Beacon Lighting Group Limited
ANNUAL
REPORT
2017
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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6
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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 23 August 2017. The
Directors have the power to amend and re-issue the financial statements.
Chairman’s and Chief Executive Officer’s Report
FY2017 was a year of very important milestones for the Beacon Lighting Group.
The most significant milestones were:
- It has been 50 years since the first Beacon Lighting store opened in Chapel Street, Prahran (VIC) in 1967
- The Group opened the 100th Beacon Lighting store at North Lakes (QLD) in March 2017
- There are now more than 1,000 Associates working for the Group
- The annual sales turnover for the Group has now exceeded $200 million for the first time
The Board of Directors would like to thank our Customers,
Associates, Suppliers and Shareholders for their contribution to the
Group’s success over the past 50 years. The Beacon Lighting Group
is looking forward to using the first 50 years as the foundation for
future success.
Key Highlights
The key highlights which contributed to the FY2017 results included:
Record sales result at $214.4 million increased
by 11.0%
The opening of 8 new company stores, the purchase
of 4 franchise stores and 4 new company stores in
the process of being opened
Company store retail sales increased by 10.7%
Commercial Office sales increased by 16.2%
Beacon Solar sales increased by 142.5%
Online sales increased by 53.8%
Acquired 3 Lights for You stores
Acquired the Masson for Light store
Acquired the license for the GE Street Light business
The establishment of new Beacon International
businesses in Germany and the USA
Group Overview
Throughout FY2017, the Beacon Lighting Group has made a record
level of investment in new company stores, a new Commercial office,
acquired retail lighting competitors and opened new businesses in new
international markets. At the end of FY2017, Beacon Lighting had 96
company stores, 7 franchise stores and 4 stores in the process of being
opened. Throughout FY2017, Beacon Lighting opened 8 new company
stores in South Melbourne (VIC), Marsden Park (NSW), Brookvale (NSW),
Claremont (WA), North Lakes (QLD), Burwood (VIC), Balwyn North (VIC)
and Killara (NSW). Beacon Lighting also closed the South Wharf (VIC)
store as a relocation to South Melbourne (VIC). The Group also purchased
a number of franchise stores being the Jindalee (QLD), Moonah (TAS),
Frankston (VIC) and Midland (WA) franchise stores, converting them into
company stores.
Beacon Lighting now has 5 Commercial offices with the opening of the
new office in South Australia. The Beacon International business has
had operations in Hong Kong and this year opened up new businesses
in Germany and the USA. Beacon Solar continues to grow strongly by
offering energy efficient solutions to our commercial customers. The
Group non retail lighting capabilities has continued to expand with the
acquisition of the GE Street Lighting business. The Masson for Light
(VIC) store acquired in FY2017 will continue to target the architecture
specification lighting market.
Financial Result
The Beacon Lighting Group achieved a record sales result in FY2017.
However, due to significant investments in new stores and new
businesses, as well as the profit impact of the liquidation sale of a major
competitor, the profit result fell short of FY2016.
Beacon Lighting achieved sales growth of 11.0% to $214.4 million in
FY2017. Company store comparative sales increased by 1.2% for the
year. QLD, SA and NSW company stores all achieved good comparative
sales increases while sales in WA company stores were particularly
challenging.
In FY2017, gross profit dollars increased by $12.2 million or 9.8%
over the underlying gross profit dollars in FY20161. As a percentage of
sales, the gross profit percentage was 63.3% in FY2017 compared to
underlying gross profit percentage of 63.9% in FY20161. Gross margin
recovered in H2 FY2017 to 64.5% after the liquidation sale of the major
competitor concluded.
Significant investments were made in opening of new stores, new
businesses and in growing market share. Against previous trends, Group
Operating Expenses increased to 51.8% of sales in FY2017 compared
to 50.7% of sales in FY2016.
The Group achieved an EBITDA of $27.6 million which was down by
$1.5 million or 5.3% down on the underlying profit in FY20161. The
Group Net Profit After Tax result of $16.6 million was $1.2 million or
6.5% down on the underlying profit in FY20161.
FY2017 was a record investment year for the Beacon Lighting Group
with the purchase of 4 franchise stores, the 3 Lights for You stores,
the Masson for Light store, the GE Street Light distribution business
CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REPORT
1
and Masson Manufacturing. The opening of 8 new company stores, plus
having 4 new company stores in the process of being opened at the end
of FY2017, resulted in a significantly higher level of investment.
Key Growth Strategies
The key growth strategies in FY2018 will be to:
Outlook
Building on the success of the first 50 years for Beacon Lighting, the
Group has planned for a year of further growth in FY2018. Beacon
Lighting has committed to the following activities for FY2018:
• Purchased the Nunawading franchise store in July 2017
• The Carlton (NSW), Bayswater (VIC) and Crows Nest (NSW) stores
• Continue to optimise the existing retail business network
have already opened in FY2018
• Grow the sales and profits of the emerging businesses
• The Gladesville (NSW) store in expected to open in September 2017
The lighting industry continues to go through a period of exciting change
with the continuing focus on new technologies, fashion and energy
efficient lighting solutions. The recent increase in power prices also
continues to drive demand for energy efficient solutions. Given that
Beacon Lighting has a strong market position as Australia’s leading
lighting retailer and with a number of emerging businesses, the Group
remains very well positioned to take advantage of the changes that
are occurring.
The Beacon Lighting team is looking forward to delivering record sales
and profits in FY2018.
• Target the opening of approximately 6 new company stores
• Be the first to market with the latest fashion, trend and energy efficient
products for our customers
• Enhance our online and social media presence.
• Conservatively investigate new business opportunities closely aligned
to our retail and emerging businesses both in Australia and in
International markets
• Target efficiency gains while continuing to drive business growth
Dividends
The Directors have declared a fully franked dividend of 2.40 cents per
share for H2 FY2017 (2.40 cents per share for H2 FY2016). Along with
the H1 FY2017 fully franked dividend of 2.35 cents per share (2.30
cents per share for H1 FY2016), this brings the annual Beacon Lighting
dividend for FY2017 to 4.75 cents per share (4.70 cents per share for
FY2016). Going forward, the Directors of Beacon Lighting will continue
to target a dividend payout ratio of between 50% and 60% of the annual
Net Profit After Tax result which will be paid in the months of March and
September each year.
Ian Robinson
Executive Chairman
Glen Robinson
Chief Executive Officer
1 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 can be found in the Operating and Financial Review in the Directors’ Report.
2
BEACON LIGHTING GROUP ANNUAL REPORT 2017 3
Key Activities of F Y 20 1 7
RECORD SALES
$214.4m
SALES $m
214.4
193.2
179.4
150.3
132.9
FY20131
FY2014
FY2015
FY20163
FY2017
EBITDA2 $m
20.1
16.6
27.4
29.2
27.6
NPAT4 $m
11.8
9.5
17.8
16.9
16.6
FY20131
FY2014
FY2015
FY20163
FY2017
FY20131
FY2014
FY2015
FY20163
FY2017
4
1 FY2013 – 52 week Pro Forma result in the Prospectus dated 12 March 2014
2 Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)
3 Underlying profit for FY2016
4 Net Profit After Tax (NPAT)
OPENED
EIGHT NEW
COMPANY
STORES
PURCHASED
THREE ‘LIGHTS
FOR YOU’
STORES
PURCHASED
FOUR
FRANCHISE
STORES
PURCHASED THE
MASSON FOR
LIGHT STORE
OPENED NEW
BUSINESSES
IN GERMANY
AND THE USA
PURCHASED THE
GE STREET LIGHT
BUSINESS
5
Board of Directors
Ian Robinson
Executive Chairman
Glen Robinson
Chief Executive Officer
43 years of service
Ian Robinson purchased the first Beacon Lighting store in 1975. Over
the subsequent 43 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 operations of the Group. Ian is a Director
of Lighting Council of Australia, Carbonetix Pty Ltd and the Large Format
Retailers Association.
