Annual Report - 30 June 2018
* John Wardle Architects
Big River Industries Limited
ABN 72 609 901 377
2
Big River Industries Limited
Contents
30 June 2018
Chairman & managing director’s report
Corporate directory
Directors’ report
Auditor’s independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Director’s declaration
Independent auditor’s report to the members if Big River Industries Limited
Shareholder information
Corporate details
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Big River Industries Limited
Chairman & Managing Director’s report
30 June 2018
Chairman and Managing
Director’s Report
Operating Highlights
Your Company achieved growth in the 2018 financial year, with revenue advancing 19% to $211million and EBITDA before
acquisition expenses increasing 7.2% to $11million. This flowed through to a statutory Net Profit after Tax of $5.2million,
reflecting growth of 31.8%, assisted by the IPO costs being accounted for in the FY2017 comparison period.
The diversified business model continued to provide stability across the operating divisions. Sales growth was achieved
in every State, albeit that NSW saw minimal organic growth given the historic highs of 2017. However, NSW/ACT market
exposure was strengthened by an acquisition.
Particularly pleasing was an improvement in Western Australia and North Queensland markets where both have been
cyclically weak in recent years. Revenue growth of 17% saw profit contribution from these two areas more than triple the
prior year. Stronger commercial and civil markets drove this improvement.
The Building Products category continued to grow strongly, as the Company expanded its product range and achieved
further market share penetration. This category is large and typically services the detached housing, medium density
and the alteration & additions markets. Formwork revenues were slightly below the previous year, as the high-density
residential market eased a little. The strength of the civil and commercial construction markets however helped mitigate
this impact. Specialty plywood and architectural products both achieved like for like growth, which exceeded 10%, as the
Company refocused manufacturing assets onto these high value, customised product areas.
Big River’s manufacturing facilities were restructured during the year as manufacturing focus was moved from lower-grade
commodity plywood products towards more sustainable, higher value, specialised products. This initiative results in lower
manufactured plywood volume however, particularly at the Wagga Wagga facility, where most of the restructure occurred.
This supply chain re-focus allowed imports of formply from China to increase 150% over the previous year and positioned
the Company as a major player in this imported product category. Whilst contribution from manufacturing facilities fell 37%
on the prior period during this transitioning year, these changes position the Company well to grow the profit contribution
from manufactured products from FY2019.
The expansion of the distribution network continued during the year, with two further acquisitions of building products
distribution businesses - one in the Gold Coast, Queensland in September 2017 and the other in Canberra, ACT in
December 2017. These have made positive contributions to both revenue and EBITDA since they were acquired, and
provide further growth opportunities in the future as revenue synergies are achieved by adding the specialty Big River
product range to these well established businesses.
Acquisition opportunities continue to be assessed, in a disciplined way. A target must be considered strategically
important, be compatible with Big River’s core competencies and have sound financial impacts. At present, a number are
being evaluated.
Operating cash flow was solid during the year, with an 80% cash conversion achieved versus the excellent 86% achieved
in FY2017. Some additional investments in inventory associated with the import supply chain, as well as additional
inventory from the acquired businesses, led to this slightly lower conversion ratio. Trade working capital management
remains a major focus for Big River and the trade working capital to sales ratio of 16.7% achieved for the year lies soundly
within the Board’s target range. The balance sheet remains strong, with gearing (measured as net debt to net debt plus
equity) of only 12.5%, giving the Company headroom to continue to execute the acquisition strategy and expand the
distribution network further.
4
Big River Industries Limited
Chairman & Managing Director’s report
30 June 2018
Dividends
Consistent with the solid trading results, the Board declared a final dividend of 3.5 cents per share, fully franked, payable
on 2 October 2018. This dividend followed the interim dividend declared in February 2018, which was also 3.5 cents per
share. The full year dividend of 7.0 cents per share, fully franked, represents a payout ratio of some 72%.
Corporate Governance
During the year the strength of the Board was increased with the appointment of Vicky Papachristos as a Director on 4
October 2017. Vicky holds engineering and MBA degrees and brings diversity through her strong marketing background.
The Board’s sub-committee structure developed well in FY2018 with the Audit & Risk Committee meeting four times
and the Nomination and Remuneration Committee meeting three times. Areas relevant to these committees were also
discussed during Board of Directors meetings from time to time. Vicky Papachristos was appointed Chair of the Audit &
Risk Committee during the year, ensuring that the Committee is chaired by an independent non-executive director.
Further information on the Company’s corporate governance policies can be found on Big River’s website at
bigriverindustries.com.au/Investors/?page=Corporate-Governance.
People
Finally, on behalf of the Board we take this opportunity to thank Big River’s management team and all team members
around the country, for their dedication and hard work. We also thank our shareholders, customers and suppliers, whose
continuing support underpins the ongoing success of the Company.
5
5
Big River Industries Limited
Corporate directory
30 June 2018
Directors
Company secretaries
Registered office
Share register
Auditor
Solicitors
Gregory Ray Laurie
James Bernard Bindon
Martin Kaplan
Malcolm Geoffrey Jackman
Vicky Papachristos
Stephen Thomas Parks
Julian Rockett
Trenayr Road
Junction Hill NSW 2460
Tel: 02 6644 0900
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Tel: 1300 554 474
Deloitte Touche Tohmatsu
Grosvenor Place
225 George Street
Sydney NSW 2000
Thomson Geer
Level 25
1 O'Connell Street
Sydney NSW 2000
Stock exchange listing
Big River Industries Limited shares are listed on the Australian Securities Exchange
(ASX code: BRI)
Website
bigrivergroup.com.au
Corporate Governance Statement
bigriverindustries.com.au/Investors/?page=Corporate-Governance
6
Big River Industries Limited
Directors' report
30 June 2018
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Big River Industries Limited (referred to hereafter as the 'Company' or 'parent entity') and the
entities it controlled at the end of, or during, the year ended 30 June 2018.
Directors
The following persons were directors of Big River Industries Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Gregory Ray Laurie
James Bernard Bindon
Martin Kaplan
Malcolm Geoffrey Jackman
Vicky Papachristos (appointed 4 October 2017)
Principal activities
During the financial year the principal continuing activities of the Group consisted of the manufacture of veneer, plywood
and formply, and the distribution of building supplies.
Dividends
Dividends paid during the financial year were as follows:
A class preference dividend for the period ended 30 June 2017, paid prior to the Group
listing
Final dividend of 3.5 cents per fully paid ordinary share paid on 29 September 2017
Interim dividend of 3.5 cents per fully paid ordinary share paid on 4 April 2018
Consolidated
2018
$
2017
$
-
1,840,721
1,856,538
2,423,302
-
-
3,697,259
2,423,302
On 27 August 2018, the directors declared a fully franked final dividend of 3.5 cents per fully paid ordinary share to be paid
on 2 October 2018.
Review of operations
Overall revenue for the year ended 30 June 2018 of $210.9 million was up 19.1% from $177.1 million over the previous
financial year.
Revenue
Same stores
Acquisitions (not a full 12 months in both periods)
Total revenue
2018
$'000
2017
$'000
Change
%
169,204
41,706
167,341
9,748
1.1%
327.8%
210,910
177,089
19.1%
Net profit after tax for the year was $5.2 million, up 31.8% from $3.9 million in the previous year.
The two acquisitions made towards the end of FY2017, along with two further acquisitions made during the 2018 financial
year made a positive contribution. EBITDA from these acquisitions was $2.7 million.
On a same-stores basis, distribution activity EBITDA was $9.3 million, a rise of 3.2% over the previous year of $9.0 million.
Contribution from the manufacturing facilities was down $1.3 million on the previous year, mainly due to lower volume,
increased energy costs and a delay in the timing of a number of projects.
Overall group EBITDA before acquisition costs for the 2018 financial year was $11.0 million, a rise of 7.2% over the
corresponding period last year of $10.2 million before acquisition and initial public offering costs.
7
Big River Industries Limited
Directors' report
30 June 2018
Significant changes in the state of affairs
On 24 August 2017, the Group executed a business purchase deed to acquire the business and assets of Midcoast
Timbers, a business located in Burleigh West, Queensland. The purchase price was $2,710,732 which includes the
acquisition of inventory and plant and equipment and was settled through the payment of $2,410,732 in cash and $300,000
in ordinary shares of Big River Industries Limited.
On 3 November 2017, the Group executed a business purchase deed to acquire the business and assets of Ern Smith
Timber & Hardware, a business located in Hume, Australian Capital Territory. The purchase price was $1,720,000 which
includes the acquisition of inventory and plant and equipment and was settled through the payment of $1,120,000 in cash
and $600,000 in ordinary shares of Big River Industries Limited. The values identified in relation to both acquisitions are
final as at 30 June 2018.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
Apart from the dividend declared as discussed above, no other matter or circumstance has arisen since 30 June 2018 that
has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's
state of affairs in future financial years.
