.
70
Breville Group Limited annual report 2021 Note 1. Summary of significant
accounting policies continued
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.
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 6.
Provision for Doubtful Debts
Estimation is required to assess the risk of probability
weighted outcomes in determining an adequate level of
provisions for doubtful debt. As required by accounting
standards the Group considers past, current and future
economic conditions. The Group uses a matrix based
approach and groups its customers into different risk
portfolios when measuring its expected credit losses.
(e) Notes to the financial statements
Notes relating to individual line items in the financial
statements include accounting policy information where
it is considered relevant to an understanding of these
items. Details of the impact of new accounting policies
and all other accounting policy information are disclosed
in note 24 of the financial report.
(f) Change of accounting policy –
Intangible assets - Restatement
The group previously capitalised costs incurred in
configuring or customising a supplier’s application
software in a cloud computing arrangement as
intangible assets, as the group considered that it would
benefit from those costs to implement the cloud-
based software over the life of the software. Following
the IFRS Interpretations Committee agenda decision
on Configuration or Customisation Costs in a Cloud
Computing Arrangement in April 2021, the group has
reconsidered its accounting treatment and adopted the
treatment set out in the IFRS IC agenda decision, which
is to recognise those costs as intangible assets only if
the activities create an intangible asset that the entity
controls and the intangible asset meets the recognition
criteria. Costs that do not result in intangible assets
are expensed as incurred, unless they are paid to the
supplier of the cloud-based software to significantly
customise the cloud-based software for the group, in
which case the costs are recorded as a prepayment for
services and amortised over the expected renewable
term of the cloud computing arrangement.
The change has been applied retrospectively and
comparative information has been restated. As a result
of the change in accounting policy the following impacts
to the financial statements have been identified:
Consolidated income statement
Increase / (decrease)
profit
Other expenses
Depreciation and
amortisation
EBIT
Income tax expense
NPAT
Increase / (decrease)
Basic EPS
Diluted EPS
FY21
$’000
(10,265)
4,153
(6,112)
1,834
(4,279)
Cents
(3.1)
(3.1)
FY20
$’000
(6,467)
3,245
(3,222)
967
(2,255)
Cents
(1.7)
(1.7)
Other Comprehensive Income
Increase / (decrease)
profit
Total comprehensive
income
FY21
$’000
FY20
$’000
(4,279)
(2,255)
Consolidated statement of financial position
Increase /
(decrease)
30 June
2021
$’000
30 June
2020
$’000
1 July
2019
$’000
Intangible assets
(22,280)
(16,167)
(12,945)
Deferred tax assets
6,684
4,850
3,883
Retained earnings
(15,596)
(11,317)
(9,062)
Consolidated cash flow statement
Inflow / (outflow)
Payments to suppliers
and employees (inclusive
of GST)
Development of intangible
assets
FY21
$’000
FY20
$’000
(10,265)
(6,467)
10,265
6,467
71
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 2. Operating segments
Operating segments
The Group has identified its operating segments in line with AASB 8 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 Group’s external reporting segments are ‘Global Product’ and ‘Distribution’.
‘Global Product’ sells premium products designed and developed by Breville, which are sold globally. Products may
be sold directly or through 3rd parties, and may be branded Breville®, Sage®, Baratza® or carry a 3rd party brand.
‘Distribution’ sells products that are designed and developed by a 3rd party. Breville distributes these products
pursuant to a license or distribution agreement, or they are sourced directly from manufacturers. Products in
this business unit may be sold under a brand owned by the Group (e.g. Breville®, Kambrook®), or they may be
distributed under a 3rd party brand.
Consolidated
30 June 2021
30 June 2020 Restated*
Global
Product
$’000
Distribu-
tion
$’000
Total
$’000
Global
Product
$’000
Distribu-
tion
$’000
Total
$’000
Segment revenue
984,159
203,500
1,187,659
764,409
187,835
952,244
Segment results
EBITDA
137,101
26,197
163,298
93,286
26,769
120,055
Depreciation and amortisation
(25,992)
(876)
(26,868)
(21,128)
(1,210)
(22,338)
111,109
25,321
136,430
72,158
25,559
97,717
130
(9,157)
127,403
192
(8,368)
89,541
EBIT
Finance income
Finance costs
Profit before income tax
Other segment information
Capital expenditure - plant and
equipment
5,727
53,652
1,612
7,339
-
53,652
Consolidated
30 June 2021
$’000
30 June 2020
$’000
492,951
257,029
234,179
984,159
422,329
170,015
172,065
764,409
4,962
1,885
6,847
Capital expenditure - intangibles
106,502
-
106,502
* Refer to Note 1 for description and impact of restatement.
(a) Segment revenue
Global Product
Americas
EMEA
APAC
Total Global Product revenue
Distribution
Revenue generated from USA, Canada, Australia and New Zealand.
72
Breville Group Limited annual report 2021 Note 3. Revenue and expenses
(a) Revenue
Sale of goods
Total revenue
(b) Cost of sales
Costs of inventories recognised as an expense (includes write-
down of inventory to net realisable value (note 7))
Costs of delivering goods to customers
Warranty expense
Total cost of sales
(c) Depreciation and amortisation expense
Depreciation – right-of-use assets
Depreciation – plant and equipment
Amortisation – computer software
Amortisation – development costs
Amortisation – customer relationships
Total depreciation and amortisation expense
(d) Other expenses
Net foreign exchange (gain)/loss
Other product related costs
Impairment charge – IoT platform
Information technology costs (including Software development expenses
formerly capitalised relating to Global IT Platform 2.0)
Professional and administration costs (including insurance)
Other
Total other expenses
(e) Employee benefits expenses
Wages & salaries, leave and other employee related benefits
Short term incentives
Defined contribution plan expense
Share-based payments expense
Total employee benefits expenses
* Refer to Note 1 for description and impact of restatement.
Consolidated
30 June 2021
Note
$’000
30 June 2020
Restated*
$’000
1,187,659
1,187,659
952,244
952,244
22(b)
8
9
9
9
9
684,399
47,632
41,960
773,991
6,086
5,718
182
14,704
178
26,868
2,922
8,380
-
21,367
9,041
10,822
52,532
94,342
11,062
6,141
6,288
117,833
556,990
38,910
35,784
631,684
6,377
5,574
63
10,145
179
22,338
(307)
5,819
9,644
15,477
7,668
11,829
50,130
82,143
-
4,130
2,940
89,213
73
Breville Group Limited annual report 2021
Notes to the financial statements
for the year ended 30 June 2021
Note 3. Revenue and expenses continued
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
22(b)
6,898
1,045
1,214
9,157
(130)
9,027
5,385
1,395
1,588
8,368
(192)
8,176
(f) Finance costs/income
Finance costs paid or payable on borrowings and bank overdrafts:
• interest and borrowing costs
Interest on other payables – non current (deferred consideration)
Interest on lease liabilities
Finance costs
Finance income
Total net finance costs
Recognition and measurement
Sale of goods
Revenue from Contracts with Customers is recognised at a point in time when the performance obligation of
transferring goods to the buyer has been satisfied and the transaction price can be measured. Goods are considered
transferred to the buyer when the buyer obtains control of those goods, which is 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.
Finance costs/income
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. Borrowing costs are recognised as an expense when
incurred.
Other Expenses
Other expenses increased by $2,402,000 to $52,532,000 from pcp $50,130,000 largely due to IT spend incurred in
rolling out the global platform, forex losses and increased investment in product development, partially offset by the
non-repeat of a one-off IoT impairment in FY20.
Employee Expenses
Employee benefit expenses increased by $28,620,000 to $117,833,000 from pcp $89,213,000 led by the increased
wages and salaries associated with the hiring of over 100 new employees globally in FY21 and the awarding of a
discretionary short term incentive in FY21 after it was suspended in FY20.
74
Breville Group Limited annual report 2021 Note 4. 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
Deferred income tax related to items charged or credited directly
to other comprehensive income
Employee equity benefits reserve
Net (loss)/gain on revaluation of cash flow hedges
Income tax (benefit)/expense reported in other comprehensive
income
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% (2020: 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
Income tax expense reported in the income statement
* Refer to Note 1 for description and impact of restatement.
