2014
BSA Limited
Annual Report
One of the Riser No. 5 pipework modules
being lifted into position prior to installation
at the new Royal Adelaide Hospital Project.
CONTENTS
Triple ‘M’ Mechanical NSW completed the $20M mechanical
installation at the Park Lane project in late June 2014.
Comprising of three buildings with a total of 805 apartments,
Park Lane was part of the redevelopment of the old Carlton
United Brewery site in Sydney’s inner city suburb of Ultimo.
4 —
Chairman’s Report
6 —
Managing Director’s Report
14 —
Directors’ Report
18 —
Remuneration Report
29 —
Corporate Governance Statement
42 —
Auditor’s Independence Declaration
43 —
Financial Report
103 —
Directors’ Declaration
104 —
Independent Auditor’s Report
106 —
Shareholder Information
108 —
Corporate Directory
BSA LIMITED ANNUAL REPORT 2014
3
CHAIRMAN’S REPORT
Entrance foyer for the new Swinburne
University Advanced Manufacturing
Centre building in Melbourne, Victoria.
KEY
HIGHLIGHTS
$492 million
Revenue
$10.7 million
EBITDA loss
$54.8 million
Net loss after tax
4
BSA LIMITED ANNUAL REPORT 2014
Ross Johnston
CHAIRMAN
For BSA Limited (BSA), 2014 presented a year
of challenges and opportunities. Whilst we have
experienced significant challenges in each of
our markets, and announced a number of write
downs and provisions in our results, we have
taken the opportunity to implement a number of
key changes, which are now bearing fruit. We are
seeing the business improve and we anticipate
further improvements in the coming months. This
expectation is bolstered by a healthy Technical
Design and Construction Projects (TDCP) Forward
Order Book of $250 million along with Technical
Maintenance Services (TMS) and Technical Field
Force Solutions (TFFS) ongoing annuity based
contracts of $250 million per annum.
BSA has built a strong forward
workload despite the underlying
market challenges.
Within the 2014 financial year, BSA appointed a new Managing
Director and Chief Executive Officer (CEO), Nicholas Yates, and a new
Chief Financial Officer (CFO), Nick Benson. The Board is confident
that this new, strengthened Executive team will be able to lead the
Group through the next phase of development.
Technical Field Force Solutions (TFFS) successfully mobilised the
extended Foxtel/Austar contract into regional areas of Australia and
has sourced additional business with Optus, via a three year contract
to provide further installation and maintenance services for this
long-standing customer of BSA’s heritage business.
Nicholas Yates has a wealth of construction and contracting
experience and has been charged with a mandate to assess all
business operations, improve operational review and controls,
identify areas across the Company where operating expenses can be
reduced and increase the focus on cross-business-unit and business
to business promotion.
Nick Benson is an experienced CFO, with a strong construction
and contracting background. Nick has initially been focused on
improving operational controls and processes, particularly across
contract management and financial areas of the business as well as
enhancing working capital management and reducing net debt.
A detailed review of our results is provided within the Managing
Director’s report; however the key highlights are as follows:
•
•
•
•
•
•
•
Revenue $492 million (2013: $474 million);
EBITDA $10.7 million loss (2013: $12.8 million profit);
Net loss after tax $54.8 million (2013: $3.8 million net profit);
Non-cash goodwill impairment $40.0 million (2013: nil);
Operating cash inflow $5.6 million (2013: $16.5 million outflow);
Basic loss per share of 23.97 cents (2013: earnings per share
of 1.64 cents);
Net debt reduced by $13.9 million in the second half, to
$18.8 million (2013: $20.5 million); and
•
Nil final dividend was declared.
It should be highlighted that our full year results are somewhat
skewed by the provisions and write downs taken primarily in the
first half and $40.0 million non-cash goodwill impairment in the
year. Detailed commentary of our second half results is outlined
within the Managing Director’s report.
Technical Design and Construction Projects (TDCP) has continued
works on a number of major projects, including the new Royal
Adelaide Hospital and the Charles Perkins Centre in Sydney. Whilst
the TDCP full year results have been affected by provisions and
write downs announced mainly in the first half, legacy contract
issues are now largely coming to an end and stronger project
commercial controls have been implemented.
Now in its third year as a stand-alone Business Unit, Technical
Maintenance Services (TMS) has been awarded a number of notable
maintenance contracts across the retail, education and health
markets, including Harvey Norman and Monash University.
BSA’s continued investment in workplace health and safety has been
rewarded with significant reductions in all reportable incidents
across the Group, and BSA continues to track towards best practice
in this key area.
The Board has resolved not to pay a final dividend for FY14. Our
decision to pay a dividend is made in every period and this will be
reviewed in FY15.
BSA has been fortunate to enjoy a strong relationship with our
financiers, and this has enabled us to navigate through issues
that have arisen throughout 2014. We look forward to this
continued support as BSA moves forward through our next period
of development.
I would like to thank my fellow Directors for their contribution to
BSA and for their support during the year.
Despite the considerable challenges faced throughout FY14, our
staff and Executive team have again shown their commitment to our
customers and shareholders. On behalf of the Board, thank you.
Ross Johnston
Chairman
22 September 2014
BSA LIMITED ANNUAL REPORT 2014
5
MANAGING DIRECTOR’S REPORT
Construction activity at the new Royal Adelaide Hospital,
looking from west to east along Port Road.
Nicholas Yates
Managing Director and
Chief Executive Officer
OPERATIONAL AND
FINANCIAL HIGHLIGHTS AND OUTLOOK
Despite the difficult conditions experienced across all of the
markets in which BSA operates, BSA’s revenue increased to $492
million (2013:$474 million), and the Group has managed to build
a strong forward workload in all Business Units for FY15 and
future years.
Although the revenue increased in the year, the loss before interest,
taxes, impairment, depreciation and amortisation (EBITDA) was $10.7
million (2013: profit $12.8 million) and the net loss after tax for the
year was $54.8 million (2013: profit $3.8 million). This statutory loss
was predominantly due to the non-recurring provisions and project
profit reductions of $24.2 million taken during FY14, relating largely
to completed projects, as well as a non-cash goodwill impairment of
$40.0 million. EBITDA in H2 returned to profit of $3.1 million after
recognising further project provisions and write downs of $3.9 million
relating to projects tendered in prior periods.
Goodwill has been assessed based on value-in-use calculations,
using discounted future cash flows. In light of the performance of
the business over the last 24 months, and considering the current
market capitalisation of BSA, the Board has resolved to write down
the carrying value of goodwill in the three divisions of the business
by a total of $40.0 million. This impairment is non-cash and does not
affect the business fundamentals or the future improving and positive
outlook for FY15 and beyond.
We are pleased to report a reduction in net debt to $18.8 million
(2013: $20.5 million) which includes a second half net debt reduction
of $13.9 million. This significant improvement in cash management
resulted in net operating cash inflows of $5.6 million (2013: cash
outflows of $16.5 million) in the year.
As previously noted, BSA’s full year results for FY14 have been
affected by the write downs, non-recurring provisions and project
profit reductions announced largely as part of our first half results.
The positive results in H2 reflect immediate action taken by
management across all Business Units during the second half to
enhance margins and improve the net debt. Specifically, our second
half EBITDA result was $3.1 million profit (H1: $13.8 million loss)
after one off items of $3.9 million. Net operating cash inflows of
$16.1 million in H2 led to a reduction in net debt of $13.9 million
to $18.8 million in the six months from 31 December 2013.
Strategic operational improvements such as enhanced bid review
processes, embedding of contractual benchmarks, a tightening of
project and contract controls and review mechanisms, along with
on-going Group-wide efficiency and cost reduction initiatives will
continue into 2015 to ensure BSA’s results maintain their current
upward trend.
BSA has continued to enjoy the on-going support of our financiers,
and we have extended key banking facilities with an increased
capacity to match future working capital requirements. We have
extended our term debt facilities to 31 March 2016 and enhanced
flexibility within the current arrangements with the creation of a $17
million multi-option facility ($11 million at 30 June 2014). This facility
includes the previously announced overdraft facility which is on track
for repayment by December 2014.
The key operational improvements, net debt reduction and banking
arrangements outlined have been undertaken with an objective of
providing a stable platform for the future growth and development
for BSA Limited.
The Directors have not declared a final dividend for 2014.
6
BSA LIMITED ANNUAL REPORT 2014
GROWTH
BSA enters FY15 with a strong Forward Order Book of $250 million
(TDCP) and committed annuity based contracts of $250 million
per annum (TMS and TFFS). To ensure we continue to build upon
this committed forward workload pipeline, we have strengthened
existing business development processes to add discipline and
rigour to our extensive market opportunities, including regular
formal marketing and business promotion sessions within each
Business Unit with an initial goal of further defining our target
market areas and identifying key customers and businesses within
those areas.
We have achieved a sound forward workload for Technical Design
and Construction Projects (TDCP) and portfolio diversification within
the business remains a priority. The business has continued to focus
on organic growth, extracting greater earnings, optimising working
capital, and strengthening project controls.
Technical Field Force Solutions extended its metropolitan contract
with Foxtel to 2017, and simultaneously gained a contract to
complete 100% of the regional work following Foxtel’s acquisition
of Austar. With this transition now complete, TFFS has turned its
attention to increasing work orders and platforms with existing
customers, and continuing research into new market opportunities.
Technical Maintenance Services (TMS) has emerged as one of
Australia’s leading Heating, Ventilation, Air Conditioning (HVAC) and
Fire services maintenance businesses, and is now a major provider
to Tier 1 customers such as Harvey Norman, Monash University and
CBRE. In a highly cost competitive market, this Business Unit has
focussed on differentiation through customer value adding benefits
such as online access to service control and asset management
systems, and we see these features as vital to future success and
client satisfaction.
NSW OFFICE OF STATE REVENUE (OSR)
BSA has previously advised the market about a possible payroll-tax
related liability with the NSW Office of State Revenue (OSR). BSA has
continued, along with our legal representatives, to constructively work
with the OSR to ensure an equitable and timely conclusion to this
matter. BSA has a provision in its FY14 accounts of $2.0 million (FY13
$2.0 million) and at this time there is no further information that
would suggest this provision should be changed.
HEALTH, SAFETY, SECURITY, ENVIRONMENT
AND QUALITY
BSA’s ongoing commitment to workplace health and safety has
delivered substantial improvements across all key indicators over the
last three years including a reduction of 48% in Lost Time Incident
Frequency Rate (LTIFR), a 50% reduction in Total Reportable Incident
Frequency Rate (TRIFR) and 78% reduction in our Lost Days Frequency
Rate (LDFR). BSA’s commitment to delivering robust improvement
programs provides a safer workplace for our people.
Underpinning the work, health and safety culture as well as
operational improvement programs has been the development and
implementation of the BSA Integrated Management System (IMS)
which has focused on enhancing consistency and compliance across
the Group. The IMS achieved third party accreditation for Safety,
Quality and Environment in March 2014.
BSA’s unwavering drive to ensure that our staff arrive home safely
every night will continue in FY15, and we look forward to seeing
further reductions across all of our key indicators in this vital field.
COMMUNITY SUPPORT
During FY14, BSA, its subsidiaries and its employees, contributed
to a number of charity fundraisers including the Rural Fire Service,
Everyday Hero, Adopt a Family appeal, the South Newcastle Rugby
League Football Club “Sleepy’s Day” and the World’s Greatest Shave.
We also continued our longstanding partnership with Youngcare,
a not-for-profit foundation that provides age appropriate
accommodation to young Australians with high-care needs.
Youngcare assists young people to find supported accommodation
outside aged care and nursing home environments. The recent
construction of Youngcare’s new Sydney apartments (located in
Auburn) will deliver self-contained apartments for young people
with severe and profound disabilities.
GENDER DIVERSITY
BSA is committed to providing a workplace for all employees that
is free from discrimination, harassment and bullying. BSA provides
a working environment that promotes diversity and encourages all
employees to reach their potential.
BSA has a commitment to diversity that ensures the elimination
of discrimination against people based on gender, ethnic group,
political or religious affiliation or disabilities. The over-arching
principle applied at BSA is that the most suitable person for a job is
employed where there is an existing vacancy.
Current staff summary:
Percentage of Employment
Board
Senior Executive
Senior Management
Managers
Professionals
Technicians and Trades
Administration
Labourers
Others
Female
0%
9%
0%
6%
7%
2%
62%
4%
12%
Male
100%
91%
100%
94%
93%
98%
38%
96%
88%
BSA is also committed to recruiting, training and retaining talented
future leaders, with apprentice and trainee employees making up
8.3% of our workforce.
BSA LIMITED ANNUAL REPORT 2014
7
MANAGING DIRECTOR’S REPORT
One of the Riser No. 6 pipework modules being
positioned in the riser shaft prior to installation
at the new Royal Adelaide Hospital Project.
TECHNICAL DESIGN AND CONSTRUCTION PROJECTS (TDCP)
Technical Design and Construction Projects
(TDCP), including Group Companies BSA, Allstaff
Airconditioning and Triple ‘M’, continue to be major
providers of heating, ventilation, air conditioning
(HVAC) and Fire Protection Services in all mainland
states and territories, despite operating in a sometimes
challenging market that has seen the failure of a
number of our competitors.
The TDCP EBITDA result was impacted by the take up of non-
recurring project provisions and write downs in the year. The projects
at the heart of these issues are largely completed, and enhanced
bid gate processes, embedding of corporate contractual benchmarks
along with additional project controls, strengthened project delivery
processes and formal reviews have been put in place in order to
protect the Business Unit from experiencing these issues in the future.
The 2014 financial year saw the resolution of a number of
outstanding claims for variations and modifications on existing TDCP
projects. As outlined above, corporate contractual benchmarks have
been embedded within the Business Unit. This ensures that any
contract that falls outside these benchmarks or standard clauses will
be subject to rigorous negotiation and risk mitigation strategies.
Our offering of a complete in-house facility for design, engineering,
fabrication, installation, commissioning and service, and our work
with specialist subcontractors, has allowed the Group to compete on
a wide variety of projects and has resulted in TDCP being awarded
some of the largest HVAC and Fire Protection contracts in Australia.
FY14 has seen the TDCP Business Unit undertake works on
landmark projects including:
•
•
•
New Royal Adelaide Hospital (completion due April 2016)
Indooroopilly Shopping Centre in Queensland (completed
July 2014)
Park Lane (mixed use residential and retail towers) in
Sydney (completed April 2014)
•
Charles Perkins Centre in Sydney (Mechanical and Fire)
(completed February 2014)
•
Fiona Stanley Hospital in Perth (completed December 2013)
TDCP commences FY15 with a healthy forward order book of $250
million and have recently been awarded the following projects:
• Wagga Wagga Hospital
•
•
•
•
Dubbo Hospital
5 Martin Place in Sydney
Royal Victorian Eye and Ear Hospital Stage 2 works
Eastland Shopping Centre in Melbourne
• Werribee Shopping Centre in Victoria
•
•
•
•
•
IKEA Marsden Park in Sydney
Pacific Fair Redevelopment on the Gold Coast
Old Treasury Building in Perth
Barangaroo in Sydney (Fire Services JV with Premier Fire)
Kings Square 2 and 3 in Perth
The new Royal Adelaide Hospital (nRAH) is Australia’s first fully
integrated 6D Building Information Modeling (BIM) project. The
BSA scope as the Tier One Mechanical Services Contractor includes
the documentation and construction of Mechanical, Infrastructure
and Essential Services, and being the lead BIM Coordinator for all
services within a BIM MEP Aus national standard environment.
The nRAH project has a number of significant and as yet unapproved
variations which are the subject of ongoing negotiations. They will
be submitted for payment in the normal course of carrying out the
subcontract. Despite this, work on nRAH is progressing well and the
working relationship is excellent.
With the Triple ‘M’ Companies celebrating 20 years in business
in 2014 and Allstaff achieving 40 years in Victoria in 2015, our
business model strategy has seen longevity and continued growth
within a diverse market. This can be directly attributed to our loyal
and dedicated workforce.
8
BSA LIMITED ANNUAL REPORT 2014
One of the 64 Level One Mechanical
Services Ring Main modules arriving on site
at the new Royal Adelaide Hospital Project.
TDCP
$234.4 million
Revenue
[2013: $249.7 million]
$12.4 million
EBIDTA loss
[2013: $6.0 million profit]
NB: Excludes Corporate Recharges and impairment
BSA LIMITED ANNUAL REPORT 2014
9
MANAGING DIRECTOR’S REPORT
The TFFS contact centre continue to
provide end-to-end services to our
field workforce, teams and customers.
TECHNICAL FIELD FORCE SOLUTIONS (TFFS)
The Technical Field Force Solutions Business Unit
had another successful year in 2014; completing
approximately 600,000 installations, upgrades
and service calls across Australia, as the Business
Unit continues to position itself as a leader in high
volume ticket of work order management.
TFFS had a positive EBITDA of $3.6 million which was affected by
$1.5 million mobilisation costs of key new contracts which extend to
2017. As reported in last year’s Annual Report, as a result of Foxtel’s
acquisition of Austar, and following a formal tender process, TFFS
was awarded a contract to complete 100% of all regional works
(along with an extension of our metropolitan works through to
2017). In November 2013, TFFS successfully completed its field work
force transition into regional Australia. This move has increased
the Business Unit’s footprint across Australia in its provision of
installation and maintenance services to Foxtel.
In December 2013, after 15 years, our long term relationship with
one of Australia’s largest telecommunications providers, Optus,
grew even stronger. TFFS was awarded a contract with Optus to
deliver Hybrid Fibre Coax (HFC), Unconditioned Local Loop (ULL)
and National Broadband Network (NBN) Installation, Maintenance
and Service Assurance services for Consumer, Wholesale and Optus
Business customers for a term of 3 years.
In February 2014, TFFS successfully completed our contract with the
Department of Broadband, Communication and the Digital Economy
to provide services to convert customers under the Household
Assistance Scheme (HAS) and Satellite Subsidy Scheme (SSS) to
digital television. The HAS provided practical and technical in- home
assistance to vulnerable Australians who may otherwise have
difficulty converting to digital television.
BSA’s Registered Training Organisation, BSA Advanced Learning
(BAL), continues to grow, providing training to over 2,000 students
this financial year. A new General Manager with extensive education
organisation experience has been appointed to this expanding
business. Over the next 12 months, focus will shift to growing and
diversifying revenue streams for this business, with an emphasis on
online training courses.
BSA was represented by BAL on the Western Sydney Vocational
Training Committee and had the opportunity to provide a
representative to sit on selection panels for Apprentice and Trainee
of the Year for Western Sydney.
