Beacon Lighting Group Limited
ANNUAL
REPORT
2016
ACN 164 122 785
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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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 Directors’ report on page 14, which is not part of the financial report. The financial report was authorized for issue by the Directors on 17 August 2016.
The Directors have the power to amend and re-issue the financial statements.
Chairman’s and Chief Executive Officer’s Report
Beacon Lighting Group Limited is pleased to release the financial results for FY2016. The Group was
again able to achieve record sales and profits for the year. With a continued focus on new store
rollouts, excellent customer service, the introduction of the latest fashion and technologically advanced
products, Beacon Lighting has been able to maintain its market leadership position as Australia’s
leading specialist lighting retailer.
Group Overview
Beacon Lighting completed the FY2016 with 85 company stores,
11 franchised stores, 4 commercial offices, along with the Beacon
International, Light Source Solutions and the Beacon Solar businesses.
During FY2016, Beacon Lighting opened 5 new company stores located
in Bundall (QLD), Maribyrnong (VIC), Gungahlin (ACT), Fairfield Waters
(QLD) and Preston (VIC). The Group also purchased the Essendon (VIC)
and Watergardens (VIC) franchised stores during the year. Additionally
Beacon Lighting advanced its online presence with a major upgrade to
its main Beacon Lighting website, plus further advances in our eBay
online store and social media activities.
Financial Result
Beacon Lighting achieved sales growth of 7.7% to $193.2 million in
FY2016. Company store comparative sales growth was a positive 2.7%
for the year. Gross profit dollars increased by 7.0% or $8.2 million
with a gross profit margin of 64.3%. Through effective management
of expenses, Beacon Lighting was able to deliver productivity gains and
reduce operating expenses from 51.6% of sales down to 50.7%. Beacon
Lighting achieved an increase in EBITDA of 9.1% to $29.9 million and an
increase in Net Profit After Tax of 8.0% to $18.3 million.
During FY2016, the Beacon Lighting Group implemented a new inventory
valuation system and conducted a review of the supply chain costs to
be capitalised into inventory. The effect of this change is an increase
in inventory and gross profit of $0.7 million. Therefore the underlying
EBITDA result for FY2016 is an increase of 6.5% to $29.2 million and
the underlying Net Profit After Tax increased by 5.1% to $17.8 million.
Trading throughout the year was varied with a strong H1 FY2016 result,
which was boosted by an exceptional gross profit margin. The H2 FY2016
trading period was more challenging, particularly during March and April
which were impacted by the early timing of Easter, the Federal Election,
reduced exposure in key marketing initiatives and increased clearance
activity by competitors. Although many of these factors are now past, the
company believes ongoing clearance activity from competitors exiting
the market will require continued attention from the Group.
Throughout the year, the company has maintained a conservative
Balance Sheet with minimal debt and a gearing ratio of 18.3%.
Inventories in the group have grown as a result of new company stores,
new businesses (i.e. Light Source Solutions), the change in supply chain
cost capitalisation and movements in exchange rates. Receivables have
increased as a result of the growth of the Commercial business and the
introduction of the Light Source Solutions business. Beacon Lighting’s
fixed assets have also increased through re-investment in new company
stores, store refurbishments and IT projects. This growth in the asset
base has for the most part been funded from the group’s cashflow along
with some trade finance.
FY2016 Highlights
Highlights which have contributed to the record results in FY2016
include:
Opened five new company stores and purchased
two Beacon Lighting franchised stores.
Established the Light Source Solutions business
in Australia and New Zealand.
Strong trade and commercial sales growth.
Online sales increased by 20.3%.
Beacon International sales increased by 32.7%.
Designed and developed over 500 exclusive new
products.
Interstate 3PL product distribution increased
by 27.6%.
VIP customers have increased by 65.0%
to 169,000.
CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REPORT
1
Key Growth Strategies
Dividends
Beacon Lighting will maintain its key growth strategies to drive
improved sales and profits. In FY2017, we will continue to:
• Target the opening of approximately six new company stores.
• Optimise the existing company store and commercial office network.
• Be the first to market with the latest fashion and technologically
advanced lighting products.
The Directors have declared a fully franked dividend of 2.4 cents per
share for H2 FY2016. Along with the H1 FY2016 fully franked dividend
of 2.3 cents per share, this brings the annual Beacon Lighting fully
franked dividend for FY2016 to 4.7 cents per share, an increase of
11.9% over FY2015. Going forward, the Directors of Beacon Lighting
will continue to target a dividend payout ratio of between 50%
and 60% of annual Net Profit After Tax which will be paid in March
and September.
• Further enhance our online and social media presence.
Outlook
• Grow the emerging businesses: Beacon International, Light Source
Solutions and Beacon Solar.
• Pursue aligned business acquisition opportunities in Australia and
internationally.
• Investigate opportunities to leverage our business capabilities into
new markets.
• Target efficiency gains whilst continuing to drive business growth.
The Board
The Board of Directors recognise the importance of good corporate
governance for the benefit of our shareholders, associates and
customers. Changes and development in the corporate governance
area are monitored and reviewed for implementation if required. The
Board is committed to ensuring that Beacon Lighting operates ethically
and in accordance with high standards of corporate governance.
Further to the FY2016 results and growth strategies in place, Beacon
Lighting has committed to undertaking the following activities for
FY2017:
• In July 2016, the Jindalee (QLD) franchised store was purchased.
• At the end of July 2016, Beacon Lighting purchased the Masson for
Light trademark and right to operate the Masson for Light architectural
lighting showroom in Richmond (VIC).
• Store network expansion of six new stores, South Melbourne (VIC),
Marsden Park (NSW), Claremont (WA), Brookvale (NSW), Gladesville
(NSW) and North Lakes (QLD) expected to open during FY2017.
The lighting industry continues to go through a period of exciting change
with the continuing focus and rapid development of new technologies
including LED, new energy efficiency regulations and lighting being
continually used in new and different applications. Given Beacon
Lighting’s market position as Australia’s leading specialist lighting
retailer, it remains very well positioned to take advantage of the changes
that are occurring.
With the key growth strategies in place, the Beacon Lighting team looks
forward to delivering another record sales and profit year in FY2017.
Ian Robinson
Executive Chairman
Glen Robinson
Chief Executive Officer
* The Financial Result commentary in The Chairman and CEO Report is based on the underlying profit result for FY2016.
2
BEACON LIGHTING GROUP ANNUAL REPORT 2016 Key Highlights of F Y 20 1 6
RECORD SALES
$193.2m
RECORD EBITDA1
$29.9m
SALES2 ($m)
$179.4
$193.2
$120.6
$132.9
$150.3
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
EBITDA1,2 ($m)
$27.4
$29.9
$15.9
$16.6
$20.1
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
NPAT2,3 ($m)
$16.9
$18.3
$9.3
$9.5
$11.8
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
1 Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)
2 52 week FY2012 and FY2013 Pro Forma result in the Prospectus dated 12 March 2014.
3 Net Profit After Tax (NPAT).
HIGHLIGHTS
3
Board of Directors
Ian Robinson
Executive Chairman
Glen Robinson
Chief Executive Officer
42 year of service
Ian Robinson purchased the first Beacon Lighting store in 1975. Over
the subsequent 40 years, his role has grown from store management,
to CEO and in July 2013 to his current role as Executive Chairman.
Ian remains actively involved in the Group operations. Ian is a
Director of Lighting Council of Australia, Carbonetix Pty Ltd and the
Large Format Retailers Association.
21 years of service
Glen Robinson assumed his current role of Chief Executive Officer
in July 2013 after joining the Group in 1994. Glen has a strong
understanding of the business having started with the Group on the
sales floor, progressed to Trainee Buyer, Merchandising Manager
and then taking responsibility for Beacon Lighting’s product range
from development to in-store presentation. Glen holds a Bachelor of
Business (Management).
(James) Eric Barr
Deputy Chairman Non-Executive Director
Neil Osborne
Non-Executive Director
Eric Barr is the Deputy Chairman and also the Chairman of Beacon
Lighting’s Remuneration and Nomination Committee. 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 Chairman of the Sydney Stock
Exchange Limited and Chairman of their audit committee. He is a
director and Chairman of the risk committee of Austock Life Limited
and a member of their Investment Committee. Eric is a Chartered
Accountant.
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, operations (including CFO Myer)
and strategic planning. Neil is a Non-Executive Director of Vita Group
(ASX Listed) and Chairman of Australian United Retailers (NSX Listed
and trading as Foodworks). Neil was previously a Non-Executive
Director of Lovisa Holdings. Neil holds a Bachelor of Commerce and
is a CPA and a FAICD.
BOARD OF DIRECTORS
5
Management Team
Ian Bunnett
Managing Director -
Retail
Joined Beacon Lighting in
2004 having had extensive
retail experience including
the GM of Store Operations
with Payless Shoes.
David Speirs
Chief Financial Officer
Joined Beacon Lighting
in 2003 after six years
of business consulting
and a career working
with various Coles Myer
businesses. David holds
a BBus (Accounting),
MBus (Accounting),
Post Grad Dip (Finance)
and is a FCPA.
Barry Martens
Chief Operating Officer
Joined Beacon Lighting
in 1996 following a retail
advertising career with
Clemenger Harvey and
retail marketing experience
with Klein’s Jewellery.
Barry holds a Certificate
in Business Studies
(Advertising).
Elizabeth Mikkelsen
Group Human
Resources Manager
Joined Beacon Lighting in
2003 having had a retail
management career which
included Myer Stores in
Human Resources and line
management. Elizabeth
holds a BA (Psych(Hons))
and a Dip (Human
Resources).
Prue Robinson
Marketing Director
Joined Beacon Lighting
in 2006 following a
variety of roles in Sydney
and London and four
years in marketing with
Spotlight. Prue holds a
BBus (Management &
Marketing).
Michael (Mick) Tan
Chief Information Officer
Joined Beacon Lighting in
2000 after having 30 years
information technology
experience including a career
with Fujitsu Systems. Mick
holds a Dip (Management),
an ICL Certificate (Systems
Analysts & Design) and an ICL
Certificate (Base Computer
Concepts & Programming).
Rodney Brown
General Manager –
Supply Chain
Joined Beacon Lighting in
2012 with extensive supply
chain experience including
management roles with
Cadbury Schweppes and
Fosters Brewing. Rodney
holds a Certificate III in
Purchasing and Warehouse
Management.
Tracey Hutchinson
Financial Controller &
Company Secretary
Joined Beacon Lighting in
2011 having had senior
financial management
roles with various ASX
businesses, including
Eyecare Partners. Tracey
holds a BBus (Accounting),
a MBus (Administration)
and is a CPA.
6
BEACON LIGHTING GROUP ANNUAL REPORT 2016 Corporate Governance Statement
The Board of Directors of Beacon Lighting Group Limited is responsible for the corporate governance of the Group. This statement outlines the corporate
governance policies and practices formally approved by the Board of Beacon Lighting. This statement is current as at 17 August 2016. These policies
and practices are in accordance with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (3rd Edition)
unless otherwise stated. The Board considers that the Group’s corporate governance practices and procedures substantially reflect the principles. The full
content of the Group’s Corporate Governance policies and charters can be found on the Group’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 matters expressly reserved to the
Board and those delegated to the Chief Executive Officer and senior
management.
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 the Group’s Board Charter is available on the Group’s website.
The Board and Committee Charters 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 reviewing executive remuneration and incentive
policies and practices.
The Group has a written agreement with each Director and senior
executive setting out the terms of their appointment.
