Breville Group LimitedAnnual Report 2023 Chair and CEO review
“A robust year for the Group with solid revenue and EBIT
growth, delivered against a challenging backdrop”.
On behalf of the Board of Directors (the “Board”) of Breville
Group Limited (“BRG”) we are pleased to present the Annual
Report for the year ended 30 June 2023 (“FY23”).
FY23 was again a record year for BRG with revenues
approaching $1.5bn and EBIT of $172m. These results were
delivered against a challenging and dynamic backdrop with
a subdued consumer, inflationary headwinds, an uncertain
economic and geopolitical outlook, and retailer destocking.
Over the last 5 years, revenue and EBIT have pleasingly
grown at an annual compound average growth rate of 17.8%
and 14.6% respectively.
Our Global Product segment grew revenue in FY23 by 8.5%,
and gross profit by 9.8%, and now represents greater than 85%
of BRG revenue. Pleasingly the Americas, APAC and EMEA
all posted positive sell-out growth, or consumer off-take, for
the year. Total sell-in growth, or sales to retailers, was also
positive, and strengthened in the second half to 14.4% as
EMEA lapped an easier prior period and BRG absorbed the
bankruptcy of a major customer in the Americas.
Despite significant input cost increases, BRG improved
its gross margin by 0.7 percentage points to 35.0%,
demonstrating the global pricing power of our premium
products and the commercial decision to sustain brand
pricing. Like-for-like headcount was held flat for the year, and
costs moderated to deliver annual EBIT growth of 10% to
$172 million.
2
During FY23, BRG continued to progress its acceleration
program. Having successfully doubled the size of the business
in the last 5 years, BRG continues to strategically increase its
spend on investment functions (R&D, Marketing, Technology,
Service and Solutions) with total spend in FY23 of $194
million, $114 million higher than in FY18.
It was also pleasing to see a significant contribution from new
product launches in FY23, the benefit of which will continue
to flow into FY24. New product releases included the Barista
ExpressTM Impress, the Barista TouchTM Impress, the Vertuo
Creatista®, and the Joule® Oven Air Fryer Pro. The success
of these innovative new products was complemented by our
enhanced Go-to-Market strategy, Launch v2.0, enabling the
entire retail channel of a country to go live on a single day.
BRG expanded its product offering in the Speciality Coffee
market through the acquisition of Lelit, an Italian-based
espresso machine manufacturer. The acquisition was
completed in July 2022 and was quickly integrated. During
the year BRG began the multi-country rollout of both Lelit and
Baratza, with Lelit taken to the US and Australia and Baratza
taken to Europe and Australia.
FY23 growth was supported by geographic expansion, which
has greatly accelerated since FY18. The seven countries
entered since 2020 (Portugal, Spain, France, Italy, Poland,
Mexico, and South Korea) grew revenue collectively by 96% in
FY23, albeit off a small base.
During FY23, BRG made significant progress in its migration
to its Solutions offering. In Coffee, the Beanz platform went
live in Australia, following the US and the UK, with significant
work done to harden and productise the service. Further
work was undertaken to make it easier for consumers to take
advantage of the coffee Master Classes. In supporting the
Cooking category, in September 2023 BRG will launch the
Breville+ service in the US. At launch, the Breville+ service
will include (i) over 1,000 recipes sourced from ChefSteps,
the Breville Test Kitchen, the New York Times, Serious
Eats, America's Test Kitchen, Williams Sonoma and many
individual chefs; (ii) cooking guides to help consumers
achieve great results with their own recipes; and (iii) live and
on-demand cooking classes. All Breville+ content has been
specifically optimised for the individual Breville products
supported by the service.
BRG is well-positioned for further growth in FY24, supported
by a number of initiatives including: an impressive new
product pipeline for release; further penetration of recently
entered geographic markets; the launch of the Solutions
offerings; and further global rollout of Baratza and Lelit.
Underpinning recent financial performance and the outlook
for BRG is the corporate platform. BRG has invested heavily
in the platform’s capability in recent years. The Technology
team largely completed the global rollout in FY22 with the
platform further optimised in FY23. The platform has enabled
the Technology team to quickly and efficiently rollout new
e-commerce websites in multiple geographies, fully integrate
Lelit, and enter new markets such as Korea.
Breville Group Limited annual report 2023 BRG’s balance sheet remains very strong with net debt at
0.6x EBITDA as of 30 June 2023. Inventory levels were
strategically built in FY22 and 1HFY23 as a hedge against
supply risk and have peaked with the strategic decision
taken in 2HFY23 to right size inventory through constrained
purchases. The planned downward trend in inventory levels is
expected to deliver enhanced cash inflow in FY24, particularly
in the second half.
The Board has declared total full year dividends of 30.5 cents,
in line with the target payout ratio of 40% EPS.
The Board Sustainability Committee has made good
progress on all its initiatives during FY23 and remains on
track to achieve its stated goals in relation to Scope 1, 2 and 3
emissions, energy efficiency, waste generation and packaging.
These goals form part of the executive LTI plan for FY24.
BRG continued to make progress on its diversity and
inclusion objectives. In relation to gender, during FY23 the
representation of women at both senior and executive roles,
and managerial roles, increased. BRG also improved gender
balance at the Board level with women on the Board now
representing 33%.
The BRG global team again delivered record annual financial
results while continuing to superbly execute the acceleration
program for long-term sustainable growth. We are very proud
of BRG’s culture and capability. We thank the team for their
outstanding consumer focus, resilience, excellence and agility
in delivering winning products and solutions on a daily basis.
We would like to thank our fellow Directors for their diligent
focus and guidance during these dynamic times. On behalf of
the Board, we would like to welcome and congratulate Tuula
Rytilä on her recent appointment as independent Director
to the Board. Ms Rytilä is an accomplished senior executive,
most recently at Microsoft, and brings specific skills in digital
technology and its application to consumer goods as well as
becoming our first European-based Director. Ms Rytilä has
made an immediate and significant impact at the Board level,
and her appointment is part of the Board’s evolution to match
and support BRG’s geographic and product and solutions
expansion.
Finally, on behalf of the Board we would like to thank our
shareholders, customers, retail partners, and suppliers for their
continued support, and we look forward to working with you
all in FY24 and beyond.
With many thanks,
Tim Antonie
Non-executive Chair
Breville Group Limited
annual report 2023
Contents:
Chair and CEO review
Strategy and brands
Directors’ Report
Corporate Governance Statement
Financial Report
Shareholder Information
Company information
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Annual general meeting:
Wednesday 8th November 2023 at 10am
Suite 2, 170-180 Bourke Rd,
Alexandria NSW 2015
Acknowledgement of
Country
Breville appliances are proudly designed and
engineered at the Breville headquarters in Alexandria,
Sydney. This is Gadigal Country and the area has
been used by the Gadigal People as well as the
Gamayngal, Bideagal and Gweagal Peoples
for millennia.
Evidence of this deep connection can be found with
remains of hunted Dugong bones dating back 6,000
years, and a campsite at nearby Wolli Creek which is
over 10,000 years old.
We acknowledge and pay respects to the traditional
custodians of the land and waters on which we work,
the Gadigal People, and to their food culture that we
seek to support through sharing these works with
Australia and the world.
Jim Clayton
Managing Director and Chief Executive Officer
Covers: the Barista Touch™ Impress
Luxe colours: Red Velvet Cake, Stainless Steel and Damson Blue,
Black Stainless Steel, Black Truffle and Sea Salt
1
Breville Group Limited annual report 2023 the Vertuo Creatista®
(right) Craft your every milk moment
with Vertuo Creatista.
the Barista Touch™ Impress
(below) Swipe. Select. Impress.
Strategy and brands
BRG’s primary strategy is the design and development of the
world’s best kitchen appliances and solutions, whilst expanding
distribution, supported by dynamic marketing, on a global scale.
A History of Innovation
90 years ago, 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
developed 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.
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 entitled 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.
BRG'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.
BRG’s appreciation of food science and culinary trends
naturally fosters relationships with leading food thinkers,
including world barista champions and prominent chefs who
have directly helped BRG’s product development.
More recently, BRG has innovated in the world of third wave
specialty coffee and has created a series of award-winning
successes, including the Barista Express®, The Oracle®, and
more recently, the Barista Express™ Impress.
The launch of the connected Joule® Oven, now supported by
Breville+, has expanded BRG’s presence in the world of the
connected kitchen and is an important step towards offering a
true cooking solution to consumers.
The Consumer at the Core of the
Business
BRG focuses on driving consumer understanding of, and
engagement with, the Group's product and proposition. BRG
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®, BRG 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.
Increasingly these perfect results are delivered not just
through great hardware, or appliances, but through recipes,
guided content, master class training and great ingredients
enabled by solution offerings such as Breville+ and beanz.com.
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.
The opportunities to make everyday moments an occasion
are innumerable, and BRG believes that the use of its products
and solution offerings will help consumers Master Every
Moment® and enjoy life to the fullest extent.
Coffee
New Products
Launched globally in FY23, the Barista Touch™ Impress is our
second product utilizing the Impress™ Puck System, a new,
innovative assisted lever tamp system that makes manual
espresso easier than ever before without losing that hands-on
feel, and follows on from the Barista Express™ Impress that
was launched in FY22.
The Impress™ Puck System applies a constant 10kg
impression to your dose, finishing it with a 7° barista twist
for a more polished puck, and works in combination with an
intelligent dosing system that learns on the job, automatically
calculating and adjusting the dose of freshly ground coffee as
required, based on the last grind and tamp outcome.
The Barista Touch™ Impress also features a larger touch
screen that shows off our new Barista Guidance system, which
coaches consumers through the process of extraction and
allows for the presentation of our automatic alternative milks
settings with our Auto MilQ™ steam wand system.
FY23 also saw the introduction of the Nespresso® Vertuo
Creatista®, which is the first Nespresso® Vertuo machine to
feature BRG’s proprietary Auto MilQ™ steam wand system,
offering consumers 3 milk temperature settings and 3 milk
texture levels.
3
Breville Group Limited annual report 2023 the Joule‰ Turbo Sous Vide
Sous vide perfection. Easier. Faster.
Strategy and brands continued
The Vertuo Creatista® joins the Creatista® Plus and the
Creatista® Pro (the latter two built on top of Nespresso's
original line pod platform) as Nespresso's premium machine
offerings automatically delivering café quality textured milk
allowing consumers to more easily create latte art at home.
This was followed in May of 2023 with the launch of the Joule®
Turbo Sous Vide immersion circulator, a major update to the
original Joule® Sous Vide immersion circulator launched by
ChefSteps to popular acclaim, with over half a million units
sold to date.
beanz.com
BRG’s focus on providing its customers the best at-home
specialty coffee experience includes providing easy access to
third wave coffee beans via a subscription service. Beanz.com
is designed to seamlessly complement our internationally
renowned espresso and coffee product portfolio with an easy
pathway and better access to beans from top tier specialty
coffee roasters.
The new platform, first launched in the US and UK, was rolled
out in Australia this year (with other markets to follow) and is
designed for consumer-facing coffee discovery and education.
All beanz.com roasters are best-in-class, renowned, and
emerging independent roasters ensuring quality in the cup
every time.
Coffee Essentials
Built on extensive customer research into the espresso
machine buying experience, BRG launched "Coffee
Essentials" bundles in December 2021.
Carefully engineered to deliver a frictionless experience,
coffee essentials guides consumers to the right espresso
machine for their lifestyle and pairs this with beanz.com to
ensure freshly roasted specialty beans are delivered to their
doorstep.
To ensure a delightful first-use experience, every customer
also receives a complimentary "Barista Tool Kit" with
everything they need to make café quality espresso, complete
with an online "Masterclasses" featuring expert baristas and
tutorials.
The right machine, quality freshly roasted beans and
“masterclass” tuition together ensure a great consumer
experience.
Cooking
New Products
In FY22, BRG successfully launched the Joule® Oven Air
Fryer Pro, the company's first smart connected oven, with a
companion app that features an impressive digital library of
video-guided recipes and content from world renowned chefs
and culinary partners.
Each recipe in the Joule® Oven App has step-by-step visual
instructions, paired with the right oven settings, to provide
truly accessible and interactive cooking experiences. Home
cooks can also cook selected recipes utilizing the oven's
autopilot functionality, where the Joule® Oven Air Fryer Pro
automatically switches modes and functions between the
different cooking phases for a virtually hands-free experience,
delivering fool-proof, professional-quality results the first time,
every time.
Keeping the same compact form factor as the original, the
new unit is only one inch taller whilst accommodating the new
components and hardware that support the Turbo function.
Turbo is a new feature made possible through complex
algorithms and propriety technology to help make select
recipes in less time. This means a steak that used to require 60
minutes to cook to temperature can now be done in roughly
30 minutes, allowing the technique to be more accessible for
regular weekday use where time is even more precious.
Cooking Solutions
In September 2023, BRG made a further important step into
delivering best in class cooking solutions with the launch of
the Breville+ service in the USA.
Building on the Joule® Oven App, Breville+ includes over
1,000 recipes from ChefSteps, the Breville Test Kitchen,
the New York Times, Serious Eats, America’s Test Kitchen,
Williams Sonoma and many individual chefs, combined with
cooking guides and live and on demand cooking classes.
All the Breville+ content is specifically optimized for the BRG
products supported by the service, which now includes the
Joule® Oven, 3 other popular Breville ovens, the Pizzaiola and
the Joule® Turbo Sous Vide.
Brands
The Breville and Sage brands are at the core of BRG’s
strategy, representing the majority of revenues and marketing
activities. In line with its global strategy, BRG is focused on
the design, development and sale of Breville-branded and
Sage -branded products supplied to currently 81 countries
in the premium kitchen segment of the market ('Global
Product').
There are, however, a number of additional company-owned
brands and brand partners in different geographies that assist
in the delivery of the BRG business strategy.
Baratza® and LELIT® were acquired in FY22 and FY23
respectively and are complementary to BRG's existing
premium coffee business with all four brands having a
shared passion for using product innovation to improve the
consumer's coffee experience at home.
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 BRG
(Breville®, Kambrook®, Aquaport®, Cli-mate®), or they may be
distributed under a third-party brand (Nespresso®).
5
Breville Group Limited annual report 2023 beanz.com
Craft Roasters.
Speciality Coffee.
Delivered Fresh.
Strategy and brands continued
Americas
ChefSteps
In the Americas, BRG distributes its range of internally
designed and developed kitchen products primarily
under the Breville®, Baratza® and LELIT® brands mainly
through premium channels and its own direct-to-consumer
e-commerce platform. A range of Breville co-branded
Nespresso® coffee machines are also sold in North America
where Breville is one of Nespresso's machine partners.
Asia Pacific
In Australia and New Zealand, BRG primarily trades under
its company owned brands, Breville®, Baratza®, LELIT®,
Kambrook®, Aquaport® and Cli-mate®.
In the Asia Pacific region BRG markets its premium designed
and developed kitchen products under the Breville®, LELIT®
and Baratza® brands as well as selected products under the
Kambrook® brand.
In Asia, BRG entered and took direct distribution
responsibility for South Korea in FY23. Distribution in the rest
of the regions is managed using local third-party distributors.
Europe, Middle East and Africa
In the United Kingdom and Europe, BRG markets and
distributes its premium designed and developed global
kitchen products under the company owned brands Sage®,
Baratza® and LELIT®.
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 BRG.
Sage®
In the United Kingdom and Europe, BRG distributes its
premium designed and developed products under the BRG
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. BRG 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.
BRG also works with distribution partners who take
advantage of BRG’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.
In July 2019, BRG 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-invigorated. The brand is also an integral
part of the Breville+ solutions offering.
Baratza®
In FY22 Seattle-based premium coffee grinding company,
Baratza, was acquired. The company designs and markets
premium coffee grinders for North America and international
markets.
The brand shares a passion for innovation and an unwavering
commitment to enhancing the consumer experience.
LELIT®
On July 1st 2022, BRG completed its acquisition of Italy-based
LELIT, which designs, manufactures, and markets premium
home coffee equipment throughout the world. The acquisition
brought together two of the great coffee cultures of the world:
Italy and Australia.
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.
Commercial Products
Products for commercial use are distributed around the world
under one the following two names as locally relevant:
1) Breville|Commercial and 2) Sage|Commercial. The
commercial division manages products such as the
HydroPro™ series, which are 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), and the Control Freak® (for
precision cooktop applications) vacuum sealers, cold plates
and vacuum evaporation systems. Most recently, the division
launched the Super Q™ Pro commercial blender and the Juice
Fountain® XL Pro commercial juicer.
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Breville Group Limited annual report 2023 Aboriginal Culinary
Journey Launch Events
From top: Sydney, Berlin (Australian
Embassy), London (Harrods and
Australian High Commission),
New York (Bloomingdale's)
Strategy and brands continued
Reconciliation Action Plan
The company's first 'Reflect' Reconciliation Action Plan (RAP)
received official endorsement from Reconciliation Australia in
March 2022.
The progress of our RAP is guided by an Advisory Council
of elders and community stakeholders that provides the
BRG RAP Working Group with advice and information on
equity issues facing Aboriginal and Torres Strait Islander
communities as well as feedback and support around
implementation and monitoring of actions, projects and
commitments identified in the RAP.
More information on these initiatives and our Reconciliation
Action Plan can be found on the Breville Group Corporate
website.
Aboriginal Culinary Journey
BRG is donating 100% of the company's profits from the
sale of the 'Aboriginal Culinary Journey' range to create
opportunity for Indigenous Australians.
After a successful launch of the project, we were able to
donate $354,904 as a first installment against our ultimate
goal to raise just over $1,000,000 through the sale of these
items globally.
Half of these funds will be used to support the National
Indigenous Culinary Institute's work to create employment
opportunities for aspiring Aboriginal and Torres Strait
Islander chefs and the 'Indi-Kindi Program' by the Moriarty
Foundation to support better childhood nutrition and sharing
Indigenous Food Culture. The other half will be used for
Indigenous scholarships and initiatives at the University of
Technology Sydney to create pathways for employment in
engineering, technology, and design.
Innovation and product development
The core driving BRG’s growth continues to be investment in
product development and a focus on design and innovation.
BRG 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.
BRG 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
BRG enjoys the benefits of highly experienced talent across
all departments and geographies.
Integrated throughout its food thinking culture, the passion,
creativity and insight of our team 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.
BRG invests in the training and education of its team,
building strong, collaborative links with world experts in food
thinking and technology. BRG 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, BRG 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 FY23, BRG 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, UI/ UX, and technical
services.
Processes built for the future
With an aligned calendar setting process, within both BRG
itself and its external manufacturing and retail channel
partners, BRG seeks to fully leverage an increasing number
of new product introductions to continue to drive its business
and iconic brands forward.
In FY23, BRG began executing against an enhanced process,
Launch v2.0.
This process ensures that the 'go-to-market' launches
are aligned functionally, regionally and with our external
wholesale and retail partners. Enough inventory is built in
market prior to launch, activities are aligned, and materials
are prepared well in advance allowing BRG to launch
new products, with impact across a number of markets
simultaneously. This maximizes the velocity of launch and
the returns on our development investments.
9
Breville Group Limited annual report 2023 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 2023.
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.
Timothy Antonie
Non-executive Chair : BEcon
Mr Antonie has more than 25 years’ experience in investment
banking, corporate advisory 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 # (Chair)
• Premier Investments Limited #
• Village Roadshow Limited
# denotes current directorship
Lawrence Myers
Non-executive Deputy Chair and Lead Independent
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 Chair of the audit and risk committee
(A&RC) and is the company’s lead independent director and
Deputy Chair.
During the last four years he has served as a director of the
following other listed companies:
• Regal Asian Investments Limited #
• VGI Partners Global Investments Limited #
# denotes current directorship
Jim Clayton
CEO and Managing Director : BBA, JD
Mr Clayton was appointed Managing Director on 18 August
2021 and has been CEO since 1 July 2015. Mr Clayton has
extensive international experience in consumer electronics,
business transformation and strategy. He joined Breville from
LG Electronics Inc., where he held a number of senior roles
since 2009, including Executive Vice President, New Business
Division for LG’s Home Entertainment Company. Prior to
this, Mr Clayton worked for Symphony Technology Group, a
Silicon Valley based private equity firm focused on midmarket
10
enterprise software and technology enabled service companies,
and McKinsey & Company in the US, Germany and Singapore.
During the last four years he has not served as a director of any
other listed company.
Tim Baxter
Non-executive Director : BS
Mr Baxter is an accomplished senior executive, with over 35
years’ experience across the consumer electronics, retail,
technology and telecom industries. He was previously Chief
Executive Officer of Samsung Electronics North America,
having been promoted to the role from Chief Operating Officer,
America. Prior to this, he held several senior management
positions across sales and marketing at Samsung, Sony
Corporation and AT&T Inc. Mr Baxter serves as a non-executive
director on a number of public and private company boards.
During the last four years, he has served as a non-executive
Director of the following listed companies:
• PAVmed Inc. #
# 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.
Breville Group Limited annual report 2023 Board of directors continued
Reporting currency and rounding
Tuula Rytilä (appointed 1 April 2023)
Non-executive Director : MSc
Ms. Rytilä is an accomplished senior executive, with over 30
years’ experience across the consumer technology and product
sector in technologies, digitization and product management.
Ms. Rytilä brings an international perspective having worked
across Europe, North America, Asia and Africa. Her most
recent focus has been on driving global business model
change and customer experience optimization. Ms. Rytilä has
detailed insight into product roadmaps, product development,
consumer insights as well as experience with global go-to-
market strategies and e-commerce. Ms. Rytilä has worked
for Microsoft for the last 9 years, with global responsibility for
Microsoft Digital Stores. During her 15 years with Nokia, Ms.
Rytilä rose to the position of global CMO.
During the last four years she has served as a non-executive
director of the following listed company:
• Bang & Olufsen A/S #
# denotes current directorship
Ms. Rytilä also serves as a Member of the Board of Trustees of
the National Nordic Museum in Seattle.
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
This preliminary 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 and refreshed through in-year reforecasts.
Appropriate key performance indicators (KPI’s) are used to
monitor operating performance and management effectiveness.
Operating and financial review
The operating and financial review has been designed
to enhance the periodic financial reporting and provide
shareholders and other stakeholders with additional information
regarding the Group’s operations, financial position, business
strategies, risks 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 and
distribution of these products across the globe.
In line with this strategy, and to drive sustainable growth in both
revenue and profits the Group has developed:
• a strong, competitive and growing product portfolio with
proven international success;
• an innovative, committed and high-quality team;
• a research and development (R&D) culture that focuses on
consumer solutions, sustainability and emerging food and
beverage technologies;
The names and details of the company secretaries in office
during the year and until the date of this report are as below.
• a strategic marketing capability supporting new product
launches and building brand awareness;
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.
• a corporate IT platform rolling out globally to bring speed
and competitive advantage;
• a proven methodology 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.
With significant headroom to grow, the Group’s objective
is to deliver annual EBIT growth against a variety of trading
backdrops, while reinvesting in R&D, marketing, technology
services and geographic expansion to drive sustained growth
and long-term shareholder value creation. During FY23 the
Group continued to invest in new product development, to
enhance our digital marketing offense and product solutions, to
roll out the Global IT platform, and to grow in our newly entered
markets increasing geographic diversity.
11
Breville Group Limited annual report 2023 Directors’ report continued
Operating and financial review continued
Company overview and principal activities
continued
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®, Lelit® 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®).
The three geographic theatres 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 Lelit® branded products and also distributes products
under a machine partnership with Nespresso®.
In the Americas, the Group markets and distributes
Breville®, Baratza® and Lelit® 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®, Baratza®, Lelit® and
Breville® in selected markets.
Group operating results
AUDm1
Revenue
Gross profit
Gross margin (%)
EBITDA
EBIT
NPAT
FY23
FY22 Growth
1,478.6
1,418.4
516.9
485.9
35.0% 34.3%
4.2%
6.4%
218.2
172.0
110.2
186.8
16.8%
156.4
10.0%
105.7
4.2%
Dividend per share - ordinary
(cents)
Franked (%)
Net cash / (debt) ($m)
30.5
30.0
100%
100%
(121.3)
(4.1)
1 Minor differences may arise due to rounding.
In FY23 the Group delivered solid revenue growth of 4.2%, with
the 2H growth rate running at 9.4%, primarily driven by EMEA
moving back into growth. This topline growth was delivered
against a subdued consumer backdrop, as well as building on
three strong years of growth in FY20-22 of 25.3%, 24.7% and
19.4% respectively.
Importantly, in the current inflationary environment, gross profit
grew by 6.4% (with the second half at 10.6%), as our gross
margin % improved year-on-year by 70bps with inflationary
pressures earlier in the year recovered and promotions well
controlled.
The Group delivered EBIT of $172m, or 10.0% growth, a result
at the top end of our guidance, and above consensus, with
expenses successfully aligned to a slower growth environment.
NPAT grew in line with sales at 4.2% (improving to 12.4% in the
second half), after absorbing higher borrowing costs.
Free cash flow (net cash flows from operating activities plus
capitalised expenditure) was $37.1m for the year up from
$(84.8)m in the prior comparative period (pcp). As expected,
the second half saw a seasonally strong total cash inflow of
$90.9m, as peak receivables were collected. Full year total cash
outflow of $(117.2)m was primarily due to the purchase of Lelit
as well as higher working capital following strong Q4 sales.
Segment results
Revenue
Gross Profit
Gross Profit Margin
AUDm1
FY23
FY22 % Change
Global Product
1,279.2
1,178.5
% Growth in constant currency
Distribution
TOTAL
199.3
239.9
(16.9)%
1,478.6
1,418.4
4.2%
8.5%
4.1%
FY23
470.5
46.4
516.9
FY22 % Change
428.7
9.8%
57.2
(18.9)%
485.9
6.4%
FY23
36.8%
23.3%
35.0%
FY22
36.4%
23.8%
34.3%
1 Minor differences may arise due to rounding.
Our strategically key Global Product segment grew revenue by 8.5%, and gross profit by 9.8%, as new product development (NPD)
launches landed well, and we successfully leveraged our pricing power in this premium segment.
Our mass market Distribution segment saw revenue and gross profit decline by (16.9)% and (18.9)% respectively, led by weaker
demand for Nespresso Distribution products.
In the Global Product segment our NPD launches performed well, with strong sales from the Barista Express™ Impress, the Barista
Touch™ Impress, the Vertuo Creatista®, the Joule® Oven Air Fryer Pro, the Joule® Turbo Sous Vide and the Baratza® Encore ESP.
After a quiet FY21 and FY22, with minimal product launches, these new products added growth to the Global Product segment with
a healthy innovation funnel expected to yield further gains in FY24.
12
Breville Group Limited annual report 2023 Operating and financial review continued
Segment results continued
In category terms, both Coffee and Cooking grew well – the
former benefiting from the continuing trend to premium
espresso coffee and the latter supported by the air-fryer
tailwind. Our Food Preparation category – juicers, blenders
and food processors – proved more discretionary and declined
year-on-year.
Pricing power in the Global Product segment again meant that
we were more successful at growing gross margins than in the
mass market Distribution segment. Pleasingly, looking forward
to FY24, inflationary pressures in product and freight costs are
abating, which should provide a tailwind to gross margins in
both segments.
Global product segment revenue growth – reported and
constant currency
Global Product Segment Revenue
AUDm1
Americas
APAC
EMEA
TOTAL
FY23
701.2
292.2
285.8
FY22 % Growth
% in constant
currency
605.0
278.4
295.2
15.9%
5.0%
(3.2)%
8.5%
7.0%
4.3%
(3.1)%
4.1%
1,279.2
1,178.6
1 Minor differences may arise due to rounding.
All three Theatres posted positive unit sell-out growth, or
consumer off-take, for the year. Sell-in growth, or sales to
retailers, was also positive and strengthened in the 2H23 to
14.4% (or 9.8% in constant currency) as EMEA lapped an
easier prior period.
The Americas, our largest region grew 15.9% (or 7.0% in
constant currency) with US consumers proving more resilient
at the premium end of the market. Sell-out growth was similar
across the first and second half, and so was sell-in, when
normalised for the impact of the Bed Bath & Beyond (BBB)
bankruptcy. Our strong credit control meant there was no credit
loss when BBB stopped trading, however, the fact that stores
remained open until July delayed the expected consumer
migration to other retailers as BBB sold through its Breville
inventory acquired pre 2H23.
APAC grew 5.0% against a difficult backdrop with market share
gains in ANZ and sell-out growth in both halves supported by
strong NPD launches. Asia contributed strongly, including a
promising early performance in South Korea.
EMEA posted the strongest sell-out growth in both the 1H23
and 2H23, with consumer offtake boosted by NPD and our
DTC channel growing well. Sell-in growth, as expected,
bounced back strongly in the 2H23 reaching 37.4% against an
easy denominator (lapping post-Ukraine invasion nervousness)
and as retailer destocking, seen in the 1H23, abated.
FY23 was another strong example of our diversified portfolio
and growth levers working for us, delivering a solid result in
testing times.
EBIT and NPAT
In a low-growth year, we contained expense growth to deliver a
10.0% EBIT growth.
An improving gross margin certainly contributed, yielding 6.4%
gross profit growth or $31.0m extra profit dollars of which fifty
percent was absorbed in operating expenses, and the other
fifty percent flowed through to EBIT. In FY23 we chose to hold
like-for-like headcount flat. Total employment costs increased
$24.5m or 15.5% in FY23 due to hires in FY22 serving a full
year and annual salary increases.