Consolidated
30 June 2021
$’000
30 June 2020
Restated*
$’000
42,118
(1,888)
(3,795)
36,435
(4,517)
147
(4,370)
127,403
38,221
(1,888)
(798)
1,138
(238)
36,435
28,063
(238)
(2,230)
25,595
(2,635)
(98)
(2,733)
89,541
26,862
(238)
(527)
1,389
(1,891)
25,595
75
Breville Group Limited annual report 2021
Notes to the financial statements
for the year ended 30 June 2021
Note 4. Income tax continued
Consolidated
Consolidated
Statement of financial position
Income statement
30 June 2021
$’000
30 June 2020
Restated*
$’000
30 June 2021
$’000
30 June 2020
Restated*
$’000
Deferred income tax
Deferred income tax at 30 June relates to
the following:
Deferred tax liabilities
Brand names
Development costs
Other intangibles
Cash flow hedge reserve
Accelerated depreciation for tax purposes
1,875
15,829
1,869
515
430
1,875
13,285
760
368
505
Gross deferred income tax liabilities
20,518
16,793
Deferred tax assets
Losses available for offset against future
taxable income
Provisions and accruals
Other long term payables
Employee benefits
Revaluation of inventories
Employee equity benefits reserve
Net leasing liability
Other
Gross deferred income tax assets
Net deferred income tax assets
Deferred tax expense
Current income tax
Current tax asset
Current tax liabilities
55
14,358
-
5,902
1,119
7,583
1,649
7,217
37,883
17,365
193
12,665
743
2,406
777
5,028
1,326
5,699
28,837
12,044
30 June 2021
$’000
30 June 2020
$’000
4,927
11,861
2,788
5,014
-
(2,544)
(1,109)
-
75
(138)
1,248
(743)
3,496
342
641
323
2,204
-
(1,280)
(479)
-
(23)
(118)
5,374
(116)
(1,202)
(274)
446
(418)
320
3,795
2,230
* Refer to Note 1 for description and impact of restatement.
At 30 June 2021, there is no recognised or unrecognised deferred income tax liability (2020: $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.
76
Breville Group Limited annual report 2021
Note 4. Income tax continued
Recognition and measurement
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.
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.
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.
Breville Group Limited is the head entity of the tax consolidated Group. For further information, refer to note 17.
77
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 5. Cash and cash equivalents
Cash at bank and on hand
Notes:
- Cash at bank earns interest at floating rates based on daily
bank deposit rates.
- At 30 June 2021, the Group had available $269,141,000
(2020: $272,429,000) of undrawn committed borrowing and
overdraft facilities in respect of which all conditions precedent
had been met. This does not include the three year committed
seasonal facility which is drawable between August and
January (see note 14).
- The fair value of cash and cash equivalents is $129,907,000
(2020: $128,457,000).
Cash and cash equivalents
Non-current borrowings
Net cash
(a) 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 (including AASB16)
Impairment charge
Share-based payments
Foreign exchange losses/(gains)
Loan to supplier
Other
Changes in assets and liabilities:
Decrease/(increase) in:
Trade receivables, prepayments and other receivables
Inventories
Other current assets
Non-current assets
(Decrease)/increase in:
Current liabilities
Non-current liabilities
Net cash flows from operating activities
* Refer to Note 1 for description and impact of restatement.
Consolidated
30 June 2021
$’000
30 June 2020
$’000
129,907
128,457
Note
(a)
(a)
14
(b)
129,907
128,457
-
-
129,907
128,457
30 June 2021
$’000
90,968
26,868
-
4,938
3,392
(2,692)
(63)
36,771
(62,935)
(2,140)
(3,250)
38,129
(5,719)
124,267
30 June 2020
Restated*
$’000
63,946
22,338
9,644
2,940
(307)
-
-
8,906
(382)
(82)
(2,453)
22,492
(1,214)
125,828
78
Breville Group Limited annual report 2021
Note 5. Cash and cash equivalents continued
(b) Net debt reconciliation
Consolidated
Cash $’000 Borrowings $’000
Total $’000
Net cash at 30 June 2019
Cash flows
FX adjustments
Net cash at 30 June 2020
Cash flows
FX adjustments
Net cash at 30 June 2021
(c) Disclosure of financing facilities
Refer to note 14.
Recognition and measurement
57,129
71,204
124
128,457
5,716
(4,266)
129,907
(47,283)
51,100
(3,817)
-
(1,355)
1,355
-
9,846
122,304
(3,693)
128,457
4,361
(2,911)
129,907
Cash and cash equivalents in the balance sheet comprise cash at bank and on 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.
For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
Note 6. Receivables, payables and provisions
Trade and other receivables
Current
Trade receivables
Allowance for uncollectible receivables
Trade receivables, net
Prepayments
Other receivables
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
(a)
(b)
123,922
(15,111)
108,811
6,396
4,128
166,133
(14,101)
152,032
2,487
1,587
Total current trade receivables, prepayments and other
receivables
119,335
156,106
Notes:
(a) Trade receivables are non-interest bearing and are generally on 30-60 day terms. An allowance for uncollectible,
or doubtful, receivables is calculated on a probability weighted measure of expected credit losses using historic,
present and future economic conditions. A charge of $1,517,000 (2020: $13,757,000) has been recognised by
the Group as an expense in ‘other expenses’ for the current year for specific debtors for which such evidence
exists.
79
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 6. Receivables, payables and provisions continued
Trade and other receivables continued
Carrying amount at the beginning of the year:
Provision
Write offs
Net exchange differences
Carrying amount at the end of the year:
30 June 2021
$’000
14,101
1,517
(14)
(493)
15,111
At 30 June 2021 an ageing analysis of those trade receivables (net of allowance for uncollected receivables) are as
follows:
Current
31 – 60 days overdue
61+ days overdue
Trade receivables, net
Consolidated
30 June 2021
$’000
30 June 2020
$’000
105,705
149,168
1,804
1,302
1,747
1,117
108,811
152,032
Trade receivables (net) past due, but not impaired, amount to $3,106,000 (2020: $2,864,000). In all instances each
operating unit has been in contact with the relevant debtor and is satisfied that payment will be received in full or has
been provided for.
(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.
Recognition and measurement
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost. Bad debts
are written off when incurred. An allowance for uncollectible, or doubtful, receivables is calculated on a probability
weighted measure of expected credit losses using historic, present and future economic conditions. 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 15.
Trade and other payables
Current
Trade and other payables – unsecured
Total current trade and other payables
Non current
Other payables
Notes:
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
175,796
175,796
147,891
147,891
(a)
12,194
12,194
15,499
15,499
(a) Relates to earn-outs in relation to the acquisition of ChefSteps which is measured at fair value.
80
Breville Group Limited annual report 2021 Note 6. Receivables, payables and provisions continued
Recognition and measurement
Current trade and other payables are carried at amortised cost. Trade payables represent liabilities for goods and
services provided to the Group prior to the end of the year, including customer rebates, 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, non-interest bearing and are usually 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 15.
Provisions
Current
Warranty and faulty goods
Employee benefits – annual leave
Employee benefits – long service
Other provisions
Total current provisions
Non-current
Employee benefits – long service
Total non-current provisions
Consolidated
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
(a)
(a)
(a)
(a)
(a)
(a)
(a)
13,645
6,919
2,972
56
23,592
1,309
1,309
12,562
5,058
2,544
50
20,214
1,060
1,060
Warranty
and faulty
goods
$’000
Employee
benefits -
annual
leave
$’000
Employee
benefits -
long
service
$’000
Other
Provisions
$’000
Total
$’000
(a) Movement in provisions
Carrying amount at the beginning of the year:
Current
Non-current
Total
Movement in provisions during the year:
Amounts utilised during the year
Additional provisions made in the year
Net exchange differences
Net movement
Carrying amount at the end of the year:
Current
Non-current
Total
12,562
-
12,562
(37,888)
39,549
(578)
1,083
13,645
-
13,645
5,058
-
5,058
(3,051)
4,982
(70)
1,861
6,919
-
6,919
2,544
1,060
3,604
(24)
713
(12)
677
2,972
1,309
4,281
50
-
50
-
5
1
6
56
-
56
20,214
1,060
21,274
(40,963)
45,249
(659)
3,627
23,592
1,309
24,901
81
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 6. Receivables, payables and provisions continued
Provisions continued
(a) Movement in provisions continued
Recognition and measurement
Provisions are recognised when the Group has a present legal or constructive obligation 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.
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.
Warranties and faulty goods
Provisions for warranty and faulty goods are recognised at the date of sale of the relevant products. 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. During the COVID pandemic related lock downs in
various markets, the ability of consumers to make returns has been somewhat constrained.
Employee benefits - annual 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 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.
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.