The Group has adopted a Diversity Policy. The Group does not propose
to establish measurable objectives for achieving gender diversity in the
foreseeable future as recommended by Recommendation 1.5 of the ASX
Corporate Governance Principles and Recommendations as:
• The Group’s senior management team is extremely experienced
and stable and the Group does not intend to make changes in the
immediate future.
• The Group is strongly committed to making all selection decisions on
the basis of merit and the setting of specific targets for the proportion
of men and women at any level would potentially influence decision
making to the detriment of the business.
The Diversity Policy affirms the commitment of the Group 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
3 years
2 years
2 years
2 years
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.
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 Beacon Lighting Group
Limited. They are Non-Executive Directors and bring objective judgment
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.
Recommendation 2.1 of the ASX Corporate Governance Principles
and Recommendations recommends that the Board establishes a
nomination committee and that the committee have at least three
members, a majority of whom are independent and be chaired by an
independent Director.
The Remuneration and Nominations 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.
A copy of the Remuneration and Nomination Committee Charter is
available on the Group’s website.
8
BEACON LIGHTING GROUP ANNUAL REPORT 2016 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 is undertaken annually on the
performance, skills and knowledge of the Board and its committees,
utilising a board skills matrix. The review provides comfort to the
Board that its structure and performance is effective and appropriate to
Beacon Lighting and that the Board has the range of skills, knowledge
and experience to direct the Group.
The board skills matrix sets out the requisite skills, expertise, experience
and other desirable attributes for the Board. The following attributes
have been identified which Beacon seeks to achieve across its Board
membership: other Board experience, retail industry experience,
financial management experience and governance experience.
The Directors have been selected for their relevant expertise and
experience. They bring to the Board a variety of skills and experience,
including industry and business knowledge, financial management,
accounting, operational and corporate governance experience. The
annual report includes details of the Directors, including their specific
experience, expertise and term of office.
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;
• Have access to appropriate continuing professional development
opportunities; and
• Are able to seek independent professional advice at the Group’s
expense in certain circumstances.
Recommendations 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 that the Chairperson
should be an independent Director. The Board, as currently composed,
does not comply with these recommendations. The Board considers
that the composition of the Board is appropriate given the Group’s
present circumstances.
Principle 3
Act ethically and responsibly
The Group has adopted a written Code of Conduct which applies to the
Directors and all associates employed by the Group, including senior
management. The objective of this Code is to ensure that high standards
of corporate and individual behavior 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 Group
values.
• In accordance with applicable legislation and regulations, and internal
policies and procedures.
• In a manner that protects the Group 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 Beacon
Lighting Group securities. The Securities Trading policy includes detailed
requirements for Directors, officers and senior management regarding
when they can trade Beacon Lighting securities.
Principle 4
Safeguard integrity in corporate reporting
Principle 4.1 of the ASX Corporate Governance Principals and
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), 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 Group’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 Group’s internal control system; and
• Its relationship with the external auditor.
In accordance with Recommendation 4.2 the Board, before it approves
the Group’s statements for a financial period, ensures that it receives
from its Chief Executive Officer and Chief Financial Officer a declaration
that, in their opinion, the financial records of the Group have been
properly maintained and that the financial statements comply with the
appropriate accounting standards and give a true and fair view of the
financial position and performance of the entity and that the opinion has
been formed on the basis of a sound system of risk management and
internal control which is operating effectively.
CORPORATE GOVERNANCE STATEMENT
9
In accordance with Principle 4.3, the Group’s external auditor attends
each annual general meeting and is available to answer shareholder
questions about the audit.
The Board does not currently have a committee to oversee risk. Instead,
the Board Charter specifically includes risk management responsibilities
(rather than these being delegated to a separate Risk Committee).
Principle 5
Make timely and balanced disclosure
Principle 5.1 of the ASX Corporate Governance Principles and
Recommendations recommends that companies should establish a
written policy designed to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure accountability at a senior
management level for that compliance and disclose that policy or
a summary of it. The Group 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 Group for ensuring the Group immediately discloses
all price-sensitive information in compliance with the Listing Rules and
Corporations Act relating to continuous disclosure.
Principle 6
Respect the rights of security holders
The Group 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.
• The approach to communications with investors whether by meetings,
via the Group’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 Group’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 its business. It also includes
a section specifically dedicated to governance, which includes links to
the Company’s Constitution, Code of Conduct and its various corporate
governance charters and policies.
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 Group.
Principle 7
Recognise and manage risk
Principle 7.1 of
the ASX Corporate Governance Principles and
Recommendations recommends that a listed company either have a
committee to oversee risk or otherwise disclose the processes it employs
to for overseeing the Company’s risk management framework.
The Board evaluates all risks to the Group on an annual basis. The risk
matrix is then reviewed at regular intervals throughout the year to ensure
that the Group is not being exposed to any new risks and that all existing
risks are being monitored and managed effectively.
The Board retains oversight responsibility for assessing the effectiveness
of the Group’s systems for the management of material business risks.
The Board reviews the Group’s risk management on an annual basis to
ensure it continues to be sound.
The Board 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 Group’s risk management and internal
control processes.
The Board has received written assurances from management as to the
effectiveness of the Group’s management of its material business risks.
The Chief Executive Officer and Chief Financial Officer provide a written
assurance in the form of a declaration in respect of each relevant financial
period that, in their opinion, the declaration 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.
Principle 7.4 of the ASX Corporate Governance Principles and
Recommendations requires the Group to disclose details about whether
it has any material exposure to economic, environmental and social
sustainability risks (if any). The Group has considered the following risks
and has risk mitigation strategies in place.
Economic risks include impacts to consumers’ willingness to spend
on discretionary retail and lighting products in particular. The Group
mitigates the risk through the constant monitoring of the macro-
economic environment and adjusting capital expenditure, new projects
and operating expenses accordingly. Whilst consumer sentiment was
lower in 2016 which affected general retail demand, housing activity
remained positive which in part offset the impact of lower consumer
sentiment towards discretionary expenditure for the Group.
Exchange rate volatility can impact upon the Group’s ability to grow
margins. The Group can also lock in a forward position for this foreign
exchange exposure for a period of up to 12 months. The Board believes
this mitigates the Group’s exchange rate volatility risk to an acceptable
level.
Environmental sustainability risks include impacts on the Group’s
supply chain from suppliers through to stores. These risks can be
reputational, regulatory and financial. The Boards assesses its primary
exposure to be in the production of its products. The Group through its
supply chain operates responsibly within the community and expects the
same from its suppliers.
Social sustainability risks include workplace health and safety as
well as personnel management and corporate conduct. The Group has
an extensive workplace health and safety policy incorporating the early
identification and correction of potential risks, both in store and at the
support offices. The Board is informed of all incidents and material
potential risks at each Board meeting and the appropriate action taken.
10
BEACON LIGHTING GROUP ANNUAL REPORT 2016
Corporate conduct risks could impact regulatory, reputational and
financial performance. It includes stock loss and theft. The Group
has a dedicated store operations team to regularly monitor and assess
store related risks. The Group undertakes regular inventory counts and
analysis of store performance to reduce the risk of material loss.
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
of independent Directors. The Remuneration and Nomination Committee
as currently composed does not comply with this recommendation. 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 Group 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.
Details of Directors’ and executives’ remuneration, including the principles
used to determine the nature and amount of remuneration, are disclosed in
the remuneration report section of the annual report.
The Group’s Securities Trading Policy expressly prohibits relevant
participants from entering into arrangements that limit the economic risk
of participating in the Group’s incentive schemes prior to the relevant
securities becoming fully vested.
CORPORATE GOVERNANCE STATEMENT
13
Directors’ Report
The Directors of Beacon Lighting Group Limited (the ‘Group’) present their report together with the Consolidated Financial Statements of the Group and
its controlled entities (the ‘Consolidated Entity’) for the 52 weeks ended 26 June 2016.
1. Directors
The Directors of the Group 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.
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.
Details of the expertise and experience of the Directors are outlined on
page 5 of this annual report.
2. Principal Activities
4. Operating and Financial Review
4.1 Overview of Operations
Beacon Lighting is Australia’s leading specialist retailer of light fittings,
ceiling fans and light globes, offering its customers expert knowledge,
service and advice on a wide range of specialist products. As a vertically
integrated retailer, Beacon Lighting develops, designs, sources, imports,
distributes, merchandises, promotes and sells its product range to meet
the demands of its customers. More than 95% of the products sold
in Beacon Lighting company stores are supplied through the Beacon
Lighting wholesale supply chain and approximately 85% of the products
are exclusively branded.
At the end of FY2016, Beacon Lighting operated the following businesses:
• 85 Beacon Lighting company stores.
• 11 Beacon Lighting franchised stores.
• 4 Commercial sales offices.
• 10 Beacon Lighting related websites.
• Beacon International.
• Beacon Solar.
• Light Source Solutions (in Australian and New Zealand).
During FY2016, the operational highlights included the following:
During the financial period the principal continuing activities of the
Group consisted of the selling of light fittings, globes, ceiling fans and
energy efficient products in the Australian market.
• Beacon Lighting opened five new company stores which were Bundall
(QLD), Maribyrnong (VIC), Gungahlin (ACT), Fairfield Waters (QLD) and
Preston (VIC).
3. Results
The consolidated profit for the year attributable to the members of
Beacon Lighting Group Limited was:
Consolidated Entity
Actual
FY2016
$’000
Actual
FY2015
$’000
Profit before Income Tax
26,160
23,832
Income Tax Expense
7,863
6,893
Operating profit after tax attributable
to the members of Beacon Lighting
Group Limited
18,298
16,939
• Beacon Lighting purchased the Essendon (VIC) and Watergardens
(VIC) franchised stores in September 2015, converting them to
company stores.
• A store expansion was completed at our Alexandria (NSW) store.
• Major store refurbishments were completed at the Osborne Park (WA)
and Southport (QLD) stores.
• Light Source Solutions was set up to operate the licensed GE Globe
Distribution business in both Australia and New Zealand, starting in
September 2015.
• Designed and developed 509 exclusive new products for Beacon
Lighting.
• Implemented a new inventory demand forecasting and replenishment
system.
• The Beacon Lighting retail website was upgraded to enable better use
on all mobile devices.
• The Beacon Lighting ebay.com.au e-commerce sales channel became
operational.
14
BEACON LIGHTING GROUP ANNUAL REPORT 2016 4.2 Financial Summary
4.2.1 Financial Performance
A summary of the Beacon Lighting actual FY2016 financial performance compared to the actual FY2015 financial performance is presented in the following table:
Sales
Gross Profit
Other Income
Operating Expenses1
EBITDA
EBIT
Net Profit After Tax
FY2016
$’000
193,179
124,194
3,647
(97,965)
29,876
27,330
18,298
FY2015
$’000
$ Inc / Dec on FY
2015
% Inc / Dec on FY
2015
179,386
116,041
3,949
(92,594)
27,395
25,042
16,939
13,793
8,153
(302)
(5,370)
2,481
2,288
1,359
7.7%
7.0%
(7.6)%
5.8%
9.1%
9.1%
8.0%
1 Operating Expenses exclude interest, depreciation and amortisation.
During FY2016, the Beacon Lighting Group implemented a new inventory valuation system and conducted a review of the supply chain costs to be
capitalised into inventory. The effect of this change was to increase inventory by $711,249 and increase the gross profit by $711,249, thereby increasing
the statutory profit compared to the underlying profit for FY2016. A reconciliation of the FY2016 statutory profit to the underlying profit is presented in
the following table:
Statutory Profit
FY2016
$’000
Underlying Profit
Adjustments
$’000
Underlying Profit
FY2016
$’000
193,179
124,194
3,647
(97,965)
29,876
27,330
18,298
(711)
(711)
(711)
(498)
193,179
123,483
3,647
(97,965)
29,165
26,619
17,800
Sales
Gross Profit
Other Income
Operating Expenses1
EBITDA
EBIT
Net Profit After Tax
1 Operating Expenses exclude interest, depreciation and amortisation.
4.2.2 Sales
Beacon Lighting achieved sales growth of 7.7% to $193.2 million in FY2016. Company stores comparative sales growth grew by 2.7% for the year, with
comparative sales in H1 FY2016 growing by 5.1% and in H2 FY2016 growing by 0.1%. New South Wales company stores achieved the best comparative
sales result whilst both the Commercial and Beacon International teams both achieved significant sales increases over FY2015. The newly established Light
Source Solutions businesses in both Australia and New Zealand also contributed to the sales increase. As a result of the strategy of acquiring franchised stores,
wholesale sales to franchise stores continue to decline.