Likely developments and expected results of operations
The building products market is closely linked to activity levels in the residential, commercial, civil and infrastructure
construction industry (comprising both new builds and additions and alterations) in Australia. The industry is cyclical and is
sensitive to a broad range of economic and other factors.
The Company has a strong balance sheet and a healthy undrawn banking facility which will continue to support the
Company with organic and acquisition growth opportunities.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Gregory Ray Laurie
Independent Non-Executive Chairman
Greg holds a Bachelor of Commerce from UNSW and has completed an Advanced
Management Programme at the University of Pittsburgh. Greg is a Fellow of the
Australian Institute of Company Directors.
Greg has been the Non-Executive Chairman of the Company since March 2017,
having formerly served as an independent non-executive director of Big River Group
Pty Limited from September 2006 to February 2016. Greg was previously Finance
Director of Crane Group Limited from 1989 to 2003.
Independent non-executive director and Chairman of the Audit and Risk Committee of
Nick Scali Limited and Shriro Holdings Limited
Former directorships (last 3 years): Former non-executive director of Bradken Limited
Special responsibilities:
Interests in shares:
Interests in options:
Chairman of the Board
30,000 ordinary shares (indirectly)
None
8
Big River Industries Limited
Directors' report
30 June 2018
Experience and expertise:
Name:
Title:
Qualifications:
James Bernard Bindon
Managing Director and Chief Executive Officer
James ('Jim') holds a Bachelor of Agricultural Economics (Honours) from the
University of New England and a Masters of Business Administration from the
University of Queensland. Jim is a member of the Australian Institute of Company
Directors.
Jim joined Big River in January 2001 and has been Chief Executive Officer and
Managing Director since 2005. He has been a director of Big River Group Pty Limited
since July 2005 and a director of the Company since February 2016. Prior to his
current role as Chief Executive Officer and Managing Director, Jim was the Chief
Financial Officer and Company Secretary from 2001 to 2005. Since working for Big
River, Jim has developed and led the Group's strategy to transform Big River from a
manufacturing focused business to a diversified provider of timber and building
products. Prior to working at Big River, Jim held the position of Business Manager of
Sugar and Horticulture at Incitec, where he was responsible for segment profitability,
strategy and marketing.
None
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
400,000 ordinary shares (indirectly)
Interests in shares:
200,000 options (indirectly)
Interests in options:
Experience and expertise:
Name:
Title:
Qualifications:
Martin Kaplan
Non-Executive Director
Martin holds a Bachelor of Commerce degree from the University of Cape Town and
is a Chartered Accountant (South Africa & Canada).
Martin has been a Non-Executive Director of the Company since November 2015 and
a director of Big River Group Pty Limited since February 2016. Martin is currently an
Investment Director of Anacacia Capital Pty Ltd, the management company of the
major shareholder Anacacia Partnership II, L.P..
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Member of the Audit and Risk Committee
Martin is an Investment Director of Anacacia Capital Pty Ltd which manages the
interests of Anacacia Partnership II, L.P., a substantial shareholder of the Company.
Martin does not have a relevant interest in those shares for the purposes of the
Corporations Act 2001.
None
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Malcolm Geoffrey Jackman
Independent Non-Executive Director
Malcolm has a Bachelor of Science in Pure Mathematics and a Bachelor of
Commerce in Accounting from Auckland University. He is a fellow of the Australian
Institute of Directors and a recipient of the Centenary of Federation Medal.
Malcolm has been an independent Non-Executive Director of the Company since
February 2016. Malcolm has also been a director of Big River Group Pty Limited
since February 2016. Malcolm is a member of the Anacacia Capital Business
Advisory Council. Malcolm is also currently the Chief Executive Officer of SAFECOM
(South Australian Fire & Emergency Services Commission) where he is employed in
a part-time capacity.
Non-executive director of Force Fire Pty Limited (non-listed)
Other current directorships:
Former directorships (last 3 years): Non-executive director of Subzero Group Limited
Special responsibilities:
Interests in shares:
Interests in options:
Chairman of the Nomination and Remuneration Committee
68,493 ordinary shares (indirectly)
None
9
Big River Industries Limited
Directors' report
30 June 2018
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Vicky Papachristos
Non-Executive Director
Vicky holds an Engineering degree from Monash University, an MBA from the
Australian Graduate School of Management and is a member of the Australian
Institute of Company Directors.
Vicky is an experienced non-executive director and has been involved across various
operational, strategic and creative roles with organisations including Shell, Westpac,
Coventry and Myer.
Non-executive director and Chairman of the Risk Committee of GMHBA Limited and
non-executive director of myOwn Health (GMHBA JV with AIA)
Former directorships (last 3 years): Former non-executive director of Coventry Group Limited and former Chairman of
Special responsibilities:
Interests in shares:
Interests in options:
Mount Baw Baw Alpine Resort.
Chairman of the Audit and Risk Committee
30,000 ordinary shares (indirectly)
None
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company Secretaries
Stephen Thomas Parks and Julian Rockett are co-Company Secretaries.
Stephen Thomas Parks (BCom, FIPA)
Steve joined Big River in July 2008 as Chief Financial Officer. Prior to working for Big River, Steve was the Chief Financial
Officer and General Manager at WDS International, where he was responsible for controlling operating performance and
leading finance and administration functions including forecasting, cash management, treasury, payroll, information
technology, general administration and warehouse operations. Prior to this role, Steve worked as Financial Controller for a
number of Australasian companies including Brazin, Strathfield Group, Sunshades Eyewear and Noel Leeming. Steve
holds a Bachelor of Commerce from the University of Canterbury and is a member of the Australian Institute of Company
Directors. Steve is a qualified accountant and is a Fellow of the Institute of Public Accountants.
Julian Rockett (BA, LLB, GDLP)
Julian is a qualified corporate lawyer and listed company secretary. His background in law has included corporate
compliance, advising on initial public offerings, mergers and acquisitions, reverse take-overs and capital raising for ASX
listed entities. His diverse ASX listed company experience includes supporting fintech, artificial intelligence, medical
technology, logistics, equity, mining, energy, technology and commercial property companies.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2018, and the number of meetings attended by each director were:
Full Board
Nomination and
Remuneration Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
G Laurie
J Bindon **
M Kaplan
M Jackman
V Papachristos *
11
11
11
11
9
11
11
11
11
9
3
2
3
3
1
3
2
3
3
1
4
4
4
4
3
4
4
4
4
3
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
*
**
Appointed 4 October 2017
J Bindon is not a member of the sub-committees but was invited to attend these meetings and his attendance was
minuted.
10
Big River Industries Limited
Directors' report
30 June 2018
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance
with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The key management personnel of the Group are the directors of Big River Industries Limited and the following persons:
●
●
●
Dean Henderson - General Manager - Marketing
Stephen Parks - Chief Financial Officer (and co-Company Secretary)
John Lorente - General Manager - Sales and Distribution (appointed 12 February 2018)
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:
●
●
●
●
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation; and
transparency.
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements
for its directors and executives. The quality of the directors and executives is a major factor in the overall performance of
the Group. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
The Nomination and Remuneration Committee has structured an executive remuneration framework that is market
competitive and complementary to the reward strategy of the Group.
The reward framework is designed to align executive reward to shareholders' interests. The Board has considered that it
should seek to enhance shareholders' interests by:
having economic profit as a core component;
●
focusing on sustained growth in shareholder value and delivering constant or increasing return on assets as well as
●
focusing the executive on key non-financial drivers of value; and
attracting and retaining high calibre executives.
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder value; and
providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and
Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure
non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are
determined independently to the fees of other non-executive directors based on comparative roles in the external market.
The chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive
directors do not receive share options or other incentives.
11
Big River Industries Limited
Directors' report
30 June 2018
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. Unless otherwise determined by a resolution of Shareholders, the maximum aggregate remuneration payable by
the Company to all Non-Executive Directors of the Company for their services as Directors, including their services on a
Board Committee or Sub-Committee and including superannuation is limited to $500,000 per annum (in total).
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which
has both fixed and variable components.
The executive remuneration and reward framework currently has two components:
●
●
fixed base salary, including superannuation and non-monetary benefits; and
short-term performance incentives.
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Nomination and Remuneration Committee based on individual and business unit performance, the overall performance of
the Group and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Group.
The short-term incentives ('STI') program is designed to align the targets of the business with the performance hurdles of
executives. STI payments granted to executives are at the discretion of the Board and are based on the achievement of
certain financial hurdles, principally relating to earnings before interest, tax, depreciation and amortisation ('EBITDA')
performance, and key performance indicators ('KPI's') being achieved. KPI's include profit contribution, cash management,
customer satisfaction, safety performance, leadership contribution and product management.