Partially offsetting this was a $15.6m or 22.8% reduction in
marketing expenses as a series of marketing platform projects
transitioned from the “build” phase to the less expensive
“run and maintain” phase. Market-facing activities, such as
advertising and content creation, were kept largely unchanged
year-on-year. Other expenses increased somewhat as we
renewed and expanded key warehousing 3PL contracts and
leases to prepare for future growth.
Total spend on investment functions – R&D, Marketing,
Technology Service and Solutions – was 13.1% of revenue in
FY23, a step up from 12.3% in FY20, the pre-Covid period,
but a step down from 13.6% during FY21 and FY22, driven by
expensing the build phase of key go-to-market platforms. In
dollar terms investment functions expense in FY23 was $77.4m
higher than FY20.
NPAT grew 4.2% for the full year and 12.4% in the second half
after absorbing higher finance costs arising from increased
borrowings, largely due to the Lelit acquisition and working
capital increases, combined with an increase in effective
interest rates.
Financial Position
The Group’s net working capital position at 30 June 2023 of
$455.1m reflects choices made in managing inventory in FY23,
the restoration of a more normal receivables balance and a
lower payables balance reflecting the slowdown in purchases
in 2H23.
After increasing inventory against a clear supply risk in FY22
and 1H23, we took the commercial decision in 2H23 to right
size inventory through constrained purchases, rather than
discounted clearances, hence our GM% has improved across
the period. In the 2H23 our inventory purchases reduced by
$140.1m over the same period last year, and overall in FY23 our
like-for-like inventory reduced by $96.6m or 22%. Our reported
inventory was broadly flat, impacted by the purchase of Lelit,
our new approach to NPD launches, with more inventory held
upfront to maximize the velocity of new launches, and the
strength of the USD and Euro against AUD. Continued planned
lower purchases in FY24 are expected to deliver another step
down in inventory levels, but not at the cost of discounting.
Receivables were $82.6m higher at 30 June 2023 than the
prior year end, reflecting stronger Q4 sales, especially in EMEA.
Average receivable days were well controlled and within terms
at 62 days (pcp 61 days). Payables were $30.9m lower than
the pcp reflecting the above-mentioned slowdown in 2H23
inventory purchases.
PPE balances increased $20.3m led by the acquisition of Lelit’s
manufacturing assets as well as increased investment in tooling
as new products are prepared for production.
The increase in capitalised development costs and software
of $15.5m in FY23 arises as an increasing number of projects
move toward launch. As a reminder, for any given project, all
costs are expensed until the project reaches the commercial
viability gate, roughly 18 months before launch, at which point
we start capitalising expenses. Once the product launches
in market, we begin amortising. You can expect to see our
amortisation costs increase over the next couple of years as our
number of launches increase. Overall, our level of capitalised
PPE, development costs and software has grown over the last
few years to about 8.5% of revenue in line with the ratios seen
in FY19 and FY20.
13
Breville Group Limited annual report 2023 Directors’ report continued
Operating and financial review continued
Financial Position continued
The step increase in Goodwill and Brands to $327.2m
($184.8m in the pcp) reflects the purchase of Lelit in July 2022.
Net Debt and Cash flow
2H23 saw a strong $90.9m cash inflow as peak receivables
were collected and inventory purchases were moderated. A
full year cash outflow of $117.2m was largely due to the Lelit
acquisition $79.6m and higher June receivables.
A more benign supply chain environment is expected to allow
a continued reduction in inventory purchases during FY24,
delivering enhanced cash inflow, especially in the second half,
and reduced net debt.
At 0.6x EBITDA the group remains conservatively leveraged and
has significant unused debt facilities in place for expansion.
Dividends
A final dividend of 15.5 cents per share (100% franked) has
been declared (FY22: 15 cents,100% franked) bringing the
total dividends for the year to 30.5 cents per share (FY22: 30.0
cents).
The dividend reflects the target payout ratio of 40% of EPS on a
full year basis.
The final dividend will have a record date of 14 September 2023
and will be paid on 5 October 2023.
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
Supply chain
disruption
and input
cost risk
Concentration of supply from one region
and country (China) raises risk of supply
interruption due to geo-political tensions,
public health decisions or extreme climate
events.
This potential puts the ability to adequately
supply our market and thus Group
revenue and profitability at risk.
Inflationary pressures on manufacturing
and transport costs may arise either
from high demand for consumer goods,
shipping and labour or from general
inflationary pressures and exchange rate
movements or additional tariffs. Unless
recoverable by pricing this puts the
profitability of the Group at risk.
Demand
pattern risk
There is risk of volatility in the growth
trajectory of the company arising from
consumer-based cost of living pressures
including interest costs.
This can be exacerbated in the short term
by retailer destocking/restocking decisions
sometimes effected by global shocks e.g.,
Ukraine invasion as well as by the general
risk stance of retailers in the current
uncertain economic environment.
This can impact revenue and profits
and reputational risk with investors if
expectations are not met.
Inventory is held in market to provide a buffer against supply chain
interruptions. In a period of heightened risk, such as during the Covid
pandemic, inventory holdings may be increased or brought to market
early.
Alternative sourcing locations are being established, nearer to
market, with the first, Mexico, having just been commissioned for one
product.
Core S&OP process gives long forward visibility to suppliers to help
ensure that required components, labour etc. 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.
Input cost inflation is monitored and negotiated by SKU and supplier
in both USD and landed currency.
Pricing power of our premium, innovative products is leveraged to
protect margins where possible on a market-by-market basis.
Contracted shipping and logistics rates are secured where possible.
Exchange rates are hedged 12 months in advance. Both of these
activities provide forward visibility of effective costs for 12 months to
allow effective management of margins.
The increasingly balanced global revenue footprint of the Group
diversifies risk and mitigates the impact of disruption in a specific
region on the Group results.
Weekly sell-out is monitored by SKU and customer. This forward
visibility allows informed adjustments in terms of market activity and
promotion in a timely, effective manner to optimise revenue and
margin.
Rolling forecasting of annual gross profit delivery allows contraction,
and expansion, of expenses as needed to deliver profit within a
specific year. The Group has a strong track record of delivering
EBIT growth against a variety of backdrops whilst still maintaining
investment for sustainable long-term growth.
The premium, innovative nature of the product range historically
provides some resilience of demand to short term economic
conditions.
14
Breville Group Limited annual report 2023 Operating and financial review continued
Material business risks continued
Risk
Nature of risk
Key actions to mitigate risk
ESG risk and
sustainability
Reputational risk with employees,
customers, investors and society, and
subsequent financial impact, if the Group
fails to act adequately on ESG issues and/
or fails to communicate its strategy and
approach.
Risk to supply continuity from extreme
climate events (see above).
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.
Cyber
security risk
Health and
safety risk
Breaches of cyber security is a
growing global risk as the volume and
sophistication of threats 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 revenue 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.
Poor WHS and well-being practices
can impact both the motivation and
engagement of employees resulting in 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 revenue and damages.
Approach to ESG issues and risks is detailed in the ESG report
section of the Directors report pages 16 to 31 which cover the
Group’s approach to climate emissions and ESG responsibilities more
generally.
Group commitment to a sustainable business and business model is
guided by the Board Sustainability committee.
Securing of proven, world class leadership for product development,
technology services, marketing and solutions functions.
Strategic annual target of increasing investment in product
development, technology and solutions as well as marketing and
communications.
The prioritization of investment in these growth drivers is
communicated as a core part of Group strategy in investor
engagements and results presentations.
The technology services team has further developed our cyber
security and privacy programs in FY23 within an overall security and
privacy framework. Including:
• Deployment of modern IT infrastructure with latest security
defenses.
• Penetration testing and vulnerability assessments.
• PCI Audits and external reviews of some of our key cloud
operating environments.
• Selection of a privacy and data mapping platform to facilitate
compliance with multiple global privacy obligations.
• Staff mandatory multi-factor authentication and annual cyber
security and phishing training.
• Annual cyber-attack simulation exercise.
• Breville has cyber insurance in place.
The Board receives and reviews OHS statistics and incidents on a
monthly basis to ensure top-down ownership of this risk. OHS office
ensures accurate monitoring and timely action on any issue.
In recognition of the strain that employees’ can face to their mental
and physical wellbeing a range of activities and support programs are
in place for employees.
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.
Breville has an outsourced business model for manufacturing and
distribution with the exception of Lelit.
15
Breville Group Limited annual report 2023 Directors’ report continued
Operating and financial review continued
Material business risks continued
Risk
Nature of risk
Key actions to mitigate risk
Key
Employee
Risk
High turnover of key staff may impact
the performance of the Group if there
is inadequate succession planning in
place. Inadequate career planning and
inadequate comparative remuneration
may heighten turnover especially given the
Group’s recent strong performance and
the global “war for talent”.
Annual high potential and succession planning identifies successors
for key roles and individual development plans for key individuals.
Key roles are benchmarked to market. Domestically and
internationally, to ensure that they are competitive.
Retention is encouraged through the use of LTI plans and deferred
remuneration share rights.
Group acceleration strategy update
During FY23, the Group has continued to progress its
acceleration program, the impacts of which helped drive the
FY23 performance as well as position the Group for future
growth.
The strategic decision made in 2016 to increase investment
into the organic growth engines of the company and continued
every year thereafter materially supported the Group’s growth in
FY23. Innovative new products, including the Barista TouchTM
Impress, the Joule® Sous Vide Turbo, Vertuo Creatista®,
and the EncoreTM ESP, were launched in FY23, all of which
performed well. Go To Market improved the financial impact
of new product launches using its new Launch v2.0 process,
enabling the entire retail channel of a country go live on a single
day. The Technology Services team, in concert with the Go-To-
Market team, continued to productise and improve the Group’s
digital offense, supporting the growth rate in all digital channels.
The Group expanded its product offering in the Specialty
Coffee market through the acquisition of Lelit, an Italian-based
company manufacturing market- leading prosumer espresso
machines.
FY23 growth was also supported by the Group’s geographic
expansion efforts, which began in earnest in FY18. The Group
leaned into geographic expansion during the Covid period,
entering Portugal, Spain, France, Italy, Poland, Mexico, and
South Korea, despite the executional complexities. In FY23,
these countries, collectively, grew revenue 96%. All will be one
year older in FY24, giving them the opportunity to have an even
more significant impact in absolute dollars.
During the financial year, the Group continued to expand both
in new geographies and channels, setting the table for FY24.
While the US successfully navigated the BBB bankruptcy in
FY23, what it lost through this retailer’s demise was physical
door presence. To counteract this, the US is launching a
limited range of products into over 1,000 doors with Target. In
early FY24, Breville- branded products will be made available
to Specialty Coffee retailers in the US through the new B2B
portal, widening Breville’s channel footprint in coffee. The
Group also began the multi-country rollout of both Baratza and
Lelit, transitioning from a distributor model to a direct model in
multiple countries. Baratza was taken to Europe and Australia,
and Lelit was taken to the US and Australia. This global rollout
will continue as both Baratza and Lelit leverage the Group’s
global footprint.
Breville made significant progress in its migration to Solutions.
In Coffee, the Beanz platform went live in Australia, following
the US and the UK, with significant work done to harden and
productise the service. Further work was done to make it easier
for consumers to take advantage of the coffee Master Classes.
Supporting the Cooking category, at the beginning of FY24,
BRG will launch the Breville+ service in the US. At launch, the
Breville+ service will include over 1,000 recipes sourced from
ChefSteps, the Breville Test Kitchen, the New York Times,
Serious Eats, Americas’ Test Kitchen, Williams Sonoma and
many individual chefs; cooking guides to help consumers
achieve great results with their own recipes; and live and on-
demand cooking classes. All Breville+ content will be specifically
optimised for the individual Breville products supported by the
service.
Underpinning these growth levers is the corporate platform. The
Technology Services team largely completed the global rollout
of the platform in FY22, meaning FY23 was a year of hardening
and further optimising the platform. The benefits of the platform
were seen in how quickly the team rolled out new websites,
like Baratza.com, as well as how quickly Lelit was integrated,
running 100% of its global product transactions through the
platform within 4 months of the closing of the transaction.
Environmental, Society and Governance
(ESG) Report
Our commitment to sustainability
The Breville Group is committed to ethical, responsible, and
sustainable conduct across and throughout its business,
reinforced through our culture, values, process, structure, and
policy. Our ESG priorities and strategy are a central part of our
overall business strategy and are a fundamental part of the way
we work.
Our ESG strategy – “to create innovative, attractive and
energy efficient kitchen appliances, designed and sourced in a
socially and environmentally responsible manner that delights
our consumers, meets the expectations of our stakeholders
and delivers sustainable value creation” is embedded in our
business operations, and risk management process.
As a consumer-facing company that operates in the heart of
our consumers’ homes, the kitchen, our reputation, and ability
to meet ethical and behavioural expectations is core to our
sustained sales, business health and value creation. Our ESG
strategy and priorities are shaped by an on-going engagement
and dialogue with our stakeholders – our employees, our
consumers, our shareholders, our suppliers, regulators, local
communities, and specific interest groups. For some priorities,
our approach is further informed by scientific analysis and
measurement such as detailed LCA (Life Cycle Analysis), which
ensures that we prioritise initiatives that empirically have the
biggest impact on reducing carbon emissions.
Engagement with employees takes place via open membership
of various sustainability teams, staff surveys and townhall
meetings. Consumer feedback comes in the form of analysis
of product reviews, focus panels and direct feedback.
16
Breville Group Limited annual report 2023 Operating and financial review continued
ESG Report continued
Our commitment to sustainability continued
Engagement with investors is ongoing through both group and
one-on-one meetings where ESG is inter-twined with business
performance discussions. With suppliers, ESG forms a standing
part of our regular business review agendas and is monitored
during supplier site visits. We keep informed of developing
regulation via our company sustainability committees, general
legal counsel, corporate secretarial function and through
briefings with our professional advisors. Community activities
are ongoing, and we seek to understand by listening, for
example through the establishment of our RAP Advisory
Council and by learning, for example through our Black America
History week run each year in the Americas. We also engage
with key issue interest groups such as IAST (Investors against
Slavery and Trafficking) to keep abreast of best practice and
opportunities.
Our strategy is consistent, but we strive to constantly improve
and adapt our execution each year. In this ESG report we
outline the key priorities that we have focussed on in FY23. We
have made good progress on each issue, but there is always
more to be done.
In terms of disclosure, we welcome the initiative of the ISSB
(International Sustainability Standard Board) in moving towards
a standard and industry specific framework for ESG disclosure.
As the current exposure drafts develop, we fully expect to
migrate towards this approach to disclosure and reporting to
meet stakeholder expectations. We also acknowledge and work
with the 17 UN sustainable development goals in shaping our
priorities.
For FY23 we identify our key priority areas and present progress
on each as well as sharing our TCFD (Task Force on Climate-
related Financial Disclosures) risk analysis approach.
Key Priorities
Environmental
Social
Governance
1. Climate Change & Action
2. Product quality and safety
6. Corporate Governance
1.4 Sustainable design, repairability &
4.2 Reconciliation action plan
1.1 Climate risks & opportunities (TCFD)
approach
1.2 Carbon emissions - measurement
and target reductions
1.3 Energy efficiency
end of life
1.5 Sustainable packaging
1.6 Waste diversion
Environmental
1. Climate Change & Action
3. Ethical Sourcing: Human rights &
modern slavery
6.1 Board independence & diversity
6.2 Internal ESG reporting mechanisms
4. Community Relations
4.1 Community engagement
5. Employee Wellbeing
5.1 Diversity & inclusion
5.2 Health & safety
7. Corporate Behaviour
7.1 Anti-bribery & corruption and whistle
blowing
7.2 Cyber security & data privacy
7.3 Tax transparency
7.4 Policy availability
1.1 Climate risks and opportunities (TCFD)
We are signed up as a supporter of TCFD and are steadily
implementing the recommendations of the TCFD in terms of
how we analyse and report climate risk. This approach helps
us identify our exposure to climate-related risks and identify
appropriate actions to mitigate these risks. In taking this risk-
based approach we seek to understand what impact Breville
is having on the climate, as well as how climate changes can
impact the sustainability of our business with a specific focus on
the following:
i. How climate risks and opportunities impact the type of
products we design and produce
ii. How consumer and society expectations present both risks
and opportunities to our business growth
iii. How the impact of living with climate change impacts our
business
TCFD 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 and the distribution
of these on a global scale. The type of products we choose to
design and distribute is undeniably impacted by climate change
considerations – both empirically based and those influenced by
opinions of our consumers and stakeholders.
One of the biggest potential risks and opportunities presented
by climate change relates to stakeholder expectations,
especially consumers, who will increasingly purchase products
based on a specific product’s environmental credentials or
a company’s or brand’s environmental and ESG credentials.
We believe that these informed choices will increasingly and
materially impact sales and profitability of the Group. This
therefore strategically impacts the type of products we develop,
how they are packaged, how energy efficient they are as well as
how we communicate this to retailers and consumers.
This risk 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
ThermoJet® on pages 21-22). Furthermore, our design and
engineering teams look to optimise the strength and weight of
the materials we use to reduce material consumption, identify
alternative recyclable materials and engineer repairability
into products to delay and reduce the end- of-life impact of
appliances. Our packaging teams are committed to reducing
our environmental footprint by minimising unnecessary
packaging and using 100% recyclable materials.
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1.1 Climate risks and opportunities (TCFD) continued
Climate related risks and opportunities are inter-twined with our
strategic product development and packaging cycle.
TCFD Goal: Disclose how the organisation identifies,
assesses, and manages climate-related risks.
Breville has an enterprise-wide risk mapping and mitigation
process led by the Audit and Risk committee that includes
climate risks. Given their importance, climate risks are treated
as enterprise level risks. Risks are identified through a granular
bottom-up process via each territory and function and are then
prioritised through a top-down review by the CEO, CFO and
Board. Climate change is an amplifier for several of our other
material business risks. As such, we recognise the potential
impacts of climate change as both environmentally and
financially material potentially impacting the attractiveness of
our offerings as well as our capability to manufacture, store and
transport our products.
The key risks, impact, mitigants and opportunities are
categorised in alignment with the TCFD recommendations
below:
Type of risk
Description of risk
Risk mitigation measures
Opportunities
TCFD category:
Transition –
reputation risk
Internal
assessment:
High
Business area:
Strategic
Timeframe:
Ongoing
TCFD category:
Transition – market
risk
Internal
assessment:
Medium risk
Business area:
Strategic
Timeframe:
Ongoing
ESG – Initiatives and
communication
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
• Reduced employee
attraction and retention
• Reduction in capital
availability
Innovation and
technological advantage
From a technology
perspective in the transition
to a low carbon economy
there is a risk / opportunity
that new materials, power
sources or designs emerge
that gives a technological or
cost advantage to, or, over
competitors
Potential financial impact
• Reduced revenue from
losing our premium
product differentiation
Increase our level of emission reduction
activity, including:
• Product Design – materials
• Product Design – repairability
• Product Design – energy efficiency
• Product Design – recyclable packaging
Accurate, complete, and reliable emissions
measurement and target setting. Scope 1
and scope 2 followed by scope 3
Communicate effectively to our consumers,
investors and other stakeholders
Upgrading our disclosure to better reflect our
existing progress including TCFD disclosure
and future adoption of ISSB framework
• R&D spending and quality – As a
primary risk mitigant the quantum of
investment in R&D has been increased
over the last five years to create
a sustainable business. Focus on
emerging sustainable materials continues
e.g., corrugated cardboard and moulded
paper pulp vs. moulded EPS.
• Project Forever – a specific deep dive
R&D project was completed in FY23
identifying a myriad of opportunities
for BRG to participate more fully in the
opportunities presented by the circular
economy. The findings will increasingly
inform our NPD process and ESG
priorities
• Cost disadvantage if
•
cheaper new materials
are not adopted
• Expensive research
and development (R&D)
expenditures required
to catch up if left behind
on new and alternative
technologies
Innovation pipeline – The Breville new
product development (NPD) process
uses an innovation funnel to progress
projects. Use of sustainable materials
and repairability increasingly informs
sales estimates and the commercial
assessments of potential projects via use
of LCA for new products.
Increase the attractiveness
of the Breville Group to
consumers, employees and
investors.
Potential financial impact
• Sustained or increased
sales
• Benefits to employee
satisfaction resulting in
lower turnover and higher
productivity
•
Increased access to
capital due to higher ESG
investor ratings
Clear 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 ThermoJet® heater
technology.
Potential financial impact
•
Increased demand for
goods and services due
to shift in consumer
preferences and cost
advantage from early
adoption of new
materials
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ESG Report continued
1.1 Climate risks and opportunities (TCFD) continued
Type of risk
Description of risk
Risk mitigation measures
Opportunities
TCFD category:
Physical – chronic
risk
Internal
assessment:
Medium risk
Business area:
Operational
Timeframe:
Ongoing
TCFD category:
Physical – acute
risk
Internal
assessment:
Medium risk
Business area:
Operational
Timeframe:
Ongoing
Supply risks
Chronic climate risks like
drought or repeated flooding
heightens risk of availability
of parts and materials to the
supply chain or interrupted
production
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
Business interruption
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 some 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)
• 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.
Potential financial impact
•
Increased reliability and
diversity of supply chain
and ability to operate
under various conditions
• Alternative Supply: qualifying suppliers
in alternative geographies is a slow
but effective way to mitigate this risk.
A Mexico manufacturing plant was
commissioned in FY23.
•
Inventory in Market: increased holding
of finished product inventory in market
reduces spasmodic vulnerability to non-
supply of parts
• Globally Diverse operations – wide
geographic spread provides a hedge
against unexpected disruption in one
territory. Dual warehouses in bigger
markets such as USA mitigate against in
country disruption.
• Supply planning – We hold inventory
in our country distribution centres and
our retail partners hold stock, providing
some buffer against disruption to supply.
• Business interruption insurance
• Physical Diligence sprinkler and
fire extinguishers / blankets at our
sites are regularly inspected and
maintained. Supplier sites are reviewed
as part of supplier audit program. An
independent audit relating to fire safety
and emergency response is completed
at both office spaces and warehouses
every three years.
Low obsolescence risk
associated with Breville
products due to long life
cycle allows extra inventory
to be held as a cost-effective
buffer against this risk of
disruption due to an acute
climate event
Potential financial impact
•
Increased market
valuation through
demonstrated supply
chain resilience
• Opportunity to gain
market share if
competitor supply chain
is interrupted
TCFD Goal: Disclose the organisation’s governance
around climate-related risks and opportunities.
The Board’s Audit & Risk Committee formally oversees all risks
and opportunities facing the Group, and climate change was
explicitly added to Breville’s material risks register in FY20 and
has been managed every year since.
Given the importance of the sustainability agenda, the Board
established a Board Sustainability Committee in FY21 directly
responsible for leading and co-ordinating current and emerging
ESG risks and opportunities. The committee is chaired by Mr
Peter Cowan, independent non-executive Director and ex-
country Chairman of FMCG multinational, Unilever – a leader
in sustainable business practices. Board members Ms Kate
Wright, Ms Sally Herman, and Mr Dean Howell complete the
committee.
The Board Sustainability Committee is responsible for
overseeing and monitoring the appropriateness and
effectiveness of the Company’s sustainability initiatives. Within
the group the leadership of key initiatives with the agenda
are taken by individual functions including quality, operations,
design, engineering, HR, Finance, corporate secretarial, legal
and HSE.
The Group CFO and General Legal counsel are standing
invitees to the Board Sustainability Committee.
TCFD Goal: Disclose the metrics and targets used to
assess and manage relevant climate-related risks and
opportunities where such information is material.
Breville is committed to accurately and comprehensively
measuring and reducing its carbon footprint across scope 1, 2
and 3 emissions (including in-use energy consumption).
Reduction in the total metric tonnes of carbon emitted with
a net zero target for scope 1 and scope 2 by 2025 and an
ongoing reduction in scope 3 will be our primary measure of
progress.
Scope 3 measurement and targeting is complex, but
undoubtedly it is where the biggest impact can be made. The
majority of scope 3 emissions arise from consumer usage
of the appliances as well as materials used in construction,
both of which needs to be modelled on a product-by-product
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Operating and financial review continued
ESG report continued
1.1 Climate risks and opportunities (TCFD) continued
basis using LCA. This process is progressing well but is
not complete for all SKUs. Once we are confident on the
comprehensive and robust measurement of scope 3 emissions,
we will publish actuals alongside time bound reduction targets.
Notwithstanding this we are progressing key emission reduction
programs and are measuring their progress across our product
range as we are confident that they will drive down our
overall emissions (e.g. the use of ThermoJet® energy efficient
espresso heaters).
Breville Lead and Lag Emissions Metrics and Targets
Target
FY23 Status
Key Areas Metric
MT CO2 eq
Scope 1 &
Scope 2
emissions
Scope 3
emissions
MT CO2 eq
Energy
Efficiency
% of espresso machines using
ThermoJet® or equivalent technology
which is 2.5x more energy efficient
than a thermoblock and 6.6x more
energy efficient than a boiler
Net Zero by 2025
Drive key reduction
initiatives whilst
comprehensive
measurement is
progressed
75% of machines
sold in 2028
Waste
Generation
KG waste produced and % recycled
65% to be recycled
by 2026
Packaging % Reusable, recyclable or
compostable
100% by 2025
On track
1121 MTCO2 eq emitted in FY23. A 22% reduction
on FY22 with significant progress in use of solar,
energy efficient lighting and green energy.
On track
Implementation of SCSS emission tracking software
based on comprehensive LCA is on track for full
implementation in FY24.
On track
52% of machines sold in FY23 use ThermoJet®.
66% of new machines launched in FY23 use
ThermoJet® as do 71% of new machines under
development.
On track
53% recycled in FY23 and total tonnage of waste
maintained despite return to work for most office
staff in FY23.
On track
Sustainable Brown box initiative launched. Roll out
globally will deliver target by 2025.
1.2 Carbon Emissions – Measurement and target reductions
Key initiatives to drive emission reductions include:
Breville is committed to methodically and markedly reducing
its total carbon footprint wherever it occurs in the business or
across the product lifecycle.
This starts with comprehensive measurement of our cradle-to-
grave footprint, namely scope 1, 2 and 3 emissions including
in-use emissions.
We have implemented and are populating SpheraCloud®
Corporate Sustainability software (SCSS herein) to measure and
track enterprise-wide emissions allowing credible and trackable
targets to be set. The package also supports the modelling of
MT CO2 eq reductions from proposed initiatives to allow impact-
based prioritisation to occur.
Scope 1 and 2 Emissions
Scope 1 and 2 emissions for all Breville Group sites, including
electricity, gas and water usage, along with petrol usage for
fleet cars, is now captured at a granular level, aggregated and
reported. The 3 years leading up to this reporting period were
used to determine a credible baseline to allow targets to be
set. The resulting data provided the Breville Group with the
confidence to commit to reach Net Zero Emissions for Scope
1 and 2 in our sites and operations by 2025.
Although scope 1 and 2 emissions make up a small minority of
our total impact, it is important that we commit to rapidly driving
these emissions directly within our hands to net zero.
• Electrification and use of renewable electricity including use
of solar in key locations;
• Energy efficiency initiatives including optimised lighting and
sensors; and,
• Defining an offset strategy for unavoidable emissions.
A review of FY22 scope 1 and 2 emissions showed that the
majority of our emission impact was a result of operations in
APAC, notably our Global headquarters and R&D facility with
a total of 79 percent of emissions emerging from this centre.
This finding drove our initiative planning for FY23, where we
focussed on reducing emissions at our Global headquarters in
Alexandria, Sydney.
In FY23 we were able to facilitate the installation of rooftop
solar panels and a complete lighting fit out to remove existing
fluorescent globes and replace them with more efficient LED
lighting to reduce on site electricity usage. We furthermore
moved to ensure the remainder of electricity usage at this
site was powered by green energy. The combination of these
achievements has allowed the Alexandria office to be carbon
neutral in electricity usage, decreasing the total scope 1 and
2 emissions in APAC by 59 percent from FY22. Our next step
in this area will be to complete the same initiatives at our other
scope 1 and 2 locations. FY23 was also the first year we have
seen a manufacturing site be included in our scope 1 and
2 emissions, following the purchase of Italian brand ‘Lelit’.
20
Breville Group Limited annual report 2023 Operating and financial review continued
ESG report continued
1.2 Carbon Emissions – Measurement and target
reductions continued
While this could have caused a dramatic increase in our total
emissions, we are pleased to announce that Lelit operates
using green energy, meaning this acquisition has had little effect
on our total carbon footprint.
Overall scope 1 and 2 emissions reduced by 21.89 % in FY23
vs FY22 to 1121 MT CO2eq. and we remain confident of
achieving our zero net emissions target by FY25.
Breville Group Total Scope 1 and 2 emissions
q
e
2
O
C
g
K
T
M
2000
1500
1000
500
0
1560
1499
1435
FY20
FY21
FY22
1121
FY23
Scope 3 Emissions
The majority of BRG’s emissions footprint is produced from
activities not owned, or directly controlled by Breville, such
as third- party manufacturing, third-party logistics as well
as the electricity consumed by our products in consumers’
hands (“in-use” emissions) and the impact of materials used in
constructing our appliances.