DIRECTORS’ REPORT
15
4.2.3 Gross Profit Margin
The gross profit dollars generated by Beacon Lighting increased by 7.0%.
The gross profit margin for FY2016 was 64.3% of sales compared to
FY2015 margin which was 64.7% of sales. The reduction occurred as a
result of the competition in the Australian retail lighting industry, the change
in the margin mix of the businesses within the Group and the fall in AUD/
USD exchange rate thereby increasing our cost prices.
4.2.4 Other Income & Other Revenue
Other Income and Other Revenue primarily consists of franchised stores
royalties and franchise stores marketing fund contributions. This income
continues to fall as franchised stores have been purchased and converted
to company operated stores. In FY2016, Other Income and Other Revenue
decreased by 7.6% of sales to $3.6 million. The Fountain Gate (VIC)
franchise store was purchased in H1 FY2015 while the Essendon (VIC) and
Watergardens (VIC) stores were purchased in H1 FY2016.
4.2.5 Operating Expenses
Supported by the effective management of operating expenses, Beacon
Lighting has continued to achieve strong expense productivity gains
despite the establishment of the new Light Source Solution business and
the opening of five new company stores. Total operating expenses have
increased by 5.8% to $98.0 million in FY2016. As a percentage of sales,
total operating expenses have improved to 50.7% in FY2016 from 51.6%
in FY2015. Operating expense productivity gains were particularly made in
relation to General and Administration expenses.
4.2.6 Earnings
Beacon Lighting achieved an Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) growth of 9.1% to $29.9 million for FY2016. As
a percentage of sales, the EBITDA result of 15.5% in FY2016 had increased
from 15.3% in FY2015. The Net Profit After Tax (NPAT) result has increased
to $18.3 million or 9.5% of sales in FY2016 compared to $16.9 million or
9.4% of sales in FY2015.
4.2.7 Dividends
The Directors of Beacon Lighting have declared an annual fully franked
divided of 4.7 cents per share for FY2016. For H1 FY2016, the Directors
have already declared a fully franked dividend of 2.3 cents per share,
therefore for H2 FY2016, the Directors have declared a fully franked
dividend of 2.4 cents per share. This means Beacon Lighting will have
a NPAT dividend payout ratio of 55.3% for FY2016. Going forward, it is
expected that Beacon Lighting will continue to have an annual NPAT
dividend payout ratio of between 50% and 60%.
4.2.8 Financial Position
In FY2016, Beacon Lighting continued to invest in additional inventory. An
additional investment of $7.1 million in inventory was the result of five new
company stores, two franchise store conversions, the establishment of the
Light Source Solution business, price increases as a result of exchange rate
changes and the inventory valuation changes that were introduced.
Receivables increased by $2.2 million reflecting the growth of sales in
the Commercial Offices and sales from the new Light Source Solutions
business. Capital expenditure of $5.6 million included investment in new
stores, store refurbishments, motor vehicles and major IT projects including
a new inventory demand and planning forecasting system. Inclusive of the
acquisition of two franchised stores, the additional investments were funded
by cash from operations and additional borrowings.
The Beacon Lighting Group banking facilities have not been fully drawn down
in FY2016 and provide Beacon Lighting with additional funding flexibility to
support the ongoing operation of the Group. The Beacon Lighting Group
also continues to operate well within its bank covenants.
4.3 Business Strategies
Beacon Lighting continues to strengthen its position as Australia’s
leading specialist retailer of light fittings, ceiling fans and light globes.
Our current market position ensures that Beacon Lighting remains very
well placed to take advantage of the changes that continue to occur
in the lighting industry in Australia and the rest of the world. Beacon
Lighting intends to drive sales and profit growth through a number of
different business strategies.
4.3.1 New Store Rollout
Beacon Lighting will continue to target the opening of approximately
six new company operated stores in Australia each year. These store
openings are however dependent upon the identification of suitable
sites, site negotiation and availability. The Group commissioned new
independent research on the potential store network during the year.
This research identified 50 new opportunities on top of the existing 96
stores.
4.3.2 Optimising Existing Stores and Commercial Offices
Beacon Lighting believes it is able to grow sales and profits through the
continued investment in the existing stores and commercial portfolio. The
existing store portfolio is being continually reviewed in order to optimise
the product range, merchandising, marketing, fit out, customer service,
training and operating costs.
4.3.3 New Product Ranges
Beacon Lighting will offer an extensive range of the latest fashion, on
trend, technologically advanced and energy efficient products to our
customers. Beacon Lighting has the scope to further improve the
product range and aims to refresh approximately 20% of the product
range each year. A need for greater energy efficiency in the market is
further driving the development of LED technology and continues to
represents additional opportunities for the Group.
4.3.4 Online and Social Media Presence
Beacon Lighting will continue to enhance our online and social media
presence in order to drive incremental sales. Further opportunities
involving third party websites and additional social media activities have
been identified and continue to be worked on.
4.3.5. Acquisitions
Beacon Lighting intends to investigate and pursue local and international
business opportunities that complement the core business activities or
leverage off existing business activities. This may include, other lighting
stores, franchise stores, wholesaling and other opportunities.
4.3.6 New Markets
There may be opportunities for Beacon Lighting to leverage our existing
business capabilities into new markets. Beacon Lighting intends to
further investigate and better understand the opportunities for the
future growth of the Group.
4.3.7 Emerging Businesses
Beacon Lighting will continue to support our emerging businesses;
Beacon International, Light Source Solutions and Beacon Solar. These
emerging businesses continue to offer significant opportunities for the
Group, including synergies with the core business and strengthen the
overall market opportunities for the brand both within Australia and the
rest of the world.
4.3.8 Efficiency Gains
Beacon Lighting will continue to target efficiency gains and manage
growth of expenses through effective negotiation and partnership with
service providers and continued investment in systems, technology and
processes.
16
BEACON LIGHTING GROUP ANNUAL REPORT 2016 4.4 Business Risks
Beacon Lighting is subject to both specific risks to the Group and risks
of a general nature which may threaten both the future operating and
financial performance of the Group and the outcome of an investment
in Beacon Lighting. The operating and financial performance of Beacon
Lighting is influenced by a variety of general economic and business
factors, including but not limited to interest rates, consumer confidence,
business confidence, property prices, dwelling approvals, inflation,
government policy, natural disasters along with other domestic and
international events. Many of these risks are beyond the control and
influence of the Directors and management of Beacon Lighting, but the
Group is well positioned to face these challenges.
The specific material business risks faced by Beacon Lighting and how
they are managed are set out below.
4.4.1 Competition
Beacon Lighting operates in a competitive retail market which is subject
to moderate barriers to entry, changing competitor tactics and consumer
preferences. Beacon Lighting believes that with its vertically integrated
business model and business strategies as previously discussed, the
Group remains well positioned to maintain its market leading position
in Australia.
4.4.2 Supplier and Buying Agents
Beacon Lighting is a vertically integrated business which heavily relies
upon third party suppliers and buying agent structures. Beacon Lighting
will continue to monitor the performance of our suppliers and buying
agents and spread product manufacturing across a number of suppliers.
4.4.3 Foreign Currency Rates
The majority of goods purchased and imported by Beacon Lighting are
purchased in US dollars. As a result, the Group is exposed to fluctuations
in the AUD/USD exchange rate. Beacon Lighting mitigates this risk by
managing selling prices to our customers and from a cost perspective,
carrying all domestic stock in Australia in AUD and by using a variety of
forward contracts, spot rates and options.
4.4.4 Growth Strategies
Beacon Lighting has a number of different growth strategies to support
future growth and earnings. There is no guarantee that the planned
benefits of these strategies will be realised. Beacon Lighting will
continue to invest in and support growth strategies that can continue to
increase Group value in the long term. If these opportunities do not have
this capability, then resources will be reallocated to other strategies.
4.4.5 GE Distribution and Licence Agreement
Light Source Solutions currently operates the GE Distribution and
Licence Agreements for Australia and New Zealand wholesale sales.
These agreements may be terminated by either party in various
circumstances. The key to GE’s ongoing support is that the business
outcomes are beneficial to all parties involved.
4.4.6 Operating Expenses
Operating expenses will continue to increase. Some of these expenses
are contractual and some are beyond the control of Beacon Lighting.
The ongoing increase in scale of Beacon Lighting gives the Group the
opportunity to achieve future operating expense efficiencies.
4.5 Trading Outlook
Company store comparative sales have made a positive start to FY2017.
Some of the key strategies that are already in place for FY2017 and
beyond are:
• In July 2016, the Jindalee (QLD) franchised store was purchased and
converted to a company store.
• Beacon Lighting purchased the Masson For Light trademark and
architectural lighting store in Richmond (VIC) in July 2016.
• Six new stores, South Melbourne (VIC), Marsden Park (NSW),
Gladesville (NSW), North Lakes (QLD), Claremont (WA) and Brookvale
(NSW) are expected to open during FY2017.
Going forward, the ongoing development in LED, fan and globe
technologies will continue to provide Beacon Lighting with opportunities
to bring fresh and exciting new products to our customers. Beacon
Lighting also continues to review a portfolio of new store opportunities
along with possible business expansion and acquisition opportunities.
Beacon Lighting expects the current growth strategies to continue to
drive improved sales and profit results in FY2017.
5. Significant Changes in the State of Affairs
During the financial year there were no significant changes in the state
of the affairs of the Group.
6. Directors’ Meetings
The numbers of meetings of the Group’s Board of Directors held during
the financial period ended 26 June 2016, and the numbers of meetings
attended by each Director were:
Director’s
Meetings
H
11
11
11
11
A
11
11
11
11
Committee Meetings
Audit
Remuneration
& Nomination
H
-
4
4
4
A
-
4
4
4
H
4
-
4
4
A
4
-
4
4
DIRECTOR
I Robinson
G Robinson
E Barr
N Osborne
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.
DIRECTORS’ REPORT
17
7. Directors’ Interests in Shares
10.2 Insurance premiums
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 2001 (Cth), at the date of the report is as follows:
Director
I Robinson1
G Robinson1
E Barr
N Osborne
Ordinary Shares in the Company
118,685,441
118,685,441
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 31 of the financial
statements.
9. Dividends
Dividends paid to members during the financial period were as follows:
Actual
FY2016
$'000
Actual
FY2015
$'000
10,111
6,882
Consolidated Entity
Fully franked dividends provided
or paid during the period
10. Insurance of Officers
10.1 Indemnification of Directors
The Group 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 Group or a related body corporate) that
may arise from their position as officers of the Group 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 Group 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
Group. The indemnity is contained in a Deed of Access, Insurance and
Indemnity, which also gives each officer access to the Group’s books
and records.
The Group 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 Group 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.