Note 7. Inventories
Finished goods (at lower of cost and net realisable value)
Stock in transit (at cost)
Total inventories
Note
(a)
Consolidated
30 June 2021
$’000
30 June 2020
$’000
142,102
74,568
216,670
126,995
26,739
153,734
Notes:
(a) Total net finished goods provision movements recognised in the income statement totalled a $1,680,000 debit
(2020: $19,000 debit) for the Group. This net debit/credit is included in the cost of inventories line in the cost of
sales. The nature of the Group’s finished products make obsolescence and deterioration in storage unlikely.
82
Breville Group Limited annual report 2021 Note 7. Inventories continued
Recognition and measurement
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 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.
Note 8. Non-current assets - plant and equipment
At the beginning of the year
At cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
Reconciliation of the carrying amount:
Carrying amount at the beginning of year
Additions
Additions from acquisitions
Disposals
Depreciation
Net exchange difference
Carrying amount at the end of year
At the end of the year
At cost (gross carrying amount)
Accumulated depreciation and impairment
Net carrying amount
Recognition and measurement
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
50,807
(37,266)
13,541
13,541
6,832
15
(44)
(5,718)
(192)
14,434
56,779
(42,345)
14,434
44,628
(32,585)
12,043
12,043
7,171
168
(271)
(5,574)
4
13,541
50,807
(37,266)
13,541
3(c)
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.
83
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 9. Non-current assets - intangible assets
Development costs
Computer software
Customer relationships
Goodwill & Brand Names
Total intangible assets (net carrying amount)
Consolidated
30 June 2021
$’000
30 June 2020
Restated*
$’000
52,742
1,425
581
175,056
229,804
44,248
812
759
98,193
144,012
Consolidated 2021
At the beginning of the year
At cost (gross carrying amount)
Accumulated amortisation and
impairment
Net carrying amount
Reconciliation of the carrying amount:
Carrying amount at the beginning of
year
Additions
Additions from acquisition of Baratza
Amortisation
Net exchange difference
(i)
3(c)
Develop-
ment
costs
$’000
Computer
software
$’000
Customer
relation-
ships
$’000
Note
Goodwill
$’000
Total
$’000
124,047
981
1,835
98,193
225,056
(79,799)
44,248
44,248
23,494
-
(14,704)
(296)
(169)
812
812
795
-
(182)
-
(1,076)
-
(81,044)
759
98,193
144,012
759
98,193
144,012
-
-
656
81,557
24,945
81,557
(178)
-
(15,064)
-
(5,350)
(5,646)
Carrying amount at the end of year
52,742
1,425
581
175,056
229,804
At the end of the year
At cost (gross carrying amount)
Accumulated amortisation and
impairment
Net carrying amount
147,204
1,776
1,835
175,056
325,871
(94,462)
(351)
(1,254)
-
(96,067)
52,742
1,425
581
175,056
229,804
84
Breville Group Limited annual report 2021 Note 9. Non-current assets - intangible assets continued
Develop-
ment
costs
$’000
Computer
software*
$’000
Customer
relation-
ships
$’000
Note
Goodwill
$’000
Total
$’000
Consolidated 2020 Restated*
At the beginning of the year*
At cost (gross carrying amount)*
Accumulated amortisation and
impairment*
Net carrying amount*
Reconciliation of the carrying amount:
Carrying amount at the beginning of
year
Additions*
Additions from acquisition of ChefSteps
Impairment charge – IoT platform
Amortisation*
Net exchange difference
Carrying amount at the end of year*
(ii)
(iii)
3(c)
At the end of the year*
At cost (gross carrying amount)*
Accumulated amortisation and
impairment*
Net carrying amount*
* Refer to Note 1 for description and impact of restatement.
99,376
107
1,835
70,179
171,497
(60,024)
39,352
39,352
24,047
717
(9,644)
(10,145)
(79)
44,248
(107)
-
-
874
-
-
(62)
-
812
(897)
938
-
(61,028)
70,179
110,469
938
70,179
110,469
-
-
-
(179)
-
759
-
28,014
-
-
-
24,921
28,731
(9,644)
(10,386)
(79)
98,193
144,012
124,047
981
1,835
98,193
225,056
(79,799)
44,248
(169)
812
(1,076)
-
(81,044)
759
98,193
144,012
Notes:
(i) Acquisition of Baratza - Goodwill of $81,557,000 was recognised arising from the acquisition of Baratza,
LLC, a US-based business on 1 October 2020, for a total consideration of $84,176,000. $60,636,000 of the
consideration was paid in cash (net of cash acquired in the business) and $23,540,000 by the issue of 884,956
fully paid ordinary shares in Breville priced at the 20-day VWAP of Breville shares traded on the ASX prior to 1
October 2020 at a value of $26.60 per share. The cash portion was funded from existing cash reserves. The
shares are subject to a trading lock. The acquisition has been included within the Global Product segment.
(ii) Acquisition of ChefSteps – Goodwill of $28,014,000 and $717,000 of Development Costs were recognised
arising from the acquisition of Chefsteps Inc., a US-based business on 16 July 2019. Cash consideration was
paid on acquisition with a further deferred consideration payable as an earn out based on future performance
of the acquired assets. The assets have been included within the Global Product segment cash generating unit
(CGU).
(iii) One-off impairment charge to IoT platform assets arising as a result of strategic decision to move to a standards-
based IoT platform and to write-off development work on a range of proprietary IoT platforms.
85
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 9. Non-current assets - intangible assets continued
A summary of the policies applied to the Group’s intangible assets is as follows:
(a) Development costs
Internally generated /
Acquired
Recognition
Useful lives
Amortisation method
Impairment test
(b) Computer software
Internally generated /
Acquired
Recognition
Useful lives
Amortisation method
Impairment test
Internally generated and acquired products and product platforms
Capitalised at cost and recognised only after the Group can demonstrate the technical
feasibility and commercial viability of 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. Research
costs are expensed as incurred.
Finite
Amortised straight line over the period of expected future sales, no more than 3-5 years,
from the related launch date on a straight line basis.
Annually and more frequently when an indication of impairment exists. An impairment loss
is recognised to the extent that the recoverable amount is lower than the carrying amount.
The amortisation method is reviewed at each year end.
Internally generated and acquired software
Capitalised at cost
Finite
Amortised over the useful life, not exceeding 7 years, on a straight line basis.
When an indication of impairment exists. The amortisation method is reviewed at each
year end.
(c) Customer relationships
Internally generated /
Acquired
Recognition
Useful lives
Amortisation method
Impairment test
(d) Goodwill and brand names
Internally generated /
Acquired
Recognition
Acquired customer relationships
Capitalised at cost or if acquired as part of a business combination at fair value at the
date of acquisition
Finite
Amortised over the useful life, not exceeding 10 years, on a straight line basis.
Annually and more frequently when an indication of impairment exists. The amortisation
method is reviewed at each year end.
Acquired goodwill and brand names
Initially capitalised 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. Capitalised at cost or if acquired as part of a business combination
at fair value at the date of acquisition. Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
Indefinite
No amortisation
Annually and more frequently when an indication of impairment exists.
Useful lives
Amortisation method
Impairment test
86
Breville Group Limited annual report 2021 Note 9. Non-current assets - intangible assets continued
The amortisation period and the amortisation method for an intangible asset with a finite useful life is 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 range of the estimated useful life of capitalised Development Costs
changed effective from the 1st January 2021. The estimated life and thus amortisation period moved to a range of
3-5 years from a flat 3 years. 3-5 years more accurately reflects the actual in-market life of the products, especially
given that most are rolled out globally, which can take at least 18 months to achieve. The impact on FY21 has been
to reduce in-year amortisation by $3,101,000 from the previous 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.
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.
Note 10. Impairment testing of goodwill and intangibles with indefinite lives
On a consistent basis, goodwill and brand names acquired through business combinations have been allocated to
these cash generating units or Groups of cash generating units for impairment testing as follows:
• Global Product APAC
• Global Product Americas
• Global Product EMEA
• Distribution
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 pre-tax discount rates applied to cash flow projections are in the range of 9.6% to 11.2% (2020: of 8.0% to
11.5%), depending on the CGU. This discount rate has been determined using the weighted average cost of capital
which incorporates both the cost of debt and the cost of capital. Cash flows beyond the approved 30 June 2022
budgets are extrapolated using a 2.0% - 3.0% growth rate (2020: 3.0%), which is considered a reasonable estimate
of the long-term average growth rate for the wholesale consumer products industry.