The Company has no long term incentive (LTI) plan in place at present. However, the Directors consider that the long-term
interests of the senior executives are presently aligned with those of shareholders as these executives, including the Chief
Executive Officer and the Chief Financial Officer, are, and will remain, existing shareholders and option holders either
directly or through persons or entities nominated by them. Furthermore, the shares and options held by those executives or
their nominees are subject to escrow arrangements. In conjunction with remuneration consultants, the Directors have
agreed the implementation of an LTI plan to be proposed for the FY2019 year which will be put to the shareholders for
approval at the Annual General Meeting.
Consolidated entity performance and link to remuneration
Remuneration for the senior executives is directly linked to the performance of the Group. A portion of their STI is
dependent on defined EBITDA targets being met. The remaining portion of the STI is at the discretion of the Nomination
and Remuneration Committee based on performance against personal objectives. Refer to the section 'Additional
information' below for details of the earnings for the last three years.
Use of remuneration consultants
During the financial year ended 30 June 2018, the Group engaged Godfrey Remuneration Group Pty Limited ('GRG'),
remuneration consultants, to independently prepare a report on the market competitiveness of total remuneration packages
for selected senior executive roles. GRG were engaged by non-executive directors and report to the Nomination and
Remuneration Committee.
In addition, GRG assisted with the preparation of the long-term incentive plan which will be put to the shareholders for
approval at the Annual General Meeting to be held on 24 October 2018. GRG were paid a fee of $38,000 for their
assistance in these matters.
Voting and comments made at the Company's 2017 Annual General Meeting ('AGM')
At the 21 November 2017 AGM, 99.75% of the votes received supported the adoption of the remuneration report for the
year ended 30 June 2017. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
12
Big River Industries Limited
Directors' report
30 June 2018
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
Short-term benefits
Post-
employment
benefits
Accrued
long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Leave
Super-
monetary annuation benefits
$
$
$
Equity-
settled
$
Total
$
91,324
-
59,361
47,804
339,266
-
-
-
-
-
-
-
-
-
8,676
-
5,639
4,541
-
-
-
-
-
-
-
-
100,000
-
65,000
52,345
-
32,230
18,178
-
389,674
257,383
251,388
117,918
1,164,444
-
-
47,000
47,000
-
-
-
-
24,451
23,882
11,202
110,621
5,101
10,730
-
34,009
286,935
-
286,000
-
-
176,120
- 1,356,074
2018
Non-Executive Directors:
G Laurie
M Kaplan*
M Jackman
V Papachristos**
Executive Directors:
J Bindon
Other Key Management
Personnel:
D Henderson
S Parks
J Lorente***
M Kaplan waived his Director's fees (including any committee fee to which he is entitled) until 31 March 2019.
Remuneration is for the period from date of appointment, 4 October 2017, to 30 June 2018.
*
**
*** Remuneration is for the period from date of appointment, 12 February 2018, to 30 June 2018. The cash bonus
included a sign-on bonus of $32,000 paid on commencement of employment.
Short-term benefits
Post-
employment
benefits
Accrued
long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Leave
Super-
monetary annuation benefits
$
$
$
Equity-
settled
$
Total
$
30,207
-
46,404
-
-
-
-
-
-
-
-
-
2,870
-
1,193
-
-
-
-
-
-
-
-
-
33,077
-
47,597
-
326,342
40,000
-
29,417
9,406
-
405,165
251,617
241,555
896,125
22,527
40,000
102,527
-
-
-
26,363
25,297
85,140
6,125
7,061
22,592
306,632
-
-
313,913
- 1,106,384
2017
Non-Executive Directors:
G Laurie***
M Kaplan*
M Jackman
J Samuel**
Executive Directors:
J Bindon
Other Key Management
Personnel:
D Henderson
S Parks
M Kaplan waived his Director's fees (including any committee fee to which he is entitled) until 31 March 2019.
*
**
Remuneration is for the period from 1 July 2016 to date of resignation, 24 March 2017.
*** Remuneration is for the period from date of appointment, 1 March 2017, to 30 June 2017.
13
Big River Industries Limited
Directors' report
30 June 2018
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Executive Directors:
J Bindon
Other Key Management
Personnel:
D Henderson
S Parks
J Lorente
Fixed remuneration
2018
2017
At risk - STI
2018
2017
At risk - LTI
2018
2017
100%
90%
-
10%
100%
100%
91%
93%
87%
n/a
-
-
9%
7%
13%
n/a
-
-
-
-
-
-
-
n/a
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
J Bindon
Other Key Management Personnel:
D Henderson
S Parks
J Lorente
Cash bonus paid/payable
Cash bonus forfeited
2018
2017
2018
2017
-
32%
100%
68%
-
-
30%
39%
72%
n/a
100%
100%
70%
61%
28%
n/a
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
J Bindon
Managing Director and Chief Executive Officer
January 2001
No fixed term
Either Jim or the Company may terminate the employment contract by giving 6
months' written notice to the other party.
D Henderson
General Manager – Marketing
July 2005
No fixed term
Either Dean or the Company may terminate the employment contract by giving 1
months' written notice to the other party.
S Parks
Chief Financial Officer and co-Company Secretary
July 2008
No fixed term
Steve may terminate his employment contract by giving 1 months' written notice to
the Company and the Company may terminate the employment contract by giving 4
months' written notice to Steve.
J Lorente
General Manager - Sales and Distribution
February 2018
No fixed term
Either John or the Company may terminate the employment contract by giving 3
months' written notice to the other party.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
14
Big River Industries Limited
Directors' report
30 June 2018
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2018.
Options
There were no options over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2018.
There were no options over ordinary shares granted to or vested in directors and other key management personnel as part
of compensation during the year ended 30 June 2018.
Additional information
The earnings of the Group for the three years to 30 June 2018 are summarised below:
Sales revenue
EBITDA
EBIT
Profit/(loss) after income tax
2018
$
2017
$
2016
$
210,756,310 176,891,981 71,536,530
(1,085,537)
10,676,690
(1,854,145)
8,180,084
(1,949,368)
5,176,270
8,144,377
6,175,247
3,927,681
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
G Laurie
M Jackman
V Papachristos
J Bindon
D Henderson
S Parks
J Lorente
30,000
68,493
-
400,000
250,000
220,000
-
968,493
-
-
-
-
-
-
-
-
-
-
30,000
-
-
-
8,017
38,017
-
-
-
-
-
-
-
-
30,000
68,493
30,000
400,000
250,000
220,000
8,017
1,006,510
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Options over ordinary shares
J Bindon
D Henderson
S Parks
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
200,000
125,000
100,000
425,000
-
-
-
-
-
-
-
-
-
-
-
-
200,000
125,000
100,000
425,000
15
Big River Industries Limited
Directors' report
30 June 2018
Options over ordinary shares
J Bindon
D Henderson
S Parks
Vested and Vested and
exercisable unexercisable
Balance at
the end of
the year
200,000
125,000
100,000
425,000
-
-
-
-
200,000
125,000
100,000
425,000
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Big River Industries Limited under option at the date of this report are as follows:
Grant date
19 February 2016
13 February 2017
Expiry date
19 February 2021
13 February 2022
Exercise
price
Number
under option
$2.00
$2.20
1,370,000
45,455
1,415,455
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Big River Industries Limited issued on the exercise of options during the year ended 30
June 2018 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives 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 the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 25 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
16
Big River Industries Limited
Directors' report
30 June 2018
The directors are of the opinion that the services as disclosed in note 25 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
●
Officers of the Company who are former partners of Deloitte Touche Tohmatsu
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Gregory Laurie
Chairman
27 August 2018
Sydney
___________________________
James Bindon
Managing Director
17
18
Big River Industries Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
Revenue
Other income
Expenses
Raw materials and consumables used
Selling and distribution expense
Employee benefits expense
Occupancy expense
General and administration expense
Acquisition costs
Depreciation and amortisation expense
IPO transaction costs
Finance costs
Profit before income tax expense
Consolidated
Note
2018
$
2017
$
5
6
7
7
210,910,160 177,089,181
62,075
57,451
(151,046,253) (121,574,190)
(7,155,079)
(25,957,380)
(6,941,724)
(5,276,761)
(192,440)
(1,969,130)
(1,904,681)
(923,545)
(6,862,377)
(28,214,355)
(8,226,698)
(5,642,004)
(303,858)
(2,496,606)
-
(791,761)
7,388,323
5,251,702
Income tax expense
8
(2,212,053)
(1,324,021)
Profit after income tax expense for the year attributable to the owners of Big
River Industries Limited
21
5,176,270
3,927,681
Other comprehensive income for the year, net of tax
-
-
Total comprehensive income for the year attributable to the owners of Big
River Industries Limited
Basic earnings per share
Diluted earnings per share
5,176,270
3,927,681
Cents
Cents
35
35
9.79
9.79
13.77
13.77
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
19
Big River Industries Limited
Statement of financial position
As at 30 June 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Income tax
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Total equity
Consolidated
Note
2018
$
2017
$
9
10
11
12
1,971,251
3,551,708
39,080,600 36,845,446
29,374,599 24,441,759
905,224
71,357,453 65,744,137
931,003
13
14
8
25,270,255 24,563,327
7,420,632
2,333,461
36,761,313 34,317,420
9,183,189
2,307,869
108,118,766 100,061,557
15
16
8
17
34,188,549 30,926,342
1,330,804
1,186,213
2,933,597
41,193,989 36,376,956
2,986,719
726,187
3,292,534
18
8
19
7,441,472
264,000
322,825
8,028,297
6,239,245
422,400
498,357
7,160,002
49,222,286 43,536,958
58,896,480 56,524,599
20
21
59,522,743 58,629,873
(2,105,274)
(626,263)
58,896,480 56,524,599
The above statement of financial position should be read in conjunction with the accompanying notes
20
Big River Industries Limited
Statement of changes in equity
For the year ended 30 June 2018
Consolidated
Balance at 1 July 2016
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 20)
Dividends paid (note 22)
Issued
capital
$
Accumulated
losses
$
Total equity
$
38,460,001
(3,609,653) 34,850,348
-
-
-
3,927,681
-
3,927,681
-
3,927,681
3,927,681
20,169,872
-
(2,423,302)
- 20,169,872
(2,423,302)
Balance at 30 June 2017
58,629,873
(2,105,274) 56,524,599
Consolidated
Balance at 1 July 2017
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Issued