During the financial period, Beacon Lighting Group Limited paid a
premium of $43,062 to insure the Directors and officers of the Group
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 Group for all or part of
those proceedings.
No proceedings have been brought or intervened in on behalf of the
Group with leave of the Court under section 237 of the Corporations Act
2001 (Cth).
13. Events Subsequent to Reporting Date
On 30th June 2016 Beacon Lighting acquired the Jindalee (QLD)
franchise store.
On 27th July 2016 Beacon Lighting purchased the Masson for Light
trademark and architectural lighting store based in Richmond, Victoria.
A fully franked dividend of $5,163,892 was declared on August 17,
2016.
Other than the above, 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.
14. Audit Services
14.1 Auditor’s independence declaration
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.
18
BEACON LIGHTING GROUP ANNUAL REPORT 2016 14.2 Audit and non-audit services provided by the external auditor
During the 52 weeks ended 26 June 2016, 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
FY 2016
$
FY 2015
$
Audit & review of financial statements
207,300
201,400
15. Auditor
PricewaterhouseCoopers continues in office in accordance with section
327 of the Corporations Act 2001 (Cth).
16. Rounding of Amounts
The Group has relied on the relief provided by ASIC Corporations
Instrument 2016/191, and in accordance with that Instrument, amounts
in the financial statements have been rounded off to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
Other services
17. Remuneration Report
Tax compliance services
23,155
33,300
17.1 Remuneration policy and link to performance
Other Services
101,680
123,166
Total remuneration of PwC
332,135
357,866
In addition to their statutory audit duties, PwC provided taxation and
other assurance related services to the Group.
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 (Cth) for the following reasons:
• All non-audit services are subject to the corporate governance
procedures adopted by the Group and are reviewed by the Audit
Committee to ensure they do not impact the integrity and objectivity
of the auditor.
• 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 Group, acting as an advocate for the
Company or jointly sharing risks and rewards with the Group.
The Board recognises that the performance of the Group depends
on the quality and motivation of our Associates, including the senior
management and our more than 800 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 and
short term incentives.
The Board has appointed
the Remuneration and Nomination
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 Group’s performance and objectives, employment conditions
and external remuneration relativities. The Committee reviews and
determines our remuneration policy and structure annually to ensure
it remains aligned to business needs and meets the Group’s
remuneration principles. No specific advice or recommendations were
sought from remuneration consultants during the financial year ended
26 June 2016.
The remuneration framework for senior executives comprises a
mix of both fixed and variable remuneration components. Variable
remuneration may be delivered in the form of cash and performance
rights or options, subject to the achievement of short term performance
targets. An outline of the remuneration framework is set out below:
Remuneration Framework
Element
Purpose
Performance
Metrics
Potential
Value
Changes
for FY2016
Link to Performance
Fixed Remuneration
Provide competitive
market salary including
superannuation and non-
monetary benefits
Nil
Short Term Incentive
(Cash Bonus)
Reward for in year
performance
Budgeted Net
Profit Before Tax
(NPBT)
Short Term Incentive
(Performance Rights
or Options)
Reward for in year
performance.
Budgeted Net
Profit Before Tax
(NPBT)
Positioned at
competitive
market rates
200% of the
executives on
target cash
bonus
125% of the
executives on
target cash
bonus
No change
Consolidated Group as well
as individual performance are
considered during the annual
review of fixed remuneration.
No change
NPBT measures as determined
by the Board.
Introduction
of options
Grants are subject to achieving
budgeted performance and
vesting is subject to the
executive remaining employed
by the Group at the vesting date.
19
DIRECTORS’ REPORT Remuneration Approach
The proportion of fixed and variable remuneration is established for Key Management Personnel (KMP) by the Board following recommendations from
the Remuneration and Nomination Committee which are subject to Board approval. For FY2016 these are:
Fixed
Remuneration
Short Term Incentive
(Cash Bonus)
Short Term Incentive
(Performance Rights or Options)
Total
Chief Executive Officer
Managing Director – Retail
Chief Financial Officer
Chief Operating Officer
84.0%
73.5%
71.6%
72.4%
9.1%
15.1%
16.2%
15.8%
6.9%
100.0%
11.4%
100.0%
12.2%
100.0%
11.8%
100.0%
The Remuneration and Nomination Committee is responsible for
assessing performance against KPIs and determining the STIs to be paid
or issued. To assist in this assessment, the Committee receives detailed
financial reports from management which are based on independently
verifiable financial statements.
In the event of serious misconduct or material misstatement in the
Group’s financial statements the remuneration committee can cancel
performance based remuneration and may also claw back performance
based remuneration paid in previous financial years.
17.2 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. Fixed remuneration.
2. Short Term Incentive (Cash Bonus).
3. Short Term Incentive (Performance Rights or Options).
The combination of these components comprises the executives’ total
remuneration.
For the year ended 26 June 2016, the Group did not have a long term
incentive program in place.
1. Fixed remuneration
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. Fixed remuneration
includes superannuation which is paid in accordance with legislated
amounts.
Fixed remuneration for executives is reviewed annually to provide
competitiveness with the market, whilst also taking into account
capability, experience, value to the organization and performance of the
individual. There are no guaranteed base salary increases included in
executive contracts. An executive’s remuneration is also reviewed on
promotion.
In FY2016 fixed remuneration was increased for the three executives at
an average of increase of 2.96%. This was done to align remuneration
with comparative roles.
2. Short term incentive (Cash Bonus)
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 (NPBT) 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 NPBT for the year. The Board considers
NPBT to be an appropriate performance measure as it aligns the Group’s
remuneration philosophy with creating value, and is within the scope of
influence of participants.
20
BEACON LIGHTING GROUP ANNUAL REPORT 2016 Structure of short term cash incentive plan
17.3 FY2016 performance and impact on remuneration
Feature
Description
Maximum opportunity
200% of on target cash bonus value
Performance metric
Budgeted NPBT
Delivery of STI
Board discretion
100% of STI award is paid in cash
after the financial results have been
audited and approved by the Board
The board has discretion to adjust
remuneration outcomes up or down
to prevent any inappropriate reward
outcomes, including reducing down
to zero if appropriate
3. Short Term Incentive (Performance Rights or Options).
During the year ended 26 June 2016 the Group continued to implement
a short term performance rights incentive plan for selected senior
management, and implemented for the first time a short term incentive
option plan. The Executive Chairman does not participate in either plan.
One Executive and the Chief Executive Officer (subject to shareholder
approval) are eligible to participate in the annual short term performance
rights incentive plan, subject to the achievement of the Group financial
performance targets. Other executives are eligible to participate in the
annual short term options incentive plan, subject to the achievement
of the Group financial performance targets. Performance rights and
options provide selected senior executives the opportunity to acquire
shares, subject to meeting the relevant conditions for vesting including
remaining an employee of the Group at that time, at no cost to the
senior executive. 100% of grants are assessed by financial measures.
The financial measure used is the Group’s NPBT result. This is tested
annually. The Board considers NPBT to be an appropriate performance
measure as it aligns the Group’s remuneration philosophy with creating
value, and is within the scope of influence of participants.
The Board will review the nature of potential issues of performance
incentives moving forward to reflect market practice and to reflect the
principles underlying the Group’s remuneration policy.
Structure of short term performance rights and options incentive plans
Feature
Description
Beacon Lighting’s financial performance in FY2016 exceeded that of
the previous year, but was down compared to the FY2016 budget.
For the year ended 26 June 2016, the Group’s financial performance
targets were partially met and the annual short term cash incentive is
expected to be in the 60% range of the on target cash bonus value and
the short term incentive (performance rights or options) is expected to
be issued in the range of 50% of the on target bonus value.
17.4 Statutory performance indicators
Beacon Lighting aims to align executive remuneration to strategic and
business objectives and the creation of shareholder wealth. The table
below shows measures of the Group’s financial performance over the
last two years as required by the Corporations Act 2001 (Cth). However
these measures are not necessarily consistent with measures used in
determining the variable amounts of remunerations awarded to KMPs.
As a consequence there may not always be a direct correlation between
the statutory key performance measures and the variable remuneration
awarded.
Statutory key performance indicators of the Group
Profit for the year attributable to
owners of Beacon Lighting Group
Limited ($’000)
FY 2016
FY 2015
18,298
16,939
Basic earnings per share (cents)
8.51
7.88
Dividend payments ($’000)
10,111
6,882
Share Price (Year End)
1.29
2.00
17.5 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
Maximum
opportunity
Performance
metric
Delivery of STI
Board discretion
125% of on target cash bonus value
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 26 June 2016 and
year ended 28 June 2015 unless otherwise stated.
Budgeted NPBT
100% of STI performance rights and options
award vests after the financial results have
been audited and approved by the Board if
the executive remains an employee of the
Group at that time
The Board has discretion to adjust
remuneration outcomes up or down to
prevent any inappropriate reward outcomes,
including reducing down to zero if
appropriate, subject to the terms of the plan
21
DIRECTORS’ REPORT 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:
Fixed Remuneration
Variable Remuneration
Cash Salary
& Fees
Non-Monetary
Benefits
Post
Employement
Super
Contributions
Annual & Long
Service Leave
Cash
Performance
Based
Payment
$
$
$
$
Share Based
Payments
$
Total
-
-
210,126
210,125
$
-
-
17,397
33,104
17,397
33,808
19,308
19,376
9,543
8,442
-
-
29,629
3,673
68,493
39,954
6,539
432,650
24,166
281,650
-
-
-
-
-
-
-
-
-
110,000
-
110,000
-
100,000
-
100,000
-
46,248
62,733
-
45,215
37,481
68,493
39,954
6,539
852,776
24,166
701,775
-
19,308
23,389
-
23,282
13,836
-
19,770
19,519
-
22,925
14,145
-
19,308
19,070
-
21,451
13,468
68,493
57,078
68,493
57,078
68,493
57,078
9,510
323,796
34,523
327,128
9,510
301,077
34,523
304,761
9,510
311,229
34,523
317,001
-
-
-
-
-
-
-
-
DIRECTORS
I Robinson (Chairman)
2016
2015
159,625
158,920
G Robinson (Chief Executive Officer)
2016
2015
308,681
194,481
E Barr (Non-Executive)
2016
2015
100,457
101,558
N Osborne (Non-Executive)
2016
2015
100,000
100,000
Total Remuneration Directors
2016
2015
668,763
554,959
EXECUTIVES
I Bunnett (Managing Director – Retail)
2016
2015
203,096
198,409
D Speirs (Chief Financial Officer)
2016
2015
183,785
176,090
B Martens (Chief Operating Officer)
2016
2015
194,848
190,481
Total Remuneration Executives
2016
2015
581,729
-
58,386
61,978
205,479
28,530
936,102
564,980
-
67,658
41,449
171,234
103,569
948,890
22
BEACON LIGHTING GROUP ANNUAL REPORT 2016 17.6 Share based compensation
The number of performance rights over shares in the Group granted to the chief executive officer and other key management personnel during the
current financial period, together with prior period grants which vested during the period is set out below:
Grant
Date
Quantity
Granted
Vest Date
Value at
Grant Date
$
Vest %
Quantity
Vested
Value
Expensed
this Year $
G Robinson
I Bunnett
D Speirs
B Martens
Total
22/08/2014
30,781
25-Aug-15
22/08/2014
43,973
25-Aug-15
22/08/2014
43,973
25-Aug-15
22/08/2014
43,973
25-Aug-15
162,700
32,813
46,875
46,875
46,875
173,438
33%
33%
33%
33%
10,260
6,539
14,658
9,341
14,658
9,341
14,658
9,341
34,562
The fair value of performance rights granted on 22 August 2014 (grant date) was $1.066, with a final vesting date of 25 August 2016. All unvested
performance rights will vest on 25 August 2016 provided the executive remains employed by the Group at the vesting date. The performance rights
have a zero exercise price. Subject to meeting the relevant vesting conditions, shares will be issued at no cost to the executive. In the event an executive
leaves the Group prior to the vesting date the performance rights will generally lapse.