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 or brand names exceeding
the recoverable amount.
Key assumptions used in value in use calculations for the cash generating units for 30 June 2021 and
30 June 2020
The key assumptions on which management has based its cash flow projections when determining the value in
use of the cash generating units are budgeted revenue and gross margins. The basis used to determine the value
assigned to the budgeted revenue and gross margins are based on past performance and expectations for the future.
87
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 10. Impairment testing of goodwill and intangibles with indefinite lives
continued
Carrying amount of goodwill and brand names
are allocated as follows:
Breville Group
- brand names with indefinite useful lives
Global Product APAC
- goodwill
Global Product Americas
- goodwill
Distribution
- goodwill
- brand names with indefinite useful lives
All cash generating units
- goodwill
- brand names with indefinite useful lives
Total carrying amount of goodwill and brand names
Recognition and measurement
Intangible assets – goodwill
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
13,800
22,794
112,578
8,109
17,775
175,056
143,481
31,5765
175,056
9
9
9
13,800
22,794
35,715
8,109
17,775
98,193
66,618
31,575
98,193
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.
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.
Impairment losses recognised for goodwill are not subsequently reversed.
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.
88
Breville Group Limited annual report 2021 Capital management
Note 11. Dividends
(a) Dividends on ordinary shares declared, paid or issued via
Dividend Reinvestment Plan (DRP) during the year:
Final partially franked dividend for the year ending 30 June 2020 of
20.5 cents per share, 12.3 cents (60%) franked (2020: final partially
franked dividend for 2019 of 18.5 cents per share, 11.1 cents (60%)
franked)
• Paid in cash
• Shares issued via DRP
Final dividend
Fully franked interim dividend for the year ending 30 June 2021 of
13.0 cents per share, 13.0 cents (100%) franked (2020: interim partially
franked dividend for 2020 of 20.5 cents per share, 12.3 cents (60%)
franked)
• Paid in cash
Interim dividend
Total partially franked dividends declared and paid during the year
of 33.5 cents per share, 25.3 cents (76%) franked (2020: 39.0 cents
per share (23.4 cents (60%) franked))
Total dividends
(b) Dividends on ordinary shares proposed and not recognised as
a liability:
Final fully franked dividend for 2021 of 13.5 cents per share, (100%)
franked (2020: final partially franked dividend of 20.5 cents per share, 12.3
cents (60%) franked)
(c) Franking credit balance
The amount of franking credits in the parent available for the subsequent
year are:
Consolidated
30 June 2021
$’000
30 June 2020
$’000
27,567
511
28,078
18,062
18,062
46,140
46,140
24,121
-
24,121
26,728
26,728
50,849
50,849
18,757
28,078
• franking account balance as at the end of the year at 30% (2020: 30%)
17,718
13,754
• franking (debits)/credits that will arise from the payment of income tax
(receivable)/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% (2020: 30%).
4,244
21,962
(1,545)
12,209
(8,038)
13,924
(7,198)
5,011
89
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 12. Earnings per share
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Consolidated
30 June 2021
$’000
30 June 2020
Restated*
$’000
Earnings used in calculating basic and diluted earnings per share:
Net profit attributable to ordinary equity holders of Breville Group
Limited
90,968
63,946
Thousands
Thousands
Weighted average number of shares:
Weighted average number of ordinary shares for basic earnings
per share
138,339
131,090
Weighted average number of ordinary shares for diluted earnings
per share
139,505
131,090
Weighted average number of exercised, forfeited or expired
potential ordinary shares included in diluted earnings per share
-
-
* Refer to Note 1 for description and impact of restatement.
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.
Recognition and measurement
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.
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;
• other non-discretionary changes in revenue or expenses during the period that would result from the dilution of
potential ordinary shares; and
• divided by the weighted average number of ordinary shares and dilutive potential ordinary shares.
Note 13. Issued capital and reserves
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
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)
309,615
246,445
-
-
309,615
246,445
90
Breville Group Limited annual report 2021 Note 13. Issued capital and reserves continued
Issued capital continued
Ordinary shares
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.
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 Share 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.
The ordinary shares held by the Breville Group Performance Share Plan Trust, if any, 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, if any, 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, if any, entitle their holder to one vote, either in person or by proxy, at a meeting
of the company. Details are provided in note 16(b) and note 18.
Consolidated
30 June 2021
Consolidated
30 June 2020
Note
Number of
shares
$’000
Number of
shares
$’000
(a) Movements in ordinary
issued shares:
Beginning of the year
136,544,125
246,445
130,095,322
140,050
Movements during the year
Ordinary shares issued during the year
for Performance Rights Plan (LTI) and
Fixed Deferred Remuneration Plan.
Ordinary shares issued, net of
transaction costs and tax, as part DRP
Ordinary shares issued, net of
transaction costs and tax, as part of
capital raise
Ordinary shares issued on acquisition of
Baratza
(i)
(ii)
423,167
11,659
331,155
5,496
1,088,556
27,971
-
-
-
-
6,117,648
100,899
(iii)
884,956
23,540
-
-
End of the year
138,940,804
309,615
136,544,125
246,445
(b) Movements in ordinary
shares held by the Breville Group
performance share plan trust:
Beginning of the year
-
-
-
-
Movements during the year
Ordinary shares transferred to
participants of the Breville Group
Performance Share Plan
Ordinary shares subscribed to/acquired
by the Breville Group Performance Share
Plan Trust during the year - cash
End of the year
(iv)
(v)
406,700
11,206
331,155
5,496
(406,700)
(11,206)
(331,155)
(5,496)
-
-
-
-
91
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 13. Issued capital and reserves continued
Issued capital continued
(i) During the year the group issued 423,167 fully paid ordinary shares (2020: 331,155) of Breville Group Limited as a result of the
vesting of performance rights issued under the Breville Group performance share plan. The average value attributable to these
issued shares was $27.55 (2020: $16.60), as of the date of issue.
(ii) In October 2020 the group issued 1,088,556 shares at $25.79 per share as part of the fully underwritten dividend reinvestment
Plan (DRP).
(iii) In October 2020 the group issued 884,956 shares at $26.60 per share as part of the consideration for the acquisition of Baratza,
LLC.
(iv) During the year the Trustee of the Breville Group Performance Share Plan Trust transferred 406,700 ordinary company shares
(2020: 331,155) to participants in order to fulfil its obligations under the Breville Group Limited Performance Share Plan.
(v) During the year the Trustee of the Breville Group Performance Share Plan Trust subscribed to 406,700 ordinary shares of Breville
Group Limited (2020: subscribed to 331,155 shares) in order to fulfil its obligations under the Breville Group Limited Performance
Share Plan. The average value placed on these subscriptions was $27.55 per share (2020: average value placed on these
subscriptions was $16.60 per share). Details are provided in note 16(b) and note 18.
(c) Rights over ordinary shares:
The company has a share-based payment rights schemes under which rights to subscribe for the company’s shares
have been granted to certain executives and other employees (refer note 18). At the end of the year there were
1,388,145 (2020: 1,380,127) potential unissued ordinary shares in respect of rights that were outstanding.
Reserves
Foreign currency translation reserve
Employee equity benefits reserve
Cash flow hedge reserve
Total reserves
Nature and purpose of reserves
Consolidated
30 June 2021
$’000
30 June 2020
$’000
(11,821)
(3,916)
1,200
(14,537)
2,921
(1,721)
859
2,059
Foreign currency translation reserve - 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 18 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.
Note 14. Borrowings
Non-current
Other loans:
- Cash advance facilities
Total non-current borrowings
92
Consolidated
30 June 2021
$’000
30 June 2020
$’000
-
-
-
-
Breville Group Limited annual report 2021 Note 14. Borrowings continued
Terms and conditions
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 2021 and 30 June 2020.
The Australia and New Zealand financing facilities were 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 were guaranteed by Breville Group Limited. The Hong Kong facility was secured via a security agreement over
the assets and undertakings of HWI International Limited. A security agreement in favour of ANZ was in existence over
the assets and undertakings of Breville USA, Inc. Breville Group Limited has issued corporate guarantees in favour of
the local bank (HSBC) which provides the day to day US, Canadian, UK , Mexican and German transactional banking
facilities. Borrowings may include Australian dollar, US dollar, Canadian dollar, British pounds, Euro and New Zealand
dollar denominated amounts.
