Beacon Lighting Group Limited
ANNUAL
REPORT
20 14
ACN 164 122 785
For personal use only For personal use only Contents
Chairman’s and Chief Executive Officer’s Report
Board of Directors
Management Team
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
Index to the Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the
Members of Beacon Lighting Group Limited
Shareholders’ Information
Corporate Directory
Store Locations
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5
6
8
12
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25
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27
59
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66
Important Notice
This financial report is the consolidated financial report of the consolidated entity consisting Beacon Lighting Group Limited, ACN 164 122 785 and its
subsidiaries. Beacon Lighting Group Limited is a Company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place
of business is 5 Bastow Place Mulgrave Victoria 3170. A description of the nature of the consolidated entity’s operations and its principal activities is included
in the Director’s report on page 12, which is not part of the financial report. The financial report was authorized for issue by the Directors on 22 August 2014.
The Director’s have the power to amend and re-issue the financial statements.
For personal use only For personal use only Chairman’s and Chief Executive Officer’s Report
Beacon Lighting Group Limited is pleased to report the achievement of two significant milestones
for FY2014. With the efforts of the Beacon Lighting team and the support of our new shareholders,
we have been able to accomplish our long-term goal, with a very successful IPO in April 2014. In
addition and pleasingly, Beacon Lighting has continued to trade strongly with record sales and profits
in FY2014. Total sales for the business grew by 13.1%, Net Profit after Tax improved by 24.8% and
Company store comparative sales were solid with a 5.7% increase on a 52 week comparable basis1.
Throughout the year we have positioned the business to be at the forefront of product development,
bringing the latest fashion, trends and technically advanced products to our valued customers. This
along with the dedication and comprehensive lighting knowledge of our sales associates has ensured
that Beacon Lighting has maintained our industry leading position in Australia.
General Market Environment
The general market conditions remain supportive of the lighting industry
in Australia. Low interest rates, improvements in renovating and
redecorating markets and stronger new housing numbers are all positive
indicators for Beacon Lighting. Whilst we did see a dip in consumer
confidence during the last quarter with the Federal Budget release, we
have seen a recovery since then. Auction clearance rates throughout the
year have also been strong, which means further opportunities for us
in the ever-increasing home renovation and redecoration market. The
continuing and rapid development of new LED technologies, increasing
energy costs and new energy efficiency regulations continue to drive
growth in the lighting category. Given this market environment and its
outlook, the Directors believe there are many opportunities ahead for
Beacon Lighting.
Overview
Beacon Lighting achieved a 13.1% sales increase over FY2013 on a
52-week comparable basis, growing sales to $150.3 million, which was
consistent with the prospectus forecast. Our Company store comparative
sales were solid, growing at a rate of 5.7%. As a result of operating
efficiency gains, operating expenses reduced as a percentage of sales
compared to the prospectus. Beacon Lighting achieved a Net Profit
After Tax increase of 24.8% on a 52 week comparable basis to a record
$11.8 million compared to last year. The Net Profit After Tax result also
exceeded the prospectus forecast by 2.8%.
Following the impact of our very successful IPO, Beacon Lighting has
continued to maintain a conservative balance sheet. Our retained
earnings, supported by our trade finance facilities, have funded the
growth in new stores, store acquisitions, inventories and other assets.
At the end of FY2014, Beacon Lighting operated 71 Company retail
stores, 14 franchise stores, 3 commercial sales offices, Beacon
International and Beacon Solar. During FY2014, we opened six new
stores, which included the conversion of an independent lighting store
in Bendigo (VIC) and one relocation. In addition the business acquired
the Taren Point (NSW) Beacon Lighting franchise store. We continued to
invest in the merchandising standards of our stores, ensuring the rapid
changes in technology are easier for our customers to understand, and
creating an exciting and engaging place to shop.
Beacon Lighting also had a number of other notable achievements in
FY2014 including:
t
56% increase in LED product sales
t
44% increase in online sales
t
125% increase in VIP members
t
20% increase in trade sales
1 Compared to the 52 week FY2013 Pro Forma historical result in the prospectus dated 12 March 2014.
CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REPORT
1
For personal use only Growth Strategies
Capital investment
Beacon Lighting intends to continue to drive sales and profits through
a number of key growth strategies. These include new store rollouts,
optimising the store portfolio and operations, introducing new product
ranges and leveraging new technology in lighting to be first to market.
We aim to enhance our online activities, leverage existing capabilities,
actively look at acquisitions, support our emerging businesses and
generate efficiency gains to ensure continued growth.
Innovation is key to our business. Throughout the year we designed
and developed over 400 new products, which represents close to
20% of the total range. Many of the products developed are industry
leading and designed to blend fashion and design with the latest
energy efficiency technology. New product innovation allows us to
maintain excitement amongst our customers and achieve strong product
margins. As a vertically integrated Company, 90% of the products sold
are supplied through our own supply chain, and 80% of those items are
exclusively branded.
Our store rollout program is largely dependent on potential sites meeting
key matrix requirements. Currently there are a number of opportunities
in various locations, which is positive news for our continued store
expansion and Company growth.
Investments in our online assets continue to improve the shopping
experience for our entire customer base. We have launched a new
Beacon Solar website, refreshed our trade website, and introduced
more engaging and informative content on our main Beacon Lighting
retail website.
We believe that a key to sales growth and business success is having
knowledgeable, dedicated and enthusiastic sales associates to provide
our customers with the best service experience and lighting advice.
Beacon Lighting has continued its commitment to ongoing training with
extensive e-learning modules, lighting consultancy training, sales skills
training and management training.
Beacon Lighting has invested in new stores and re-invested in all stores
with the introduction of new merchandise display units.
Corporate Governance
The Board recognises the importance of good corporate governance
for the benefit of our shareholders, associates and customers. Changes
and developments in the corporate governance area are monitored and
reviewed for implementation if required. The Board is committed to
ensuring that Beacon Lighting is operated ethically and in accordance
with high standards of corporate governance.
Dividends
The Directors have declared a dividend of 1.4 cents per share fully
franked for the half year ended 29 June 2014, consistent with the
dividend contemplated in the IPO prospectus. Going forward, it is
expected that fully franked dividends of between 50% and 60% of Net
Profit After Tax will be paid half yearly in March and September.
Outlook
Looking forward to FY2015, Beacon Lighting remains well positioned
to take advantage of ongoing changes in the lighting industry. We will
continue to introduce new and exciting product ranges to provide the
latest in fashion, technology and energy efficiency to our customers.
We intend to continue to invest and grow the business with the opening
of new stores, undertaking major refurbishments, improving our
merchandising, sales associate training and a number of other initiatives
and projects. The Beacon Lighting team joins our shareholders in looking
forward to another successful year in FY2015.
Ian Robinson
Executive Chairman
Glen Robinson
Chief Executive Officer
2
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only Highlights
SALES1 ($m)
200.0
150.0
100.0
50.0
0.0
FY 2012
FY 2013
FY 2014
COMPARATIVE SALES GROWTH1,2
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
25.0
20.0
15.0
10.0
5.0
0.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
FY 2012
FY 2013
FY 2014
EBITDA1,3 ($m)
FY 2012
FY 2013
FY 2014
NPAT1,4 ($m)
FY 2012
FY 2013
FY 2014
1 52 week FY2012 & FY2013 Pro Forma result in the Prospectus dated 12 March 2014.
2 Company store comparative sales growth
3 Earnings before interest, Tax, Depreciation and Amortisation (EBITDA).
4 Net Profit After Tax (NPAT).
HIGHLIGHTS
3
For personal use only
For personal use only Board of Directors
Ian Robinson
Executive Chairman
40 years of service
Glen Robinson
Chief Executive
Officer
BBus (Mgt)
19 years of service
Eric (James) Barr
Deputy Chairman
Non-Executive
Director
Neil Osborne
Non-Executive
Director
BCom, CPA, FAICD
Ian Robinson purchased the first Beacon Lighting store in 1975. Over the
subsequent 40 years, his role has grown from management of the first store
to CEO. He assumed his current position in July 2013 when he relinquished
the role of CEO. He continues to be actively involved in the management
and operation of Beacon Lighting on a day-to-day basis.
Ian is a Director of Lighting Council of Australia. He is also President of the
Large Format Retailers Association. Ian is also a Director of Indice Ecotech
Pty Ltd.
Ian’s interest in shares of the Company are Noted in section 7 of the
Director’s report.
Glen Robinson assumed the current role of Chief Executive Officer in July
2013 and was appointed to the Board on 7 February 2014. He has a strong
understanding of all aspects of the business with a particular passion for
bringing the latest lighting products to market.
Glen started at Beacon Lighting on the sales floor and progressed to Trainee
Buyer, before becoming Merchandising Manager in 2003. In 2006 he
was promoted to General Manager – Merchandise taking responsibility
for Beacon Lighting’s product range from development through to
in-store presentation.
Glen’s interest in shares of the Company are Noted in section 7 of the
Director’s report.
Appointed to the Board on 7 February 2014 Eric Barr is the Deputy
Chairman and also the Chairman of Beacon Lighting’s Remuneration and
Nomination Committee.
A Chartered Accountant, Eric retired in 2000 as a partner with
PricewaterhouseCoopers after 20 years service providing multi-disciplinary
services to numerous retailers. Since then he has been a Director of public
and private companies in the United States and Australia, including 10 years
as lead Director of Reading International Inc. Eric is a Director and Chairman
of the Audit Committee of Asia Pacific Exchange Limited, Director of Western
Bulldogs Forever Foundation Limited and Western Bulldogs Society Limited.
Eric’s interest in shares of the Company are Noted in section 7 of the
Director’s report.
Appointed to the Board on 7 February 2014 Neil Osborne is also chairman
of the Company’s Audit Committee.
Neil has over 30 years’ experience in the retail industry. He was formerly an
Accenture Partner, leading large strategic projects in Australia and Asia. He
also spent 18 years with Coles Myer Ltd in senior positions including finance
(including CFO Myer) and strategic planning.
Neil is a non-Executive Director of Vita Group, Deputy Chairman of Australian
United Retailers and is a non-Executive Director of Callista Software Services
which is wholly owned by Deakin University.
Neil’s interest in shares of the Company are Noted in section 7 of the
Director’s report.
BOARD OF DIRECTORS
5
For personal use only Management Team
Ian Bunnett
Managing Director: Retail
9 years service
Responsible for overseeing the Company’s national retail and commercial network,
with the assistance of five state sales managers. Ian’s experience includes senior
roles in an extensive retail career with Payless Shoes culminating in the position
of General Manager of store operations. He joined Beacon Lighting as National
Sales Manager in 2004 and was appointed to his current role in 2013.
David Speirs
Chief Financial Officer
11 years service
Responsible for the finance department, distribution and information technology
functions. David’s experience includes various businesses within Coles Myer
followed by consulting roles with KPMG and Deloitte where he managed major
projects for local and international retailers. David holds a BBus(Accounting),
MBus(Accounting), Post Grad Dip(Finance) and is a FCPA.
Barry Martens
Chief Operating Officer
17 years service
Responsible for all corporate operations, property, franchising, mergers and
acquisitions. He also oversees the facilities maintenance and Beacon Solar
divisions. Barry joined the Company as Marketing Manager, following a career in
retail advertising with agencies, Clemenger Harvey and J. Walter Thompson, and
also with retail chain Klein’s Jewellery heading its national marketing function.
Barry holds a Certificate in Business Studies(Advertising).
Elizabeth Mikkelsen
Group Human Resources
Manager
11 years service
Responsible for the full range of human resources activities including payroll,
safety and compliance. Elizabeth’s previous experience includes an optical
retailer in Denmark and the Commonwealth Bank. Australian retail has dominated
her career, spending nearly 15 years with Myer in human resources, training
and line management positions. Elizabeth holds a BA(Psych(Hons)) and a Dip
(Human Resources).
Prue Robinson
Marketing Director
8 years service
Responsible for developing marketing and e-commerce strategies to generate
traffic and to develop the Company’s market position and brand integrity. Also
responsible for the internal marketing team. Prue developed her experience
through a variety of roles including periods in Sydney and London before
spending four years in marketing with Spotlight. Prue holds a BBus(Management
& Marketing).
Michael (Mick) Tan
Chief Information Officer
13 years service
Responsible for the strategic direction of the Company’s information technology
support, infrastructure and development. Mick has over 30 years experience
in information technology and its application in retail. He has worked in various
companies specialising in retail point of sale systems including Fujitsu Systems
Business (Malaysia). Mick holds a Dip(Management), an ICL Certificate(Systems
Analysts & Design) and an ICL Certificate(Base Computer Concepts & Programming).
Rodney Brown
National Distribution
Manager
2 years service
Responsible for the supply chain operations within Australia and overseas,
including the Company’s distribution centre and third party logistics warehouses.
Rodney has extensive supply chain experience including domestic and
international logistics and the management of distribution centres for Cadbury
Schweppes and Fosters Brewing. Rodney holds a Certificate III (Purchasing),
Certificate (Warehouse Management).
Tracey Hutchinson
Finance Manager &
Company Secretary
2 years service
Responsible for the finance and accounting functions including responsibility
for the integrity of financial systems and reporting. Tracey’s experience
includes senior financial management roles with various Australian divisions of
ASX and internationally listed companies. Most recently Tracey was CFO and
Company secretary for Eyecare Partners, formerly ASX listed. Tracey holds a
BBus(Accounting), an MBus(Administration) and is a CPA.
6
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only For personal use only Corporate Governance Statement
The Board of Directors of Beacon Lighting Group Limited is responsible for the corporate governance of the Company. This statement outlines the
corporate governance policies and practices formally adopted by Beacon Lighting. These policies and practices are in accordance with the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations with 2010 Amendments (3rd Edition) unless otherwise stated. The Board
considers that the Company’s corporate governance practices and procedures substantially reflect the principles. The full content of the Company’s
Corporate Governance policies and charters can be found on the Company’s website (www.beaconlightinggroup.com.au).
Principle 1
Lay solid foundations for management and oversight
Principle 2
Structure the Board to add value
The Board’s responsibilities are defined in the Board Charter and there is
a clear delineation between the functions reserved to the Board and those
conferred upon the Chief Executive Officer and certain other officers of
the Company.
The Board Charter outlines:
The experience and expertise relevant to the position of Director held by
each Director in office at the date of the annual report is included in the
Directors’ Report.