The number of options over shares in the Group granted to the key management personnel during the current financial period, together with prior period
grants which vested during the period is set out below.
Grant
Date
Quantity
Granted
Vest Date
Value at
Grant Date
$
Vest %
Quantity
Vested
Value
Expensed
this Year $
I Bunnett
D Speirs
B Martens
Total
24/06/2016
31,582
Refer below
24/06/2016
31,582
Refer below
24/06/2016
31,582
Refer below
94,746
40,740
40,740
40,740
122,220
0%
0%
0%
0
0
0
169
169
169
507
The fair value of options granted on 24 June 2016 (grant date) was $1.29. 40% vest on 25 June 2017, 30% vest on 25 August 2017 and 30% vest on
25 August 2018, in each case provided that the executive remains employed by the Group at the vesting date. The options expire on 24 June 2031.
The options have a zero exercise price. Subject to meeting the relevant vesting conditions, shares will be issued at no cost to the executive. In the event
an executive leaves the Group prior to the vesting date the options will generally lapse.
DIRECTORS’ REPORT
23
17.7 Share holdings
The numbers of ordinary voting shares in the Company held during the financial year by each director of Beacon Lighting Group and other key management
personnel of Beacon Lighting Group, including their personally related parties, are set out below.
Balance
at Start
of Year
Received
During
the Year1
Purchase
of Shares
Sales of
Shares
Balance at
End of the
Year
DIRECTORS
I Robinson (Chairman)2
2016
2015
G Robinson (Chief Executive Officer)
118,602,329
118,595,000
2016
2015
E Barr (Non-Executive)
2016
2015
N Osborne (Non-Executive)
2016
2015
EXECUTIVES
I Bunnett (Managing Director – Retail)
2016
2015
D Speirs (Chief Financial Officer)
2016
2015
B Martens (Chief Operating Officer)
2016
2015
Total
2016
2015
50,260
40,000
150,000
150,000
300,000
300,000
34,658
20,000
44,658
30,000
39,203
24,545
119,221,108
119,159,545
12,592
7,329
10,260
10,260
-
-
-
-
14,658
14,658
14,658
14,658
14,658
14,658
66,826
61,563
10,000
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000
-
1 Shares received during the year were a result of performance rights vesting under the STI plan.
2 Heystead Nominees Pty Ltd and other Robinson Family member interests, excluding Glen Robinson.
24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
118,624,921
118,602,329
60,520
50,260
150,000
150,000
300,000
300,000
49,316
34,658
59,316
44,658
53,861
39,203
119,297,934
119,221,108
17.8 Service agreements
17.9 Voting of shareholders at last year’s annual general meeting
All executives are employed on terms consistent with the remuneration
framework outlined in this report. Each of the relevant executive
agreements is for a continuing term but may be terminated by either
party with a required notice period of 12 weeks. These agreements do
not provide for any termination payments other than payment in lieu of
notice.
Signed in accordance with a resolution of Directors
Beacon Lighting Group received more than 90% of yes votes on its
remuneration report for the 2015 financial year. The Company did not
receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
Ian Robinson
Executive Chairman
Melbourne,
17 August 2016
Glen Robinson
Chief Executive Officer
25
DIRECTORS’ REPORT Auditor’s Independence Declaration
26
BEACON LIGHTING GROUP ANNUAL REPORT 2016 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
17. Current Borrowings
29
30
31
32
33
39
42
42
42
43
44
45
45
46
47
47
48
49
50
51
52
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. Share Based Payments
27. Earnings Per Share
28. Remuneration of Auditors
29. Contingencies
30. Commitments
31. Related Party Transactions
32. Subsidiaries
33. Events Occurring After the Reporting Period
34. Reconciliation of Profit After Income Tax to Net
Cash Inflow from Operating Activities
35. Non-Cash Investing and Financing Activities
36. Critical Accounting Estimates
37. Parent Entity Financial Information
38. Deed of Cross Guarantee
52
53
54
55
55
56
57
58
58
60
60
60
60
61
63
63
64
64
64
65
66
28
BEACON LIGHTING GROUP ANNUAL REPORT 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015
Beacon Lighting Group and its controlled entities
Revenue from ordinary activities
Sale of goods
Other revenue
Total revenue from ordinary activities and 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
Exchange differences on translation of foreign operations
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
Notes
4
4
4
5
6
6
7
23(a)
23(a)
27
27
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying Notes.
FY 2016
$’000
193,179
3,484
196,663
163
FY 2015
$’000
179,386
3,743
183,129
206
(68,985)
(63,345)
(11,536)
(73,362)
(15,614)
(1,169)
26,160
(7,863)
18,298
(430)
37
118
(275)
18,023
Cents
8.51
8.50
(11,004)
(67,508)
(16,436)
(1,210)
23,832
(6,893)
16,939
767
613
(414)
966
17,905
Cents
7.88
7.87
29
FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET
As at 26 June 2016 and as at 28 June 2015
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)
FY 2016
$’000
9,255
9,188
51,737
-
970
71,150
22,076
4,965
6,063
33,104
104,254
16,171
20,939
5,237
1
323
42,671
1,220
2,940
4,160
46,831
57,423
62,735
(43,105)
37,793
57,423
FY 2015
$’000
11,779
7,017
44,656
299
698
64,449
19,121
5,481
5,085
29,687
94,136
15,686
18,090
4,764
-
2,572
41,112
1,278
2,340
3,618
44,730
49,406
62,647
(42,847)
29,606
49,406
The above consolidated balance sheet should be read in conjunction with the accompanying Notes.
30
BEACON LIGHTING GROUP ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015
Beacon Lighting Group and its controlled entities
Consolidated Entity
Notes
Balance as at 28 June 2015
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Issue of shares to employees
Employee share scheme
Dividends provided for or paid
Total contributions by and distributions to owners
Balance as at 26 June 2016
Balance as at 30 June 2014
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Issue of shares to employees
Employee share scheme
Dividends provided for or paid
Total contributions by and distributions to owners
23(a)
22
23(a)
24
23(a)
22
23(a)
24
Contributed
Equity
$’000
Reserves
$’000
62,647
(42,847)
-
-
-
88
-
-
88
-
(275)
(275)
-
17
-
17
Retained
Earnings
$’000
29,606
18,298
-
Total
Equity
$’000
49,406
18,298
(275)
18,298
18,023
-
-
88
17
(10,111)
(10,111)
(10,111)
(10,006)
62,735
(43,105)
37,793
57,423
62,565
(43,910)
-
-
-
82
-
-
82
-
966
966
-
97
-
97
Balance as at 28 June 2015
62,647
(42,847)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying Notes.
19,549
16,939
-
38,204
16,939
966
16,939
17,905
-
-
(6,882)
(6,882)
29,606
82
97
(6,882)
(6,703)
49,406
31
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS
For the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015
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
34
Cash flows from investing activities
Payments for acquisitions
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings (net)
Dividends paid to Company's shareholders
Net cash (outflow) from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
24
8
The above consolidated statement of cash flows should be read in conjunction with the accompanying Notes.
FY 2016
$’000
208,300
(187,688)
101
(1,169)
(8,849)
10,695
(1,425)
(4,559)
85
(5,899)
2,791
(10,111)
(7,320)
(2,524)
11,779
9,255
FY 2015
$’000
201,208
(184,439)
91
(1,210)
(6,566)
9,084
(1,400)
(3,986)
75
(5,311)
3,461
(6,882)
(3,421)
352
11,427
11,779
32
BEACON LIGHTING GROUP ANNUAL REPORT 2016 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 (Cth). 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 ending on the
26 June 2016 (2015: 52 week period ending 28 June 2015). This
treatment is consistent with section 323D of Corporations Act 2001
(Cth).
(i) New,
revised or amending Accounting Standards and
Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting
Standards and Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) that are mandatory for the current reporting
period.
(ii) New Accounting Standards and
Interpretations not yet
mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently
been issued or amended but are not yet mandatory, have not been early
adopted by the Group for the annual reporting period ended 26 June
2016. The Group’s assessment of the impact of these new or amended
Accounting Standards and Interpretations, most relevant to the Group,
are set out below
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or
after 1 January 2019. For lessee accounting, the standard eliminates
the ‘operating lease’ and ‘finance lease’ classification required by
AASB 117 ‘Leases’. Subject to exceptions, a ‘right-of-use’ asset will be
capitalised in the consolidated statement of financial position, measured
as the present value of the unavoidable future lease payments to be
made over the lease term. The exceptions relate to short-term leases
of 12 months or less and leases of low-value assets (such as personal
computers and office furniture) where an accounting policy choice exists
whereby either a ‘right-of-use’ asset is recognised or lease payments
are expensed to profit or loss as incurred. A liability corresponding
to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred
and an estimate of any future restoration, removal or dismantling costs.
Straight-line operating lease expense recognition will be replaced with
a depreciation charge for the leased asset (included in operating costs)
and an interest expense on the recognised lease liability (included in the
finance costs). For classification within the consolidated statement of
cash flows, the lease payments will be separated into both a principal
(financing activities) and interest (either operating or financing activities)
components. For lessor accounting, the standard does not substantially
change how a lessor accounts for leases. The Group will adopt this
standard from 1 July 2018 but the impact of its adoption is yet to be
assessed by the Group.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on
or after 1 January 2018. The standard provides a single standard for
revenue recognition. The core principle of the standards is that an
entity will recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods
or services. The standard will require: contracts (either written, verbal
or implied) to be identified, together with the separate performance
obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk; allocation
of the transaction price to the separate performance obligations on
a basis of relative stand-alone selling price of each distinct good or
service, or estimation approach if no distinct observable prices exist;
and recognition of revenue when each performance obligation is
satisfied. Credit risk will be presented separately as an expense rather
than adjusted to revenue. For goods, the performance obligation
would be satisfied when the customer obtains control of the goods.
The Group will adopt this standard from 1 July 2018. The changes in
revenue recognition requirements in AASB 15 are not expected to have
a significant impact on the timing and amount of revenue recorded in
the financial statements, or result in significant additional disclosures
(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 Group’s accounting policies.
Refer to Note 36 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.
(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.
(c) Principles of Consolidation
The consolidated financial report incorporates the assets and liabilities
of all subsidiaries of Beacon Lighting Group Limited (‘Group’ or ‘parent
entity’) as at 26 June 2016 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
33
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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.
(iv) Group companies
The results and financial position of foreign operations (none of which
has the currency of a hyper inflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
• Assets and liabilities for each balance sheet presented are translated
at the closing rate at the date of that balance sheet.
• Income and expenses for each income statement and statement of
comprehensive income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions).
• All
resulting exchange differences are
recognised
in other
comprehensive income.
On consolidation, exchange differences arising from the translation
of any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments, are
recognised in other comprehensive income. When a foreign operation
is sold or any borrowings forming part of the net investment are repaid,
the associated exchange differences are reclassified to profit or loss, as
part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of the foreign
operation and translated at the closing rate.
(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
control of the goods is passed to the customer. Revenue recognised
equals the fair value of the consideration received or receivable.
(ii) Trust distribution income
Trust distribution revenue is recognised when the right to receive a
distribution has been established.
(iii) Specific commitments
(iii) Interest income
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 consolidated
statement 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.
Interest income is recognised using the effective interest method.