These scope 3 emissions are also being captured and
measured in SCSS by:
• Aggregating emissions data from manufacturing and
logistics partners;
• Capturing transportation volumes and resultant emissions
impact;
• Using LCA Lifecycle Analysis of key products to model
energy in-use emissions by unit by year; and,
• Using LCA Lifecycle Analysis and BOM (bill of materials) to
model the impact of materials and packaging used in our
appliances and the end-of-life impact by unit.
To ensure as much objectivity and accuracy as possible in
the LCA estimation process Breville engaged the Sustainable
Manufacturing and Life Cycle Engineering Research Group
at UNSW to conduct a LCA on one of our best-selling coffee
machines, the Breville Barista Touch (BES880). This involved
a detailed assessment of the emissions profile of the materials
used in its production, the manufacturing 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 over the full life of the
product.
The findings of this detailed study are now being flexed for the
different technical specifications and BOMs (bills of material) of
our other key products and will be loaded into SCCS to allow us
to quantify our current carbon footprint per product sold and to
measure the forecast change in our carbon footprint as mix and
volumes change and as we implement new materials or energy
efficient components.
LCA modelling will estimate an average expected impact per
product. For example, the actual in “use-phase” emissions
of a product will vary with both the frequency of use and the
electricity source in the country where the product is operated.
Here we model an average expected life span, frequency of
usage and average electricity source to calculate the scope 3
impact of in use power. The impact of a product will then be
applied to the total units sold in the year to determine the total
scope 3 emissions.
Starting in FY24, all new products in development will be
subject to a LCA prior to production start. This will ensure that
sustainability (including materials used and repairability) are
explicitly taken into consideration during the design phase.
Alongside new products, certain existing products will also
have a LCA completed to estimate total scope 3 emissions and
opportunities for reduced footprint.
This process is involved and complex, and once we are
confident that it is both comprehensive and robust, we will
publish actuals alongside annual reduction targets. We estimate
to be ready to publish our scope 3 emissions in our FY24 ESG
report.
Key Scope 3 Emissions Reduction Opportunities
• The LCA performed for BRG by UNSW found that the
majority of scope 3 emissions impact arises firstly, from the
materials used in production and secondly, through “use-
phase” power usage once a product is in a consumer’s
home and thirdly from transport and packaging.
Informed by these results we have focussed on reducing
emissions by improving the energy efficiency of our products,
applying sustainable design principles to our NPD process and
accelerating sustainable packaging adoption.
1.3 Energy Efficiency
Enhancing energy efficiency in the “use-phase’ is a key ESG
opportunity.
We assess our current energy efficiency performance through
the use of the Swiss Energy Ratings label across our key
appliances to monitor the relative energy efficiency of our
range (star rating is currently not available for small domestic
appliances). 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 use this testing regime globally as a substitute for the ‘star
rating’ for energy efficiency, which is only available for large
appliances e.g., fridges and washing machines.
All Breville products are also 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.
ThermoJet® – a significant innovative impact on reducing
CO2 emissions
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Breville Group Limited annual report 2023
Directors’ report continued
Operating and financial review continued
ESG report continued
1.3 Energy Efficiency continued
In terms of key energy saving initiatives, Breville is proud to have
jointly pioneered the ThermoJet® heating system in its espresso
machines addressing the major energy usage in a typical
espresso machine – delivery of hot water and steam. Traditional
espresso machines are one of the highest energy consuming
products in the small kitchen appliances world due to the
need to heat up and keep a body of water at temperature,
traditionally done using metal boilers. The alternative to boilers,
thermocoils, still require the heating of blocks of aluminium to
transfer energy, a process that consumes significant amounts
of energy.
It was with this in mind that Breville helped pioneer a printed
thick film heater for coffee makers (ThermoJet®) that heats
up instantly and delivers precise temperature control using a
fraction of the energy of traditional methods. We believe that
this is one of the more significant climate-friendly innovations
in small kitchen appliances in the last decade and it forms a
key part of our path to reduce our in-use energy consumption.
The technology scores an A rating in Swiss Energy Ratings for
energy savings compared to a B or C rating for thermocoils and
a D rating for boilers.
Key Facts
Breville espresso machines fitted with a ThermoJet® heater:
• Use approximately 2.5 times less total energy during normal
use than a thermocoil machine and 6.6 times less energy
than a typical machine using a boiler*
• Save between 50 to 200 (KWH) per coffee machine vs. a
thermocoil or traditional boiler machine respectively*
* as estimated by the Swiss Energy certification labs, an independent
body set up to test and report on appliance energy consumption.
Breville has embraced this energy efficient technology:
• Doubling the number of machines sold using a ThermoJet®
from FY20 to FY23 reaching over 600,000 in FY23;
•
Increasing the percentage of Breville coffee machines
using ThermoJet® from 43% in FY20 to 52% in FY23 and
reducing the proportion of Breville coffee machines using
Boilers to 4.9% in FY23 from 5.9% in FY20;
• Two out of the three new Breville coffee machines
launched in FY23 use a ThermoJet® and 71% of new
models currently under development are slated to use a
ThermoJet®;
22
• Based on units sold in FY20-23 the adoption of the
ThermoJet® technology has saved approximately 861
million kilowatt hours (KWH) of lifetime electricity used
against an equivalent range of thermocoil machines or
3.432 billion kilowatt hours (KWH) against a range of
traditional boiler machines. Both estimates are based on
typical annual consumer usage and a 7-year lifecycle; and,
• The carbon footprint of electricity generation varies
greatly from country to country, but assuming that 0.386
kgs of CO2 was generated per KWH (sourced from US
Energy Information Administration) Breville’s transition to
ThermoJet® heaters over FY20- 23 is calculated to have
saved between 332,601 and 1,326,143 metric tonnes of
CO2 over the lifetime of the machines sold.
A significant and innovative contribution to our energy efficiency
and emissions reduction journey.
Looking forward Breville remains committed to have at least
75% of our coffee machines using ThermoJet® or equivalent
technology by 2028.
1.4 Sustainable design, repairability and end of life
Our LCA highlighted an emissions reduction opportunity from
reducing key material usage, notably plastics and metals, in
the design and construction of our products. Our design and
engineering teams are continually working to optimise the
strength and weight of materials used in our key machines
to reduce material consumption whilst maintaining desired
quality, using Finite Element Analysis (FEA), Computational Fluid
Dynamics (CFD), Design for Manufacturing studies (DFM), as
well as Failure Mode and Effect Analysis tools (FMEA).
To complement this approach, our R&D team completed the
discovery phase of its Forever Project with the objective of
identifying the most impactful activities Breville could undertake
to materially reduce the per unit carbon impact (Scope 3
emissions) of the products it designs and engineers. This phase
of the project was undertaken by the strategic business unit of
Design and Innovation known as Deepdive, which is responsible
for many of the innovations in our award-winning products.
The primary consideration of the project was to examine how
circular economy principles could deliver sustainable outcomes
for the environment whilst delivering elevated customer
experiences and ongoing strong commercial growth. The
project resulted in a detailed paper containing several promising
avenues that will be shortlisted and reviewed during FY24 for
priority, investment, and action.
Material usage can also be reduced by extending the lifecycle
of our products. Breville already sells key spare parts, filters,
and cleaners for our most popular appliances to help extend
their lifecycle. Baratza goes further, with its grinders explicitly
designed to be user repairable. The ‘don’t dump it, fix it’
program has a wide range of spare parts available for purchase
and instructional videos on YouTube to support repair at home
and even rebuilds. This approach is mirrored in the newly
acquired Lelit business with repairability a key part of the brand
identity and driver of consumer choice. In core Breville ranges
a ‘serviceability index,’ has been introduced, to track and
encourage repairability as a design criterion in new products.
1.5 Sustainable packaging
Packaging materials constitute an estimated 6 percent of our
materials climate change impact. It is an important area to our
employees, our consumers and other stakeholders and an area
in which we are making rapid and significant progress. We are
a decade-long member of the Australian Packaging Covenant
Organisation (APCO) and as such have entered into a
Breville Group Limited annual report 2023 Operating and financial review continued
ESG report continued
1.5 Sustainable packaging continued
voluntary agreement to reduce the impact of packaging on the
environment. In FY23 our comprehensive packaging audit was
extended to include all new SKUs to support the rapid roll out of
key developments in recyclable packaging across all existing as
well as new products as soon as they are available.
Breville’s key sustainable packaging commitments are:
• All packaging to be reusable, recyclable or compostable by
2025 (aligned to APCO target);
• Removal of expanded polystyrene (EPS) from consumer
packaging by July 2025 (a target set by the National
Plastics Plan); and,
• Removal of non-essential packaging (on-going target) for
example the combination of shipper and inner display box.
Baratza led the way with the release of a ‘one box’ design or
“beautiful brown box” combining retail and shipping boxes in
the launch of the Vario+ and Vario W+.
In 2023 Breville developed and launched the company-wide
Sustainable Brown Box initiative which will see the company
adopt best-in-class sustainable packaging practices. The goal
is to reduce our packaging footprint by moving to a recyclable
brown box, the complete removal of expanded polystyrene
(EPS), and minimal use of internal soft plastics. In addition, the
new brown box will carry simplified on-pack communications
with the rollout of a new Product Information and Sticker
Strategy. This strategy will allow Breville to streamline a
sustainable packaging supply chain for Breville’s three theatre,
multi-region production.
Breville will globally adopt a recycled and recyclable cardboard
box with standard offset printing in two water-based inks,
accompanied by a recyclable printed sticker. This approach
will replace the non-recyclable cardboard box with standard
offset printing in full CMYK colour with added spot UV plastic
highlights and a matte plastic coating. Internally, a protective
polystyrene foam had been historically used to protect the
product from damage during transit and storage. Moving
forward, protective recycled and recyclable moulded paper
pulp and or corrugated cardboard will be used to protect the
product.
one box, two-branded versions, and three sticker variations
with minimal translation thereby greatly reducing waste and
ultimately a single version in-market.
In FY24 all new product releases for all markets will be EPS free.
They will instead use corrugated cardboard and or moulded
paper pulp. In addition, new product releases in all markets will
use the sustainable brown box and sticker approach. For legacy
products, a global rollout roadmap is being defined, starting
with ANZ, where most legacy products will be ready to order
from September 2023 (brown box and EPS-free).
The Company remains confident with the national APCO
commencement EPS-free July 2025 deadline and is satisfied
with the progress towards similar deliverables in key overseas
markets.
• Full CMYK colour printing
• Standard offset printing
• Process Spot UV plastic highlights
• Matte plastic coating
• Protective polystyrene foam
• 4 regional versions
Sustainable Packaging Initiative
Legacy Package
Full CMYK
Sustainable Package
Recyclable 2x Water-
Based
Standard Offset
Recyclable Printed Sticker
Inks
Printing
Process
Insert
Standard Offset
Spot UV Plastic
Highlights Matte
Plastic Coating
Expanded
Polystyrene Foam
Recyclable, Recycled
Molded Pulp Recyclable,
Recycled Corrugated
Cardboard
The Sustainable Brown Box Initiative will also deliver substantial
efficiencies to the packaging supply chain thereby reducing
waste and impact. For example, historically packaging
development for four regional versions in nine languages would
require 800hrs+ in initial development and another 100hr+ in
revision resulting in waste and multiple in-market versions. By
comparison, the new strategy will require 20hrs to produce the
2x water-based printing inks
•
• Standard offset printing
• Process recyclable printed sticker
• Recycled & recyclable cardboard
• Recycled & sustainable protective pulp
•
2 brand versions
23
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Operating and financial review continued
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1.6 Waste diversion
All recyclable waste streams generated at our Sydney
headquarters and global 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 are all disposed of in a sustainable way.
Soft plastics remains an area of challenge and one where we
continue to look for a recycling partner.
During FY23, Breville produced a total of 57.7 tonnes of waste,
30.6 tonnes (or 53%) of which was recycled. As we adapt to
the post-covid environment, we have seen a significant increase
in the number of staff attending our offices and expected an
increase in the amount of waste produced on-site. Our FY23
goal was to ensure the amount of waste being diverted from
landfill did not increase despite the return-to-office impact. We
were able to meet this goal, with an increase on waste diversion
from 52 percent in FY22 to 53 percent in FY23.
Social
2. Product quality and safety including product recall
Breville’s reputation with consumers for innovative, high quality
and safe products underpins our sustainable growth.
To protect this hard-earned reputation Breville adheres to
rigorous quality standards during design and production and
has clear consumer focussed protocols for Product recalls.
Breville has a comprehensive quality regime to ensure that 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 example, in approving all new
products 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’
for any particular failure point of a product. This allows us to
better understand the impact of potential product failures on
our customer base and how to rectify/design these out of the
product before they occur.
The Group also maintains a rigorous Quality Assurance and
Control program for our products.
24
This includes Pre-Shipment Inspection (PSI) of products before
they leave the factory, as well as System and Process audits. A
zero-tolerance approach to quality and safety within the Quality
Assurance and Control programs gives us a high degree of
confidence that the products shipped and sold to customers
are free from safety-related defects. Our quality team is in our
partners’ factories daily qualifying the manufacturing processes
and products before shipment.
Our General Manager Quality also monitors all returns and
warranty claims, as well as any specific customer complaints,
to identify and rectify any quality issues and identify any trends
in quality. These are reported to the CEO and CFO monthly or
immediately in the case of a serious issue.
Customer safety is a non-negotiable core responsibility of
the Group.
For any alleged or actual injury to a consumer 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.
Product recall
If potential for harm, arising from a Breville product, is
identified, then a recall protocol is triggered and recall
procedures appropriate in each territory are started. These
are accompanied by a vigorous all channel consumer
communications approach.
As a result of our quality and safety standards and reassurance
regime Breville has not had to trigger a product recall for over 6
years. The last product recall was on 7 November 2016.
All historic product recalls remain online on key websites 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
3. Ethical sourcing – Human rights and modern slavery
Ethical procurement
The Group conducts its business in a socially responsible
manner. This includes upholding consistently high ethical
standards in our procurement decisions and processes. The
consumer facing nature of Breville, and the importance of this
issue to our stakeholders in maintaining our reputation, and
therefore sustainable sales, ensures that this is a high focus
issue within our operations.
Our Ethical Sourcing Policy sets out our requirements for
our manufacturing partners and sub-contractors including
compliance with the protection of human rights, all local and
international labour and employment laws, and generally
ensuring a safe and fair work environment.
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ESG report continued
Ethical procurement continued
All our supplier’s sign and are held accountable to adherence
with this policy. Ensuring compliance with the policy, and the
highest ethical standards, is the responsibility of our Chief
Operating Officer, who also owns the overall commercial
relationship with suppliers, supported by our General Manager
Quality who has frequent touch points and interaction with the
suppliers via their QA team and procedures.
Human rights & modern slavery
Breville respects and upholds the Universal Declaration of
Human Rights through its sound business activities. Our
suppliers, bound by our Ethical Sourcing Policy, are required to
do likewise in order 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 Modern
Slavery Act Statement, is published on our website and the
Australian government platform. The actions we are taking to
identify and address modern slavery and human trafficking risks
in our operations and supply chains described above ensures
that our Ethical sourcing policy is adhered to.
The Group’s products are largely manufactured in the Shenzhen
area of southern China, with long-term manufacturing
partners, many of whom we have partnered with for well
over 20 years. Our long-term relationships with our partners
are collaborative in terms of bringing innovation projects to
commercialization, which fosters a close understanding of
each other's businesses. We represent a significant part of
our manufacturing partners’ business, giving us influence over
expected standards. We attempt to give our suppliers good
visibility of future volumes and pricing to avoid any business
constraints that may encourage poor behaviour. Our portal
allows suppliers to view future POs (purchase orders) by
SKU for a rolling one year, giving the suppliers good visibility
and adequate lead time to scale production up and down,
including the scheduling of labour. In addition, fair pricing is
continuously monitored throughout the fiscal year by watching
currency, commodities, and capacity utilization. The nature of
our manufacturing, requiring high end, well trained and skilled
assembly, rather than low skilled transitory labour, reduces the
likelihood of any serious non-adherence including no tolerance
violations such as forced or child labour issues. There is,
however, no complacency on this risk. Our frequent onsite
visits give us visible reassurance that standards are being
adhered to in practice, which we then systematically confirm by
independent audits.
We regularly visit our partners’ plants and get visible
reassurance of how the plants are run. Our engineering teams
make frequent visits to the plants during the commercialisation
phase on innovation projects. Our Chief Operating Officer
and teams normally make plant visits 3-4 times per annum to
review operational plans and, critically, our quality assurance
teams make plant visits on a weekly basis to quality assess
and release production batches. We have consulted with IAST
(Investors against slavery and trafficking) and are working
on a simple awareness and training program to increase the
effectiveness of these visits in identifying potential human rights
issues even if that is not the primary purpose of the visits. The
advantage being that these visits are both frequent, and at
times, unscheduled.
To support our regular internal observations Breville
commissions SMETA Audits (Sedex Member Ethical Trade
Audits) conducted by AACs (Affiliate Audit Companies) which
comprehensively 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. In FY23 Breville independently
audited 12 of our manufacturing partners.
Sedex membership also gives us access to any audit performed
by the organisation, whether we commissioned it or not. Out
of our 95 current suppliers, 70 representing 95 percent of our
supplier spend are connected to the Sedex platform and have
performed a self-assessment during the last year which we can
access and review.
Detailed audit reports and findings are received and reviewed by
our General Manager Quality and COO. The severity of any non-
compliance, and hence rating of the vendor is completed, and
any that do not meet our internal ‘baseline’ standard are placed
into a ‘below standard’ category and actively monitored until
the non-compliance is addressed. A zero-tolerance matter such
as modern slavery would result in us severing the relationship
immediately.
In FY23 although there were specific areas for improvement
no supplier rated ‘below standard’, and there were no zero
tolerance violations.
FY2023 Sedex Audit Scorecard
FY23 Audits
Zero tolerance issues
Critical issues
12
0
9
Other issues
182
Total issues raised
191
No zero tolerance issues
identified.
6 overtime / workings
hours related; 2 record
keeping; 1 fire inspection.
Range of medium to low
level issues.
All finished goods we are selling under Breville/Sage brands
in the European Union, UK, and South Korea comply with
European RoHS legislation banning substances of concern.
Furthermore, the Group ensures all parts and materials in
Breville/Sage products meet the food contact safety/REACH
requirements.
25
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Operating and financial review continued
ESG report continued
Breville’s engagement with its community explicitly excludes
affiliation to any political cause, and Breville does not make any
political donations.
4. Community relations
4.1 Community engagement
Breville recognises that the health and wellbeing of the
communities we serve is directly correlated to our ongoing
viability and success as a business. In FY23, we partnered
with various not-for-profit organisations on a range of initiatives
designed to make our communities fairer, kinder, and stronger.
Projects included:
• STEPtember Program – a month long global program which
encouraged employees to exercise each day, with proceeds
going to the Cerebral Palsy Alliance (Breville matched
donations made by employees).
• Heritage Awareness Months (US & Canada) – information
shared with employees each month to celebrate and
acknowledge the contribution of various ethnic and
traditionally marginalised groups in US and Canadian
history.
•
International Women’s Day – Breville sponsored a panel
discussion run by Future Women, celebrating first nations
women in Australia. The event profiled our Aboriginal
Culinary Journey collection and the curator of the range,
Alison Page was a member of the panel. The panel was
recorded and broadcast on the ABC’s ‘Speaking Out’
program.
• Reconciliation Week - to mark National Reconciliation Week,
Breville invited our staff to an event run by our Partner UTS
on Voice, Treaty and Truth, as an in-depth discussion on
‘the voice to Parliament’ as part of our commitment to
educating our team on the coming Referendum.
• Clean Up Australia Day – in conjunction with people across
Australia, Breville employees volunteered their time to
cleaning up the Corporate Park within which Breville is
located.
• Future Careers – FY23 saw the Breville Group undertake
several programs where current employees engaged with
young people who have an interest in the areas in which
we operate. These include the ‘Guluwa Engineering and
IT Experience’, a week-long program for Indigenous high
school students to discover the opportunities that a degree
in engineering or technology can provide, ‘Girls Big Day
Out’, an event sponsored by Breville where young women
in their later years of high school that are in engineering
clubs attend a networking event and learn about the life of
an engineer at Breville, and ‘Launch Your Career: Creative
Industries’, an event that allowed current university students
and alumni to network with Breville employees.
• Oz Harvest Food Drive - Breville organised an office
food drive in support of Oz Harvest. Oz Harvest aims to
keep food out of landfill and instead, to direct it to feed
people in need in our local community. We received a
higher contribution than expected and Oz Harvest were
appreciative of the generosity shown by our Alexandria
based employees.
• Our Big Kitchen - the Australian Finance Team volunteered
at ‘Our Big Kitchen', a charity that cooks and packages
fresh meals for people in need across Sydney. In total, 200
meals were delivered to needy people on the day.
26
4.2 Reconciliation Action Plan (RAP) and an Aboriginal
Culinary Journey collection (ACJ)
In FY23 we continued our efforts on reconciliation and
engagement with the Aboriginal and Torres Strait Islander
communities within Australia via our RAP and continued to
launch the Aboriginal Culinary Journey (ACJ) collection in
Europe and the USA.
Breville’s first ‘Reflect’ Reconciliation Action Plan received official
endorsement from Reconciliation Australia in March 2022 and
now guides our reconciliation initiatives. Our progress is guided
by an Advisory Council of elders and community stakeholders
that provides the Breville RAP Working Group with advice and
information on equity issues facing Aboriginal and Torres Strait
Islander communities.
More information on these initiatives, and our Reconciliation
Action Plan, can be found on the Breville Group Corporate
website.
An Aboriginal Culinary Journey collection (ACJ)
On the 26 May 2022 we launched a world first partnership
between First Nations People and the National Museum of
Australia to create products for the heart of the home that
celebrate contemporary design and reflect 65,000 years of
ongoing Australian Indigenous culture. A decade in the making,
an Aboriginal Culinary Journey combines ancient stories with
the best of contemporary design, with Breville’s profits from the
sale of the range donated to three key charity partners to create
opportunities for Indigenous Australians.
Donation of 100% of Profits to support Indigenous
Australians
In FY23, we are pleased to report the sale of over 2,500 pieces
from the collection and the distribution of $354,904 to our
nominated charity partners, who are the beneficiaries of 100%
of our profits from the sale of the Aboriginal Culinary Journey
range worldwide.
Half of the funds have been used to support the National
Indigenous Culinary Institute’s work, creating employment
opportunities for aspiring Aboriginal and Torres Strait Islander
chefs, and the 'Indi-Kidi Program' by the Moriarty Foundation,
which aims to support better childhood nutrition and share
Indigenous Food Culture. The other half has been used to
create scholarships at the University of Technology Sydney,
creating pathways for employment in engineering, technology,
and design.
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ESG report continued
4.2 Reconciliation Action Plan (RAP) and an Aboriginal
Culinary Journey collection (ACJ) continued
The first of the scholarships will be awarded to students in
August this year and will remain open for application until they
are awarded. Currently we have 3 fully funded scholarships with
UTS and have committed to internship positions within Breville
to support the student’s transition from study to work.
The profits earned are donated in quarterly increments
commencing September 2022, and Breville has absorbed all
other overhead costs associated with advertising, marketing,
and administration relating to the sale of the products. For
further information on our how profits are calculated or to learn
more about our charity partners please visit our website.
Royalties were also paid to the artists that collaborated with us
on the collection.
Global Tour
Following the successful Australian launch, we embarked
on a global tour with the National Museum of Australia to
exhibit the collection in cultural institutions and Australian High
Commissions and Embassies in London, Berlin, Brussels and
Washington DC. The range was also showcased at high profile
press events and distributed in premium retailers all over Europe
and the USA including Harrods, KaDeWe and Bloomingdales,
bringing prominence to Aboriginal storytelling, and profiling
indigenous art and culture to the world.
65,000 Years of Design
As an Australian company, we are proud to share these stories
belonging to the world's oldest living culture and weave them
together with our own 90 years of innovation. More than just
a collection of products, an Aboriginal Culinary Journey is an
invitation to immerse yourself in a deep and vibrant culture, and
we’re honoured to provide a platform to bring these art objects
into the homes of our consumers around the world.
5. Employee wellbeing
Working to ensuring that our workplace is a safe, inclusive,
and encouraging environment for all employees is core to our
growth and sustainability as an organisation.
5.1 Diversity and inclusion (D&I)
Breville’s approach to D&I is informed by its Diversity &
Inclusion Charter published on our corporate website. The
Charter was drafted under the guidance of our Diversity &
Inclusion Committee, incorporating over 60 employees as
active members, which showcases diversity in all of 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 work force and promoting diversity of attributes.
We will not tolerate any form of discrimination with regard to
personal traits such as:
•
religion, creed, race, ethnicity, national origin, ancestry,
cultural background, language, and citizenship status;
• gender, sexual identity or preference;
• marital status;
• age;
• psychological and physical capability or disability;
• education and experience level;
• socio-economic status;
•
family situation and background;
• military or veteran status; and
• political belief and worldview.
We maintain that diversity includes differences in perspectives,
thoughts, interests, and ideas; and that inclusion means
ensuring that all employees are valued, heard, recognised,
engaged, and involved at work, and have opportunities to
collaborate, contribute, and grow professionally in line with our
business needs. Diversity and inclusion are the result of respect,
valuing others and caring about the lives we touch through the
people we employ, the customers who enjoy our products, and
the societies in which we operate.
One way in which the Breville team strives to inspire diversity is
through initiatives aimed at enhancing gender balance including:
•
•
•
representation of women on the Board;
representation of women in Senior Executive roles including
succession planning;
issuance of the Breville equal opportunity statement to
recruiting agencies;
• explicit requirement of recruiting agencies to provide a
gender balance of suitable, qualified, shortlisted candidates
for interview; and,
•
flexible working arrangements where operationally
appropriate.
We are confident that superior business performance results
from a business culture that is open-minded, accepting
and conscientious about protecting and promoting these
interests. For example, diversity and inclusion can lead to
better outcomes for customers, wherein we are able to deliver
improved value to the populations we serve; greater innovation
and valuation resulting from eclectic ideation; and a more
attractive, enriching, and supportive environment for employees.
Our Diversity & Inclusion program provides continual recognition
and activities in order to promote our ideals. Recent initiatives
have included:
• Respect in the Workplace Training - Breville launched the
‘Respect in the Workplace’ (Respect) training video to all
employees globally. The training addressed; the behaviours
described as bullying, harassment, discrimination, and
victimisation, the risks and consequences which can arise
from transgressions and the importance of eliminating these
behaviours from Breville’s workplace; and how an employee
should escalate any concerns and how Breville would
handle these.
•
•
International Women’s Day - Breville celebrated International
Women’s Day by hosting a workshop run by the NGO,
‘Ladies Finance Club’. Key topics included investing,
budgeting, and managing debt. Ladies Finance Club aim
to empower women to take greater control of their financial
futures through financial education.
Internal Community Events - featured speakers, and events
and communications oriented toward recognition and
learning opportunities with respect to significant cultural
milestones (e.g. International Women’s day, Men’s Health
Week, NAIDOC week, Diwali and Pride week).
27
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Operating and financial review continued
ESG report continued
5.1 Diversity and inclusion (D&I) continued
• Breville complies with the (Australian) Workplace Gender
Equality Act, which requires the submission of an annual
report on gender diversity practices and metrics. Globally in
FY23, our Board was 33 percent female and the percentage
of women across the organisation was 45 percent. The
percentage of women in managerial roles was 37 percent,
up from 36 percent in FY22 with senior and executive roles
at 35 percent, up from 34 percent in FY22.
While we do not maintain specific quotas for individual facets
of diversity, we continue to apply principles of equity and
social justice to achieve equal employment opportunities
for talented individuals of all backgrounds and cultures. We
celebrate achievements and we endeavour to enable continued
improvement.
Our approach to Board diversity is detailed in Section 6.1
below.
5.2 Health, Safety and Wellbeing
Ensuring a healthy and safe workplace is foundational to our
ongoing success as a growing business, and we strive for
continuous improvement and consistency in our wellbeing and
safety practices.
A Group Health, Safety and Environment (HSE) Advisor
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.
The Breville Group has an internal health and wellbeing
program, branded ‘Nourish’. The Nourish team organise several
initiatives for employees throughout the year, examples of these
include;
• STEPtember - Breville Group employees from around the
world, again participated in the STEPtember challenge.
Employees were encouraged to form teams and walk,
swim, ride or spin their way to 10,000 steps each day.
Employee registration costs were covered by Breville|Sage
and over 200 Breville|Sage employees participated globally.
This resulted in a combined stepping total of over 31
million steps with $18,500 being raised through employee
sponsorship.
• RUOK? - RUOK? Is a day where we are encouraged to
check in on one another. This year Nourish organised guest
speaker Stacey Copas to speak with employees on the
theme of resilience while sharing her inspirational story. Over
300 employees participated in this event.
• Breville|Sage Day – An annual event where all employees
are given a device-free day to spend time with their friends
and family.
• Summertime Hours – An initiative where employees are able
to extend their hours Monday through Thursday, allowing
them to have an early finish on a Friday.
• Mental Health First Aiders - As part of Breville’s commitment
to the mental health of our employees, Breville invited
interested employees to apply to be trained in mental health
first aid. This was through providers accredited by Mental
Health First Aid Australia. We now have 9 trained employees
who are able to assist employees when required.