22 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,
progressing 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 Deputy Chairman and Chairman of the Remuneration and
Nomination Committee of the Group. Eric retired in 2000 as a Partner
with PricewaterhouseCoopers after 20 years of service. Since then
he has been a Director of public companies in the United States and
Australia, including 10 years as lead director of Reading International
Inc. Eric is the Chairman of Austock Group Limited and the Chairman
of the Audit Committee. He is a Non-Executive director of Austock
Life Limited where he is Chairman of both the Risk Committee and
Remuneration Committee. Eric is a Non-Executive director of the Sydney
Stock Exchange Limited, holding the positions of Chairman of Directors
and Chairman of the Audit Committee. Eric is a Chartered Accountant.
Neil Osborne is a Non-Executive Director and is also Chairman of the
Group’s Audit Committee. Neil has over 30 years experience in the retail
industry. He was formerly an Accenture Partner, leading large strategic
projects in Australia and Asia. He also spent 18 years with Coles Myer
Ltd in senior positions including finance, operations (including CFO
Myer) and strategic planning. Neil is a Non-Executive Director of Vita
Group (ASX Listed) and Chairman of their Audit and Risk Committee. He
is also Chairman of Australian United Retailers (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.
6
BEACON LIGHTING GROUP ANNUAL REPORT 2017 Management Team
Ian Bunnett
Managing Director -
Sales
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).
Michael (Mick) Tan
Chief Information Officer
Joined Beacon Lighting in
2000 and has had 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).
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).
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).
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), a Graduate
Diploma of Corporate
Governance and is a CPA.
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.
MANAGEMENT TEAM
7
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 23 August 2017. 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 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
4 years
3 years
3 years
3 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 Executive
Chairman since July 2013 having previously held the position of
Executive 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 Andrew Hanson as an 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 2017 In relation to nominations, the Remuneration and Nomination Committee
is responsible for:
In summary, the Code requires associates to always act:
• In a professional, fair and ethical manner, in accordance with Group
• Assessing current and future Director skills and experiences and
values.
identifying suitable candidates for succession.
• In accordance with applicable legislation and regulations, and internal
• Annually enquiring of the Executive Chairman and the Chief Executive
policies and procedures.
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 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 (Directors) and Andrew Hanson (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 Andrew Hanson 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.
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 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).
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 2017 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.
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.
10
BEACON LIGHTING GROUP ANNUAL REPORT 2017 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 Andrew Hanson as an 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 25 June 2017.
1. Directors
The Directors of the Group during the whole financial period and up to
the date of the report were:
Ian Robinson
Executive Chairman
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 6 of this annual report.
2. Principal Activities
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.
3. Results
The consolidated profit for the year attributable to the members of
Beacon Lighting Group Limited was:
Consolidated Entity
Actual
FY2017
$’000
Actual
FY20161
$’000
Profit before Income Tax
23,370
26,160
to meet the demands of its customers. More than 95% of the lighting and
fan products sold by Beacon Lighting businesses are supplied through
the Beacon Lighting supply chain and approximately 85% of the products
are exclusively branded.
At the end of FY2017, Beacon Lighting operated the following trading
businesses:
• 96 Beacon Lighting company stores
• 7 Beacon Lighting franchise stores
• 5 Commercial sales offices
• 14 Beacon Lighting related websites
• Beacon International trading in Hong Kong, Germany and the USA
• Light Source Solutions trading in Australia and New Zealand
• Masson for Lights
FY2017 was a record investment year for the Beacon Lighting Group.
These investments included:
• Beacon Lighting opened 8 new company stores in South Melbourne
(VIC), Marsden Park (NSW), Brookvale (NSW), Claremont (WA), North
Lakes (QLD), Burwood (VIC), Balwyn North (VIC) and Killara (NSW)
• Beacon Lighting purchased 4 franchise stores being the Jindalee
(QLD), Moonah (TAS), Frankston (VIC) and Midland (WA) franchise
stores and converted them into company stores
• Purchased the Masson for Light architecture lighting design store
in Richmond (VIC)
• Purchased the Lights for You stores at Killara (NSW), Carlton
(NSW) and Crows Nest (NSW) to be converted into Beacon Lighting
company stores
• Established new Beacon International businesses in Germany and
the USA
• Purchased the Masson Manufacturing (VIC) business in order to
develop bespoke lighting products
• Implemented Afterpay on the beaconlighting.com.au website
• Designed and developed 450 exclusive new products for Beacon
Income Tax Expense
6,726
7,863
Lighting stores
Operating profit after tax attributable to
the members of Beacon Lighting Group
Limited
16,644
18,298
1 Statutory profit for FY2016.
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 business, Beacon Lighting develops, designs, sources,
imports, distributes, merchandises, promotes and sells its product range
14
At the end of FY2017, Beacon Lighting was also in the process of
opening the Carlton (NSW), Bayswater (VIC), Crows Nest (NSW) and
Gladesville (NSW) stores.
FY2017 was a year of significance for the Beacon Lighting Group. It has
been 50 years since the opening of the first Beacon Lighting store. It was
the first time that the Group has had over 1,000 Associates and $200
million in sales. FY2017 was also eventful for Beacon Lighting with the
closure of a major competitor in H1 FY2017.
BEACON LIGHTING GROUP ANNUAL REPORT 2017 4.2. Financial Summary
4.2.1. Financial Performance
A summary of the Beacon Lighting Group FY2017 profit result compared to the underlying FY2016 profit result is presented in the following table:
Sales
Gross Profit
Other Income & Other Revenue
Operating Expenses2
EBITDA
EBIT
Net Profit After Tax
1 Underlying profit for FY2016 (refer to the following table)
2 Operating Expenses excludes interest, depreciation and amortisation
FY2017
$’000
214,404
135,640
3,104
(111,128)
27,616
24,624
16,644
FY20161
$’000
193,179
123,483
3,647
(97,965)
29,165
26,619
17,800
Change $’000
Change %
21,225
12,157
(543)
(13,163)
(1,549)
(1,995)
(1,156)
11.0%
9.8%
(14.9%)
13.4%
(5.3%)
(7.5%)
(6.5%)
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 FY2016 underlying profit is
presented in the following table:
Sales
Gross Profit
Other Income & Other Revenue
Operating Expenses1
EBITDA
EBIT
Net Profit After Tax
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
1 Operating Expenses exclude interest, depreciation and amortisation.
Throughout the Operating and Financial Review, the underlying profit for FY2016 will be used as the point of comparison for the FY2017 profit result.
4.2.2. Sales
Beacon Lighting achieved sales growth of 11.0% to $214.4 million in FY2017. Company store retail sales grew by 10.7%. Sales for Beacon Lighting comparative
company stores grew by 1.2% with strong sales growth in SA, QLD and NSW, while comparative sales in WA were particular challenging. Sales for the
Commercial offices increased by 16.2%, Beacon Solar sales increased by 142.5% and online sales increased by 53.8%. Sales to Beacon Lighting franchise
stores reduced as a result of purchasing franchise stores and converting them into company stores.
DIRECTORS’ REPORT
15
4.2.3. Gross Profit Margin
The gross profit dollars generated by Beacon Lighting increased by 9.8% to
$135.6 million. The gross profit margin for FY2017 was 63.3% compared
to the underlying gross profit margin of 63.9% in FY2016. In H1 FY2017, to
compete with the liquidation sale of a major competitor, the Group achieved
a lower full year gross profit margin of 62.1%. However, in H2 FY2017, the
gross profit margin recovered to a stronger 64.5% of sales.
4.2.4. Other Income & Other Revenue
Other Income and Other Revenue has continued to decline as franchise
stores have been purchased and converted into company operated stores.
In FY2017, Beacon Lighting was able to sell licence fees to the Group’s
intellectual property which has helped to provide another source of Other
Revenue. In FY2017, Other Income and Other Revenue decreased by 14.9%
to $3.1 million.
4.2.5. Operating Expenses
Operating Expenses increased by 13.4% to $111.1 million in FY2017.