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
34
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 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 Group 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 30). 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.
If the business combination is achieved in stages, the acquisition date
carrying value of the acquirer’s previously held equity interest in the
acquire is remeasured to fair value at the acquisition date. Any gains or
losses arising from such remeasurement are 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
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
35
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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 which hedge imported inventory purchases are
ultimately recognised in the profit or loss as cost of goods sold.
(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.
Depreciation is calculated using the straight-line method to allocate
their cost or revalued amounts, net of their residual values, over their
estimated useful lives or, in the case of leasehold improvements and
certain leased plant and equipment, the shorter lease term as follows:
• Furniture, Fittings & Equipment 4 to 20 years
• Computer equipment 4 years
• Motor vehicles 5 to 8 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.
36
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 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.
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.
(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.
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) Provisions
Provisions for legal claims and product warranties are recognised when
the group has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources will be required
to settle the obligation and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering the
class of obligations as a whole. A provision is recognised even if the
likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of managements best
estimate of the expenditure required to settle the present obligation at
the end of the reporting period.
(t) 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. The liabilities are presented as current employee
benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
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.
(iii) Share based payments
Share based compensation benefits are provided to employees via
the Beacon Lighting Short Term Incentive Plan. Information relating
to this scheme is set out in the Remuneration Report and Note 26.
The fair value of performance rights and options granted under the
plan are recognised as an employee benefit expense over the period
during which the employees become unconditionally entitled to the
rights with a corresponding increase in equity. The total amount to
be expensed is determined by reference to the fair value of the rights
granted, which includes any market performance conditions and the
impact of any non-vesting conditions but excludes the impact of any
service and non-market performance vesting conditions. Non-market
vesting conditions are included in assumptions about the number of
rights that are expected to vest which are revised at the end of each
reporting period. The impact of the revision to original estimates, if any;
is recognised in the consolidated statement of comprehensive income,
with a corresponding adjustment to equity.
The fair value is measured at grant date and the expense recognised
over the life of the plan. The fair value is determined using a Black-
Scholes pricing model that takes into account the exercise price, the
term of the right, the impact of dilution, the share price at grant date and
expected price volatility of the underlying share, the expected dividend
yield and the risk-free interest rate for the term of the rights.
(u) 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. 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.
(v) Store Opening Costs
Non-capital costs associated with the setup of a new store are expensed
in the period in which they are incurred.
(w) 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.
(x) Contributed Equity
Ordinary Shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as
a deduction, net of tax, from the proceeds.
37
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS (y) 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 Group, 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) Diluted earnings per share
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.
(z) Rounding Amounts
The Group has relied on the relief provided by ASIC Corporations
Instrument 2016/191, and in accordance with that Instrument, amounts
in the financial statements have been rounded off to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
(aa) Parent Entity Financial Information
The financial information for the parent entity, Beacon Lighting Group
Limited, disclosed in Note 37 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.
38
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 2. Financial Risk Management
The consolidated entity is exposed to a variety of financial risks comprising:
a) Market 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 ageing 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
FY 2016
$’000
FY 2015
$’000
9,255
9,188
-
18,443
16,171
22,159
1
38,331
11,779
7,017
299
19,095
15,686
19,368
-
35,054
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 has a policy of hedging 100% of the Group’s inventory which is purchased in USD and sold in AUD. The Group can also lock in a
forward position for this foreign exchange exposure for a period of up to 12 months.
Consolidated Entity
Forward exchange and interest rate swap contracts - buy cash flow hedges
FY 2016
$’000
26,489
FY 2015
$’000
20,237
39
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS Interest rate risk
The Group’s main interest rate risk arises from short terms borrowings with variable rates, which expose the group to cash flow interest rate risk. The Group
manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps.
The Group’s exposure to foreign currency and interest rate risk at the end of the reporting period, expressed in Australian dollar, was as follows:
Group sensitivity
At 26 June 2016 100% of Beacon Lighting Group’s short term borrowings are hedged using forward exchange contracts and interest rate swaps. Therefore
any movements in the Australian dollar against the US dollar or interest rates would have no impact on the Group’s pre- tax profit or equity.
Therefore a sensitivity analysis has not been performed.
(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 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
Maturities of financial liabilities
FY 2016
$’000
FY 2015
$’000
500
27,750
3,500
500
7,916
1,175
500
23,750
3,500
500
6,529
1,353
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.
40
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 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 26 June 2016
Non-derivatives
Trade and other payables
Borrowings
Finance lease liabilities
Total non-derivatives
Derivatives
16,171
19,834
-
36,005
Net settled (cash flow hedges)
1
At 28 June 2015
Non-derivatives
Trade and other payables
Borrowings
Finance lease liabilities
Total non-derivatives
Derivatives
15,686
17,221
-
32,907
Net settled (cash flow hedges)
(299)
-
-
1,105
1,105
-
-
-
869
869
-
-
-
1,220
1,220
-
-
-
1,278
1,278
-
-
-
-
-
-
-
-
-
-
-
16,171
19,834
2,325
38,330
16,171
19,834
2,325
38,330
1
1
15,686
17,221
2,147
35,054
15,686
17,221
2,147
35,054
(299)
(299)
(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 Group’s financial assets and financial liabilities measured and recognised at fair value at 26 June 2016 on a recurring basis.
At 26 June 2016
Derivatives used for hedging - Net Position
Level 2
$’000
1
Total
$’000
1
41
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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 Group), is the Chief Executive Officer (CEO). The
Group determines operating segments based on information provided to the CEO in assessing performance and determining the allocation of resources
with the Group. 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 Group purchases goods in USD for sales
into Australia. The Group’s one reportable segment is the selling of light fittings, 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 Group 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
FY 2016
$’000
FY 2015
$’000
193,179
179,386
3,087
397
3,484
3,543
200
3,743
196,663
183,129
FY 2016
$’000
FY 2015
$’000
101
-
62
163
91
33
82
206
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
42
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016
6. Expenses
Consolidated Entity
(a) Profit before income tax includes the following specific expenses:
FY 2016
$’000
FY 2015
$’000
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
Net foreign exchange (gains)/losses recognised in profit before income tax for the period (as
either other income or expense)
(c) Individually significant items
Profit for the year includes the following items that are significant because of their nature, size or incidence:
Change in accounting estimates (gain) relating to inventory valuation
2,248
278
20
1,169
78
17,134
40,461
(20)
(711)
2,068
265
20
1,210
815
15,444
41,055
43
-
43
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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 (Note 14):
Decrease (increase) in deferred tax assets
(Decrease) increase in deferred tax liabilities
(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% (2014 – 30.0%)
Tax effect of amounts which are not deductible (taxable)in calculating taxable income:
Write off deferred tax assets relating to prior year losses
Tax effect of prior years franchise agreement termination fees
Entertainment
Sundry items
Income tax expense
FY 2016
$’000
FY 2015
$’000
7,263
700
(100)
7,863
747
(47)
700
26,160
7,848
-
(185)
24
176
7,863
8,093
(1,200)
-
6,893
(1,193)
(7)
(1,200)
23,832
7,150
355
(755)
19
124
6,893
(c) Aggregate amounts of deferred tax arising in the reporting period not recognised in net profit or other comprehensive income but directly credited to
equity (Note 14): 2016: nil (2015: $29,000).
44
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 8. Cash and Cash Equivalents
Consolidated Entity
Cash at bank and in hand
Deposits at call (a)
(a) Classification as cash equivalents
FY 2016
$’000
8,235
1,020
9,255
FY 2015
$’000
11,579
200
11,779
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
Other debtors (c)
(a) Ageing 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
FY 2016
$’000
8,905
(288)
8,617
571
9,188
FY 2016
$’000
6,814
1,166
395
530
8,905
FY 2015
$’000
6,856
(239)
6,617
400
7,017
FY 2015
$’000
5,167
825
470
394
6,856
45
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS (b) Provision for impairment of receivables
Trade receivables are non-interest bearing with terms that vary between 30 and 60 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 $288,000 (2015: $239,228)
has been raised against the balance of trade receivables for 2016. 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
FY 2016
$’000
239
93
(44)
288
FY 2015
$’000
178
104
(43)
239
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 lower of cost and net realizable value
Goods in transit - at cost
FY 2016
$’000
49,583
2,154
51,737
FY 2015
$’000
42,392
2,264
44,656
Inventory expense
Inventories recognised as expense during the 52 week period ended 26 June 2016 and included in cost of sales of goods amounted to $73,059,273
(2015: $63,023,378).
Write-downs of inventories to net realisable value recognised as an expense during the 52 week period ended 26 June 2016 amounted to $14,696 (2015:
$936,417).
Change in estimates
During the period the Group implemented a new inventory valuation system and conducted a review of supply chain costs that should be capitalised into
inventory. As a result, effective 26 June 2016, the Group updated its estimates to more accurately represent the costs incurred in bringing the Groups’
inventories to their present location.
The effect of this change in estimate was to increase inventory by $711,249 and increase profit before tax by $711,249.
46
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 11. Derivative Financial Instruments
Consolidated Entity
Derivatives used for hedging - Net Position
The Group’s risk exposures are provided in Note 2.
Forward exchange contracts and interest rate swaps– cash flow hedges
FY 2016
$’000
(1)
FY 2015
$’000
299
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 and an interest rate swap to hedge against interest rate fluctuations.
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 26 June 2016 there were no gains or losses (2015 – $0) recognised in profit or loss for the ineffective portion of these hedging
contracts.
12. Other Current Assets
Consolidated Entity
Prepayments and other current assets
FY 2016
$’000
970
FY 2015
$’000
698
47
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 13. Property, Plant and Equipment
Consolidated Entity
At 29 June 2014
Cost
Accumulated depreciation
Net book amount
Year ended 28 June 2015
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
At 28 June 2015
Cost
Accumulated depreciation
Net book amount
Year ended 26 June 2016
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
At 26 June 2016
Cost
Accumulated depreciation
Net book amount
Furniture, Fittings
and Equipment
$’000
Vehicles
$’000
27,037
(11,413)
15,624
15,624
5,008
(763)
(2,068)
17,801
31,282
(13,481)
17,801
17,801
5,187
(90)
(2,248)
20,650
32,149
(11,499)
20,650
2,819
(1,625)
1,194
1,194
519
(128)
(265)
1,320
3,210
(1,890)
1,320
1,320
449
(65)
(278)
1,426
2,676
(1,250)
1,426
Total
$'000
29,856
(13,038)
16,818
16,818
5,527
(891)
(2,333)
19,121
34,492
(15,371)
19,121
19,121
5,636
(156)
(2,526)
22,076
34,825
(12,749)
22,076
Change in accounting estimate
During the period a review of property, plant and equipment was undertaken and as a result from 29 June 2015 the Group has adopted the straight line
method of depreciation for all classes of assets.
In addition, changes to the useful lives of certain assets has been made where it was considered appropriate. The impact of this change on the 52 week
period result was not significant. Refer to Note 1(o) for details of the updated accounting policy.