28
In terms of supporting an employee focussed management of
work life balance Breville offers:
• Flexible Work Policy – allowing employees a greater choice
around work locations and hours including numerous part
time roles.
• Technology – which is leveraged to support a choice of
work locations and to protect personal time with meeting
recordings and do not disturb periods.
• Paid Parental Leave – Breville introduced 12 week paid
parental leave in countries where this is not provided by the
state.
In FY23, Breville employees worked a total of 2,355,998
hours, and there were two recordable injuries in that time,
one occurring in APAC and the other in EMEA. One of the
incidents was a lost time accident, so our FY23 LTIFR is one.
Safety performance in terms of LTIR and RIFR are reported and
reviewed with the Board on a monthly basis.
* Reportable Injuries per million hours worked
6. Corporate Governance
Breville is committed to the highest standards of Corporate
Governance and delivers this through culture, demonstrated
behaviours and policy.
6.1 Board independence & diversity
Breville maintains a majority independent Board and is steadily
evolving its Board composition to benefit from diversity in all
its forms including gender, skill set, experience, ethnicity, and
residency.
As previously announced the Group was committed to adding
diversity, both geographic and skill set, to its Board. Given that
85% of the Group’s revenue in FY23 was outside of Australia,
priority was given to adding highly credentialed, non-Australian-
based, Directors.
In August 2021, the CEO Jim Clayton joined the Board as
Managing Director. In June 2022 Mr Tim Baxter joined the
Board bringing specific experience of leading a consumer
products business on a global scale and geographic and
nationality diversity to the Board. Mr Baxter is the first non-
Australian-based Director the group has appointed. Along with
Mr Clayton, Mr Baxter’s appointment increases the number of
North Americans on the Board to two, or 25%. In April 2023
Ms Tuula Rytilä, who is based in Finland, joined the Board
increasing the number of internationally based Directors and
bringing specific experience of consumer facing technology to
the Group.
For eleven months of FY22, 29% of the Board were women
(Sally Herman and Kate Wright). This percentage reduced to
25% when Tim Baxter joined the Board in June 2022. In FY23,
when Tuula Rytilä joined the Board (April 2023) the percentage
reverted to 33%.
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ESG report continued
6.1 Board independence & diversity continued
Breville will continue to look for opportunities to promote an
effective, diverse, and inclusive Board and senior leadership
team, including with respect to gender, background, ethnicity,
professional experience, and geographic location. 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 10
and 11 of the Directors report.
Our Chair Tim Antonie is non-independent due to his affiliation
with a major shareholder. Lawrence Myers was appointed
Deputy Chair in August 2022: he is the lead independent
director and chairs the Audit and Risk Committee (ARC).
The People, Performance, Remuneration and Nominations
Committee (PPRNC) and the ARC are 100% independent.
Dean Howell is considered an independent director by the
Group, despite his fifteen-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 eight
years, which is eight years after Mr Howell took up his Board
role, and Mr Howell’s track-record of independent and impartial
decision-making.
6.2 Internal ESG reporting mechanisms
Given the importance of the sustainability agenda, the Board
established a Board Sustainability committee in FY21 to
enhance oversight and focus on sustainability strategies,
policies and programs throughout the Group.
The committee is chaired by Peter Cowan, independent non-
executive director and ex-country Chair of FMCG multinational,
Unilever – a leader in sustainable business practices. Sally
Herman, Kate Wright and Dean Howell also sit on the
committee. The Group CFO and General Legal Counsel and all
Board Members are standing invitees to committee meetings.
The agenda and minutes of the Sustainability committee are
presented to and reviewed at subsequent Board meetings.
The Board Sustainability committee itself receives periodic
updates from the company Sustainability Committee, the
Reconciliation Action Plan (RAP) Committee as well as from
business functions including quality, design, engineering, HR
and WHS. The Board PPRNC Committee formally oversees
and reviews all HSE and Diversity and Inclusion related topics,
including company-wide safety targets and performance along
with updates on diversity initiatives. The Board’s Audit & Risk
Committee formally oversees all risks and opportunities facing
the Group, and climate change was explicitly added to Breville’s
material risks register in FY20 and has been developed every
year since.
7. Corporate Behaviour
A key focus of the Breville Board is to instil and encourage a
positive corporate culture across the Group that values honesty,
openness and integrity. This is reinforced through policies, a
demonstrated risk appetite including zero tolerance issues and
visible leadership on key issues.
During FY23, Breville embarked on a comprehensive review
of the company values. Recognising our significant growth
over recent years, we saw the need to realign our core values
with our strategic direction and growing employee base. This
initiative allowed us to engage with employees, customers and
partners, gathering insights that guided us in refining our core
values to better reflect the essence of our organisation.
These updated values are represented in the acronym,
CREATE,
We are CONSUMER-FOCUSED: We place consumer needs
first, creating exceptional products and services that elevate
daily life.
We are RESILIENT: We embrace challenges as chances to
learn, grow, and leave our mark on the world.
We strive for EXCELLENCE: We redefine the game with
cutting-edge products and services that surpass expectations.
We are AGILE: We proactively adapt to market demands and
trends, staying ahead of the curve.
We are one TEAM: We draw strength from our diversity in
collaborating across boundaries in achieving shared goals.
We are EMPOWERED: We can all make a tangible difference
by fostering autonomy, trust, and accountability.
7.1 Anti-bribery, corruption, and whistleblowing
Honesty, integrity, and trust are considered integral to the Group
ethos, its products, and its brands. The standards of behaviour
expected across the Group are laid out in the Corporate
Conduct Policy.
Conduct associated with bribery and corruption is a ‘zero
tolerance’ issue and unacceptable under all circumstances.
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.
These policies prohibit 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.
Our whistleblowing procedure and policy ensures the safety
and appropriate protection from recrimination for any employee
reporting a breach of the corporate conduct policies.
7.2 Cyber security & data privacy
The ongoing hybrid working conditions continue to provide
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 by ramping up
investment in its cybersecurity capabilities and strengthening
the team further to protect and support both staff and key
assets for the organisation.
The Technology Services team continues to strengthen
our Cybersecurity and Privacy programs globally, including
continuing work aligning to the NIST Cybersecurity & Privacy
frameworks with focus on continuous improvement to
increase our overall maturity. Establishment of additional
cross-organisational governance bodies supporting both
Cybersecurity & Privacy programs have also been implemented
to provide additional focus in these critical areas.
On the security front, many normal operational activities were
completed throughout the year including rounds of penetration
testing, vulnerability assessments, PCI Audits and external
reviews of some of our key environments to assess their
ongoing security readiness. We have continued to enhance our
ongoing security operations capabilities in terms of observability,
threat intelligence, protections, incident management &
response.
29
Breville Group Limited annual report 2023 The Board has oversight over our tax risk management
framework and sets the Group’s tax risk tolerance and level of
justification required for tax positions. Tax risks are monitored
by the Board, with assistance from the ARC. The global
tax function oversees our tax approach across all territories
ensuring a uniform approach and compliance with the
framework in line with the Board’s agreed tax risk appetite.
With IP largely generated and housed in Australia, and long-
established variable licence and service fee agreements in
place between countries, the majority of the Group’s profits are
repatriated and taxed in Australia, resulting in a Group effective
corporate tax rate of 27.0%, well above the global minimum
tax rate of 15% under the OECD Pillar Two model rules. The
global tax function oversees our tax approach across all
territories ensuring a uniform approach and compliance with the
framework in line with the Board’s agreed tax risk appetite.
Directors’ report continued
Operating and financial review continued
ESG report continued
7.2 Cyber security & data privacy continued
A ransomware cyber simulation exercise was conducted with
the Board and senior executives and was facilitated by one
of our key partners in the cybersecurity space. This exercise
provided a real-world scenario that allowed for in depth
exploration and discussion on how we would respond to this
type of event. As a result of the simulation some updates to
our ransomware response playbook were made to further
strengthen the processes that have been established previously.
Additional to this all Breville staff have completed mandatory
annual cybersecurity awareness training with specific security
training for our software development teams globally. The team
continue to test overall security awareness via planned phishing
campaigns which assist us to identify weaknesses / reinforce
training and behaviours.
With respect to personal data, our privacy platform (OneTrust)
continues to play a key role in our ongoing operational ability
to map data relationships across our systems and to meet
the ongoing compliance obligations around the world. This
platform allows us to track and respond to privacy queries
from consumers and partners and act accordingly. We
have continued to evaluate additional modules that may be
appropriate to ensure our ongoing compliance obligations can
be met.
Breville has cyber insurance in place. No claims have been
made to date.
7.3 Tax transparency and governance
Breville takes a low risk, high compliance, high transparency
approach to its global tax affairs, contributing significantly to the
communities in which it operates. During FY23, Breville paid
A$216.3m in taxes globally comprising a significant amount of
indirect taxation as well as corporate income tax
30
Breville Group Limited annual report 2023 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) in person on 8 November 2023.
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 13 September
2023 (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 18
October 2023 (15 business days prior to AGM).
Directors’ interests
As at the date of this report, the interests of the Directors in the
shares or other instruments of Breville Group Limited were:
T. Antonie
L. Myers
T. Baxter
J. Clayton
P. Cowan
S. Herman
D. Howell
T. Rytilä
K. Wright
Ordinary
shares
43,791
163,000
-
277,903
11,055
47,484
140,000
-
21,859
Unvested
Rights
-
-
3,562
498,894
-
1,781
-
-
-
Operating and financial review continued
ESG report continued
7.4 Policy availability
Breville’s suite of policies on both governance and behaviours
are reviewed, and refreshed, on a rolling annual basis.
The policies are publicly available in the corporate governance
section of the company’s website (www.brevillegroup.com)
• Board charter
• Audit and risk committee charter
• People, performance, remuneration and nomination
committee charter
• Sustainability committee charter
• Code of conduct
• Corporate Values
• Anti-bribery and corruption
• Whistleblower Protection Policy
• Ethical sourcing policy
• Modern Slavery statement
• Diversity & inclusion policy
• Share trading policy
• Continuous disclosure policy
• Selection and appointment of Directors
• Criteria for assessing independence of Directors
• Shareholder communications policy
• Minimum shareholding guideline policy
• Workplace gender equality agency report
• Sustainability Policy
• Reconciliation Action Plan
Risk management
The company’s risk management approach is discussed in the
corporate governance statement on page 54.
Dividends
The following dividends have been paid, declared, or
recommended since the end of the preceding year.
Cents per
ordinary share
$’000
Final FY23 dividend
declared:
Dividends paid in the year:
Interim FY23 dividend paid
Final FY22 dividend paid
15.5
22,131
15.0
15.0
21,417
21,417
31
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited)
The Directors are pleased to present the Group’s Remuneration Report for the financial year ended 30 June 2023, which has been
prepared in accordance with section 300A of the Corporations Act 2001 and has been audited by PwC as required by section
308(3c) of the Corporations Act 2001.
1. Introduction and overview
Business performance and shareholder returns
Breville Group (BRG), led by Jim Clayton and the executive team, has delivered sustained, sector-leading performance over the 5
years (from July 1, 2018 to June 30, 2023), doubling the size of the business and delivering outstanding shareholder returns. The
market capitalisation of the Group increased by $1.34bn or 88% over this 5-year period.
Explicitly, from FY18 to FY23, BRG’s revenue has grown by 129%, EBIT by 98% and NPAT by 88%, whilst the share price has
increased by 72%, outperforming the ASX 200 index (which grew 16% over the same 5-year period).
During this 5-year period the Group has also successfully increased its geographic diversification, with Global Product segment sales
made outside of Australia increasing to 85% (from 79% in FY18). The Americas now accounts for 55% of Global sales, Europe 22%
and Asia 8%. This successful geographic diversification has underpinned the consistency of business performance.
In FY23, despite facing challenging consumer conditions that have seen peers in the kitchen appliance industry decline in sales and
profits, BRG outperformed its competitive set to grow revenue by 4.2%, EBIT by 10.0% and NPAT by 4.2% whilst the BRG share
price appreciated by 10.8% against the ASX 200 index gain of 9.7%.
In FY23 BRG gave, and met guidance, which was above consensus.
Financial Highlights to June 2023
Group revenue increased to A$1.479b
Group EBIT increased to A$172.0m
Group EPS increase to 77.2c
Share price increased to A$19.94 on June 30th 2023
Market Cap increased to $2.85b
1 Year
+4.2%
+10.0%
+1.7%
+10.8%
5-year CAGR *
+17.8%
+14.6%
+11.4%
+11.4%
+A$340m
+A$1.340bn
*CAGR: compound average growth rate from FY18-FY23. Note market capitalisation increase is shown as an absolute $ increase.
Managing Director and CEO Remuneration
Jim Clayton joined Breville as CEO in July 2015 and joined the Board as Managing Director on 18th August 2021.
As the above financial performance summary illustrates, Mr Clayton has proven himself to be a transformative and high performing
CEO who has delivered outstanding shareholder returns over a sustained period. He continues to set, and is executing, a winning
strategy for the Group against a range of significantly larger global competitors.
During 2021 the Board negotiated and reset Mr Clayton’s remuneration package to secure his on-going leadership of the Group for
the benefit of shareholders. The package was developed through external benchmarking against both ASX peers and international
kitchen appliance groups, as well as other high growth companies, to be a competitive remuneration package to both retain, and
reward, a high performing international CEO. Given that 85% of the Group’s Global Segment revenue is now outside of Australia, and
with Breville’s increasing global complexity, particular weight was given to international peers in designing an appropriate package.
The package was pegged at the bottom 25th percentile of the international peer group, reflecting the larger scale of a number of the
international peers, and in the top quartile of ASX80-130 peers which is considered appropriate given Mr Clayton’s long tenure and
track record of delivery.
During the second half of 2021, the Board undertook extensive shareholder consultation, talking with approximately 75% of the
share register by value, to discuss the proposed package, the process undertaken and its rationale. Shareholders expressed
overwhelming support for Mr Clayton’s leadership and strong support for securing his services through the enhanced package.
The reset package was finalised, signed, and announced on 5th October 2021 with the details of the change laid out in the FY22
remuneration report. Importantly, the contract includes a 12-month notice period and a non-compete of 12 months making it more
difficult for competing groups to successfully poach Mr Clayton.
40% of the available package is delivered in base pay, in cash and fixed deferred remuneration rights, with 60% at risk pay in the
form of STI cash and LTI performance rights.
Mr. Clayton’s total available package increased from $2.814m to $6.375m from July 1st 2018 to July 1st 2023, an increase of
126%, during the period when revenue of the Group grew 127%, market capitalisation increased by A$1.34bn and the share price
increased 72%.
As part of the negotiated package, Mr Clayton’s deferred rights increased by $350k in FY23, as signalled in the FY22 remuneration
report and approved by shareholders at the November 2022 AGM. No increase in Mr Clayton’s package is planned for FY24.
32
Breville Group Limited annual report 2023 Remuneration report (audited) continued
1. Introduction and overview continued
Total effective remuneration as reported in Table 6 in FY23 of A$5.6m is below FY22 at $5.8m mainly due to a lower STI payout of
58.2% vs. 100% in pcp and a smaller movement in leave balances, partially offset by higher accounting expense of LTI and deferred
remuneration rights arising from fair valuing of rights.
As of 30 June 2023, Mr Clayton held 498,894 unvested share rights, subject to various performance and service criteria that may
vest in his favour in the future with potential value of $9,947,946 (based on 30 June 2023 share price of $19.94).
New performance and deferred remuneration rights to be issued to the CEO in FY24 will be issued subject to shareholder approval
at the AGM in November 2023.
KMP group and remuneration
The strong performance of the Group over the last 5 years has been led by both Mr Clayton and the executive team.
As flagged above, and in the FY22 Remuneration Report, an independent benchmarking study was commissioned by the Board to
assess the competitiveness of KMP and executive packages, as well as their relativity to the CEO package. Existing packages were
benchmarked against 64 ASX listed peers of a similar size to Breville (for Australian based roles) and against this group plus 16 listed
US based peers for international roles.
The total remuneration of each role was benchmarked against the 50th percentile of the peer group. Comparisons varied role by
role, but broadly speaking the existing Breville packages were just above the bottom quartile and 20% below the 50th percentile of
the peer group. Using the 50th percentile as the target package, and also looking at relativity to CEO package, overall increases of
10-20% in base pay were identified and implemented for KMPs and other executives. The individual executives were given a choice
of taking their increase either as cash base pay or as deferred remuneration rights.
Following the grant of these increases the Executive KMP remuneration FY23 split is ~71% fixed and ~29% at risk (~64% and ~36%
in prior year).
No further change to executive KMP packages is planned in FY24.
No change to Non-Executive Director remuneration was made in FY23.
The Group has 12 individuals reported as KMPs with the authority and responsibility for planning, directing, and controlling the key
activities of the Group. Tuula Rytilä joined the Board in April 2023, increasing the number of non-executive KMPs to eight.
In addition to non-executive Board members, the list of executives classed as KMPs was reviewed in FY23 and revised to comprise
the Group CEO, Group CFO, Global CMO and Global CPO.
The latter two are included given the strategic criticality of product development and go-to-market execution for an innovative
product company. The maturing of the underlying infrastructure and supply chain processes led to the decision to group the COO
with other executives, rather than as a KMP.
33
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited) continued
1. Introduction and overview continued
Incentive Outcomes for FY23
1. STI award 58.2%
STI for FY23 will be awarded at 58.2% of potential (pcp 100%). The Group met guidance and exceeded consensus EBIT, however,
under the Group scheme, STI is only funded after target EBIT has been delivered in full. The design of the scheme ensures that
shareholders are rewarded first. In FY23 target EBIT was set at $172m representing 10% growth over the pcp (and the top end of
guidance given in Feb 23). A pre-STI EBIT of $182.7m was achieved, so $10.7m was funded and awarded to management. This
represents 58.2% of the maximum possible award.
2. LTI vesting 92.5%
Two tranches of LTI performance rights were tested at 30 June 2023 and will vest at an average of 92.5% in August 2023:
• Tranche 3 of the FY20 scheme was measured with a 4-year TSR of 24%. This put the Group at 19th out of 56 peers (8 having
delisted during the period) and at the 67th percentile of relative TSR. On the agreed vesting schedule, with 100% vesting for top-
quartile performance, 50% for mid-quartile and a straight-line pro rata in between, the 67th percentile triggered vesting at 85.1%.
• The single tranche of the FY21 scheme will vest at 100% following the exercise of discretion by the Board to recognise
outstanding absolute and relative business performance during the three years to June 2023 giving an overall vesting of LTI at
92.5%.
This is the first time the Board has exercised discretion on any incentive awards, except to reduce STI to zero at the start of the
Covid period – June 2020 – to protect shareholders.
Targets set for this tranche were an absolute TSR gain of 25% for 100% vesting and 15% TSR for 50% vesting.
The LTI target for FY21 was set in June 2020, the height of Covid uncertainty. In setting the LTI targets, the Board took into account
the extreme volatility in asset prices and the unprecedented uncertain outlook for the global economy. With this backdrop, the Board
selected an absolute TSR gateway and specifically approved the exercise of discretion in favour of the LTI recipients in the event that
the absolute gateways were not achieved but management delivered strong and superior performance in the long- term interests of
shareholders.
To ensure shareholders were fully informed as to the Board’s LTI determinations for the FY21 single tranche, the FY20, FY21 and
FY22 remuneration reports specifically addressed this matter. Extracts are set out below.
• FY20 “The Board is aware that it may need to exercise discretion to equitably reward management’s performance given the
expected turbulence in the upcoming 3-year performance period”.
• FY21 “Board discretion is likely to be used to properly judge team performance against the actual trading environment”.
• FY22 “In this environment it was difficult to call an appropriate absolute TSR target so the need for potential Board discretion in
deciding appropriate vesting was explicated flagged for this tranche of rights”.
As expected, extreme multiple volatility was experienced over the three-year period.
In the first 18 months the multiples of consumer discretionary stocks expanded and Breville’s share price increased by over 40%.
Multiples then contracted severely before partially growing again in the final year. While Breville’s NPAT increased by 72.3% over the
three years to June 2023, multiple contraction yielded an overall price decline of (12.4)% over the 3-year measurement period and a
TSR of (8.5)%. The absolute TSR gateways were not achieved.
In determining whether the Board would exercise its foreshadowed discretion, the Board has undertaken a detailed assessment
of Breville’s absolute and relative performance over the period from July 2020 to June 2023, including engaging the services of an
investment bank to assist in completion of the analysis.
In the three years to June 2023 Breville’s absolute performance was outstanding with revenue up 55%, EBIT up 76% and NPAT up
72%. Despite the volatile global retail and economic environment, including trading through the Covid cycle, annual budget EBIT
targets were achieved in each year.
34
Breville Group Limited annual report 2023 Remuneration report (audited) continued
1. Introduction and overview continued
This was achieved whilst continuing to invest in the medium-term growth drivers of the business.
• Annual investment in NPD, marketing and Technology increased by $77.4m compared to FY20;
• Geographical expansion continued including entering France, Spain, Portugal, Italy, Poland, Mexico, and South Korea;
•
Investment in manufacturing diversification commenced (Mexico site);
• Breville acquired and successfully integrated Baratza and Lelit, deepening the Company’s position in coffee; and,
• A solutions offering and offensive was developed in both the Coffee and Cooking segments.
Breville is very well positioned as we enter FY24 with: a strong NPD pipeline and Go-To-Market plan; further penetration of recently
entered geographies; continued globalisation of Lelit and Baratza; and the exciting launch of our new solutions offensive in the first
half of the year.
To understand Breville’s relative performance the Board, with the assistance of an investment bank, selected 3 listed peer groups for
comparison – key competitors, key customers and high growth companies with substantial international sales.
• Key competitors - Listed international kitchen and appliance companies (De’Longhi, Groupe SEB, Hamilton Beach, Whirlpool,
Newell Brands, Traeger and Electrolux)
• Key customers - Listed international and Australian retailers (Williams-Sonoma, Best Buy, Bed Bath and Beyond, JB Hifi,
Ceconomy, Harvey Norman, Currys, and Myer)
• High growth international companies - (Yeti, TWE, Dominos, Cochlear, A2Milk, and ARB)
Breville outperformed all but one company in the comparator set (whose share price actually declined 16% over the period) and
substantially outperformed all 3 peers groups in both revenue and profit growth.
This was achieved whilst continuing to invest in the medium-term growth drivers of the business: NPD, Marketing and Technology;
developing a solutions offensive; acquiring and integrating Baratza and Lelit; geographically expand entering France, Spain, Portugal,
Italy, Poland, Mexico, and South Korea; and enhancing portfolio diversification.
The Board believes that this outstanding performance, combined with the continued investment in these growth initiatives during the
Covid period, has been in the long-term interest of shareholders and warranted the exercise of its discretion to vest a portion of the
performance rights in favour of management.
* Source: Publicly reported performance of listed companies compiled and compared by independent investment bank in July 2023.
Benchmarked companies: De Longhi, Groupe SEB, Hamilton Beach, Whirlpool, Newell Brands, Traeger, Electrolux, Williams-Sonoma, Best Buy,
Bed Bath and Beyond, JB Hifi, Ceconomy, Harvey Norman, Currys, Myer, Yeti, TWE, Dominos, Cochlear, A2Milk, and ARB.
The very strong relative outperformance against peers was then judged by the Board to warrant a 100% vesting of this tranche
resulting in an overall 92.5% vesting of LTI performance rights. This reflected the Board’s recognition of management’s superior
performance and the importance of rewarding and retaining Breville’s high performing team.
35
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited) continued
1. Introduction and overview continued
This is the first time that the Board has exercised discretion in favour of management on any incentive awards and was based on
unprecedented circumstances.
In response to the continuing uncertainty during the Covid pandemic the Board moved LTI targets for the FY22 and FY23 LTI grants
to internal performance gateways. For FY24 the Board has selected a balanced set of metrics, including relative TSR, PBT growth
and strategy implementation.
FY24 targets
1. STI FY24
FY24 STI award will be 80% based on achievement of an EBIT target and 20% based on delivery of an inventory target.
The scheme will again only be funded once the EBIT target set by the Board has been achieved, with funding coming from over
achievement of this EBIT target.
Given the seasonal nature of the sales profile, the Group has historically chosen to give guidance with 1H results in February and not
before. In keeping with this stance STI targets for FY24 will be fully disclosed on measurement and award in the Remuneration report
FY24.
2. LTI FY24
The FY24 LTI scheme will reintroduce the Board’s preferred LTI measure of relative TSR combined with two other targets to capture
business performance and delivery of the Group’s strategic priorities.
The vesting of FY24 LTI performance rights will be judged in June 2026 based on three separate criteria:
• 50% of rights will vest based on relative TSR performance and the achievement of an absolute positive TSR gateway. Half of
the rights will vest if the Group TSR is in the top 50% of the peer group, and all of the rights will vest if Group TSR is in the top
quartile of the peer group, with a straight-line pro rata between these points. The peer group will comprise 112 listed companies
made up of the ASX200 less miners and banks (107 companies) plus 5 international competitors in the kitchen appliance sector.
• 30% of performance rights will vest based on achievement of 3-year business performance targets with the unifying measure
of PBT (profit before tax) chosen as the best measure of performance over a 3-year period. 50% of this tranche will vest based
on achieving a minimum PBT target, 100% for reaching a maximum target and straight-line interpolation between these points.
The minimum target will represent reasonable growth over FY23, and the maximum target will represent the Board’s view of
good growth, judged against the current and expected economic backdrop. The targets will also be adjusted for any significant
impact arising from a change in accounting standards or acquisitions during the measurement period. For reasons of commercial
confidentiality, the specific targets will be disclosed in arrears in the FY26 Remuneration Report.
• 20% of rights will vest based on the level of progress against key strategic priorities as judged by the Board. Zero rights will vest
for limited progress, 20% for good progress and a sliding scale between these two. Evaluation of the progress achieved will be
based on both quantitative and qualitative measures in the following strategic priority areas:
- Sustained investment in the growth drivers of the business measured as an increasing percentage of revenue invested in
New Product Development, Go-to-Market, Technology Services and Solutions over the three-year period;
- Progress with alternative sourcing to China measured as the volume of products sourced outside of China (e.g., Mexico);
- Continued geographic diversification measured as an increasing % revenue made outside of UK, USA, Canada, Australia and
New Zealand;
- Acceleration of the solutions agenda largely measured in qualitative terms on the success of key initiatives launched; and,
- Progress on the sustainability agenda including reduction in the Group’s emissions footprint driven by increasing the energy
efficiency of products (measured as percentage of espresso machines using Thermojets with target of 85% set by 2025);
recyclability of packaging (measured as % of range using fully recyclable packaging); the achievement of net zero scope
1 and 2 emissions by 2025; and, the full measurement and improvement of scope 3 emissions including LCA by 2024.
Progress on repairability and recyclability of products will also be assessed.
The use of 3 targets is intended to deliver a balanced view of business progress, with the largest weighting being for improvement in
direct shareholder returns.
2. Key management personnel (KMP)
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.
As noted in the overview above the executives deemed KMPs were reviewed in FY23 and narrowed to those central to the operation
and growth of an innovative product and solutions company, namely Group CEO, Group CFO, Global CMO (Global Go- to-Market
Officer) and Global CPO (Global Product Officer).
36
Breville Group Limited annual report 2023 Remuneration report (audited) continued
2. Key management personnel (KMP) continued
Table 1: Key management personnel (KMP)
Name
Position
Non-Executive Directors
Tim Antonie
Non-Executive Chair
Lawrence Myers
Non-Executive Deputy Chair / Lead Independent Director (a),(d)
Tim Baxter
Peter Cowan
Sally Herman
Dean Howell
Kate Wright
Tuula Rytilä
Executive Directors
Jim Clayton
Executives
Scott Brady
Non-Executive Director
Non-Executive Director (e)
Non-Executive Director (f)
Non-Executive Director (b),(d).(f)
Non-Executive Director (c),(b),(f)
Non-Executive Director
Managing Director & Group Chief Executive Officer
Global Product Officer
Martin Nicholas
Group Chief Financial Officer
Cliff Torng
Global Go-to-Market Officer
(a) Chair of Audit and Risk Committee
(b) Member of Audit and Risk Committee
(c) Chair, People Performance Remuneration and Nominations Committee (PPRNC)
(d) Member of PPRNC
e) Chair of Sustainability Committee
(f) Member of Sustainability Committee
3. Remuneration framework
Term as KMP
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Appointed 1st April 2023
Full Year
Full Year
Full Year
Full Year
The People, Performance, Remuneration and Nominations Committee (PPRNC) reviews and recommends executive and employee
remuneration arrangements each year within a framework 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. In FY22 a study was commissioned to benchmark key executive packages
against peer companies as well as reviewing their relativity to the CEO package. This was used to implement specific package
changes in FY23 to facilitate both reward and retention of a high performing team.
Key principles that guide the remuneration framework include:
Fair and competitive
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.
Simple
Aligned to strategy
Shareholder aligned
Sustained delivery
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.
Reward linked to achievement of strategic goals and sustainable performance of the company.
Reward explicitly linked to short and long-term shareholder value creation.
Reward balanced to optimise long, medium, and short term, performance.