The term in office held by each Director in office at the date of this report
is as follows:
• The guidelines for Board composition, including the processes around
Director appointments and resignations.
• The operation of the Board and the Board Committees.
• The roles of the Board, the Chairperson, CEO and senior management.
• Specifically includes risk management responsibilities (rather than these
being delegated to a separate Risk Committee).
A copy of
Company’s website.
the Company’s Board Charter
is available on
the
The Board and Committee Evaluation Policy sets out the processes for the
annual review of the performance of the Board as a whole, each Director
and the Board Committees.
The Board has established a Remuneration and Nomination Committee
which is responsible for annually reviewing executive remuneration and
incentive policies and practices.
The Company has adopted a Diversity Policy. The Company does not
propose to establish measurable gender diversity objectives in the
foreseeable future as:
• Our senior management team are extremely experienced and stable
and we do not intend to make changes in the coming year.
• We are strongly committed to making all selection decisions on the
basis of merit and the setting of specific objectives for the quantum of
males/females at any level would potentially influence decision making
to the detriment of the business.
The Diversity Policy affirms the commitment of the Company to embrace
diversity and sets out the principles and work practices to ensure that all
Associates have the opportunity to achieve their full potential.
Name
Ian Robinson
Eric Barr
Glen Robinson
Neil Osborne
Term in office
1 year
Less than 1 year
Less than 1 year
Less than 1 year
Note: these terms of office relate to the listed entity Beacon Lighting Group
Limited only and do not relate to the subsidiary or operating entities.
Principle 2.4 and 2.5 of the ASX Corporate Governance Principles and
Recommendations recommends that the Board comprise a majority
of Directors who are independent, and an independent Chairperson.
The Board, as currently composed, does not comply with these
recommendations.
Ian Robinson is a substantial shareholder. He has been Chairman since
July 2013 having previously held the position of Chairman and Chief
Executive Officer.
Eric Barr and Neil Osborne are shareholders of the Company. They
are Non-Executive Directors in the current Board structure and bring
objective judgement to bear on Board decisions commensurate with their
commercial knowledge, experience and expertise.
Glen Robinson is a senior executive of Beacon Lighting and has been
Chief Executive Officer since July 2013.
the ASX Corporate Governance Principles and
Principle 2.1 of
Recommendations
the Board establishes a
recommends
nomination committee and that the committee have at least three
members, a majority of whom are independent and be chaired by an
independent Director.
that
The Remuneration and Nomination Committee has four members. Three
are independent: Eric Barr and Neil Osborne, as independent Directors,
and one external consultant. Ian Robinson, Executive Chairman, is the
other member.
The Committee is chaired by Eric Barr.
8
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only Eric Barr, Glen Robinson and one external consultant. Two of the four
members of the committee are Non-Executive Directors and have
experience in, and knowledge of, the industry in which Beacon Lighting
operates. Neil Osborne, Eric Barr and the external consultant each have
accounting qualifications.
The details of the number of Audit Committee meetings held and
attended are included in the Directors’ Report. Minutes are taken at each
Audit Committee meeting, with the minutes tabled in the following full
Board meeting.
The Audit Committee has adopted a formal charter which outlines its role
in assisting the Board in the Company’s governance and exercising of due
care, diligence and skill in relation to:
• Reporting of financial information.
• The application of accounting policies.
• Financial risk management.
• The Company’s internal control system.
• Its relationship with the external auditor.
In accordance with Principle 4.2 the Board received assurance for the
year ended 29 June 2014 from the Chief Executive Officer and the
Chief Financial Officer that the declaration provided in accordance with
section 295A of the Corporations Act is founded on a sound system of
risk management and internal control and that the system is operating
effectively in all material respects.
In accordance with principle 4.3, the Company’s external auditor attends
each annual general meeting and is available to answer shareholder
questions about the audit.
Principle 5
Make timely and balanced disclosure
Principle 5.1 of
the ASX Corporate Governance Principles and
Recommendations recommends that Companies should establish written
policies designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior executive level
for that compliance and disclose those policies or a summary of
those policies. Accordingly the Company has adopted a Continuous
Disclosure Policy.
This Policy sets out the standards, protocols and the detailed requirements
expected of all Directors, officers, senior management and associates
of the Company for ensuring the Company immediately discloses all
price-sensitive information in compliance with the Listing Rules and
Corporations Act relating to continuous disclosure.
In relation to nominations, the Remuneration and Nomination Committee
is responsible for:
• Assessing current and future Director skills and experiences and
identifying suitable candidates for succession.
• Annually enquiring of the Executive Chairman and the Chief Executive
Officer their processes for evaluating their direct reports.
An internal process of evaluation will be undertaken annually on the
performance of the Board and its committees. This review will provide
satisfaction to the Board that its structure and performance is effective
and appropriate to Beacon Lighting and the Board has the range of skills,
knowledge and experience to direct the Company.
To enable performance of their duties, all Directors:
• Are provided with appropriate information in a timely manner and can
request additional information at any time;
• Have access to the Company Secretary;
• Are able to seek independent professional advice at the Company’s
expense in certain circumstances.
Principle 3
Act ethically and responsibly
The Company has adopted a written Code of Conduct which applies
to all associates employed by the Company, including executives and
non-executives. The objective of this Code is to ensure that high standards
of corporate and individual behaviour are observed by all associates in the
context of their employment.
In summary, the Code requires associates to always act:
• In a professional, fair and ethical manner, in accordance with
Company values.
• In accordance with applicable legislation and regulations, and internal
policies and procedures.
• In a manner that protects the Company interests, reputation, property
and resources.
The Code also reminds associates of their responsibility to raise any
concerns in relation to suspected or actual breaches of the Code.
Beacon Lighting has in place a policy concerning trading in Company
securities. The Securities Trading policy includes detailed requirements
for Directors, officers and key management regarding when they can
trade Beacon Lighting securities.
Principle 4
Safeguard integrity in corporate reporting
the ASX Corporate Governance Principals and
Principle 4.1 of
Recommendations, recommends that the Audit Committee consist only
of Non-Executive Directors and consists of a majority of independent
Directors. The Audit Committee as currently composed does not comply
with these recommendations. Beacon Lighting has an Audit Committee
comprising of four members, three of whom are considered independent.
The Audit Committee presently comprises Neil Osborne (Chairman),
CORPORATE GOVERNANCE STATEMENT
9
For personal use only Principle 6
Respect the rights of security holders
Principle 8
Remunerate fairly and responsibly
Principle 8.1 of
the Corporate Governance Principles and
Recommendations, recommends that the remuneration committee
should comprise a majority as independent Directors. The Remuneration
and Nomination Committee as currently composed does not comply with
this recommendation. The Company has established a Remuneration and
Nomination Committee. The Remuneration and Nomination Committee
has four members. Three are independent: Eric Barr and Neil Osborne,
as independent Directors, and one external consultant. Ian Robinson,
Executive Chairman, is the other member. The Committee is chaired by
Eric Barr.
In relation to remuneration, the Remuneration and Nomination Committee
is responsible for:
• Ensuring the Company has remuneration policies and practices
appropriate to attracting and retaining key talent.
• Reviewing and making recommendations in relation to the remuneration
of Directors and senior management.
• Reviewing and recommending the design of any executive incentive
plans and approving the proposed awards to each executive under
those plans.
In accordance with its Charter, the Remuneration and Nomination
Committee clearly distinguishes the structure of Non-Executive Directors’
remuneration from that of Executive Directors and senior executives.
Directors’ and executives’ remuneration has been disclosed in the
remuneration report section of the annual report.
The Company has adopted a Communications Policy governing its
approach to communicating with its shareholders, market participants,
customers, associates and other stakeholders.
This policy specifically includes:
• The approach to briefing institutional investors, brokers and analysts.
• Includes communications whether by meetings, via the Company’s
websites, electronically or by any other means.
Beacon Lighting provides a printed copy of its annual report to all
requesting shareholders. The annual report contains relevant information
about the Company’s operations during the year, changes in the state of
affairs and, other disclosures required by the Corporations Act. The half
year report contains summarised financial information and a review of
Beacon Lighting operations during the period.
The Beacon Lighting Corporate website provides all shareholders and the
public access to our announcements to the ASX, and general information
about Beacon Lighting and our business.
The format of general meetings aims to encourage shareholders to
actively participate in the meeting through being invited to comment, or
raise questions of Directors on any matter relevant to the performance
and operation of the Company.
Principle 7
Recognise and manage risk
Principle 7.1 of
the ASX Corporate Governance Principles and
Recommendations recommends that the Board of a listed Company have
a committee to oversee risk.
The Board, having regard to the Company’s stage of development does
not currently comply with these recommendations. The Board Charter
specifically includes risk management responsibilities (rather than these
being delegated to a separate Risk Committee).
The Board retains oversight responsibility for assessing the effectiveness
of the Company’s systems for the management of material business risks.
The Board, having regard to the Company’s stage of development does
not consider a separate internal audit function is necessary at this stage.
One of the Audit Committee responsibilities is to evaluate compliance
with the Company’s risk management and internal control processes.
The Board has received written assurances from management as to the
effectiveness of the Company’s management of its material business risks.
The Chief Executive Officer and Chief Financial Officer have provided
written assurance that the declaration provided in accordance with
section 295A of the Corporations Act is founded on a sound system of
risk management and internal control and that the system is operating
effectively in all material respects in relation to financial reporting risks.
10
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only For personal use only Directors’ Report
The Directors of Beacon Lighting Group Limited (the ‘Company’) present their report together with the Consolidated Financial Statements of the Company
and its controlled entities (the ‘Consolidated Entity’) for the 52 weeks ended 29 June 2014.
1. Directors
The Directors of the Company during the whole financial period and up to
the date of the report were:
Ian Robinson
Executive Director
Chairman of the Board, Member of the Remuneration and
Nomination Committee.
The following Directors were appointed during the year:
Glen Robinson
Chief Executive Officer
Member of the Audit Committee.
Eric Barr
Non-Executive Director
Deputy Chairman of the Board, Chairman of the Remuneration and
Nomination Committee and Member of the Audit Committee.
Neil Osborne
Non-Executive Director
Chairman of the Audit Committee and Member of the Remuneration and
Nomination Committee.
Directors Appointed during the year
Glen Robinson, Eric Barr and Neil Osborne were appointed as Directors
on 7 February 2014 and continue in office at the date of this report.
Martin Hanman was a Director of Beacon Lighting Corporation Pty
Ltd from the beginning of the financial year until his resignation on 9
April 2014.
Details of the expertise and experience of the Directors are outlined on
page 5 of this annual report.
2. Principal Activities
During the financial period the principal continuing activities of the
Group consisted of the selling of lighting, globes, ceiling fans and energy
efficient products in the Australian market.
3. Results
The consolidated profit for the year attributable to the members of
Beacon Lighting Group Limited was:
Consolidated Entity
20141
$000
20131
$000
Profit before Income Tax
17,057
14,170
Income Tax Expense
5,260
4,304
Operating profit after tax attributable
to the members of Beacon Lighting
Group Limited
11,797
9,866
1 Year ended 29 June 2014 was a 52 week period compared to year ended 30 June 2013
being a 53 week period.
12
BEACON LIGHTING GROUP ANNUAL REPORT 2014
4. Operating and Financial Review
4.1 Overview of Operations
Beacon Lighting is Australia’s leading specialist retailer of lighting, ceiling
fans and light globes, offering its customers knowledge, service and advice
on a wide range of products. As a vertically integrated business, Beacon
Lighting develops, designs, sources, imports, distributes, merchandises,
promotes and sells its product range to meet the demands of customers.
More than 90% of the products in Company stores are supplied through
the Company’s wholesale supply chain and approximately 80% of the
products are exclusively branded.
As at 29 June 2014, Beacon Lighting operated the following businesses:
• 71 Beacon Lighting Company Operated Stores;
• 14 Beacon Lighting Franchise Stores;
• 3 Commercial Sales Offices;
• Beacon International; and
• Beacon Solar
During FY2014, Beacon Lighting opened 6 new stores, bought back the
Taren Point (NSW) franchise store, relocated an existing store and merged
one commercial sales office back into the retail network. The new stores
that opened in FY2014 were Baldivis (WA), Kawana (QLD), McGraths
Hill (NSW), Noarlunga (SA), Toowoomba (QLD) and Bendigo (VIC), which
was an existing independent lighting store acquired and converted to a
Beacon Lighting store. During the year, the Joondalup (WA) store was
relocated and the Far North Queensland Commercial Sales Office was
merged back into the Townsville retail store.
For personal use only 4.1.1 Financial Performance
A summary of the actual FY2014 financial performance compared to the FY2014 Prospectus Forecast and the FY2013 Pro Forma historical results is
presented in the following table.
Consolidated Entity
Sales
Gross Profit
Other Income & Other Revenue
Operating Expenses3
EBITDA
EBIT
Net Profit After Tax (NPAT)
Historical1
FY2013
$’000
Prospectus 2
FY2014
$’000
132,932
85,599
4,575
(73,559)
16,615
14,511
9,456
150,261
96,611
5,503
(82,823)
19,291
17,229
11,480
Actual
FY2014
$’000
150,338
96,660
5,521
(82,095)
20,086
18,066
11,797
% Inc / Dec
on Last Year
% Inc / Dec
on Prospectus
13.1%
12.9%
20.7%
11.6%
20.9%
24.5%
24.8%
0.1%
0.1%
0.3%
(0.9%)
4.1%
4.9%
2.8%
1 Based on the 52 week FY2013 Pro Forma Historical result in the Prospectus dated 12 March 2014
2 Based on the FY2014 Pro Forma Statutory Forecast in the Prospectus 12 March 2014
3 Operating Expenses exclude depreciation and amortisation
4.1.2 Sales
4.1.6 Earnings
In FY2014, Beacon Lighting sales increased by 13.1% as a result of
new store openings, comparative Company store growth, wholesale
sales to franchise stores and the combined sales of the Beacon Lighting
Commercial, Beacon International and Beacon Solar businesses. Key to
the total sales increase was the FY2014 comparative Company store
sales of 5.7%. Following a first half comparative sales increase of 4.9%,
the positive comparative sales momentum continued into the second
half of the year with a comparative sales increase of 6.9%. The sales for
FY2014 were in line with the Prospectus forecast.