As a percentage of sales, Operating Expenses increased from 50.7%
in FY2016 to 51.8% in FY2017. With continued investment in the store
network along with significant investments in new company stores and new
businesses, the Selling and Distribution Expenses increased from 36.7%
of sales in FY2016 to 38.7% of sales in FY2017. Expense productivity
improvements were able to be achieved for Marketing and General and
Administration Expenses.
4.2.6. Earnings
The Beacon Lighting Group achieved an Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA) decrease of 5.3% to $27.6
million in FY2017. As a percentage of sales, the EBITDA margin of 12.9%
decreased from an underlying EBITDA margin of 15.1% in FY2016. The
Net Profit After Tax (NPAT) result has decreased to $16.6 million or 7.8%
of sales from an underlying NPAT result of $17.8 million or 9.2% of sales
in FY2016.
4.2.7. Dividends
The Directors of Beacon Lighting have declared an annual fully franked
divided of 4.75 cents per share for FY2017 (4.70 cents per share for
FY2016). For H1 FY2017, the Directors have already declared a fully franked
dividend of 2.35 cents per share (2.30 cents per share for H1 FY2016)
and for H2 FY2017, the Directors have declared a fully franked dividend of
2.40 cents per share (2.40 cents per share for H2 FY2016). As a result the
Beacon Lighting Group will have a NPAT dividend payout ratio of 61.4% for
FY2017. Going forward, it is expected that the Beacon Lighting Group will
continue to have an annual NPAT dividend payout ratio of between 50%
and 60%.
4.2.8. Financial Position
In FY2017, Beacon Lighting invested an additional $3.5 million in inventory
to operate the new stores and new businesses. The increase in the
Receivables balance by $0.3 million has been the result of a decline in
franchise store receivables which has been more than offset by the increase
in receivables from the emerging businesses. Capital Expenditure of $9.9
million includes new stores, asset purchases for new businesses, store
refurbishments, new motor vehicles and ongoing IT projects. The Beacon
Lighting Group also spent $6.0 million on acquisitions.
The additional investments made in FY2017 were funded by retained
earnings and also an increase in the borrowings of the Group of $8.1 million.
The Beacon Lighting Group banking facilities have not been fully drawn
down in FY2017 and the Group has additional funding available to support
the ongoing operations. The Beacon Lighting Group continues to operate
comfortably within all of 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. The Group also has an emerging presence with the growth
in Commercial, Beacon International, Light Source Solutions, Beacon
Solar and the Masson for Light businesses. 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. Continue to Optimise the Existing Retail Network
Beacon Lighting believes it is able to grow sales and profits through the
continued investment in the existing store retail network. The existing
store network is being continually reviewed in order to optimise the
marketing plan, product range, merchandising, customer service,
training and operations.
4.3.2. Grow the Sales and Profits of the Emerging Businesses
Beacon Lighting will continue to grow the sales and profits of the
emerging businesses being Commercial, Beacon International, Light
Source Solutions, Beacon Solar and Masson for Light. These businesses
continue to offer significant growth opportunities for the Group, including
synergies with the retail business and strengthen the overall market
opportunities for the brand both within Australia and the rest of the world.
4.3.3. New Store Rollout
Beacon Lighting will continue to target the opening of approximately
6 new Company operated stores in Australia each year. These store
openings are however dependent on the identification of suitable sites,
site negotiation and availability.
4.3.4. 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 is continuing to
drive the development of LED technology and continues to represents
additional opportunities for the Group.
4.3.5. Online and Social Media Presence
Beacon Lighting will continue to enhance its online and social media
presence in order to drive incremental sales. Further opportunities
involve the optimising of the existing Group websites, utilising third party
websites and tools and additional social media activities.
4.3.6. New Business Opportunities
Beacon Lighting intends to investigate and pursue local and international
business opportunities that complement the core business activities
or leverage off existing business capabilities. This may include other
lighting stores, franchise stores and other aligned opportunities.
4.3.7. Efficiency Gains
Beacon Lighting will continue to target efficiency gains and manage
growth of operating expenses through negotiation and in partnership
with service providers and through continued investment and refinement
in systems, technology and processes.
16
BEACON LIGHTING GROUP ANNUAL REPORT 2017 • Grow and optimise the investments the Group has made in new stores
and new businesses in FY2017.
• In July 2017, the Nunawading (VIC) franchise store was purchased
and converted to a company store.
• The Carlton (NSW), Bayswater (VIC) and Crows Nest (NSW) stores
have already opened in FY2018.
• The new company store at Gladesville (NSW) is expected to open in
September 2017.
Going forward, Beacon Lighting still has a range of exciting retail and
emerging business growth opportunities both in Australia and around
the world. The Beacon Lighting Group expects the current business
strategies to drive growth in FY2018.
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 25 June 2017, and the numbers of meetings
attended by each Director were:
Director’s
Meetings
H
10
10
10
10
A
10
10
10
10
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.
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. A number of the Group 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 compared to
our competitors.
The specific material business risks faced by Beacon Lighting and how
they are managed are set out below.
4.4.1. Retail Environment and General Economic Conditions
The Group is sensitive to the current state and future changes in the
retail environment and general economic conditions. This includes
but is not limited to interest rates, consumer confidence, business
confidence, property prices, housing churn, dwelling approvals,
government policy and natural disasters. Beacon Lighting plans to
manage the Group according to the current environment and maintain
a capital structure capable of supporting the Group in any anticipated
operating environment.
4.4.2. 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 leading retail marketing
position in Australia and to grow the emerging businesses in Australia
and around the world.
4.4.3. Foreign Currency Rates
The majority of goods purchased and imported by Beacon Lighting
into Australia 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. 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 risk across a number
of suppliers.
4.4.6. Operating Expenses
The Beacon Lighting Group operating expenses continue to increase.
The Group’s ability to maintain and improve profitability is based on
the economies of scale of the operation, reasonable stock turns and
maintaining a reasonable cost structure.
4.5. Trading Outlook
Some of the specific strategies that the Beacon Lighting Group already
has in place for FY2018 and beyond include:
DIRECTORS’ REPORT
17
7. Directors’ Interests in Shares
The relevant interest of each Director in the Company, as notified by
the Directors to the ASX in accordance with section 205G(l) of the
Corporations Act 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
118,752,739
118,752,739
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
FY2017
$'000
Actual
FY2016
$'000
10,224
10,111
14. Audit Services
Consolidated Entity
Fully franked dividends provided
or paid during the period
10. Insurance of Officers
10.1. Indemnification of Directors
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
A fully franked dividend of $5,167,513 was declared on August 23,
2017.
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.
14.1. 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.
14.2. Audit and Non-Audit Services Provided by the External Auditor
During the 52 weeks ended 25 June 2017, 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
FY2017
$
FY2016
$
Audit & review of financial statements
229,100
207,300
Other services
Tax compliance services
19,200
23,155
Other Services
10,529
101,680
Total remuneration of PwC
258,829
332,135
The Group has indemnified each Director and external consultant
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.
10.2. Insurance Premiums
During the financial period, Beacon Lighting Group Limited paid a
premium of $45,569 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.
18
BEACON LIGHTING GROUP ANNUAL REPORT 2017 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.
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.
17. Remuneration Report
17.1. Remuneration Policy and Link to Performance
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 1,000 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 Remuneration and Nomination
The Board has appointed
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 25 June 2017.
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
FY2017
Link to Performance
Fixed Remuneration
Provide competitive
market salary including
superannuation and non-
monetary benefits
Nil
Positioned at
competitive
market rates
No change
Consolidated Group as well
as individual performance are
considered during
the annual
review of fixed remuneration.