48
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 14. Deferred Tax Assets
Consolidated Entity
Gross Deferred Tax Assets
The balance comprises temporary differences attributable to:
Employee benefits
Inventory
Franchise agreement termination fees
Debtor provision
Fixed assets
IPO capitalised 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:
Other accruals and provisions
Total deferred tax liabilities
Deferred tax liabilities expected to be settled within 12 months
Movements in Net Deferred Tax Assets
Opening balance
Charged/(credited) to the consolidated statement of comprehensive income (Note 7)
Charged/(credited) amounts recognised on acquisitions
Charged/(credited) amounts recognised directly in equity
Net Deferred Tax Assets
FY 2016
$’000
FY 2015
$’000
1,549
770
833
86
381
209
716
585
5,129
4,133
846
4,979
15
15
15
15
5,481
(700)
184
-
4,965
1,657
1,109
940
72
274
314
642
535
5,543
4,328
1,215
5,543
62
62
62
62
3,832
1,200
420
29
5,481
49
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS Goodwill
$’000
Patents, Trademarks
and Other Rights
$’000
3,825
980
-
4,805
4,805
-
-
4,805
4,805
998
-
5,803
5,803
-
-
5,803
300
-
(20)
280
-
500
(220)
280
280
-
(20)
260
-
500
(240)
260
Total
$’000
4,125
980
(20)
5,085
4,805
500
(220)
5,085
5,085
998
(20)
6,063
5,803
500
(240)
6,063
15. Intangible Assets
Consolidated Entity
Year ended 28 June 2015
Opening net book amount
Additions
Amortisation charge for the year
Closing net book amount
At 28 June 2015
Cost
Valuation
Accumulated amortisation and impairment
Net book amount
Year ended 26 June 2016
Opening net book amount
Additions
Amortisation charge for the year
Closing net book amount
At 26 June 2016
Cost
Valuation
Accumulated amortisation and impairment
Net book amount
50
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 (a) Impairment tests for goodwill
Goodwill is allocated to the Group’s one cash generating unit being the selling of light fittings, 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
2016
%
64.0
2015
%
64.0
2016
%
3.0
2015
%
3.0
2016
%
11.0
2015
%
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
FY 2016
$’000
6,628
2,377
4,141
2,388
637
16,171
FY 2015
$’000
5,883
2,723
4,701
2,139
240
15,686
(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.
51
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 17. Current Borrowings
Consolidated Entity
Unsecured
Trade finance
Hire purchase liability (a)
Total unsecured current borrowings
(a) Hire purchase liability
FY 2016
$’000
19,834
1,105
20,939
FY 2015
$’000
17,221
869
18,090
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
FY 2016
$’000
3,990
1,137
110
5,237
FY 2015
$’000
3,786
870
108
4,764
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 not expected to be taken or paid within the next 12 months.
Consolidated Entity
Leave obligations not expected to be settled within 12 months
FY 2016
$’000
3,237
FY 2015
$’000
2,670
52
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 (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 labor costs.
If claim costs to differ by 10% from management’s estimates, the warranty provision would be an estimated $113,000 (2015: $87,000) higher or lower.
Movement in warranty provision
(c) Other provisions
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
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
FY 2016
$’000
870
268
1,138
FY 2016
$’000
108
505
(503)
110
FY 2016
$’000
323
FY 2015
$’000
1,038
(168)
870
FY 2015
$’000
92
470
(454)
108
FY 2015
$’000
2,572
53
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 20. Non Current Borrowings
Consolidated Entity
Unsecured
Hire purchase plan (a)
Total unsecured non-current borrowings
(a) Hire purchase plan
FY 2016
$’000
1,220
1,220
FY 2015
$’000
1,278
1,278
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.
54
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 21. Non Current Provisions
Consolidated Entity
Lease liabilities
Employee benefits
Total non current provisions
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
Performance rights vesting into shares
Balance at the end of the year
FY 2016
$’000
2,027
913
2,940
FY 2015
$’000
1,789
551
2,340
FY 2016
FY 2015
215,157,117
215,075,927
FY 2016
$’000
62,647
88
62,735
FY 2015
$’000
62,565
82
62,647
Consolidated Entity
FY 2016
FY 2015
Movements in the number of ordinary shares
Balance at the beginning of the year
Performance rights vesting into shares
Balance at the end of the year
Ordinary shares
215,075,927
215,000,000
81,190
75,927
215,157,117
215,075,927
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group 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 Group 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 (borrowings less
cash) divided by net debt plus total equity.
55
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 23. Reserves and Retained Profits
Consolidated Entity
(a) Other reserves
Cash flow hedges reserve
Share based payment reserve
Foreign currency translation reserve
Common control reserve
Movement in cash flow hedges
Opening balance
Revaluation (net of tax effect)
Closing balance
Movement in share based payments reserve
Opening balance
Transactions arising from share based payments
Closing balance
Movement in foreign currency translation reserve
Opening balance
Revaluation (net of tax effect)
Closing balance
Movement in common control reserve
Opening balance
Transactions arising from share capital restructure
Closing balance
FY 2016
$’000
(1)
115
454
(43,672)
(43,105)
299
(300)
(1)
97
17
115
429
25
454
FY 2015
$’000
299
97
429
(43,672)
(42,847)
(238)
537
299
-
97
97
-
429
429
(43,672)
-
(43,672)
(43,672)
-
(43,672)
Nature and Purpose of Other Reserves
Cash flow hedges
Foreign currency translation reserve
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(n). Amounts are reclassified to profit or
loss when the associated hedged transaction affects profit or loss.
Exchange differences arising on translation of the foreign controlled entity
are recognised in other comprehensive income and accumulated in a
separate reserve within equity. The cumulative amount is reclassified to
profit or loss when the net investment is disposed of.
Share based payments reserve
Common control reserve
The share based payments reserve is used to recognise:
• the grant date fair value of rights issued to employees
but not exercised
• the grant date fair value of shares issued to employees
This reserve is used to record the differences which may arise as a result
of transactions with non-controlling interests that do not result in a loss
of control.
56
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 Consolidated Entity
(b) Retained earnings
Movements in retained earnings were as follows:
Opening balance
Net profit for the period
Dividends paid
Closing balance
24. Dividends
(a) Ordinary shares
Consolidated Entity
Final Dividend for year ended 28 June 2015 2.4 cents (2015 - 1.4 cents) per fully paid share
Interim dividend for year ended 26 June 2016 of 2.3 cents (2015 - 1.8 cents) per full paid
share
Total Dividends paid
FY 2016
$’000
FY 2015
$’000
29,606
18,298
(10,111)
37,793
FY 2016
$’000
5,163
4,948
10,111
19,549
16,939
(6,882)
29,606
FY 2015
$’000
3,011
3,871
6,882
(b) Dividends not recognized at the end of the reporting period
Consolidated Entity
In addition to the above dividends, since year end the directors have recommended the
payment of a final dividend of 2.4 cents per fully paid ordinary share (2015 - 2.4 cents),
fully franked based on tax paid at 30%. The proposed dividend is to be paid out of retained
earnings at 26 June 2016, but not recognised as at liability at year end.
FY 2016
$’000
FY 2015
$’000
5,164
5,163
57
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS (c) Franked dividends
The franked portions of the final dividends recommended after 26 June 2016 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 26 June 2016.
Consolidated Entity
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
(2015 - 30.0%)
FY 2016
$’000
28,279
FY 2015
$’000
22,529
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.
25. Key Management Personnel Disclosures
Consolidated Entity
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Performance based cash benefits
Performance based share benefits
FY 2016
$
581,729
58,386
61,978
205,479
28,530
936,102
FY 2015
$
564,980
67,658
41,449
171,234
103,569
948,890
Detailed remuneration disclosures are provided in the remuneration report on pages 19 to 25.
26. Share Based Payments
(a) Executive Short Term Incentive Scheme
Under the Group’s short-term incentive (STI) plan, executives received 57% of the annual STI in cash and 43% in the form of performance rights and
options to ordinary shares of Beacon Lighting Group Limited.
Performance rights were granted on 22 August 2014, which in part vested immediately, one year after the grant date and two years after the grant date.
Under the plan, participants are granted performance rights which only vest if certain requirements are met.
Options were granted on 24 June 2016 40% vest on 25 June 2017, 30% vest on 25 August 2017 and 30% vest on 25 August 2018, in each case
provided that the executive remains employed by the Group at the vesting date. The options expire on 24 June 2031. The options have a zero exercise
price. Subject to meeting the relevant vesting conditions, shares will be issued at no cost to the executive. In the event an executive leaves the Group
prior to the vesting date the options will generally lapse.
Participation in the plan is at the discretion of the Board and no individual has a contractual right to participate in the plan or to receive any guaranteed
benefits.
58
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 The number of rights and options to be granted is determined based on the average share price at 30 June (averaged over + / - 30 days).
Number of performance rights granted
Fair Value of performance rights at grant date
Number of options granted
Fair Value of options at grant date
FY 2016
-
-
FY 2016
94,746
$1.29
FY 2015
227,779
$1.066
FY 2015
-
-
(b) Fair value of performance rights granted
The fair value of the rights at the grant date was estimated using the Black Scholes Model which takes into account the share price at grant date, the
impact of dilution (where material), expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate.
The model inputs for the performance rights granted during the year ended 26 June 2016 included:
Exercise price
Grant date
Share Price at grant date
Expected dividend yield
FY 2016
-
-
-
-
FY 2015
$0.000
22 August 2014
$1.16
4.09%
The expected volatility of the Company’s shares and the risk free interest rate do not have a material impact on the fair value calculation of the performance
rights granted.
c) Fair value of options granted
The fair value of the options at the grant date was estimated using the Black Scholes Model which takes into account the share price at grant date, the
impact of dilution (where material), expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate.
The model inputs for the options granted:
Exercise price
Grant date
Share Price at grant date
Expected dividend yield
FY 2016
$0.000
24 June 2016
$1.29
3.64%
FY 2015
-
-
-
-
The expected volatility of the company’s shares and the risk free interest rate do not have a material impact on the fair value calculation of the options
granted.
d) Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the period as part of employee benefits expense were as follows:
Consolidated Entity
Performance rights and options issued under employee STI plans
FY 2016
$’000
105
FY 2015
$’000
178
59
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 27. Earnings Per Share
Consolidated Entity
Basic earnings per share - cents
Diluted earnings per share - cents
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
FY 2016
FY 2015
8.51
8.50
7.88
7.87
215,110,924
215,064,423
215,180,919
215,193,269
28. 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
Other Services:
Taxation services
Other services
Total remuneration of PwC
29. Contingencies
FY 2016
$
FY 2015
$
207,300
201,400
23,155
101,680
332,135
33,300
123,166
357,866
There were no significant or material contingent liabilities including legal claims at 26 June 2016 or 28 June 2015.
30. Commitments
Lease commitments: 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
FY 2016
$’000
17,627
47,868
10,246
75,741
FY 2015
$’000
16,478
45,604
12,777
74,859
The Group leases various offices, warehouses and retail stores under non-cancellable operating leases expiring within 1 to 15 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.
60
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 (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)
FY 2016
$’000
FY 2015
$’000
1,197
1,287
2,484
(159)
2,325
1,105
1,220
2,325
964
1,328
2,292
(145)
2,147
869
1,278
2,147
(c) Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is $1.2m (2015: $0).
31. Related Party Transactions
(a) Subsidiaries
Interests in subsidiaries are set out in Note 32.
(b) Key management personnel
Disclosures relating to key management personnel are set out in Note 25.
(c) Transactions with other related parties
Consolidated Entity
The following transactions occurred with related parties:
Purchases of goods
FY 2016
$
FY 2015
$
Purchases of goods and supply of services from other related parties
3,227
-
Other transactions
Income received from other related parties
Rent paid to other related parties
36,493
1,455,881
37,557
1,288,724
61
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS The Robinson family has a 100% interest as the owner of the Derrimut
distribution centre leased by Beacon Lighting on arms length commercial
terms. The current rent is $947,600 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 Robinson family has a 100% interest as owner of the Heidelberg store
leased by Beacon Lighting on arms length terms. The current rent is
$167,489 per annum increasing by 3% annually. The lease expires in 2017
with one further right of renewal for a period of seven years.