4.1.3 Gross Profit Margin
The gross profit margins at 64.3% of sales in FY2014 were consistent
with the gross profit margins in FY2013 and the Prospectus forecast for
FY2014. Despite the fall in AUD/USD exchange rate, Beacon Lighting was
able to maintain the gross profit margins through effective management
of retail prices and the introduction of new product ranges.
4.1.4 Other Income & Other Revenue
Other income and other revenue, which primarily relates to franchise
store royalties and franchise store contributions to the marketing fund
along with third party related supplier income was ahead of last year and
in line the Prospectus forecast.
4.1.5 Operating Expenses
The operating expenses consist of the marketing, selling, distribution
and general administration expenses. Despite the increase in the total
operating expenses compared to FY2013, Beacon Lighting was able
to effect productivity gains to reduce the FY2014 actual expenses
compared to the Prospectus forecast.
NPAT of $11.8 million was up by 24.8% in FY2014 compared to
$9.5 million. The NPAT result was also up by 2.8% compared to the
Prospectus forecast. The significant factors which impacted on the NPAT
performance were the growth in sales, the stable gross profit margin
and the management of operating expenses. The NPAT result as a
percentage of sales has increased to 7.8% of sales in FY2014 from
7.1% of sales in FY2013.
4.1.7 Dividends
The Directors have declared a dividend of 1.4 cents per share fully
franked for the half year ended 29 June 2014. Thereafter, it is expected
that fully franked dividends of between 50% and 60% of NPAT will be
paid half yearly in March and September.
4.1.8 Financial Position
Beacon Lighting continues to maintain banking facility agreements with
the ANZ Bank and the Bank of Melbourne. Importantly, these banking
facilities provide Beacon Lighting with trade finance facilities to meet
the working capital requirements of stock funding. The facilities have not
been fully drawn over the FY2014 period but provide Beacon Lighting
with additional funding flexibility in the operation of the business. Beacon
Lighting continues to operate well within the bank covenants.
In FY2014, Beacon Lighting invested $5.0 million in capital expenditure
items, principally associated with the expansion of the store network.
An additional $1.3 million was also invested in stock for new stores
and other parts of the supply chain. During FY2014, Beacon Lighting
also acquired the Beacon Lighting Franchise store at Taren Point (NSW)
and an existing independent lighting store in Bendigo (VIC), which was
converted to a Beacon Lighting store.
DIRECTOR’S REPORT
13
For personal use only 4.2 Business Strategies
4.2.8 Efficiency Gains
Beacon Lighting has strategically positioned itself to take full advantage
of the dramatic changes that continue to occur in the global lighting
market. Beacon Lighting intends to drive sales and profit growth through
a number of different strategies.
4.2.1 New Store Rollout
Beacon Lighting plans to open approximately six stores per year for the
foreseeable future depending on suitable site identification, negotiation
and availability.
4.2.2 Optimising Store Portfolio and Operations
Beacon Lighting believes it is able to grow sales through improvements
to its store portfolio and operations. The store portfolio is continually
analysed to identify optimum size, format, fit out and merchandising.
Store refurbishments, review of store operating procedures and
further work on tailoring product ranges to local demographic market
requirements have all been identified as strategies to drive top line
growth.
4.2.3 New Products and Ranges
Beacon Lighting currently offers an extensive range of products with
fashion and energy efficiency in mind. Beacon Lighting has scope
to further improve the breadth and depth of the range. This includes
offering more product categories and more options within each category
to better meet the needs of residential and trade customers.
4.2.4 Technology in Lighting
The lighting industry is experiencing rapid change in technology. A
need for greater energy efficiency is driving the development of LED
technology. Although still in the relatively early stages of development,
this represents a significant opportunity for Beacon Lighting as more
people switch to LED to save on power.
4.2.5 Online Presence
There are significant opportunities to enhance and develop the
Company’s existing online presence to drive top line incremental sales.
Various opportunities have been identified and the majority are yet to be
initiated. These may include opportunities through third party websites
and dedicated category websites.
4.2.6 Acquisitions
Beacon Lighting intends to pursue local and international business
acquisitions that complement the core business activities or leverage
off existing business activities. This may include other lighting stores
including franchised stores, other retail formats or wholesale operations.
4.2.7 Emerging Businesses
Beacon Lighting intends to continue to support the emerging business
divisions in Beacon Solar and Beacon International. Beacon Lighting
recognises they have synergies with the core business and believe
they can strengthen overall market penetration for the brand to drive
additional top line sales and bottom line profit.
Beacon Lighting believes it can make efficiency gains and better control
its cost base as it grows, through further investing in systems and
technology. There are also other opportunities to leverage the Company’s
buying power to reduce supply chain costs and lead times, and improve
inventory management.
4.3 Business Risks
There are a number of risk factors, both specific to Beacon Lighting
and of a general nature which may threaten both the future operating
and financial performance of Beacon Lighting and the outcome of an
investment in Beacon Lighting Group Limited. Many of the risks are
outside the control and influence of the Directors and management but
Beacon Lighting is well positioned to face these risks.
The business risks faced by Beacon Lighting and how it manages these
risks are set out below.
4.3.1 Retail Environment and General Economic Conditions
Beacon Lighting is sensitive to the current state and future changes
in the retail environment and general economic conditions. Beacon
Lighting will manage the business to the current economic conditions.
4.3.2 Competition
Beacon Lighting operates in a competitive retail market, which is subject
to moderate barriers to entry and changing consumer preferences.
Beacon Lighting believes that with its vertically integrated business
model and the business strategies discussed previously its market
leading position will be maintained.
4.3.3 Product Sourcing
Beacon Lighting is a vertically integrated business, which relies
heavily on third party manufacturing. Beacon Lighting will continue to
monitor supplier performance and spread the product sourcing across
many suppliers.
4.3.4 Exchange Rates
The majority of goods that are purchased and imported by Beacon
Lighting are purchased in US dollars and as a result, the Company is
exposed to fluctuations in the AUD/USD exchange rates. Beacon Lighting
mitigates this exchange risk by using a combination of forward contracts
and options.
4.3.5 Product Failure
As a vertically integrated business self-supplying over 90% of stock that
is technically complex in nature, there is risk of some product failure.
Beacon Lighting continues to make significant investment in engineering,
product development and quality control to minimise this risk.
4.3.6 Operating Expenses
Beacon Lighting operating expenses continue to increase. Some of these
are contractual and some are beyond the control of the Company. The
ongoing increase in scale of Beacon Lighting gives the business the
opportunity to deliver operating expense efficiencies.
14
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only 4.4 Trading Outlook
Beacon Lighting has had a solid start to the FY2015. New and exciting
product ranges have been developed for the upcoming Spring / Summer
catalogue release. We are also continuing to see further development in
LED, fan and globe technology, which continues to provide fresh and new
product ranges throughout the business.
In July 2014, Beacon Lighting opened a new store at Mittagong (NSW).
The company has already made leasing commitments at Port Macquarie
(NSW), Pakenham (VIC), Maribyrnong (VIC), North Lakes (QLD), Coburg
(VIC) and Camberwell (VIC) and expects these stores to open in FY2015.
The company will also close the Hawthorn (VIC) store in the first half of
the year. Beacon Lighting continues to review a portfolio of new store
opportunities along with possible business acquisitions.
Beacon Lighting expects the current growth strategies to continue to
drive improved sales and profits in FY2015.
5. Significant Changes in the State of Affairs
During the financial year the group undertook an IPO on the Australian
Stock Exchange in order to facilitate the sale of 45% interest in Beacon
Lighting Corporation Limited. Following the completion of the offer,
Heystead Nominees Pty Ltd, a company owned by the Robinson Family
owns 118,250,000 shares or 55% and other investors own 96,750,000
shares or 45% of the company.
6. Directors’ Meetings
The numbers of meetings of the Company’s Board of Directors held
during the financial period ended 29 June 2014, and the numbers of
meetings attended by each Director were:
Director’s
Meetings
Committee Meetings
Audit
Remuneration
& Nomination
DIRECTOR
I Robinson
G Robinson
E Barr
N Osborne
H
7
7
7
7
A
7
7
7
7
H
-
1
1
1
A
-
1
1
1
H
2
-
2
2
A
1
-
2
2
H = Number of meetings held during the time the Director held office or was a member of the
committee during the period.
A = Number of meetings attended.
7. Directors’ Interests in Shares
The relevant interest of each Director in the Company, as notified by
the Directors to the ASX in accordance with section 205G(l) of the
corporations Act 2000 (Cth), at the date of the report is as follows:
Director
I Robinson1
G Robinson1
E Barr
N Osborne
Ordinary Shares in the Company
118,635,000
118,635,000
150,000
300,000
1Heystead Nominees Pty Ltd and other Robinson Family member interests.
8. Directors’ Interests in Contracts
Directors’ interests in contracts are disclosed in Note 30 of the financial
statements.
9. Dividends
Dividends paid to members during the financial period were as follows:
Director
Fully franked dividends provided
or paid during the period
2014
$000
14,500
2013
$000
200
To avoid any doubt, $14.5m were paid prior to the group listing and does
not include the dividend of $3.01m declared on the day of this report,
disclosed in Note 32 of this report.
DIRECTOR’S REPORT
15
For personal use only
10. Insurance of Officers
10.1 Indemnification of Directors
14. Audit Services
14.1 Auditor’s independence declaration
The Company has indemnified each Director referred to in this Report,
the Company Secretary and previous Directors and officers against all
liabilities or loss (other than to the Company or a related body corporate)
that may arise from their position as officers of the Company and its
controlled entities, except where the liability arises out of conduct
involving a lack of good faith or where indemnification is otherwise not
permitted under the Corporations Act. The indemnity stipulates that the
Company will meet the full amount of any such liabilities, including costs
and expenses, and covers a period of seven years after ceasing to be an
officer of the Company. The indemnity is contained in a Deed of Access,
Insurance and Indemnity, which also gives each officer access to the
Company’s books and records.
The Company has also indemnified the current and previous Directors
of its controlled entities and certain members of the Company’s senior
management for all liabilities or loss (other than to the Company or a
related body corporate) that may arise from their position, except where
the liability arises out of conduct involving a lack of good faith or where
indemnification is otherwise not permitted under the Corporations Act.
The auditor’s independence declaration to the Directors of the
Consolidated Entity in relation to the auditor’s compliance with the
independence requirements of the Corporations Act 2001 (Cth) and
the professional code of conduct for external auditors, forms part of the
Directors’ Report.
No person who was an officer of the Consolidated Entity during the
financial year was a Director or partner of the Consolidated Entity’s
external auditor at a time when the Consolidated Entity’s external auditor
14.2 Audit and non-audit services provided by the external auditor
During the 52 weeks ended 29 June 2014, the following fees were paid
or were due and payable for services provided by the external auditor,
PwC, of the Consolidated Entity:
Consolidated Entity
Audit & assurance services
2014
$000
2013
$000
10.2 Insurance premiums
Audit & review of financial statements
199,410
150,000
During the financial period, Beacon Lighting Group Limited paid a
premium of $11,993 to insure the Directors and officers of the company
against any loss which he/she becomes legally obligated to pay on
account of any claim first made against him/her during the policy period.
11. Indemnity of Auditors
Beacon Lighting Group Limited has agreed to indemnify their auditors,
PricewaterhouseCoopers (PwC), to the extent permitted by law, against
any claim by a third party arising from Beacon Lighting Group Limited’s
breach of their agreement. The indemnity stipulates that Beacon
Lighting Group Limited will meet the full amount of any such liabilities
including a reasonable amount of legal costs.
12. 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.
No proceedings have been brought or intervened in on behalf of the
Company with leave of the Court under section 237 of the Corporations
Act 2001.
13. Events Subsequent to Reporting Date
Other than the item described below, there has been no other matter
or circumstance that has occurred subsequent to period end that has
significantly affected, or may significantly affect, the operations of the
Group, the results of those operations or the state of affairs of the Group
or economic entity in subsequent financial periods. A fully franked
dividend of $3,010,000 was declared on August 22, 2014.
IPO due diligence
Other services
Other IPO services
IPO tax related services
164,495
38,836
118,935
-
-
-
Tax services
30,190
22,800
Total remuneration of PWC
551,866
172,800
In addition to their statutory audit duties, PwC provided taxation and
other assurance related services to the Company.
The Board has a review process in relation to non-audit services provided
by the external auditor. The Board considered the non-audit services
provided by PwC and, in accordance with written advice provided, and
endorsed, by a resolution of the Audit Committee, is satisfied that the
provision of these non-audit services by the auditor is compatible with,
and does not compromise, the auditor independence requirements of
the Corporations Act 2001 for the following reasons:
• all non-audit services are subject to the corporate governance
procedures adopted by the Company and are reviewed by the Audit
Committee to ensure they do not impact the integrity and objectivity of
the auditor; and
• non-audit services provided do not undermine the general principles
relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants, as they do not involve reviewing
or auditing the auditor’s own work, aiding in a management or decision
making capacity for the Company, acting as an advocate for the
Company or jointly sharing risks and rewards with the Company.
16
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only
15. Auditor
1. Base salary and benefits
PricewaterhouseCoopers continues in office in accordance with section
327 of the Corporations Act 2001.
16. Remuneration Report
16.1 Remuneration overview
The Board recognises that the performance of the Group depends on
the quality and motivation of our Associates, including the executives
and our 760 Associates employed by the Group across Australia and
Internationally. The Group remuneration strategy therefore seeks to
appropriately attract, reward and retain Associates at all levels in the
business, but in particular for management and key executives. The
Board aims to achieve this by establishing executive remuneration
packages that include a mix of fixed remuneration, short term incentives
and long term incentives.
The Board has appointed
the Remuneration and Nominations
Committee whose objective is to assist the Board in relation to the
Group remuneration strategy, policies and actions. In performing this
responsibility, the Committee must give appropriate consideration to the
Company’s performance and objectives, employment conditions and
external remuneration relativities. No remuneration consultants were
engaged by the Group in FY2014.
16.2 Principles used to determine the nature and amount
of remuneration
(a) Directors’ Fees
The Executive Chairman and the Chief Executive Officer do not receive
Directors’ fees but are remunerated as executives within the business.
The Deputy Chairman and the Non-Executive Director are entitled to
receive annual fees of $110,000 and $100,000 respectively. These
fees are inclusive of their relevant responsibilities on the various Group
Committees, and are also inclusive of superannuation. These fees
exclude any additional fees for special services which may be determined
from time to time. No additional retirement benefits are payable.