Short Term Incentive
(Cash Bonus)
Reward for in year
performance
Budgeted
Earnings before
Interest & Tax
(EBIT)
200% of the
executives
on target
cash bonus
Performance
metric formerly
Net Profit
before Tax
(NPBT)
EBIT measures as determined by
the Board
Short Term Incentive
(Performance Rights
or Options)
Reward for in year
performance
Budgeted
Earnings before
Interest & Tax
(EBIT)
125% of the
executives
on target
cash bonus
Performance
metric
formerly Net
Profit before
Tax (NPBT)
performance
Grants are subject to achieving
budgeted
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 FY2017 these are:
Fixed
Remuneration
%
Short Term Incentive
(Cash Bonus)
%
Short Term Incentive
(Performance Rights or Options)
%
Total
%
Executive Chairman
Chief Executive Officer
Managing Director – Sales
Chief Financial Officer
Chief Operating Officer
100.0
71.0
81.1
80.7
78.9
-
11.9
7.6
7.8
8.5
-
100.0
17.1
11.3
11.5
12.6
100.0
100.0
100.0
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 25 June 2017, the Group did not a have 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 FY2017 fixed remuneration was increased for the five executives at
an average of increase of 9.4%. 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 Earnings before Interest and Tax (EBIT) 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 EBIT budget for the year. The
Board considers EBIT 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 2017 Structure of Short Term Cash Incentive Plan
17.3. FY2017 Performance and Impact on Remuneration
Feature
Description
Maximum opportunity
200% of on target cash bonus value
Performance metric
Budgeted EBIT
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 25 June 2017 the Group continued with the short
term performance rights incentive plan and the short term incentive
option plan for selected senior management. The Executive Chairman
does not participate in either plan. The Chief Executive Officer (subject
to shareholder approval) and one executive 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 the
grants are assessed by financial measures. The financial measure used
is the Group’s EBIT result against the Group’s EBIT budget. This is tested
annually. The Board considers EBIT 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 FY2017 was below that of
the previous year and below the FY2017 budget. For the year ended 25
June 2017, the Group’s financial performance targets were partially met
and the annual short term cash incentive is expected to be in the 50%
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)
FY2017
FY2016
16,644
18,298
Basic earnings per share (cents)
7.73
8.51
Dividend payments ($’000)
10,224
10,111
Share Price (Year End)
1.38
1.29
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 – Sales
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 25 June 2017 and
year ended 26 June 2016 unless otherwise stated.
Budgeted EBIT
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
Post
Employement
Super
Contributions
Cash Salary
& Fees
Annual & Long
Service Leave
Cash
Performance
Based
Payment
$
$
$
DIRECTORS
I Robinson (Executive Chairman)
2017
2016
192,728
17,397
192,728
17,397
(16,398)
(15,301)
G Robinson (Chief Executive Officer)
$
-
-
Share Based
Payments
$
Total
-
-
193,727
194,824
321,111
19,616
871
57,165
82,123
480,886
338,312
19,308
48,295
97,716
6,539
510,170
2017
2016
E Barr (Non-Executive)
2017
2016
N Osborne (Non-Executive)
100,457
9,543
100,457
9,543
2017
2016
100,000
100,000
-
-
Total Remuneration Directors
-
-
-
-
-
-
-
-
-
110,000
-
110,000
-
100,000
-
100,000
2017
2016
EXECUTIVES
714,296
46,556
(15,527)
57,165
82,123
884,613
731,497
46,248
32,994
97,716
6,539
914,994
I Bunnett (Managing Director – Sales)
2017
2016
246,324
19,616
17,812
26,713
39,685
350,150
226,484
19,308
10,353
45,662
9,510
311,317
D Speirs (Chief Financial Officer)
2017
2016
236,824
19,616
20,643
203,304
19,770
11,251
26,713
45,662
39,685
343,481
9,510
289,497
B Martens (Chief Operating Officer)
2017
2016
221,287
19,616
7,847
26,713
39,685
315,147
213,918
19,308
13,350
45,662
9,510
301,748
Total Remuneration Executives
2017
2016
704,435
58,848
46,302
80,139
119,055
1,008,779
643,706
58,386
34,954
136,986
28,530
902,562
22
BEACON LIGHTING GROUP ANNUAL REPORT 2017 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
G Robinson
G Robinson
I Bunnett
D Speirs
B Martens
Total
22/08/2014
30,781
25-Aug-16
24/06/2016
22,107
11-Oct-16
18/08/2016
23,603
11-Oct-16
22/08/2014
43,973
25-Aug-16
22/08/2014
43,973
25-Aug-16
22/08/2014
43,973
25-Aug-16
32,813
43,750
32,100
46,875
46,875
46,875
208,410
249,288
33.0%
67.0%
33.0%
33.0%
33.0%
33.0%
10,260
14,738
7,869
14,658
14,658
14,658
727
41,830
39,566
1,038
1,038
1,038
85,237
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.
The fair value of performance rights granted on 24 June 2016 (grant date) was $1.979, with a final vesting date of 20 August 2017. All unvested
performance rights will vest on 20 August 2017 provided the executive remains employed by the Group at the vesting date.
The fair value of performance rights granted on 18 August 2016 (grant date) was $1.360, with a final vesting date of 25 August 2018. All unvested
performance rights will vest on 25 August 2018 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
24/06/2016
31,582
Refer below
18/08/2016
11,029
Refer below
D Speirs
24/06/2016
31,582
Refer below
18/08/2016
11,029
Refer below
B Martens
24/06/2016
31,582
Refer below
18/08/2016
11,029
Refer below
Total
127,833
40,740
15,000
40,740
15,000
40,740
15,000
167,220
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0
0
0
0
0
0
30,777
7,870
30,777
7,870
30,777
7,870
115,941
The fair value of options granted on 24 June 2016 (grant date) was $1.29. 40% vest on 26 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 fair value of options granted on 18 August 2016 (grant date) was $1.36. 40% vest on 18 August 2017, 30% vest on 18 August 2018 and 30% vest
on 18 August 2019, 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 (Executive Chairman)2
2017
2016
G Robinson (Chief Executive Officer)
118,624,921
118,602,329
2017
2016
E Barr (Non-Executive)
2017
2016
N Osborne (Non-Executive)
2017
2016
EXECUTIVES
I Bunnett (Managing Director – Sales)
2017
2016
D Speirs (Chief Financial Officer)
2017
2016
B Martens (Chief Operating Officer)
2017
2016
Total
2017
2016
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
14,432
12,592
32,866
10,260
-
-
-
-
14,658
14,658
14,658
14,658
14,658
14,658
91,272
66,826
20,000
10,000
-
-
-
-
-
-
-
-
-
-
-
-
20,000
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
BEACON LIGHTING GROUP ANNUAL REPORT 2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
118,659,353
118,624,921
93,386
60,520
150,000
150,000
300,000
300,000
63,974
49,316
73,974
59,316
68,519
53,861
119,409,206
119,297,934
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 2016 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,
23 August 2017
Glen Robinson
Chief Executive Officer
25
DIRECTORS’ REPORT Auditor’s Independence Declaration
26
BEACON LIGHTING GROUP ANNUAL REPORT 2017 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. Business Combinations
38. Parent Entity Financial Information
39. Deed of Cross Guarantee
52
53
54
55
55
56
57
58
58
59
60
60
60
61
62
62
63
63
63
64
65
66
28
BEACON LIGHTING GROUP ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016
Beacon Lighting Group and its controlled entities
Consolidated Entity
Notes
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
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.
FY2017
$’000
214,404
2,968
217,372
136
FY2016
$’000
193,179
3,484
196,663
163
(78,764)
(68,985)
(12,839)
(85,556)
(15,724)
(1,254)
23,370
(6,726)
16,644
92
(27)
(20)
45
16,689
Cents
7.73
7.73
(12,083)
(72,931)
(15,498)
(1,169)
26,160
(7,863)
18,298
(430)
37
118
(275)
18,023
Cents
8.51
8.50
29
FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET
As at 25 June 2017 and as at 26 June 2016
Beacon Lighting Group and its controlled entities
Consolidated Entity
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Current tax receivable
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
19
12
13
14
15
16
17
18
11
19
20
21
22
23(a)
23(b)
FY2017
$’000
12,925
9,613
55,267
63
108
1,004
78,980
28,865
5,890
10,342
45,097
124,077
20,282
23,928
6,428
-
-
50,638
6,340
2,981
9,321
59,959
64,118
62,870
(42,965)
44,213
64,118
FY2016
$’000
9,128
9,315
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
The above consolidated balance sheet should be read in conjunction with the accompanying Notes.