Fair value
The carrying value and estimated net fair values of the borrowings held with banks (determined under Level 2, as
described in note 15) approximates their fair value. Fair values of the company’s interest-bearing loans are determined
by using a discounted cash flow method using a discount rate that reflects the issuer’s borrowing rate as at the
end of the reporting period. The non-performance risk as at 30 June 2021 was assessed to be insignificant (2020:
insignificant). Details regarding interest rate, foreign exchange and liquidity risk are disclosed in note 15.
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
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)
(b)
(c)
(a) Facilities used at the reporting date:
- Non-current cash advance facilities – committed
- Non-current cash advance facilities – uncommitted
- 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 – committed
- Non-current cash advance facilities – uncommitted
- 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 – committed
- Non-current cash advance facilities – uncommitted
- Overdraft facilities
- Business transactions facilities
- Indemnity/guarantee facilities
- Documentary credit facilities
Total facilities
6,045
275,492
281,537
-
-
-
304
5,741
-
6,045
259,255
-
9,886
3,478
2,207
666
275,492
259,255
-
9,886
3,782
7,948
666
281,537
7,984
276,974
284,958
-
-
395
1,929
5,660
-
7,984
261,376
-
11,053
1,612
2,207
726
276,974
261,376
-
11,448
3,541
7,867
726
284,958
93
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 14. Borrowings continued
Group facilities
At 30 June 2021, the Group had debt facilities with ANZ bank including;
- a committed base ($142,800,000) and seasonal multicurrency facilities ($93,165,000 at peak) from 1 to 3 years
- a $115,000,000 one year multicurrency facility, with a defined extension mechanism.
The Group’s 3 year committed seasonal facilities were available between August and January for FY21, FY22 and
FY23, which ranged between $39,959,000 and $93,165,000 (2020: between $43,619,000 and $99,682,000).
Borrowings may include Australian dollar, US dollar, Canadian dollar, British pounds, Euro and New Zealand dollar
denominated amounts.
In August 2021 the Group amended its existing facilities with ANZ bank which now comprise;
- $250,000,000 committed multicurrency facilities with tenures between 1.5 and 5 years
- $100,000,000 one year uncommitted facility.
Recognition and measurement
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.
Note 15. Financial risk management
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, primarily forward exchange contracts. The purpose
is to manage the 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 foreign currency risk and credit risk. The Board reviews and agrees policies for managing
each of these risks and they are summarised below.
Recognition and measurement
Derivative financial instruments and hedging
The Group may use derivative financial instruments such as forward exchange contracts to hedge its risks associated
with foreign currency 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. The fair value of the
forward exchange contracts is estimated using market observable inputs. 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 are calculated by reference to current forward exchange rates for
contracts with similar maturity profiles and where applicable, exercise prices.
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.
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.
94
Breville Group Limited annual report 2021 Note 15. Financial risk management continued
Recognition and measurement continued
Derivative financial instruments and hedging continued
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.
A hedge of the foreign currency risk of a firm commitment is accounted for as a cash flow hedge.
Other Financial assets at amortised cost
These amounts generally arise outside of the usual operating activities of the Group. Interest may be charged at
commercial rates, the Group has obtained collateral over the balance. The non-current receivables are expected to
be repaid within 3 years of the reporting period.
Loans to suppliers – Current
Loans to suppliers – Non Current
Total
Interest rate risk
30 June 2021
$’000
30 June 2020
$’000
285
2,326
2,611
-
-
-
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 where appropriate. 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 2021, the Group has the following exposure to interest rate risk:
Cash at bank
Cash advance facilities
Net exposure
Consolidated
30 June 2021
$’000
30 June 2020
$’000
129,907
128,457
-
-
129,907
128,457
The Group’s net exposure to interest rate risk calculated as at 30 June 2021 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.
At 30 June 2021, the Group did not have any borrowings drawn down from its cash advance facilities, and so there
is no material interest rate risk that would impact finance costs due to exposure to floating rates.
95
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 15. Financial risk management continued
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency 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, forward exchange 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 2021, 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 – forward exchange contracts
Other financial liabilities – derivative liabilities – forward exchange contracts
Net exposure
Instruments used by the group
Consolidated
30 June 2021
$’000
30 June 2020
$’000
2,547
4,519
(3,734)
2,340
(626)
5,046
7,346
3,178
(15,358)
2,243
(1,016)
(3,607)
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. The fair value of Non-current
other payables of $12,194,000 has been determined under Level 3. Expected cash outflows are estimated based on
the terms of the sale contract and the entity’s knowledge of the business and how the current economic environment
is likely to impact the valuation. Changes in the fair value are not expected to differ significantly from the carrying
value.
96
Breville Group Limited annual report 2021 Note 15. Financial risk management continued
Instruments used by the group continued
(i) Forward exchange contracts – cash flow hedges
The majority of the Group’s inventory purchases from suppliers are denominated in US dollars (US$). In order
to manage exchange rate movements and to manage the inventory costing process, the Group has entered
into forward exchange contracts to purchase USD, Euro and CHF. 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. All forward exchange contracts have 0-12 months maturity
(2020: 0-12 months).
The cash flows are expected to occur between 0-12 months from 1 July 2021 (2020: 0-12 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:
Buy USD
Buy Euro
Buy CHF
Consolidated
30 June 2021
A$’000
30 June 2020
A$’000
139,579
13,235
23,502
115,446
3,265
17,222
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 or the risk is assumed, the amount recognised in equity is
adjusted to the inventory account in the balance sheet. During the year $4,172,000 was debited to inventory (2020:
$4,698,000 credited) and $6,446,127 was debited (2020: $2,254,000 credited) to equity in respect of the Group.
At 30 June 2021, the Group had hedged 37% (2020: 42%) of its forecast foreign currency purchases extending to
June 2022 (2020: June 2021). The remaining 63% (2020: 58%) is exposed to some foreign exchange risk, however
is also naturally hedged within the Group.
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 $11,671,000 (2020: $10,649,000). 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 $9,349,000 (2020: $8,633,000).
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 2021
and 30 June 2020 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).
Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. The credit
risk on financial assets (including trade receivables), excluding investments, of the Group that has been recognised on
the balance sheet is the carrying value amount, net of any uncollectible receivables (measured on a collective basis).
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due. The Group appropriately provides for expected credit losses on a timely
basis, and in calculating the expected credit loss rates, the Group considers historic loss rates for each category of
customers, adjusting for forward looking macroeconomic data.
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.
97
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 15. Financial risk management continued
Credit risk continued
Post COVID-19 a number of retailers/customers have experienced cashflow difficulties with an increased instance
of delayed payments or bankruptcy. At the same time insurers have reduced insurable limits with a number of
customers heightening 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 appropriately provided for.
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.
Group financial liabilities
As at 30 June 2021, the Group did not have any outstanding debt relating to its cash advance facilities (2020: the
Group did not have any outstanding debt relating to its cash advance facilities).
Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flows. See note
14 for details of available facilities.
At 30 June 2021, the remaining contractual maturities of the Group’s financial liabilities are:
Less than 1 year
Between 1 and 5 years
Consolidated
30 June 2021
$’000
30 June 2020
$’000
183,632
43,700
227,332
156,289
32,463
188,752
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.
Consolidated
30 June 2021
Consolidated
30 June 2020
Less than
1 year
$’000
Between 1
and 5 years
$’000
Total
$’000
Less than
1 year
$’000
Between 1
and 5 years
$’000
Total
$’000
Trade and other payables
175,796
12,194
187,990
147,891
15,499
163,390
Borrowings
Lease liabilities
Other financial liabilities
-
7,210
626
-
-
31,506
38,716
-
626
-
7,382
1,016
-
16,964
-
-
24,346
1,016
183,632
43,700
227,332
156,289
32,463
188,752
Contractual maturities disclosed in the tables above include contracted interest payments. Total borrowings disclosed
in note 14 exclude such contracted interest payments.
98
Breville Group Limited annual report 2021 Group structure
Note 16. Interests in other entities
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
Breville Services (Shenzhen) Company Limited
Breville Holdings USA, Inc.
Breville USA, Inc.
Baratza LLC
Holding HWI Canada, Inc.
HWI Canada, Inc.
Breville Canada, L.P.
BRG Appliances Limited
Sage Appliances GmbH
Sage Appliances France SaS
Breville Mexico, S.A. de C.V.
Breville Servicios, S.A. de C.V.
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
New Zealand
Hong Kong
China
USA
USA
USA
Canada
Canada
Canada
UK
Germany
France
Mexico
Mexico
Equity interest
30 June 2021
%
30 June 2020
%
Note
(a)
(a)
(a)
(b)
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
100
100
100
100
100
-
-
Breville Group Limited, a company incorporated in Australia is the ultimate parent of the group.