In implementing its remuneration framework and ensuring proper oversight, the committee:
• sets compensation to motivate and retain a high performing global team in line with shareholder interests;
• encourages an increasing level of executive shareholdings, in excess of minimum shareholding guidelines;
• aligns interest of shareholders and executives via increasing use of share-based payments;
•
retrospectively discloses all performance hurdles and calculation of award and payments made to ensure transparency;
• encourages increased variability of pay linked to short and long-term performance;
•
rewards sustained long-term performance, not just single year peak performance;
• utilises measurable and shareholder relevant targets; and,
•
retains Board discretion over the level of any award.
37
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited) continued
3. Remuneration framework continued
In establishing the remuneration arrangements each year, the Board and PPRNC 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 FY23 and FY22, based on statutory remuneration Tables 6 and 7, is shown in Table 2 below. The
change in FY23 vs. FY22 largely reflects the lower STI awarded in FY23. The weight of the available potential package for the CEO
remains 40:60 fixed to variable and for other executive KMPs 58:42.
Table 2: Actual Remuneration Mix of CEO and other executive KMPs for FY23 compared to FY22
• 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.
• Termination Provisions – Contracts include notice periods are 12 months for the CEO and 3-6 months for other KMPs.
Amounts payable on termination vary from statutory entitlements to 12 months of fixed pay plus accrued leave balances. Any LTI
performance rights not vested at the date of termination are 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. Specific termination arrangements, as part of the CEO’s package, were proposed and approved by
shareholders at the November 2021 AGM.
• 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 recommending the STI and LTI to be
awarded each year to the Board. To assist in this assessment, the Committee receives detailed reports on performance from
management that are based on independently verifiable, and in most cases, audited data. An external specialist is always used
to calculate and report on actual and relative TSR performance 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.
4. 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 used in Executive KMP incentive plans – EBIT, PBT, revenue growth and TSR – are measurable, verifiable,
and well aligned to shareholder value creation.
• Group Revenue - A measure of the Group’s success at growing the scale and scope of our operations. An auditable IFRS
measure of marketplace success.
• EBIT - Earnings before interest and tax 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. EBIT is preferred to EBITDA given the strategic
importance of investment in new product development and associated amortisation costs.
• PBT – Profit before tax is EBIT after accounting for the financing costs of the business and is also 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,
and in a period where the Group has a level of debt, it is an alternative to EBIT.
• 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 a
defined group of peers.
Table 3 below shows the Group’s revenue, profit and TSR 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.
38
Breville Group Limited annual report 2023 Remuneration report (audited) continued
4. Linking remuneration to performance continued
Table 3: Five Year Group Performance ($m)
Year ended
Group Revenue
Revenue Growth
Revenue CAGR (5 Year)
Group EBIT
EBIT Growth
EBIT Growth CAGR (5 Year)
NPAT
Earnings per share (cents)
EPS Growth
EPS Growth CAGR (5 Year)
Total dividends per share (cents)
Share price at 30 June ($)
Share Price Change
5 Year share price change CAGR
One Year TSR
5 Year TSR
30 June
2018
30 June
2019
30 June
2020
652.3
7.7%
86.9
10.0%
58.5
45.0
760.0
17.5%
97.3
12.0%
67.4
51.8
952.2
25.3%
97.7
0.4%
63.9
48.8
30 June
2021
1,187.7
24.7%
30 June
2022
1,418.4
19.4%
136.4
39.6%
91.0
65.8
156.4
14.6%
105.7
75.9
15.4%
15.2%
15.2%
(5.8)%
34.8%
33.0
11.62
-
-
37.0
16.36
40.8%
41.0
22.76
39.3%
26.5
29.87
31.2%
30.0
17.99
(39.8%)
43.8%
41.5%
32.6%
(38.8)%
30 June
2023
1,478.6
4.2%
17.8%
172.0
10.0%
14.6%
110.2
77.2
1.7%
11.4%
30.5
19.94
10.8%
11.4%
12.4%
86.1%
58.2%
Average STI as % Maximum Opportunity
78.0%
76.0%
0%
100%
100%
Percentage of Executive LTI performance
rights that vested/will vest related to schemes
maturing in the year *
100%
100%
100%
100%
91.9%
92.5%
* FY18-FY22 LTI percentage vesting were all tested on relative TSR (100% for top quartile; 50% for second quartile), a standard objective test,
validated by an independent party.
Performance against Targets
STI
• The Group FY23 STI paid out at 58.2% of maximum based on achieving an audited EBIT of $172.0m (10% growth), having
funded 58.2% of STI, against a target for FY23 of $172.0m set in June 2022. The target was based on 10% growth against the
expected FY22 EBIT. $172m was also the top end of the guidance range of $165-$172m given with 1H23 results in February
2023. The design of the STI scheme acts as buffer against any volatility in performance, post guidance, helping the group give,
and reliably deliver, guidance.
• The Group’s FY24 STI plan has a financial EBIT target based on a targeted EBIT growth from FY23 and an inventory target. The
specific targets and actuals will be retrospectively disclosed as a part of the FY24 remuneration report. Again, no STI is awarded
until the target EBIT is met. Once it is met, the STI pool is funded until full, at which point reported EBIT may be further increased.
LTI
Two tranches of LTI were tested as of 30 June 2023 and will vest in August 2023 with an average vesting of 92.5%.
• Tranche 3 of the FY20 scheme was measured with a 4-year absolute TSR of 24%, putting the Group at 19th out of 56 peers and
thus at the 67th percentile of relative TSR. Being between the 50th and 75th percentile this tranche vested at 85%.
• The single tranche of the FY21 scheme was vested at 100% after the exercise of Board discretion as detailed on page 34 above.
• Average vesting across the two tranches measured was 92.5%.
• TSR of the Group, and peers, was calculated by an independently commissioned expert.
5. Executive remuneration - detailed elements
There are four key components in executive remuneration
i) Fixed Cash Remuneration
ii) Fixed Deferred Remuneration Rights
iii) Short Term Performance Incentive (STI)
iv) Long Term Performance rights (LTI)
39
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited) continued
5. Executive remuneration - detailed elements continued
i) Fixed Cash Remuneration
Executives receive their fixed cash remuneration in the form of cash, car allowance, health insurance, annual leave benefits, long
service leave benefits and superannuation. Fixed cash remuneration is reviewed annually by the PPRNC, and in the case of the CEO,
the Board. The Committee considers company and individual performance, relevant comparative market compensation and internal
relativities. Breville increasingly competes in a global market for talent and employs both Australian and international executives. The
Group regularly benchmarks both domestically, and internationally, when reviewing suitability of remuneration.
Details of fixed cash remuneration by KMPs are shown in the remuneration Tables 6 and 7.
Remuneration
component
Fixed Cash
remuneration
Purpose & execution
FY23 outcomes
Aims to provide competitive salary, including
superannuation and non-monetary benefits, to attract
and retain a high performing team.
• CEO Fixed Cash remuneration remained at $1.7m
as detailed in the explanatory memorandum in the
November 2022 AGM.
Fixed cash remuneration is reviewed annually, with
outside assistance where needed, and set with
reference to:
• Size and complexity of role
• Market benchmarks (domestic & international)
• Experience, skills and competencies
• Other executive KMPs were awarded increases in
base salary in FY23 as a result of a benchmarking
study and relativity to the CEO package. The
KMPs had the option to take the increase as
fixed cash pay or in the form of fixed deferred
remuneration rights.
Annual leave and long service leave benefits shown in Table 6 and 7 reflect the movement in accrued benefit owing to the individual
in accordance with accounting standards. If leave balances increase, or if base salary increases are implemented, then accrued
benefits increase.
ii) Fixed Deferred Remuneration Rights
Fixed deferred remuneration rights are a core part of fixed base remuneration delivered in the form of share rights as opposed to
cash. As with cash, fixed pay remuneration is only earned, and vests, when the period of service is completed. It is not part of at- risk
remuneration or performance incentives.
The number of rights granted is calculated as the deferred base salary amount for a year divided by the relevant value of shares in
the Company using a 20-trading day trailing volume weighted average price (VWAP) at the time that the grant is agreed. The rights
only vest if the service period is completed. Because the number of rights issued is calculated at the VWAP on the date of issue,
any appreciation or depreciation of share price during the service period is to the effective benefit, or detriment, of the executive
versus taking a fixed cash base pay amount. This aligns shareholder and management interests in achieving sustained share price
appreciation.
For example, currently the CEO and KMPs will receive a lower effective base reward than if they had opted for cash for the tranches
of fixed deferred remuneration rights issued in FY22. If the share price can be increased before the rights vest the executives can
increase their effective fixed remuneration, just as shareholders also gain from share price appreciation.
The accounting value of fixed deferred remuneration rights grants for which compensation is included in the remuneration tables 4, 6
and 7 is shown in table 11. Under AASB 2 accounting, although the rights relate to future periods of employment service, part of the
cost is recognised in the current period.
40
Breville Group Limited annual report 2023 Remuneration report (audited) continued
5. Executive remuneration - detailed elements continued
Remuneration
component
Fixed Deferred
remuneration
rights
Purpose & execution
FY23 outcomes
CEO Fixed Deferred Remuneration
New tranches of CEO rights were
issued after approval by shareholders
at the 2022 AGM.
• A new grant equivalent to
$850,000 was issued vesting on
completion of service through to 25
August 2027.
• The issue of these rights was
approved by shareholders at the
2022 AGM.
•
In FY23 29,940 of fixed deferred
remuneration rights vested
and 46,296 of fixed deferred
remuneration rights were granted
to the CEO.
KMP Fixed Deferred Remuneration
•
•
In FY23 KMPs who opted to take
their salary increase in this form
were issued with four new tranches
of rights in lieu of a fixed cash
increase in salary.
In FY23 9,053 fixed deferred
remuneration rights vested, and
70,808 rights were granted.
For accounting purposes, a fair value
is determined on the rights of these
shares and expensed over the full
vesting period so part of the costs for
future periods are recognised in the
current period.
Delivers fixed remuneration to the executive in the form of an annual
grant of deferred rights.
Supports the retention of high performing international executives over
sustained periods and may prove particularly effective as an incentive
and retention tool in times of increased share price volatility.
Conditions
• Upon completion of a specific period of employment service (the
service condition) the rights will vest and convert into fully paid
ordinary shares in the Company.
• 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.
• 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.
• No disposal restrictions apply to the shares received when the
rights have vested.
CEO Fixed Deferred Remuneration
A new tranche of CEO rights is granted annually to ensure that 5 years
of annual rights are ahead of the CEO at any time. Each tranche vests
once the specified period of service has been completed.
The number of rights granted in each tranche is calculated as a
deferred remuneration amount divided by the VWAP 20 days prior to
the end of the previous financial year. From FY22 forward the annual
deferred remuneration value is set at $850,000.
An additional year’s tranche of rights, vesting in FY28, will be proposed
for shareholder approval at the Nov 2023 AGM.
KMP Fixed Deferred Remuneration
In FY23 KMPs were given the option to take all or a portion of their
fixed cash salary increase in the form of fixed deferred remuneration
rights. To take this option the executive had to commit to forgoing a
base cash pay element for four years and receiving four separate grants
of rights vesting at 4 individual year ends. The number of rights granted
in FY23 represented four years of the cash salary amount forgone with
the total number of rights calculated as that amount of forgone cash
remuneration divided by the relevant 20-day VWAP at the time that the
grant was agreed. Vesting will only occur once the required period of
service has been delivered.
41
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited) continued
5. Executive remuneration - detailed elements continued
Table 4: Fixed Deferred Remuneration included in Remuneration tables 6 and 7
Year of issue
Conditions
•
Issued for nil consideration
• Exercise price is $0
•
Issue price of $16.70
• Participant (Jim Clayton) must complete the service period
FY20
between:
26 August 2019 – 25 August 2020
26 August 2020 – 25 August 2021
26 August 2021 – 25 August 2022
26 August 2022 – 25 August 2023
26 August 2023 – 25 August 2024
• 60% vested as of 30 June 2023
•
Issued for nil consideration
• Exercise price is $0
•
Issue price of $22.41
FY21
• Participant (Jim Clayton) must complete the service period
between:
25 August 2024 – 25 August 2025
• 0% vested at 30 June 2023
•
Issued for nil consideration
• Exercise price is $0
•
Issue price of $28.98
Jim Clayton must complete the service period between:
26 August 2022 – 25 August 2023
26 August 2023 – 25 August 2024
26 August 2024 – 25 August 2025
26 August 2025 – 25 August 2026
• 0% vested as at 30 June 2023
Executive KMPs must complete the service period between
26 August 2021 – 25 August 2022
26 August 2022 – 25 August 2023
26 August 2023 – 25 August 2024
26 August 2024 – 25 August 2025
26 August 2025 – 25 August 2026
• 8% vested as of 30 June 2023
•
Issued for nil consideration
• Exercise price is $0
•
Issue price of $18.36
Jim Clayton must complete the service period between:
26 August 2026 – 25 August 2027
• 0% vested as at 30 June 2023
Executive KMPs must complete the service period between
26 August 2022 – 25 August 2023
26 August 2023 – 25 August 2024
26 August 2024 – 25 August 2025
26 August 2025 – 25 August 2026
• 0% vested as of 30 June 2023
FY22
FY23
42
Fair value
right at
Grant date
$
Number
outstanding
30 June
2023
Number
outstanding
30 June
2022
$16.70
$16.70
$16.70
$16.70
$16.70
-
-
-
29,940
29,940
-
-
29,940
29,940
29,940
$19.60
22,311
22,311
$29.28
$28.91
$28.54
$28.17
$27.21
$26.87
$26.52
$26.18
$25.85
12,077
12,077
12,077
29,330
-
13,581
20,370
30,555
45,834
$18.57
46,296
17.97
17.66
17.44
17.18
17,702
17,702
17,702
17,702
12,077
12,077
12,077
29,330
9,053
13,581
20,370
30,555
45,834
-
-
-
-
-
Breville Group Limited annual report 2023 Remuneration report (audited) continued
5. 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 bonus subject to the
attainment of clearly defined business targets.
Remuneration
component
Short term
incentives (STI)
Purpose & execution
FY23 outcomes
Aims to reward and incentivise executives and employees for achieving
in-year company targets and is paid in cash.
•
In June 2022 a FY23 pre STI
EBIT target of $172m was
set.
• A guidance EBIT range of
$165m-$172m was given
with the 1H23 results in
February 2023.
• The Group achieved EBIT
of $172.0m having funded
58.2% of the potential STI
pool.
A pre-STI EBIT target is set by the Board in advance of the financial
year. Until this pre-STI EBIT is exceeded no STI is awarded.
If pre-STI EBIT exceeds the pre-STI target, the STI pool is funded until
the maximum pool is reached. Shareholders are rewarded before any
STI is awarded.
The maximum pool is calculated as the sum of maximum STI dollar
opportunities for each eligible participant.
The CEO has a maximum STI opportunity of 100% of Fixed cash
remuneration, other KMPs 35% and other staff are in a range of 5-35%.
Once a pool is awarded it is distributed based on each individual’s
achievement of their individual targets.
• The CEO and other KMPs are targeted on Group EBIT and
additionally in FY24 an inventory target.
• Regional Presidents and teams have Group EBIT and Regional EBIT
targets and in FY24 inventory targets.
• Product Development teams have Group EBIT and GM$ from new-
to-market product targets.
• Functional Teams have Group EBIT (in FY24 inventory) and specific
deliverables, e.g., timing of implementation of key targets, or HSE
targets.
Following finalisation of the annual audit, the PPRNC recommends the
amount of STI to be paid to the Group CEO for Board approval. The
PPRNC seeks and approves recommendations on other individual pay
outs from the Group CEO.
The level of STI pay out always remains at the discretion of the Board.
As recently as FY21 the Board opted to withhold STI during the COVID
Pandemic.
iv) Long term performance incentives (LTI)
The Group operates an annual LTI program available to executives and other employees that grants performance rights that fully, or
partially, vest into shares on the achievement of clearly defined medium-term targets.
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. Performance conditions for
the 3 years ahead are agreed at the same time taking into account what the Board considers to be the most effective means of
incentivising management to deliver sustained enhancement of shareholder value in the context of the existing environment.
Under AASB 2 accounting, although the share rights relate to future specific periods of employment, part of the cost is recognised in
the current period.
43
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited) continued
5. Executive remuneration - detailed elements continued
iv) Long term performance incentives (LTI) continued
Remuneration
component
Purpose & execution
Long term
incentives (LTI)
Aims to reward and incentivise executives to deliver
sustained shareholder value over multiple periods.
Annual performance right grants are made to the CEO,
KMPs and other managers based on a percentage of
their fixed cash remuneration, ranging from 10% for
employees to 65% for KMPs and 125% for the CEO.
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.
The number of rights vesting in favour of the individual
depends on the delivery of set performance metrics
agreed each year.
Conditions
• Upon satisfaction of the performance hurdles, the
performance rights will vest into fully paid ordinary
shares in the company.
• All unvested performance rights automatically lapse
upon a participant ceasing employment unless
otherwise determined by the Board.
• Participants do not receive distributions or dividends
on unvested performance rights.
• The number of rights vesting is guided by the
achievement of performance metrics, but the Board
retains absolute discretion on the number of rights
that vest.
• To make the scheme globally tax efficient (reflecting
different timing of taxation) there are no disposal
restrictions after vesting, notwithstanding that any
trading in shares is, at all times, subject to the
Company’s share trading policy.
•
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.
Performance Metrics
Performance metrics are agreed and set each year to
govern the potential vesting of the performance rights.
FY23 outcomes
In-Year grants
•
In FY23 the CEO received a LTI performance
rights grant of 125% of Fixed Cash
Remuneration or equivalent to 115,741
performance rights. The issue of these rights
was approved at the AGM 10 November 2022.
• Other KMP’s received a grant of up to 65% of
fixed cash remuneration or equivalent to 61,248
performance rights.
In-Year LTI Vesting
During FY23 63,347 rights vested in the CEO’s
favour under the schemes below, and 42,815 rights
vested in favour of the other KMPs.
FY19 Performance rights
• 34,100 shares vested to the CEO and 24,000
to other KMPs as part of the third tranche of the
FY19 performance-based grant. 100% of the
potential rights in the tranche vested based on
3-year positive TSR of 70% which was above
the 75th percentile of the peer Group.
FY20 Performance rights
• 29,247 shares vested to the CEO and 18,815
to other KMPs as part of the second tranche of
the FY20 performance-based grant. 83.8% of
the potential rights in the tranche vested based
on 2-year positive TSR of 15% which was in the
66th percentile of the peer Group.
FY24 Vesting
In FY24 it is expected that in August 2023:
- 85.1% of the third tranche of FY20 performance
rights will vest based on a 3-year positive TSR of
24%, putting the Group at the 67th percentile on
relative TSR.
- 100% of the single tranche of FY21 performance
rights will vest based the exercise of Board discretion
(see page 34).
44
Breville Group Limited annual report 2023
Remuneration report (audited) continued
5. 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
FY19
Performance
based LTI
rights
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 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.
100% vested as of 30 June 2023.
FY20
Performance
based LTI
rights
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.
66% vested as of 30 June 2023.
FY21
Performance
based LTI
rights
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.
- minimum 0% and maximum 100% TSR targets set with straight line pro-
rating between these two.
- potential Board discretion in deciding appropriate vesting was explicitly
flagged given volatile environment in which original TSR targets were set
0% vested as of 30 June 2023 (nil lapsed).
FY22
Performance
based LTI
rights
Issued for nil consideration.
- Exercise price is $0.
- Term of three years with vesting based on meeting a minimum EBIT CAGR
growth target and Sales CAGR
If threshold EBIT CAGR is met then 50% vesting is achieved.
-
- To achieve higher than 50% vesting a Sales 3-year CAGR must exceed a
minimum target
- To achieve 100% vesting a maximum target must be achieved - sliding scale
set between these 2 points.
- KMPs (Grant Date 6th October 2021)
- Jim Clayton (Grant Date 11th November 2021 post shareholder approval)
0% vested as of 30 June 2023 (nil lapsed).
Fair value per
performance
right at Grant
date $
Number
outstanding
30 June 2023
Number
outstanding
30 June 2022
-
65,700
$7.07
$6.81
$6.58
$6.51
$6.81
$7.06
$14.69
$25.96
$28.91
57,350
114,700
131,058
131,059
112,129
112,129
FY23
Performance
based LTI
rights
Issued for nil consideration.
- Exercise price is $0.
- Term of three years with vesting based on EBIT growth delivery.
-
-
- Sliding scale set between these 2 points.
- KMPs (Grant Date 21st October 2022)
-
If threshold positive EBIT growth is met then 50% vesting is achieved.
If target EBIT growth is met then 100% vesting is achieved.
Jim Clayton (Grant Date 10th November 2022, post shareholder
approval)
0% vested as of 30 June 2023 (nil lapsed).
$17.44
176,989
-
$19.13
45
Breville Group Limited annual report 2023
Directors’ report continued
Remuneration report (audited) continued
6. 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 Chair of a Board committee recognising the additional time
commitment required by the Director to facilitate the running of the committee.
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 $1,800,000 per year was approved by
shareholders at the annual general meeting held in November 2021.
The remuneration of non-executive Directors for the year ended 30 June 2023 is detailed in Table 6 on page 47.
Remuneration
component
Non-executive
Director fees
Purpose & execution
FY22 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 Chair or
Chair of a Board committee recognising the
additional time commitment required.
• Non-Executive Director remuneration is
reviewed annually within the aggregate
remuneration pool of $1,800,000
approved by the AGM held in November
2021.
Directors are entitled to defer a cash salary
in lieu of Breville share rights to encourage
Board stock ownership.
Participation is voluntary. A participant can
elect how much of their salary they would
like to exchange for share rights. The election
must be performed by the 1st of December
ahead of the vesting period of 1st of January
to the 31st of December. Rights issued are
determined based on a VWAP for the period
20 days commencing on the 15th February
2023.
Rights vest following the completion of the
service period and are issued on a pro-rata
basis based on service period.
• Main Board Chair Fee: equivalent to $350,000 p.a. inclusive
of superannuation.
• Main Board Member Fee: equivalent to $145,000 p.a.
inclusive of superannuation.
• Lawrence Myers receives an additional $40,000 p.a. for his
role as Deputy Chair.
• Board Committee Chair Fee: equivalent to $30,000
p.a. inclusive of superannuation. Board subcommittees
including the Audit and Risk Committee (ARC), the People
Performance Remuneration and Nominations Committee
(PPRNC) and the Sustainability Committee.
• Lawrence Myers chairs the ARC; Kate Wright chairs the
PPRNC; Peter Cowan Chairs the Sustainability committee.
• Tuula Rytilä was appointed as a non-executive Director
effective 1st April 2023.
• The total fees paid in FY23 of $1,422,016 represents 79%
of the shareholder approved aggregate remuneration of
$1,800,000.
• Two Directors elected to defer a portion of their salary in
exchange for rights for the period 1st January 2023 – 31st
December 23.
• The issued number of rights was determined based on
VWAP of $20.36 for the period 15th February 2023 – 14th
March 2023.
46
Breville Group Limited annual report 2023 Remuneration report (audited) continued
7. Statutory Remuneration Tables
Table 6: KMP remuneration for the year ended 30 June 2023
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 FY23.
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47
Breville Group Limited annual report 2023
Directors’ report continued
Remuneration report (audited) continued
7. Statutory Remuneration Tables continued
Table 7: KMP Remuneration for the year ended 30 June 2022
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48
Breville Group Limited annual report 2023
Remuneration report (audited) continued
7. Statutory Remuneration Tables continued
Table 8: KMP STI cash bonuses awards in FY23 and FY22 and LTI performance rights vesting in FY23
STI Cash bonuses
Financial Year
% Earned % Forfeited
Share-based LTI performance base
compensation vesting in FY23
Financial Year
Granted
% Vested % Forfeited
2023
2022
2023
2022
2023
2022
2023
2022
58.2%
100%
58.2%
100%
58.2%
100%
58.2%
100%
41.8%
0%
41.8%
0%
41.8%
0%
41.8%
0%
2020
2019
2020
2019
2020
2019
2020
2019
83.8%
100%
83.8%
100%
83.8%
100%
83.8%
100%
16.2%
0%
16.2%
0%
16.2%
0%
16.2%
0%
Name
J. Clayton
S. Brady
M. Nicholas
C. Torng
Table 9: KMP shareholdings
Ordinary shares held* in Breville Group Limited (number)
30 June 2023
Balance at
1 July 2022
On exercise of
rights
Net change other (a)
Balance at
30 June 2023
Directors
T. Antonie
T. Baxter
L. Myers
P. Cowan
S. Herman
D. Howell
K. Wright
T. Rytilä
Executive Director
J. Clayton
Other KMP
S. Brady
M. Nicholas
C. Torng
Total (b)
43,791
-
133,000
10,968
42,484
140,000
21,859
-
-
-
-
-
-
-
-
-
-
-
30,000
87
5,000
-
-
-
43,791
-
163,000
11,055
47,484
140,000
21,859
-
231,616
93,287
(47,000)
277,903
105,000
24,150
114,085
866,953
18,277
17,453
16,138
145,155
(48,140)
(5,650)
(25,400)
(91,103)
75,137
35,953
104,823
921,005
* 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) ~0.6%% of total share capital is owned by KMPs (~0.6% in FY22).
49
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited) continued
7. Statutory Remuneration Tables continued
Table 9: KMP shareholdings continued
Ordinary shares held* in Breville Group Limited (number)
30 June 2022
Directors
T. Antonie
T. Baxter
L. Myers
P. Cowan
S. Herman
D. Howell
K. Wright
Executive Director
J. Clayton
Other KMP
S. Brady
M. Nicholas
C. Torng
Total
Balance at
1 July 2021
On exercise
of rights
Net change other (a)
Balance at
30 June 2022
43,791
-
100,000
10,968
42,484
140,000
21,764
-
-
-
-
-
-
-
-
-
33,000
-
-
-
95
43,791
0
133,000
10,968
42,484
140,000
21,859
180,443
130,740
(79,567)
231,616
171,716
41,185
119,785
872,136
21,800
15,800
19,800
188,140
(88,516)
(32,835)
(25,500)
(193,323)
105,000
24,150
114,085
866,953
* 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.
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:
Grant Date
Expiry
Date
Exercise
price
Fair value per performance
right at grant date ($)
FY19 Performance based
11 Sep 18 (a)*
3 Oct 22
FY20 Performance based
11 Oct 19 (b)*
2 Oct 23
FY21 Performance based
7 Sep 20 (c)*
1 Oct 23
FY22 Performance based
6 Oct 21 (d)*
1 Oct 24
FY22 Performance based
11 Nov 21 (d)*
1 Oct 24
FY23 Performance based
21 Oct 22 (e)
1 Oct 25
FY23 Performance based
10 Nov 22 (e)
1 Oct 25
0.00
0.00
0.00
0.00
0.00
0.00
0.00
6.58
7.06
14.69
25.96
28.91
17.44
19.13
Vested and
exercised
30 June 2023
Yes
-
-
-
-
-
-
Number of
Rights
46,600
57,350
131,058
38,803
73,326
61,248
115,741
* In addition to the TSR performance hurdle, the participant must be employed by the Company on the vesting date.
(a) 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.
(b) 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.
(c) One tranche with an absolute total shareholder return hurdle (TSR) applying an absolute test.
(d) One tranche with an EBIT CAGR gateway and max and min revenue CAGR target.
(e) One tranche with a target EBIT growth %.
50
Breville Group Limited annual report 2023 Remuneration report (audited) continued
7. Statutory Remuneration Tables continued
Table 11: Fixed deferred remuneration share rights holding of KMPs
The terms and conditions of each grant of rights issued as deferred remuneration affecting remuneration of KMPs in this financial
year or future reporting years are as follows:
Grant Date
Expiry
Date
Exercise
price
Fair value per performance
right at grant date ($) (Note 19)
Vested and exercised
30 June 2023
Number
of Rights
Jim Clayton
Jim Clayton
Jim Clayton
Jim Clayton
Other KMPs
Other KMPs
Other KMPs
Other KMPs
Other KMPs
Jim Clayton
Jim Clayton
Jim Clayton
Jim Clayton
Other KMPs
Other KMPs
Other KMPs
Other KMPs
Jim Clayton
NED
29 Jan 20
3-Oct-22
29 Jan 20
2-Oct-23
29 Jan 20
1-Oct-24
7 Sep 20
3-Oct-25
5 Oct 21
3-Oct-22
5 Oct 21
2-Oct-23
5 Oct 21
1-Oct-24
5 Oct 21
3-Oct-25
5 Oct 21
3-Oct-26
11 Nov 21
3-Oct-23
11 Nov 21
2-Oct-24
11 Nov 21
1-Oct-25
11 Nov 21
3-Oct-26
21 Oct 22
2-Oct 23
21 Oct 22
1-Oct 24
21 Oct 22
1-Oct 25
21 Oct 22
1-Oct 26
10 Nov 22
1-Oct 27
1 Dec 22
28-Feb 24
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
16.70
16.70
16.70
19.60
27.21
26.87
26.52
26.18
25.85
29.28
28.91
28.54
28.17
17.97
17.66
17.44
17.18
18.57
20.15
Yes
-
-
-
Yes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29,940
29,940
29,940
22,311
9,053
13,581
20,370
30,555
45,834
12,077
12,077
12,077
29,330
17,702
17,702
17,702
17,702
46,296
5,343
Table 12: Unvested Performance and Fixed Deferred Remuneration Rights holdings of KMPs
30 June 2023
T. Baxter
S. Herman
J. Clayton
Other KMPl
S. Brady
M. Nicholas
C. Torng
Balance
30 June 2022
-
-
435,797
96,469
92,358
88,448
713,072
Granted as
remuneration (a)
3,562
1,781
162,037
21,242
69,377
41,437
Vested and
exercised
-
-
(93,287)
(18,277)
(17,453)
(16,138)
299,436
(145,155)
Other (b)
-
-
(5,653)
(1,263)
(1,206)
(1,166)
(9,288)
Balance
30 June 2023
3,562
1,781
498,894
98,171
143,076
112,581
858,065
(a) Performance rights granted during the year are subject to performance hurdles and remaining in employment until date of vesting.