30
BEACON LIGHTING GROUP ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016
Beacon Lighting Group and its controlled entities
Consolidated Entity
Notes
Balance as at 26 June 2016
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 25 June 2017
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
23(a)
22
23(a)
24
23(a)
22
23(a)
24
Contributed
Equity
$’000
Reserves
$’000
62,735
(43,105)
-
-
-
135
-
-
135
-
44
44
-
96
96
Retained
Earnings
$’000
37,793
16,644
-
Total
Equity
$’000
57,423
16,644
44
16,644
16,688
-
-
135
96
(10,224)
(10,224)
(10,224)
(9,995)
62,870
(42,965)
44,213
64,118
62,647
(42,847)
-
-
-
88
-
-
88
-
(275)
(275)
-
17
-
17
29,606
18,298
-
49,406
18,298
(275)
18,298
18,023
-
-
88
17
(10,111)
(10,111)
(10,111)
(10,006)
Balance as at 26 June 2016
62,735
(43,105)
37,793
57,423
The above consolidated statement of changes in equity should be read in conjunction with the accompanying Notes.
31
FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS
For the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016
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.
FY2017
$’000
238,846
(209,926)
43
(1,254)
(6,774)
20,935
(6,025)
(9,225)
100
(15,150)
8,109
(10,224)
(2,115)
3,670
9,255
12,925
FY2016
$’000
208,300
(187,815)
101
(1,169)
(8,849)
10,568
(1,425)
(4,559)
85
(5,899)
2,791
(10,111)
(7,320)
(2,651)
11,779
9,128
32
BEACON LIGHTING GROUP ANNUAL REPORT 2017 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
25 June 2017 (2016: 52 week period ending 26 June 2016). This
treatment is consistent with section 323D of Corporations Act 2001
(Cth).
(i) New and Amended Standards Adopted by the Group
A number of new or amended standards became applicable for the
current reporting period, however, the Group did not have to change
its accounting policies or make retrospective adjustments as a result of
adopting these standards.
(ii) Impact of Standards Issued but Not Yet Applied by Group
AASB 9 Financial Instruments
AASB 9 Financial Instruments addresses the classification, measurement
and derecognition of financial assets and financial liabilities, introduces
new rules for hedge accounting and a new impairment model for
financial assets. The standard does not need to be applied until 1 July
2018 but is available for early adoption.
The Group does not expect the new guidance to have a significant
impact on the classification and measurement of its financial assets.
There will be no impact on the Group’s accounting for financial liabilities,
as the new requirements only affect the accounting for financial
liabilities that are designated at fair value through profit or loss and the
Group does not have any such liabilities. The derecognition rules have
been transferred from IAS 39 Financial Instruments: Recognition and
Measurement and have not been changed.
The new hedge accounting rules will align the accounting for hedging
instruments more closely with the Group’s risk management practices.
As a general rule, more hedge relationships might be eligible for hedge
accounting. While the Group is yet to undertake a detailed assessment,
it would appear that the Group’s current hedge relationships would
qualify as continuing hedges upon the adoption of AASB 9. Accordingly,
the Group does not expect a significant impact on the accounting for its
hedging relationships.
The new impairment model requires the recognition of impairment
provisions based on expected credit losses rather than only incurred
credit losses as is the case under IAS 39. It applies to financial assets
classified at amortised cost, debt instruments measured at fair value
through other comprehensive income, contract assets under AASB
15 Revenue from Contracts with Customers, lease receivables,
loan commitments and certain financial guarantee contracts. While
the Group has not yet undertaken a detailed assessment of how its
impairment provisions would be affected by the new model, it may result
in earlier recognition of credit losses.
The new standard also introduces expanded disclosure requirements
and changes in presentation. These are expected to change the nature
and extent of the Group’s disclosures about its financial instruments
particularly in the year of the adoption of the new standard.
AASB 15 Revenue from Contracts with Customers
The AASB has issued a new standard for the recognition of revenue.
This will replace AASB 118 which covers revenue arising from the sale
of goods and the rendering of services and AASB 111 which covers
construction contracts.
The new standard is based on the principle that revenue is recognised
when control of a good or service transfers to a customer.
The standard permits either a full retrospective or a modified
retrospective approach for the adoption. The new standard is effective
for the first interim period within annual reporting periods beginning on
or after 1 July 2018, and will allow early adoption.
Management is currently assessing the effects of applying the new
standard on the Group’s financial statements however it is not expected
to have a significant impact on the results of the Group.
At this stage, the Group is not able to estimate the effect of the new
rules on the Group’s financial statements. The Group will make more
detailed assessments of the effect over the next twelve months. The
Group does not expect to adopt the new standard before 1 July 2018.
AASB 16 Leases
AASB 16 Leases was issued in February 2016. It will result in almost all
leases being recognised on the balance sheet, as the distinction between
operating and finance leases is removed. Under the new standard, an
asset (the right to use the leased item) and a financial liability to pay
rentals are recognised. The only exceptions are short-term and low-value
leases. The accounting for lessors will not significantly change. The
standard will affect primarily the accounting for the Group’s operating
leases. The standard is mandatory for first interim periods within annual
reporting periods beginning on or after 1 July 2019. At this stage, the
Group does not intend to adopt the standard before its effective date.
As at the reporting date, the Group has non-cancellable operating lease
commitments of $99,760,000. The Group has not yet determined to
what extent these commitments will result in the recognition of an asset
and a liability for future payments and how this will affect the Group’s
profit and classification of cash flows. The Group continues to assess
and analyse the options available under the new standard in order to
appropriately account for and reflect the changes required by AASB
16. Some of the commitments may be covered by the exception for
short-term and low-value leases and some commitments may relate to
arrangements that will not qualify as leases under AASB 16.
(iii) Compliance with IFRS
The consolidated
the Group also complies
with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
financial report of
(iv) Historical Cost Convention
This financial report has been prepared in accordance with the historical
cost convention.
(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
33
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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 25 June 2017 and the results of all subsidiaries for the
period then ended. Beacon Lighting Group Limited and its subsidiaries
together are referred to in this financial report as the Group or the
consolidated entity.
Subsidiaries are all entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability
to affect those returns through its power to direct the activities of the
entity. Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date that
control ceases.
The acquisition method of accounting is used to account for business
combinations by the Group (refer to Note 1(i)).
transactions, balances and unrealised gains on
Intercompany
transactions between Group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Where control of an entity is obtained during a financial period, its
results are included in the consolidated statement of comprehensive
income from the date on which control commences. Where control of
an entity ceases during a financial period its results are included for that
part of the period during which control existed.
Investments in subsidiaries are accounted for at cost in accounting
records of Beacon Lighting Group Limited.
(d) Segment Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as
the Chief Executive Officer.
(e) Foreign Currency Translation
(i) Functional and Presentation Currency
Items included in the financial report of each of the Group’s entities are
measured using the currency of the primary economic environment in
which the entity operates (‘the functional currency’). The consolidated
financial report is presented in Australian dollars, which is Beacon
Lighting Group Limited’s functional and presentation currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year end exchange rates
of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss, except when they are deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges.
(iii) Specific Commitments
Hedging is undertaken in order to avoid or minimise possible adverse
financial effects of movements in exchange rates. Gains or costs arising
upon entry into a hedging transaction intended to hedge the purchase or
sale of goods and services, together with subsequent exchange gains or
losses resulting from those transactions are deferred in the 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.
(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.
34
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 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) Interest Income
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
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
35
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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
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.
36
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 (p) Intangible Assets
(i) Goodwill
(t) Employee Benefits
(i) Short-Term Obligations
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.
Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period. They
are recognised initially at their fair value and subsequently measured at
amortised cost using the effective interest method.
(r) Borrowings
Borrowings are initially recognised at fair value, net of transaction
costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs)
and the redemption amount is recognised in the consolidated statement
of comprehensive income over the period of the borrowings using the
effective interest method.
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.
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.
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.
(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.
37
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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.
(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.