The Non-Executive Director fees are reviewed annually to ensure that
the fees reflect market rates. There are no guaranteed annual increases
in any Directors’ fees. The Executive Chairman and Non-Executive
Directors do not participate in the short or long term incentive schemes.
(b) Executive Remuneration
The current executive salary and reward framework has three
components:
1. Base salary and benefits;
2. Short term cash incentives; and
3. Short term performance rights incentives.
The combination of these components comprises the executives’
total remuneration.
For the year ended 29 June 2014, the Group did not a have long term
incentive program in place.
Executive base salaries are structured as a part of the total employment
remuneration package which comprises the fixed component of pay and
other financial benefits being car allowances. In addition, superannuation
is paid in accordance with legislated amounts.
for executives are reviewed annually
Base salaries
to provide
competitiveness with the market but there are no guaranteed base
salary increases in any executive contracts. An executive’s remuneration
is also reviewed on promotion.
In addition to financial benefits, executives have received non-monetary
benefits in the form of fuel cards and e-tags. These benefits ceased to
exist from 31 March 2014 however the value of these benefits prior to
that date have been included in this report.
2. Short term cash incentives
Executives including the Chief Executive Officer but not the Executive
Chairman are eligible to participate in an annual short term cash
incentive which delivers rewards by way of cash bonuses, subject to the
achievement of the Group financial performance targets.
The Group’s Net Profit Before Tax (NBPT) result has been determined
as the appropriate financial performance target to trigger the payment
of cash incentives for each period. The amount of any short term cash
incentive paid in a year is dependent upon the level of performance
achieved against the Group’s financial performance target (NPBT)
for the year. For the year ended 29 June 2014, the Group’s financial
performance targets were met and the annual short term cash incentive
will be paid in FY2015.
3. Short term performance rights incentives
For year ended 29 June 2014, the Beacon Lighting Group did not issue
any share based compensation or bonuses in relation to this component
of executives incentives. The company will implement the Performance
Rights plan for selected senior executives post the signing of the current
year financial statements as contemplated by the IPO prospectus. Details
will be disclosed at the time of issue and at the next reporting date.
16.3 Details of remuneration
The following executives along with the Directors are identified as key
management personnel with the authority and responsibility for
planning, directing and controlling the activities of the Group, directly
and indirectly, during the financial year.
Ian Robinson
Executive Chairman
Glen Robinson
Chief Executive Officer
Ian Bunnett
Managing Director – Retail
David Speirs
Chief Financial Officer
Barry Martens
Chief Operating Officer
All of the above executives were employed by Beacon Lighting and were
key management personnel for the entire year ended 29 June 2014 and
year ended 30 June 2013 unless otherwise stated.
The details of the remuneration of the Directors and other key
management personnel for the Beacon Lighting Group Limited and the
consolidated entity for the current and prior financial periods are set out
in the following table:
DIRECTOR’S REPORT
17
For personal use only
Short Term Employment Benefits
Post
Employment
Long Term
Benefits
Financial
Year
Salary &
Fees $
Performance
Based
Payment $
Non-Monetary
Benefits $
Super
Contributions $
Annual &
Long Service
Leave $
Total $
Total
Performance
Related %
DIRECTORS
I Robinson (Chairman)
2014
2013
167,752
150,459
G Robinson (Chief Executive Officer)
1,873
15,312
31,949
216,886
3,023
13,541
(5,570)
161,453
2014
2013
169,647
19,222
6,025
15,307
658
210,859
141,862
11,009
7,605
11,778
4,269
176,523
E Barr (Non-Executive)
20141
2013
152,281
-
N Osborne (Non-Executive)
20141
2013
72,472
-
M Hanman (Non-Executive)
2014
2013
88,073
110,091
Total Remuneration Directors
-
-
-
-
-
-
-
-
-
-
-
-
7,817
-
-
-
8,146
9,909
-
-
-
-
-
-
160,098
-
72,472
-
96,219
120,000
650,225
19,222
7,898
46,582
32,607
756,534
402,412
11,009
10,628
35,228
(1,301)
457,976
2014
2013
EXECUTIVES
I Bunnett (Managing Director – Retail)
2014
2013
198,137
27,460
1,223
18,889
15,464
261,173
176,309
22,018
1,474
15,795
2,577
218,173
D Speirs (Chief Financial Officer)
2014
2013
176,809
27,460
2,921
18,660
16,359
242,209
163,726
29,358
5,880
17,378
1,656
217,998
B Martens (Chief Operating Officer)
2014
2013
192,776
27,460
1,869
16,494
8,872
247,471
181,625
29,358
2,591
15,326
4,364
233,264
Total Remuneration Executives
2014
2013
567,722
82,380
6,013
54,043
40,695
750,853
521,660
80,734
9,945
48,499
8,597
669,435
-
-
9.12%
6.24%
-
-
-
-
-
-
2.54%
2.40%
10.51%
10.09%
11.34%
13.47%
11.10%
12.59%
10.97%
12.06%
1 Eric Barr and Neil Osborne were paid additional fees for work performed during the IPO of the company ($60,000 and $20,000 respectively). Eric Barr received $51,939 prior to being appointed as
a Director for services provided.
18
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only
16.4 Service Agreements
All executives are on employment terms consistent with the remuneration framework outlined in this report. Each of the agreements has an open term
with but may be terminated by either party with a required notice period of 12 weeks. Executives are eligible for statutory entitlements upon termination
of employment, and no further payments will be made to exiting executives.
Signed in accordance with a resolution of Directors
Ian Robinson
Executive Chairman
Melbourne, 22 August 2014
Glen Robinson
Chief Executive Officer
DIRECTOR’S REPORT
19
For personal use only Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Beacon Lighting Group Limited for the year ended 29 June 2014, I
declare that to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Beacon Lighting Group Limited and the entities it controlled during
the period.
Daniel Rosenberg
Partner
PricewaterhouseCoopers
Melbourne
22 August 2014
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
20
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only 21
For personal use only Index to the Financial Statements
Page
Page
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
1 Summary of Significant Accounting Policies
2 Financial Risk Management
3 Segment Information
4 Revenue from Ordinary Activities and Other Revenue
5 Other Income
6 Expenses
7 Income Tax Expense
8 Cash and Cash Equivalents
9 Trade and Other Receivables
10 Inventories
11 Derivative Financial Instruments
12 Other Current Assets
13 Property, Plant and Equipment
14 Deferred Tax Assets
15 Intangible Assets
16 Trade and Other Payables
23
24
25
26
27
32
35
35
35
36
37
38
38
39
40
40
41
42
43
44
17 Current Borrowings
18 Current Provisions
19 Current Tax Liabilities
20 Non Current Borrowings
21 Non Current Provisions
22 Contributed Equity
23 Reserves and Retained Profits
24 Dividends
25 Key Management Personnel Disclosures
26 Earnings Per Share
27 Remuneration Of Auditors
28 Contingencies
29 Commitments
30 Related Party Transactions
31 Subsidiaries
32 Events Occurring After the Reporting Period
33 Reconciliation of Profit After Income Tax to Net
Cash Inflow From Operating Activities
34 Non-Cash Investing And Financing Activities
35 Critical Accounting Estimates
36 Parent Entity Financial Information
45
45
46
47
47
48
49
50
51
51
52
52
52
53
55
55
56
56
56
57
22
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
Consolidated Entity
Notes
Revenue from ordinary activities
Sale of goods
Other revenue
Other income
Expenses
Cost of sales of goods
Other expenses from ordinary activities
Marketing
Selling and distribution
General and administration
Finance costs
Profit before income tax
Income tax expense
Profit for the period attributable to the members of the parent entity
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of derivatives
Income tax relating to these items
Other comprehensive income for the period, net of tax
Total comprehensive income for the period attributable to the members of
the parent entity
Earnings per share
Basic earnings per share
Diluted earnings per share
4
4
4
5
6
6
7
23(a)
26
26
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying Notes.
2014
$’000
150,338
4,181
154,519
1,340
2013
$’000
135,718
4,539
140,257
186
(53,678)
(48,497)
(9,629)
(60,309)
(14,177)
(1,009)
17,057
(5,260)
11,797
(474)
143
(331)
11,466
Cents
5.49
5.49
(9,137)
(55,319)
(12,297)
(1,023)
14,170
(4,304)
9,866
133
(40)
93
9,959
Cents
4.59
4.59
23
For personal use only CONSOLIDATED BALANCE SHEET
As at 29 June 2014 and as at 30 June 2013 Beacon Lighting Group and its controlled entities.
Consolidated Entity
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Provisions
Derivative financial instruments
Current tax liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other reserves
Retained earnings
Total equity
Notes
8
9
10
11
12
13
14
15
16
17
18
11
19
20
21
22
23(a)
23(b)
2014
$’000
11,427
8,217
32,194
-
365
52,203
16,818
3,832
4,125
24,775
76,978
29,594
564
4,236
238
1,147
35,779
774
2,221
2,995
38,774
38,204
62,565
(43,910)
19,549
38,204
2013
$’000
7,602
15,207
29,073
93
580
52,555
14,025
2,467
3,356
19,848
72,403
22,892
639
2,879
-
1,157
27,567
267
2,056
2,323
29,890
42,513
2,150
(692)
41,055
42,513
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying Notes.
24
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities.
Consolidated Entity
Notes
Balance as at 1 July 2013
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs & tax
Non controlling interests in acquired subsidiaries
Dividends provided for or paid
Total contributions by and distributions to owners
Balance as at 29 June 2014
Balance at 25 June 2012
Adjustment on correction of lease liabilities
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Movement in other reserves
Dividends provided for or paid
Total contributions by and distributions to owners
22
23
24
21
23
24
-
-
60,415
62,565
2,150
-
-
-
-
-
-
-
Balance as at 30 June 2013
2,150
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying Notes.
Contributed
equity
$’000
2,150
-
-
-
Reserves
$’000
(692)
-
(331)
(331)
Retained
earnings
$’000
41,055
11,797
-
Total
equity
$’000
42,513
11,797
(331)
11,797
11,466
60,415
-
60,415
(42,887)
(18,803)
(61,690)
-
(14,500)
(14,500)
(42,887)
(33,303)
(15,775)
(43,910)
19,549
38,204
-
-
-
93
93
(785)
-
(785)
(692)
33,089
(1,700)
9,866
-
9,866
-
(200)
(200)
35,239
(1,700)
9,866
93
9,959
(785)
(200)
(986)
41,055
42,513
25
For personal use only CONSOLIDATED STATEMENT OF CASH FLOWS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
Consolidated Entity
Notes
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Interest received
Borrowing costs
Income taxes paid
Net cash inflow from operating activities
33
Cash flows from investing activities
Payments for acquisitions
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Repayment of loans from related parties
Payments of loans to related parties
Net cash (outflow) from investing activities
Cash flows from financing activities
Repayment of borrowings (net)
Dividends paid to Company's shareholders
Proceeds from share capital raised
Costs associated with share capital raised
Payment to non-controlling interests
Net cash inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of period
24
8
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying Notes.
2014
$’000
167,236
(144,612)
117
(1,009)
(6,026)
15,706
(790)
(3,620)
26
9,200
-
4,816
(908)
(14,500)
63,854
(1,289)
(63,854)
(16,697)
3,825
7,602
11,427
2013
$’000
154,777
(135,378)
187
(1,023)
(4,990)
13,573
(1,748)
(2,426)
2
1,312
(9,200)
(12,060)
(794)
(600)
-
-
-
(1,394)
119
7,483
7,602
26
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
1. Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of this
consolidated financial report is set out below. These policies have been
consistently applied to all the periods presented, unless otherwise
stated. The financial report is for the consolidated entity consisting of
Beacon Lighting Group Limited and its subsidiaries.
(a) Basis of Preparation
This general purpose financial report has been prepared in accordance
with Australian Accounting Standards and interpretations issued by the
Australian Accounting Standards Board and the Corporations Act 2001.
Beacon Lighting Group Limited is a for-profit entity for the purpose of
preparing the financial report.
Beacon Lighting Group Limited operates within a retail financial period.
The current financial period was a 52 week retail period ended on the
29 June 2014 (2013: 53 week period ending 30 June 2013). This
treatment is consistent with section 323D of Corporation Act 2001.
(i) New and amended standards adopted
The Group has applied the following standards and amendments
applicable for the first time for the June 2014 annual report:
• AASB 10 Consolidated Financial Statements
• AASB 119 Revised - Accounting for Employee Benefits
• AASB 13 Fair Value Measurement
• AASB 12 Disclosure of Interests in Other Entities
AASB10 Consolidated Financial Statements
AASB 10 was issued in August 2011 and replaces the guidance on
control and consolidation in AASB 127 Consolidated and Separate
Financial Statements. Under the new principles, 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 over the entity.
The Group has reviewed its investments in other entities to assess
whether the consolidation in relation to these entities is different under
AASB 10 than under AASB 127. No differences were found and therefore
no adjustments to any of the carrying amounts in the financial statements
are required as a result of the adoption of AASB 10.
AASB119 Employee Benefits
The adoption of the revised AASB 119 Employee Benefits has changed
the accounting for the group’s annual leave obligations. As the entity
does not expect all annual leave to be taken within 12 months of the
respective service being provided, annual leave obligations are now
measured on a discounted basis. However, the impact of this change
was immaterial since the majority of the leave is still expected to be
taken within a short period after the end of the reporting period.
AASB13 Fair Value Measurement
AASB 13 was released in September 2011 and aims to improve
consistency and reduce complexity by providing a precise definition of
fair value and a single source of fair value measurement and disclosure
requirements for use across Australian Accounting Standards. The
standard does not extend the use of fair value accounting but provides
guidance on how it should be applied where its use is already required
or permitted by other Australian Accounting Standards. This standard
does not affect the Group’s accounting policy.
AASB12 Disclosure of Interests in Other Entities
Upon review of this standard, no change has been made to the carrying
amounts in the Financial Statements as a result of the adoption of AASB 12.
The group also elected to adopt the following standard early:
• AASB2013-3 Amendments to AASB 136 Recoverable Amount
Disclosures for Non-Financial Assets, which had a small impact
on the impairment disclosures.
(ii) Standards and interpretations not yet adopted
AASB9 Financial Instruments
AASB 9 addresses the classification, measurement and derecognition
of financial assets and financial liabilities.
Since December 2013, it also sets out new rules for hedge accounting.