(a) Entities subject to reporting relief
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, 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 instrument, 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 “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 19(i) and 19(ii).
(b) Breville Group Performance Share Plan Trust (refer note 13)
A trust fund has been established with the appointment of an independent Trustee. The trust is funded by funds
irretrievably contributed to it by the company and the Trustee uses 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 year the Trustee of the Breville Group Performance Share Plan Trust subscribed to 406,700 ordinary
shares of Breville Group Limited (2020: subscribed to 331,155 shares) in order to fulfil its obligations under the
Breville Group Limited Performance Share Plan. The average value placed on these subscriptions was $27.55 per
share (2020: average value placed on these subscriptions was $16.60 per share). Details are provided in note 18.
99
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 17. Parent entity information
As at and throughout the financial year ended 30 June 2021 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
Contingencies
30 June 2021
$’000
30 June 2020
$’000
51,490
51,490
104,167
320,008
-
-
53,457
53,457
74,996
253,684
-
-
320,008
253,684
309,615
(3,916)
14,309
320,008
246,445
(1,721)
8,960
253,684
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 corporate guarantees in favour of the HSBC local banks in the Canada and Mexico
which provides the day to day US, Canadian, Mexican, UK, French and German transactional banking facilities.
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 standalone taxpayer 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.
100
Breville Group Limited annual report 2021
Other
Note 18. Share-based payments
Performance rights plan (LTI) and fixed deferred remuneration rights plan
Under the performance rights plan (LTI) and fixed deferred remuneration rights plan participants are issued with rights
over the ordinary shares of Breville Group Limited issued in accordance with the Breville Group Limited Share Plan.
See pages 45 to 47 of the Remuneration report for details of the two plans.
At 30 June 2021 there were 1,388,145 (2020: 1,380,127) total rights outstanding under both plans, 1,246,074
(2020: 1,183,900) under the performance rights plan (LTI) and 142,071 (2020: 196,227) under the fixed deferred
remuneration rights plan. The expense recognised in the income statement in relation to share-based payments is
disclosed in note 3(e).
Recognition and measurement
Performance rights issued to employees (including key management personnel) are accounted for as share-
based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled
transactions). 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 Monte-Carlo model, further details of which are given below.
Market based performance conditions are reflected within the fair value at grant date. Service and non-market
performance conditions are not taken into account when determining the grant date fair value of the awards. The
likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity
instruments that will ultimately vest.
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. 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.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service
conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated
as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance
and/or service conditions are satisfied.
Rights granted and outstanding under the performance rights plan (LTI)
The following table illustrates the number and weighted average exercise prices (“WAEP”) of and movements in
performance rights issued during the year:
30 June 2021
30 June 2020
Number of
performance
rights
Note
Number of
performance
rights
WAEP
Outstanding at the beginning of the year
1,183,900
0.00
1,046,255
Performance rights granted during
the year
Performance rights exercised
during the year
Performance rights lapsed during
the year
410,828
(346,700)
(1,954)
Outstanding at the end of the year
(a)
1,246,074
Exercisable at the end of the year
-
0.00
0.00
0.00
0.00
-
476,400
(331,155)
(7,600)
1,183,900
-
WAEP
0.00
0.00
0.00
0.00
0.00
-
101
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 18. Share-based payments continued
Rights outstanding under the performance rights plan (LTI)
Notes
(a) The outstanding balance as at 30 June 2021 is represented by:
Number of
performance
Period
Vesting
rights Measure
start Period End Grant date
date Expiry date
96,300
TSR 30-Jun-17 30-Jun- 21
13-Nov-17
27-Aug-21
1-Oct-21
116,000
114,900
19,800
19,700
159,200
157,400
157,400
3,450
3,450
TSR 30-Jun-18 30-Jun-21
11-Sep-18
27-Aug-21
1-Oct-21
TSR 30-Jun-18 30-Jun-22
11-Sep-18 29-Aug-22
3-Oct-22
0.00
TSR 30-Jun-18 30-Jun-21
16-Nov-18
27-Aug-21
1-Oct-21
TSR 30-Jun-18
30-Jun-22
16-Nov-18
29-Aug-22
3-Oct-22
TSR 30-Jun-19
30-Jun-21
11-Oct-19
27-Aug-21
1-Oct-21
TSR 30-Jun-19 30-Jun- 22
11-Oct-19
29-Aug-22
3-Oct-22
TSR 30-Jun-19 30-Jun- 23
11-Oct-19
29-Aug-23
2-Oct-23
TSR 30-Jun-20 30-Jun- 22
7-Sep-20
29-Aug-22
3-Oct-22
TSR 30-Jun -20 30-Jun- 23
7-Sep-20
27-Aug-21
2-Oct-23
398,474
TSR 30-Jun-20 30-Jun- 23
7-Sep-20
29-Aug-23
1-Oct-23
1,246,074
WAEP
$
Fair value
at grant
date ($)
6.68
6.81
6.58
6.81
6.58
6.51
6.81
7.06
6.58
6.81
14.69
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Rights granted and outstanding under the fixed deferred remuneration plan
The following table illustrates the number and weighted average exercise prices (“WAEP”) of and movements in rights
issued during the year:
30 June 2021
30 June 2020
Note
Number of
share rights
WAEP
Number of
share rights
Outstanding at the beginning of the year
Rights granted during the year
Rights exercised during the year
Rights lapsed during the year
196,227
22,311
(76,467)
-
Outstanding at the end of the year
(b)
142,071
Exercisable at the end of the year
-
0.00
0.00
0.00
0.00
0.00
-
60,000
136,227
-
-
196,227
-
Rights outstanding under the fixed deferred remuneration plan
Notes
(b) The outstanding balance as at 30 June 2021 is represented by:
WAEP
0.00
0.00
0.00
0.00
0.00
-
Number of
performance rights
Note
Grant date
Vesting date
Expiry date
WAEP $
29,940
29,940
29,940
29,940
22,311
142,071
(i)
(ii)
(iii)
(iv)
(v)
29-Jan-20*
25-Aug-21
29-Jan-20*
25-Aug-22
29-Jan-20*
25-Aug-23
29-Jan-20*
25-Aug-24
7-Sep-20
25-Aug-25
1-Oct-21
3-Oct-22
2-Oct-23
1-Oct-24
3-Oct-25
0.00
0.00
0.00
0.00
0.00
0.0000
Fair value at
grant date ($)
16.70
16.70
16.70
16.70
19.60
102
Breville Group Limited annual report 2021 Note 18. Share-based payments continued
Rights outstanding under the fixed deferred remuneration plan continued
* material terms and conditions of the grant were agreed in January 2020 but administrative finalisation of grants were delayed
due to COVID-19 priorities. In line with AASB2, fair value was based on the price at the time when grant was agreed when
VWAP for H1 FY20 was $16.70.
(i) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2020 – 25 August 2021.
(ii) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2021 – 25 August 2022.
(iii) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2022 – 25 August 2023.
(iv) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2023 – 25 August 2024.
(v) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2024 – 25 August 2025.
Rights granted under the performance rights plan and fixed deferred remuneration plan
The average remaining contractual life for the performance and the fixed deferred remuneration rights outstanding at
30 June 2021 is between 1 and 4 years (2020: 1 and 4 years).
The exercise price for performance rights and the fixed deferred remuneration rights outstanding at the end of the
year was $nil (2020: $nil).
The weighted average fair value of performance rights granted under the performance rights plan during the year was
$14.69 (2020: $6.83).
The fair value of the equity-settled performance rights granted under the performance rights plan is estimated as
of the date of grant using a Monte-Carlo or Black Scholes option-pricing model, taking into account the terms and
conditions upon which the options and performance rights were granted.
The following table lists the inputs to the model used for the grants during the year ended 30 June 2021 and
30 June 2020:
Grant date
Vesting date
Dividend yield (%)
Expected volatility (%)
Historical volatility (%)
Risk-free interest rate (%)
30 June 2021
30 June 2020
30 June 2020
30 June 2020
(Monte- Carlo)
(Monte- Carlo)
(Monte- Carlo)
(Monte- Carlo)
7 Sep 20
29 Aug 23
11 Oct 19
27 Aug 21
11 Oct 19
29 Aug 22
11 Oct 19
29 Aug 23
2.50
35.00
35.00
0.30
2.50
33.00
33.00
0.70
2.50
33.00
33.00
0.70
2.50
33.00
33.00
0.70
Expected life of performance right
2.9 years
1.8 years
2.8 years
3.8 years
Performance right exercise price ($)
Weighted average share price ($)1
Weighted average fair value ($)1
1 At grant date
0.00
22.41
14.69
0.00
16.70
6.51
0.00
16.70
6.81
0.00
16.70
7.06
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.