38
(aa) Parent Entity Financial Information
The financial information for the parent entity, Beacon Lighting Group
Limited, disclosed in Note 38 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.
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 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 aging analysis for
credit risk.
The Group holds the following financial instruments:
Consolidated Entity
Financial Assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Financial Liabilities
Trade and other payables
Borrowings
Derivative financial instruments
(a) Market Risk
Foreign Exchange Risk
FY2017
$’000
FY2016
$’000
12,925
9,613
63
22,601
20,282
30,268
-
50,550
9,128
9,315
-
18,443
16,171
22,159
1
38,331
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
FY2017
$’000
20,261
FY2016
$’000
26,489
39
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon 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 25 June 2017 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
Inventory finance facility
Asset finance facility
Loan facility – multi currency
Loan facility – floating rate
Floating rate – Total undrawn facilities
Overdraft
Inventory finance facility
Asset finance facility
Loan facility – multi currency
Loan facility – floating rate
Maturities of Financial Liabilities
FY2017
$’000
FY2016
$’000
500
30,797
7,385
2,801
6,000
500
8,294
6,164
2,057
200
500
27,750
3,500
-
-
500
7,916
1,175
-
-
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 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 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 25 June 2017
Non-derivatives
Trade and other payables
Borrowings
Finance lease liabilities
Total non-derivatives
Derivatives
20,282
23,247
-
43,529
Net settled (cash flow hedges)
(63)
At 26 June 2016
Non-derivatives
Trade and other payables
Borrowings
Finance lease liabilities
Total non-derivatives
Derivatives
16,171
19,834
-
36,005
-
-
681
681
-
-
-
-
5,800
540
6,340
-
-
-
1,105
1,105
1,220
1,220
-
-
-
-
-
-
-
-
-
-
20,282
29,047
1,221
50,550
20,282
29,047
1,221
50,550
(63)
(63)
16,171
19,834
2,325
38,330
16,171
19,834
2,325
38,330
1
1
Net settled (cash flow hedges)
1
-
-
(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 25 June 2017, on a recurring basis.
At 25 June 2017
Derivatives used for hedging - Net Position
Level 2
$’000
(63)
Total
$’000
(63)
41
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon 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 and the adjustments are all based on valuations provided by third party banking institutions.
There has been no change in valuation techniques during the period.
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
FY2017
$’000
FY2016
$’000
214,404
193,179
2,226
616
126
2,968
217,372
FY2017
$’000
43
93
136
3,087
-
397
3,484
196,663
FY2016
$’000
101
62
163
Consolidated Entity
(a) From ordinary activities
Sale of goods
(b) Other revenue
Franchise fees
Royalty revenue
Sundry revenue
5. Other Income
Consolidated Entity
Interest
Other
42
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 6. Expenses
Consolidated Entity
(a) Profit before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Motor vehicles
Amortisation
Patents, trademarks and other rights
Finance costs
Interest and finance charges paid/payable
Net loss on disposal of property, plant and equipment
Rental expense relating to operating leases
Minimum lease payments
Employee benefits
(b) Net foreign exchange gains and losses
FY2017
$’000
FY2016
$’000
2,676
296
20
1,254
29
19,736
50,778
2,248
278
20
1,169
78
17,134
40,461
Net foreign exchange (gains)/losses recognised in profit before income tax for the period (as
either other income or expense)
106
(20)
(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
-
(711)
43
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon 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% (2016 – 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Previously unrecognised tax losses now recouped
Entertainment
Sundry items
Income tax expense
(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)
FY2017
$’000
FY2016
$’000
6,508
237
(19)
6,726
231
6
237
23,370
7,011
(335)
21
29
6,726
7
7,263
700
(100)
7,863
747
(47)
700
26,160
7,848
(185)
24
176
7,863
-
44
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 8. Cash and Cash Equivalents
Consolidated Entity
Cash at bank and in hand
Deposits at call (a)
(a) Classification as Cash Equivalents
FY2017
$’000
11,671
1,254
12,925
FY2016
$’000
6,761
2,367
9,128
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
FY2017
$’000
8,677
(233)
8,444
1,169
9,613
FY2017
$’000
6,781
1,151
128
617
8,677
FY2016
$’000
8,905
(288)
8,617
698
9,315
FY2016
$’000
6,814
1,166
395
530
8,905
45
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon 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 $233,000 (2016: $288,000) has
been raised against the balance of trade receivables for 2017. 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 / (reversal of provision)
Receivables written off during the year as uncollectable
Closing balance
(c) Other Debtors
FY2017
$’000
288
(9)
(46)
233
FY2016
$’000
239
93
(44)
288
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
FY2017
$’000
52,536
2,731
55,267
FY2016
$’000
49,583
2,154
51,737
Inventory Expense
Inventories recognised as expense during the 52 week period ended 25 June 2017 and included in cost of sales of goods amounted to $77,236,031
(2016: $68,292,916).
Write-downs of inventories to net realisable value recognised as an expense during the 52 week period ended 25 June 2017 amounted to $115,004
(2016: $14,696).
46
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 11. Derivative Financial Instruments
Consolidated Entity
Derivatives used for hedging - Net Position
FY2017
$’000
63
FY2016
$’000
(1)
The Group’s risk exposures are provided in Note 2.
Forward Exchange Contracts and Interest Rate Swaps– Cash Flow Hedges
The Group purchases products in US currency. In order to protect against exchange rate movements, the Group has entered into forward exchange contracts
to purchase US dollars 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 25 June 2017 there were no gains or losses (2016: nil ) recognised in profit or loss for the ineffective portion of these hedging
contracts.
12. Other Current Assets
Consolidated Entity
Prepayments and other current assets
FY2017
$’000
1,004
FY2016
$’000
970
47
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 13. Property, Plant and Equipment
Consolidated Entity
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
Year ended 25 June 2017
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
At 25 June 2017
Cost
Accumulated depreciation
Net book amount
Furniture, Fittings
and Equipment
$’000
Vehicles
$’000
17,801
5,187
(90)
(2,248)
20,650
32,149
(11,499)
20,650
20,650
9,277
(22)
(2,676)
27,229
41,394
(14,165)
27,229
1,320
449
(65)
(278)
1,426
2,676
(1,250)
1,426
1,426
614
(108)
(296)
1,636
3,005
(1,369)
1,636
Total
$'000
19,121
5,636
(156)
(2,526)
22,076
34,825
(12,749)
22,076
22,076
9,891
(130)
(2,972)
28,865
44,399
(15,534)
28,865
48
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 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
FY2017
$’000
FY2016
$’000
1,914
753
1,391
70
362
105
624
691
5,910
4,688
1,222
5,910
20
20
20
4,965
(237)
1,155
7
5,890
1,549
770
833
86
381
209
716
585
5,129
4,133
846
4,979
15
15
15
5,481
(700)
184
-
4,965
49
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 15. Intangible Assets
Consolidated Entity
Year ended 26 June 2016
Opening net book amount
Additions
Amortisation charge for the year
Closing net book amount
At 26 June 2016
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 25 June 2017
Opening net book amount
Additions
Amortisation charge for the year
Closing net book amount
At 25 June 2017
Cost
Accumulated amortisation and impairment
Net book amount
Goodwill
$’000
Patents, Trademarks
and Other Rights
$’000
4,805
998
-
5,803
5,803
-
5,803
5,803
4,300
-
10,102
10,102
-
10,102
280
-
(20)
260
500
(240)
260
260
-
(20)
240
500
(260)
240
Total
$’000
5,085
998
(20)
6,063
6,303
(240)
6,063
6,063
4,300
(20)
10,342
10,602
(260)
10,342
50
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 (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
2017
%
64.0
2016
%
64.0
2017
%
3.0
2016
%
3.0
2017
%
11.0
2016
%
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
FY2017
$’000
9,011
2,865
5,611
2,079
716
20,282
FY2016
$’000
6,628
2,377
4,141
2,388
637
16,171
(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 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 17. Current Borrowings
Consolidated Entity
Secured
Inventory finance (a)
Multi currency finance (b)
Hire purchase liability (c)
FY2017
$’000
22,503
744
681
23,928
FY2016
$’000
19,834
-
1,105
20,939
(a) Inventory Finance
The Group utilises inventory finance facilities to fund inventory.