When adopted, the standard will affect the group’s accounting for
its available-for-sale financial assets, since AASB 9 only permits the
recognition of fair value gains and losses in other comprehensive income
if they relate to equity investments that are not held for trading. There
will be no impact on the group’s accounting for financial liabilities, as
the new requirements only affect the accounting for financial liabilities
that are designated at fair value through profit or loss and the group
does not have any such liabilities. The new hedging rules align hedge
accounting more closely with the group’s risk management practices.
The International Accounting Standard Board (IASB) has published the
complete version of International Financial Reporting Standard (IFRS) 9
Financial instruments, which replaces the guidance in IAS 39. This final
version includes requirements on the classification and measurement of
financial assets and liabilities; it also includes an expected credit losses
model that replaces the incurred loss impairment model used today.
The final hedging part of IFRS 9 was issued in November 2013. Beacon
Lighting Group Limited will consider the impact of the new standard on
its financial assets once an equivalent AAS has been issued.
IFRS 15 Revenue from contracts with customers
IFRS 15: Revenue from contracts with customers was issued by the
International Accounting Standards Board in May 2014 and is based
on the principle that revenue is recognised when control of a good
or service transfers to a customer. The new standard replaces the
principle under the current standard of recognising revenue when risks
and rewards transfer to the customer. Beacon Lighting Group Limited
will consider the impact of the new rules on its revenue recognition
policy once an equivalent AASB has been issued.
(iii) Compliance with IFRS
The consolidated financial report of the Beacon Lighting Group Limited
Group also complies with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
(iv) Historical cost convention
This financial report has been prepared in accordance with the
historical cost convention. Comparative information is reclassified
where appropriate to enhance comparability.
(v) Critical accounting estimates
The preparation of financial statements requires the use of certain
critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the Company’s accounting
policies. Refer to Note 35 Critical accounting estimates for detailed
explanation of items requiring assumptions and estimates.
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period,
except as set out below:
27
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
Warranty provision
A warranty provision was raised at 29 June 2014 due to the increased
magnitude of this cost in line with the increase in business activity
compared to the prior period. Provisions for product warranties are
recognised when the Company has a legal or constructive obligation as
a result of a past event; it is probable that an outflow of resources will
be required to settle the obligation; and the amount has been reliably
estimated.
(b) Comparative Financial Information
Unless otherwise stated, the accounting policies adopted are consistent
with those of the previous year. Comparative information is reclassified
where appropriate to enhance comparability and provide more
appropriate information to users.
During the period comparatives in respect of sales and cost of sales
were reclassified to eliminate certain intra group transactions. As
a result of this, Sale of goods and Cost of sales of goods were each
reduced by $7.8m in the Consolidated statement of comprehensive
income for the year ended 30 June 2013.
(c) Principles of Consolidation
The consolidated financial report incorporates the assets and liabilities
of all subsidiaries of Beacon Lighting Group Limited (‘Company’ or
‘parent entity’) as at 29 June 2014 and the results of all subsidiaries
for the period then ended. Beacon Lighting Group Limited and its
subsidiaries together are referred to in this financial report as the Group
or the consolidated entity.
Subsidiaries are all 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 deconsolidated from the date that
control ceases.
The acquisition method of accounting is used to account for business
combinations by the Group (refer to Note 1(i)).
Intercompany
transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the group.
Where control of an entity is obtained during a financial period, its
results are included in the consolidated statement of comprehensive
income from the date on which control commences. Where control of
an entity ceases during a financial period its results are included for that
part of the period during which control existed.
Investments in subsidiaries are accounted for at cost in accounting
records of Beacon Lighting Group Limited.
(d) Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the Chief Executive Officer.
(e) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial report of each of the Group’s entities are
measured using the currency of the primary economic environment in
which the entity operates (‘the functional currency’). The consolidated
financial report is presented in Australian dollars, which is Beacon
Lighting Group Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year end exchange rates
of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss, except when they are deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges.
(iii) Specific commitments
Hedging is undertaken in order to avoid or minimise possible adverse
financial effects of movements in exchange rates. Gains or costs arising
upon entry into a hedging transaction intended to hedge the purchase
or sale of goods and services, together with subsequent exchange
gains or losses resulting from those transactions are deferred in the
statements of comprehensive income from the inception of the hedging
transaction up to the date of the purchase or sale and included in the
measurement of the purchase or sale. Any gains or losses arising on the
hedging transaction after the recognition of the hedge purchase or sale
are included in the consolidated statement of comprehensive income.
In the case of hedges of monetary items, exchange gains or losses are
brought to account in the financial period in which the exchange rates
change. Gains or costs arising at the time of entering into such hedging
transactions are brought to account in the consolidated statement of
comprehensive income over the lives of the hedges.
(f) Revenue Recognition
Revenue is measured at the fair value of the consideration received
or receivable. Amounts disclosed as revenue are net of returns, trade
allowances, rebates and amounts collected on behalf of third parties.
(i) Sale of goods
Revenue is recognised when the significant risks and rewards of
ownership have been transferred to the buyer and the costs incurred or
to be incurred in respect of the transaction can be measured reliably.
Risks and rewards are considered passed to the buyer at the time of
delivery of the goods to the customer. Revenue recognised equals the
fair value of the consideration received or receivable.
In the current financial year bill and hold transactions where the customer
has paid for goods in full inventory is on hand, but the customer has
elected not to take possession of the inventory are recognised as sales.
As a result incremental revenue of $276,000 and profit of $139,000
were recognised in FY2014.
(ii) Trust distribution income
Trust distribution revenue is recognised when the right to receive a
distribution has been established.
(iii) Interest income
Interest income is recognised using the effective interest method.
28
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
When a receivable is impaired, the group reduces the carrying amount
to its recoverable amount, being the estimated future cash flow
discounted at the original effective interest rate of the instrument, and
continues unwinding the discount as interest income. Interest income
on impaired loans is recognised using the original effective interest rate.
(g) Income Tax
The income tax expense or revenue for the period is the tax payable on
the current period’s taxable income based on the applicable income tax
rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences
at the tax rates expected to apply when the assets are recovered or
liabilities are settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary
differences to measure the deferred tax asset or liability. An exception is
made for certain temporary differences arising from the initial recognition
of an asset or a liability. No deferred tax asset or liability is recognised in
relation to these temporary differences if they arose in a transaction, other
than a business combination, that at the time of the transaction did not
affect either accounting profit or taxable profit or loss.
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.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when the
deferred tax balances related to the same taxation authority. Current
tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or
to realize the asset and settle the liability simultaneously.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of investments
in foreign operations where the Company is able to control the timing
of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Current and deferred tax is recognised in profit or loss, except to the
extent that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
Beacon Lighting Group Limited and its wholly-owned Australian controlled
entities have not implemented the tax consolidation legislation.
(h) Leases
Leases of property, plant and equipment where the Group, as lessee,
has substantially all the risks and rewards of ownership are classified
as non current assets (Note 13). Finance leases are capitalised at the
lease’s inception at the fair value of the leased property or, if lower, the
present value of the minimum lease payments. The corresponding rental
obligations, net of finance charges, are included in other short-term and
long-term payables. Each lease payment is allocated between the liability
and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The property, plant and
equipment acquired under finance leases is depreciated over the asset’s
useful life or over the shorter of the asset’s useful life.
Leases in which a significant portion of the risks and rewards of
ownership are not transferred to the Group as lessee are classified as
operating leases (Note 29). Payments made under operating leases (net
of any incentives received from the lessor) are charged to profit or loss
on a straight-line basis over the period of the lease.
(i) Business Combinations
The acquisition method of accounting is used to account for all business
combinations, regardless of whether equity instruments or other assets
are acquired. The consideration transferred for the acquisition of
a subsidiary comprises the fair values of the assets transferred, the
liabilities incurred and the equity interests issued by the Group. The
consideration transferred also includes the fair value of any asset or
liability resulting from a contingent consideration arrangement and
the fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair
values at the acquisition-date. On an acquisition-by-acquisition basis,
the Group recognises any non-controlling interest in the acquiree either
at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s net identifiable assets.
The excess of the consideration transferred and the amount of any
non-controlling interest in the acquiree over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts
are less than the fair value of the net identifiable assets of the subsidiary
acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts
payable in the future are discounted to their present value as at the date
of exchange. The discount rate used is the entity’s incremental borrowing
rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability.
Amounts classified as a financial liability are subsequently remeasured to
fair value with changes in fair value recognised in profit or loss.
(j) Impairment of Assets
Goodwill and intangible assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might
be impaired. Other assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less cost of disposal and
value-in-use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable
cash inflows which are largely independent of the cash inflows from other
assets or groups of assets (cash-generating units). Non-financial assets
other than goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
(k) Cash and Cash Equivalents
For the purpose of presentation in the consolidated statement of cash
flows, 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
29
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the consolidated balance sheet.
(l) Trade Receivables
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost, less provision for doubtful debts. Trade
receivables are due for settlement no more than 30-60 days from the
date of recognition.
Collectability of trade receivables is reviewed on an ongoing basis.
Debts which are known to be uncollectible are written off. A provision
for doubtful receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to
the original terms of receivables. The amount of the provision is the
difference between the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the effective interest rate.
The amount of the provision is recognised in the consolidated statement
of comprehensive income.
The amount of the impairment loss is recognised in profit or loss within
general and administration expenses. When a trade receivable for which
an impairment allowance had been recognised becomes uncollectible
in a subsequent period, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited
against other expenses in profit or loss.
(m) Inventories
Finished goods are stated at the lower of cost and net realisable value.
Cost comprises direct materials, and an appropriate proportion of
variable and fixed overhead expenditure.
Costs are assigned to individual items of inventory on the basis of
weighted average costs. Net realisable value is the estimated selling
price in the ordinary course of business less the estimated costs
necessary to make the sale.
(n) Derivatives and Hedging Activities
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured to their fair
value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item being hedged.
The Group documents at the inception of the hedging transaction the
relationship between hedging instruments and hedged items, as well
as its risk management objective and strategy for undertaking various
hedge transactions. The Group also documents its assessment, both
at hedge inception and on an ongoing basis, of whether the derivatives
that are used in hedging transactions have been and will continue to
be highly effective in offsetting changes in fair values or cash flows of
hedged items.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that
are designated and qualify as cash flow hedges is recognised in other
comprehensive income and accumulated in reserves in equity. The gain
or loss relating to the ineffective portion is recognised immediately in
profit or loss within other income or general and administration expenses.
Amounts accumulated in equity are reclassified to profit or loss in the
periods when the hedged item affects profit or loss (for instance when
the forecast purchase of inventory that is hedged takes place).
The gain or loss relating to the effective portion of forward foreign
exchange contracts hedging imported inventory purchases is recognised
in profit or loss within other income or general and administration
expenses. The deferred amounts are ultimately recognised in profit or
loss as cost of goods sold in the case of inventory.
(o) Property, Plant and Equipment
All plant and equipment is stated at historical cost less depreciation.
Historical cost includes expenditure that is directly attributable to the
acquisition of the items. Cost may also include transfers from equity
of any gains/losses on qualifying cash flow hedges of foreign currency
purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a separate asset
is derecognised when replaced. All other repairs and maintenance are
charged to profit or loss during the reporting period in which they are
incurred.
• Furniture, Fittings & equipment 3 to 10 years
• Leased plant and equipment 5 to 10 years
The assets’ residual values and useful lives are reviewed, and adjusted
if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds
with carrying amount. These are included in profit or loss.
(p) Intangible Assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the
fair value of the Group’s share of the net identifiable assets of the
acquired subsidiary/associate at the date of acquisition. Goodwill on
acquisitions of subsidiaries is included in intangible assets. Goodwill is
not amortised. Instead, goodwill is tested for impairment annually, or
more frequently if events or changes in circumstances indicate that it
might be impaired, and is carried at cost less accumulated impairment
losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of
impairment testing.
(ii) Patents, Trademarks and Other Rights
Patents, Trademarks and Other Rights have a finite useful life and
are carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method to allocate the cost of the
patents, trademarks and other rights over their useful life of 25 years.
(q) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the
group prior to the end of financial year which are unpaid. The amounts
are unsecured and are usually paid within 30 days of recognition.
30
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period. They
are recognised initially at their fair value and subsequently measured at
amortised cost using the effective interest method.
(r) Borrowings
Borrowings are initially recognised at fair value, net of transaction
costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs)
and the redemption amount is recognised in the consolidated statement
of comprehensive income over the period of the borrowings using
the effective interest method. Fees paid on the establishment of loan
facilities, which are not an incremental cost relating to the actual draw-
down of the facility, are recognised as prepayments and amortised on a
straight-line basis over the term of the facility.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
(s) Employee Benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that
are expected to be settled wholly within 12 months after the end of the
period in which the employees render the related service are recognised
in respect of employees’ services up to the end of the reporting period
and are measured at the amounts expected to be paid when the
liabilities are settled.
Short-term employee benefit obligations are presented as provisions.
The net amount of GST recoverable from, or payable to, the taxation
authority is included with other receivables or payables in the
consolidated balance sheet.
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 taxation authority, are presented as
operating cash flows.
(u) Store Opening Costs
Non-capital costs associated to the setup of a new store are expensed
in the period in which they are incurred.
(v) Dividends
Provision is made for the amount of any dividends declared, determined
or publicly recommended by the Directors on or before the end of the
financial period but not distributed at balance date.
(w) Contributed Equity
Ordinary Shares are classified as equity.
(x) Earnings Per Share
(i) Basic earnings per share
Basic earnings per share is determined by dividing net profit after
income tax attributable to members of the Company, excluding any
costs of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the financial
period, adjusted for bonus elements in ordinary shares issued during
the period.
(ii) Other long-term employee benefit obligations
(ii) Diluted earnings per share
The liabilities for long service leave and annual leave are not expected to
be settled wholly within 12 months after the end of the period in which
the employees render the related service. They are therefore recognised
in the provision for employee benefits and measured as the present
value of expected future payments to be made in respect of services
provided by employees up to the end of the reporting period using the
projected unit credit method. 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 end of the reporting period of government bonds with terms
and currencies that match, as closely as possible, the estimated future
cash outflows.
Re-measurements as a result of experience adjustments and changes
in actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet
if the entity does not have an unconditional right to defer settlement for
at least twelve months after the reporting period, regardless of when
the actual settlement is expected to occur.