capital
$
Accumulated
losses
$
Total equity
$
58,629,873
(2,105,274) 56,524,599
-
-
-
5,176,270
-
5,176,270
-
5,176,270
5,176,270
Transactions with owners in their capacity as owners:
Issue of ordinary shares as consideration for business combinations, net of
transaction costs (note 20)
Dividends paid (note 22)
892,870
-
-
(3,697,259)
892,870
(3,697,259)
Balance at 30 June 2018
59,522,743
(626,263) 58,896,480
The above statement of changes in equity should be read in conjunction with the accompanying notes
21
Big River Industries Limited
Statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Other revenue
Interest and other finance costs paid
Income taxes paid
Consolidated
Note
2018
$
2017
$
229,596,787 189,775,476
(221,193,291) (182,955,997)
8,403,496
153,850
(791,761)
(2,804,887)
6,819,479
197,200
(923,545)
(1,351,701)
Net cash from operating activities
33
4,960,698
4,741,433
Cash flows from investing activities
Payment for purchase of businesses, net of cash acquired
Final payments for prior period's business acquisition
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Proceeds from borrowings
Repayment of borrowings
Net lease repayments
Dividends paid
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
30
13
(3,530,732)
(200,000)
(2,058,001)
93,825
(5,084,192)
-
(1,339,718)
132,727
(5,694,908)
(6,291,183)
20
20
22
(7,130)
3,400,000
(500,000)
(41,858)
(3,697,259)
- 17,100,001
(614,470)
5,020,000
(12,000,000)
(418,487)
(2,423,302)
(846,247)
6,663,742
(1,580,457)
3,551,708
5,113,992
(1,562,284)
Cash and cash equivalents at the end of the financial year
9
1,971,251
3,551,708
The above statement of cash flows should be read in conjunction with the accompanying notes
22
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 1. General information
The financial statements cover Big River Industries Limited as a Group consisting of Big River Industries Limited
('Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ('Group'). The financial
statements are presented in Australian dollars, which is Big River Industries Limited's functional and presentation currency.
Big River Industries Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Trenayr Road
Junction Hill NSW 2460
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 27 August 2018. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these
Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of
the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss,
investment properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 29.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Big River Industries Limited
as at 30 June 2018 and the results of all subsidiaries for the year then ended.
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. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control ceases.
23
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received or receivable.
Sale of goods
Sale of goods revenue is recognised when the goods are delivered, at which time the risks and rewards are transferred to
the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns.
Interest
Interest 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
rate, 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.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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
nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
24
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months
after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities 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.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is
objective evidence that the Group will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 90 days overdue) are considered indicators that the
trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a 'weighted
average' basis. Cost comprises of direct materials and delivery costs, direct labour, import duties and other taxes, an
appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity. Costs of purchased
inventory are determined after deducting rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items. The cost of fixed assets constructed within
the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable
overhead.
25
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Buildings
Plant and equipment
25 to 40 years
5 to 25 years
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the
improvements, whichever is shorter.
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease
term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite life of up to 5 years.
26
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
Impairment of non-financial assets
Goodwill and other 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 non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at 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 expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the reporting date on high-quality
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services.
27
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken
of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Issued capital
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.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
28
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Big River Industries Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
29
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2018. The Group's
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group,
are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets.
A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets
in order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an
irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in
other comprehensive income ('OCI'). For financial liabilities at fair value, the standard requires the portion of the change in
fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch).
New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk
management activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to
recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial
instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. The
standard introduces additional new disclosures.
The Group will adopt this standard from 1 July 2018 but the impact of its adoption is not expected to have any material
impact on the amounts recognised in the Group's financial statements.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate
performance obligations within the contract; determine the transaction price, adjusted for the time value of money
excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-
alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and
recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an
expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer
obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided,
typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would
select an appropriate measure of progress to determine how much revenue should be recognised as the performance
obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial position as a contract
liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the
customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the
contracts with customers; the significant judgements made in applying the guidance to those contracts; and any assets
recognised from the costs to obtain or fulfil a contract with a customer.
The Group will adopt this standard from 1 July 2018 but the impact of its adoption is not expected to have any material
impact on the amounts recognised in the Group's financial statements.
30
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 2. Significant accounting policies (continued)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the
unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit
or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or
dismantling costs.
Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included
in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier
periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will
be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16.
For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing
activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not
substantially change how a lessor accounts for leases.
The Group will adopt this standard from 1 July 2019. Whilst the directors are yet to finalise the assessment of the impact of
AASB 16, it is noted that operating leases will be capitalised on the balance sheet by recognising a 'right-of-use' asset and
a lease liability for the present value of the obligation and the rental expense will be replaced with depreciation of the right-
of-use asset and interest on the lease liability.
IASB revised Conceptual Framework for Financial Reporting
The revised Conceptual Framework has been issued by the International Accounting Standards Board ('IASB'), but the
Australian equivalent has yet to be published. The revised framework is applicable for annual reporting periods beginning
on or after 1 January 2020 and the application of the new definition and recognition criteria may result in future
amendments to several accounting standards. Furthermore, entities who rely on the conceptual framework in determining
their accounting policies for transactions, events or conditions that are not otherwise dealt with under Australian Accounting
Standards may need to revisit such policies. The Group will apply the revised conceptual framework from 1 July 2020 and
is yet to assess its impact.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of
provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection
rates and specific knowledge of the individual debtor's financial position.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
has suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-
generating units have been determined based on value-in-use calculations. These calculations require the use of
assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated
future cash flows.
31
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Impairment of non-financial assets other than goodwill
The Group assesses impairment of non-financial assets other than goodwill at each reporting date by evaluating conditions
specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists, the
recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations,
which incorporate a number of key estimates and assumptions.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into one operating segment as the Group operated predominantly in Australia and in one industry
being the supply of building products. This assessment is based on the internal reports that are reviewed and used by the
Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in
determining the allocation of resources. Accordingly the information provided in this Annual Report reflects the one
operating segment.