BAL Management has also assisted the Industry Skills Council in the
development of competencies in telecommunications, specifically
for NBN works and has participated in workshops conducted for the
amalgamation of the Telecommunications and IT Training Packages.
TFFS has invested significant time and resources into a number of
information technology (IT) development based initiatives, which
have resulted in improvements to operational efficiency. These
initiatives include:
•
•
•
Contracting Company On-Boarding/Compliance Portal
Optus Project Infinity System - to manage Optus
workflows and processes
Project Growth – to allow business efficiencies with
contracting companies
•
Contracting Company Work Management System
10 BSA LIMITED ANNUAL REPORT 2014
The Optus Management team filming an
informative video as part of their tender for
the Optus contract.
TFFS
$158.9 million
Revenue
[2013: $134.8 million]
$3.6 million
EBIDTA
[2013: $5.1 million]
NB: Excludes Corporate Recharges and impairment
BSA LIMITED ANNUAL REPORT 2014
11
MANAGING DIRECTOR’S REPORT
TECHNICAL MAINTENANCE SERVICES (TMS)
LOOKING FORWARD
Technical Maintenance Services increased revenue
by 9.7% to $98.5 million (2013: $89.8 million)
in 2014. This increase was achieved despite a
downturn of activity in our minor projects operations,
particularly in the resources sector.
TMS had a positive EBITDA of $3.1 million despite being affected by a
number of project write downs and provisions in FY14 of $1.5 million.
TMS has now completed these legacy projects and has strengthened
the controls and procedures around project management.
During FY14 TMS was awarded a number of contracts, including:
•
Harvey Norman National Multi-Services
• Monash University Maintenance Contracts
• Maintenance Services at Gold Coast University Hospital
On the back of these contract wins TMS has also been expanding our
national capabilities in both Fire and Electrical Maintenance Services.
Whilst our maintenance work bid pipeline is increasing, price
competition remains tight, so we have focused on improving value
adding solutions for our clients – which we see as key to the success
of future TMS bids. We have continued to enhance our mobility
systems by expanding features such as customer portal reporting,
detailed asset level reporting, real-time service records, dashboard
reporting, work order management and data capture from the field.
Customer feedback about our mobility systems is very positive
and this value-add solution provides TMS with a significant
market advantage.
IT system activities undertaken within 2014 include:
•
•
•
Automating and integrating between field technician and
customer systems, and BSA Accounting systems, which
has increased efficiencies by automating previously
manual processes
Integration of technician timesheets directly into BSA
Accounting systems
Transfer of service call allocation and asset management
information directly to and from technician iPads
•
Client driven customised call management integration
In response to the FY14 results, TMS management have
undertaken a full operational efficiency review. This review,
which covered all areas of the TMS Business Unit, aimed to refine
business processes, enhance productivity, increase the focus on
building a recurring revenue base, and expand services across
Fire and Electrical Maintenance markets. A range of initiatives
identified throughout this review have been undertaken and will
continue throughout 2015. These include initiatives to optimise
overhead structures, labour productivity, reduce travel time and
focus on less working capital intensive projects.
12
BSA LIMITED ANNUAL REPORT 2014
As the new Managing Director and Chief Executive Officer,
(appointed in March 2014), I have commenced a full review of all
operations for each Business Unit and our Corporate functions
with a focus on reducing operating expenses and increasing
operational efficiencies across the board. This in-depth Group-wide
process will cover all discretionary spend areas, office and facility
accommodation, head count and remuneration. It will also include
further development in areas where we can improve efficiency by
automating manual processes, refining reporting requirements and
optimising productivity.
Encouraging market conditions are leading to emerging untapped
opportunities across all market sectors. The BSA management team
are actioning plans to capitalise on Business Unit capabilities across
these sectors. In addition, a strong focus continues on improving
margins and optimising working capital and cashflows.
Nicholas Yates
Managing Director and
Chief Executive Officer
22 September 2014
DISCLOSING NON-IFRS FINANCIAL INFORMATION
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)
FY14
H1 FY14
H2 FY14
FY13
A$’000
A$’000
A$’000
A$’000
(54,847)
(23,367)
(31,480)
3,763
(Loss)/Profit for
the year from
continuing operations
Add back
Income tax benefit
(6,455)
(5,642)
Finance costs
Interest revenue
Depreciation
Amortisation expense
Impairment of
intangibles
EBITDA
Total Key Project
Provisions and
Write Downs
EBITDA excluding Key
Profit Provisions
2,319
(94)
6,888
1,441
1,098
(69)
3,441
720
40,000
10,000
30,000
(813)
1,221
(25)
3,447
721
(965)
1,932
(357)
7,002
1,440
-
(10,748)
(13,819)
24,222
20,353
3,071
3,869
12,815
-
13,474
6,354
6,940
12,815
Monash University, New Horizons Building.
The central atrium lets light into the
building down through 4 levels.
TMS
$98.5 million
Revenue
[2013: $89.8 million]
$3.1 million
EBIDTA
[2013: $5.5 million]
NB: Excludes Corporate Recharges and impairment
BSA LIMITED ANNUAL REPORT 2014
13
DIRECTORS’ REPORT
THE BOARD OF DIRECTORS PRESENTS ITS REPORT
The Directors of BSA Limited (‘BSA’ or the ‘Company’) present their report on the Company and
its subsidiaries for the financial year end 30 June 2014.
THE BOARD OF DIRECTORS
D - PAUL TEISSEIRE
NON-EXECUTIVE DIRECTOR
Mr Teisseire is a professional independent Non-Executive Director.
He spent over 20 years in private practices as a corporate lawyer
specialising in business and corporate law with a special interest
in corporate governance. He is a Non-Executive Director of Drake
Supermarkets Pty Ltd. Within the last three years, Paul was a Non-
Executive Director of Gunns Limited and Mesbon China Nylon
Limited. Paul was appointed as a Non-Executive Director on 23
March 2005.
E - MARK LOWE
NON-EXECUTIVE DIRECTOR
Mr Lowe was appointed as a Director of BSA on 1 August 2007
upon completion of the acquisition of the Triple ‘M’ Group. Mark
brings a wealth of knowledge to the Company from his 30 years’
experience in the installation and maintenance of Air Conditioning
and Fire Protection Services. He is a former Director of Construction
Information Systems Limited (NATSPEC) and a former National
President of the Air Conditioning Mechanical Contractors Association
of Australia. Following his retirement from executive duties Mark
was appointed a Non-Executive Director on 2 March 2012.
F - MAX COWLEY
NON-EXECUTIVE DIRECTOR
Mr Cowley practised as Principal of Chartered Accounting firm
E M Cowley & Co for 47 years. His years of corporate and financial
experience are extensive. Max is a consultant to WIN Corporation
Pty Ltd, Australia’s largest regional television network and has been
involved with that organisation from its commencement and over
the past 35 years. Max is a Director of a number of private companies.
Having previously served on the Board of BSA from 2 May 2006 until 27
November 2012, Max was reappointed as a Non-Executive Director on
10 April 2014.
G - DANIEL COLLIS
NON-EXECUTIVE DIRECTOR
Mr Collis was appointed to the Board of BSA on 27 November 2012 and
represented Birketu Pty Ltd, BSA’s largest shareholder, until 10th April
2014 when he retired as Non-Executive Director.
H – STEPHEN NASH
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Mr. Nash was appointed as Managing Director and Chief Executive
Officer of BSA on 17th January 2011 and held this position until he
retired on 11th March 2014.
A
E
B
F
C
G
D
H
A - ROSS JOHNSTON
CHAIRMAN (NON-EXECUTIVE)
Mr Johnston is an extensively experienced executive in the
facilities management and building services industries. Ross was
the National General Manager, Property and Facilities and then the
Chief Executive Officer, Spotless Australian Services, the Australian
arm of Spotless Group Limited. Ross worked both internationally
and domestically with Lend Lease for fifteen years. Ross has a focus
on strategic development and brings his skills in building and
repositioning major businesses to BSA. Ross joined the Board on 29
April 2008 and was appointed as Chairman from that date.
B - NICHOLAS YATES
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Mr Yates graduated with a Bachelor of Engineering (Mechanical)
from the University of Sydney and went on to forge an extensive
career in the construction, building services and facilities
management industries. Commencing as a site engineer overseeing
mechanical services installations, Nicholas then progressed through
various management roles within Lend Lease and eventually moved
on to become CEO of APP Corporation Pty Limited, Australia’s
leading Construction Project Management consulting business.
When APP was acquired by Transfield Services, Nicholas moved
into a series of leadership roles within Transfield Services, most
recently Chief Executive Officer, Infrastructure ANZ. Nicholas sits on
the Boards of a number of private companies and was appointed
Managing Director and Chief Executive Officer of BSA Limited on 11
March 2014.
C - MICHAEL GIVONI
NON-EXECUTIVE DIRECTOR
Mr Givoni has had extensive executive experience in the business-to-
business (B2B) areas of commerce. His particular area of expertise is in
Strategy, Business Development and Mergers and Acquisitions. Michael
has held senior executive roles in listed companies including Spotless
Group Ltd. Prior to his executive career, Michael was a partner in a
prominent Melbourne legal practice.
Michael joined BSA as a Non-Executive Director on 23 March 2005. He
holds a number of other Non-Executive Director and Advisory Board
roles in prominent privately owned businesses.
14
BSA LIMITED ANNUAL REPORT 2014
Ground floor level of the central atrium in the Monash
University, New Horizons Building. Glass raking walls
let light into the central laboratories at each level.
DIRECTOR INDEPENDENCE
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Board considers three of BSA’s Directors independent, as defined
under the guidelines of the ASX Corporate Governance Council,
being: Ross Johnston, Paul Teisseire and Michael Givoni.
BSA was not subject to any particular or significant environmental
regulations of the Commonwealth, individual states, or territories,
during the financial year.
CORPORATE GOVERNANCE
BSA continued to follow best practice recommendations as set out
by the ASX Corporate Governance Council. Where the Company has
not followed best practice for any recommendation, explanation is
given in the Corporate Governance section in this annual report.
Further corporate governance information is available on the
Company’s web site at www.bsa.com.au/about-bsa.
In assessing the independence of Directors, the Board follows the
ASX guidelines as set out in the Corporate Governance Statement
within this Annual Report.
PERFORMANCE OF DIRECTORS
In accordance with Principle 2.5 of the ASX Corporate Governance
Principles and Recommendations, the Board conducts a review of
the performance of its Directors and the Board’s function as a whole
each year. The evaluation of Directors is carried out in accordance
with the process established by the Board, led by the chairman of
the Nomination and Remuneration Committee.
COMPANY SECRETARY
The following person held the position of Company Secretary at the
end of the financial year:
Mr Graham Seppelt - Mr Seppelt has had extensive experience as a
contract accountant and in corporate advisory roles. He is currently
Company Secretary for Legend Corporation Limited, Australian
Zircon NL and UXA Resources Limited.
BSA LIMITED ANNUAL REPORT 2014
15
DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
As at 30 June 2014, the following information is provided in relation to Directors:
Director
Special Responsibilities
Ordinary Share
Options
Share Rights
Ross Johnston
Chairman Non-Executive Director
Chairman of Board
Member of Nomination and Remuneration Committee
Member of Audit and Compliance Committee
Nicholas Yates
Executive Director
Managing Director and Chief Executive Officer
Max Cowley
Non-Executive Director
Member of Nomination and Remuneration Committee
Member of Audit and Compliance Committee
Michael Givoni
Non-Executive Director
Chairman of Nomination and Remuneration Committee
Member of Audit and Compliance Committee
Non-Executive Director
Member of Nomination and Remuneration Committee
Chairman of Audit and Compliance Committee
Non-Executive Director
Member of Nomination and Remuneration Committee
Member of Audit and Compliance Committee
Paul Teisseire
Mark Lowe
Stephen Nash
Daniel Collis
1,209,315
Nil
Nil
Nil
Nil
Nil
*63,057,156
Nil
Nil
230,000
Nil
Nil
404,769
Nil
Nil
10,315,403
Nil
Nil
Executive Director (retired 11 March 2014)
Managing Director and Chief Executive Officer (retired 11 March 2014)
Nil
Nil
Nil
Non-Executive Director (retired 10 April 2014)
Member of Nomination and Remuneration Committee
Member of Audit and Compliance Committee
Nil
Nil
Nil
*Shares owned by Birketu Pty Ltd. Mr Max Cowley is the non-related representative of Birketu Pty Ltd.
16 BSA LIMITED ANNUAL REPORT 2014
Communication between management and workers
regarding Workplace Health and Safety continues to
be an important factor to TFFS.
DIRECTORSHIPS HELD IN OTHER LISTED ENTITIES
Period of Appointment
Name of Company
Position Held (Non-Executive or Executive Director)
Paul Teisseire
Appointed March 2008
Resigned 20th July 2012
Appointed September 2007
Resigned 8 November 2012
Gunns Limited
Non-Executive Director and Chairman of the Audit Committee
Mesbon China Nylon Limited
Non-Executive Director
Chairman of the Audit and Compliance Committee
BSA LIMITED ANNUAL REPORT 2014
17
DIRECTORS’ REPORT
REMUNERATION REPORT - AUDITED
Alignment to program participants’ interests:
This remuneration report details the nature and amount of
remuneration for each key management person of BSA Limited.
The Company’s policy for determining the nature and amount of
emoluments of Board members and Senior Executives of
the Company is as follows and is set out under the following
main headings:
•
•
•
•
Rewards capability and experience;
Reflects competitive reward for contribution to growth in
shareholder wealth;
Provides a clear structure for earning rewards; and
Provides recognition for contribution.
The framework provides a mix of fixed and variable pay as well
as a blend of short and long-term incentives. As executives gain
seniority within the Group, the balance of this mix shifts to a higher
proportion of at risk rewards.
The Board has established a Nomination and Remuneration
Committee which provides advice on remuneration and incentive
policies and practices, as well as specific recommendations on
remuneration packages and other terms of employment for
Executive Directors, other Senior Executives and Non-Executive
Directors. The Corporate Governance Statement provides further
information on the role of this committee.
Non-Executive Directors
Fees and payments to Non-Executive Directors reflect the demands
which are made on, and the responsibilities of, the Directors. Non-
Executive Directors’ fees and payments are reviewed annually by
the Board. The Board has also considered the advice of independent
remuneration consultants to ensure Non-Executive Directors’ fees
and payments are appropriate and in line with the market.
The Chairman’s fees are determined independently to the fees
of Non-Executive Directors based on the Director’s experience and
comparative roles in the external market. The Chairman is
not present at any discussions relating to determination of his
own remuneration.
A.
B.
C.
D.
E.
Principles used to determine the nature and amount
of remuneration
Details of remuneration
Service agreements
Cash bonuses
Share-based compensation
The information provided in this remuneration report has been audited
as required by section 308(3C) of the Corporations Act 2001.
A
PRINCIPLES USED TO DETERMINE THE NATURE
AND AMOUNT OF REMUNERATION
The objective of the Group’s executive reward framework is to ensure
reward for performance is competitive and appropriate for the results
delivered. The framework aligns executive reward with achievement
of strategic objectives, the creation of value for shareholders and
conforms to market practice for delivery of the reward. The Board
ensures that the executive reward satisfies the following key criteria
for good reward governance practices:
•
•
•
•
•
Competiveness and reasonableness;
Acceptability to shareholders;
Performance linkage/alignment of executive compensation;
Transparency; and
Capital management
In consultation with external remuneration consultants, the Group
has structured an executive remuneration framework that is
market competitive and complementary to the reward strategy of
the organisation.
Alignment to shareholders’ interests:
•
•
Has economic profit as a core component of plan design;
Focuses on sustained growth in shareholder wealth,
consisting of dividends and growth in share price, and
delivering constant return on assets as well as focusing the
executive on key non-financial drivers of value; and
•
Attracts and retains high calibre executives.
18 BSA LIMITED ANNUAL REPORT 2014
Directors fees
Short-Term Incentives
The current base remuneration for Directors was last reviewed on
26 June 2012. Directors’ fees are inclusive of superannuation and
include the requirement to sit on two or more Board committees for
the duration of their tenure. A Director’s expected time commitment
is between five to ten hours per month. Directors are reimbursed
actual expenses or paid a per diem allowance for attendance at the
monthly meetings.
Non-Executive Directors’ fees are determined within an aggregate
Directors’ fee pool limit, which is periodically recommended
for approval by shareholders. The maximum currently stands at
$600,000 per annum and was last approved by shareholders at the
Annual General Meeting (AGM) on 26 November 2007. The following
fees have applied:
Base fees including superannuation
Chairman
Other Non-Executive Directors
$158,325
$91,560
Retirement allowances for Directors
Non-Executive Directors do not participate in any share or option
incentive plan and there are no retirement schemes or retirement
benefits other than statutory benefits for Non-Executive Directors.
Executive Pay
Executive remuneration packages include a bonus based on a
combination of the Company achieving a pre-determined profit
target and the operational pre-determined target being met. Using
a profit target ensures variable reward is only available when value
has been created for shareholders and when profit is consistent with
the business plan.
Each executive with operational responsibilities has a short-term
incentive (STI) depending on the accountabilities of the role
and impact on organisation and business unit performance. The
maximum target bonus opportunity is 30% of base salary.
For the year ended 30 June 2014, the targets linked to the STI plans
were based on the group and individual business objectives. The
target achievement required performance in reducing operating
cost, increasing revenue and overall increase in EBITDA. The Group
targets are generic across the management team.
The Nomination and Remuneration Committee is responsible
for assessing whether the targets are met. Targets are set at the
beginning of the year and are assessed semi-annually. Short-term
bonus payments are adjusted up or down in line with under or over
achievement against target performance levels. Because short-term
targets cover several operational areas of the business as well
as the overall company target, STI may be paid when operational
targets are achieved although the Company’s overall target may not
be met. The STI target annual payment is reviewed annually.
The executive pay and reward framework has three components:
Options
•
•
•
Base pay and benefits, including superannuation;
No options were exercised during the year ended 30 June 2014.
Short-term performance incentives; and
No amounts are unpaid on any shares issued on the exercise of options.
Long-term incentives through participation in the employee
share scheme, employee option plan and performance
rights plan.
All options have expired as at 30 June 2014.
Employee share scheme
The combination of these components comprises the executive’s
total remuneration.
Base Pay
Base pay is structured as a total employment cost package which
may be delivered as a combination of cash and prescribed non-
financial benefits at the executives’ discretion.
Executives are offered a competitive base pay that comprises the
fixed component of pay and rewards. Base pay for Senior Executives
is reviewed annually to ensure the executive’s pay is competitive
with the market and meets the responsibilities of the position.