(t) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of
associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST
receivable or payable.
Diluted earnings per share adjusts the figure 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 (including performance rights) and the
weighted average number of shares assumed to have been issued for
no consideration in relation to dilutive potential ordinary shares.
(y) Rounding Amounts
The Company is of a kind referred to in ASIC Class Order 98/100, and in
accordance with that Class Order, amounts in the financial statements
have been rounded off to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
(z) Parent Entity Financial Information
The financial information for the parent entity, Beacon Lighting Group
Limited, disclosed in Note 36 has been prepared on the same basis as
the consolidated financial report, except as set out below.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial
report of Beacon Lighting Group Limited.
31
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
2. Financial Risk Management
The consolidated entity is exposed to a variety of financial risks comprising:
a) Market risk (encompassing – foreign currency risk);
b) Credit risk; and
c) Liquidity risk
Risk management is carried out under policies approved by the Chief Executive Officer.
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency 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 foreign exchange contracts and interest rate swaps to hedge certain risk exposures.
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 foreign exchange risks and aging analysis for
credit risk.
The Group holds the following financial instruments:
Consolidated Entity
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial Liabilities
Trade and other payables
Borrowings
Derivative financial instruments
(a) Market risk
Foreign exchange risk
2014
$’000
11,427
8,217
-
19,644
29,594
1,338
238
31,170
2013
$’000
7,602
15,207
94
22,903
22,892
906
-
23,798
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar.
Foreign exchange risk arises when future commercial transactions and recognised financial assets and financial liabilities are denominated in a currency
that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
The Group hedges its foreign exchange risk exposure arising from future commercial transactions and recognised assets and liabilities using forward
contracts. The Group’s risk management policy is to hedge between 70% - 120% of cash flows arising from known inventory purchase commitments,
mainly denominated in US dollars for the subsequent six months.
Consolidated Entity
Trade payables
Forward exchange contracts - buy foreign currency (cash flow hedges)
2014
$’000
12,998
19,340
2013
$’000
8,948
2,108
32
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollar, was as follows:
Group sensitivity
At 29 June 2014 100% of Beacon lighting Groups purchases in USD are hedged using forward exchange contracts. Therefore any movements in the
Australian dollar against the US dollar would have no impact on the Group’s pre tax profit or equity. Therefore a sensitivity analysis has not been performed.
There is currently no Price or Interest rate risk applicable to the Group.
(b) Credit risk
Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, favorable derivative financial instruments and deposits with
banks as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. Individual credit limits
are set based on internal or external ratings in accordance with limits set by the Board. The compliance with credit limits by wholesale and retail customers
is regularly monitored by line management. Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk.
There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.
An analysis of trade receivables is disclosed in Note 9.
(c) Liquidity risk
Financing arrangements
The Group and parent entity had access to the following financing facilities at the end of each reporting period:
Consolidated Entity
Floating rate – Total facilities
Overdraft
Trade finance facility
Asset finance facility
Floating rate – Total undrawn facilities
Overdraft
Trade finance facility
Asset finance facility
2014
$’000
500
23,750
3,500
500
7,693
2,539
2013
$’000
500
19,500
1,015
500
6,323
771
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings as follows:
(a) based on their contractual maturities:
(i) all non-derivative financial liabilities, and
(ii) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the
cash flows.
(b) based on the remaining period to the expected settlement date:
(i) derivative financial liabilities for which the contractual maturities are not essential for an understanding of the timing of the cash flows.
33
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact
of discounting is not significant.
Contractual maturities of financial liabilities:
Less than 6
months
$’000
6 - 12 months
$’000
Between
1 and 5 years
$’000
Over 5 years
$’000
Total
contractual
cash flows
$’000
Carrying amount
(assets) liabilities
$’000
Consolidated Entity
At 29 June 2014
Non-derivatives
Trade and other payables
29,594
Finance lease liabilities
Total non-derivatives
Derivatives
-
29,594
-
564
564
Net settled (forward foreign exchange contracts - cash flow hedges)
238
At 30 June 2013
Non-derivatives
Trade and other payables
22,892
Finance lease liabilities
Total non-derivatives
Derivatives
-
22,892
-
-
639
639
-
774
774
-
-
267
267
Net settled (forward foreign exchange contracts - cash flow hedges)
(93)
-
-
-
-
-
-
-
-
-
-
29,594
1,338
30,932
29,594
1,338
30,932
238
238
22,892
906
23,798
22,892
906
23,798
(93)
(93)
(d) Fair Value measurements
For information about the methods and assumptions used in determining the fair value of derivatives please refer to Note 11.
Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2); and
c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following table presents the groups’ financial assets and financial liabilities measured and recognised at fair value at 29 June 2014, on a
recurring basis.
At 29 June 2014
Derivatives used for hedging - Net Position
$’000
Level 2
(238)
$’000
Total
(238)
34
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
The fair value of financial instruments that are not traded in an active market (for example, over–the–counter derivatives) is determined using valuation
techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
All of the resulting fair value adjustments are included in level 2.
There are no financial assets and liabilities in Level 1 and Level 3, and there are no transfers between the levels.
3. Segment Information
The chief operating decision maker for Beacon Lighting Group Limited and its controlled entities (the Company), is the Chief Executive Officer (CEO).
The Company determines operating segments based on information provided to the CEO in assessing performance and determining the allocation of
resources with the Company. Consideration is given to the manner in which products are sold, nature of the products supplied, the organisational structure
and the nature of customers.
Reportable segments are based on the aggregated operating segments determined by the manner in which products are sold, similarity of products, nature
of the products supplied, the nature of customers and the methods used to distribute the product. The Company purchases goods in USD for sales into
Australia. Therefore the Company’s one reportable segment is the selling of lighting, fans and energy efficient products in the Australian market.
The total of the reportable segments’ revenue, profit, assets and liabilities, is the same as that of the Company as a whole and as disclosed in the
consolidated statement of comprehensive income and consolidated statement of financial position.
4. Revenue from Ordinary Activities and Other Revenue
Consolidated Entity
(a) From ordinary activities
Sale of goods
(b) Other revenue
Franchise fees
Sundry revenue
5. Other Income
Consolidated Entity
Interest
Customs duty refund
Other income
2014
$’000
2013
$’000
150,338
135,718
3,859
322
4,181
4,088
451
4,539
154,519
140,257
2014
$’000
117
1,162
61
1,340
2013
$’000
186
-
-
186
35
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
6. Expenses
Consolidated Entity
(a) Profit before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Motor vehicles
Amortisation
Patents, trademarks and other rights
Finance costs
Interest and finance charges paid/payable
Net loss on disposal of property, plant and equipment
Rental expense relating to operating leases
Minimum lease payments
Employee benefits
(b) Net foreign exchange gains and losses
2014
$’000
1,758
242
20
1,009
143
13,827
35,357
2013
$’000
1,836
279
20
1,023
34
13,084
31,456
Net foreign exchange (gains)/losses recognised in profit before income tax for the period
(as either other income or expense)
(134)
186
(c) Individually significant items
Profit for the year includes the following items that are significant because of their nature, size or
incidence
Gains
Other income – customs import duty refund
Expenses
Expense incurred in the collection of customs import duty refund
Initial recognition of warranty provision expense
1,162
274
1,038
-
-
-
36
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
7. Income Tax Expense
Consolidated Entity
(a) Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior periods
Deferred income tax (revenue) included in income tax expense comprises:
Decrease (increase) in deferred tax assets (Note 14)
(Decrease) increase in deferred tax liabilities (Note 14)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30.0% (2013 – 30.0%)
Tax effect of amounts which are not deductible (taxable)in calculating taxable income:
Amortisation of acquired rights
Entertainment
Sundry items
Adjustments for income tax expense of prior periods
Income tax expense
(c) Aggregate amounts of $552,000 deferred tax arose in the reporting period were not
recognised in net profit or other comprehensive income but directly credited to equity
(Note 14).
2014
$’000
5,913
(813)
160
5,260
(122)
(691)
(813)
17,057
5,117
-
14
15
5,146
114
5,260
2013
$’000
4,384
(360)
280
4,304
1,657
(2,017)
(360)
14,170
4,251
29
12
15
4,307
(3)
4,304
37
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
8. Cash and Cash Equivalents
Consolidated Entity
Cash at bank and in hand
Deposits at call (a)
(a) Classification as cash equivalents
2014
$’000
10,177
1,250
11,427
2013
$’000
7,350
252
7,602
Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition and are repayable with 24
hours notice with no loss of interest.
Risk exposure
The Group’s and the parent entity’s exposure to interest rate risk is discussed in Note 2.
9. Trade and Other Receivables
Consolidated Entity
Trade receivables (a)
Provision for impairment of receivables (b)
Net amounts receivable from customers
Receivable from Director related entity
Other debtors (c)
(a) Aging of trade receivables
Trade receivables ageing analysis at period end is:
Consolidated Entity
Not past due
Past due 31-60 days
Past due 61-90 days
Past due more than 91 days
38
BEACON LIGHTING GROUP ANNUAL REPORT 2014
2014
$’000
7,368
(178)
7,190
-
1,027
8,217
2014
$’000
6,198
671
277
222
7,368
2013
$’000
5,585
(213)
5,372
9,200
635
15,207
2013
$’000
4,246
635
571
133
5,585
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
(b) Provision for impairment of receivables
Trade receivables are non interest bearing with 30 days end of month terms. An impairment loss is recognised when there is objective evidence that an
individual trade receivable is impaired. A provision against impairment for the amount of $177,751 (2013: $212,564) has been raised against the bal-
ance of trade receivables for 2014. The impairment losses have been included within expenses in the consolidated statement of comprehensive income.
Trade receivables that are not impaired are largely expected to be received within trading terms or shortly thereafter.
Movements in the provision for impairment of receivables are as follows:
Consolidated Entity
Opening balance
Provision for impairment recognised during the year
Receivables written off during the year as uncollectable
Closing balance
(c) Other debtors
2014
$’000
213
(22)
(13)
178
2013
$’000
268
4
(59)
213
These amounts generally arise from transactions outside the usual operating activities of the Group. Interest may be charged at commercial rates where the
terms of repayment exceed six months. Collateral is not normally obtained.
Foreign exchange and interest rate risk
Information about the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in Note 2.
Fair value and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above. Refer to Note
2 for more information on the risk management policy of the Group and the credit quality of the entity’s trade receivables.
10. Inventories
Consolidated Entity
Inventory at cost
Goods in transit - at cost
Inventory expense
2014
$’000
29,622
2,572
32,194
2013
$’000
26,310
2,763
29,073
Inventories recognised as expense during the 52 week period ended 29 June 2014 and included in cost of sales of goods amounted to $53,274,131
(2013: $48,616,894).
Write-downs of inventories to net realisable value recognised as an expense during the 52 week period ended 29 June 2014 amounted to $511,460
(2013: $561,651).
39
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
11. Derivative Financial Instruments
Consolidated Entity
Derivatives used for hedging - Net Position
2014
$’000
(238)
2013
$’000
93
The Group’s and the parent entity’s risk exposures are provided in Note 2.
Forward exchange contracts – cash flow hedges
The Group purchases products in US currency. In order to protect against exchange rate movements, the group has entered into forward exchange contracts
to purchase US dollars.
These contracts are hedging highly probable forecasted purchases for the ensuing financial year. The contracts are timed to mature when payments for
major purchases of inventory are scheduled to be made.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income. When
the cash flows occur, the group adjusts the initial measurement of the component recognised in the balance sheet by removing the related amount from
other comprehensive income.
During the year ended 29 June 2014 there were no gains or losses (2013 – loss of $208,097) recognised in profit or loss for the ineffective portion of
these hedging contracts.
12. Other Current Assets
Consolidated Entity
Prepayments and other current assets
2014
$’000
365
2013
$’000
580
40
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
13. Property, Plant and Equipment
Consolidated Entity
At 30 June 2012
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2013
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
At 30 June 2013
Cost
Accumulated depreciation
Net book amount
Year ended 29 June 2014
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
At 29 June 2014
Cost
Accumulated depreciation
Net book amount
Furniture, fittings
and equipment
$’000
Vehicles
$’000
20,059
(7,819)
12,240
12,240
2,547
(14)
(1,836)
12,937
22,441
(9,504)
12,937
12,937
4,555
(110)
(1,758)
15,624
27,037
(11,413)
15,624
2,304
(1,104)
1,200
1,200
189
(22)
(279)
1,088
2,471
(1,383)
1,088
1,088
407
(59)
(242)
1,194
2,819
(1,625)
1,194
Total
$'000
22,363
(8,923)
13,440
13,440
2,736
(36)
(2,115)
14,025
24,912
(10,887)
14,025
14,025
4,962
(169)
(2,000)
16,818
29,856
(13,038)
16,818
41
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
14. Deferred Tax Assets
Consolidated Entity
Gross Deferred Tax Assets
The balance comprises temporary differences attributable to:
2014
$’000
2013
$’000
Employee benefits
Inventory
Debtor provision
Derivatives
Tax losses
IPO capitalized expenses
Marketing fund
Other provisions/accruals
Total deferred tax assets
Deferred tax assets expected to be recovered within 12 months
Deferred tax assets expected to be recovered after more than 12 months
Gross Deferred Tax Liabilities
The balance comprises temporary differences attributable to:
Derivatives
Other accruals and provisions
Total deferred tax liabilities
Deferred tax liabilities expected to be settled within 12 months
Deferred tax liabilities expected to be settled after more than 12 months
Movements in Net Deferred Tax Assets
Opening balance
Charged/(credited) to the consolidated statement of comprehensive income
Charged/(credited) amounts recognized directly in equity
Net Deferred Tax Assets
42
BEACON LIGHTING GROUP ANNUAL REPORT 2014
1,107
446
54
-
504
552
442
796
3,901
1,484
2,417
3,901
-
69
69
69
-
69
2,467
813
552
3,832
951
616
64
604
-
-
365
627
3,227
2,872
355
3,227
632
128
760
760
-
760
2,107
360
-
2,467
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
15. Intangible Assets
Consolidated Entity
Year ended 30 June 2013
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 June 2013
Cost
Valuation
Accumulated amortisation and
impairment
Net book amount
Year ended 29 June 2014
Opening net book amount
Additions
Amortisation charge for the year
Closing net book amount
At 29 June 2014
Cost
Valuation
Accumulated amortisation and
impairment
Net book amount
Goodwill
$’000
Patents,trademarks
and other rights
$’000
Other
$’000
Total
$’000
2,088
947
-
3,035
3,035
-
-
3,035
3,035
790
-
3,825
3,825
-
-
3,825
340
-
(20)
320
-
500
(180)
320
320
-
(20)
300
-
500
(200)
300
1
-
-
1
1
-
-
1
1
-
(1)
-
1
-
(1)
-
2,429
947
(20)
3,356
3,036
500
(180)
3,356
3,356
790
(21)
4,125
3,826
500
(201)
4,125
43
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
(a) Impairment tests for goodwill
Goodwill is allocated to the Group’s one cash generating unit being the selling of lighting, fans and energy efficient products in the Australian market (refer
Note 3).