Note 5. Revenue
Sales revenue
Sale of goods
Other revenue
Other revenue
Revenue
Note 6. Other income
Consolidated
2018
$
2017
$
210,756,310 176,891,981
153,850
197,200
210,910,160 177,089,181
Consolidated
2018
$
2017
$
Net gain on disposal of property, plant and equipment
62,075
57,451
32
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 7. Expenses
Profit before income tax includes the following specific expenses:
Cost of sales
Cost of sales
Depreciation
Buildings
Plant and equipment
Total depreciation
Amortisation
Customer relationships
Total depreciation and amortisation
Finance costs
Interest and finance charges paid/payable
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
Expenses associated with business combinations
Transaction costs
Consolidated
2018
$
2017
$
151,046,253 121,574,190
171,544
1,797,062
179,044
1,614,086
1,968,606
1,793,130
528,000
176,000
2,496,606
1,969,130
791,761
923,545
2,940,619
2,083,376
1,761,026
1,576,758
303,858
192,439
33
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 8. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
Decrease in deferred tax liabilities
Deferred tax - origination and reversal of temporary differences
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-allowable items
Research and development
Sundry items
Overprovision from prior period
Income tax expense
Amounts credited directly to equity
Deferred tax assets
Consolidated
2018
$
2017
$
2,362,222
(132,808)
(17,361)
2,256,754
(784,679)
(148,054)
2,212,053
1,324,021
25,592
(158,400)
(731,879)
(52,800)
(132,808)
(784,679)
7,388,323
5,251,702
2,216,497
1,575,511
12,917
-
-
7,602
(90,482)
30,946
2,229,414
(17,361)
1,523,577
(199,556)
2,212,053
1,324,021
Consolidated
2018
$
2017
$
-
(184,341)
34
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 8. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Impairment of receivables
Property, plant and equipment
Employee benefits
IPO capitalised expenses
Lease provisions
Other provisions and accruals
Deferred tax asset
Movements:
Opening balance
Credited/(charged) to profit or loss
Credited to equity
Additions through business combinations (note 30)
Closing balance
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Customer relationships
Deferred tax liability
Amount expected to be settled within 12 months
Amount expected to be settled after more than 12 months
Movements:
Opening balance
Credited to profit or loss
Additions through business combinations (note 30)
Closing balance
Provision for income tax
Provision for income tax
35
Consolidated
2018
$
2017
$
397,666
67,331
1,039,570
437,375
104,265
261,662
349,901
66,941
939,562
583,166
148,799
245,092
2,307,869
2,333,461
2,333,461
(25,592)
-
-
1,386,295
731,879
184,341
30,946
2,307,869
2,333,461
Consolidated
2018
$
2017
$
264,000
422,400
264,000
422,400
158,400
105,600
158,400
264,000
264,000
422,400
422,400
(158,400)
-
-
(52,800)
475,200
264,000
422,400
Consolidated
2018
$
2017
$
726,187
1,186,213
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 9. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Note 10. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Impairment of receivables
The ageing of the impaired receivables provided for above are as follows:
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
2018
$
2017
$
133,276
1,837,975
11,226
3,540,482
1,971,251
3,551,708
Consolidated
2018
$
2017
$
38,627,107 36,077,732
(1,166,338)
37,301,553 34,911,394
(1,325,554)
1,779,047
1,934,052
39,080,600 36,845,446
Consolidated
2018
$
2017
$
110,216
231,202
984,136
277,225
368,748
520,365
1,325,554
1,166,338
Consolidated
2018
$
2017
$
1,166,338
607,302
(448,086)
608,728
732,132
(174,522)
1,325,554
1,166,338
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $18,618,388 as at 30
June 2018 ($15,092,726 as at 30 June 2017).
The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on
recent collection practices.
36
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 10. Current assets - trade and other receivables (continued)
The ageing of the past due but not impaired receivables are as follows:
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Note 11. Current assets - inventories
Raw materials and work in progress - at cost
Finished goods - at cost
Note 12. Current assets - other
Prepayments
Deferred expenses
Other deposits
Note 13. Non-current assets - property, plant and equipment
Freehold land - at cost
Buildings - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
37
Consolidated
2018
$
2017
$
15,692,563 12,012,160
1,323,958
1,756,608
973,174
1,952,651
18,618,388 15,092,726
Consolidated
2018
$
2017
$
3,080,195
2,744,897
26,294,404 21,696,862
29,374,599 24,441,759
Consolidated
2018
$
2017
$
408,471
386,388
136,144
518,115
250,965
136,144
931,003
905,224
Consolidated
2018
$
2017
$
855,701
855,701
6,025,131
(434,591)
5,590,540
5,832,741
(263,047)
5,569,694
21,726,030 19,458,023
(1,320,091)
18,824,014 18,137,932
(2,902,016)
25,270,255 24,563,327
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 13. Non-current assets - property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2016
Additions
Additions through business combinations (note 30)
Disposals
Depreciation expense
Balance at 30 June 2017
Additions
Additions through business combinations (note 30)
Disposals
Depreciation expense
Freehold
land
$
Buildings
Plant and
equipment
$
$
Total
$
855,701
-
-
-
-
855,701
-
-
-
-
5,547,699 18,457,107 24,860,507
1,339,718
1,138,679
231,508
231,508
(75,276)
(75,276)
(1,793,130)
(1,614,086)
201,039
-
-
(179,044)
5,569,694 18,137,932 24,563,327
2,058,001
1,865,611
649,283
649,283
(31,750)
(31,750)
(1,968,606)
(1,797,062)
192,390
-
-
(171,544)
Balance at 30 June 2018
855,701
5,590,540 18,824,014 25,270,255
Property, plant and equipment secured under finance leases
Refer to note 27 for further information on property, plant and equipment secured under finance leases.
Note 14. Non-current assets - intangibles
Goodwill - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Consolidated
2018
$
2017
$
8,303,189
6,012,632
1,584,000
(704,000)
880,000
1,584,000
(176,000)
1,408,000
9,183,189
7,420,632
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2016
Additions through business combinations (note 30)
Amortisation expense
Balance at 30 June 2017
Additions through business combinations (note 30)
Amortisation expense
Balance at 30 June 2018
38
Goodwill
$
Customer
relationships
$
Total
$
942,699
5,069,933
-
-
1,584,000
(176,000)
942,699
6,653,933
(176,000)
6,012,632
2,290,557
-
1,408,000
-
(528,000)
7,420,632
2,290,557
(528,000)
8,303,189
880,000
9,183,189
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 14. Non-current assets - intangibles (continued)
Impairment testing
Goodwill is allocated to the Group’s one operating segment (refer Note 4).
The recoverable amount is determined based on value-in-use calculations. These calculations use cash flow projections
based on financial budgets approved by management covering a five-year period.
Key assumptions used for value-in-use calculations:
Growth rate
Discount rate
2018
%
2017
%
3.0%
10.5%
3.0%
11.0%
The weighted average growth rates used are consistent with forecasts included in industry reports. In addition,
management have used gross margins based on past performance and its expectations for the future. Management has
considered possible changes in the key assumptions used in the value-in-use calculations and has not identified any
reasonably possible change that would cause a material impact in the carrying amount of the Group’s cash generating unit.
Note 15. Current liabilities - trade and other payables
Trade payables
Goods and services tax payable
Other payables and accrued expenses
Refer to note 23 for further information on financial instruments.
Note 16. Current liabilities - borrowings
Bank bills
Lease liability
Consolidated
2018
$
2017
$
29,939,728 27,133,222
584,786
3,208,334
577,006
3,671,815
34,188,549 30,926,342
Consolidated
2018
$
2017
$
2,000,000
986,719
500,000
830,804
2,986,719
1,330,804
Refer to note 18 for further information on assets pledged as security and financing arrangements.
Refer to note 23 for further information on financial instruments.
39
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 17. Current liabilities - provisions
Annual leave
Long service leave
Onerous lease
Consolidated
2018
$
2017
$
1,412,297
1,597,824
282,413
1,233,933
1,442,976
256,688
3,292,534
2,933,597
Onerous lease
The provision represents the present value of the estimated costs, net of any sub-lease revenue, that will be incurred until
the end of the lease terms where the obligation is expected to exceed the economic benefit to be received.
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
Consolidated - 2018
Carrying amount at the start of the year
Amounts transferred from non-current
Amounts used
Carrying amount at the end of the year
Note 18. Non-current liabilities - borrowings
Bank bills
Lease liability
Refer to note 23 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Bank bills
Lease liability
Onerous
lease
$
256,688
174,172
(148,447)
282,413
Consolidated
2018
$
2017
$
5,920,000
1,521,472
4,520,000
1,719,245
7,441,472
6,239,245
Consolidated
2018
$
2017
$
7,920,000
2,508,191
5,020,000
2,550,049
10,428,191
7,570,049
Assets pledged as security
The bank bills are secured by first mortgages over the Group's assets.
The lease liabilities are effectively secured as the rights to the leased assets, recognised in the statement of financial
position, revert to the lessor in the event of default.
40
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 18. Non-current liabilities - borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Consolidated
2018
$
2017
$
Total facilities
Bank overdraft and trade finance
Bank bills
Asset finance
Used at the reporting date
Bank overdraft and trade finance
Bank bills
Asset finance
Unused at the reporting date
Bank overdraft and trade finance
Bank bills
Asset finance
Note 19. Non-current liabilities - provisions
Long service leave
Onerous lease
6,200,000
6,200,000
22,500,000 23,000,000
4,000,000
32,700,000 33,200,000
4,000,000
-
7,920,000
2,508,191
10,428,191
-
5,020,000
2,550,049
7,570,049
6,200,000
6,200,000
14,580,000 17,980,000
1,449,951
22,271,809 25,629,951
1,491,809
Consolidated
2018
$
2017
$
257,689
65,136
259,049
239,308
322,825
498,357
Onerous lease
The provision represents the present value of the estimated costs, net of any sub-lease revenue, that will be incurred until
the end of the lease terms where the obligation is expected to exceed the economic benefit to be received.