An executive’s pay is also reviewed on promotion. There are no
guaranteed base pay increases included in the Senior Executive
terms of employment.
Benefits
Executives receive benefits including allowances.
Retirement benefits
All employees are eligible to participate in the Company’s default
superannuation fund. With the change in legislation as at 1
July 2005, employees can now exercise choice as to where their
superannuation is paid.
A scheme under which shares were issued by the Company to
employees for no cash consideration was ratified by shareholders
at the 2004 AGM. All permanent employees (including Executive
Directors) who were continuously employed by the consolidated
entity for a period of at least one year were eligible to participate in
the scheme. Employees could elect not to participate in the scheme.
Under the scheme, eligible employees were offered $1,000 worth
of fully-paid ordinary shares in BSA Limited in the Year Ended 30
June 2004 for no cash consideration. The market value of shares
issued under the scheme, measured as the weighted average
market price on the day of issue of the shares, was recognised in
the statement of financial position as share capital and as part of
employee benefit costs.
Offers under the scheme are at the discretion of the Company.
No offers were made to Directors of BSA Limited or other key
management personnel of the Group during the year ended 30
June 2014.
BSA LIMITED ANNUAL REPORT 2014
19
DIRECTORS’ REPORT
Executives Securities Loan
Employee Performance Rights Plan
The establishment of the BSA Executive Securities Plan was approved
by shareholders at the 2005 AGM. The plan was established as a
mechanism to provide the Company’s key executives with a direct
equity involvement and incentive in the Company which aligns them
with the shareholders.
The number of securities to be offered and the time at which securities
may be offered from time to time to executives, and the price and terms
of payment shall be determined by the Board in its discretion.
The Board may at such times as it determines invite any executive to be
a member of the plan.
If an executive to whom an invitation has been issued forwards to
the Company a duly completed Loan Application and the Transfer
Documents together with his acceptance, and where appropriate his
Application for Shares, then the Company shall, in accordance with the
terms of the Loan Agreement, lend to the executive such amount as the
executive has applied for in the Loan Application.
The maximum amount of any loan shall be the total subscription price
for the shares applied for.
No interest is payable by the Borrower under the Loan Agreement.
All shares are held in escrow until loans are fully repaid. An executive
shall not sell, mortgage, charge, assign or otherwise dispose of or
encumber any shares before payment or repayment of any amount
outstanding to the Company in respect thereof.
Subject to the above restriction and to the terms of the Loan
Agreement (if any) deemed to be entered into by the executive,
an executive shall from the Date of Allotment, be the absolute
beneficial owner of the shares.
Unless the Directors of the Company otherwise provide in the terms
of any invitation, all Plan Shares shall rank for dividends declared on
or after the Date of Allotment and shall in all respects rank equally
with and have the same rights and entitlements as all other fully paid
ordinary shares of the Company.
Offers under the scheme are at the discretion of the Company. No
offers were made to Directors of BSA Limited or other key management
personnel of the Group during the year ended 30 June 2014.
At the AGM held on 25 November 2008, shareholders approved the
introduction of the BSA Employee Performance Rights Plan.
This incentive plan is designed to increase the motivation of
eligible key staff and to create a stronger link between increasing
shareholder value and employee reward.
To achieve its corporate objectives, the Company needs to attract
and retain its key staff. The Board believes that awards made to
selected eligible employees under the proposed plan will:
•
•
•
•
•
Provide an incentive for the creation of, and focus on,
shareholder wealth;
Enable the Company to recruit and retain the talented people
needed to achieve the Company’s business objectives;
Link the reward of key staff with the achievement of
strategic goals and the performance of the Company;
Align the financial interests of participants in the plan with
those of Company shareholders; and
Ensure the remuneration packages of employees are
consistent with market practice.
As part of the Company’s strategy, the Board wishes to be in a position
to offer rights to acquire shares in the company to selected eligible
employees who, in the opinion of the Board, are able by virtue of their
skill and their application in performing their allocated tasks within
the Company to improve shareholder wealth.
The flexibility of the plan rules will enable the Board to design
grants that best meet the particular circumstances.
The Board is cognisant that long-term equity-based reward for key
staff should be linked to the achievement by the Company of testing
performance hurdles.
Rights granted to certain plan participants in each grant will be at
zero vesting value and will be subject to the following performance
conditions as determined by the Board:
(i)
Service condition of two to three years; or
(ii) The Company’s performance as measured by earnings per
share (EPS), being the EPS for the relevant Measurement
Period as determined by the Board having regard to the
financial statements. Certain growth in EPS for the shares
must be attained in respect of each Measurement Period
and pro-rata in respect of the initial Measurement Period
and service condition of three years.
The Company must achieve these performance conditions before the
rights vest.
20 BSA LIMITED ANNUAL REPORT 2014
B
DETAILS OF REMUNERATION
Details of the remuneration of the Directors, the key management
personnel of the Group (as defined in AASB 124 Related Party
Disclosures) and specified executives of BSA and the BSA Group are
set out in the following tables.
The key management personnel of the Group are the following:
(i)
Chairman - Non-Executive
Ross Johnston
(ii) Executive Directors
Stephen Nash (Resigned 11 March 2014)
Nicholas Yates (Appointed 11 March 2014)
(iii) Non-Executive Directors
Paul Teisseire
Michael Givoni
Max Cowley (Appointed 10 April 2014)
Mark Lowe
Daniel Collis (Resigned 10 April 2014)
(iv) Other key management personnel
Karl Nixon (Chief Financial Officer Resigned 5 July 2013)
Nicholas Benson (Chief Financial Officer
Appointed 1 October 2013)
Once rights have been exercised by an eligible employee (subject
to performance conditions being met), the Company may make non-
refundable contributions to either fund the purchase of a new plan
share, or to acquire on the ASX existing shares and transfer these to
an eligible employee.
The specific terms of a particular grant, including any performance
conditions, will be contained in the invitation and associated
documentation sent to the eligible employee.
A right granted to a participant is not transferable and may not
otherwise be dealt with, except with the Board’s approval, or by
operation of law on death or legal incapacity.
Rights to acquire shares will not be exercisable until the end of the
final measurement period, and until those rights have satisfied all
vesting conditions and all performance hurdles established by the
Board. This is subject to a number of exceptions (including death,
cessation of employment, takeovers and schemes of arrangement).
The rights will have a specified life determined by the Board. All
grants of rights will have a life terminating five (5) years after the
grant date or such other date as determined by the Board.
The Board will prescribe the date when performance under the
hurdle is measured for each tranche.
On or after the end of the final measurement period and provided
any performance hurdle prescribed by the Board has been achieved
and, where applicable, to the extent it has been achieved, the plan
participant may then acquire shares by exercising the rights.
A right lapses if the vesting conditions are not met.
There is a Board policy in relation to the person limiting exposure to
risk in relation to the securities issued as part of the remuneration.
There was no new issue of rights in the current year.
BSA LIMITED ANNUAL REPORT 2014
21
Short-term
Benefits
Post
Employment
Long-term
Benefits
Share-based
payments
Cash, Salary
& Fees
Cash
Bonus
Interest
Unwind
on Loans
Superannuation
Long
Service
Leave
Termination
Benefits
Rights
Rights
Total
Performance
Related
$
$
$
$
$
$
$
%
$
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,095
7,770
7,770
1,405
9,620
6,040
40,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48,652
( 20,637)
194,465
10,692
4,314
-
1,923
( 25,244)
179,451
17,692
5,254
-
119,659
( 36,313)
373,916
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
158,325
91,560
91,770
16,589
115,620
71,178
545,042
595,492
183,521
174,518
260,022
1,758,595
-
-
-
-
-
-
-
-
-
-
DIRECTORS’ REPORT
Key management personnel of the Company and the Group
2014
Name
Non-Executive Directors
Ross Johnston
Paul Teisseire
Michael Givoni
Max Cowley
(Appointed 10 April 2014)
Mark Lowe
Daniel Collis
(Resigned 10 April 2014)
150,230
83,790
84,000
15,184
106,000
65,138
Sub-total Non-Executive Directors
504,342
Executive Director
Stephen Nash
(Resigned 11 March 2014)
Nicolas Yates
(Appointed 11 March 2014)
Other Key Management Personnel
Karl Nixon
(Resigned 5 July 2013)
Nicholas Benson
(Appointed 1 October 2013)
373,012
168,515
18,388
237,076
Total compensation
1,301,333
22
BSA LIMITED ANNUAL REPORT 2014
2013
Name
Short-term
Benefits
Post
Employment
Long-term
Benefits
Share-based payments
Cash,
Salary &
Fees
Interest
Unwind
on Loans
Cash
Bonus
Superannuation
Long
Service
Leave
Termination
Benefits
Rights
Rights
Total
Performance
Related
$
$
$
$
$
$
$
%
$
%
Non-Executive Directors
Ross Johnston
Paul Teisseire
Michael Givoni
Max Cowley
(Retired 30 October 2012)
Mark Lowe
Daniel Collis
(Appointed 27 November 2012)
148,993
84,000
83,862
25,707
83,862
49,921
Sub-total Non-Executive Directors
476,345
Executive Director
Stephen Nash
504,749
Other Key Management Personnel
Karl Nixon
318,442
Total compensation
1,299,536
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,653
7,560
7,547
2,314
7,547
4,493
39,114
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
158,646
91,560
91,409
28,021
91,409
54,414
515,459
-
-
-
-
-
-
45,427
8,651
-
( 66,063)
( 13.41)
492,764
( 13.41)
25,000
5,795
-
( 59,287)
( 20.45)
289,950
( 20.45)
109,541
14,446
-
( 125,350)
1,298,173
BSA LIMITED ANNUAL REPORT 2014
23
DIRECTORS’ REPORT
Performance Income as a Proportion of Total Remuneration
C
SERVICE AGREEMENTS
Executive Directors and executives are paid performance based
bonuses based on set monetary figures, rather than proportions
of their salary. This has led to the proportions of remuneration
related to performance varying between individuals. The
Nomination and Remuneration Committee has set these bonuses
to encourage achievement of specific goals that have been given
a high level of importance to the future growth and profitability
of the consolidated Group.
The Nomination and Remuneration Committee will review
the performance bonuses to gauge their effectiveness against
achievement of the set goals, and adjust future years’ incentives
as they see fit, to ensure use of the most cost effective and
efficient methods.
Name
Other key management personnel (Group)
Stephen Nash
On appointment to the Board, all Non-Executive Directors enter into
a service agreement with the Company in the form of a letter of
appointment. The letter summarises the Board policies and terms,
including compensation, relevant to the office of Director.
Remuneration and other terms of employment for the Managing
Director and the other key management personnel are also
formalised in service agreements. Each of these agreements provide
for the provision of performance-related cash bonuses, other
benefits, car allowances, and participation, when eligible, in the BSA
Limited Option Plan and the BSA Performance Rights Plan. Other
major provisions of the agreements relating to remuneration are set
out below.
All contracts with executives may be terminated early by either party
with three to six months notice.
D
CASH BONUSES
Key management personnel and executives are entitled to a short-
term cash incentive based on performance criteria described in
section A to this Remuneration Report. Details of these FY14 short-
term incentives recognised as remuneration, forfeited or available for
vesting in future financial years is outlined below.
Included in
Remuneration
% Vested in
current year
% Forfeited
in current year
-
-
100
24 BSA LIMITED ANNUAL REPORT 2014
Exhaust fume stacks installed on the Monash
University, New Horizons Building. There were
150 fume cupboards installed on this project.
E
SHARE-BASED COMPENSATION
Executives Securities Plan
Set out below are summaries of securities held in escrow:
Grant Date
Issue Price (cents)
Balance at Start
of the Year
Number
Granted During the Year
Released from Escrow
During the Year Based on
Full Loan Repayment
Balance in Escrow at
End of the Year
Number
Number
Number
Consolidated and parent entity
13 Oct 2006
19 Jul 2007
11 Sep 2007
13 Sep 2007
14 Dec 2007
10 Feb 2009
Total
0.23
0.63
0.68
0.68
0.68
0.10
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
BSA LIMITED ANNUAL REPORT 2014
25
DIRECTORS’ REPORT
Employee Performance Rights Plan
Set out below are summaries of Rights issued to key management personnel under the plan:
Balance at
Start of the
Year
Granted
During the
Year
Released
from Escrow
during the
Year
Forfeited
During the
Year
Balance in
Escrow at
End of the
Year
Fair
Value
per
Right at
Grant
Date
Aggregate
Fair Value
Number
Number
Number
Number
Number
$
454,000
454,000
1,360,000
613,000
2,881,000
-
-
-
-
-
-
-
-
-
-
(454,000)
(454,000)
(1,360,000)
(613,000)
(2,881,000)
0.160
0.195
0.190
0.190
-
-
-
-
-
$
-
-
-
-
-
Name
Grant Date
Exercise Date
Expiry Date
Consolidated and parent entity
Karl Nixon
Karl Nixon
29 Sep 2009
29 Sep 2012
29 Sep 2014
24 Aug 2010
24 Aug 2013
24 Aug 2015
Stephen Nash
15 Nov 2011
15 Nov 2014
15 Nov 2016
Karl Nixon
Total
15 Nov 2011
15 Nov 2014
15 Nov 2016
Rights are granted over ordinary shares and nil is payable on exercise.
REMUNERATION CONSULTANTS
The Board and Remuneration Committee engaged KPMG as an independent remuneration consultant to provide remuneration advice
and information to the Board during the year. KPMG was engaged independent of management to assist the Board using an agreed set of
protocols that would be followed by KPMG, members of the Remuneration Committee and members of the key management personnel
for the way in which remuneration recommendations would be developed by KPMG and provided to the Board. These arrangements
were implemented to ensure that KPMG would be able to carry out its work, including information capture and the formation of its
recommendations, free from undue influence by members of the key management personnel about whom the recommendations may
relate. The Board undertook its own inquiries and review of the processes and procedures followed by KPMG and is satisfied that their
remuneration recommendations were made free from such undue influence. The Board and Remuneration Committee confirm that KPMG
made remuneration recommendations within the meaning of the Corporations Act. The total consideration paid by the company to KPMG for
the provision of the remuneration recommendations in the 2014 financial year was $9,000 (2013: $9,000).
In the 2014 financial year KPMG also provided other non-remuneration related consultancy services to the company. The total consideration
paid by the company to KPMG for these other services was $142,000 (2013: Nil).
End of Audited Remuneration Report
26 BSA LIMITED ANNUAL REPORT 2014
MEETINGS OF DIRECTORS
The number of meetings of BSA’s Board of Directors and each Board committee held during the year ended 30 June 2014, and the number of
meetings attended by each Director were:
Board Meetings
Audit and Compliance
Committee Meetings
Nomination and Remuneration
Committee Meetings
Meetings Held
during tenure
in FY14
Meetings Attended
Meetings Held
during tenure
in FY14
Meetings Attended
Meetings Held
during tenure
in FY14
Meetings Attended
Ross Johnston
Stephen Nash
Max Cowley
Michael Givoni
Paul Teisseire
Mark Lowe
Daniel Collis
Nicholas Yates
30
25
3
27
29
30
24
5
31
26
3
31
31
31
28
5
11
*
1
11
11
10
9
*
11
*
1
11
11
11
10
*
5
*
1
5
3
5
2
*
5
*
1
5
5
5
4
*
*Not a member of the relevant committee, but invited to attend the Audit and Remuneration Committee meetings
RETIREMENT, ELECTION AND
CONTINUATION IN OFFICE OF DIRECTORS
Directors are subject to retirement by rotation and election by
shareholders at a general meeting. No Director, other than the
Managing Director, may remain on the Board for more than three
years without re-election. Where a Director is appointed during
the year, the Director will hold office until the next Annual General
Meeting (AGM), and then be eligible for election.
Michael Givoni and Paul Teisseire are Directors who have been in
office for three years and who, being eligible, offer themselves for
re-election. Max Cowley is a Director elected during the year and,
being eligible, offers himself for election.
OPTIONS
As at the date of this report, there were no unissued ordinary shares
of the Company under option.
During the year ended 30 June 2014, no ordinary shares of the
Company were issued on the exercise of options granted under the
BSA Limited Employee Option Plan. No further shares have been
issued since that date. No amounts are unpaid on any of the shares.
RIGHTS
As at the date of this report, the unissued ordinary shares of the
Company, under right, are as follows:
INDEMNIFYING OFFICERS OR AUDITORS
Grant Date
Date of Expiry
Exercise Price
During the year, the Company paid a premium for a contract
insuring all Directors, secretaries, Executive officers and officers of
the Company, and of each related body corporate of the Company.
The insurance does not provide cover for the independent auditors
of the Company, or of a related body corporate of the Company.
In accordance with usual commercial practice, the insurance
contract prohibits disclosure of details of the nature of the
liabilities covered by the insurance, the limit of indemnity and
the amount of the premium paid under the contract.
No liability has arisen under this indemnity as at the date of
this report.
Number under
Right
454,000
454,000
1,049,000
1,957,000
29 Sep 2009
24 Sept 2014
24 Aug 2010
24 Aug 2015
14 Nov 2011
24 Nov 2016
$0.00
$0.00
$0.00
During the year ended 30 June 2014, 725,467 ordinary shares of the
Company were issued on the exercise of rights granted under the
BSA Limited Employee Performance Rights Plan relating to FY11.
No further shares have been issued since that date. No amounts are
unpaid on any of the shares.
No person entitled to exercise the right had, or has, any right by
virtue of the right to participate in any share issue of any other
body corporate.
BSA LIMITED ANNUAL REPORT 2014
27
DIRECTORS’ REPORT
24 cylinder reciprocating diesel fired engine in one of
the two Mega Watt capacity Cogeneration Plants at
the new Royal Adelaide Hospital Project
PROCEEDINGS ON BEHALF OF THE COMPANY
AUDITORS’ REMUNERATION
No person has applied to the court under section 237 of the
Corporations Act 2001 (Cth) for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which
the Company is a party, for the purpose of taking responsibility on
behalf of the Company for all, or part, of those proceedings.
No proceedings have been brought or intervened on behalf of
the Company with leave of the court under section 237 of the
Corporations Act 2001 (Cth).
NON AUDIT SERVICES
The Company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or Group are
important.
Details of the amounts paid or payable to the auditor (Deloitte
Touche Tohmatsu) for audit and non-audit services during the year
are set out below.