(b) Includes forfeitures and lapses.
30 June 2022
J. Clayton
Other KMP
S. Brady
M. Nicholas
C. Torng
Balance
30 June 2021
427,650
Granted as
remuneration (a)
138,887
Vested and
exercised
(130,740)
Other (b)
-
Balance
30 June 2022
435,797
63,403
55,578
57,498
604,129
54,866
52,580
50,750
297,083
(21,800)
(15,800)
(19,800)
(188,140)
-
-
-
-
96,469
92,358
88,448
713,072
(a) Performance rights granted during the year are subject to performance hurdles and/or remaining in employment until date of vesting.
(b) Includes forfeitures and lapses.
51
Breville Group Limited annual report 2023 Directors’ report continued
Remuneration report (audited) continued
8. LTI Relative TSR Peer group appendix
Table 13: Bloomberg ASX200 Consumer Staples, Consumer
Discretionary and Industrials Peer Group used for Relative
TSR Measurement
Code Company
A2M The a2 Milk Co Ltd
ALG Ardent Leisure grp Ltd
ALL
Aristocrat Leisure Ltd
ALQ ALS Ltd
ALX
ARB
ASB
AZJ
BAP
BGA
BKL
BXB
Atlas Arteria Ltd
ARB Corp Ltd
Austal Limited
Aurizon Holdings Ltd
Bapcor Ltd
Bega Cheese Ltd
Blackmores Ltd
Brambles Ltd
CGC Costa Group Holdings Ltd
Coles Group Ltd
Sector
Consumer Staples
Consumer Discretionary
Consumer Discretionary
Industrials
Industrials
Consumer Discretionary
Industrials
Industrials
Consumer Discretionary
Consumer Staples
Consumer Staples
Industrials
Consumer Staples
Consumer Staples
COL
CTD
EHL
ELD
FLT
Corporate Travel Management Ltd Consumer Discretionary
CWY Cleanaway Waste Management
Ltd
Industrials
DMP Domino's Pizza Enterprises Ltd
Consumer Discretionary
DOW Downer EDI Ltd
Emeco Holdings
Elders Ltd
Industrials
Industrials
Consumer Staples
Flight Centre Travel Group Ltd
Consumer Discretionary
GEM G8 Education Limited
Consumer Discretionary
GNC GrainCorp Ltd
GUD GUD Holdings Ltd
GWA GWA Group Limited
Consumer Staples
Consumer Discretionary
Industrials
HVN Harvey Norman Holdings Ltd
Consumer Discretionary
IEL
ING
IPH
IVC
IDP Education Ltd
Inghams Group Ltd
IPH Ltd
InvoCare Ltd
JBH
JB Hi-Fi Ltd
Consumer Discretionary
Consumer Staples
Industrials
Consumer Discretionary
Consumer Discretionary
MMS Mcmillan Shakespeare
MND Monadelphous Group Ltd
Industrials
Industrials
MTS Metcash Ltd
NEC Nine Entertainment Co Holdings
Ltd
Consumer Staples
Communication Services
NWH NRW Holdings Ltd
Industrials
NWS News Corp
OML Ooh! Media Limited
PMV
Premier Investments Ltd
QAN Qantas Airways Ltd
QUB Qube Holdings Ltd
RWC Reliance Worldwide Corp Ltd
Communication Services
Consumer Discretionary
Consumer Discretionary
Industrials
Industrials
Industrials
SEK
SEEK Ltd
Communication Services
SGR The Star Entertainment Grp Ltd
Consumer Discretionary
52
Code Company
SIQ
Smartgroup Corporation
Sector
Industrials
SKC Skycity Ent Group Limited Foreign
Exempt NZX
Consumer Discretionary
SSM Service Stream
Industrials
SUL
Super Retail Group Ltd
Consumer Discretionary
SVW Seven Group Holdings Ltd
Industrials
SXL
TAH
TCL
TWE
Southern Cross Media
Consumer Discretionary
Tabcorp Holdings Ltd
Consumer Discretionary
Transurban Group
Industrials
Treasury Wine Estates Ltd
Consumer Staples
WEB Webjet Ltd
WES Wesfarmers Ltd
WOW Woolworths Group Ltd
TWE
Treasury Wine Estate
WEB Webjet Limited
WES Wesfarmers Limited
Consumer Discretionary
Consumer Discretionary
Consumer Staples
Consumer Staples
Consumer Discretionary
Consumer Discretionary
WOW Woolworths Group Limited
Consumer Staples
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 (ARC) and the People, Performance, Remuneration
and Nominations Committee (PPRNC) and the Sustainability
Committee, was as follows:
People,
performance,
remuneration
& nominations
(PPRNC)
Audit
& risk
(A&RC)
Sustainability
Committee
5
5
5 (b)
5
4
5
4
4 (a)
5 (a)
0
4
4
4 (a)
4
2
4
3
4 (a)
4 (b)
0
3
1
0
0
0
3 (b)
3 (a)
3 (a)
3 (a)
0
Full
board
12
11 (b)
12
12
11
11
12
11
12
3
Number of
meetings
T. Antonie
L. Myers
J Clayton
T. Baxter
P. Cowan
S. Herman
D. Howell
K. Wright
T. Rytilä (c)
(a) A member of the relevant committee. All board members are invited
to attend the committee meetings.
(b) Designates the current chair of the Board or committee.
(c) Tuula Rytilä appointed Director on 1st April 2023 – 100% attendance
after appointment.
Breville Group Limited annual report 2023 Committee membership
Lapse of unvested performance rights
As of the date of this report, the Company had an ARC and
PPRNC and a 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
ARC are L. Myers (chair), D. Howell and K. Wright.
• The current members, as at the date of this report, of the
PPRNC are K. Wright (chair), D. Howell and L. Myers.
• The current members, as at the date of this report, of the
Sustainability Committee are P. Cowan (chair), K. Wright, S.
Herman and D. Howell.
All Chairs and members of the ARC and PPRNC committees
are independent.
During the year 38,822 unvested performance rights lapsed
following the cessation of employment of employees or
executives and 25,082 unvested performance rights lapsed as
a result of performance hurdles not being met. (2022: 101,606
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 107 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 2023. This
auditor’s declaration forms part of this Directors’ report.
Indemnification of Directors and Officers
Non-audit services
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 16 to 31 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 54.
Performance rights
Unissued shares
During the financial year ended 30 June 2023 the Company’s
auditor, PwC, provided non-audit services to Breville Group
entities. Details of the amounts paid to the auditor PwC for
the provision of non-audit services during the year ended 30
June 2023 are set out in note 22 on page 103. These services
primarily relate to tax compliance and advisory services.
For FY23, the ratio between audit and non-audit fees is
1.2 to 1.0.
A significant portion of the non-audit fees associated with
taxation and accounting advisory services in FY23 are non-
recurring in nature relating to renewal of the APA, intercompany
agreement renewal and new reporting requirements
(transfer pricing).
In accordance with the recommendation from the ARC, 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 ARC, 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 ARC 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
No 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.
As of the date of this report there were 2,408,673 potential
unissued shares under the performance rights, fixed deferred
remuneration share rights and NED schemes (2022: 1,687,103).
Refer to note 19 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 rights to participate in any share issue of the
Company.
Timothy Antonie
Chair
Sydney
21 August 2023
53
Breville Group Limited annual report 2023 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 2023 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
• Board charter
• Audit and risk committee charter
• People, performance, remuneration and nomination
committee charter
• Sustainability committee charter
• Code of conduct
• Corporate Values
• Anti-bribery and corruption
• Whistleblower Protection Policy
• Ethical sourcing policy
• Modern Slavery statement
• Diversity & inclusion policy
• Share trading policy
• Continuous disclosure policy
• Selection and appointment of Directors
• Criteria for assessing independence of Directors
• Shareholder communications policy
• Minimum shareholding guideline policy
• Workplace gender equality agency report
• Sustainability Policy
• Reconciliation Action Plan
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
Timothy Antonie (Chair)
2013
10 years
BEcon
Lawrence Myers (Deputy
Chair and Lead Independent
Director)
Timothy Baxter
Jim Clayton
Peter Cowan
Sally Herman
Dean Howell
Kate Wright
Tuula Rytilä
2013
2022
2021
2018
2013
2008
2016
2023
10 years B.Acct, CA, CTA
1 year
BS
2 years BBA, Finance, JD
5 years
10 years
15 years
7 years
0 years
Other
BA, GAICD
FCA, CTA
BA
MSc
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
No
2020
Yes
Yes
No
Yes
No
Yes
Yes
Yes
2021
2022
N/A
2021
2022
2020
2022
-
The Board has a wide range of skills that are necessary for
the effective governance and management of the business
including in the following areas:
• Corporate strategy and executive leadership
• Product Development
• Marketing
• Consumer-orientated technology
• Multinational businesses and global markets
• Consumer goods
• Retail
• Risk management
• Banking Compliance and governance
• Accounting, tax, reporting, and financial analysis
• Mergers, acquisitions, and capital raisings
• Human resources and executive remuneration
•
Investor relations
Breville maintains a majority independent Board and has been
steadily evolving its Board composition to benefit from diversity
in all its forms including gender, skill set, experience, ethnicity,
and geography.
Following the addition of Mr Tim Baxter in June 2022, Ms Tuula
Rytilä joined the Board in April 2023 bringing specific skills in
digital technology and its application to consumer goods as
well as becoming the Group’s first European based Director. Ms
Rytilä appointment follows the previously announced intent to
identify an additional independent director as part of the Board’s
evolution to match and support the Group’s geographic,
product and, solutions expansion.
Ms Rytilä is an accomplished senior executive, with 30 years’
experience across the consumer technology and product sector
in technologies, digitisation and product management. Ms
Rytilä brings an international perspective having worked across
Europe, North America, Asia and Africa rising to the position
of Global CMO at Nokia, where she worked for 15 years, and
subsequently for 9 years at Microsoft with global responsibility
for Microsoft Digital Stores. Her most recent focus has been
on driving global business model change and customer
experience optimisation. Ms Rytilä has detailed insight into
product roadmaps, product development, consumer insights
as well as experience with global go-to-market strategies and
e-commerce and is a valuable addition to the Board.
54
Breville Group Limited annual report 2023 Principle 1: Lay solid foundations for
management and oversight
Role of the Board and management
The Board guides and monitors the business and affairs of
the Company on behalf of the shareholders, by whom it is
elected and to whom it is accountable. The Board has adopted
formal guidelines for Board operation and membership. These
guidelines outline the roles and responsibilities of the Board and
its members and establish the relationship between the Board
and management.
The Board is responsible for approving the strategic direction
of the company, establishing goals for management including
the annual budget, monitoring the achievement of those
goals and establishing a sound system of risk oversight and
management. The Board regularly reviews 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.
Appointment of Board members
A detailed process is undertaken for the appointment of
new Board members, including appropriate checks as to
background, experience and skill set and any potential conflicts
of interest.
During FY23 the Board appointed Ms Rytilä via an extensive
international search for a Director possessing the specific
digital, consumer technology and product management skill set
that would complement the skill set of the current Board. This
strategic skill set is viewed as critical to help ensure Breville’s
solutions orientated strategy is successfully leveraged and
executed to its full potential.
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 and
induction program 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, sexuality, culture, disability
and, ethnicity. 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.
Diversity policy objectives
The objectives and actions set by the Board in accordance
with the diversity policy, and progress towards achieving them,
including gender balance, are as follows:
• Promoting a safe workplace free from harassment or
discrimination of any kind: training and education programs
which included topics on unconscious bias, harassment,
bullying, victimisation and discrimination were repeated
during the year;
• Explicit requirement of recruiting agencies to provide a
gender balance of suitable, qualified, shortlisted candidates
for interview continued during the year;
• Representation of women trained in recruitment and on
selection panels: the process to train additional women in
these skills continued during the year;
• Enhancing the gender balance in career development in
senior and managerial roles;
• Continued flexible working arrangements where
operationally appropriate: Breville’s policies on Flexible Work
and Paid Parental leave along with its technology set up
activity support the choice of work locations and timing of
work.
The proportion of women employees in the company at 30
June 2023 is shown in the below table.
Women on the Board1
Women in senior executive roles2
Women in managerial roles3
Women in company
30 June
2023
30 June
2022
33%
35%
37%
45%
25%
34%
36%
45%
1 The number of women on the Board is 3. Following the appointment
of Tuula Rytilä the percentage of women on the Board increased to
33%.
2 The senior and executive role measure 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
the 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 monthly 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.
• A target gender balance of at least 40% of either gender
Evaluating the performance of the Board
in managerial and executive roles and approximately 30%
for the Board: Breville is constantly striving to improve
its gender balance and has done so in all categories in
FY23, with women on the Board now presenting 33%, the
percentage of women in managerial roles was 37%, up
from 36% in FY22 with senior and executive roles at 35%,
1% higher than FY22. The percentage of women across the
organisation remained at 45%;
The Chair of the Board 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 Chair to the Board
following the assessment.
55
Breville Group Limited annual report 2023 Corporate governance statement continued
Principle 1: Lay solid foundations for
management and oversight continued
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.
Principle 2: Structure the Board to be
effective and add value
Board composition
The Company’s constitution states that there must be a
minimum of three Directors and contains detailed provisions
concerning the tenure of Directors. The Board currently
comprises eight non-executive Directors and one executive
Director. The Directors’ report, on pages 10 and 11, 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
Chair 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 Chair and representing the Board as the lead independent
Director when the Chair is unable to do so because of his non-
independent status.
As the Chair is not an independent Director, the Board
appointed Mr Myers as its lead independent Director. Mr Myers
was appointed as Deputy Chair in FY22.
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 Tim Baxter, Mr Peter Cowan, Mr Dean
Howell, Mr Lawrence Myers, Ms Kate Wright and Ms Rytilä 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 8 years. Thus, Mr Howell’s
tenure in working with this current leadership team is no longer
than many other members of the Board.
The following Directors are not classified independent Directors:
• Mr Timothy Antonie (non-executive Chair) is a non-
executive Director of Premier Investments Ltd, a substantial
shareholder of the company;
• Ms Sally Herman (non-executive Director) is a non-
executive Director of Premier Investments Ltd, a substantial
shareholder of the company; and,
• Mr Jim Clayton (Managing Director) in his dual role as Chief
Executive Officer is not considered independent.
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 Chair is required, which
will not be unreasonably withheld.
Induction and continuing professional development
Newly appointed Directors participate in an extensive induction
program. This includes the provision of information relevant to
their role as a listed company Director, and briefings with other
Directors and key members of management on the Group’s
strategy, operations, structure and material risks. Directors
are also encouraged to undertake ongoing professional
development to develop and maintain the skills and knowledge
required to perform their role effectively.
Board committees
The Board has established the ARC, the PPRNC, and the
Sustainability Committee to assist in the execution of its duties
and to allow the detailed consideration of complex issues. The
composition of these committees is shown on page 53. The
ARC and PPRNC comprises only independent Directors. The
Sustainability Committee is chaired by an independent, non-
executive Director and has only non-executive membership.
56
Breville Group Limited annual report 2023 Principle 3: Instil a culture of acting lawfully,
ethically, and responsibly
•
recommends to the Board the appointment and
remuneration of the external auditors;
•
reviews the scope of external audits;
Values
The culture and values of the group are led by the Board and
supported by policy and procedure, underpin the ethical and
responsible behaviour expected by all Directors and employees
of the Group. The Company undertook an extensive refresh of
its values and published these in FY23. These can be found
under the “About” section within the Company’s website
brevillegroup.com.
Code of conduct
The Board has formally adopted a code of conduct (“code”)
for all Directors and employees. 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.
Whistleblower, anti-bribery and corruption policies
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.
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 of corporate
reports
Audit and risk committee
The Board has an ARC, 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 and the integrity and accuracy of corporate
reports. 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 ARC.
Among its responsibilities, the ARC:
• ensures that Company accounting policies and practices
are in accordance with current and emerging accounting
standards;
•
reviews all financial statements of the Group to be publicly
released;
• 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 and a bi-annual
review of the risk register and risk matrix.
Composition of committee
The members of the ARC as at the date of this report are:
• Mr Lawrence Myers (Chair)
• Mr Dean Howell
• Ms Kate Wright
The Directors’ report, on page 52, outlines the number of ARC
meetings held during the year and the member’s attendance
at those meetings. It also outlines the qualifications of ARC
members on pages 10 and 11.
There is an open invitation for Board members and the Group
CEO, company secretaries, Group CFO to attend the ARC; the
external auditors and any other persons considered appropriate
may attend meetings of the ARC by invitation by the Chair.
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 ARC
is structured so that it:
•
•
is comprised of 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 provide 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 that 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 under the corporate governance section.
Materials used for investor and analyst briefing purposes are
made public via ASX announcements prior to the briefing.
The Board approves all material market announcements before
release. Any new, or substantive, analyst presentations are
released on the ASX Market Announcements Platform.
57
Breville Group Limited annual report 2023 Corporate governance statement continued
Principle 6: Respect the rights of security
holders
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
and all governance information are available on the corporate
governance section of the Company’s website.
The Company aims to facilitate effective communication with
shareholders in a number of ways, including through:
•
the Annual General Meeting (AGM), which shareholders
are encouraged to attend and participate in, including by
exercising their voting rights and asking questions of the
Chair and the Board and the external auditor. The Company
ensures that all substantive resolutions at the AGM, or any
other meeting of shareholders, are decided by a poll rather
than a show of hands;
• an investor relations program, which includes scheduled
and ad-hoc briefing sessions with investors, analysts and
other stakeholders;
•
the Breville Group website which provides up-to-date
information about the Company, its governance framework
and recent ASX announcements;
• publishing any communication material provided at investor
conferences before they are presented, and
• notifications from the Company’s share registry.
Electronic communication
Shareholders can elect to receive communications from the
Company’s share registry 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, climate, ethical
conduct, brand, technology and product quality risks. The
Company has embedded in its management and reporting
systems a number of risk management controls.
These include:
• a bi-annual presentation of the risk register and risk matrix
to the Board and the ARC identifying key risks, mitigants
and the residual risk compared to Board risk appetite.
• policies and procedures for the management of financial
risk and treasury operations including exposures to foreign
currencies and movements in interest rates;
• annual strategic planning sessions;
• 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; and
• guidelines and limits for approval, including capital
expenditure, significant contracts, acquisitions and
disposals, actual or contingent liabilities, borrowings and
legal matters.
Audit and Risk committee
The Company operates a twice yearly extensive self-
assessment process, a companywide risk register review, as
well as external audits, Management is responsible to the Board
for the internal control and risk management systems and
reporting to the Board on the effectiveness of the management
of its material business risks. The ARC assists the Board in
monitoring this function.
During FY23, the ARC directly undertook these duties and
responsibilities and met five times during the year. As referred
to above, the ARC is composed of the following Directors as of
the date of this report:
• Mr Lawrence Myers (Chair)
• Mr Dean Howell
• Ms Kate Wright
Sustainability Committee
The Sustainability Committee is responsible for assisting the
Board in fulfilling its oversight responsibilities in relation to
sustainability policies, strategies and programs of the Group.
This responsibility includes reviewing, monitoring and making
recommendations to the Board in relation to any material
sustainability risks, including those associated with the
execution of the Group’s sustainability agenda, as well as the
integrity of the Group’s sustainability reporting.
The Sustainability committee is composed of the following
Directors as of the date of this report:
• Mr Peter Cowan (Chair)
• Ms Sally Herman
• Ms Kate Wright
• Mr Dean Howell
The Sustainability committee comprises:
• an independent chair; and
• at least three members, all of whom are non-executive
Directors.
For details on the number of meetings of the Sustainability
Committee held during the year and the members’ attendance
at those meetings, refer to the Directors’ report on page 52.
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.
58
Breville Group Limited annual report 2023 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 (Chair)
• Mr Dean Howell
• Mr Lawrence Myers
In accordance with the council’s recommendation 8.1, the
PPRNC comprises:
• an independent Chair; 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 each members’ attendance at those
meetings, refer to the Directors’ report on page 52.
The Company’s policies for participants in equity-based
remuneration schemes are published on its website. KMPs and
recipients of equity-based remuneration and their associates,
executives and staff are prohibited from entering transactions
with options, hedging arrangements or other derivative
products. All trading activity by KMPs and recipients of equity-
based remuneration, and their associates, in relation to the
Company’s shares, requires formal sign off by the Company
Secretary and/or the Chair of the Board.
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
32 to 52.
Equity based remuneration schemes and share trading
The securities trading policy details restrictions on the trading
of shares received via equity-based remuneration schemes or
otherwise acquired. All transactions by KMP’s explicitly require
Chair of the Board approval.
59
Breville Group Limited annual report 2023 Consolidated income statement
for the year ended 30 June 2023
3(e)
(183,066)
Consolidated
30 June 2023
30 June 2022
$’000
$’000
1,478,554
1,418,437
(961,612)
516,942
778
(13,670)
(52,721)
(50,100)
218,163
(46,142)
172,021
(21,699)
669
150,991
(932,500)
485,937
405
(158,530)
(17,360)
(68,310)
(55,317)
186,825
(30,464)
156,361
(8,844)
317
147,834
(40,783)
(42,117)
110,208
105,717
Cents
Cents
77.2
76.6
75.9
75.3
Note
3(a)
3(b)
3(d)
3(c)
3(f)
3(f)
4
13
13
Revenue
Cost of sales
Gross profit
Other income
Employee benefits expenses
Premises & utilities expenses
Advertising and marketing expenses
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
the Company:
Basic earnings per share
Diluted earnings per share
The accompanying notes form an integral part of this consolidated income statement.
60
Breville Group Limited annual report 2023 Consolidated statement of comprehensive income
for the year ended 30 June 2023
Consolidated
30 June 2023
30 June 2022
Note
$’000
$’000
Net profit after income tax for the year
110,208
105,717
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
Other comprehensive income for the year,
net of income tax
Total comprehensive income for the year attributable to:
Owners of Breville Group Limited
Total comprehensive income for the year attributable to owners of
Breville Group Limited arises from:
Continuing operations
4
26,986
(10,887)
4,163
19,361
21,940
(7,650)
20,262
33,651
130,470
139,368
130,470
139,368
The accompanying notes form an integral part of this consolidated statement of comprehensive income.
61
Breville Group Limited annual report 2023 Consolidated statement of financial position
as at 30 June 2023
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax receivables
Derivative financial instruments
Other financial assets
Total current assets
Non-current assets
Property, 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
Borrowings
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Equity attributable to equity holders of Breville Group Limited
Issued capital
Reserves
Retained earnings
Total equity
Consolidated
30 June 2023
30 June 2022
Note
$’000
$’000
5
6
7
4
16
16
8
4
10
9
16
6
10
4
15
6
16
15
10
4
6
14
14
84,155
276,753
439,633
4,366
14,200
1,711
820,818
53,766
29,112
69,968
399,028
2,160
554,034
168,256
194,202
445,884
2,464
23,987
9,497
844,290
33,477
13,684
44,656
241,047
1,998
334,862
1,374,852
1,179,152
261,336
19,777
6,285
3,245
29,699
1,430
321,772
-
202,200
55,272
22,155
3,794
283,421
605,193
769,659
385,541
39,337
344,781
769,659
292,272
12,172
8,849
-
29,482
330
343,105
9,770
172,349
37,643
105
1,763
221,630
564,735
614,417
323,165
13,845
277,407
614,417
The accompanying notes form an integral part of this consolidated statement of financial position.
62
Breville Group Limited annual report 2023 Consolidated statement of changes in equity
for the year ended 30 June 2023
Consolidated
2023
At 1 July 2022
Foreign currency translation reserve
Cash flow hedges
Income tax on items taken directly to equity
4
Total other comprehensive income
for the year
Profit for the year ended
Total comprehensive income
for the year ended
Transactions with owners in their capacity as owners:
Dividends paid
Ordinary shares issued on acquisition of Lelit Srl,
net of transaction costs
Ordinary shares issued for Performance Rights Plan (LTI) and
Fixed Deferred Remuneration Plan, net of transaction costs
and tax
Ordinary shares acquired by the Trustee of the Breville
Group Employee Share Trust (LTI)
Transferred to participants of the performance rights plan
Share-based payments
At 30 June 2023
2022
At 1 July 2021
Foreign currency translation reserve
Cash flow hedges
Issued
capital
$’000
Foreign
currency
translation
$’000
Employee
equity
benefits
reserve
$’000
Note
Cash flow
hedges
$’000
Retained
earnings
$’000
7,540
26,986
-
-
26,986
-
(10,255)
16,560
277,407
-
-
-
(10,887)
897
3,266
(7,621)
897
-
-
110,208
26,986
897
(7,621)
110,208
130,470
12
14(a)
55,703
14(a)
6,673
14(b)
14(b)
3(e)
(6,093)
6,093
-
385,541
34,526
-
-
-
-
-
-
-
-
(6,690)
-
-
11,920
(4,128)
-
-
-
-
-
-
(42,834)
(42,834)
-
-
-
-
-
55,703
(17)
(6,093)
6,093
11,920
8,939
344,781
769,659
(3,916)
1,200
211,407
506,485
(11,821)
19,361
-
-
-
-
(1,070)
-
21,940
(6,580)
Total
$’000
614,417
26,986
(10,887)
4,163
20,262
110,208
19,361
21,940
(7,650)
33,651
105,717
-
-
-
-
-
-
-
-
323,165
-
-
-
-
-
-
-
309,615
-
-
-
-
-
-
-
Income tax on items taken directly to equity
4
Total other comprehensive income
for the year
Profit for the year
Total comprehensive income
for the year ended
Transactions with owners in their capacity as owners:
Dividends paid
12
Ordinary shares issued for Performance Rights Plan (LTI) and
Fixed Deferred Remuneration Plan, net of transaction costs
and tax
Ordinary shares acquired by the Trustee of the Breville
Group Employee Share Trust (LTI)
Transferred to participants of the performance rights plan
Share-based payments
At 30 June 2022
14(a)
13,550
14(b)
14(b)
3(e)
(12,626)
12,626
-
19,361
(1,070)
15,360
-
-
-
105,717
19,361
(1,070)
15,360
105,717
139,368
-
-
-
-
-
-
(13,576)
-
-
8,307
-
-
-
-
-
(39,717)
(39,717)
-
-
-
-
(26)
(12,626)
12,626
8,307
323,165
7,540
(10,255)
16,560
277,407
614,417
The accompanying notes form an integral part of this consolidated statement of changes in equity.
63
Breville Group Limited annual report 2023 Consolidated statement of cash flows
for the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Finance income received
Finance costs paid
Income tax paid
Net cash flows from (used in) operating activities
Cash flows from investing activities
Purchase of plant and equipment
Proceeds from sale of property, plant and equipment
Development of intangible assets
Acquisition of subsidiary, net of cash acquired
Net cash (used in) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Equity dividends paid
Principal elements of lease payments
Net cash (used in) from financing activities
Consolidated
30 June 2023
30 June 2022
Note
$’000
$’000
1,474,092
(1,319,631)
1,458,572
(1,445,886)
669
(21,699)
(43,177)
90,254
(20,479)
44
(32,764)
(79,647)
(132,846)
399,471
(387,212)
(42,834)
(18,303)
(48,878)
353
(7,834)
(47,358)
(42,153)
(16,550)
42
(26,142)
-
(42,650)
284,989
(116,068)
(39,717)
(7,674)
121,530
5(c)
8
9
21(a)
5(b)
5(b)
12(a)
10
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Net foreign exchange difference
(91,470)
36,727
168,256
7,369
129,907
1,622
Cash and cash equivalents at end of the year
5(c)
84,155
168,256
The above Consolidated statement of cash flows should be read in conjunction with the accompanying notes.
64
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
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 Property, plant and equipment
9 Non-current assets - intangible assets
10
11
Leases
Impairment testing of goodwill and intangibles with indefinite lives
Capital management
12 Dividends
13 Earnings per share
14
Issued capital and reserves
15 Borrowings
16
17
Financial risk management
Interests in other entities
18 Parent entity information
Further details
19 Share-based payments
20 Related party transactions
21 Business combination
22 Auditor’s remuneration
23 Contingencies
24 Events occurring after the reporting period
25 Other accounting policies
65
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Key numbers
Note 1. Summary of significant accounting
policies
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.
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 11 to 31. 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) Compliance with IFRS
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.
(d) Business combinations
The excess of the consideration transferred and the amount of
any non-controlling interest in the acquiree over the fair value of
the net identifiable assets acquired is recorded as goodwill. If
those amounts are less than the fair value of the net identifiable
assets of the subsidiary acquired and the measurement of
all amounts has been reviewed, the difference is recognised
directly in profit or loss as a bargain purchase. Further details
are provided in note 21.