The weighted average fair value of share rights granted under the fixed deferred remuneration plan during the year
was $19.60 (2020: $16.70).
103
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 19. Related party transactions
(i) Consolidated statement of financial position for
class order closed group
30 June 2021
$’000
30 June 2020
Restated*
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other financial assets
Total current assets
Non-current assets
Investments
Right-of-use-assets
Plant and equipment
Intangible assets
Deferred tax assets
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Lease liabilities
Other financial liabilities
Total current liabilities
Non-current liabilities
Other payables
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
* Refer to Note 1 for description and impact of restatement.
104
60,324
52,483
44,053
-
2,625
159,485
247,212
8,318
11,531
102,728
8,696
2,326
380,811
540,296
107,869
4,244
10,507
3,690
625
126,935
-
9,497
1,180
10,677
137,612
402,684
309,615
(2,715)
95,784
402,684
43,991
59,111
28,491
1,545
2,245
135,383
166,176
10,826
9,588
98,723
2,176
-
287,489
422,872
71,773
-
7,717
2,949
1,016
83,455
2,476
13,439
911
16,826
100,281
322,591
246,445
(861)
77,007
322,591
Breville Group Limited annual report 2021
Note 19. Related party transactions 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 at the beginning of the year
Adjustment due to change in accounting standard
Adjustment due to change in accounting policy
Dividends paid or reinvested
Accumulated profits at the end of the year
* Refer to Note 1 for description and impact of restatement.
(a) Ultimate controlling entity
30 June 2021
$’000
30 June 2020
Restated*
$’000
94,540
(29,623)
64,917
77,007
-
-
(46,140)
95,784
80,989
(22,482)
58,507
80,999
(2,588)
(9,062)
(50,849)
77,007
The ultimate controlling entity of the Group in Australia is Breville Group Limited.
(b) Wholly owned Group transactions
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 the Remuneration Report
and below:
Compensation by category: key management personnel
Short-term
Post-employment
Other long-term
LTI Share-based payment
Total
Consolidated
Note
30 June 2021
$
30 June 2020
$
(i)
7,345,732
4,769,722
200,297
51,562
1,604,473
9,202,064
187,262
35,278
1,177,713
6,169,975
(i) This comprises defined contribution plans expense of $200,297 (2020: $187,262)
105
Breville Group Limited annual report 2021
Notes to the financial statements
for the year ended 30 June 2021
Note 20. Auditor’s remuneration
Amounts received or due and receivable from the entity
and any other entity in the consolidated entity:
PricewaterhouseCoopers Australia – primary auditors
Parent entity
Audit or review services
Taxation and accounting advisory services
Network Firms of PricewaterhouseCoopers Australia
Controlled entities
Audit or review services
Taxation and accounting advisory services
Total auditor’s remuneration
Note 21. Contingencies
Consolidated
30 June 2021
$
30 June 2020
$
658,261
130,036
524,956
101,468
153,739
594,790
154,869
390,456
1,536,826
1,171,749
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 16(a).
Breville Group Limited has issued corporate guarantees in favour of the local bank (HSBC) in Mexico and Canada,
which provides the day to day US, Canadian, Mexican, UK, French and German transactional banking facilities.
Note 22. Leases
This note provides information for leases where the group is a lessee. The Group does not act as a lessor under any
circumstances.
a) Amounts recognised in the consolidated statement of financial position
Right-of-use assets
Buildings
Vehicles
Total
Lease liabilities
Current
Non-current
Total
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
(i)
33,186
-
33,186
7,210
31,506
38,716
17,186
12
17,198
7,382
16,964
24,346
(i) Additions to the right-of-use assets during FY21 were $22,556,000 (FY20: $4,029,000).
106
Breville Group Limited annual report 2021 Note 22. Leases continued
b) Amounts recognised in the consolidated income statement
Depreciation charge of right-of-use assets
Buildings
Vehicles
Total
Other expenses
Consolidated
Note
30 June 2021
$’000
30 June 2020
$’000
6,074
12
6,086
6,328
49
6,377
3(c)
Interest expense on lease liabilities (included in finance costs)
3(f)
1,214
1,588
The total cash outflow for leases during FY21 was $8,693,000 (includes principal elements of lease payments of
$7,479,000 (refer consolidated cash flow statement) plus interest expense on lease liabilities of $1,214,000). (FY20:
total cash outflow for leases of $8,913,000 (includes principal elements of lease payments of $7,325,000 (refer
consolidated cash flow statement) plus interest expense on lease liabilities of $1,588,000).
As at 30 June 2021, the Group’s leases do not contain any variable payment terms.
c) The Group’s leasing activities and how these are accounted for
The Group leases various office buildings and motor vehicles, with rental contracts typically spanning fixed periods of
1 to 6 years, with some having options to extend.
Contracts may contain both lease and non-lease components. The group allocates the consideration in the contract
to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate
for which the group is a lessee, it has elected not to separate lease and non-lease components and instead accounts
for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants other than the security interests in the leased assets that are held by
the lessor. Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-
-
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
- amounts expected to be payable by the group under residual value guarantees
-
the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
- payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of
the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is
used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
- where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to
reflect changes in financing conditions since third party financing was received
- uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by Breville
Group Limited, which does not have recent third party financing, and
- makes adjustments specific to the lease, e.g. term, country, currency and security.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period.
107
Breville Group Limited annual report 2021 Notes to the financial statements
for the year ended 30 June 2021
Note 22. Leases continued
c) The Group’s leasing activities and how these are accounted for continued
Right-of-use assets are measured at cost comprising the following:
-
the amount of the initial measurement of lease liability;
- any lease payments made at or before the commencement date less any lease incentives received;
- any initial direct costs; and,
-
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on
a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
Note 23. Significant events after year end
Breville Group announced to the ASX on 17 August 2021 a number of Board changes. These changes are detailed
in that announcement and will be reflected in next year’s Directors’ Report. No other 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 2021 was authorised for issue in accordance
with a resolution of the directors on 17 August 2021.
Note 24. Other accounting policies
a) 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.
The functional currency of the foreign subsidiaries is either:
• USD - United States dollar (Breville Holdings USA, Inc. and Breville USA, Inc.);
• HKD - Hong Kong dollar (HWI International Limited);
• CAD - Canadian dollar (HWI Canada, Inc., Holding HWI Canada, Inc. and Breville Canada, L.P.);
• NZD - New Zealand dollar (Breville New Zealand Limited);
• GBP - British pound (BRG Appliances Limited);
• RMB - Chinese Renminbi (Breville Services (Shenzhen) Company Limited); and
• EUR – Euro (Sage Appliances GmbH and Sage Appliances France SaS).
• MXN – Mexican Peso (Breville Mexico, S.A. de C.V. and Breville Servicios, S.A. de C.V.)
As of 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.
108
Breville Group Limited annual report 2021 Note 24. Other accounting policies continued
(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.
b) 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 or sell 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) 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.
(ii) 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.
c) Other Taxes
Revenue, 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.
d) New accounting standards and interpretations
(i) Changes to accounting policy and disclosures
The accounting policies of the Group are consistent with those of the previous financial year with the exception of a
change in policy on recognition of software intangible assets described in Note 1.
The Group adopted all other new and amended Australian Accounting Standards and Interpretations that became
applicable during the current financial year.
The adoption of other Standards and Interpretations did not have a significant impact on the Group’s financial results
or statement of financial position.
109
Breville Group Limited annual report 2021 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 statements and notes set out on pages to 64 to 109 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 2021 and of its
performance for the financial year ended on that date; and,
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as disclosed in note 1;
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and,
(d) as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed
Group identified in note 16(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.
2. This declaration has been made after receiving the declarations by the Chief Executive Officer and Chief Financial
Officer required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for
the financial year ended 30 June 2021.
On behalf of the Board
Steven Fisher
Non-executive chairman
Sydney
17 August 2021
110
Breville Group Limited annual report 2021 Auditor’s independence declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Breville Group Limited for the year ended 30 June 2021, I declare that to the
best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Breville Group Limited and the entities it controlled during the period.