The Board of Directors has considered the position and in accordance
with the advice received from the audit committee, is satisfied that
the provision of non-audit services by the auditor, as set out below,
did not compromise the auditor independence requirements of the
Corporations Act 2001 (Cth) for the following reasons:
•
•
All non-audit services have been reviewed by the Audit
Committee to ensure they do not impact the impartiality
and objectivity of the auditor; and
None of the services undermine the general principles
relating to auditor independence as set out in Professional
Statement APES 110 Code of Ethics for Professional
Accountants, including reviewing or auditing the auditors
own work, acting in a management or a decision making
capacity for the Company, acting as advocate for the
Company or jointly sharing economic risk and rewards.
2014
$
2013
$
Amounts due for the financial year to Deloitte Touche Tohmatsu for:
Auditing or reviewing the financial report
531,300
302,430
Taxation services
Other non-audit services
327,929
219,419
14,000
48,136
AUDITORS INDEPENDENCE DECLARATION
The lead auditors’ independence declaration for the year ended
30 June 2014 as required under section 307c of the Corporations
Act 2001 (Cth) has been received and can be found on page 42 of
this report.
ROUNDING OF AMOUNTS
The Company is an entity to which ASIC Class Order 98/100 applies.
Accordingly, amounts in the Financial Statements and Directors’
Report have been rounded to the nearest thousand dollars.
Signed in accordance with a resolution of the Board of Directors.
Ross Johnston
Chairman
22 September 2014
28 BSA LIMITED ANNUAL REPORT 2014
CORPORATE GOVERNANCE STATEMENT
Technical Field Force Solutions continue to conduct
mandatory Workplace Health and Safety audits with
all contracting companies.
The Company, through its Board and Executives, recognises the need to establish and maintain
corporate governance policies and practices, which reflect the requirements of the market regulators
and participants, and the expectations of members and others who deal with the Company.
These policies and practices remain under constant review as the corporate governance environment and good practice evolve.
This statement outlines the Company’s system of governance during the financial year and the extent of the Company’s compliance, as at the
end of the financial year, by reference to the second edition of the ASX Corporate Governance Principles and Recommendations with 2010
Amendments and to the Corporations Act 2001 (Cth).
As at the date of publication, the Company complies with the recommendations in all respects, other than the requirement for the majority
of the Directors of the Company to be independent, and the recommendation that there be two separate committees for remuneration and
nomination. Further, in undertaking a review of the Company’s current practices, the Company has established a new Code of Conduct, a
Whistleblowing Policy, and a Diversity Policy which sets out the diversity targets against which the Company will report. The Company did not
meet its targets for female representation set in the last financial year. However, the Company has increased its total percentage of female
representation, and has been assessed by the Workplace Gender Equality Agency as compliant with the Workplace Gender Equality Act 2012.
Corporate governance documentation including charters and relevant corporate policies and codes referred to in this statement can be found
on the www.bsa.com.au website.
BSA LIMITED ANNUAL REPORT 2014
29
CORPORATE GOVERNANCE STATEMENT
PRINCIPLE 1
LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
•
Policies
-
Approving significant policies for the Company
including the Code of Conduct, security trading
policies for Directors and Senior Executives, health
and safety policies, risk management policies, and
continuous disclosure and communications policies.
•
Corporate governance matters
-
-
-
-
Determining the independence of Non-
Executive Directors;
Taking into account the recommendations of
the Nomination and Remuneration Committee
in determining the remuneration of Non-
Executive Directors;
Determining the resolutions and documentation to
be put to members in general meetings; and
Approving announcements and press releases
concerning matters decided by the Board,
including announcements relating to the operating
performance of the Company.
The Board has delegated a number of responsibilities to its
Committees. The role and responsibilities of these Committees
are explained later in this statement. Directors may attend any
Committee meetings. The Board receives copies of the minutes of all
the Committee meetings.
Day-to-day management of the business and operations of the
Company is delegated by the Board to management through the
Managing Director, subject to the agreed authority limits. The Board
has delegated, to management, responsibility for:
•
Strategy – development of strategies and the making of
recommendations to the Board on such strategies;
• Management – management and performance of the
Company in accordance with the strategy, business plans
and policies approved by the Board;
•
•
•
•
Financial performance –developing the Company’s annual
budget, managing day-to-day operational and capital
expenditure, and ensuring that the Financial Reports
present a true and fair view of the Company’s financial
condition, and are in accordance with the relevant
accounting standards;
Risk management – establishing and maintaining effective
risk management frameworks and internal control systems;
Continuous disclosure – keeping the Board and the market
fully informed about material developments; and
Selection of senior management – making recommendations
for the appointment of senior management, determining
terms of appointment, and evaluating performance and
development of senior management.
1.1 Functions of Board and Management
•
Strategy and direction
-
-
Setting policies regarding the Company’s overall
strategic direction, and plans for each of the
Company’s Business Units, key business and
financial objectives; and
Approving any significant acquisitions or disposals
of assets, and significant expenditure.
•
Financial controls, compliance and risk management
-
-
-
-
Approving annual operating and capital
expenditure budgets;
Monitoring and approving financial statements and
published reports, including the Directors’ Report
and the Corporate Governance Statement;
Approving any significant changes in accounting
policies or procedures; and
Reviewing the effectiveness of the internal
control systems and risk management processes,
and compliance with statutory and regulatory
obligations which, if not complied with, would have
a material effect on the Company’s business.
•
Capital and debt structure
-
Approving any changes to the Company’s debt and
capital structure including any reductions in share
capital, buy backs, or issue of new securities.
•
Appointments
-
-
-
-
Appointing Directors to the Board,
following a review by the Nomination and
Remuneration Committee;
Appointing and reviewing the performance of
the Managing Director against objectives set by
the Board;
Approving the Boards of subsidiary companies; and
Appointing the Company Secretary.
•
Delegation of authority
-
-
Approving any changes to the membership or
charter of any committee of the Board; and
Determining the scope of authority delegated to
the Managing Director, the Chief Financial Officer,
or other Executive Management team members.
30 BSA LIMITED ANNUAL REPORT 2014
1.2 Process for Evaluating the Performance of Senior Executives
The Company has an established process of objective setting and
performance review of all staff.
Senior Executives have defined objectives which are agreed at the
commencement of each financial year. Their performance against
these objectives is assessed annually, in addition to regular feedback
during the performance period. The potential future development
of the Executive is discussed, together with any training required
to assist in achieving the development objectives and progression
within the Company.
In the case of the Senior Executives (including the Managing
Director), an assessment of their performance is undertaken by the
Nomination and Remuneration Committee and the Board.
In addition to the induction program provided to new employees,
new members of the Executive Management team undertake
an induction program customised to their needs. This typically
includes one on one meetings with every member of the Executive
Management team, and visits to major sites. Senior Executives and
senior managers also participate in training sessions on key topics
of relevance such as changes in corporate governance standards,
legislation, and compliance.
1.3 Performance Evaluation
It is our policy that, each member of the Executive Management
team, including the Managing Director, is subject to a performance
review as described in 1.2 above.
PRINCIPLE 2
STRUCTURE THE BOARD TO ADD VALUE
The membership of the Board is reviewed by the full Board, from
time to time, having regard to the ongoing needs of the Company
and the Company’s Constitution. It is the policy of the Board that
its membership should reflect an appropriate balance between
Executive members possessing extensive direct experience and
expertise in the business activities of the Company, and Non-
Executive members who bring to the Board a broad range of general
commercial expertise, experience and qualifications.
The Group’s objective is that the Board should be of a size and
composition that is conducive to effective decision making, with the
benefit of a variety of perspectives and skills and in the interests of
the Company.
The appointment of a new member to the Board is made after
consultation with the Nomination and Remuneration Committee and
the Board. New Directors are initially appointed by the full Board and
must then submit themselves to election by members of the Company
at the Annual General Meeting (AGM) following their appointment.
On 4 November 2013, the Company announced that Mr Stephen
Nash would retire his position as Managing/Executive Director of
the Board. On 14 January 2014, the Company announced that Mr
Nicholas Yates would assume the position of Managing/Executive
Director, on 11 March 2014. On 10 April 2014, the Company
announced that Mr Daniel Collis would retire his position as a Non-
Executive Director of the Board, from that date and that Mr Max
Cowley would assume the position of a Non-Executive Director.
Board renewal and succession planning is part of the Company’s
overall governance program and the Company remains committed
to a Board which includes a mix of Non-Executive members who
have outstanding track records and reputations at the highest levels
of business and commerce generally.
The Company has undertaken a review of its practices on diversity.
This has included an assessment of the relevant policies to codify
the Company’s position on diversity; and, in particular, the targets
from which the Company will report against. Further information
on how the Company is currently addressing the issue of diversity is
contained in section 3 of this statement.
BSA LIMITED ANNUAL REPORT 2014
31
CORPORATE GOVERNANCE STATEMENT
2.1 Independent Directors
The composition of the Board is set out in the table below:
Name
Position
Independent
Ross Johnston
Chair/Non-Executive Director
Nicholas Yates (1)
Managing/Executive Director
Stephen Nash (2)
Managing/Executive Director
Michael Givoni
Non-Executive Director
Paul Teisseire
Non-Executive Director
Mark Lowe
Non-Executive Director
Daniel Collis (3)
Non-Executive Director
Max Cowley (4)
Non-Executive Director
Yes
No
No
Yes
Yes
No
No
No
(1) Mr Yates was appointed to the Board on 11 March 2014.
(2) Mr Nash retired his position on the Board on 11 March 2014.
(3) Mr Collis retired his position on the Board on 10 April 2014.
(4) Mr Cowley was appointed to the Board on 10 April 2014.
Biographies of the Directors are included in the section on the
Board of Directors in this Annual Report.
The Board currently has six members. Of these, three are
independent Non-Executive Directors. These Directors are
considered by the Board to be independent of management and free
of any business or other relationship, or any other circumstance that
could materially interfere with the exercise of objective, unfettered
or independent judgment.
The Board considers that it should include significant
representation by Directors who are capable and willing to make
decisions which are in the best interests of members, free from
interests and influences which conflict with that duty, and are also
independent of management.
The Board continually assesses the independence of each Director
in accordance with the interests they have disclosed, and such other
factors as the Board determines are appropriate.
In making this determination, the Board is seeking to assess
whether Directors are:
• Within the last three years has been a partner or a senior
management Executive with audit responsibilities of a firm
which has acted in the capacity of statutory auditor of any
member of the Company;
• Within the last three years has been a principal, employee
or consultant of a material professional adviser to any
member of the Company;
•
•
•
Is a principal, employee or associate of a material supplier
to, or material customer of, any member of the Company;
Has a material contractual relationship with any member of
the Company other than as a Director of the Company; and
Has any interest, or business, or other relationship, which
could materially interfere with the Director’s ability to act in
the best interests of the Company, and independently
of management.
As regarding the Non-Executive Directors, applying the
criteria set out in the Board Charter, the Board has made the
following determinations:
• Mr Daniel Collis(1) is not independent given that he is a
Director, and Company Secretary, of the major substantial
shareholder in the Company;
• Mr Mark Lowe is not independent (following his resignation
as an Executive in March 2012), given his long standing
Executive role with the Company;
• Mr Stephen Nash(2) is not independent given that his role
was that of Managing Director, an Executive Director;
• Mr Nicholas Yates(3) is not independent given that his role is
that of Managing Director, an Executive Director;
• Mr Max Cowley(4) is not independent given that he was a
Director, and Company Secretary, of the major substantial
shareholder in the Company; and
• Mr Ross Johnston, Mr Michael Givoni and Mr Paul Teisseire
are all considered to be independent Directors.
(1) Mr Collis retired his position on the Board on 10 April 2014.
(2) Mr Nash retired his position on the Board on 11 March 2014.
(3) Mr Yates was appointed to the Board on 11 March 2014.
Independent of management;
(4) Mr Cowley was appointed to the Board on 10 April 2014.
•
•
•
Free of any business or other relationship that could
materially interfere or be perceived to materially interfere
with their unfettered and independent judgment; and
Capable of making decisions without bias and which are in
the best interests of all members.
A Non-Executive Director will not be regarded as an independent
director if that Director:
•
Is a substantial shareholder of the Company or an officer
of, or otherwise associated directly with, a substantial
shareholder of the Company;
• Within the last three years has been employed in an
Executive capacity by any member of the Company, or been
a Director after ceasing to hold any such employment;
32
BSA LIMITED ANNUAL REPORT 2014
The Board, through the Nomination and Remuneration Committee,
has come to the conclusion that whilst 50% of the Board is
independent, the balance of skills and experience required for
Board members for the size and development of the Company
is appropriate. The Board is confident that each Non-Executive
Director brings independent judgment to bear on Board decisions.
That conclusion was reached based on the Board’s knowledge of
the significant contributions made by each Director to the business
of the Board, and its Committees. This includes the willingness of
the Directors to debate issues openly and constructively and freely
express their views and opinions on matters being considered by the
Board, including occasions where those views are contrary to those
expressed by the Executive Directors and management.
•
•
•
Identifying suitable candidates (Executive and Non-
Executive) to fill Board vacancies as and when they arise,
and nominating candidates for approval of the Board;
Annually reviewing the performance of the Board; and
Ensuring the existence of proper succession planning
processes and plans for the Board.
No member of the Committee will participate in a review of their
own performance or re-appointment.
The Nomination and Remuneration Committee Charter, as approved
by the Board, appears in the corporate governance section of the
www.bsa.com.au website.
Recommendations regarding future appointment of additional
Directors will be made by the Nomination and Remuneration
Committee, and considered by the Board, having regard to:
•
•
•
The assessment made on the skill set required to discharge
the responsibilities of the Board, compared with the skills
currently represented on the Board;
The current strategic direction of the Company, and the
consequent need to consider skills which may be required
in the future; and
The suitability of available candidates, identified in the
context of a detailed description of the role and capabilities
required, for a particular appointment.
Recommendations made by the Nomination and Remuneration
Committee will be considered by the Board, which retains an
unfettered discretion on the appointment of a Director to fill a
casual vacancy or act as an additional Director, prior to the formal
election of that Director, by the members of the Company at a
General Meeting.
Upon appointment, a new Director undertakes an induction program
specifically designed to their needs, to assist in familiarising them
with issues relating to the current business before the Board.
New Board members are provided with the opportunity to
experience the operations of the Company, and to meet and
discuss all aspects of the Company’s operations with key members
of Executive Management. As part of the induction program, access
is provided to information in areas such as; operations, finance,
treasury, and risk management, to assist the new Board member
as required.
Directors are able to take independent professional advice, and
are required to make that advice available to the other Directors.
Directors are encouraged to direct any enquiries or requests for
additional information to the Company Secretary, who will facilitate
a response to the query and/or provide the Director with the
requested information.
Each Non-Executive Director has signed a letter of appointment
which, amongst other things, places an onus on each independent
Director to promptly and fully disclose to the Board any matter or
circumstance which may impact on their status as an independent
Director, or the likely perception of their status, as an independent
member of the Board. Where the Board concludes that a Director
has lost their status as an independent Director, that determination
will be advised to the market.
The Nomination and Remuneration Committee’s Charter discloses
a process for selection and appointment of new Directors and
re-election of incumbent Directors. The role and responsibilities of
the Nomination and Remuneration Committee are set out later in
this statement.
2.2 Chair and Independence
The ASX Corporate Governance Council recommends that listed
companies should have an independent Director as Chair, and that
the roles of Chair and Chief Executive Officer should not be held by
the same person.
Mr Ross Johnston is considered to be independent by the Board,
having regard to the guidelines for independence.
2.3 Nomination and Remuneration Committee
The Board has appointed a combined Nomination and Remuneration
Committee, with the two distinct roles, having regard to the size and
requirements of the Company.
The objective of the Nomination and Remuneration Committee is
to support and advise the Board in relation to the identification,
selection, recommendation and appointment, of the Board, the
Directors and the Senior Executives, as well as the ongoing
evaluation and review of their performance. It is also responsible
for the general remuneration, recruitment and termination policies
and practices.
The members of the Committee are set out in the Directors’ Report.
The Board recognises the ASX’s recommendation that the
Nomination and Remuneration Committee should be chaired by an
independent Director. Mr Michael Givoni is an independent Director.
The Committee met during the financial year, per the details set out
in the Directors’ Report. The Executive Directors may be invited to
attend Nomination and Remuneration Committee discussions.
The functions undertaken by the Committee in discharging their
responsibilities include:
•
•
Assessing the skills of current Board members against the
collective skill set required by the Board to competently
discharge the Board’s duties, having regard to the strategic
direction of the Company;
Regularly reviewing and making recommendations to
the Board regarding the structure, size, diversity and
composition (including the balance of skills, knowledge
and experience) of the Board; and reviewing the
effectiveness of the Board as a whole, and continually
reviewing the leadership needs of the Company, both
Executive and Non-Executive;
BSA LIMITED ANNUAL REPORT 2014
33
CORPORATE GOVERNANCE STATEMENT
On an ongoing basis, Directors are provided with periodic updates
on legal and corporate developments, particularly those pertaining
to matters relating to the responsibilities of boards and directors
generally, health and safety, changes to the Corporations Act
2001 (Cth), corporate governance principles, tax and accounting
developments, and other matters of interest. Management conducts
regular briefing sessions to the Board and Board Committees on
operational, financial, treasury, legal, and tax issues of relevance to
the Board.
The Company Secretary is appointed and removed by the Board.
The Company Secretary works with the Chair, the Board and the
Board Committees on all governance related issues. All Directors
have access to the Company Secretary for the purpose of obtaining
information or advice. The Company Secretary may also retain
the services of independent advisory bodies, if requested by the
Board or Board Committees. The office of the Company Secretary is
responsible for the systems and processes that enable the Board to
perform its role, and also provides secretariat services for each of
the Board Committees. The Committee agendas, papers and minutes
are available to all members of the Board.
The Board undertakes ongoing self-assessment and review of its
performance, and of the performance of the Board Committees. The
Board is committed to transparency in assessing the performance of
the Board.
PRINCIPLE 3
PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING
3.1 Code of Conduct
Compliance Manual
As part of the Company’s ongoing commitment to high standards
of ethical conduct, the Company is committed to continually
developing a Compliance Manual which provides detailed guidance
to employees on the current laws applicable in the jurisdiction in
which they work, the standards of conduct, and the procedures to
be adopted to comply with those laws. The Compliance Manual has
been supplemented by seminars and information memoranda to
help employees understand the legal requirements with which the
Company must comply.
The Compliance Manual deals with issues such as:
• Workplace health and safety;
•
•
•
•
•
•
Australian Consumer Law;
Employment;
Privacy;
Anti-discrimination, equal opportunity and bullying;
Environmental compliance;
Corporations Act 2001 (Cth) and ASX Listing Rules
requirements; and
•
Complaints handling procedures.