Movements in provisions
Movements in each class of provision during the current financial year, other than employee benefits, are set out below:
Consolidated - 2018
Carrying amount at the start of the year
Amounts transferred to current
Carrying amount at the end of the year
Onerous
lease
$
239,308
(174,172)
65,136
41
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 20. Equity - issued capital
Consolidated
2018
Shares
2017
Shares
2018
$
2017
$
Ordinary shares - fully paid
53,043,949 52,592,007 59,522,743 58,629,873
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Issue of shares
Conversion of preference shares to ordinary shares
on Initial Public Offering 1:1
Issue of shares as purchase consideration for
Adelaide Timber and Building Supplies
Share capital raised
Transaction costs arising on share issue, net of tax
Balance
Issue of shares as purchase consideration for
Midcoast Timbers
Issue of shares as purchase consideration for Ern
Smith Timber & Hardware
Transaction costs arising on share issue, net of tax
1 July 2016
13 February 2017
1,370,001
45,455
$1.10
1,370,001
50,000
24 April 2017
37,135,455
37,140,000
24 April 2017
24 April 2017
2,397,260
11,643,836
$1.46
3,500,000
$1.46 17,000,001
(430,129)
30 June 2017
52,592,007
58,629,873
5 September 2017
153,059
$1.96
300,000
4 December 2017
298,883
$2.01
600,000
(7,130)
Balance
30 June 2018
53,043,949
59,522,743
Movements in A class preference shares
Details
Date
Shares
Issue price
$
Balance
Issue of shares
Conversion of shares on Initial Public Offering
1 July 2016
13 February 2017
24 April 2017
37,090,000
45,455
(37,135,455)
$1.10
37,090,000
50,000
(37,140,000)
Balance
Balance
30 June 2017
30 June 2018
-
-
-
-
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
A class preference shares
The Company's preference shares were converted into ordinary shares on a 1:1 basis on 24 April 2017.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital.
42
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 20. Equity - issued capital (continued)
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current Company's share price at the time of the investment.
The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.
The capital risk management policy remains unchanged from the 30 June 2017 Annual Report.
Note 21. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Profit after income tax expense for the year
Dividends paid (note 22)
Accumulated losses at the end of the financial year
Note 22. Equity - dividends
Dividends
Dividends paid during the financial year were as follows:
A class preference dividend for the period ended 30 June 2017, paid prior to the Group
listing
Final dividend of 3.5 cents per fully paid ordinary share paid on 29 September 2017
Interim dividend of 3.5 cents per fully paid ordinary share paid on 4 April 2018
Consolidated
2018
$
2017
$
(2,105,274)
5,176,270
(3,697,259)
(3,609,653)
3,927,681
(2,423,302)
(626,263)
(2,105,274)
Consolidated
2018
$
2017
$
-
1,840,721
1,856,538
2,423,302
-
-
3,697,259
2,423,302
On 27 August 2018, the directors declared a fully franked final dividend of 3.5 cents per fully paid ordinary share to be paid
on 2 October 2018.
Franking credits
Franking credits available at the reporting date based on a tax rate of 30%
Franking credits that will arise from the payment of the amount of the provision for income
tax at the reporting date based on a tax rate of 30%
19,507,313 18,286,966
726,187
1,186,213
Franking credits available for subsequent financial years based on a tax rate of 30%
20,233,500 19,473,179
Consolidated
2018
$
2017
$
43
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 23. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Group. The Group uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk
exposures which are not significant. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other
speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These
methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for
credit risk and beta analysis in respect of investment portfolios to determine market risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating
units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The Group is not exposed to any significant foreign currency risk.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the
Group to interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The policy is
to regularly monitor interest rates and utilise fixed rates for a portion of long-term borrowings when deemed appropriate by
the Board.
As at the reporting date, the Group had the following variable rate borrowings outstanding:
Consolidated
Bank bills
2018
2017
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
Balance
$
4.92%
7,920,000
4.67%
5,020,000
Net exposure to cash flow interest rate risk
7,920,000
5,020,000
An analysis by remaining contractual maturities is shown in 'liquidity and interest rate risk management' below.
For the Group the bank bills outstanding, totalling $7,920,000 (2017: $5,020,000), are principal and interest payment loans.
Monthly cash outlays of approximately $32,472 (2017: $19,536) per month are required to service the interest payments.
An official increase/decrease in interest rates of 100 (2017: 100) basis points would have an adverse/favourable effect on
profit before tax of the following:
Consolidated - 2018
Basis points
change
profit before
tax
Effect on
equity
Basis points
change
profit before
tax
Effect on
equity
Basis points increase
Effect on
Basis points decrease
Effect on
Bank bills
(100)
(79,200)
(55,440)
100
79,200
55,440
44
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 23. Financial instruments (continued)
Consolidated - 2017
Basis points
change
profit before
tax
Effect on
equity
Basis points
change
profit before
tax
Effect on
equity
Basis points increase
Effect on
Basis points decrease
Effect on
Bank bills
(100)
(50,200)
(35,140)
100
50,200
35,140
The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts. In
addition, minimum principal repayments of $2,000,000 (2017: $500,000) are due during the year ending 30 June 2019
(2017: 30 June 2018).
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum
exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The
Group does not hold any collateral.
The Group has no significant credit risk to any individual customer.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
Consolidated
2018
$
2017
$
Bank overdraft and trade finance
Bank bills
Asset finance
6,200,000
6,200,000
14,580,000 17,980,000
1,449,951
22,271,809 25,629,951
1,491,809
The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice.
45
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 23. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Bank bills
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Consolidated - 2017
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Bank bills
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
29,939,728
2,510,069
-
-
-
-
- 29,939,728
2,510,069
-
4.92%
2,000,000
2,000,000
3,920,000
-
7,920,000
5.25%
1,107,566
35,557,363
822,444
2,822,444
785,749
4,705,749
-
2,715,759
- 43,085,556
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
27,133,322
1,762,072
-
-
-
-
- 27,133,322
1,762,072
-
4.67%
500,000
2,000,000
2,731,084
-
5,231,084
5.02%
941,808
30,337,202
940,005
2,940,005
873,692
3,604,776
-
2,755,505
- 36,881,983
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 24. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
46
Consolidated
2018
$
2017
$
1,211,444
110,621
34,009
998,652
85,140
22,592
1,356,074
1,106,384
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 25. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the
auditor of the Company:
Audit services - Deloitte Touche Tohmatsu
Audit or review of the financial statements
Other services - Deloitte Touche Tohmatsu
Due diligence
Taxation
Consolidated
2018
$
2017
$
174,027
183,253
-
38,352
392,294
40,585
38,352
432,879
212,379
616,132
Note 26. Contingent liabilities
The Group has given bank guarantees as at 30 June 2018 of $742,975 (2017: $629,262) to various landlords.
Note 27. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Lease liability - current (note 16)
Lease liability - non-current (note 18)
Consolidated
2018
$
2017
$
3,344,346
6,389,206
276,323
2,230,739
4,300,494
383,333
10,009,875
6,914,566
1,107,566
1,608,193
941,808
1,813,697
2,715,759
(207,568)
2,755,505
(205,456)
2,508,191
2,550,049
986,719
1,521,472
830,804
1,719,245
2,508,191
2,550,049
Operating lease commitments includes contracted amounts for various distribution outlets under non-cancellable operating
leases expiring within 1 to 10 years with, in some cases, options to extend. The leases have various escalation clauses.
On renewal, the terms of the leases are renegotiated.
47
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 27. Commitments (continued)
Finance lease commitments includes contracted amounts for various plant and equipment under finance leases expiring
within 5 years. Under the terms of the leases, the Group has the option to acquire the leased assets for predetermined
residual values on the expiry of the leases.
Note 28. Related party transactions
Parent entity
Big River Industries Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 31.
Key management personnel
Disclosures relating to key management personnel are set out in note 24 and the remuneration report included in the
directors' report.
Transactions with related parties
There were no transactions with related parties during this financial year.
During 2017, the Company paid a management fee to Anacacia Capital Pty Ltd, a director related entity and substantial
shareholder of $480,000 for the provision of ongoing services and assistance, and a fee of $960,000 for the provision of
support services to Big River Industries Limited to assist the Company with its Initial Public Offering and listing on the ASX.