(e) Foreign currency translation
(i) Functional and presentation currency
Items included in the consolidated financial statements of each
of the Group's entities are presented in Australian dollar ($),
which is Breville Group Limited's functional and presentation
currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised
in profit or loss. They are deferred in equity if they relate to
qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a
foreign operation.
(f) 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 11.
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 using a risk neutral methodology for non-market
measures, the assumptions are detailed in note 19.
66
Breville Group Limited annual report 2023 Note 1. Summary of significant accounting
policies continued
Taxes
Uncertainties exist with respect to the interpretation of complex
tax regulations, changes in tax laws, and the amount and timing
of future taxable income. Given the wide range of international
business relationships and the long-term nature and complexity
of existing contractual agreements, differences arising between
the actual results and the assumptions made, or future changes
to such assumptions, could necessitate future adjustments to
tax income and expense already recorded.
The Group establishes provisions, based on reasonable
estimates, for possible consequences of audits by the tax
authorities of the respective countries in which it operates. The
amount of such provisions is based on various factors, such as
experience of previous tax audits and differing interpretations
of tax regulations by the taxable entity and the responsible
tax authority. Such differences of interpretation may arise on a
wide variety of issues depending on the conditions prevailing
in the respective Group Company’s domicile. As the Company
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 quality initiatives,
as well as parts and labour costs. The related carrying amounts
are disclosed in note 6.
Allowance for uncollectible receivables
Estimation is required to assess the risk of probability weighted
outcomes in determining an adequate level of provisions for
uncollectible receivables. 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.
(g) 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 25 of the financial
report.
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®, Lelit® 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.
(a) Segment results
Consolidated 2023
Consolidated
30 June 2023
30 June 2022
Global
Product
$’000
Distribution
$’000
Total
$’000
Global
Product
$’000
Distribution
$’000
Total
$’000
Segment revenue
1,279,224
199,330
1,478,554
1,178,560
239,877
1,418,437
Cost of sales
Gross Profit
GM%
EBIT
Finance income
Finance costs
Profit before income tax
(808,656)
(152,956)
(961,612)
(749,800)
(182,700)
(932,500)
470,568
46,374
516,942
428,760
57,177
485,937
36.8%
23.3%
35.0%
36.4%
23.8%
34.3%
172,021
669
(21,699)
150,991
156,361
317
(8,844)
147,834
67
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 2. Operating segments continued
(b) Segment revenue
Global Product
Americas
EMEA
APAC
Total Global Product revenue
Distribution
Revenue generated from USA, Canada, Australia and New Zealand.
Note 3. Revenue and expenses
(a) Revenue
Sale of goods
Total revenue
(b) Cost of sales
Costs of inventories recognised as an expense
Costs of delivering goods to customers
Warranty expense
Total cost of sales
(c) Depreciation and amortisation expense
Depreciation - right-of-use assets
Depreciation - property, plant and equipment
Depreciation - production tools
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
Information technology costs
Professional and administration costs
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
68
Consolidated
30 June 2023
$’000
30 June 2022
$’000
701,232
285,774
292,218
605,012
295,160
278,388
1,279,224
1,178,560
Consolidated
30 June 2023
$’000
30 June 2022
$’000
1,478,554
1,478,554
1,418,437
1,418,437
856,637
60,478
44,497
961,612
18,239
6,550
4,073
1,065
15,464
751
46,142
(698)
9,717
19,074
7,023
14,984
50,100
151,512
10,447
9,187
11,920
183,066
819,883
64,238
48,379
932,500
7,876
4,506
5,320
259
12,323
180
30,464
185
7,747
19,702
14,653
13,030
55,317
127,609
15,120
7,494
8,307
158,530
Breville Group Limited annual report 2023 Note 3. Revenue and expenses continued
(f) Finance costs/income
Finance costs paid or payable on borrowings and bank overdrafts:
Interest and borrowing costs
Interest on lease liabilities
Finance costs
Finance income
Total net finance costs
Recognition and measurement
Sale of goods
Consolidated
30 June 2023
$’000
30 June 2022
$’000
17,559
4,140
21,699
(669)
21,030
7,265
1,579
8,844
(317)
8,527
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.
Employee benefits expenses
Employee benefits expenses increased by $24,536,000 to $183,066,000 from pcp $158,530,000 due to the wages and salaries
associated with headcount increases, largely related to additions in FY22.
Premises & utilities expenses
Premises & utilities expenses include non-lease accounted warehouse and office costs, storage locations, utiliities, repairs and
maintenance costs.
Advertising and marketing expenses
Advertising and marketing expenses decreased by $15,589,000 to $52,721,000 from pcp $68,310,000 as a series of marketing
platform projects transitioned from the build phase to the less expensive run and maintain phase.
Finance costs/income
Borrowing costs are recognised as an expense when incurred. 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.
Finance costs increased by $12,855,000 to $21,699,000 from $8,844,000 pcp largely due to increases in interest rates, elevated
borrowings due to the acquisition of Lelit Srl and working capital requirements.
69
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
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
Adjustments in respect of deferred income tax of previous years
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
Consolidated
30 June 2023
$’000
30 June 2022
$’000
40,940
(2,001)
2,076
(232)
40,783
(897)
(3,266)
(4,163)
40,532
3,844
2,443
(4,702)
42,117
1,070
6,580
7,650
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
Tax at the Australian tax rate of 30.0% (2022 - 30.0%)
Adjustments in respect of income tax of previous years
Effect of different rates of tax on overseas income
Expenditure not allowable for income tax purposes
Share-based payments
Other
Consolidated
30 June 2023
$’000
30 June 2022
$’000
150,991
45,297
(2,233)
(1,368)
1,363
(3,638)
1,362
147,834
44,350
(858)
(612)
1,987
(2,499)
(251)
Income tax expense reported in the income statement
40,783
42,117
70
Breville Group Limited annual report 2023 Note 4. Income tax continued
Deferred income tax at 30 June relates to the following:
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Brand names
Development costs and production tools
Other intangibles
Cash flow hedge reserve
Accelerated depreciation for tax purposes
Other
Gross deferred income tax liabilities
Deferred tax assets
Losses available for offset against future taxable income
Provisions and accruals
Employee benefits
Inventory
Employee equity benefits reserve
Leases
Other
Gross deferred income tax assets
Net deferred income tax assets
Movement
Opening Balance
Credit / (Charged) to income statement
Credit / (Charged) to equity
Acquisition of Lelit Srl
FX
Closing Balance
Current income tax
Current tax receivables
Current tax liabilities
Consolidated
Statement of financial position
30 June 2023
$’000
30 June 2022
$’000
12,720
19,082
5,887
3,762
1,348
194
1,875
22,068
3,833
7,028
320
-
42,993
35,124
2,044
26,376
8,048
771
7,832
1,668
3,211
49,950
6,957
1,630
24,544
8,756
110
5,225
1,520
6,918
48,703
13,579
Consolidated
Note
30 June 2023
$’000
30 June 2022
$’000
21
13,579
(1,844)
4,163
(7,003)
(1,938)
6,957
4,366
6,285
17,365
2,259
(7,650)
-
1,605
13,579
2,464
8,849
71
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 4. Income tax continued
At 30 June 2023, there is no recognised or unrecognised deferred income tax liability (2022: $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.
The Group has applied the exemption to recognising and disclosing information about deferred tax assets and liabilities related to
Pillar Two income taxes, which are income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two
model rules published by the Organisation for Economic Co-operation and Development (OECD).
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 18.
72
Breville Group Limited annual report 2023 Note 5. Cash and cash equivalents
Cash at bank and on hand
Consolidated
30 June 2023
$’000
30 June 2022
$’000
84,155
168,256
Notes:
- At 30 June 2023, the Group had available $266,771,000 (2022: $189,956,000) of undrawn committed borrowing and overdraft
facilities in respect of which all conditions precedent had been met (see note 15).
- The fair value of cash and cash equivalents is $84,155,000 (2022: $168,256,000).
Cash and cash equivalents
Borrowings - Current
Borrowings - Non-current
Net (debt)/ cash
(a) Disclosure of financing facilities
Refer to note 15.
Recognition and measurement
84,155
(3,245)
(202,200)
(121,290)
168,256
-
(172,349)
(4,093)
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.
(b) Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each of the years presented.
Consolidated
Cash $’000 Borrowings $’000
Total $’000
Net debt as at 1 July 2021
Cash flows
Foreign exchange adjustments
Net (debt)/ cash as at 30 June 2022
Cash flows
On Acquisition of Lelit Srl
Foreign exchange adjustments
Net (debt)/ cash as at 30 June 2023
129,907
36,727
1,622
168,256
(91,470)
3,289
4,080
84,155
-
(168,921)
(3,428)
(172,349)
(12,259)
(12,349)
(8,488)
129,907
(132,194)
(1,806)
(4,093)
(103,729)
(9,060)
(4,408)
(205,445)
(121,290)
73
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 5. Cash and cash equivalents continued
(c) Reconciliation of net profit after tax for the year to net cash flows from operating activities
Profit for the year
Non-cash adjustments:
Depreciation and amortisation
Share-based payments
Other
Net exchange differences
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 from/(used in) operating activities
Note 6. Receivables, payables and provisions
Trade and other receivables
Current assets
Trade receivables from contracts with customers
Allowance for uncollectible receivables
Trade receivables, net
Prepayments and Other receivables
Total current trade receivables, prepayments and other receivables
Notes:
(a) Trade receivables are non-interest bearing and are generally on 30-60 day terms.
Consolidated
30 June 2023
$’000
30 June 2022
$’000
110,208
105,717
46,142
11,920
304
(2,375)
(81,631)
62,366
(1,142)
(12,616)
(44,617)
1,695
90,254
30,401
8,307
18
248
(53,860)
(222,380)
468
(5,709)
97,855
(3,218)
(42,153)
Consolidated
30 June 2023
$’000
30 June 2022
$’000
253,216
(9,609)
243,607
33,146
276,753
182,166
(11,563)
170,603
23,599
194,202
74
Breville Group Limited annual report 2023 Note 6. Receivables, payables and provisions continued
Trade and other receivables continued
Carrying amount at the beginning of the year:
Provision
Utilised
Net exchange differences
Carrying amount at the end of the year:
Consolidated
30 June 2023
$’000
11,563
(2,367)
(220)
633
9,609
At 30 June 2023 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 2023
$’000
30 June 2022
$’000
235,866
163,960
3,987
3,754
3,001
3,642
243,607
170,603
Trade receivables (net) past due, but not impaired, amount to $7,741,000 (2022: $6,643,000). 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.
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 16.
Trade and other payables
Current
Trade and other payables – unsecured
Total current trade and other payables
Recognition and measurement
Consolidated
30 June 2023
$’000
30 June 2022
$’000
261,336
261,336
292,272
292,272
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 16.
75
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 6. Receivables, payables and provisions continued
Consolidated
30 June 2023
$’000
30 June 2022
$’000
Provisions
Current
Warranty and faulty goods
Employee benefits – annual leave
Employee benefits – long service leave
Other provisions
Total current provisions
Non-current
Employee benefits – long service leave
Total non-current provisions
(a) Movement in provisions
Consolidated
14,932
10,982
3,785
-
29,699
3,794
3,794
Warranty and
faulty goods
$’000
Employee
benefits -
annual leave
$’000
Employee
benefits -
long service
$’000
Other
Provisions
$’000
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
Recognition and measurement
16,116
-
16,116
(46,298)
44,497
617
(1,184)
14,932
-
14,932
9,935
-
9,935
(5,248)
6,158
137
1,047
10,982
-
10,982
3,378
1,763
5,141
(171)
2,603
6
2,438
3,785
3,794
7,579
53
-
53
(54)
-
1
(53)
-
-
-
16,116
9,935
3,378
53
29,482
1,763
1,763
Total
$’000
29,482
1,763
31,245
(51,771)
53,258
761
2,248
29,699
3,794
33,493
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.
76
Breville Group Limited annual report 2023 Note 6. Receivables, payables and provisions continued
Provisions continued
(a) Movement in provisions continued
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. 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. Returns have normalised as reflected in
amounts utilised.
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
Current assets
Finished goods and materials
Stock in transit
Total inventories
Recognition and measurement
Consolidated
30 June 2023
$’000
30 June 2022
$’000
420,432
19,201
439,633
338,263
107,621
445,884
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.
77
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 8. Property, plant and equipment
Property,
plant and
equipment
$’000
Production
Tools
$’000
Total
$’000
40,450
56,607
97,057
(31,010)
(32,570)
(63,580)
9,440
24,037
33,477
9,440
8,258
8,002
(157)
(6,550)
1,174
20,167
24,037
12,221
-
-
(4,073)
1,414
33,599
33,477
20,479
8,002
(157)
(10,623)
2,588
53,766
64,179
(44,012)
20,167
56,810
(23,211)
33,599
120,989
(67,223)
53,766
Property,
plant and
equipment
$’000
Production
Tools
$’000
Total
$’000
35,230
(25,923)
44,761
79,991
(27,272)
(53,195)
9,307
17,489
26,796
9,307
4,640
(79)
(4,506)
78
17,489
11,910
(65)
(5,320)
23
26,796
16,550
(144)
(9,826)
101
9,440
24,037
33,477
40,450
(31,010)
9,440
56,607
(32,570)
24,037
97,057
(63,580)
33,477
Consolidated 2023
At the beginning of the year
Cost or fair value
Accumulated depreciation
Net carrying amount
Reconciliation of the carrying amount:
Carrying amount at the beginning of year
Additions
Additions from acquisition of Lelit Srl
Disposals
Depreciation charge
Net exchange difference
Carrying amount at the end of year
At the end of the year
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
Consolidated 2022
At the beginning of the year
Cost or fair value
Accumulated depreciation
Net carrying amount
Reconciliation of the carrying amount:
Carrying amount at the beginning of year
Additions
Disposals
Depreciation charge
Net exchange difference
Carrying amount at the end of year
At the end of the year
Cost or fair value
Accumulated depreciation and impairment
Net carrying amount
78
Breville Group Limited annual report 2023 Note 8. Property, plant and equipment continued
A summary of the policies applied to the Group's property, plant and equipment is as follows:
(a) Property, plant and equipment
Internally generated /
Acquired
Recognition
Useful lives
Depreciation method
Impairment test
(b) Production tools
Internally generated /
Acquired
Recognition
Useful lives
Depreciation method
Impairment test
Acquired
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated
impairment losses. The assets’ residual values, useful lives and depreciation methods are reviewed, and
adjusted if appropriate, at each year end. An item of property, 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.
Finite
Depreciation on plant and equipment is calculated on a straight-line basis over the estimated useful
life of between 2 and 10 years. Depreciation on property is calculated on a straight-line basis over the
estimated useful life or in line with local tax regulations.
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.
Acquired
Production tools are manufacturing components including moulds, dies, jigs, gauges, cutting equipment
and patterns that are used in conjunction with manufacturing equipment. The tools are specified,
purchased and owned by Breville, although they are deployed in our manufacturing partners' plants.
Production tools are stated at cost less accumulated depreciation and any accumulated impairment
losses. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted
if appropriate, at each year end. An item of production tooling 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.
Finite
Depreciation on production tools is calculated on a straight-line basis over the estimated useful life of 5
years.
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.
79
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 9. Non-current assets - intangible assets
Consolidated
30 June 2023
$’000
30 June 2022
$’000
Development costs
Computer software
Customer relationships
Goodwill & Brand Names
Total intangible assets (net carrying amount)
Consolidated 2023
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 Lelit Srl
Disposals
Amortisation
Net exchange difference
Carrying amount at the end of year
At the end of the year
At cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
Consolidated 2022
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
Amortisation
Net exchange difference
Carrying amount at the end of year
At the end of the year
At cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
80
54,573
1,671
401
184,402
241,047
Total
$’000
337,331
(96,284)
241,047
241,047
32,764
131,504
(81)
(17,280)
11,074
399,028
66,720
5,059
1,301
325,948
399,028
Development
costs
$’000
Computer
software
$’000
Customer
relationships
$’000
Goodwill &
Brand Names
$’000
148,850
(94,277)
54,573
54,573
28,514
34
(15)
(15,464)
(922)
66,720
178,253
(111,533)
66,720
2,244
(573)
1,671
1,671
4,250
241
(66)
(1,065)
28
5,059
6,798
(1,739)
5,059
1,835
(1,434)
184,402
-
401
184,402
184,402
-
129,933
-
-
11,613
325,948
401
-
1,296
-
(751)
355
1,301
3,784
(2,483)
1,301
325,948
-
514,783
(115,755)
325,948
399,028
Development
costs
$’000
Computer
software
$’000
Customer
relationships
$’000
Goodwill &
Brand Names
$’000
Total
$’000
122,140
(81,760)
40,380
40,380
25,637
(12,323)
879
54,573
148,850
(94,277)
54,573
1,771
(346)
1,425
1,425
505
(259)
-
1,671
2,244
(573)
1,671
1,835
(1,254)
175,056
-
581
175,056
300,802
(83,360)
217,442
581
-
(180)
-
401
175,056
217,442
-
-
9,346
26,142
(12,762)
10,225
184,402
241,047
1,835
(1,434)
184,402
-
401
184,402
337,331
(96,284)
241,047
Breville Group Limited annual report 2023 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. Therefore in practice a project is only capitalised when it becomes feasible and meets the
development phase recognition criteria. All costs before this are expensed as incurred as deemed to be
in the research phase.
Finite
Amortised straight-line over the period of expected future sales, between 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
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.
(d) Goodwill and brand names
Internally generated /
Acquired
Recognition
Useful lives
Amortisation method
Impairment test
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.
The amortisation expense on intangible assets with finite lives is recognised in the consolidated 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 consolidated income statement when the asset is derecognised.
81
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 10. Leases
This note provides information for leases where the Group is a lessee. The Group does not act as a lessor. Breville leases offices,
vehicles and several of its warehouses. While the warehouses are operated by a third parties, in some instances Breville has the right
to control use and therefore accounts for these contracts as leases.
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 2023
$’000
30 June 2022
$’000
10(a)(i)
69,484
484
69,968
19,777
55,272
75,049
44,580
76
44,656
12,172
37,643
49,815
(i) Additions to the right-of-use assets during FY23 were $40,398,000 (FY22: $16,665,000). Other movements of $3,153,000 (2022:
$2,681,000) including foreign exchange differences.
b) Amounts recognised in the consolidated income statement
Depreciation charge of right-of-use assets
Buildings
Vehicles
Total
Finance expenses
Note
3(c)
3(c)
Consolidated
30 June 2023
$’000
30 June 2022
$’000
18,054
185
18,239
7,863
13
7,876
Interest expense on lease liabilities (included in finance cost)
3(f)
4,140
1,579
The total cash outflow in the consolidated statement of cash flows for leases during FY23 was $22,443,000 (FY22: $9,253,000). This
amount includes principal lease repayments of $18,303,000 plus interest expense on lease liabilities of $4,140,000. (FY22 principal
lease repayments of $7,674,000 plus interest expense on lease liabilities of $1,579,000).
c) The Group’s leasing activities and how these are accounted for
The Group leases various office buildings, third party warehouses and motor vehicles, with rental contracts typically spanning fixed
periods of 1 to 7 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.
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.
82
Breville Group Limited annual report 2023 Note 10. Leases continued
c) The Group’s leasing activities and how these are accounted for continued
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 payments 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.
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 without a
purchase option. Low-value assets comprise IT equipment and small items of office furniture.
83
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 11. Impairment testing of goodwill and intangibles with indefinite lives
Global Product APAC
- goodwill
- brand names with indefinite useful lives
Global Product Americas
- goodwill
Global Product EMEA
- goodwill
- brand names with indefinite useful lives
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
Consolidated
30 June 2023
$’000
30 June 2022
$’000
68,646
13,800
22,794
13,800
178,804
121,924
10,189
28,625
8,109
17,775
325,948
265,748
60,200
325,948
-
-
8,109
17,775
184,402
152,827
31,575
184,402
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 10.9% to 11.7% (2022: of 9.6% to 10.9%), 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 2024 budgets are extrapolated using a 2.0% - 5.0%
growth rate 2022: 2.0% - 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 2023 and 30 June 2022.
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.
Recognition and measurement
Intangible assets – goodwill
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.
84
Breville Group Limited annual report 2023 Note 11. Impairment testing of goodwill and intangibles with indefinite lives continued
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.
Capital management
Note 12. Dividends
(a) Dividends on ordinary shares declared and paid during the year:
Final dividend for the year ended 30 June 2022 of 15.00 cents per share, 100%
franked (2022: final dividend for 2021 of 13.5 cents per share, 100% franked)
Final dividend
21,417
18,814
Consolidated
30 June 2023
$’000
30 June 2022
$’000
Interim dividend for the year ending 30 June 2023 of 15.00 cents per share, 100%
franked (2022: interim dividend for 2022 of 15.00 cents per share, 100% franked)
Interim dividend
Total dividends declared and paid during the year of 30 cents per share, 100%
franked (2022: Total dividends of 28.50 cents per share, 100% franked)
Total dividends
(b) Dividends on ordinary shares proposed and not recognised as a liability:
Final fully franked dividend for 2023 of 15.50 cents per share, 100% franked
(2022: final franked dividend of 15.00 cents per share, 100% franked)
(c) Franking credit balance
The amount of franking credits in the parent available for the subsequent year
are:
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
(2022 30.0%)
Franking (debits)/credits that will arise from the payment of income tax (receivable)/payable
as at the end of the year
Franking debits that will be used on the payment of dividends subsequent to the end of
the financial year
Total franking credit balance
The tax rate at which dividends are franked is 30.0% (2022: 30.0%).
21,417
20,903
42,834
42,834
39,717
39,717
22,131
21,369
39,413
32,763
(1,751)
(9,517)
28,145
586
(9,158)
24,191
85
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 13. Earnings per share
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Earnings used in calculating basic and diluted earnings per share:
Consolidated
30 June 2023
$’000
30 June 2022
$’000
Net profit attributable to ordinary equity holders of Breville Group Limited
110,208
105,717
Weighted average number of shares used as the denominator
2023
Number
'000's
2022
Number
'000's
Weighted average number of ordinary shares for basic and diluted earnings per share
142,696
139,294
Weighted average number of exercised, forfeited or expired potential ordinary shares
included in diluted earnings per share
143,788
140,345
Consolidated
30 June 2023
Cents
30 June 2022
Cents
(a) Basic earnings per share
From continuing operations attributable to the ordinary equity holders of the company
77.20
75.90
(b) Diluted earnings per share
From continuing operations attributable to the ordinary equity holders of the company
76.60
75.30
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 14. Issued capital and reserves
Issued capital
Ordinary shares – authorised, issued and fully paid
Ordinary shares – held by the Breville Group Employee Share Trust
Total contributed equity
Consolidated
30 June 2023
$’000
30 June 2022
$’000
385,541
323,165
-
-
385,541
323,165
86
Breville Group Limited annual report 2023 Note 14. Issued capital and reserves continued
Issued capital continued
Ordinary shares held by the Breville Group Employee Share Trust
Ordinary shares held by the Breville Group Employee Share Trust in order to fulfil its obligations under the Breville Group Limited
Share Plan are deducted from equity. No gain or loss is recognised in the consolidated income statement on the purchase of the
Group’s equity instruments by the Breville Group Employee Share Trust.
The ordinary shares held by the Breville Group Employee Share Trust, if any, are yet to be allocated to LTI or fixed deferred
remuneration participants. They will be allocated to participants once performance rights vest and they are exercised. The ordinary
shares held by the Breville Group Employee Share 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 Employee Share 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 17(b) and note 19.
(a) Movements in ordinary issued shares:
Beginning of the year
139,359,544
323,165
138,940,804
309,615
Consolidated
30 June 2023
Consolidated
30 June 2022
Number of shares
$’000
Number of shares
$’000
Movements during the year
Ordinary shares issued during the year for Performance
Rights Plan (LTI) and Fixed Deferred Remuneration Plan
(net of transaction costs) (i)
Ordinary shares issued on acquisition of Lelit Srl
(net of transaction costs)
End of the year
321,616
6,673
418,740
13,550
3,100,205
55,703
-
-
142,781,365
385,541
139,359,544
323,165
(i) During the year the group issued 321,616 fully paid ordinary shares (2022: 418,740) of Breville Group Limited as a result of the
vesting of performance and fixed deferred remuneration rights issued under the Breville Group share plan. The average value
attributable to these issued shares was $20.80 (2022: $32.42), as of the date of issue.
(ii) In July 2022 the group issued 3,100,205 shares at $17.99 per share as part of the consideration for the acquisition of Lelit Srl.
(b) Movements in ordinary shares held by the Breville Group Employee Share Trust:
Beginning of the year
Movements during the year
Ordinary shares transferred to participants of the Breville
Group Share Plan (i)
Ordinary shares subscribed to/acquired by the Breville
Group Employee Share Trust during the year - cash (ii)
End of the year
30 June 2023
30 June 2022
Number of shares
$’000
Number of shares
-
-
-
$’000
-
292,978
6,093
389,440
12,626
(292,978)
(6,093)
(389,440)
(12,626)
-
-
-
-
(i) During the year the Trustee of the Breville Group Employee Share Trust transferred 292,978 ordinary company shares (2022:
389,440) to participants in order to fulfill its obligations under the Breville Group Limited Share plan.
(ii) During the year the Trustee of the Breville Group Employee Share Trust subscribed to 292,978 ordinary shares of Breville Group
Limited (2022: 389,440) in order to fulfill its obligations under the Breville Group Limited Share plan. The average value placed on
these subscriptions was $20.80 (2022: $32.42). Details are provided in note 17(b) and note 19.
87
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 14. Issued capital and reserves continued
Issued capital continued
(c) Rights over ordinary shares:
The Company has a share-based payment rights scheme under which rights to subscribe for the Company's shares have been
granted to certain executives and other employees (refer note 19). At the end of the year there were 2,408,673 (2022: 1,687,103)
potential unissued ordinary shares in respect of rights that were outstanding.
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.
Reserves
Foreign currency translation
Employee equity benefits reserve
Cash flow hedges
Total reserves
Nature and purpose of reserves
Consolidated
30 June 2023
$’000
30 June 2022
$’000
34,526
(4,128)
8,939
39,337
7,540
(10,255)
16,560
13,845
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 19 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 15. Borrowings
Current
Borrowings
Total current borrowings
Non-current
Borrowings
Total non-current borrowings
Consolidated
30 June 2023
$’000
30 June 2022
$’000
(3,245)
(3,245)
-
-
(202,200)
(202,200)
(172,349)
(172,349)
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 2023 and 30 June 2022.
Breville Group Limited has issued corporate guarantees in favour of the local bank (HSBC) in Canada and Mexico. HSBC also
provides the day to day US, Canadian, UK, French, Mexican and German transactional banking facilities. Intesa Sanpaolo SpA, BCC
Brescia and UniCredit SpA provide the day to day Italian transactional banking facilities.
Borrowings may include Australian dollar, US dollar, Canadian dollar, British pounds, Euro and New Zealand dollar denominated
amounts.
88
Breville Group Limited annual report 2023 Note 15. Borrowings continued
Fair value
The carrying value and estimated net fair values of the borrowings held with banks (determined under Level 2, as described in note
16) approximates their fair value. Fair values of the company’s interest-bearing loans are determined by using a effective interest
rate method. The non-performance risk as at 30 June 2023 was assessed to be insignificant (2022: insignificant). Details regarding
interest rate, foreign exchange and liquidity risk are disclosed in note 16.
Financing facilities available
At reporting date, the following financial facilities have been negotiated and were available
to the group:
Facilities used at the reporting date
Facilities unused at the reporting date
Total facilities
(a) Facilities used at the reporting date:
Non-current cash advance facilities – 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
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
Overdraft facilities
Business transactions facilities
Indemnity/guarantee facilities
Documentary credit facilities
Total facilities
Group facilities
Consolidated
30 June 2023
$’000
30 June 2022
$’000
212,180
273,843
486,023
205,445
-
-
654
6,015
66
212,180
255,998
10,773
3,207
3,179
686
273,843
461,443
10,773
3,861
9,194
752
486,023
178,933
196,717
375,650
172,349
-
-
785
5,799
-
178,933
179,206
10,750
2,959
3,077
725
196,717
351,555
10,750
3,744
8,876
725
375,650
At 30 June 2023, the Group had debt facilities with ANZ bank including;
• $250,000,000 committed multicurrency facilities with tenures between 1.2 and 3.2 years.
• $200,000,000 one year uncommitted facility.
Borrowings may include Australian dollar, US dollar, Canadian dollar, British pounds, Euro and New Zealand dollar denominated
amounts.
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.
89
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 16. 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.
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.
Cash flow hedges
Forward exchange contracts - Assets
Forward exchange contracts - Liabilities
Consolidated
30 June 2023
$’000
30 June 2022
$’000
14,200
(1,430)
12,770
23,987
(330)
23,657
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.
90
Breville Group Limited annual report 2023 Note 16. Financial risk management continued
Recognition and measurement continued
Loans to suppliers – Current
Loans to suppliers – Non Current
Total
Interest rate risk
Consolidated
30 June 2023
$’000
30 June 2022
$’000
1,711
2,160
3,871
9,497
1,998
11,495
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 2023, the Group has the following exposure to interest rate risk:
Cash at bank
Borrowings
Net exposure
Consolidated
30 June 2023
$’000
30 June 2022
$’000
84,155
(205,445)
(121,290)
168,256
(172,349)
(4,093)
At 30 June 2023, 100% of the Groups borrowings are exposed to floating rates. On a principal net debt of $121,290,000 (2022:
$4,093,000), an increment/ reduction of 0.5% in the market rates would result in an increase/ decrease in finance costs of $554,000.