The Company has provided a number of such seminars to date, and
encourages education on these core principles.
Company Values
The conduct of all Company employees is governed by a set of
fundamental principles to which employees are expected to adhere
to when dealing with other employees, clients, contractors, members,
and the community.
These core values require Company employees, at all times, to
conduct themselves having regard to the following:
•
•
The Safety and wellbeing of our staff is non negotiable:
We will not harm our people;
Talented and committed People are the heart of
our business:
The retention and development of our staff is a
business imperative;
• We will conduct ourselves with the highest Integrity:
Uphold integrity in everything we say and do;
•
•
Teamwork is the foundation for success:
Working as one across all business units to achieve success;
Respect for our fellow workers is essential:
Treat everyone as you would expect to be treated;
• We will be Innovative and create our own future:
We will continue to strive to evolve our people and our
technology; and
•
Our Reputation is paramount:
We will ensure our decisions and behaviour enhances the
reputation of BSA.
34 BSA LIMITED ANNUAL REPORT 2014
In adhering to those values, the Company and its employees will
achieve the following:
•
Creation of an environment that motivates and allows
employees to contribute and develop;
•
Honest, just and fair management in all dealings;
• Meeting the commitments of the Company;
•
•
•
•
•
Examination of ways to continually improve processes
in a manner which adds value;
Providing members with superior returns on a
sustainable basis;
Constantly seek new opportunities and pursue sound
growth and earning opportunities;
Conducting all activities in a safe and environmentally
responsible manner;
Contributing expertise and resources to promote positive
interaction between all members of the community; and
•
Being a leading corporate citizen.
Employee Code of Conduct
The core principles of the BSA Group are supplemented by the
Code of Conduct which is provided to all employees at the time
of joining the Company, and which deals, in broad terms, with the
following matters:
•
•
•
•
The high standards of personal conduct and ethical
behaviour expected of all employees;
The duty of employees to avoid conflicts of interest
which may arise if the employee or any person or entity
associated with that employee has a business arrangement
or relationship with the Company outside their normal
employment relationship;
The duty of employees to maintain confidentiality with
respect to the Company’s information and information
provided by our contractors and clients;
The duty of employees to avoid discrimination against any
person; and
•
The Company’s policy prohibiting harassment in any form.
The Code of Conduct, which is provided to, and acknowledged by,
all employees who join the Company, is reviewed on a regular basis
to ensure it remains current and relevant. Compliance seminars
to update senior management on changes to legal requirements
and procedures are conducted on a regular basis, and all senior
managers are required to pass this information on to their staff.
Senior managers are required to attend and formally acknowledge
their understanding and compliance.
It is the responsibility of each Director and employee to understand
the Company values, Code of Conduct, and other policies applicable
to them and to bring to the attention of senior management any
conduct or activities which may be in breach of those policies, so
that a proper investigation can be conducted.
Serious breaches of these policies must be reported immediately,
either via a Whistleblower Service Hotline, or to the Managing
Director, the Chief Financial Officer, or the General Counsel, for
investigation, in accordance with the Company’s policies. Where
appropriate, the police or other regulatory authority will be informed.
Complaints are treated in a confidential manner. No action of any
kind will be taken against an employee, adviser or contractor who, in
good faith, makes an allegation against the Company, any employee,
adviser or contractor, whether or not that complaint is confirmed by
subsequent investigation.
Whistleblower Policy
Having regard to the above, the Company has implemented
a Whistleblowing Policy which forms an integral part of the
Company’s compliance program. The policy will be adopted to
ensure that concerns regarding unethical, unlawful or improper
conduct may be raised without fear of reprisal.
•
Under the policy, the Company has appointed a
Whistleblower Protection Officer. Employees will be
encouraged to report any genuine matter, or behaviour,
that they honestly believe contravenes the Code of
Conduct, policies, or the law. Such matters may include any
actual or suspected:
-
-
-
-
-
Conduct or practices which are illegal;
Corrupt activities;
Theft or fraud;
Misleading or deceptive conduct of any kind; or
Harm to public health or safety, or the health or
safety of any employee.
The Company has now implemented a Whistleblower Program and
an external Whistleblower Hotline Service, whereby actions that are
unethical, unlawful or improper can be dealt with in a formal manner.
The Company will investigate all reported concerns appropriately,
and will, where applicable, provide feedback regarding the
investigation’s outcome. The Company will take any necessary action
in response to a report, and where no action is taken an explanation
will be provided.
A report will be provided to the Audit and Compliance Committee,
summarising the whistleblower activities for the preceding six
month period.
3.2 Diversity
As noted at section 2 above, the Board has undertaken a review
and assessment of its current practices, including how the Board
and the Nomination and Remuneration Committee presently take
into account the diversity criteria when identifying and assessing
potential Director candidates and members of senior management.
The Company has implemented a Diversity Policy which expressly
incorporates the diversity targets against which the Company will
report, and which the Board and Committee will consider in relation
to their objectives and responsibilities.
BSA LIMITED ANNUAL REPORT 2014
35
CORPORATE GOVERNANCE STATEMENT
The Company values an inclusive culture where all people are able
to succeed to the best of their ability. These principles also guide
our employees’ conduct in all their dealings with stakeholders of
the Company. Diversity is regarded as a key factor in enabling the
Company to attract the broadest range of talent in the market.
Our commitment to diversity requires that we work to ensure
an environment which is supportive of equality and access for
all our staff to career opportunities, development, remuneration
and benefits. Diversity includes but is not limited to gender, age,
disability, ethnicity, religion and cultural background. However,
the initial emphasis by the Company is on gender diversity with a
primary goal being to strengthen the representation of women in
management positions.
Women in BSA
The Company recognises that working towards gender diversity
and equality is essential to attracting and retaining the best talent
in our business. Currently, 17% of the Company’s total workforce is
female, with 9% representation within the Senior Executive team. In
accordance with the Workplace Gender Equality Act 2012 (the Act), the
Company has reported on the distribution of gender in the workplace,
and has complied with the notification and access requirements.
The Board has considered appropriate targets, having regard to the
industry in which the Company operates. Relevantly, the Company
has decided to maintain the target it set in the last financial
year. Therefore, the Company has set a target of 20% female
representation in the senior management of the Company, together
with a target of 20% female representation in the senior talent and
succession plans, for the next financial year.
The Company will seek to improve each year on the target scores,
and employees’ views on diversity will be tracked via employee
surveys. The Company will also review its progress on diversity
against other organisations within this industry.
The Company has established a working group which has reviewed
the Act, with the objective of ensuring compliance with the
standardised gender equality indicators, minimum standards and
reporting requirements and implementing strategies to ensure such
compliance. The Company is aware that it must comply with the Act,
and, on that basis, will continually revise its practices and policies
to ensure it complies with, and reports against, any standardised
gender equality indicators and other minimum standards set by the
relevant Minister, having regard to the Act.
As part of this process, the Company is committed to achieving the
following objectives over the next financial year:
•
•
•
•
•
•
The Managing Director will develop a three year plan to
address diversity targets;
The establishment of processes in relation to objective
setting, co-ordination, monitoring and reporting of diversity
measures;
Implementing an education program focusing on raising
awareness of the need for diversity;
Reviewing the opportunities in non-traditional roles (e.g.
construction and project managers) and, where possible and
practical, ensuring at least one woman is on the recruitment
short list;
Reviewing the hiring processes with the intention of
increasing the representation of a diverse candidate
pool; and
Succession planning reviews with each Senior Executive
with a focus on improved diverse representation and career
planning for senior positions.
The Company will report against the above objectives. In the past
financial year, the Company submitted a compliance report to the
Workplace Gender Equality Agency (the Agency). The Agency advised
that the Company is compliant with the Act.
Professional development is available for all our employees, with
additional emphasis and focus placed on leadership development
throughout all levels of our talent pipeline. All employees are
provided with opportunities to strengthen their leadership skills and
capabilities, and enhance their potential for leadership positions in
the future.
The Company’s Parental Leave Policy aims to provide employees
with sufficient options and choices to enable them to devote time
and care to their new or adopted children without disadvantaging
their career. Paid parental leave is available to employees based
on a sliding scale of entitlement. Employees on parental leave
are invited to attend relevant training programs, seminars or
conferences to keep them up to date on developments within their
area of business and help support their transition back to work.
The Diversity Policy shall be continually reviewed as part of an
ongoing commitment to achieving the above objectives, and the
standardised gender equality indicators set, in accordance with
the Act.
36 BSA LIMITED ANNUAL REPORT 2014
Cultural Diversity
The Company is committed to maintaining and developing
mutually beneficial and respectful indigenous partnerships with the
industries within which the Company operates, by providing real
opportunities in education, training, mentoring and employment to
indigenous Australians.
The Company continues to focus on enhancing diversity through
a range of strategies at the Board and business levels, which in
turn contribute significantly to the Company’s business and to
achievement of the business values which we have established.
3.3 Security Trading Policy
The Company is committed to promoting knowledge and awareness
of the legal, regulatory and governance requirements to which the
Company and its employees are subject, including prohibitions
against insider trading.
All Directors and employees are subject to Corporations Act 2001
(Cth) restrictions on buying, selling, or subscribing for securities in
the Company if they are in possession of price sensitive information
which has not been published.
Members of the Board, and certain employees within the
Company who have been notified that this policy applies to them,
are prohibited from trading in Company securities in certain
defined black-out periods, which include periods leading up to
an announcement of results. They are encouraged to first obtain
written, or email, consent from the Managing Director or Chair
before dealing. These people are reminded of their obligations at
appropriate times throughout the financial year.
At any other time, any member of the Board dealing in the
Company’s securities must notify the Company Secretary.
A copy of the Security Trading Policy is available on the
www.bsa.com.au website.
A copy of the Company’s Security Trading Policy was lodged with the
ASX and released to the market on 28 December 2010.
PRINCIPLE 4
SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
4.1 Audit and Compliance
Committee Composition
The Board has established an Audit and Compliance Committee
to ensure that an effective internal control framework exists to
safeguard the assets of the business, and to ensure the integrity and
reliability of financial and management reporting systems.
The composition of the Audit and Compliance Committee is as set
out in the Directors’ Report, with Mr Paul Teisseire, an independent
Director, chairing this Committee.
The Committee met 11 times during the financial year, per the
details set out in the Directors’ Report.
Audit and Compliance Committee Charter
The Audit and Compliance Committee operates under a charter
to enable it to fulfil its corporate governance and monitoring
responsibilities by:
•
•
Reviewing the adequacy of, and, where necessary,
questioning the action and judgment of management
in relation to the Company’s half-yearly and annual
financial reports prepared for release to members, the ASX,
regulators, and to the public;
Reporting to the Board on the half-year and annual reports
and financial statements of the Company;
• Making recommendations regarding the appointment,
remuneration, evaluation and removal of the Company’s
external auditor and reviewing and reporting to the Board
on the adequacy, scope and quality of the annual statutory
audit and half-year audit review, and on the integrity and
reliability of the financial statements;
• Monitoring and reviewing the effectiveness of the
Company’s internal control environment;
• Monitoring and reviewing the reliability of financial reporting;
• Monitoring and reviewing the compliance of the Company
with applicable laws and regulations;
• Monitoring and reviewing the scope and the co-ordination
of the external audit functions; and
• Monitoring the adequacy and effectiveness of compliance
systems in relation to the legal exposures of the Company.
The Audit and Compliance Committee meets with external auditors
at least twice each year (and more frequently if required), to
review the adequacy of existing external audit arrangements, and
the scope of the audit. The external auditors have a direct line of
communication at any time to either the Chair of the Audit and
Compliance Committee, or the Chair of the Board.
The Audit and Compliance Committee reports to the Board after
each Committee meeting, and the minutes of each Audit and
Compliance Committee meeting are included in the Board papers.
The external auditors, the Managing Director and the Chief Financial
Officer are invited to attend Audit and Compliance Committee
meetings at the discretion of the Committee.
A copy of the Audit and Compliance Committee charter is available
on the www.bsa.com.au website.
BSA LIMITED ANNUAL REPORT 2014
37
CORPORATE GOVERNANCE STATEMENT
PRINCIPLE 5
MAKE TIMELY AND BALANCED DISCLOSURE
5.1 Continuous Disclosure Policy
PRINCIPLE 6
RESPECT THE RIGHTS OF MEMBERS
6.1 Communications with Members
The Company’s Continuous Disclosure Policy underlines the
Company’s commitment to ensuring that the Company’s members,
and the market, are provided with high quality, relevant and accurate
information in a timely manner; and that investors are able to trade
in Company securities in a market which is efficient, competitive
and informed, as well as ensuring that market participants have an
equal opportunity to review and assess information disclosed by
the Company. The Company is also committed to complying with
continuous disclosure obligations contained in the applicable ASX
Listing Rules, and the Corporations Act 2001 (Cth).
The Policy includes a vetting and authorisation process so that
all disclosures are factual, do not omit material matters, and are
expressed in a clear and objective manner. The Policy also outlines
how the Company identifies and distributes information to members
and the market generally.
The Continuous Disclosure Policy appears on the
www.bsa.com.au website.
The Company is committed to providing all members with
comprehensive, timely, and equal access to information about its
activities, to enable them to make informed investment decisions.
The Company employs a wide range of communication
approaches, including direct communications with members, and
publication of all relevant company investor information on the
www.bsa.com.au website.
The Company uses its corporate website as a means of providing
information to members, and the broader investment community.
A section of this website is dedicated to BSA’s investors. Media
releases, investor presentations and interim and full-year financial
reports are available for review on the www.bsa.com.au website.
These announcements, presentations and reports are placed on the
website immediately after they have been released to the ASX. An
archive of announcements, presentations, and reports is retained on
the www.bsa.com.au website.
Also available for review on the www.bsa.com.au website are
notices of members’ meetings, and explanatory documents issued
by the Company in respect of those meetings. A copy of the Chair’s
address to the AGM, the AGM presentation, and the outcome of
voting on the items of business, are posted to the website following
the AGM.
Members are encouraged to attend the AGM held each year, and
to use these opportunities to ask questions and vote on important
matters affecting the Company, including the election of Directors,
the receipt of annual financial statements, and the advisory vote
on the remuneration report. The external auditor attends the AGM
and is available to answer questions. Members may appoint proxies
electronically through the www.bsa.com.au website, or via mail.
The Company encourages members to access the Annual
Report online to assist with the Company’s commitment to the
environment, as well as being more cost efficient. A printed copy of
the Annual Report will only be sent to those members who have
made an election to receive it. Otherwise members will be notified
when the Annual Report is available to be accessed online at the
www.bsa.com.au website.
Members are also encouraged to provide the Company with their
email address, so that they can be notified when the Annual
Report is available online, and also to be kept updated on other
member communications.
The Company works closely with its share registrar to monitor and
review the potential to increase the use of electronic means of
communicating with its investors.
The Communications Policy is available on the
www.bsa.com.au website.
38 BSA LIMITED ANNUAL REPORT 2014
PRINCIPLE 7
RECOGNISE AND MANAGE RISK
7.1 Risk oversight and management and internal control
The entire Board is responsible for monitoring and reviewing the
corporate policies for identifying and managing relevant risks
associated with the business of the Company, and the adequacy
of the Company’s practices and procedures in implementing those
policies. This involves monitoring and reviewing:
•
•
The Company’s policies regarding risk oversight and risk
management;
The appropriateness of the risk management and internal
control systems adopted by the Company; and
•
The Company’s continuing processes for:
-
-
-
-
The identification of material workplace health
and safety, financial, legal, and operational risks
associated with the conduct of the business of
the Company;
The maintenance of appropriate internal control
systems designed to manage key risk areas;
Assessing the above matters in conjunction with
management and the external auditors; and
Monitoring and reporting against compliance with
the risk management policies.
Operating a group of companies undertaking technical and building,
including construction related services, inevitably involves risks
of various kinds. Furthermore, operating a company which utilises
a contractor base involves risks of a different nature, which need
to be balanced with the Company’s business and management.
The Company’s objective is to ensure that those business risks
are identified and assessed, and that, where it is practical and
economical, steps are taken to mitigate the impact of any risk which
may eventuate.
The Company regards risk management as an essential element
in its management processes, with links to every aspect of the
Company’s business including health and safety issues in respect of
employees, clients, contractors and customers, the construction of
sites, and relationships with major clients, contractors, and suppliers.
The Company’s approach to risk management involves:
•
•
•
•
Pro-actively identifying risk;
Properly assessing and making informed decisions on risk
issues;
Ensuring that sound risk mitigation and management plans
are in place; and
Reviewing, as part of its regular business processes, the
operation and adequacy of its risk management systems
and the assumptions which dictate those systems.
Risk management is aimed at managing the level of risk within
parameters which are acceptable to the Company, rather than
seeking to eliminate all risks. The Company’s risk management
systems promote the need for informed and measured decision
making on risk issues based on a systematic approach to risk
identification, assessment, control, and review and reporting.
The Company has developed and implemented a risk profile to
operate as a general guide as to identification, assessment, and
management of the various risks inherent to the Company’s
business, from a contractual perspective.
7.2 Management of material business risks
The Board has delegated specific risk related responsibilities to the
Managing Director, who, in turn, has delegated these responsibilities
to management.
Each Senior Executive, and all managers, are responsible for:
•
•
•
Assisting in the formulation of all aspects of the risk
management process;
Overseeing the implementation of the Company’s policies
and procedures by ensuring that all phases of the process
of identification, assessment, control, review and reporting
are reflected appropriately in the business processes of the
Company; and
Implementing appropriate systems for confirming
compliance with all relevant laws, and other regulatory
obligations, are complied with.
The Managing Director reports to the Board on the effectiveness of
the Company’s management of its material risks.
7.3 Managing Director and Chief Financial Officer Assurance
The Managing Director and the Chief Financial Officer are required
to confirm in writing to the Board, every half year, that in all material
respects:
•
•
•
The financial statements present a true and fair view;
That this assertion is founded on a sound system of
financial risk management and internal compliance and
control which implements the policies adopted by the
Board; and
That the Company’s financial risk management and internal
compliance and control systems are operating efficiently
and effectively in all material respects in relation to
financial reporting risks.
This assurance has been given.
BSA LIMITED ANNUAL REPORT 2014
39
CORPORATE GOVERNANCE STATEMENT
PRINCIPLE 8
REMUNERATE FAIRLY AND RESPONSIBLY
The Company’s remuneration policy is designed to attract and retain
high caliber Directors and Senior Executives, capable of meeting the
specific management needs of the Company.