(b) Multi Currency Finance
The Group utilises multi currency finance facilities to fund inventory purchases for international operations.
(c) Hire Purchase Liability
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
FY2017
$’000
4,993
1,300
135
6,428
FY2016
$’000
3,990
1,137
110
5,237
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
FY2017
$’000
3,647
FY2016
$’000
3,237
52
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 (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 $130,000 (2016: $113,000) higher or lower.
Movement in Warranty Provision
Consolidated Entity
Carrying amount at the start of the year
Charged/(credited) to profit or loss - amount incurred and charged
Carrying amount at end of period
(c) Other Provisions
Provision is made for the fringe benefit tax payable at the end of the reporting period.
Movements in Other Provisions
Consolidated Entity
Carrying amount at the start of the year
Charged/(credited) to profit or loss - amount incurred and charged
Amounts used during the year
Carrying amount at end of period
19. Current Tax Liabilities
Consolidated Entity
Provision for income tax
FY2017
$’000
1,138
163
1,300
FY2017
$’000
110
535
(510)
135
FY2017
$’000
(108)
FY2016
$’000
870
268
1,138
FY2016
$’000
108
505
(503)
110
FY2016
$’000
323
53
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 20. Non Current Borrowings
Consolidated Entity
Secured
Loan facility floating rate (a)
Hire purchase plan (b)
FY2017
$’000
5,800
540
6,340
FY2016
$’000
-
1,220
1,220
(a) Loan Facility Floating Rate
The Group utilises floating rate loan facilities to fund business acquisitions.
(b) Hire Purchase Plan
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.
Secured Liabilities and Asset Security
The Group’s liabilities are secured by general security agreements and deed of cross guarantee and indemnity over certain entities within the Group. Under
the letter of offer the security arrangements cover entities that generate a minimum 85% EBITDA and hold a minimum 85% total assets.
Compliance with Covenants
The Group has complied with the financial covenants of its borrowing facilities during the 52 weeks ended 25 June 2017 and the 52 weeks ended
26 June 2016.
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 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 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
FY2017
$’000
2,068
913
2,981
FY2016
$’000
2,027
913
2,940
FY2017
FY2016
215,262,753
215,157,117
FY2017
$’000
62,735
135
62,870
FY2016
$’000
62,647
88
62,735
Consolidated Entity
FY2017
FY2016
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
215,157,117
215,075,927
105,636
81,190
215,262,753
215,157,117
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 total equity.
55
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon 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
FY2017
$’000
63
210
434
(43,672)
(42,965)
(1)
64
63
115
95
210
454
(20)
434
FY2016
$’000
(1)
115
454
(43,672)
(43,105)
299
(300)
(1)
97
17
115
429
25
454
(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
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.
• the grant date fair value of shares issued to employees
56
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 Consolidated Entity
(b) Retained earnings
Movements in retained earnings were as follows:
Opening balance
Net profit for the period
Dividends paid
24. Dividends
(a) Ordinary Shares
Consolidated Entity
Final dividend for year ended 26 June 2016 of 2.4 cents (2016 - 2.4 cents) per fully paid share
Interim dividend for year ended 25 June 2017 of 2.35 cents (2016 – 2.3 cents) per full paid share
Total dividends paid
(b) Dividends Not Recognized At The End Of The Reporting Period
Consolidated Entity
FY2017
$’000
FY2016
$’000
37,793
16,644
(10,224)
44,213
FY2017
$’000
5,166
5,058
10,224
FY2017
$’000
29,606
18,298
(10,111)
37,793
FY2016
$’000
5,163
4,948
10,111
FY2016
$’000
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 (2016 - 2.4 cents), fully
franked based on tax paid at 30%. The proposed dividend is to be paid out of retained earnings
at 25 June 2017, but not recognised as at liability at year end.
5,168
5,166
(c) Franked Dividends
The franked portions of the final dividends recommended after 25 June 2017 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 25 June 2017.
Consolidated Entity
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
(2016 - 30.0%)
FY2017
$’000
30,080
FY2016
$’000
28,279
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.
57
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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
FY2017
$
FY2016
$
1,218,274
1,174,746
95,860
30,775
137,304
201,178
95,091
67,948
234,702
35,069
1,683,391
1,607,556
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 40% of the annual STI in cash and 60% in the form of performance rights and
options to ordinary shares of Beacon Lighting Group Limited for the year ended 25 June 2017.
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 26 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.
Options were granted on 18 August 2016. 40% vest on 18 August 2017, 30% vest on 18 August 2018 and 30% vest on 18 August 2019, 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.
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
FY2017
23,603
$1.36
FY2017
33,087
$1.36
FY2016
22,107
$1.97
FY2016
94,746
$1.29
(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.
58
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 The model inputs for the performance rights granted during the year ended 25 June 2017 included:
Exercise price
Grant date
Share Price at grant date
Expected dividend yield
FY2017
$0.00
FY2016
$0.00
18 August 2016
20 August 2015
$1.62
3.45%
$2.10
2.0%
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
FY2017
$0.00
FY2016
$0.00
18 August 2016
24 June 2016
$1.62
3.45%
$1.29
3.64%
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
FY2017
$’000
223
FY2016
$’000
105
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
FY2017
FY2016
7.73
7.73
8.51
8.50
215,224,437
215,110,924
215,283,871
215,180,919
59
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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
FY2017
$
FY2016
$
229,100
207,300
19,200
10,529
258,829
23,155
101,680
332,135
There were no significant or material contingent liabilities including legal claims at 25 June 2017 or 26 June 2016.
30. Commitments
(a) Non-Cancellable Operating Leases: Lessee
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
FY2017
$’000
20,975
59,886
18,899
99,760
FY2016
$’000
17,627
47,868
10,246
75,741
The Group leases various offices, warehouses and retail stores under non-cancellable operating leases expiring within one to seven years. The leases have
varying terms, with rent payable monthly in advance. Various options exist to renew the leases at expiry for an additional term. On renewal, the terms of the
leases are renegotiated.
(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)
FY2017
$’000
FY2016
$’000
720
567
1,287
(66)
1,221
681
540
1,221
1,197
1,287
2,484
(159)
2,325
1,105
1,220
2,325
(c) Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is $1.2m (2016: $1.2m).
60
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 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
FY2017
$
FY2016
$
Purchases of goods and supply of services from other related parties
58,196
3,227
Other transactions
Income received from other related parties
Rent paid to other related parties
61,707
1,553,818
36,493
1,455,881
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 $977,028 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 2021
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
$224,944 per annum increasing by 3% annually. The lease expires in 2024
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
$88,000 per annum increasing by CPI annually. The lease expires in 2019
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 25 June 2017 Carbonetix Pty Ltd owed the Group $73,610 (2016:
$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.
61
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 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
2017 %
2016 %
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
Masson Manufacturing Pty Ltd (formerly Beacon
Solar Pty Ltd)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Light Source Solutions New Zealand Limited
New Zealand
Beacon Lighting Europe GmbH
Beacon Lighting Corporation USA Inc.
Beacon Lighting America Inc.
Light Source Solutions Limited
Beacon International Limited
Beacon Lighting International
Fanaway International Trading Limited (deregistered
26 May 2017)
Germany
United States of
America
United States of
America
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
A fully franked dividend of $5,167,513 was declared on August 23, 2017.
Ordinary
Ordinary
Ordinary
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
100
100
100
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.
62
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 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
FY2017
$’000
16,644
3,170
29
20
223
106
(423)
(3,531)
(198)
(32)
4,126
(431)
1,232
20,935
FY2017
$’000
-
FY2016
$’000
18,299
2,526
78
20
105
(20)
(2,298)
(7,081)
516
(274)
(128)
(2,249)
1,074
10,568
FY2016
$’000
1,077
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.