Aishwarya Chandran
Partner
PricewaterhouseCoopers
Sydney
17 August 2021
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
111
Breville Group Limited annual report 2021 Independent auditor’s report
Independent auditor’s report
To the members of Breville Group Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Breville Group Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial
performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2021
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated cash flow statement for the year then ended
the consolidated income statement for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information
•
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial report section
of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards)
(the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
112
Breville Group Limited annual report 2021 Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
● For the purpose of our audit we used overall
Group materiality of $6.3 million, which
represents approximately 5% of the Group’s
profit before tax.
● Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
● We applied this threshold, together with
qualitative considerations, to determine the
scope of our audit and the nature, timing and
extent of our audit procedures and to evaluate
the effect of misstatements on the financial
report as a whole.
● We chose Group profit before tax because, in
our view, it is the benchmark against which the
performance of the Group is most commonly
measured.
● We utilised a 5% threshold based on our
professional judgement, noting it is within the
range of commonly acceptable thresholds.
● The Group comprises entities located globally,
with the most financially significant operations
being located in Australia and the United States
of America.
● PwC Australia undertook all audit procedures
to obtain sufficient appropriate audit evidence
to express an opinion on the Group’s financial
report as a whole.
113
Breville Group Limited annual report 2021 Independent auditor’s report continued
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular
audit procedure is made in that context. We communicated the key audit matters to the Audit and Risk
Committee.
Key audit matter
Estimated recoverable amount of goodwill and
intangibles with indefinite lives
(Refer to note 10)
Under Australian Accounting Standards, the Group is
required to test goodwill and intangibles with indefinite
lives annually for impairment, irrespective of whether
there are indicators of impairment.
The Group assesses goodwill and intangibles with
indefinite lives for impairment at the cash generating
unit (‘CGU’) level. This assessment is inherently
complex and judgemental. It requires judgement by
the Group in forecasting the operational cash flows of
the CGUs, and determining discount rates and terminal
value growth rates used in the discounted cash flow
models used to assess impairment (the ‘models’).
The recoverable amount of goodwill and intangibles
with indefinite lives was a key audit matter given the:
● financial significance of intangible assets to the
consolidated statement of financial position; and
●
judgement applied by the Group in completing the
impairment assessments
How our audit addressed the key audit
matter
Assisted by PwC valuation experts in aspects of
our work, our audit procedures included, amongst
others:
● assessing the identification of CGUs and the
allocation of carrying value of assets and
liabilities and cash flows to those CGUs for
consistency with our knowledge of the Group;
● assessing whether the models applied by the
Group for impairment testing were prepared in
accordance with the requirements of Australian
Accounting Standards;
● comparing the cash flow forecasts in the models
to the Board approved budget;
●
testing the mathematical accuracy and integrity
of the models;
● assessing the terminal value growth rates and
discount rates applied in the models;
● assessing cash flow forecasts, which contain
key growth assumptions included in the models
against historical performance and budget
accuracy, future strategic plans, the impact of
COVID-19 and other market information;
● performing sensitivity analyses over the key
assumptions used in the models to assess any
possibility of a reasonable possible change; and
● evaluating the related financial statement
disclosures for consistency with Australian
Accounting Standards requirements.
114
Breville Group Limited annual report 2021 Key audit matter
How our audit addressed the key audit
matter
Risk of fraud in recognition of revenue from
contracts with customers
Our procedures over the recognition of revenue
included, amongst others:
(Refer to note 3)
The Group’s accounting policy is to recognise revenue
when the performance obligation of transferring goods
to the customer has been satisfied and the transaction
price can be measured.
Revenue was a key audit matter given the financial
significance of revenue to the financial report and the
significant audit effort required to gather sufficient
appropriate audit evidence for revenue recognition.
● considering the Group’s accounting policy
in line with Australian Accounting Standard
requirements;
● developing an understanding and evaluating key
controls over the revenue to receivables business
process;
● obtaining a sample of revenue transactions
and testing back to source documentation,
including identifying performance obligations,
assessing whether the transactions occurred
and were recognised in the correct period and
understanding any manual adjustments; and
● evaluating the related financial statement
disclosures for consistency with Australian
Accounting Standards requirements.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2021, but does not include the financial report and
our auditor’s report thereon. Prior to the date of this auditor’s report, the other information we obtained
included the Company information, Directors’ report and Corporate governance statement. We expect the
remaining other information to be made available to us after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and accordingly we do not and will
not express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and use our professional judgement to
determine the appropriate action to take.
115
Breville Group Limited annual report 2021 Independent auditor’s report continued
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/
ar1_2020.pdf. This description forms part of our auditor’s report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 36 to 56 of the directors’ report for the year
ended 30 June 2021.
In our opinion, the remuneration report of Breville Group Limited for the year ended 30 June 2021
complies with section 300A of the Corporations Act 2001.
116
Breville Group Limited annual report 2021 Responsibilities
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.
PricewaterhouseCoopers
Aishwarya Chandran
Partner
Sydney
17 August 2021
117
Breville Group Limited annual report 2021 Shareholder information
Substantial shareholders notices as at 24 August 2021
The following information is extracted from the company’s register of substantial shareholder notices:
Name
S. Lew Custodians (a)
Bennelong Australian Equity Partners
Matthews International
Greencape Capital Pty Ltd (b)
% of issued
ordinary shares
Number of
ordinary shares
31.96%
9.92%
6.13%
5.26%
43,638,384
13,777,357
8,370,474
7,303,405
(a) The interests of S. Lew Custodians Pty Limited include a deemed relevant interest in the 36,499,538 shares held by Premier
Investments and shares held by other related parties of the group.
(b) Greencape Capital Pty Ltd and Challenger Limited both issued substantial shareholder notices relating to the same amount and
holding, reflected as Greencape Capital Pty Ltd, an associated entity of Fidante Partners, which is a division of Challenger’s
Funds Management operating segment.
Distribution of shareholdings as at 24 August 2021
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
5,074
1,564
230
257
37
7,162
0
118
Breville Group Limited annual report 2021 Twenty largest shareholders by registered holder as at 24 August 2021
Name
Premier Investments Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
National Nominees Limited
SL Superannuation No1 Pty Ltd
BNP Paribas Nominees Pty Ltd Six Sis Ltd
Lew Family Investments Pty Ltd
BNP Paribas Noms Pty Ltd
Lew Family Investments Ltd
BNP Paribas Nominees Pty Ltd
Premier Investments Ltd
S L Nominees Pty Ltd
Mirrabooka Investments Limited
HSBC Custody Nominees (Australia) Limited
Carole Todd Anderson
Citicorp Nominees Pty Limited
Netwealth Investments Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Quotidian No 2 Pty Ltd
Total
Unquoted equity securities as at 24 August 2021
Rights issued under the Breville Group Performance Rights Plan and Fixed
Deferred Remuneration Plan to take up ordinary shares
Shares
35,761,415
29,766,990
23,913,615
13,135,149
4,522,582
3,000,000
2,334,464
1,891,461
1,815,189
1,535,718
1,026,201
738,123
711,667
600,000
461,263
442,478
430,502
419,580
322,432
301,764
% IC
25.74
21.42
17.21
9.45
3.26
2.16
1.68
1.36
1.31
1.11
0.74
0.53
0.51
0.43
0.33
0.32
0.31
0.30
0.23
0.22
123,130,593
88.62
Number
on issue
Number
of holders
1,368,108*
52
* Number of unissued ordinary shares under the performance rights plan (LTI) and fixed deferred remuneration - share rights.
119
Breville Group Limited annual report 2021 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
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
Barangaroo NSW 2000
Australia
Bankers
Australia and New Zealand Banking Group Limited
242 Pitt Street
Sydney NSW 2000
Company information
Directors
Steven Fisher
Non-executive chairman
Timothy Antonie
Non-executive director
Peter Cowan
Non-executive director
Sally Herman
Non-executive director
Dean Howell
Non-executive director
Lawrence Myers
Non-executive director
Deputy Chairperson
Kate Wright
Non-executive director
Jim Clayton
Managing Director and CEO
Company secretaries
Sasha Kitto
Craig Robinson
Registered office and principal place of
business
Ground Floor, Suite 2
170-180 Bourke Road
Alexandria NSW 2015
Telephone (+61 2) 9384 8100
Company websites
brevillegroup.com
breville.com
kambrook.com.au
sageappliances.com
chefsteps.com
baratza.com
beanz.com
120
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