The Company’s current remuneration objectives and policies
regarding determination of base pay, the short term variable
bonus, and long term equity linked incentives, are explained in the
Remuneration Report, which forms part of the Directors’ Report.
Details of the remuneration of all Directors are set out in the
Remuneration Report.
8.1 Nomination and Remuneration Committee
As the Company has a combined Nomination and Remuneration
Committee, the composition of the Nomination and Remuneration
Committee is as set out in the Directors’ Report.
The Board recognises the ASX’s recommendation that the
Nomination and Remuneration Committee should be chaired by
an independent chair and consist of a majority of independent
directors. The Chair, Mr Michael Givoni, is independent and the
Committee consists of a majority of independent Directors. Mr Mark
Lowe is not independent given his long standing Executive role
within the Company, and Mr Daniel Collis and Mr Max Cowley are
not independent because they were/are Directors and Company
Secretaries of the major substantial shareholder in the Company.
The Committee met during the financial year, as set out in the
Directors’ Report.
The objective of the Committee is to assist the Board in establishing
remuneration policies and practices which:
•
•
•
Enable the Company to attract and retain Executives and
Directors who will create sustainable value and returns for
members and other stakeholders;
Fairly and responsibly reward Executives and Directors,
having regard to the performance of the Company, the
Executive, and the market; and
Comply with all relevant legislation and regulations
including the ASX Listing Rules and the Corporations Act
2001 (Cth).
The Charter of the Nomination and Remuneration Committee may
be viewed on the www.bsa.com.au website.
The responsibilities of the Committee include:
•
Determining and reviewing remuneration policies to
apply to members of the Board, and to Executives within
the Company;
•
•
•
•
•
Determining the specific remuneration packages for
Executive Directors (including base pay, incentive
payments, equity linked plan participation, and other
contractual benefits);
Reviewing contractual rights of termination for members of
the Senior Executive team;
Reviewing and approving the policy for participation by
Senior Executives in equity-linked plans;
Reviewing and approving management’s recommendations
of the total proposed awards to be issued under each
plan; and
Administering the equity-linked plans as required in
accordance with the rules of the plans.
8.2 Structure of Non-Executive Directors’ Remuneration
Fees paid to Non-Executive Directors are determined by the Board,
within the current maximum aggregate limit set by members of
the Company. Current fees and salaries are fully disclosed in the
Remuneration Report section of the Directors’ Report. Directors’
fees are reviewed annually by the Nomination and Remuneration
Committee, and by the Board, taking into consideration the level of
fees paid to Non-Executive Directors by companies of a similar size
and stature.
Non-Executive Directors receive their fees in cash. The Non-
Executive Directors do not participate in schemes designed for the
remuneration of Executives, nor do they receive options or bonus
payments. The gross fee received by Non-Executive Directors is
inclusive of any contribution that the Company is obliged to pay
pursuant to the superannuation guarantee legislation. There are
no retirement schemes or retirement benefits for Non-Executive
Directors, other than statutory benefits for Non-Executive Directors.
8.3 Equity Linked Executive Remuneration
The Company has a policy to preclude its Senior Executives
from entering into transactions to limit their economic risk from
investing in Company shares, options, or rights, where those
entitlements are unvested. The Company makes Senior Executives
aware of their obligations in relation to financial commitments
against shares issued under the Executive securities plan, and
has requested that they take sufficient independent, professional
advice in relation to their individual financial position. The
Company does not provide advice.
In addition to the Corporate Governance Principles and
Recommendations, the Company considers that a commitment to
workplace health and safety, and the environment, and to privacy, is
paramount to a good corporate governance programme.
40 BSA LIMITED ANNUAL REPORT 2014
Heating Hot Water Plantroom serving all levels to
Stage 2b of the Olivia Newtown John Cancer and
Wellness Centre in Heidelberg, Victoria.
WORKPLACE HEALTH, SAFETY AND ENVIRONMENT
PRIVACY
The Company is committed to respecting stakeholders’ rights to privacy,
protecting personal information, and complying with the new Australian
Privacy Principals.
The Company will treat all personal information with due care, and
take reasonable steps to protect such information from loss, misuse,
unauthorised access or disclosure.
The Company’s Privacy Policy can be found on the
www.bsa.com.au website.
The Company is committed to ensuring the safety and wellbeing of all
employees, its clients, customers, and members of the public. To this end,
the number one value of the Company is “The safety and wellbeing of our
staff is non-negotiable”. The Company provides ongoing training across
the organisation, with respect to its legal obligations, and specific training
as to operational risks in the field. The Company places great emphasis on
carrying out everything it does in a safe manner.
The Company values the environment and recognises the responsibility to
protect our surroundings. Operations are managed in an environmentally
responsible manner, with an undertaking to:
•
•
•
Operate in compliance with relevant local environmental
legislation and regulations;
Seek to reduce the energy consumption and waste produced per
unit of output;
Educate our employees, ensuring the requirements for
environmental responsibility is integrated into work practices
training; and
• Monitor and report on environmental compliance through
management to the Board.
BSA LIMITED ANNUAL REPORT 2014
41
AUDITOR’S INDEPENDENCE DECLARATION
42
BSA LIMITED ANNUAL REPORT 2014
FINANCIAL REPORT
BSA LIMITED
ABN 50 088 412 748
44 —
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
45 —
Consolidated Statement of Financial Position
46 —
Consolidated Statement of Changes in Equity
47 —
Consolidated Statement of Cash Flows
48 —
Notes to Financial Statements
103 —
Directors’ Declaration
104 —
Independent Auditor’s Report
106 —
Shareholder Information
BSA LIMITED ANNUAL REPORT 2014
43
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
Revenue
Investment revenue
Other gains and losses
Share of profits of joint venture
Changes in inventories of finished goods and work in progress
Subcontractor and raw materials used
Employee benefits expense
Depreciation expenses
Amortisation expenses
Impairment of intangibles
Occupancy expenses
Finance costs
Other expenses
(Loss)/Profit before tax
Income tax benefit
(Loss)/Profit for the year
Other comprehensive income for the year, net of tax
Items that may be reclassified subsequently to profit or loss:
Net gain/(loss) recognised on cash flow hedges
Total comprehensive income for the year, net of tax
Earnings per share for profit from continuing operations:
Basic earnings per share
Diluted earnings per share
Note
5
6
7
20
8
8
8
8.5, 17
8
37
9.1
2014
$’000
Consolidated
2013
$’000
491,512
474,180
94
84
101
(506)
(424,213)
(42,189)
(6,888)
(1,441)
(40,000)
(6,542)
(2,319)
(28,995)
(61,302)
6,455
(54,847)
35
(54,812)
357
47
-
2,202
(390,673)
(44,499)
(7,002)
(1,440)
-
(6,084)
(1,932)
(22,358)
2,798
965
3,763
(16)
3,747
12
12
(23.97) cents
(23.97) cents
1.64 cents
1.60 cents
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
44 BSA LIMITED ANNUAL REPORT 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
Consolidated
2013
$’000
2,009
85,190
5,202
1,206
93,607
1,279
-
3
17,866
1,981
55,185
7,473
83,787
177,394
70,532
8,545
8,054
87,131
14,008
1,218
242
15,468
102,599
74,795
77,797
1,313
(8,177)
3,862
74,795
2014
$’000
5,297
86,403
4,696
1,483
97,879
1,279
165
3
14,819
8,564
15,185
6,032
46,047
143,926
78,488
16,068
19,738
114,294
8,029
1,673
-
9,702
123,996
19,930
77,797
1,295
(63,024)
3,862
19,930
Note
13
14
15
9.2
14
20
19
16
9.3
17
18
23
24
25
24
25
26
27 (a)
27 (b)
27 (c)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Tax assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Investment in Joint Venture
Other financial assets
Property, plant & equipment
Deferred tax assets
Goodwill
Other intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Provisions
Other liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Profit reserve
TOTAL EQUITY
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
BSA LIMITED ANNUAL REPORT 2014
45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
Balance at 1 July 2012
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Share-based payment expense
Shares issued in satisfaction of performance conditions
Dividends paid
Balance at 30 June 2013
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Share-based payment expense
Shares issued in satisfaction of performance conditions
Issued
Capital
$’000
Accumulated
Losses
$’000
77,797
(8,177)
-
-
-
-
-
-
-
-
-
-
-
-
77,797
(8,177)
-
-
-
-
-
(54,847)
-
(54,847)
-
-
Profit
Reserve
$’000
3,532
3,763
-
3,763
-
-
(3,433)
3,862
-
-
-
-
-
Balance at 30 June 2014
77,797
(63,024)
3,862
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Share-based
Payment Reserve
Cash Flow
Hedge Reserve
$’000
$’000
1,522
-
-
-
(129)
(39)
-
1,354
-
-
-
42
(95)
1,301
(25)
-
(16)
(16)
-
-
-
(41)
-
35
35
-
-
(6)
Consolidated
Total
$’000
74,649
3,763
(16)
3,747
(129)
(39)
(3,433)
74,795
(54,847)
35
(54,812)
42
(95)
19,930
46 BSA LIMITED ANNUAL REPORT 2014
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
Note
Cash Flows From Operating Activities:
Cash receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Income tax received/(paid)
Net cash generated by/(used in) operating activities
30 (a)
Cash Flows From Investing Activities:
Proceeds from disposal of property, plant and equipment
Payment for businesses
Payment to equity-accounted investment
Payment for plant and equipment
Net cash used in investing activities
Cash Flows From Financing Activities:
Payment for shares issued for vesting rights
Proceeds from borrowings
Repayment of borrowings
Repayment of Executive loans
Payment of finance lease liabilities
Dividends paid to owners of the Company
Net cash generated by/(used in) financing activities
Net increase/(decrease) in cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
13
2014
$’000
547,434
(539,202)
94
(2,340)
(405)
5,581
195
-
(165)
(3,480)
(3,450)
(95)
12,140
(8,065)
-
(2,823)
-
1,157
3,288
2,009
5,297
Consolidated
2013
$’000
511,962
(521,227)
144
(1,953)
(5,450)
(16,524)
422
(188)
-
(5,439)
(5,205)
(39)
10,444
(5,058)
4
(2,914)
(3,433)
(996)
(22,725)
24,734
2,009
BSA LIMITED ANNUAL REPORT 2014
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1 GENERAL INFORMATION
BSA Limited (the Company) is a limited company incorporated in Australia. The address of its registered office and principal places of business are disclosed in the Corporate Directory at the
end of the Annual Report. The principal activities of the Company and its subsidiaries (the Group) are described in note 29.
NOTE 2 APPLICATION OF NEW AND REVISED ACCOUNTING STANDARDS
2.1 New and revised AASBs affecting amounts reported and/or disclosures in the financial statements
Standard/Interpretation
Effective date (Beginning) Application Date (Ending) Comments
AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7
‘Amendments to Australian Accounting Standards arising from the
consolidation and Joint Arrangements standards’
1 January 2013
30 June 2014
Requirements for consolidated financial statements. Defines
the principles of control.
The adoption of this standard does not have any material impact on the consolidated financial statements.
AASB 11 ‘Joint Arrangements’ and AASB 2011-7 ‘Amendments to
Australian Accounting Standards arising from the consolidation
and Joint Arrangements standards’
1 January 2013
30 June 2014
Replaces AASB 131 Interests in Joint Ventures
The adoption of this standard does not have any material impact on the consolidated financial statements.
AASB 12 ‘Disclosure of Interests in Other Entities’ and AASB 2011-7
‘Amendments to Australian Accounting Standards arising from the
consolidation and Joint Arrangements standards’
1 January 2013
30 June 2014
The adoption of this standard does not have any material impact on the consolidated financial statements.
AASB 13 ‘Fair Value Measurement’ and related AASB 2011-8
‘Amendments to Australian Accounting Standards arising from
AASB 13’
1 January 2013
30 June 2014
Requires the extensive disclosure of information that
enables users of financial statements to evaluate the nature
of, and risks associated with, interests in other entities
and the effects of those interests on its financial position,
financial performance and cash flows.
This AASB defines fair value, provides guidance on how
to determine fair value and requires disclosures about
fair value measurements. However, AASB 13 does not
change the requirements regarding which items should be
measured or disclosed at fair value.
The adoption of this standard does not have any material impact on the consolidated financial statements.
AASB 119 ‘Employee Benefits (2011)’ and AASB 2011-10
‘Amendments to Australian Accounting Standards arising from
AASB 119 (2011)’
1 January 2013
30 June 2014
An amended version of AASB 119 ‘Employee Benefits’ revises
the definition of short-term benefits, which now makes
annual leave provision a long-term employee benefit.
The adoption of this amending standard does not have any material impact on the consolidated financial statements.
AASB 128 ‘Investments in Associates and Joint Ventures (2011)’
and AASB 2011-7 ‘Amendments to Australian Accounting Standards
arising from the consolidation and Joint Arrangements standards’
1 January 2013
30 June 2014 This Standard supersedes AASB 128 ‘Investments in
Associates’ and prescribes the accounting for investments in
associates and sets out the requirements for the application
of the equity method when accounting for investments in
associates and joint ventures.
The adoption of this standard does not have any material impact on the consolidated financial statements.
AASB 2011-4 ‘Amendments to Australian Accounting Standards
to Remove Individual Key Management Personnel Disclosure
Requirements’
1 July 2013
30 June 2014 Amends AASB 124 Related Party Disclosures to remove the
individual key management personnel (KMP) disclosures
required by Australian
specific paragraphs.
The adoption of this standard does not have any material impact on the consolidated financial statements.
48 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 2 APPLICATION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED)
2.2 Standards and Interpretations on issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were on issue but not yet effective.
Standard/Interpretation
Effective date (Beginning) Application Date (Ending) Comments
AASB 9 ‘Financial Instruments’(December 2009) and AASB 2009-11
‘Amendments to Australian Accounting Standards arising from AASB 9’
AASB 2012-6 ‘Amendments to Australian Accounting Standards –
Mandatory Effective Date of AASB 8 and Transition Disclosure’
AASB 2013-9 ‘Amendments to Australian Accounting Standards –
Conceptual Framework, Materiality and Financial Instruments’
AASB 9 ‘Financial Instruments’(December 2010), AASB 2010-7
‘Amendments to Australian Accounting Standards arising from AASB 9
(December 2010)’,
AASB 2012-6 ‘Amendments to Australian Accounting Standards –
Mandatory Effective Date of AASB 8 and Transition Disclosure’
AASB 2013-9 ‘Amendments to Australian Accounting Standards –
Conceptual Framework, Materiality and Financial Instruments’
1 January 2017
30 June 2018
Entities early adopting AASB 9 may either adopt AASB
9 (December 2009) or AASB 9 (December 2010) and
the relevant amending standards.
1 January 2017
30 June 2018
Entities early adopting AASB 9 may either adopt AASB
9 (December 2009) or AASB 9 (December 2010) and
the relevant amending standards
AASB 1031 ‘Materiality’ (2013)
1 January 2014
30 June 2015
Early adoption is not permitted
AASB 2012-3 ‘Amendments to Australian Accounting Standards –
Offsetting Financial Assets and Financial Liabilities’
1 January 2014
30 June 2015
IFRS 9 Financial Instruments (2014) and all related amendments
1 January 2018
30 June 2019
IFRS 15 Revenue from Contracts with Customers
1 January 2017
30 June 2018
Interim standard that cross-references to other
Standards and the Framework (issued December 2013)
that contain guidance on materiality.
Address inconsistencies in current practice when
applying the offsetting criteria in AASB 132 ‘Financial
Instruments: Presentation’.
IFRS 9 introduces new requirements for the
classification and measurement of financial assets,
hedge accounting and impairment of financial asset.
The Directors do not anticipate the application of IFRS
9 to have a material impact on the financial results of
the Group.
IFRS 15 Revenue from Contracts with Customers
outlines a single comprehensive model for entities
to use in accounting for revenue from contracts
with customers, which will supersede current
revenue recognition guidance included in IAS 18
Revenue, IAS 11 Construction Contracts and related
Interpretations. The key principle of this standard
is that an entity will recognise revenue when it
transfers promised goods or services to customers for
an amount that reflects its expected consideration.
The Standard introduces more prescriptive and
detailed implementation guidance than was included
in IAS 18, IAS 11, and the related Interpretations.
The directors are yet to assess the impact of the
application of IFRS 15.
A number of Australian Accounting Standards are on issue but are not effective for the current year end. The reported results and position of the Group are not expected to change on
adoption of these pronouncements. Adoption will, however, result in changes to information currently disclosed in the financial statements. The Group does not intend to adopt any of these
pronouncements before their effective dates.
BSA LIMITED ANNUAL REPORT 2014
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES
3.1 Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations,
and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing consolidated financial statements, the Company is a for-profit entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Company and the
Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the Directors on 22 September 2014.
3.2 Going Concern
As at 30 June 2014, the consolidated entity has a deficiency of current net assets of $16,415,000. Notwithstanding this deficiency, the Directors have concluded that it is appropriate to
prepare the financials on a going concern basis based upon:
•
•
•
•
•
•
current net assets include bank borrowings of $8,382,000 that are expected to be rolled over at the annual renewal in November 2014. In addition $5,300,000 of debt relating to
quarterly amortisation of term debt is also included in net current assets and is scheduled in current forecasts for repayment in FY15
significant non-cash project provisions of $9,260,000 related to legacy issues are included in current net liabilities at 30 June 2014
forward cash flow projections for the Group
strong ongoing support by our financiers
improved trading position and
strong forward order book.
Note: Tax losses carried forward of $2,479,000, expected to be offset against taxable profits in FY15, were reported in the Appendix 4E in current tax assets. Under AASB 101 deferred tax
assets are required to be reported as non-current assets.
3.3 Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for certain financial instruments that are measured at revalued amounts or fair values at
the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. All amounts are presented in Australian dollars, unless otherwise noted.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the
characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope
of AASB 2, leasing transactions that are within the scope of AASB 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in
AASB 2 or value in use in AASB 136.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,2 or 3 based on the degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
•
•
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the Financial Report are rounded
off to the nearest thousand dollars, unless otherwise indicated.
50 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.4 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved
when the Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct
the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are
sufficient to give it power, including:
•
•
•
•
the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
potential voting rights held by the Company, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to
be made, including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses
of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains
control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
BSA LIMITED ANNUAL REPORT 2014
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.5 Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum
of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity instruments issued by the Group
in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value.
Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in
the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant Standards. Changes in the fair value of contingent consideration
classified as equity are not recognised.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:
•
•
•
Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements, are recognised and measured in accordance with AASB 112 Income Taxes and
AASB 119 Employee Benefits respectively;
Liabilities or equity instruments related to share-based payment arrangements of the acquiree, or share-based payment arrangements of the Group entered into to replace share-
based payment arrangements of the acquiree, are measured in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date; and
Assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Noncurrent Assets Held for Sale and Discontinued Operations are measured in
accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously
held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the
acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially
measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is
made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another Standard.
Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent
consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration
is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent
consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 ‘Provisions, Contingent Liabilities and
Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group
attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been
recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items
for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
3.6 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the business (see 3.5 above) less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable
amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then
to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
52
BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.7 Interests in Joint Arrangements
Under AASB 11, there are only two types of joint arrangements, joint operations and joint ventures. The classification of joint arrangements under AASB 11 is determined based on the
rights and obligations of parties to the joint arrangements by considering the structure, the legal form of the arrangements, the contractual terms agreed by the parties to the arrangement,
and, when relevant, other facts and circumstances. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights
to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint
venturers) have rights to the net assets of the arrangement.
The Group’s Investments in joint ventures are accounted for using the equity method. Under the equity method, an investment in a joint venture is initially recognised in the consolidated
statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the joint venture
The Group’s Investments in joint operations are accounted for such that each joint operator recognises its assets (including its share of any assets jointly held), its liabilities (including its
share of any liabilities incurred jointly), its revenue (including its share of revenue from the sale of the output by the joint operation) and its expenses (including its share of any
expenses incurred jointly). The Group accounts for the assets and liabilities, as well as revenues and expenses, relating to its interest in the joint operation in accordance with the
applicable Standards.
3.8 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances..
3.8.1 Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and title has passed, at which time all the following conditions are satisfied:
•
•
•
•
•
The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the Group; and
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
3.8.2 Rendering of services
Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows:
•
•
•
Installation fees are recognised by reference to the stage of completion of the installation, determined as the proportion of the total time expected to install that has elapsed at
the end of the reporting period;
Servicing fees included in the price of products sold are recognised by reference to the proportion of the total cost of providing the servicing for the product sold; and
Revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses are incurred.
The Group’s policy for recognition of revenue from construction contracts is described at 3.9 below
3.8.3 Dividend and interest income
Dividend income from investments is recognised when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group
and the amount of revenue can be measured reliably).
Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest revenue is accrued on a time basis,
by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount on initial recognition.
BSA LIMITED ANNUAL REPORT 2014
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.9 Construction contracts and work in progress
Construction contract revenue is recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract revenue
for work performed to date relative to the estimated total contract value. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured
reliably and its receipt is considered probable.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts
where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received
before the related work is performed are included in the consolidated statement of financial position, as a liability, as advances received. Amounts billed for work performed but not yet paid by the
customer are included in the consolidated statement of financial position under trade and other receivables.
3.10 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
3.10.1 The Group as lessee
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses
are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs
(see 3.11 below). Contingent rentals are recognised as expenses in the periods in which they are incurred.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which
economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental
expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
3.11 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible
for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
3.12 Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required
and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Group in respect of
services provided by employees up to reporting date.
54 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.13 Share-based payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding
the determination of the fair value of equity-settled share-based transactions are set out in note 31.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
equity instruments that will eventually vest. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the
revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-
settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair
value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the
counterparty renders the service.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting
period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.
3.14 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.14.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income because
of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting period.
3.14.2 Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able
to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the
temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have
been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
3.14.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity. Where current tax or deferred tax
arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
BSA LIMITED ANNUAL REPORT 2014
55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.14.4 Tax consolidation
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 1 August 2007 and are therefore taxed as a single entity from that date. The
head entity within the tax-consolidated group is BSA Limited. The members of the tax-consolidated group are identified in note 19. Tax expense/income, deferred tax liabilities and deferred tax assets
arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate
taxpayer within group’ approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities
and assets and deferred tax assets arising from un-used tax losses and relevant tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-
consolidated group).
Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or received by the Company and each member of the
Group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the arrangement.
3.15 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the Consolidated Statement of Financial Position at cost.
Depreciation on buildings is recognised in profit or loss.
Freehold land is not depreciated.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost (other than freehold land) less their residual values over their useful lives, using the straight-line method. The estimated useful lives,
residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be
obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognised in profit or loss.
3.16 Intangible assets
3.16.1 Intangible assets acquired separately
Intangible assets with finite lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis
over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for
on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
3.16.2 Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as
intangible assets that are acquired separately.
56 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.17 Impairment of tangible and intangible assets excluding goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not
possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. Where a reasonable
and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-
generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset
may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not
been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior
years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
3.18 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories by the
method most appropriate to the particular class of inventory, with the majority being valued on the basis of weighted average cost. Net realisable value represents the estimated selling
price for inventories less all estimated costs of completion and costs necessary to make the sale.
3.19 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those
cash flows (where the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable can be measured reliably.
3.19.1 Warranties
Provisions for the expected cost of warranty obligations under construction contracts are recognised at the Directors’ best estimate of the expenditure required to settle the Group’s obligation.
3.19.2 Make Good
Provisions for the estimated cost of work to comply with make good provisions in certain Group property leases are recognised at the Directors’ best estimate of the expenditure to settle the
Group’s obligation.
3.20 Financial Assets
Financial assets are classified into the specified category of ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the
time of initial recognition.
3.20.1 Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the debt instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments.
BSA LIMITED ANNUAL REPORT 2014
57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.20.2 Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and
receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-
term receivables when the recognition of interest would be immaterial.
3.20.3 Impairment of financial assets
Financial assets, other than those at Fair Value Through Profit or Loss , are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be
impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis.
Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period of 30 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
3.21 Financial liabilities and equity instruments issued by the Group
3.21.1 Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
3.21.2 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at
the proceeds received, net of direct issue costs.
3.21.3 Financial Liabilities
Financial liabilities are classified as ‘other financial liabilities’.
3.21.4 Other Financial Liabilities
Other financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying on initial recognition.
3.22 Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate risk, including interest rate swaps. Further details of derivative financial
instruments are disclosed in note 35.
Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.
The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition
in profit or loss depends on the nature of the hedge relationship.
58 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.22.1 Cash flow hedges
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. The gain or loss relating
to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘other gains and losses’ line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit
or loss, in the same line of the Consolidated Statement of Profit or Loss and Other Comprehensive Income as the recognised hedged item. However, when the forecast transaction that is
hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the
initial measurement of the cost of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies
for hedge accounting. Any gain or loss accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
3.23 Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
ii For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable
to, the taxation authority is classified within operating cash flows.
NOTE 4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts
of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered
to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
4.1 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year.
4.1.1 Contracts - estimates to complete
Construction contracts are accounted for as per 3.9. Inherent in the assessment of profitability of each contract is the estimate to complete. This estimate requires the Directors to assess
the conduct of the contract to date and the expected cost to complete the contract. In addition, where appropriate, Management and the Directors assess the probability of recovery of
variations within the contract estimates.
4.1.2 Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation
requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual
future cash flows are less than expected, a material impairment loss may arise.
The carrying amount of goodwill at 30 June 2014 was $15,200,000 (30 June 2013: $55,200,000).
See note 17 for details.
4.1.3 Payroll Tax Liability
BSA has previously advised the market about a possible payroll-tax related liability with the NSW Office of State Revenue (OSR). BSA has continued, along with our legal representatives to
constructively work with the OSR to ensure an equitable and timely conclusion to this matter. BSA has a provision in its FY14 accounts of $2,000,000 (FY13 $2,000,000) and at this time
there is no further information that would suggest this provision should be changed.
See Note 25 for details
BSA LIMITED ANNUAL REPORT 2014
59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 5 REVENUE
The following is an analysis of the Group’s revenue from continuing operations (excluding investment revenue - see note 6).
Revenue from sale of goods
Revenue from the rendering of services
Contract revenue
Total Revenue
NOTE 6 INVESTMENT REVENUE
Interest revenue
Bank deposits
Other loans and receivables
The following is an analysis of investment revenue earned on financial assets by category of asset:
Loans and receivables (including cash and bank balances)
NOTE 7 OTHER GAINS AND LOSSES
Continuing operations
Gain on disposal of property, plant and equipment
60 BSA LIMITED ANNUAL REPORT 2014
2014
$’000
18,781
140,082
332,649
Consolidated
2013
$’000
18,235
116,545
339,400
491,512
474,180
2014
$’000
74
20
94
94
94
2014
$’000
84
84
Consolidated
2013
$’000
144
213
357
357
357
Consolidated
2013
$’000
47
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 8 (LOSS)/PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS
(Loss)/Profit for the year from continuing operations has been arrived at after charging/(crediting):
8.1
Cost of sales
8.2
Finance costs
Interest on bank overdrafts and loans
Total finance costs
8.3
Depreciation and amortisation expense
Depreciation of property, plant and equipment
Amortisation of intangible assets
Total depreciation and amortisation expense
8.4
Employee benefits expense
Post employment benefits
Superannuation
Share-based payments (see note 31(d))
Equity-settled share-based payments
Other employee benefits
Total employee benefits expense
8.5
Significant Items
Impairment of intangible goodwill assets
Non-recurring project provisions relating to legacy issues
Key Project Profit Write Downs
2014
$’000
Consolidated
2013
$’000
424,719
388,471
2,319
2,319
6,888
1,441
8,329
1,932
1,932
7,002
1,440
8,442
10,009
9,215
42
32,138
42,189
40,000
20,579
3,643
64,222
(129)
35,413
44,499
-
-
-
-
$64,222,000 is included in the following categories in the Consolidated Statement of Profit or Loss and other Comprehensive Income, “Subcontractors and raw materials”
($22,126,000), “Other expenses” ($2,096,000) and “Impairment of intangibles” ($40,000,000).
BSA LIMITED ANNUAL REPORT 2014
61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 9 INCOME TAXES
9.1
Income tax recognised in profit or loss
Current tax
In respect of the current year
In respect of prior years
Deferred Tax
In respect of the current year
Total income tax benefit recognised in the current year relating to continuing operations
The expense for the year can be reconciled to the accounting (loss)/profit as follows:
(Loss)/Profit from continuing operations
Income tax expense calculated at 30%
Adjusted for:
Non-deductible expenses
Research and development allowance
Adjustments recognised in the current year in relation to the current tax of prior years
Research and development allowance
Rights to future income adjustment due to change in legislation
Other
Total income tax benefit recognised in the current year relating to continuing operations
2014
$’000
Note
Consolidated
2013
$’000
-
128
128
(6,583)
(6,583)
(6,455)
(61,302)
(18,391)
(a)
12,059
(251)
(6,583)
-
-
128
128
(6,455)
710
(1,137)
(427)
(538)
(358)
(965)
2,798
840
25
(693)
172
(1,039)
-
(98)
(1,137)
(965)
(a)
Includes $12,000,000 for Goodwill Impairment.
The tax rate used for the 2014 and 2013 reconciliations above is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under
Australian tax law.
9.2
Current tax assets and liabilities
Current tax assets
Tax refund receivable
62 BSA LIMITED ANNUAL REPORT 2014
1,483
1,483
1,206
1,206
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Opening Balance
Recognised in
Profit or Loss
Closing Balance
$’000
$’000
$’000
(51)
(2,242)
3,110
943
221
-
1,981
(15)
432
177
2,633
877
2,479
6,583
(66)
(1,810)
3,287
3,576
1,098
2,479
8,564
NOTE 9 INCOME TAXES (CONTINUED)
9.3
Deferred tax balances
2014
Temporary differences
Finance leases
Intangible assets
Employee benefits
Provisions
Doubtful debts
Tax losses carried forward
Note: Tax losses carried forward of $2,479,000, expected to be offset against taxable profits in FY15, were reported in the Appendix 4E in current tax assets. Under AASB 101
deferred tax assets are required to be reported as non-current assets and are disclosed in the table above.
2013
Temporary differences
Finance leases
Intangible assets
Employee benefits
Provisions
Doubtful debts
Deferred tax balances are presented in the Statement of Financial Position as follows:
Deferred tax assets
Deferred tax liabilities
Opening Balance
Recognised in
Profit or Loss
Closing Balance
$’000
$’000
$’000
(4)
(2,674)
3,321
392
408
1,443
(47)
432
(211)
551
(187)
538
(51)
(2,242)
3,110
943
221
1,981
30/06/2014
30/06/2013
$’000
8,564
-
8,564
$’000
1,981
-
1,981
BSA LIMITED ANNUAL REPORT 2014
63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 9 INCOME TAXES (CONTINUED)
9.4
Tax consolidation
Relevance of tax consolidation to the Group
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 1 August 2007 and are therefore taxed as a single
entity from that date. The head entity within the tax-consolidated group is BSA Limited. The members of the tax-consolidated group are identified in note 19. Tax expense/
income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying amounts in the separate financial
statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from un-used tax losses and
relevant tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group).
Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or received by the Company and
each member of the Group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in
accordance with the arrangement.
NOTE 10 KEY MANAGEMENT PERSONNEL
Compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based-payments
2014
$
1,301,333
119,659
(36,313)
373,916
-
Consolidated
2013
$
1,299,536
109,541
14,446
-
(125,350)
1,758,595
1,298,173
Further information regarding the identity of key management personnel and their compensation can be found in the Audited Remuneration Report contained in the Directors’
Report on pages 18 to 26 of this Annual Report.
64 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 11 AUDITORS’ REMUNERATION
Remuneration of the auditor of the Group for:
- Auditing or reviewing the Financial Report
- Taxation services
- Other non-audit services
Included in taxation services is $73,000 payroll tax advice relating to NSW Office of State Revenue matter.
The auditor of BSA Limited is Deloitte Touche Tohmatsu.
2014
$
531,300
327,929
14,000
873,229
Consolidated
2013
$
302,430
219,419
48,136
569,985
BSA LIMITED ANNUAL REPORT 2014
65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 12 EARNINGS PER SHARE
Basic (loss)/profit per share
Diluted (loss)/profit per share
(a)
Reconciliation of Earnings to Profit
(Loss)/Profit
(Loss)/Profit used to calculate basic EPS and dilutive EPS
2014
Cents
(23.97)
(23.97)
Consolidated
2013
Cents
1.64
1.60
$’000
$’000
(54,847)
(54,847)
3,763
3,763
Number
Number
(b)
Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS
228,861,202
228,861,202
Weighted average number of options/rights outstanding
-
5,779,836
Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS
228,861,202
234,641,038
(c)
Information concerning the classification of securities
Options/Rights
Options granted to employees under the BSA Limited Employee Option Plan and rights granted to employees under the BSA Limited Employees Performance Rights Plan are
considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options/rights
have not been included in the determination of basic earnings per share. Details relating to the options and rights are set out in note 31.
NOTE 13 CASH AND CASH EQUIVALENTS
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents include
cash on hand and in banks.
Cash at bank and on hand
2014
$’000
5,297
5,297
Consolidated
2013
$’000
2,009
2,009
66 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 14 TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
Allowance for doubtful debts
Other receivables
Executive Share Plan receivables
Amounts due from customers under construction contracts
Allowance for doubtful debts (construction contracts)
Contract Retentions
Accrued Revenue
Prepayments
Note
33 (c)
21
2014
$’000
10,706
(437)
10,269
2,460
194
61,303
(2,781)
219
13,514
1,225
76,134
86,403
Consolidated
2013
$’000
11,399
(84)
11,315
614
194
64,734
(597)
592
7,460
878
73,875
85,190
NON-CURRENT
Executive Share Plan receivables
33 (c)
1,279
1,279
Trade receivables
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
The average debtor days for the Group is 48 days. No interest is charged on overdue receivables. Allowances for doubtful debts are recognised against trade receivables greater
than 60 days based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and specific details around invoice collectability.
Before accepting a new customer, the Group uses an external credit scoring system to assess the potential customer's credit quality and defines credit limits by customer.
BSA LIMITED ANNUAL REPORT 2014
67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 14 TRADE AND OTHER RECEIVABLES (CONTINUED)
Age analysis of trade receivables that are past due but not impaired at the reporting date
2014
Amount
Impaired
$’000
Amount Not
Impaired
$’000
-
-
-
365
72
437
-
-
-
-
2,781
2,781
7,932
1,493
241
467
136
10,269
40,215
9,754
3,492
2,486
2,575
58,522
Total
$’000
7,932
1,493
241
832
208
10,706
40,215
9,754
3,492
2,486
5,356
61,303
2013
Amount
Impaired
$’000
Consolidated
Amount Not
Impaired
$’000
-
-
12
38
34
84
-
-
-
-
597
597
6,459
1,414
690
1,795
957
11,315
43,007
12,107
2,424
951
5,648
64,137
Total
$’000
6,459
1,414
702
1,833
991
11,399
43,007
12,107
2,424
951
6,245
64,734
Trade receivables
Not past due
Past due [30] days
Past due [30-60] days
Past due [60-90] days
Past due [>90] days
Total
Amounts due from customers under construction contracts
Not past due
Past due [30] days
Past due [30-60] days
Past due [60-90] days
Past due [>90] days
Total
As at 30 June 2014, the Group had current trade receivables of $3,218,000 (2013: $681,000) that were impaired. The amounts relate to customers who had not
responded to final request for payment notices, customers that BSA had requested external collection agencies to collect outstanding debts or customers who have
disputed invoiced amounts.
Analysis of Allowance Account
Opening Balance
Provisions for doubtful receivables current
Receivables written off during the year
Reversal of amounts provided
Closing balance
NOTE 15 INVENTORIES
CURRENT
Raw materials and stores at net realisable value
The cost of inventories recognised as an expense includes $229,000 (2013: $NIL) in respect of write-down of inventory to net realisable value.