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 2023, 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
Loans to suppliers
Net exposure
Consolidated
30 June 2023
$’000
30 June 2022
$’000
2,857
7,814
(15,925)
14,200
(1,430)
3,871
11,387
12,108
5,689
(10,586)
23,987
(330)
11,495
42,363
91
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 16. Financial risk management continued
Instruments used by the group
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 has been determined under Level 2.
(i) Forward exchange contracts – cash flow hedges
The majority of the Group’s inventory purchases from suppliers are denominated in US dollars (USD). 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 (2022: 0-12 months).
The cash flows are expected to occur between 0-12 months from 1 July 2023 (2022: 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 2023
$’000
30 June 2022
$’000
230,723
-
21,620
295,167
84,746
18,479
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 $13,743,393 was credited to inventory (2022: $7,517,591) and $2,856,479 was debited (2022: $29,174,191)
to equity in respect of the Group.
At 30 June 2023, the Group had hedged 58% (2022: 58%) of its forecast foreign currency purchases extending to June 2024 (2022:
June 2023). The remaining 42% (2022: 42%) is not exposed to foreign exchange risk because it is 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 $23,234,000 (2022: $30,743,000). 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 $19,010,000 (2022: $25,153,000).
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 2023 was a multiple of 0.56 and 30 June 2022 was 0.02.
The gearing ratio is defined as Group net borrowings divided by EBITDA.
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.
92
Breville Group Limited annual report 2023 Note 16. Financial risk management continued
Credit risk continued
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, receivables insurance is
acquired to offset the Group’s exposure to credit risk. The Group also uses other measures such as obtaining letters of credit.
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.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of borrowing facilities and
bank overdrafts.
Group financial liabilities
Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flows. See note 15 for details of
available facilities.
At 30 June 2023, the remaining contractual maturities of the Group’s financial liabilities are:
Less than 1 year
Between 1 and 5 years
Consolidated
30 June 2023
$’000
30 June 2022
$’000
285,788
257,472
543,260
304,773
219,762
524,535
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 2023
Less than
1 year
$’000
Between
1 and 5 years
$’000
-
202,200
55,272
Consolidated
30 June 2022
Less than
1 year
$’000
Between
1 and 5 years
$’000
292,271
-
12,172
9,770
172,349
37,643
Total
$’000
261,336
205,445
75,049
Total
$’000
302,041
172,349
49,815
-
1,430
330
-
330
257,472
543,260
304,773
219,762
524,535
Trade and other payables
Borrowings
Lease liabilities
Deriviative financial
instruments
261,336
3,245
19,777
1,430
285,788
Note 17. Interests in other entities
(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.
93
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 17. Interests in other entities continued
(a) Entities subject to reporting relief continued
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 note 20.
(b) Breville Group Employee Share Trust
A trust has been established with the appointment of an independent Trustee. The trust is funded by cash 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 Share 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 Employee Share Trust subscribed to 292,978 ordinary shares of Breville Group
Limited (2022: 389,440 shares) in order to fulfil its obligations under the Breville Group Employee Share Trust. The average value
placed on these subscriptions was $20.80 per share (2022: $32.42 per share). Details are provided in note 19.
The consolidated financial statements include the financial statements of Breville Group Limited and the subsidiaries listed in the
following table.
Thebe International Pty Limited
Legal entity
Investments not held directly by Breville Group Limited:
Breville Holdings Pty Limited
Breville Pty Limited
Breville R&D Pty Limited
Breville Group Employee Share 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 Korea Limited
Lelit Srl
Lelit Italy Srl
Seriveneta Srl
Country of
incorporation
Australia
Australia
Australia
Australia
Australia
New Zealand
Hong Kong
Note
17(a)
17(a)
17(a)
17(b)
China
USA
USA
USA
Canada
Canada
Canada
UK
Germany
France
Mexico
Korea
Italy
Italy
Italy
Equity interest
30 June 2023
%
30 June 2022
%
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
100
100
100
100
100
100
-
-
-
Breville Group Limited, a company incorporated in Australia is the ultimate parent of the group.
94
Breville Group Limited annual report 2023 Note 18. Parent entity information
(a) Summary financial information
As at and throughout the financial year ended 30 June 2023 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
Tax consolidation
30 June 2023
$’000
30 June 2022
$’000
54,544
54,544
47,852
47,852
123,512
415,566
-
-
118,426
335,939
586
586
415,566
335,353
385,541
(4,128)
34,153
415,566
323,165
(10,255)
22,443
335,353
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 Group 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.
Contingencies
The parent company has guaranteed under the terms of an ASIC class order any deficiency of funds if Thebe International Pty
Limited, Breville Pty Limited and Breville Holdings Pty Limited are wound up. No such deficiency currently exists.
The parent company has issued corporate guarantees in favour of HSBC local banks in Canada and Mexico. HSBC provides the day
to day US, Canadian, Mexican, UK, French and German transactional banking facilities.
95
Breville Group Limited annual report 2023
Notes to the financial statements for the year ended 30 June 2023
Further details
Note 19. 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 39 to 45 of the
Remuneration report for details of the two plans.
At 30 June 2023 there were 2,408,673 (2022: 1,687,103) total rights outstanding under both plans, 1,618,067 (2022: 1,149,704)
under the performance rights plan (LTI) and 790,606 (2022: 537,399) under the fixed deferred remuneration rights plan, also
including non-executive director remuneration rights. 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 using a risk neutral methodology for non market valuations, and Black Scholes
or Monte-Carlo model for market valuations 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 2023
30 June 2022
Number of
performance rights
WAEP
Number of
performance rights
Outstanding at the beginning of the year
Performance rights granted during the year
Performance rights exercised during the year
Performance rights lapsed during the year
Outstanding at the end of the year (a)
Exercisable at the end of the year
1,149,704
796,735
(264,468)
(63,904)
1,618,067
-
0.00
0.00
0.00
0.00
0.00
-
1,246,074
364,450
(388,800)
(72,020)
1,149,704
-
WAEP
0.00
0.00
0.00
0.00
0.00
-
96
Breville Group Limited annual report 2023 Note 19. Share-based payments continued
Rights outstanding under the performance rights plan (LTI)
(a) The outstanding balance as at 30 June 2023 is represented by:
Number of
performance
rights
143,350
364,177
258,455
74,214
662,130
115,741
1,618,067
Measure
start Period End Grant date
date Expiry date
Period
Vesting
Relative TSR
30-Jun-19
30-Jun-23
11-Oct-19
29-Aug-23
02-Oct-23
Relative TSR
30-Jun-20
30-Jun-23
07-Sep-20
29-Aug-23
01-Oct-23
EBIT & Revenue CAGR
30-Jun-21
30-Jun-24
06-Oct-21
27-Aug-24
01-Oct-24
EBIT & Revenue CAGR
30-Jun-21
30-Jun-24
11-Nov-21
27-Aug-24
01-Oct-24
EBIT CAGR
EBIT CAGR
30-Jun-22
30-Jun-25
21-Oct-22
25-Aug-25
01-Oct-25
30-Jun-22
30-Jun-25
10-Nov-22
25-Aug-25
01-Oct-25
WAEP
$
Fair value
at grant
date ($)
7.06
14.69
25.96
28.91
17.44
19.13
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 fixed deferred
remuneration rights and non-executive director remuneration rights issued during the year:
Outstanding at the beginning of the year
Rights granted during the year
Rights exercised during the year
Rights lapsed during the year
Outstanding at the end of the year (b)
Exercisable at the end of the year
30 June 2023
30 June 2022
Number of
share rights
WAEP
Number of
share rights
537,399
310,355
(57,148)
-
790,606
-
0.00
0.00
0.00
0.00
-
-
142,071
460,801
(29,940)
(35,533)
537,399
-
WAEP
0.00
0.00
0.00
0.00
-
97
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 19. Share-based payments continued
Rights outstanding under the fixed deferred remuneration plan
Notes
(b) The outstanding balance as at 30 June 2023 is represented by:
Number of performance rights
Note
Grant date
Vesting date
Expiry date
WAEP $
Fair value at
grant date ($)
29,940
29,940
22,311
36,442
70,570
81,991
122,989
20,507
12,077
12,077
12,077
29,330
64,679
64,679
64,679
64,679
46,296
5,343
790,606
(i)
(ii)
(iii)
(i)
(ii)
(iii)
(iv)
(i)
(i)
(ii)
(iii)
(iv)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
29-Jan-20*
25-Aug-23
29-Jan-20*
25-Aug-24
7-Sep-20
25-Aug-25
2-Oct-23
1-Oct-24
3-Oct-25
5-Oct-21
25-Aug-23
25-Aug-23
5-Oct-21
25-Aug-24
25-Aug-24
5-Oct-21
25-Aug-25
25-Aug-25
5-Oct-21
25-Aug-26
25-Aug-26
6-Oct-21
25-Aug-23
2-Oct-23
11-Nov-21
25-Aug-23
25-Aug-23
11-Nov-21
25-Aug-24
25-Aug-24
11-Nov-21
25-Aug-25
25-Aug-25
11-Nov-21
25-Aug-26
25-Aug-26
21-Oct-22
25-Aug-23
01-Oct-23
21-Oct-22
25-Aug-24
01-Oct-24
21-Oct-22
25-Aug-25
01-Oct-25
21-Oct-22
25-Aug-26
01-Oct-26
10-Nov-22
25-Aug-27
01-Oct-27
01-Dec-22
01-Jan-24
28-Feb-24
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
16.70
16.70
19.60
26.87
26.52
26.18
25.85
16.70
29.28
28.91
28.54
28.17
17.97
17.66
17.44
17.18
18.57
20.15
* 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 participants must complete the service period
between 26 August 2022 - 25 August 2023.
(ii) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2023 - 25 August 2024.
(iii) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2024 - 25 August 2025.
(iv) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2025 - 25 August 2026.
(v) Rights granted as fixed deferred remuneration with vesting condition that the participant must complete the service period
between 26 August 2026 - 25 August 2027.
(vi) Rights granted as non-executive director remuneration with vesting condition that the participant must complete the service
period between 01 January 2023 - 01 January 2024.
98
Breville Group Limited annual report 2023 Note 19. Share-based payments continued
Rights granted under the performance rights plan and fixed deferred remuneration plan
The remaining contractual life for the performance and the fixed deferred remuneration rights outstanding at 30 June 2023 is
between 0 and 4 years (2022: 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
(2022: $nil).
The weighted average fair value of performance rights granted under the performance rights plan during the year was $20.46
(2022: $26.60).
In the current period ending 30 June 2023, and prior period ending 30 June 2022, rights issued under the performance rights
plan and fixed deferred remuneration plan are measured using a risk neutral methodology (CAGR EBIT, CAGR Revenue and
service period).
The following table lists the inputs to the model used for the grants during the year ended 30 June 2023 and 30 June 2022:
30 June 2023
Fixed Deferred
Remuneration
(NED)
Performance
rights
Fixed Deferred
Remuneration
01 Dec 22
21 Oct 22
21 Oct 22
25 Aug 25
Grant date
Vesting Date - Performance Rights
Vesting Date - Fixed Deferred Remuneration Rights
Share price at the grant date
Dividend Yield
Right exercise price
20.60
1.61%
0.00
18.20
1.5%
0.00
Grant date
Vesting Date - Performance Rights
Vesting Date - Fixed Deferred Remuneration Rights
Share price at the grant date
Dividend Yield
Franking rate
Imputation credits valuation factor
Implied pre-tax effective dividend yield (p.a)
Right exercise price
Performance
rights
Fixed Deferred
Remuneration
6 Oct 21
5 Oct 21
27 Aug 24
26.81
1.0%
100%
65%
1.3%
0.00
-
25 Aug 22
25 Aug 23
25 Aug 24
25 Aug 25
25 Aug 26
27.39
1.0%
100%
65%
1.3%
0.00
The weighted average fair value of share rights granted under the fixed deferred remuneration plan during the year was $22.92
(2022: $26.18).
99
-
25 Aug 23
25 Aug 24
25 Aug 25
25 Aug 26
18.20
1.5%
0.00
30 June 2022
Performance
rights and
Fixed Deferred
Remuneration
(Jim Clayton)
10 Nov 22
25 Aug 25
25 Aug 27
19.13
1.5%
0.00
Performance
rights and
Fixed Deferred
Remuneration
(Jim Clayton)
11 Nov 21
27 Aug 24
25 Aug 22
25 Aug 23
25 Aug 24
25 Aug 25
25 Aug 26
29.85
1.0%
100%
65%
1.3%
0.00
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 20. Related party transactions
(i) Consolidated statement of financial position for
class order closed group
30 June 2023
$’000
30 June 2022
$’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
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
100
27,638
53,385
43,114
1,751
15,911
141,799
421,606
4,026
36,869
137,402
15,109
2,160
617,172
758,971
98,517
-
15,573
3,902
1,430
119,422
-
2,287
2,196
4,483
123,905
111,935
49,293
57,816
-
24,260
243,304
274,534
6,048
11,256
119,969
1,054
1,998
414,859
658,163
107,215
586
15,018
4,135
330
127,284
35,000
5,605
1,625
42,230
169,514
635,066
488,649
385,541
4,811
244,714
635,066
323,165
6,304
159,180
488,649
Breville Group Limited annual report 2023 Note 20. 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
Dividends paid or reinvested
Accumulated profits at the end of the year
(a) Ultimate controlling entity
30 June 2023
$’000
30 June 2022
$’000
162,331
(33,963)
128,368
159,180
(42,834)
244,714
139,516
(36,403)
103,113
95,784
(39,717)
159,180
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
Compensation by category: key management personnel
Short-term
Defined contribution plans expense
Other long-term
LTI Share-based payment
Total
Note 21. Business combination
Consolidated
30 June 2023
$
30 June 2022
$
8,233,693
9,070,762
217,111
210,708
2,769,984
11,431,496
224,594
454,153
2,316,742
12,066,251
Breville Group Limited (ASX: BRG) completed the acquisition of 100% of the Italian-based prosumer coffee group, Lelit Srl and its
associated subsidiaries, on 1 July 2022 (CET).
The assets acquired constitute the acquisition of a business. The acquisition is considered a business combination pursuant to
AASB 3.
Total consideration comprises $82,936,000 in cash and the issue of 3,100,205 BRG ordinary shares (“Shares”). The share
component was valued at market prices on the date of completion, share price on date of issue was $17.99 (closing price on day
before 1 July 2022). Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Ordinary shares issued
Total purchase consideration
$’000
82,936
55,773
138,709
101
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 21. Business combination continued
The assets and liabilities recognised as a result of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Other Assets
Inventories
Property, plant and equipment
Deferred tax assets
Intangible assets
Trade and other payables
Cash advance
Borrowings
Provisions
Other liabilities
Deferred tax liability
Net identifiable assets acquired
Add: goodwill
Fair value
$’000
10,788
5,325
666
34,116
8,002
1,973
30,196
(20,696)
(7,499)
(12,349)
(1,962)
(2,183)
(8,976)
37,401
101,308
138,709
Intangible assets includes an indefinite life Brand name asset of $28,625,000.
(i) Revenue and profit contribution
The acquired Lelit Srl business has been completely integrated into the Group and is managed within the Global Product segment
and geographies alongside other brands within the Group. Lelit brand revenues during FY23 were $64.5m.
(a) Purchase consideration - cash outflow
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration
Less: Balances acquired
Cash and cash equivalents
Cash advance repaid
Net outflow of cash - investing activities
Recognition and measurement
30 June 2023
$’000
82,936
10,788
(7,499)
3,289
79,647
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:
•
•
fair values of the assets transferred
liabilities incurred to the former owners of the acquired business
• equity interests issued by the Group
•
•
fair value of any asset or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity
on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired
entity’s net identifiable assets.
102
Breville Group Limited annual report 2023 Note 21. Business combination continued
Recognition and measurement continued
Acquisition-related costs are expensed as incurred. The excess of the:
• consideration transferred,
• amount of any non-controlling interest in the acquired entity, and
• acquisition-date fair value of any previous equity interest in the acquired entity
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are
recognised in profit or loss.
Note 22. 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 - Parent
Taxation and accounting advisory services - Parent
Network Firms of PricewaterhouseCoopers Australia
Controlled entities
Audit or review services - Controlled entities
Taxation and accounting advisory services - Controlled entities
Total services provided by PricewaterhouseCoopers
Consolidated
30 June 2023
$
30 June 2022
$
609,754
253,341
670,362
256,079
369,872
581,336
158,638
333,895
1,814,303
1,418,974
Taxation and accounting advisory services provided by PricewaterhouseCoopers Australia as the auditor of the parent entity, Breville
Group Limited and by PricewaterhouseCoopers related network firms has increased by $244,703. This was predominantly due to
taxation advice in the current year which was non-recurring in nature, including advice on Advance Pricing Agreement (APA) renewal,
intercompany agreement update and new reporting requirements (transfer pricing).
Note 23. Contingencies
Indemnity agreements have been entered into with certain officers of the Group in respect of expenses and liabilities they incur in
their official capacities. No monetary limit applies to these agreements and no known obligations have emerged as a result of these
agreements.
Cross guarantees given by Breville Group Limited, Thebe International Pty Limited, Breville Holdings Pty Limited and Breville Pty
Limited are described in note 17(a).
Breville Group Limited has issued corporate guarantees in favour of the local bank (HSBC) in Canada and Mexico.
Note 24. Events occurring after the reporting period
Other than the events disclosed elsewhere in this report, no other matters or circumstances have arisen since the end of the year
which significantly affected or may affect the operations of the consolidated entity.
The financial report of Breville Group Limited for the year ended 30 June 2023 was authorised for issue in accordance with a
resolution of the directors on 21 August 2023.
103
Breville Group Limited annual report 2023 Notes to the financial statements for the year ended 30 June 2023
Note 25. Other accounting policies
a) Foreign currency translation
(i) Functional and presentation currency
Both the functional and presentation currency of Breville Group Limited and its Australian subsidiaries are Australian dollars (AUD or
A$). 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);
• EUR - Euro (Sage Appliances GmbH, Sage Appliances France SaS, Lelit Srl, Lelit Italy Srl and Seriveneta Srl);
• MXN - Mexican Peso (Breville Mexico, S.A. de C.V.); and
• KRW - South Korean Won (Breville Korea Limited)
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.
(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.
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. 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.
(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.
104
Breville Group Limited annual report 2023 Note 25. Other accounting policies continued
(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.
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.
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.
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.
105
Breville Group Limited annual report 2023 Directors’ declaration
In accordance with a resolution of the directors of Breville Group Limited, I state that:
1. In the Directors' opinion:
(a) the financial statements and notes set out on pages 60 to 105 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 2023 and of its performance for the
financial year ended on that date, and
(ii) complying with 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) at the date of this declaration, there are reasonable grounds to believe that the members of the extended Closed Group
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 is 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 2023.
On behalf of the Board
Timothy Antonie
Non-executive Chair
Sydney
21 August 2023
106
Breville Group Limited annual report 2023 Auditor’s independence declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Breville Group Limited for the year ended 30 June 2023, 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
21 August 2023
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.
107
Breville Group Limited annual report 2023 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 2023 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 2023
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 statement of cash flows 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.
108
Breville Group Limited annual report 2023 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
● Our audit focused on where the Group made subjective
materiality of $7.54 million, which represents
approximately 5% of the Group’s profit before tax.
● 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.
judgements; for example, significant accounting estimates
involving assumptions and inherently uncertain future
events.
● The Group comprises entities located globally, with the
most financially significant operations being located in
Australia and the United States of America.
● The group audit was led by our team from PwC Australia
(“group audit team”). With the exception of work
undertaken over the Group’s Italian operations, 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.
● Under instructions from the group audit team, component
auditors in Italy performed an audit of the special purpose
financial information of significant financial statement line
items for those locations used to prepare the consolidated
financial statements.
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.
109
Breville Group Limited annual report 2023 Independent auditor’s report continued
Key audit matter
Estimated recoverable amount of goodwill and intangibles
with indefinite lives
(Refer to note 11)
Under Australian Accounting Standards, the Group is required
to test goodwill and intangibles with indefinite lives annually for
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.
Revenue from contracts with customers
(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.
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, and
other market information;
● performing sensitivity analyses over the key assumptions used
in the models to understand the impact of reasonably possible
changes to key assumptions; and
● evaluating the related financial statement disclosures for
consistency with Australian Accounting Standards requirements.
Our procedures over the recognition of revenue included, amongst
others:
● considering the Group’s accounting policy in line with Australian
Accounting Standard requirements;
● 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; understanding any
manual adjustments; and
● evaluating the related financial statement disclosures for
consistency with Australian Accounting Standards requirement.
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 2023, 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 we do not and will not express an opinion or any
form of assurance conclusion thereon through our opinion on the financial report. We have issued a separate opinion on the
remuneration report.
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.
110
Breville Group Limited annual report 2023 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 32 to 52 of the directors’ report for the year ended 30 June 2023.
In our opinion, the remuneration report of Breville Group Limited for the year ended 30 June 2023 complies with section 300A of
the Corporations Act 2001.
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
21 August 2023
111
Breville Group Limited annual report 2023
Shareholder information
Substantial shareholders notices as at 28 August 2023
Source: ASX Notices lodged
Name
S. Lew Custodians (a)
Bennelong Australian Equity Partners
Greencape Capital Pty Ltd (b)
First Sentier Investors (Mitsubishi UFJ)
% of issued
ordinary shares
Number of
ordinary shares
30.56%
12.51%
7.33%
5.91%
43,638,384
17,861,854
10,465,528
8,438,588
(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 issues 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 operation segment.
Distribution of shareholdings as at 28 August 2023
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
Voting rights
All ordinary shares issued by Breville Group Limited carry one vote per share without restriction.
Ordinary
shareholders
5,631
1,695
253
228
37
7,844
112
Breville Group Limited annual report 2023 Twenty largest shareholders by registered holder as at 28 August 2023
Name
Premier Investments Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
National Nominees Limited
Gemme Italian Producers SRL
SL Superannuation No1 Pty Ltd
BNP Paribas Noms Pty Ltd
Lew Family Investments Pty Ltd
Lew Family Investments Ltd
HSBC Custody Nominees (Australia) Limited
Premier Investments Ltd
S L Nominees Pty Ltd
Australian Foundation Investment Company Limited
Mirrabooka Investments Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Netwealth Investments Limited
Citicorp Nominees Pty Limited
Carole Todd Anderson
BNP Paribas Nominees Pty Ltd
Shares
% IC
35,761,415
25.046%
29,701,746
20.802%
25,215,389
17.660%
13,131,693
4,138,775
3,100,205
3,000,000
2,930,820
1,891,461
1,535,718
859,434
738,123
711,667
702,494
616,200
598,335
543,591
468,718
442,478
418,518
9.197%
2.899%
2.171%
2.101%
2.053%
1.325%
1.076%
0.602%
0.517%
0.498%
0.492%
0.432%
0.419%
0.381%
0.328%
0.310%
0.293%
Total
126,506,780
88.602%
Unquoted equity securities as at 28 August 2023
Rights issued under the Breville Group Performance Rights Plan and Fixed
Deferred Remuneration Plan to take up ordinary shares
Number
on issue
Number
of holders
2,408,673
253
113
Breville Group Limited annual report 2023 Company information
Directors
Timothy Antonie
Non-executive Chair
Lawrence Myers
Non-executive Deputy Chair and
Lead Independent Director
Jim Clayton
Managing Director and CEO
Tim Baxter
Non-executive Director
Peter Cowan
Non-executive Director
Sally Herman
Non-executive Director
Dean Howell
Non-executive Director
Tuula Rytilä
(appointed 1 April 2023)
Non-executive Director
Kate Wright
Non-executive Director
Company secretaries
Sasha Kitto
Craig Robinson
ABN
Breville Group Limited ABN 90 086 933 431
Registered office and principal place of
business
170-180 Bourke Road
Alexandria NSW 2015
(+61 2) 9384 8100
Share register
Boardroom Pty Limited
Level 8, 210 George St
Sydney NSW 2000
Enquiries within Australia: 1300 737 760
Enquiries outside Australia: (+61 2) 9290 9600
Website: www.boardroomlimited.com.au
Auditors
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
Barangaroo NSW 2000
Bankers
Australia and New Zealand Banking Group Limited
242 Pitt Street
Sydney NSW 2000
Company websites
brevillegroup.com
breville.com
kambrook.com.au
sageappliances.com
chefsteps.com
baratza.com
beanz.com
lelit.com
This report is printed on ecoStar+ which is an environmentally responsible paper made carbon neutral, and
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114
Breville Group Limited annual report 2023 Selected Accolades
GOOD DESIGN AWARD WINNER
2022 BES876 Barista Express™ Impress
2022 BOV950 the Joule Oven Air Fryer
2021 CSV750/700 Hydro Pro Immersion
Circulator
2021 BMO870/8503 in 1 Combi Wave/
Smooth Wave
2021 BNE900 the Creatista™ Pro
2019 BES878 The Barista Pro
2019 BES500 The Bambino Plus
2019 BPZ8oo The Smart Oven Pizzaiolo
2018 BJE830 The Juice Fountain Cold XL
2018 BNE500 Creatista Uno
2018 BDC450 The Precision Brewer
Thermal
2017 BOV900 The Smart Oven Air
2017 BTA735 The Toast Select Luxe
2017 BNE8oo Creatista Plus
IDSA Design Award – USA
IDEA International Design Excellence
Awards
Red Dot Design Award - Best of the Best
2022 BES876 Barista Express™ Impress
Silver Award
2019 BES878 the Barista Pro
2017 BNE800 Creatista Plus
2017 BES990 the Oracle Touch
Red Dot Design Award
2023 BES881 the Barista Touch™ Impress
2023 BVE850 Vertuo Creatista
2022 BOV950 The Joule Oven Air Fryer
2020 BJB815 the 3x Bluicer Pro
2020 BNE900 the Creatista Pro
2020 CSV750/700 Hydro Pro Immersion
Circulator
2020 BMO870/850 3 in 1 Combi Wave /
Smooth Wave
2019 BES500 the Bambino Plus
2019 BES878 the Barista Pro
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
Finalists
2021 BJB815 the 3x Bluicer Pro
2021 CSV750/700 Hydro Pro Immersion
Circulator
2021 BMO870/850 3 in 1 Combi Wave /
2016 BPB620 Boss To Go Personal Blender
2019 BTM700 the Tea Maker Compact
Smooth Wave
2014 BBL910 The Boss Superblender
2013 BRC6oo The Multi Chef
2013 BEF100 The Thermal Pro Grill
BEST IN CATEGORY - Domestic
Appliances
2022 An Aboriginal Culinary Journey
2017 BSM600 the Smoking Gun
GOLD WINNER
2021 BJB815 the 3x Bluicer Pro
2019 BBL920 the Super Q
2019 BTM700 the Tea Maker Compact
2018 BES880 The Barista Touch
2017 BFS800 The Steam Zone
2017 BES990 The Oracle Touch
2016 CMC800 Control Freak Cooker
2016 BEM825 The Bakery Boss
2015 BMO700 Quick Touch Microwave
2015 BCP600 Citrus Press
2015 BBL405 The Kinetix Twist
2014 BES980 The Oracle Espresso
Machine
2013 BSG1974 the Original ‘74
2023 BES881 - the Barista Touch™
Impress
2022 BES876 Barista Express™ Impress
2019 BBL920 the Super Q
2019 BPZ800 the Smart Oven Pizzaiolo
2018 BES880 the Barista Touch
2018 BDC450 the Precision Brewer
Thermal
2018 BJE830 the Juice Fountain
Cold XL
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
2018 BFP820 the Kitchen Wizz Peel and
2017 BOV900 the Smart Oven Air
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
2017 BKE735 the Soft Top Luxe
2016 CMC800 Control Freak Cooker
2016 BEM825 the Bakery Boss
2016 Thermal Pro Cookware
2016 BPB620 Boss To Go Personal Blender
2015 BMO700 Quick Touch Microwave
2015 BCP600 Citrus Press
2014 BES980 the Oracle Espresso
2014 BMO734 the Quick Touch
2014 BTA720/730 the Lift and
Look Pro
2014 BWM640 the Smart Waffle
2013 BEF100 the Thermal Grill Pro
2013 BRC600 the Multi Chef
2022 An Aboriginal Culinary Journey
2014 BWM640 the Smart Waffle
2014 BTA720/730 the Lift and Look Pro
2013 BFP800 Kitchen Wizz Food Processor
2013 BBL 605 Kinetix Control Blender
2013 BDC600 You-Brew Drip Coffee
Machine
Good Design Award Chicago Anthenaeum
2022 An Aboriginal Culinary Journey
2022 BES876 Barista Express™ Impress
2021 BMO870/8503 in 1 Combi Wave/
Smooth Wave
2021 BNE900 the Creatista Pro
2019 BOV860 the 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
2018 BDC450 The Precision Brewer
2018 BMC8oo The Control Freak
2018 BES990 The Oracle Touch
2018 BSM6oo The Smoking Gun
2018 BOV900 The Smart Oven Air
2018 BKE735 The Soft Top Luxe
2018 BTA735 Toast Select Luxe