During 2017, M Jackman, a director, was paid a fee of $25,000 for management consultancy services provided in
conjunction with the acquisition of Adelaide Timber and Building Supplies.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 29. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income
Parent
2018
$
2017
$
3,697,259
1,090,021
-
-
3,697,259
1,090,021
48
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 29. Parent entity information (continued)
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Total equity
Parent
2018
$
2017
$
23,212,913 19,274,252
41,412,541 41,558,332
64,625,454 60,832,584
2,000,000
500,000
5,920,000
4,520,000
7,920,000
5,020,000
56,705,454 55,812,584
59,522,743 58,629,873
(2,817,289)
(2,817,289)
56,705,454 55,812,584
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity is a party to a deed of cross guarantee (refer Note 32) under which it guarantees the debts of its
subsidiaries as at 30 June 2018 and 30 June 2017.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018 and 30 June 2017.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 and 30 June 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for
investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Note 30. Business combinations
2018
Midcoast Timbers
On 24 August 2017, the Group executed a business purchase deed to acquire the business and assets of Midcoast
Timbers, a business located in Burleigh West, Queensland. The purchase price was $2,710,732 which includes the
acquisition of inventory and plant and equipment and was settled through the payment of $2,410,732 in cash and $300,000
in ordinary shares of Big River Industries Limited.
Ern Smith Timber & Hardware
On 3 November 2017, the Group executed a business purchase deed to acquire the business and assets of Ern Smith
Timber & Hardware, a business located in Hume, Australian Capital Territory. The purchase price was $1,720,000 which
includes the acquisition of inventory and plant and equipment and was settled through the payment of $1,120,000 in cash
and $600,000 in ordinary shares of Big River Industries Limited.
The values identified in relation to the acquisitions are final as at 30 June 2018.
49
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 30. Business combinations (continued)
Details of the acquisitions are as follows:
Inventories
Plant and equipment
Employee benefits
Net assets acquired
Goodwill
Midcoast
Timbers
Fair value
Ern Smith
Timber
& Hardware
Fair value
Total
Fair value
$
$
$
506,075
143,383
(24,715)
1,037,936
505,900
(28,404)
1,544,011
649,283
(53,119)
624,743
2,085,989
1,515,432
204,568
2,140,175
2,290,557
Acquisition-date fair value of the total consideration transferred
2,710,732
1,720,000
4,430,732
Representing:
Cash paid or payable to vendor
Big River Industries Limited shares issued to vendor
2,410,732
300,000
1,120,000
600,000
3,530,732
900,000
2,710,732
1,720,000
4,430,732
Acquisition costs expensed to profit or loss
195,100
108,758
303,858
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: shares issued by Company as part of consideration
Net cash used
2,710,732
(300,000)
1,720,000
(600,000)
4,430,732
(900,000)
2,410,732
1,120,000
3,530,732
2017
Adelaide Timber and Building Supplies
On 1 March 2017, the subsidiary Big River Group Pty Limited, executed a business purchase deed to acquire the business
assets of Adelaide Timber and Building Supplies, a business located in Adelaide, South Australia. The purchase price was
$7,534,192 which includes inventory and plant and equipment and was settled through the payment of $3,834,192 in cash
and the issue of ordinary shares to a value of $3,500,000. A contingent amount of $200,000 is payable upon achieving an
agreed EBITDA target.
Sabdia Mitre 10
On 8 March 2017, the subsidiary Big River Group Pty Limited, executed a business purchase deed to acquire the business
assets of Sabdia Mitre 10, a business located in Brisbane, Queensland. The purchase price was $1,250,000 which
includes inventory and plant and equipment and is settled through the payment of $1,250,000 in cash.
The values identified in relation to the acquisitions are final as at 30 June 2018.
50
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 30. Business combinations (continued)
Details of the acquisitions are as follows:
Inventories
Prepayments
Plant and equipment
Customer relationships
Deferred tax asset
Trade payables
Deferred tax liability
Employee benefits
Accrued expenses
Net assets acquired
Goodwill
Adelaide
Timber
and Building
Supplies
Fair value
Sabdia
Mitre 10
Fair value
Total
Fair value
$
$
$
1,787,143
161,447
121,267
1,584,000
30,946
(587,142)
(475,200)
(103,154)
(55,048)
1,139,759
-
110,241
-
-
-
-
-
-
2,926,902
161,447
231,508
1,584,000
30,946
(587,142)
(475,200)
(103,154)
(55,048)
2,464,259
5,069,933
1,250,000
-
3,714,259
5,069,933
Acquisition-date fair value of the total consideration transferred
7,534,192
1,250,000
8,784,192
Representing:
Cash paid or payable to vendor
Big River Industries Limited shares issued to vendor
Contingent consideration
3,834,192
3,500,000
200,000
1,250,000
-
-
5,084,192
3,500,000
200,000
7,534,192
1,250,000
8,784,192
Acquisition costs expensed to profit or loss
150,279
42,160
192,439
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: contingent consideration
Less: shares issued by Company as part of consideration
Net cash used
Note 31. Interests in subsidiaries
7,534,192
(200,000)
(3,500,000)
1,250,000
-
-
8,784,192
(200,000)
(3,500,000)
3,834,192
1,250,000
5,084,192
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name
Principal place of business /
Country of incorporation
Ownership interest
2017
2018
%
%
ACN 609 939 139 Pty Ltd (formerly known as Big River
Group Holdings Pty Limited)
Big River Group Pty Limited
Australia
Australia
100.00%
100.00%
100.00%
100.00%
51
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 32. Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the
others:
Big River Industries Limited
Big River Group Pty Ltd
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial
statements and directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and
Investments Commission.
The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no
other parties to the deed of cross guarantee that are controlled by Big River Industries Limited, they also represent the
'Extended Closed Group'.
The statement of profit or loss and other comprehensive income and statement of financial position are substantially the
same as the Group and therefore have not been separately disclosed.
Note 33. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
5,176,270
3,927,681
Consolidated
2018
$
2017
$
Adjustments for:
Depreciation and amortisation
Net gain on disposal of property, plant and equipment
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Decrease/(increase) in deferred tax assets
Decrease/(increase) in other operating assets
Increase in trade and other payables
Increase/(decrease) in provision for income tax
Decrease in deferred tax liabilities
Increase in other provisions
Increase/(decrease) in other operating liabilities
Net cash from operating activities
Note 34. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2016
Net cash used in financing activities
Balance at 30 June 2017
Net cash from/(used in) financing activities
Balance at 30 June 2018
52
2,496,606
(62,075)
1,969,130
(57,451)
(2,235,154)
(3,388,829)
25,592
(25,779)
3,662,207
(460,026)
(158,400)
130,286
(200,000)
(4,805,703)
(2,739,013)
(731,878)
98,642
6,080,281
756,998
(52,800)
95,546
200,000
4,960,698
4,741,433
Bank
bills
$
Lease
liability
$
Total
$
12,000,000
(6,980,000)
2,968,536 14,968,536
(7,398,487)
(418,487)
5,020,000
2,900,000
2,550,049
(41,858)
7,570,049
2,858,142
7,920,000
2,508,191 10,428,191
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 35. Earnings per share
Earnings per share
Consolidated
2018
$
2017
$
Profit after income tax attributable to the owners of Big River Industries Limited
Preference dividends
5,176,270
-
3,927,681
(2,423,302)
Profit after income tax attributable to the owners of Big River Industries Limited used in
calculating basic earnings per share
5,176,270
1,504,379
Weighted average number of ordinary shares used in calculating basic earnings per share
52,888,531 10,921,448
Weighted average number of ordinary shares used in calculating diluted earnings per share 52,888,531 10,921,448
Number
Number
Basic earnings per share
Diluted earnings per share
Options over ordinary shares were excluded from the above calculations as they are not dilutive.
Adjusted earnings per share
Cents
Cents
9.79
9.79
13.77
13.77
Consolidated
2018
$
2017
$
Profit after income tax attributable to the owners of Big River Industries Limited used in
calculating adjusted earnings per share
5,176,270
3,927,681
Weighted average number of ordinary shares
Weighted average number of preference shares
Number
Number
52,888,531 10,921,448
- 30,188,800
Weighted average number of shares used in calculating adjusted earnings per share
52,888,531 41,110,248
Adjusted basic earnings per share
Adjusted diluted earnings per share
Cents
Cents
9.79
9.79
9.55
9.55
Options over ordinary shares were excluded from the above calculations as they are not dilutive.
Note 36. Share-based payments
Unlisted options
The Company has granted options to senior managers of the Company, through persons or entities nominated by them.
The options will not be listed.