63
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 37. Business Combinations
The Company acquired four franchise stores (12 January 2017), three Lights for You stores (26 May 2017), the Masson for Light store (1 August
2016), the GE Street Light distribution business (23 February 2017) and Masson Manufacturing (18 January 2017) during FY17 with a total purchase
consideration of: $6,025,265. The acquisitions are expected to increase the Group’s retail sales and synergies are expected to arise after the Company’s
acquisition of these stores. Revenue of the acquired stores has not been disclosed as it is impracticable to determine.
Details of the purchase consideration, the net assets acquired and the resulting goodwill are as follows:
Consolidated Entity
Purchase consideration
Cash
Total purchase consideration
Assets or liabilities acquired:
Inventories
Fixtures and fittings
Payables
Deferred tax assets
Total net identifiable assets acquired and liabilities assumed
Purchase consideration
Less: Identifiable assets acquired
Goodwill
Total $’000
6,025
6,025
2,260
726
(2,416)
1,155
1,725
6,025
1,725
4,300
The goodwill is attributable to the retail stores purchased, strong profitability in trading and synergies expected to arise after the Company’s acquisition
of these stores.
64
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017
38. Parent Entity Financial Information
(a) Summary Financial Information
The individual financial report for the parent entity show the following aggregate amounts:
Beacon Lighting Group Limited
FY2017
$’000
FY2016
$’000
Balance sheet
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
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 25 June 2017 or 26 June 2016.
21,977
88,583
110,560
1,406
22
1,428
15,411
88,604
104,015
1,397
15
1,412
109,132
102,603
87,187
191
21,754
109,132
1,404
1,404
87,052
(23)
15,574
102,603
1,653
1,653
65
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesNOTES TO THE FINANCIAL STATEMENTS 39. 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 ASIC Corporations Instrument 2016/914 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 25 June 2017 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
FY2017
$’000
25,770
(3,888)
21,882
(6,591)
15,291
169
(51)
118
FY2016
$’000
29,041
(3,073)
25,968
(7,816)
18,152
44
(13)
31
Total comprehensive income for the period attributable to the members of the
closed Group
15,409
18,183
66
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 CONSOLIDATED BALANCE SHEET OF THE CLOSED GROUP
Beacon Lighting Group Limited and Beacon Lighting Corporation Pty Ltd
FY2017
$’000
FY2016
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax asset
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
Borrowings
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
926
457
148
16
51,996
53,543
5,817
70,633
76,450
129,993
590
744
20
673
-
2,027
2,025
2,025
4,052
125,941
62,864
191
62,886
125,941
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
67
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon 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 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 26 June 2016
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 25 June 2017
Contributed
equity
$’000
62,642
Reserves
$’000
(71)
-
-
-
88
-
-
88
62,730
62,730
-
-
-
134
-
-
134
62,864
-
31
31
-
17
-
17
(23)
(23)
-
118
118
-
95
-
95
191
Retained
earnings
$’000
49,779
18,152
18,152
-
-
(10,111)
(10,111)
57,820
57,820
15,291
15,291
-
-
(10,224)
(10,224)
62,886
Total equity
$’000
112,350
18,152
31
18,183
88
17
(10,111)
(10,006)
120,527
120,527
15,291
118
15,409
134
95
(10,224)
(9,995)
125,941
68
NOTES TO THE FINANCIAL STATEMENTSFor the 52 weeks ended 25 June 2017 and the 52 weeks ended 26 June 2016Beacon Lighting Group and its controlled entitiesBEACON LIGHTING GROUP ANNUAL REPORT 2017 Directors’ Declaration
In the opinion of the Directors:
(a) the Financial Statements, notes and the additional disclosures set out on pages 29 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 25 June 2017 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 39 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 39,
(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, 23 August 2017
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 2017 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEACON LIGHTING GROUP LIMITED
71
INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEACON LIGHTING GROUP LIMITED
72
BEACON LIGHTING GROUP ANNUAL REPORT 2017 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEACON LIGHTING GROUP LIMITED
73
INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BEACON LIGHTING GROUP LIMITED
74
BEACON LIGHTING GROUP ANNUAL REPORT 2017 76
BEACON LIGHTING GROUP ANNUAL REPORT 2017 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 14 July 2017, the distribution of shareholdings
was as follows:
Size of Shareholding
Number of
Shareholders
At 14 July 2017, there were 1,549 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 14 July 2017:
1 - 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
Over 100,000
Total number of
shareholders
Holdings of less than a
marketable parcel
178
414
340
577
40
1549
-
(b) Substantial Shareholdings
The number of shares held by the substantial
shareholders listed in the Company’s register of
substantial shareholders as at 14 July 2017 were:
Number of
Shares
% Held
118,752,739
55.15%
Shareholder
Heystead
Nominees Pty
Ltd (including
Robinson
Family
members)
Rank
Name
Number
of Shares
%
Holding
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Heystead Nominees Proprietary Limited
118,250,000
54.92%
Hsbc Custody Nominees (Australia) Limited
39,009,111
18.12%
Citicorp Nominees Pty Limited
11,482,927
5.33%
J P Morgan Nominees Australia Limited
6,570,965
3.05%
National Nominees Limited
5,103,029
2.37%
Hsbc Custody Nominees (Australia) Limited
2,195,143
1.02%
Mirrabooka Investments Limited
2,000,000
0.93%
Amcil Limited
1,624,141
0.75%
Reliable Business Co Ltd
1,363,636
0.63%
Kja Holdings Pty Ltd
1,092,993
0.51%
Bond Street Custodians Limited
Truebell Capital Pty Ltd
Wask Management Pty Ltd
Dr David John Ritchie + Dr Gillian Joan Ritchie
867,314
0.40%
700,000
0.33%
510,748
0.24%
350,000
0.16%
Bnp Paribas Noms Pty Ltd
343,636
0.16%
Mr N Osborne
Mrs Ellen Jane Gray
Invia Custodian Pty Limited
Adrian Hugh Kelly + Philippa June Kelly
Mr William Patrick Howey + Mrs Sarah Elizabeth
Howey
300,000
0.14%
268,727
0.12%
268,379
0.12%
244,000
0.11%
217,227
0.10%
Top 20 holders of issued capital
192,761,976
89.51%
Total remaining holders balance
22,551,059
10.49%
Total shareholders
215,313,035
100.00%
77
SHAREHOLDERS’ INFORMATION LEGAL ADVISORS
Baker & McKenzie
Level 19
181 William Street
Melbourne
Victoria
AUDITORS
PricewaterhouseCoopers
2 Riverside Quay
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
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.lightsourcesolutions.com.au
www.lightsourcesolutions.com.nz
www.fanaway.com
www.lucciair.com
www.lucciair.com
www.massonforlight.com.au
www.beaconlighting.us
www.beaconlighting.eu
78
BEACON LIGHTING GROUP ANNUAL REPORT 2017 79
Store Locations
VIC
Abbotsford
250 Hoddle St
Ballarat
Wendouree
Homemaker Centre
333 Gillies St
Balwyn North
304 Doncaster Rd
Bayswater
216 Canterbury Rd
Bayswater Nth
Bendigo
285 High St
Kangaroo Flat
Burwood
110 Burwood Hwy
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
Springvale
IKEA Homemaker Centre
917 Princes Hwy
80
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
Brookvale
577-579 Pittwater Rd
Carlton
367 Princes Hwy
Campbelltown
Homebase
24 Blaxland Rd
Castle Hill
Home Hub Hills
Cnr Victoria & Hudson Ave
Crossroads
Homemaker Centre
Parkers Farm Place
Casula
Crows Nest
118 Falcon St
Gosford West
Hometown
356 Manns Rd
Hornsby
Cnr Pacific Hwy
& Yardley Ave
Waitara
Killara
694 Pacific Hwy
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
Cannington
21 William St
Clarkson
Ocean Keys
Homemaker Centre
61 Key Largo Drv
Claremont
201-207 Stirling Hwy
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
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
Northlakes
Primewest Northlakes
Cnr Northlakes Drv
Mason St
& Stapylton St
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
BEACON LIGHTING GROUP ANNUAL REPORT 2017 www.beaconlighting.com.au