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.
(b) Key assumptions used for value-in-use calculations
Gross Margin
Growth Rate
Discount Rate
2014
%
64.0
2013
%
64.0
2014
%
3.0
2013
%
3.0
2014
%
11.0
2013
%
11.0
Management determined gross margin based on past performance and its expectations for the future. The weighted average growth rates used are
consistent with forecasts included in industry reports. Management has considered reasonably 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.
16. Trade And Other Payables
Consolidated Entity
Trade payables
Customer deposits
Sundry creditors
Marketing fund
Other payables
2014
$’000
22,898
2,388
2,693
1,407
208
29,594
2013
$’000
17,605
1,820
2,058
1,216
193
22,892
(a) Risk exposure
Information about the Group’s exposure to foreign exchange risk is provided in Note 2.
(b) Fair Value
Trade payables are unsecured and are usually paid within 30 days of recognition.
The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to their short-term nature.
44
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
17. Current Borrowings
Consolidated Entity
Unsecured
Hire purchase liability (a)
Total unsecured current borrowings
(a) Hire purchase liability
2014
$’000
564
564
The Group utilises hire-purchase plans to acquire assets (i.e. fixtures and fittings and motor vehicles).
The terms range from one to four years. Details on the accounting for these hire-purchase plans is disclosed in Note 1(h) of this report.
Security and fair value disclosures
Information about the security relating to each of the secured liabilities and the fair value of each of the borrowings is provided in Note 20.
Risk exposures
Details of the Group’s exposure to risks arising from current and non-current borrowings are set out in Note 2.
18. Current Provisions
Consolidated Entity
Employee benefits (a)
Warranty provision (b)
Other provisions (c)
(a) Employee benefits
2014
$’000
3,106
1,038
92
4,236
2013
$’000
639
639
2013
$’000
2,815
-
64
2,879
The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it covers all unconditional
entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain
circumstances. The entire amount of the provision is presented as current, since the Group does not have an unconditional right to defer settlement for
any of these obligations. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require
payment within the next 12 months. The following amounts reflect leave that is expected to be taken or paid within the next 12 months.
Consolidated Entity
Leave obligations not expected to be settled within 12 months
2014
$’000
2,161
2013
$’000
1,886
45
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
(b) Warranty provision
The group generally offers 12 months warranty on its products. Provision is made for estimated warranty claims in respect of products sold which are still
under warranty at the end of the reporting period. These claims are expected to be settled in the next financial year. Management estimates the provision
based on historical warranty claim information and any recent trends that may suggest claims could differ from historical amounts.
Factors that could impact the estimated claim information include the success of the group’s product and quality initiatives, as well as parts and labour
costs. Were claim costs to differ by 10% from management’s estimates, the warranty provision would be an estimated $104,000 higher or lower. Product
warranties were not material in previous financial years.
Movement in warranty provision
Consolidated Entity
Carrying amount at the start of the year
Charged/(credited) to profit or loss - amount incurred and charged
Carrying amount at end of period
(c) Other provisions
Provision is made for the fringe benefit tax payable at the end of the reporting period.
Movements in other provisions
Consolidated Entity
Carrying amount at the start of the year
Charged/(credited) to profit or loss - amount incurred and charged
Amounts used during the year
Carrying amount at end of period
19. Current Tax Liabilities
Consolidated Entity
Provision for income tax
2014
$’000
-
1,038
1,038
2014
$’000
64
368
(340)
92
2014
$’000
1,147
2013
$’000
-
-
-
2013
$’000
76
267
(279)
64
2013
$’000
1,157
46
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
20. Non Current Borrowings
Consolidated Entity
Unsecured
Hire purchase plan (a)
Total unsecured non-current borrowings
(a) Hire purchase plan
2014
$’000
774
774
2013
$’000
267
267
The Group utilises hire-purchase plans to acquire assets (i.e. furniture and fittings and motor vehicles), with one to four year terms. Details on the
accounting for these hire-purchase plans is disclosed in Note 1(h) of this report.
Risk exposures
Information about the Group’s exposure to interest rate and foreign exchange risk is provided in Note 2.
21. Non Current Provisions
Consolidated Entity
Lease liabilities (a)
Employee benefits
Total non-current liabilities - provisions
(a) Lease liabilities
Adjustment on correction for lease liabilities
2014
$’000
1,638
583
2,221
2013
$’000
1,700
356
2,056
In the 2014 Annual Report, Beacon Lighting has corrected the balance sheet to account for leases with a fixed increment on a straight line basis over the
term of the lease. As a result a liability of $1.70m has been recorded to the opening balance sheet of the 2013 financial year with no impact on the 2013
financial year profit before income tax. There is a $62,000 favourable impact to current year profit before income tax as a result of this correction.
47
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
22. Contributed Equity
Consolidated Entity
Number of ordinary shares, fully paid
Consolidated Entity
Movements in ordinary share capital
Balance at the beginning of the year
Elimination of prior year share capital
Transaction costs arising on share issue net of tax
Share capital raised
Balance at the end of the year
Consolidated Entity
Movements in the number of ordinary shares
Balance at the beginning of the year
Elimination of prior year share capital
New shares Issued
Balance at the end of the year
Ordinary shares
2014
$’000
2013
$’000
215,000,000
2,150,000
2014
$’000
2,150
(2,150)
(1,289)
63,854
62,565
2014
$’000
2013
$’000
2,150
-
-
-
2,150
2013
$’000
2,150,000
(2,150,000)
215,000,000
215,000,000
2,150,000
-
-
2,150,000
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts
paid on the shares held.
All shares carry one vote per share.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
Consistently with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by borrowings
less cash plus total equity. Net debt is calculated as total borrowings less cash.
48
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
23. Reserves And Retained Profits
Consolidated Entity
(a) Other reserves
Cash flow hedges
Common control reserve
Movement in cash flow hedges
Opening balance
Revaluation
Closing balance
Movement in common control reserve
Opening balance
Transactions arising from share capital restructure
Closing balance
Nature and Purpose of Other Reserves
Cash flow hedges
2014
$’000
(238)
(43,672)
(43,910)
93
(331)
(238)
(785)
(42,887)
(43,672)
2013
$’000
93
(785)
(692)
-
93
93
-
(785)
(785)
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in other comprehensive income, as
described in Note 1(p). Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
Common control reserve
An internal reorganisation occurred prior to the initial public offering of shares in Beacon Lighting Group Limited (“BLG” or the “Group”) in April 2014. The
business of Beacon Lighting is conducted through Beacon Lighting Corporation Pty Ltd (“BLC”) and its 100% owned subsidiaries. BLC was formerly known
as Sonman Investments Pty Ltd. Prior to the restructure, BLC was 55% owned by Heystead Nominees Pty Ltd, a Company associated with the Robinson
family and the remaining 45% owned by a minority shareholder. The internal reorganisation has resulted in BLG as the current listed Company and the
ultimate parent Company of BLC and its wholly owned subsidiaries, and the acquisition of the 45% of non-controlling interests by BLG, prior to the IPO in
April 2014.
There was no change in control of the Group as a result of either the internal reorganisation or the subsequent initial public offering. Therefore, the
reorganisation has been accounted for as a common control transaction, and presented in the consolidated accounts of BLG from the date the Group obtains
the ownership interest. Assets and liabilities are recognised upon consolidation at their carrying amounts in the consolidated financial statements of the
ultimate parent entity, Beacon Lighting Group.
Consolidated Entity
(b) Retained earnings
Movements in retained earnings were as follows:
Opening balance
Adjustment on correction of lease liabilities (Note 21)
Net profit for the period
Transactions arising from share capital restructure
Dividends
Closing balance
2014
$’000
2013
$’000
41,055
11,797
(18,803)
(14,500)
19,549
33,089
(1,700)
9,866
-
(200)
41,055
49
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
24. Dividends
(a) Ordinary shares
Dividends of $14.5m were paid prior to the group listing, including dividends of $6.525m paid to the non-controlling interest shareholder during the year
ended 29 June 2014.
To avoid any doubt, this does not include the dividend of $3.01m declared on the day of this report.
Consolidated Entity
Declared final fully franked dividend of $0.067 (2013: $0.093) per fully paid share at a tax rate
of 30% (2013: 30%)
2014
$’000
14,500
2013
$’000
200
(b) Franked dividends
The franked portions of the final dividends recommended after 29 June 2014 will be franked out of existing franking credits or out of franking credits arising
from the payment of income tax in the 52 week period ended 29 June 2014.
Consolidated Entity
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
(2013 - 30.0%)
2014
$’000
21,412
2013
$’000
21,796
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for:
• franking credits that will arise from the payment of the amount of the provision for income tax,
• franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and
• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries were paid as dividends.
50
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
25. Key Management Personnel Disclosures
Consolidated Entity
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Performance based benefits
Detailed remuneration disclosures are provided in the remuneration report on pages 17 to 19.
26. Earnings Per Share
Consolidated Entity
Basic earnings per share - cents
Diluted earnings per share - cents
2014
$
573,735
54,043
40,695
82,380
750,853
2014
5.49
5.49
2013
$
531,605
48,499
8,597
80,734
669,435
2013
4.59
4.59
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share1
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share1
215,000,000
215,000,000
215,000,000
215,000,000
1 Due to the number of ordinary shares increasing due to a reorganization of capital, the calculation of basic and diluted earnings per share for all periods presented have been adjusted retrospectively.
51
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
27. Remuneration Of Auditors
During the period the following fees were paid or payable for services provided by PricewaterhouseCoopers, auditor of the parent entity.
Consolidated Entity
Audit and Assurance Services
Audit and review of financial statements
IPO due diligence
Other services:
Other IPO services
IPO tax related services
Taxation services
Total remuneration of PwC
28. Contingencies
There were no significant or material contingent liabilities including legal claims at 29 June 2014.
29. Commitments
Lease commitments: group as lessee
(a) Non-cancellable operating leases
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Consolidated Entity
Within one year
Later than one year but not later than five years
Later than five years
2014
$
199,410
164,495
38,836
118,935
30,190
551,866
2014
$’000
13,446
37,449
7,895
58,790
2013
$
150,000
-
-
22,800
172,800
2013
$’000
13,348
31,072
5,050
49,470
The Group leases various offices, warehouses and retail stores under non-cancellable operating leases expiring within one to seven years. The leases have
varying terms, with rent payable monthly in advance. Various options exist to renew the leases at expiry for an additional term. On renewal, the terms of the
leases are renegotiated.
52
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
(b) Hire purchase commitments
Commitments in relation to finance leases are payable as follows:
Consolidated Entity
Within one year
Later than one year but not later than five years
Minimum lease payments
Future finance charges
Total lease liabilities
Representing lease liabilities:
Current (Note 17)
Non-current (Note 20)
30. Related Party Transactions
(a) Subsidiaries
Interests in subsidiaries are set out in Note 31.
(b) Key management personnel
Disclosures relating to key management personnel are set out in Note 25.
Consolidated Entity
(c) Transactions with other related parties
The following transactions occurred with related parties:
Purchases of goods
Purchases of goods from other related parties
Purchases of goods and supply of services from/to other related parties
Other transactions
Interest received from other related parties
Consulting fees paid to other related parties
Rent paid to other related parties
2014
$’000
632
824
1,456
(118)
1,338
564
774
1,338
2013
$’000
701
282
983
(77)
906
639
267
906
2014
$’000
2013
$’000
-
47,610
-
49,090
1,404,101
895,124
-
-
32,722
1,387,925
53
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
The Robinson family has a 55% interest as owner of the Derrimut distribution centre leased by Beacon Lighting on arms length commercial terms.
The current rent is $920,000 per annum increasing by 3% annually. The lease expires in March 2021 with two further rights of renewal for periods of
seven years each. The remaining 45% interest is held by interests associated with Gusaka Pty Ltd. The Robinson family is in the process of negotiating
to acquire the remaining 45% interest.
The Robinson family has a 55% interest as owner of the Heidelberg store leased by Beacon Lighting on arms length terms. The current rent is $153,276 per
annum increasing by 3% annually. The lease expires in 2017 with one further right of renewal for a period of seven years. The remaining 45% interest is held
by interests associated with Gusaka Pty Ltd. The Robinson family is in the process of negotiating to acquire the remaining 45% interest.
The Robinson family has a 100% interest as owner of the Fyshwick store leased by Beacon Lighting on arms length terms. The current rent is $205,855 per
annum increasing by 3% annually. The lease expires in 2017 with one further right of renewal for a period of seven years.
These disclosures are made due to Beacon Lighting having obtained, at the time of listing, a waiver from Listing Rule 10.1 permitting the lease arrangements
described above continuing without shareholder approval conditional on disclosure being made in the Annual Report as set out here.
Ian Robinson has a 100% interest in Carbonetix Pty Ltd. Carbonetix Pty Ltd and Beacon Solar have an arms length working alliance whereby business
opportunities are jointly explored. Beacon Lighting provides Carbonetix Pty Ltd with administrative services and receives an arms length fee for these
services. Beacon Lighting subleases office space to Carbonetix Pty Ltd at an arms length fee.
(d) Outstanding balances
There are no outstanding balances arising from sales/purchases of goods and services with related parties at the end of the reporting period.
No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of
bad or doubtful debts due from related parties.
Consolidated Entity
(e) Loans to/from related parties
Loans to other related parties
Beginning of the year
Loans advanced
Loans repaid
End of period
2014
$’000
2013
$’000
9,200,000
-
(9,200,000)
-
1,311,772
9,200,000
(1,311,772)
9,200,000
No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or
doubtful debts due from related parties.
The related party loan receivable is non-interest bearing and therefore no interest has been charged on this loan during the 52 week period ended 29 June 2014.