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
$218,392 per annum increasing by 3% annually. The lease expires in 2017
with one further right of renewal for a period of seven years.
The Robinson family has a 100% interest as owner of the Bendigo store
leased by Beacon Lighting on arms length terms. The current rent is
$52,056 per annum increasing by CPI 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 subleases office space to
Carbonetix Pty Ltd at an arms length fee.
(d) Outstanding balances
As at 26 June 2016 Carbonetix Pty Ltd owed the Group $40,263.
No provisions for doubtful debts have been raised in relation to any out-
standing balances, and no expense has been recognised in respect of bad
or doubtful debts due from related parties.
(e) Loans to/from related parties
There were no loans owing to or from related parties for the years ended
26 June 2016 and 28 June 2015.
62
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 32. 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
2016 %
2015 %
Beacon Lighting Corporation Pty Ltd
Beacon Lighting Group Incentive Plan 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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Light Source Solutions New Zealand Limited
New Zealand
Light Source Solutions Limited
Beacon International Limited
Beacon Lighting International
Fanaway International Trading Limited
Hong Kong
Hong Kong
Hong Kong
Hong Kong
1The proportion of ownership interest is equal to the proportion of voting power held.
33. Events Occurring After the Reporting Period
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
On 30th June 2016 Beacon Lighting acquired the Jindalee (QLD) franchise store and converted it to a company store.
On 27th July 2016 Beacon Lighting purchased the Masson for Light trademark and architectural lighting store based in Richmond, Victoria.
A fully franked dividend of $5,163,891 was declared on August 17 2016.
Other than the above, 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.
63
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 34. Reconciliation of Profit After Income Tax to Net Cash Inflow from Operating Activities
Consolidated Entity
Profit for the period
Depreciation
Net loss on disposal of non-current assets
Amortisation
Share based payments
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 other provisions
Net cash inflow from operating activities
35. Non-Cash Investing and Financing Activities
Consolidated Entity
Acquisition of plant and equipment by means of finance leases
36. Critical Accounting Estimates
FY 2016
$’000
18,299
2,526
78
20
105
(20)
(2,171)
(7,081)
516
(274)
(128)
(2,249)
1,074
10,695
FY 2015
$’000
16,939
2,333
815
20
179
43
1,201
(12,462)
(1,648)
(333)
(74)
1,425
647
9,084
FY 2016
$’000
1,077
FY 2015
$’000
1,541
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.
The areas that involves a higher degree of judgement or complexity, and items which are more likely to be materially adjusted due to estimates and
assumptions turning out to be wrong are detailed in Note 18. The group has assessed the calculation of the warranty provisions to be a critical
accounting estimate.
64
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 37. 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
Reserves
Retained profits
Total equity
Profit / (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 26 June 2016 or 28 June 2015.
FY 2016
$’000
FY 2015
$’000
15,411
88,604
104,015
1,397
15
1,412
102,603
87,052
(23)
15,574
102,603
1,653
1,653
8,939
88,892
97,831
1,905
-
1,905
95,926
86,964
(71)
9,033
95,926
946
946
65
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 38. Deed of Cross Guarantee
Beacon Lighting Group Limited and Beacon Lighting Corporation are parties to a deed of cross guarantee under which each Group guarantees the debts
of the others. By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare a financial report and directors
report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investment Commission.
The above companies represent a closed group for the purposes of the Class Order, and as there are no other parties to the deed of cross guarantee
that are controlled by Beacon Lighting Group Limited, they also represent the extended closed group.
Set out below is a consolidated income statement, a consolidated statement of comprehensive income and a summary of movements in consolidated
retained earnings for the year ended 26 June 2016 of the closed group consisting of Beacon Lighting Group Limited and Beacon Lighting Corporation.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME OF THE CLOSED GROUP
Beacon Lighting Group Limited and Beacon Lighting Corporation Pty Ltd
Distribution income
Expenses
General and administration
Profit before income tax
Income tax expense
Profit for the period attributable to the members of the closed group
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
FY 2016
$’000
29,041
(3,073)
25,968
(7,816)
18,152
44
(13)
31
FY 2015
$’000
26,324
(3,271)
23,053
(6,260)
16,793
(241)
72
(169)
Total comprehensive income for the period attributable to the members of the closed
group
18,183
16,624
66
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 CONSOLIDATED BALANCE SHEET OF THE CLOSED GROUP
Beacon Lighting Group Limited and Beacon Lighting Corporation Pty Ltd
FY 2016
$’000
FY 2015
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Related party receivables
Total current assets
Non-current assets
Deferred tax assets
Investment in subsidiaries
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Provisions
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other reserves
Retained earnings
Total equity
627
278
286
45,696
46,887
4,936
70,633
75,569
122,456
-
138
632
296
1,066
863
863
1,929
120,527
62,730
(23)
57,820
120,527
1,292
516
26
38,623
40,457
5,158
70,633
75,791
116,248
759
169
571
2,399
3,898
-
-
3,898
112,350
62,642
(71)
49,779
112,350
67
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY OF THE CLOSED GROUP
Beacon Lighting Group Ltd and
Beacon Lighting Corporation Pty Ltd
Balance as at 29 June 2014
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Issue of shares to employees
Employee share scheme
Dividends provided for or paid
Total contributions by and distributions to owners
Balance as at 28 June 2015
Balance as at 28 June 2015
Profit for the year
Other comprehensive income
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Issue of shares to employees
Employee share scheme
Dividends provided for or paid
Total contributions by and distributions to owners
Contributed
equity
$’000
62,561
-
-
-
81
-
-
81
62,642
62,642
-
-
-
88
-
-
88
Reserves
$’000
-
-
(169)
(169)
-
98
-
98
(71)
(71)
-
31
31
-
17
-
17
Balance as at 26 June 2016
62,730
(23)
Retained
earnings
$’000
39,868
16,793
16,793
-
-
(6,882)
(6,882)
49,779
49,779
18,152
18,152
-
-
(10,111)
(10,111)
57,820
Total equity
$’000
102,429
16,793
(169)
16,624
81
98
(6,882)
(6,703)
112,350
112,350
18,152
31
18,183
88
17
(10,111)
(10,006)
120,527
68
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 26 June 2016 and the 52 weeks ended 28 June 2015Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2016 Directors’ Declaration
In the opinion of the Directors:
(a) the Financial Statements, notes and the additional disclosures set out on pages 28 to 68 are in accordance with the Corporations Act 2001 (Cth),
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 26 June 2016 and of its performance for the 52 weeks ended
on that date.
(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) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in note 38 will be
able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in Note 38,
(d) Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board and
(e) 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 (Cth).
This declaration is made in accordance with a resolution of the Directors.
Signed in accordance with a resolution of Directors.
Ian Robinson
Executive Chairman
Melbourne, 17 August 2016
Glen Robinson
Chief Executive Officer
69
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEACON LIGHTING GROUP LIMITED
70
BEACON LIGHTING GROUP ANNUAL REPORT 2016 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEACON LIGHTING GROUP LIMITED
71
INDEPENDENT AUDITOR’S REPORT 72
BEACON LIGHTING GROUP ANNUAL REPORT 2016 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 28 July 2016, the distribution of shareholdings was
as follows
Size of Shareholding
Number of
Shareholders
At 28 July 2016, there were 1,976 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 28 July 2016:
Rank
Name
Number
of Shares
%
Holding
HEYSTEAD NOMINEES PTY LTD
118,250,000
54.96
1 - 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
Over 100,000
189
536
453
750
48
Total number of shareholders
1,976
Holdings of less than a
marketable parcel
84
(b) Substantial shareholdings
The number of shares held by the substantial shareholders
listed in the Company’s register of substantial shareholders
as at 28 July 2016 were:
Number of
Shares
% Held
118,685,441
55.16%
Shareholder
Heystead
Nominees Pty
Ltd (including
Robinson Family
members)
FMR LLC
10,803,502
5.02%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
RBC INVESTOR SERVICES
21,044,228
HSBC CUSTODY NOMINEES
12,414,837
CITICORP NOMINEES PTY LTD
10,487,157
J P MORGAN NOMINEES
AUSTRALIA
NATIONAL NOMINEES LTD
RBC INVESTOR SERVICES
MIRRABOOKA INVESTMENTS
LTD
AMCIL LTD
6,419,026
4,277,337
2,267,510
2,000,000
1,624,141
RELIABLE BUSINESS CO LTD
1,363,636
BOND STREET CUSTODIANS LTD
TRUEBELL CAPITAL PTY LTD
KJA HOLDINGS PTY LTD
WASK MANAGEMENT PTY LTD
BNP PARIBAS NOMS PTY LTD
DR DJ RITCHIE & DR GJ RITCHIE
MR N OSBORNE
MRS EJ GRAY
INVIA CUSTODIAN PTY LTD
BB CAPITAL PTY LTD
867,314
800,000
520,000
510,748
487,972
350,000
300,000
268,727
268,379
250,000
Totals: Top 20 holders of ISSUED CAPITAL
184,771,012
Total Remaining Holders Balance
30,386,105
9.78
5.77
4.87
2.98
1.99
1.05
0.93
0.75
0.63
0.40
0.37
0.24
0.24
0.23
0.16
0.14
0.12
0.12
0.12
85.88
14.12
215,157,117
100.00
73
SHAREHOLDERS’ INFORMATION Corporate Directory
DIRECTORS
Ian Robinson
Glen Robinson
(James) Eric 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 websites
www.beaconlightingtradeclub.com.au
www.beaconsolar.com.au
www.beaconlightingcommercial.com.au
www.beaconinternational.com
www.fanaway.com
www.lucciair.com
www.lightsourcesolutions.com.au
www.lightsourcesolutions.com.nz
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
74
BEACON LIGHTING GROUP ANNUAL REPORT 2016 75
Store Locations
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
Camberwell
347 Camberwell Rd
Chirnside Park
Showroom Centre
286 Maroondah Hwy
Coburg
Lincoln Mills
Homemaker Centre
64-74 Gaffney St
Cranbourne
Cranbourne Home
Cnr Sth 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
Heidelberg
2-4 Dora St
Hoppers Crossing
283 Old Geelong Rd
Maribyrnong
Harvey Norman Centre
169 Rosamond Rd
Moorabbin
867 Nepean Hwy
Nunawading
262 Whitehorse Rd
Oakleigh
807 Warrigal Rd
Pakenham
Lifestyle Centre
825 Princes Hwy
Preston
23 Bell St
Scoresby
1391 Ferntree Gully Rd
South Melbourne
50-56 York St
South Wharf DFO
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
Launceston
40 William St
Moonah
7-9 Derwent Park Rd
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
Kotara Home
108 Park Ave
Lake Haven
Home Mega Centre
Cnr Pacific Hwy
& Lake Haven Drv
Marsden Park
Home Hub Marsden Park
Richmond Rd
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
Port Macquarie
180 Lake Rd
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
Warners Bay Home
240 Hillsborough Rd
ACT
Fyshwick
175 Gladstone St
Gungahlin
10 Gribble St
QLD
Bundall
61 Upton St
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
Ipswich
Ipswich Riverlink
Shopping Centre
Cnr The Terrace
& Downs Sts
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 - Fairfield
Homemaker Centre
1 D’Arcy Dr, Idalia
Townsville - Garbutt
Mega Centre
Cnr Dalrymple Rd
& Duckworth St
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
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
Churchill
Churchill Centre South
252 Churchill Rd
Kilburn
Gepps Cross
Home HQ
750 Main North Rd
Melrose Park
Melrose Plaza
1039 South Rd
Mile End
Mile End Home
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
www.beaconlighting.com.au