The options are governed by the terms of option deeds (as amended pursuant to deeds of amendment to comply with the
ASX Listing Rules) that are on the same or substantially similar terms. The terms of issue of the options are summarised
below.
53
Big River Industries Limited
Notes to the financial statements
30 June 2018
Note 36. Share-based payments (continued)
Exercise
Under the option deeds, the options may be exercised for the exercise price specified on grant of the option (as set out in
the table below). The options may only be exercised before the expiry date (as set out in the table below). The options may
be exercised by delivering a signed exercise notice and an amount equal to the exercise price multiplied by the number of
options being exercised to the address of the Company’s solicitors. On exercise, the holder will be issued one ordinary
share for each option exercised.
Lapse
The options lapse automatically:
●
●
●
●
if the senior management executive who nominated the optionholder ceases to be employed by the Company; or
at the end of the designated exercise period for the options, unless extended in accordance with the option deeds; or
if the optionholder ceases to be a holder of ordinary shares in the Company; or
in the event that a drag along notice or a tag along notice is issued, each option will terminate and lapse with
immediate effect upon issue of the drag along notice or the tag along notice and the Company must upon completion
of the transaction contemplated, pay an amount to the optionholder equal to the price per share specified in the drag
along notice less the exercise price multiplied by the number of options.
Transfer/Dealing
The optionholder cannot dispose, encumber or otherwise deal with their options without the prior written approval of the
Board.
Set out below are summaries of options granted under the plan:
2018
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
19/02/2016
13/02/2017
19/02/2021
13/02/2022
$2.00
$2.20
1,370,000
45,455
1,415,455
-
-
-
2017
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
19/02/2016
13/02/2017
19/02/2021
13/02/2022
$2.00
$2.20
1,370,000
-
1,370,000
-
45,455
45,455
The weighted average share price during the financial year was $2.082 (2017: $1.649).
-
-
-
-
-
-
-
-
-
1,370,000
45,455
1,415,455
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
1,370,000
45,455
1,415,455
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.64 years
(2017: 3.64 years).
Note 37. Events after the reporting period
Apart from the dividend declared as disclosed in note 22, no other matter or circumstance has arisen since 30 June 2018
that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the
Group's state of affairs in future financial years.
54
Big River Industries Limited
Directors' declaration
30 June 2018
In the directors' opinion:
●
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2018 and of its performance for the financial year ended on that date;
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
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 described in note 32 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Gregory Laurie
Chairman
27 August 2018
Sydney
___________________________
James Bindon
Managing Director
55
56
57
58
59
Big River Industries Limited
Shareholder information
30 June 2018
The shareholder information set out below was applicable as at 3 August 2018.
In accordance with ASX listing rule 4.10.19 the Company confirms that it has used the cash and assets in a form readily
convertible to cash that it had at the time of admission to the ASX in a way consistent with its business objectives.
Distribution of equitable securities
Analysis of number of equitable security holders by 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
Holding less than a marketable parcel
Equity security holders
Number
of holders
of ordinary
shares
26
75
41
56
19
217
-
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
shares
issued
Number held
ANACACIA PARTNERSHIP II LP
NATIONAL NOMINEES LIMITED
PANTHEON GLOBAL CO-INVESTMENT OPPORTUNITIES FUND I I LP
PANTHEON INTERNATIONAL PLC
PANTHEON GLOBAL CO-INVESTMENT OPPORTUNITIES FUND III LP
SAID BUILDING PRODUCTS GROUP PTY LTD
ANACACIA PTY LIMITED (WATTLE FUND)
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PANTHEON MULTI STRATEGY CO-INVESTMENT PROGRAM 2014
PANTHEON ASIA FUND VI LP
ERN SMITH PTY LTD
DEAN JOSEPH HENDERSON & TERESA YOLANDA HENDERSON (THE HENDERSON
SUPER FUND)
MEGAN ANNE BINDON (THE BINDON FAMILY A/C)
VESKAY PTY LTD (VESKAY SUPER FUND A/C)
BINDON SUPER PTY LTD (BINDON SUPER FUND A/C)
JAMES HIATT & BREE HIATT (THE J&B HIATT SUPER FUND A/C)
MICHELLE MARGARET GLANCY (GLANCY FAMILY)
CRAIG ANDREW DORWARD & KATRINA LOUISE DORWARD (DORWARD FAM SUPER
FUND)
DAVID MCFEETER & MARY N BAKER (MCFEETER SUPER FUND A/C)
SIXTEENONINE HOLDINGS PTY LTD (SIXTEENONINE INVEST SUPER FUND A/C)
15,850,001
10,750,819
7,062,056
3,892,055
3,539,834
2,397,260
1,999,644
1,356,365
854,139
501,916
298,883
250,000
200,000
200,000
200,000
160,000
153,059
150,000
140,000
100,000
29.88
20.27
13.31
7.34
6.67
4.52
3.77
2.56
1.61
0.95
0.56
0.47
0.38
0.38
0.38
0.30
0.29
0.28
0.26
0.19
50,056,031
94.37
60
Big River Industries Limited
Shareholder information
30 June 2018
Unquoted equity securities
Options over ordinary shares issued
Substantial holders
Substantial holders in the Company are set out below:
Anacacia Partnership II, LP
NAOS Asset Management Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Number
on issue
Number
of holders
1,415,455
15
Ordinary shares
% of total
shares
issued
Number held
31,700,001
10,400,819
59.76
19.61
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
On-market buy-backs
There is no current on-market buy-back in relation to the Company's securities.
Securities subject to voluntary escrow
Class
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Expiry date
Upon close of market on 28 August 2018
30 September 2018
4 December 2018
31 December 2018
Number
of shares
18,000,001
153,059
298,883
4,948,170
23,400,113
61
Big River Industries Limited
Corporate details
30 June 2018
QLD:
Townsville
Sunshine Coast
Brisbane (Meadowbrook)
Brisbane (Hillcrest)
Gold Coast
NSW:
Sydney
Kiama
Grafton (Factory)
Wagga Wagga (Factory)
Head Office
ACT:
Canberra
VIC:
Melbourne
SA:
Adelaide
WA:
Perth
57 Bolam Street, Garbutt QLD 4814
Phone: (07) 4431 2500 Fax: (07) 4779 6024
Postal: PO Box 7296 Garbutt QLD 4814
10 Main Drive, Warana QLD 4575
Phone: (07) 5439 1000 Fax: (07) 5493 8018
Postal: PO Box 260 Buddina QLD 4575
45 Ellerslie Road, Meadowbrook QLD 4131
Phone: (07) 3451 8300 Fax: (07) 3200 8339
Postal: PO Box 1858 Springwood QLD 4127
Sabdia
22-24 Johnson Road, Hillcrest QLD 4118
Phone: (07) 3800 2255 Fax: (07) 3800 6936
Postal: 22-24 Johnson Road, Hillcrest QLD 4118
Midcoast Timbers
11 Central Drive, Burleigh Heads QLD 4220
Phone: (07) 5522 0624 Fax: (07) 5522 0614
Postal: PO Box 3189 Burleigh Town QLD 4220
89 Kurrajong Avenue, Mt Druitt NSW 2770
Phone: (02) 8822 5555 Fax: (02) 8822 5500
Postal: PO Box 1049 St Marys NSW 2760
113 Shoalhaven Street, Kiama NSW 2533
Phone: (02) 4232 6600 Fax: (02) 4232 6605
Postal: PO Box 430 Kiama NSW 2533
61 Trenayr Road, Junction Hill NSW 2460
Phone: (02) 6644 0900 Fax: (02) 6643 3328
Postal: PO Box 281 Grafton 2460
128 Elizabeth Avenue, Forest Hill NSW 2651
Phone: (02) 6926 7300 Fax: (02) 6922 7824
Postal: PO Box 205 Forest Hill NSW 2651
61 Trenayr Road, Junction Hill NSW 2460
Phone: (02) 6644 0900 Fax: (02) 6643 3328
Postal: PO Box 281 Grafton 2460
Ern Smith Building Supplies
13 Sheppard Street, Hume ACT 2620
Phone: (02) 6260 1366 Fax: (02) 6260 1399
Postal: PO BOX 305 Jerrabomberra NSW 2619
24-32 Discovery Road, Dandenong South VIC 3175
Phone: (03) 9586 6900 Fax: (03) 9587 4501
Postal: PO Box 4388 Dandenong South VIC 3164
Adelaide Timber & Building Supplies
10 Kingstag Crescent, Edinburgh North SA 5113
Phone: (08) 8255 5577 Fax: (08) 8252 2552
Postal: PO Box 18 Edinburgh North SA 5113
255 Treasure Road, Welshpool WA 6106
Phone: (08) 9256 7400 Fax: (08) 9256 7477
Postal: PO Box 183 Welshpool DC WA 6986
62
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