54
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
31. Subsidiaries
The consolidated financial report incorporate the assets, liabilities and results of the following principal subsidiaries in accordance with the accounting
policy described in note 1(b):
Name of Entity
Incorporation
Shares
Equity holding1
Beacon Lighting Corporation Pty Ltd
Brightlite Unit Trust
Beacon Lighting Wholesalers Unit Trust
Beacon Lighting Franchising Unit Trust
Tanex Unit Trust
Enviro Renew Pty Ltd
Manrob Investments Pty Ltd
Beacon Solar Pty Ltd
Light Source Solutions Limited
Beacon International Limited
1592603 Ltd (formerly known as Beacon Lighting International Ltd)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Hong Kong
Hong Kong
Beacon Lighting International (formerly known as Fanaway Technology Ltd)
Hong Kong
Fanaway Trading Limited
Fanaway International Trading Limited
Hong Kong
Hong Kong
1The proportion of ownership interest is equal to the proportion of voting power held.
32. Events Occurring After the Reporting Period
2014 %
2013 %
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
Other than the item described below, there has been no other matter or circumstance that has occurred subsequent to period end that has significantly
affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or economic entity
in subsequent financial periods.
A fully franked dividend of $3,010,000 was declared on August 22, 2014.
55
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
33. Reconciliation of Profit After Income Tax to Net Cash Inflow from Operating Activities
Consolidated Entity
Profit for the period
Depreciation and amortisation
Net loss on sale of non-current assets
Amortisation
Fair value adjustment to derivatives
Net exchange differences
Change in operating assets and liabilities:
(Increase) decrease in receivables
(Increase) decrease in inventories
(Increase) decrease in deferred tax assets
(Increase) decrease in other operating assets
(Decrease) increase in payables
(Decrease) increase in provision for income taxes payable
(Decrease) increase in deferred tax liabilities
(Decrease) increase in other provisions
Net cash inflow from operating activities
34. Non-Cash Investing and Financing Activities
Consolidated Entity
Acquisition of plant and equipment by means of finance leases
2014
$’000
11,797
2,000
143
20
-
134
(2,246)
(3,122)
(1,365)
215
6,619
(10)
-
1,521
15,706
2014
$’000
1,341
2013
$’000
9,866
2,135
34
220
208
(118)
432
(2,346)
1,657
(54)
3,553
(388)
(2,017)
391
13,573
2013
$’000
161
35. Critical Accounting Estimates
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management
also needs to exercise judgement in applying the group’s accounting policies.
This note provides an overview of the area that involves a higher degree of judgement or complexity, and of items which are more likely to be materially
adjusted due to estimates and assumptions turning out to be wrong. Detailed information about the groups estimates and judgements is included in
Note 18.
The area involving significant estimates or judgements are the estimation of provision for warranty claims – Note 19.
56
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only NOTES TO THE FINANCIAL STATEMENTS
For the 52 weeks ended 29 June 2014 and the 53 weeks ended 30 June 2013
Beacon Lighting Group and its controlled entities
36. Parent Entity Financial Information
(a) Summary financial information
The individual financial report for the parent entity show the following aggregate amounts:
Consolidated Entity
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Retained profits
Total Equity
Loss for the period
Total comprehensive income
(b) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 29 June 2014 or 30 June 2013.
2014
$’000
2013
$’000
15,068
88,737
103,805
1,951
-
1,951
101,854
86,884
14,970
101,854
(30)
(30)
-
-
-
-
-
-
-
-
-
-
-
-
57
For personal use only For personal use only Directors’ Declaration
In the opinion of the Directors:
(a)
the Financial Statements, notes and the additional disclosures set out on pages 23 to 57 are in accordance with the Corporations Act
2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 29 June 2014 and of its performance for the 52 weeks year
ended on that date, and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
(c)
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board. The Directors have been given the declarations by the Chief Executive Officer and Chief
Financial Officer required by the section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors.
Ian Robinson
Executive Chairman
Melbourne, 22 August 2014
Glen Robinson
Chief Executive Officer
59
For personal use only
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEACON LIGHTING GROUP LIMITED
Independent auditor’s report to the members of Beacon
Lighting Group Limited
Report on the financial report
We have audited the accompanying financial report of Beacon Lighting Group Limited (the company),
which comprises the balance sheet as at 29 June 2014, the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year ended on that date, a summary
of significant accounting policies, other explanatory notes and the directors’ declaration for Beacon
Lighting Group (the consolidated entity). The consolidated entity comprises the company and the
entities it controlled at year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the consolidated
entity’s preparation and fair presentation of the financial report in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
For personal use only INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEACON LIGHTING GROUP LIMITED
Independent auditor’s report to the members of Beacon
Lighting Group Limited (continued)
Report on the financial report (continued)
Auditor’s opinion
In our opinion:
(a)
the financial report of Beacon Lighting Group Limited is in accordance with the Corporations
Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity's financial position as at 29 June
2014 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
(b)
the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report included on pages 17 to 19 of the directors’ report for the
year ended 29 June 2014. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Beacon Lighting Group Limited for the year ended 29 June
2014 complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Daniel Rosenberg
Partner
Melbourne
22 August 2014
61
For personal use only 62
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only Shareholders’ Information
In accordance with Section 4.10 of the Australian Stock Exchange Limited Listing Rules, the Directors provide the following information.
SHAREHOLDING ANALYSIS
(a) Distribution of shareholders
(c) Class of shares and voting rights
At 11 August 2014, the distribution of shareholdings was
as follows:
Size of Shareholding
1 - 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
Over 100,000
Number of
Shareholders
54
281
338
777
37
Total number of shareholders
1,487
Holdings of less than a
marketable parcel
6
(b) Substantial shareholdings
The number of shares held by the substantial shareholders
listed in the Company’s register of substantial shareholders
as at 11 August 2014 were:
Number of
Shares
% Held
118,635,000
55.18%
Shareholder
Heystead
Nominees Pty
Ltd (including
Robinson Family
members)
At 11 August 2014, there were 1,487 holders of ordinary shares of the
Company. All of the issued shares in the capital of the parent entity are ordinary
shares and each shareholder is entitled to one vote per share.
Twenty largest shareholders, as at 11 August 2014:
Rank
Name
Number
of Shares
%Holding
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HEYSTEAD NOMINEES
118,250,000
55.00%
NATIONAL NOMINEES
CITICORP NOMINEES
19,757,388
13,825,952
HSBC CUSTODY NOMINEES
8,967,474
J P MORGAN NOMINEES
UBS NOMINEES PTY LTD
7,496,573
7,153,078
RBC INVESTOR SERVICES
3,270,672
CITICORP NOMINEES
2,109,197
RELIABLE BUSINESS CO LTD
1,363,636
BNP PARIBAS NOMS PTY LTD
1,198,236
MIRRABOOKA INVESTMENTS
1,064,133
AMCIL LIMITED
HSBC CUSTODY NOMINEES
D J RITCHIE SUPER FUND
TRUEBELL CAPITAL
MR NEIL OSBORNE
MR ROBERT BRYAN
608,075
535,989
400,000
300,000
300,000
250,000
UBS WEALTH MANAGEMENT
250,000
FABATOTO PTY LTD
ADRIAN & PHILIPPA KELLY
225,000
225,000
9.19%
6.43%
4.17%
3.49%
3.33%
1.52%
0.98%
0.63%
0.56%
0.49%
0.28%
0.25%
0.19%
0.14%
0.14%
0.12%
0.12%
0.10%
0.10%
Top 20 holders of ISSUED CAPITAL
187,550,403
87.23%
Total Remaining Holders Balance
27,449,597
12.74%
215,000,000
100.00%
63
For personal use only Corporate Directory
DIRECTORS
Ian Robinson
Glen Robinson
Eric(James) Barr
Neil Osborne
Executive Chairman
Chief Executive Officer
Deputy Chairman
Non-Executive Director
COMPANY SECRETARY
Tracey Hutchinson
REGISTERED OFFICE
5 Bastow Place
Mulgrave
Victoria
WEBSITE
Corporate site
www.beaconlightinggroup.com.au
Retail site
www.beaconlighting.com.au
Other business divisions
www.beaconlightingtradeclub.com.au
www.beaconsolar.com.au
www.beaconlightingcommercial.com.au
www.beaconinternational.com
www.fanaway.com
LEGAL ADVISORS
Baker & McKenzie
Level 19, 181 William Street, Melbourne
Victoria
AUDITORS
PricewaterhouseCoopers
Freshwater Place
2 Southbank Boulevard, Southbank
Victoria
SHARE REGISTRY
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street, Abbotsford
Victoria
STOCK EXCHANGE LISTING
Beacon Lighting Group Limited (BLX) shares are
listed on the ASX
64
BEACON LIGHTING GROUP ANNUAL REPORT 2014
For personal use only 65
For personal use only Store Locations
www.beaconlighting.com.au
VIC
Abbotsford
250 Hoddle St
Albury Wodonga
Harvey Norman Centre
94 Borella Rd,
Albury NSW
Ballarat
Wendouree
Homemaker Centre
333 Gillies St
Bendigo
285 High St
Kangaroo Flat
Chirnside Park
Showroom Centre
286 Maroondah Hwy
Cranbourne
Homemaker Centre
Corner South
Gippsland Hwy
& Thompsons Rd
Essendon DFO
Homemaker Hub
120 Bulla Rd, Strathmore
Fountain Gate
Casey Lifestyle Centre
430 Princes Hwy
Frankston
22 McMahons Rd
Geelong
354 Melbourne Rd
Hawthorn
47 Camberwell Rd
Heidelberg
2-4 Dora Street
Hoppers
Crossing
283 Old Geelong Rd
Moorabbin
867 Nepean Hwy
Nunawading
262 Whitehorse Rd
Oakleigh
807 Warrigal Rd
Scoresby
1391 Ferntree Gully Rd
South Wharf DFO
Level 1,
Homemaker Hub
20 Convention
Centre Place
Springvale
IKEA Homemaker Centre
917 Princes Hwy
St Kilda
366 St Kilda Rd
Sunshine
497 Ballarat Rd
Thomastown
Homemaker Centre
Cnr Dalton and
Settlement Rds
Watergardens
Homemaker Centre
440 Keilor-Melton Hwy,
Taylors Lakes
Waurn Ponds
Homemaker Centre
235 Colac Rd
(Princes Hwy)
TAS
Moonah
7-9 Derwent Park Rd
Launceston
40 William Street
NSW
Albury Wodonga
Harvey Norman Centre
94 Borella Rd, Albury
Alexandria
Style Homemaker
Centre, Cnr O’Riordan
& Doody Sts
Artarmon
Home HQ
North Shore
Cnr Reserve Rd
& Frederick St
Bankstown
Home Central
9 - 67
Chapel Rd South
Belrose
Supa Centa Belrose
4-6 Niangala Cl
Campbelltown
Homebase
24 Blaxland Rd
Castle Hill
Home Hub Hills, Cnr
Victoria & Hudson Ave
Crossroads
Homemaker Centre
Parkers Farm Place,
Casula
Gosford West
Hometown
356 Manns Rd
Hornsby
Cnr Pacific Hwy
& Yardley Ave, Waitara
Kotara
Homemaker Centre
108 Park Ave
Lake Haven
Home Mega Centre
Cnr Pacific Hwy
& Lake Haven Drv
66
BEACON LIGHTING GROUP ANNUAL REPORT 2014
Joondalup
3 Sundew Rise
Malaga
Home Centre
655 Marshall Rd
Mandurah
28 Gordon Rd
Mandurah
Home City
430 Pinjarra Rd
Midland
Midland Central
Cnr Clayton
& Lloyd Sts
Myaree
Melville Square
Cnr Leach Hwy
& Norma Rd
Osborne Park
Hometown
381 Scarborough
Beach Rd
Subiaco
320 Hay St
SA
Gepps Cross
Home HQ
750 Main North Rd
Melrose Park
Melrose Plaza
1039 South Rd
Mile End
Homemaker Centre
121 Railway Tce
Munno Para
Harvey Norman Centre
600 Main North Rd,
Smithfield
Noarlunga
Harvey Norman Centre
2 Seaman Dr
NT
Darwin
Homemaker Village
356-362
Bagot Rd, Millner
McGraths Hill
Home Central,
264-272 Windsor Rd
Mittagong
Highlands
Homemaker Centre,
205 Old Hume Hwy
Parramatta
Cnr Church and
Daking Sts
Penrith
Homemaker Centre
2 Patty’s Place
Prospect
Homebase
19 Stoddart Rd
Rutherford
Harvey Norman Centre,
366 New England Hwy
Shellharbour
146 New Lake
Entrance Rd
Taren Point
105 Parraweena Rd
Warners Bay
Homemaker Centre
240 Hillsborough Rd
ACT
Fyshwick
175 Gladstone St
QLD
Burleigh
Stockland Centre
177-207 Reedy
Creek Rd
Cairns
331 Mulgrave Rd
Cannon Hill
Homemaker Centre
1881 Creek Rd
Capalaba
Freedom
Home Centre
67 Redland Bay Rd
Carseldine
Homemaker Centre
1925 Gympie Rd,
Bald Hills
Fortitude Valley
Homemaker
City North
650 Wickham St
Helensvale
Homeworld
502 Hope Island Rd
Hervey Bay
140 Boat
Harbour Drv
Jindalee
Homemaker City
182 Sinnamon Rd
Kawana
2 Eden St, Minyama
Macgregor
550 Kessels Rd
Maroochydore
Sunshine
Homemaker Centre 72
Maroochydore Rd
Morayfield
Supa Centre
344 Morayfield Rd
Noosa
Noosa Civic
Eenie Creek Rd
Rockhampton
Red Hill
Homemaker Centre
Cnr Yaamba &
Richardson Rds
Southport
Bunnings Complex
542 Olsen Ave
Toowoomba
Harvey Norman Centre,
910 Ruthven St
Townsville
Mega Centre
Cnr Dalrymple Rd
& Duckworth St,
Garbutt
Underwood
Homemaker HQ
1-21 Kingston Rd
Windsor
Homemaker City
190 Lutwyche Rd
WA
Baldivis
Safety Bay Rd
Bunbury
Homemaker Centre
42 Strickland St
Cannington
21 William St
Clarkson
Ocean Keys
Homemaker Centre
61 Key Largo Drv
Jandakot
South Central
Cockburn
87 Armadale Rd
For personal use only
For personal use only