68 BSA LIMITED ANNUAL REPORT 2014
Consolidated
2013
$’000
1,160
681
(503)
(657)
681
Consolidated
2013
$’000
5,202
5,202
2014
$’000
681
2,537
(384)
384
3,218
2014
$’000
4,696
4,696
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 16 PROPERTY, PLANT AND EQUIPMENT
Movements in Carrying Amounts
Movements in the carrying amounts of each class of property, plant and equipment between the beginning and the end of the financial year:
Land
Buildings
Leasehold
Improvements
Plant &
Equipment
Plant &
Equipment
Under Finance
Lease and Hire
Purchase
Make Good
Total
$’000
$’000
$’000
$’000
$’000
$'000
$’000
Cost
Balance as at 1 July 2012
253
410
Additions
Disposals
Acquisitions through business combinations
Transfers *
-
-
-
-
-
-
-
-
2,258
1,332
(537)
-
-
Balance as at 30 June 2013
253
410
3,053
Additions
Disposals
Transfers *
-
-
-
-
-
-
133
-
-
20,208
4,107
(1,120)
132
2,985
26,312
3,347
(509)
(41)
10,379
3,942
(1,093)
-
(2,985)
10,243
470
(151)
41
-
230
-
-
-
33,508
9,611
(2,750)
132
-
230
40,501
4
-
-
3,954
(660)
-
Balance as at 30 June 2014
253
410
3,186
29,109
10,603
234
43,795
Accumulated depreciation and impairment
Balance as at 1 July 2012
Additions
Disposals
Transfers *
Balance as at 30 June 2013
Additions
Disposals
Transfers *
Balance as at 30 June 2014
Net Book Value as at 30 June 2014
Net Book Value as at 30 June 2013
*Transfers between categories
-
-
-
-
-
-
-
-
-
253
253
6
17
-
-
23
16
-
-
39
371
387
1,168
583
(609)
-
1,142
559
-
-
1,701
1,485
1,911
12,818
4,445
(725)
874
17,412
4,228
(461)
(8)
21,171
7,938
8,900
4,015
1,886
(1,040)
(874)
3,987
2,009
(86)
8
5,918
4,685
6,256
-
71
-
-
71
76
-
-
147
87
159
18,007
7,002
(2,374)
-
22,635
6,888
(547)
-
28,976
14,819
17,866
16.1
The following useful lives are used in the calculation of depreciation:
Buildings
Leasehold improvements
Plant and equipment
Plant and equipment under finance lease
25 years
4 - 5 years
3 - 10 years
3 - 5 years
16.2
Assets held as security
Fixed and floating charges over the whole of the Consolidated Entity assets has been pledged as security for bank loans.
BSA LIMITED ANNUAL REPORT 2014
69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 17 NON-CURRENT ASSETS - GOODWILL
Cost
Balance at the beginning of year TFFS
Balance at the beginning of year TDCP
Balance at the beginning of year TMS
Balance at the beginning of year
Additional amounts recognised from business combinations occurring during the year TMS
Balance at end of year TFFS
Balance at end of year TFFS
Balance at end of year TFFS
Balance at end of year
Accumulated impairment losses
Balance at the beginning of year TFFS
Impairment lossed recognised in the year TFFS
Impairment lossed recognised in the year TDCP
Impairment lossed recognised in the year TMS
Total Impairment lossed recognised in the year
Balance at end of year TFFS
Balance at end of year TDCP
Balance at end of year TMS
Balance at end of year
Closing carrying value at 30 June 2014
Closing carrying value TFFS
Closing carrying value TDCP
Closing carrying value TMS
Total closing carrying value
2014
$’000
13,025
34,142
9,553
56,720
-
13,025
34,142
9,553
56,720
(1,535)
(11,490)
(18,957)
(9,553)
(40,000)
(13,025)
(18,957)
(9,553)
(41,535)
-
15,185
-
15,185
Consolidated
2013
$’000
13,025
34,142
9,413
56,580
140
13,025
34,142
9,553
56,720
(1,535)
-
-
-
-
(1,535)
-
-
(1,535)
11,490
34,142
9,553
55,185
The recoverable amount of each cash generating unit is determined based on value-in-use calculations. Value-in-use is calculated based on the present value of cash flow
projections over a three year period with the period extending beyond three years extrapolated using an estimated growth rate of 2.0% for TFFS, 2.0% for TDCP and 2.5% for TMS.
The cash flows are discounted using the weighted average cost of capital with mid-year discounting,
After completion of the value-in-use calculations, the Directors resolved to impair the Goodwill in each of the CGUs (TFFS $11,490,000 TDCP $18,957,000 and TMS $9,553,000).
70 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 17 NON-CURRENT ASSETS - GOODWILL (CONTINUED)
The following assumptions were used in the value-in-use calculations in the latest model:
Technical Field Force Solutions (TFFS)
2015
2016
2017
Terminal Year
Technical Design and Construction Projects (TDCP)
2015
2016
2017
Terminal Year
Technical Maintenance Services (TMS)
2015
2016
2017
Terminal Year
Growth Rate
WACC/Discount
Rate
25.9%
0.0%
(14.0%)
2.0%
7.1%
2.3%
(1.1%)
2.0%
9.4%
5.0%
2.4%
2.5%
17.0%
17.0%
17.0%
17.0%
18.0%
18.0%
18.0%
18.0%
16.8%
16.8%
16.8%
16.8%
Other assumptions used in the value-in-use model include Cost of Goods Sold (COGs), Operating Expenses (OPEX), Debtor Days, Creditor Days, Provisions and Work in Progress (WIP) Days.
Forecasts use historical weighted average growth rates and rates at which contracts are currently being written to project revenue. Costs are calculated taking into account
historical gross margins. Discount rates are pre-tax and are adjusted to incorporate risks associated with a particular segment.
The Board considers that it has taken a moderate view of the market conditions and business operations. Recent improvements and the future impact of planned improvements
and business re-engineering have not been fully incorporated in the value-in-use model. Management expects a potential uplift in the performance through these changes and the
overall performance of the CGUs.
Impact of possible changes to key assumptions
Growth Rate
TFFS - In a sensitivity analysis, Management estimates that a 5% reduction in top line revenue growth over the model period would cause a reduction in enterprise value of
$13,300,000 and a 5% increase in the overall revenue growth would result in an increase in enterprise value by $13,300,000. A sensitivity analysis of 5% has been chosen due to
the underlying stability of the TFFS business operation model, predominantly based on the back of long term contracts with major clients. The impact on enterprise value excludes
any compensating adjustments to operating expenses.
TDCP - In a sensitivity analysis, Management estimates that a 5% reduction in top line revenue growth over the model period would cause a reduction in enterprise value
of $9,100,000 and a 5% increase in the overall revenue growth would result in an increase in enterprise value by $9,100,000. A sensitivity analysis of 5% has been chosen
due to the mature construction market and the current environment projected over a longer term. The impact on enterprise value excludes any compensating adjustments to
operating expenses.
TMS - In a sensitivity analysis, Management estimates that a 5% reduction in top line revenue growth over the model period would cause a reduction in enterprise value of
$9,600,000 and a 5% increase in the overall revenue growth would result in an increase in enterprise value by $9,600,000. A sensitivity analysis of 5% has been chosen due to
overall growth of the construction and maintenance market conditions. The impact on enterprise value excludes any compensating adjustments to operating expenses.
BSA LIMITED ANNUAL REPORT 2014
71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 17 NON-CURRENT ASSETS - GOODWILL (CONTINUED)
Gross Margin: Revenue less Costs of Goods Sold (Direct Costs)
TFFS - In a sensitivity analysis, Management estimates that a 1% reduction in gross margin would cause a reduction in enterprise value of $23,700,000 and an improvement
in gross margin of 1% will increase the enterprise value of the division by $23,700,000. A sensitivity analysis of 1% has been chosen due to the underlying stability of the TFFS
business operation model, predominantly based on the back of long term contracts with major clients. Whilst the value-in-use model has gross margin steady, Management
anticipates that based on current initiatives that gross margin percentages may improve slightly over the value-in-use cash flow projection period.
TDCP - In a sensitivity analysis, Management estimates that a 1% reduction in gross margin would cause a reduction in enterprise value of $16,900,000 and an improvement
in gross margin by 1% would increase the enterprise value by $16,900,000. A sensitivity analysis of 1% has been chosen due to the competitive nature of the industry that TDCP
operates in that has resulted in lower than expected margin performance. Whilst the value-in-use model has gross margin steady, Management anticipates that based on current
initiatives that gross margin percentages may improve slightly over the value-in-use cash flow projection period.
TMS - In a sensitivity analysis, Management estimates that a 1% reduction in gross margin would cause a reduction in enterprise value of $8,400,000 and a 1% improvement
in gross margin would result in an increase in enterprise value of $8,400,000. A sensitivity analysis of 1% has been chosen due to the underlying stability of the TMS business
operation model, predominantly based on a spread of work across maintenance contracts, service and small project work. Whilst the value-in-use model has gross margin steady,
Management anticipates that based on current initiatives that gross margin percentages may improve slightly over the value-in-use cash flow projection period.
Operating Expense (as a percentage of Revenue)
TFFS - Management estimates that a 1% increase in OPEX would cause a reduction in enterprise value of $24,000,000 and a reduction of 1% in OPEX the enterprise value
increases by $24,000,000. While the OPEX percentage in the value-in-use model is steady over the period, Management anticipates that based on current restructuring that OPEX
percentages may reduce slightly over the value-in-use cash flow projection period.
TDCP - Management estimates that a 1% increase in OPEX would cause a reduction in enterprise value of $17,000,000 and reduction of 1% in OPEX the enterprise value
increases by $17,000,000. While the OPEX percentage in the value-in-use model is steady over the period, Management anticipates that based on current restructuring that OPEX
percentages may reduce slightly over the value-in-use cash flow projection period.
TMS - Management estimates that a 1% increase in OPEX would cause a reduction in enterprise value of $8,600,000 and a reduction of 1% in OPEX the enterprise value
increases by $8,600,000. While the OPEX percentage in the value-in-use model is steady over the period, Management anticipates that based on current restructuring that OPEX
percentages may reduce slightly over the value-in-use cash flow projection period.
Working Capital
Key components affecting working capital include debtor day collections, accounts payable days and project work in progress days. Management believe the assumptions used
in the cash flow projection period are conservative based on historical performance and do not take into account initiatives to improve these metrics going forward. Applying
sensitivity analysis impacts each respective cash-generating-unit as follows:
TFFS – A sensitivity in adversely impacting working capital based on collecting debtors two days later and paying creditors two days earlier would reduce enterprise value
by $2,000,000.
TDCP – A sensitivity in adversely impacting working capital based on collecting debtors two days later and paying creditors two days earlier, and WIP reducing two days would
reduce enterprise value by $4,400,000.
TMS - A sensitivity in adversely impacting working capital based on collecting debtors two days later and paying creditors two days earlier, and WIP reducing two days would
reduce enterprise value by $1,300,000.
Combined Scenario (Gross Margin, Working Capital, OPEX and Growth Rate)
An assessment of combining the impact of the following key variables:
•
•
•
•
Revenue reduction of 1%
Gross Margin reduction of 0.5%
OPEX increase of 0.5%
Working capital movements due to collecting debtors two days later and paying creditors two days earlier and WIP reducing two days (TDCP)
results in a potential reduction in enterprise value of $57,535,000 (Reduction by CGU’s: TFFS $25,878,000, TDCP $21,543,000, TMS $10,114,000).
In the event of the value-in-use model in line with this combined scenario occurring, Management expects that action would be taken to mitigate the impact of one or
more variables.
In the event that the value-in-use model indicates impairment, intangible assets in TDCP and TMS (Customer Relationships and Order Backlog) would be tested for impairment as
well as tangible assets for each CGU.
72
BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 18 NON-CURRENT ASSETS - OTHER INTANGIBLE ASSETS
Intangible assets, other than goodwill, have finite lives. The current amortisation for intangible assets is included under depreciation and amortisation expense per the
Consolidated Statement of Profit or Loss and Other Comprehensive Income.
Cost
Balance as at 1 July 2012
Acquisitions through business combinations
Balance at 30 June 2013
Acquisitions through business combinations
Customer
Relationships
$’000
6,900
-
6,900
-
Order
Backlog
$’000
10,079
-
Total
$’000
16,979
-
10,079
16,979
-
-
Balance at 30 June 2014
6,900
10,079
16,979
Accumulated amortisation and impairment
Balance as at 1 July 2012
Amortisation expense
Balance at 30 June 2013
Amortisation expense
Balance at 30 June 2014
Net Book Value as at 30 June 2014
Net Book Value as at 30 June 2013
(3,771)
(767)
(4,538)
(767)
(4,295)
(673)
(4,968)
(674)
(8,066)
(1,440)
(9,506)
(1,441)
(5,305)
(5,642)
(10,947)
1,595
2,362
4,437
5,111
6,032
7,473
The amortisation expense has been included in the line “depreciation and amortisation expense” in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
The following useful lives are used in the calculation of amortisation.
Customer relationships
Order backlog
9 years
1 to 9.5 years
BSA LIMITED ANNUAL REPORT 2014
73
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 19 OTHER FINANCIAL ASSETS
Shares in other corporations at cost
(a)
Shares in subsidiaries
Details of Group Companies
Parent Entity:
BSA Limited
Ultimate Parent Entity:
BSA Limited
Name of Subsidiary
Mr Broadband Pty Limited
Allstaff Airconditioning Holdings Pty Limited
Allstaff Airconditioning (VIC) Pty Limited
Allstaff Airconditioning (NSW) Pty Limited
Allstaff Airconditioning (ACT) Pty Limited
Complex Airconditioning Pty Limited
Mr Antenna Pty Limited
Satellite Receiving Systems (QLD) Pty Limited
Mr Alarms Pty Limited
MEC Services Pty Limited
BSA Transmission Solutions Pty Limited
066 059 809 Pty Limited
Triple M Group Pty Limited
Triple M Mechanical Services Pty Limited
Triple M Mechanical Services (Qld) Pty Limited
Triple M Fire Pty Limited
Triple M Mechanical Services (Administration) Pty Limited
BSA Networks Pty Limited
BurkeAir Pty Limited
(b)
Deed of Cross Guarantee:
2014
$’000
3
3
Consolidated
2013
$’000
3
3
Principal
Activity
Country of
incorporation
Percentage Owned (%)
2014
2013
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
TDCP
TDCP
TDCP
TDCP
TDCP
TDCP
TFFS
TFFS
TFFS
TMS
TFFS
TFFS
TDCP
TDCP
TDCP
TDCP
TDCP
TFFS
TMS
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
All Controlled Entities are parties to the Deed of Cross Guarantee, where relief is obtained from preparing individual financial reports under ASIC Class Order 98/1418, and are
members of the Closed Group. Under the Deed, BSA Limited agrees to support the liabilities and obligations of the Controlled Entities.
(c)
Tax Consolidation Group
All the controlled entities are part of the Tax Consolidation Group.
BSA Limited is the head entity in the Tax Consolidation Group.
74
BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 19 OTHER FINANCIAL ASSETS (CONTINUED)
19.1
Composition of the Group
Information about the composition of the Group at the end of the reporting period is as follows:
Pricipal Activity
Technical Field Force Solutions (TFFS)
Technical Design and Construction
Projects (TDCP)
Technical Maintenance Services (TMS)
Total Number of Subsidiaries
NOTE 20 DETAILS OF JOINT VENTURE
Country of
incorporation
Australia
Australia
Australia
Number of wholly-owned
subsidiaries
2014
2013
6
11
2
19
6
12
1
19
Details of the Group’s joint venture at the end of the reporting period is as follows:
Name of Joint Venture
Principal
Activity
Place of incorporation and
principal place of business
Number of wholly-owned
subsidiaries
2014
2013
Triple M and Premier Fire JV Co Limited
Installation of fire services
Australia
50%
0%
Triple M and Premier Fire JV Co Limited is a limited liability company whose legal form confers separation between the parties to the joint arrangement and the company itself.
Furthermore, there is no contractual arrangement or any other facts and circumstances that indicate that the parties to the joint arrangement have rights to the assets and
obligations for the liabilities of the joint arrangement. Accordingly, Triple M and Premier Fire JV Co Limited is classified as a joint venture of the Group.
The above joint venture is accounted for using the equity method in these consolidated financial statements.
Summarised financial information in respect of the Group’s joint venture is set out below. The summarised financial information below represents amounts shown in the joint
venture’s financial statements prepared in accordance with accounting standards (adjusted by the Group for equity accounting purposes).
Triple M and Premier Fire JV Co Limited
Current Assets
Non-current assets
Current Liabilities
Non-current liabilities
The above amounts of assets and liabilities include the following:
Cash and cash equivalents
Current financial liabilities (excluding trade and other payables and provisions)
Non-current financial liabilities (excluding trade and other payables and provisions)
2014
$’000
1,084
-
(753)
-
280
-
-
2013
$’000
-
-
-
-
-
-
-
BSA LIMITED ANNUAL REPORT 2014
75
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 20 DETAILS OF JOINT VENTURE (CONTINUED)
Revenue
Profit or loss from continuing operations
Post-tax profit (loss) from discontinued operations
Profit (loss) for the year
Other comprehensive income for the year
Total comprehensive income for the year
Dividends received from the joint venture during the year
The above profit (loss) for the year include the following:
Depreciation and amortisation
Interest income
Interest expenses
Income tax expense (income)
$’000
1,876
-
202
-
202
-
-
-
-
-
$’000
-
-
-
-
-
-
-
-
-
-
-
Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the consolidated financial statements:
Net assets of the joint venture
Proportion of the Group's ownership interest in the joint
venture
Goodwill
Other adjustments
Carrying amount of the Group’s interest in the joint venture
NOTE 21 AMOUNTS DUE FROM (T0) CUSTOMERS UNDER CONSTRUCTION CONTRACTS
Contracts in progress
Construction costs incurred plus recognised profits less recognised losses to date
Less: progress billings
Represented by amounts due:
- from customers under construction contracts (note 14)
- to customers under construction contracts (note 23)
76 BSA LIMITED ANNUAL REPORT 2014
2014
$’000
331
50%
-
-
165
2014
$’000
331,194
(271,080)
60,114
61,303
(1,189)
60,114
2013
$’000
-
0%
-
-
-
2013
$’000
339,424
(274,969)
64,455
64,734
(279)
64,445
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 22 PARENT ENTITY DISCLOSURES
(a)
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Retained earnings
Profit Reserve
Reserves
Share-based payments reserve
Cash flow hedge reserve
Total equity
(b)
Financial Performance
(Loss)/Profit for the year
Other comprehensive income for the year, net of tax
Items that may be reclassified subsequently to profit or loss:
Gain/(loss) recognised on cash flow hedges
Total comprehensive income for the year, net of tax
2014
$’000
41,365
82,423
123,788
49,972
8,002
57,974
65,814
77,797
(35,426)
22,148
1,301
(6)
65,814
(660)
35
(625)
(c)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
BSA Limited has entered into a cross guarantee with its wholly owned subsidiaries.
73,660
Consolidated
2013
$’000
32,083
79,955
112,038
33,138
12,408
45,546
66,492
77,797
(34,766)
22,148
1,354
(41)
66,492
25,580
(16)
25,564
73,660
(d)
Contingent Liabilities
Guarantees established in favour of National Australia Bank Limited and Swiss Re International SE for Guarantees issued to various clients for satisfactory contract performance,
secured by cross guarantees from all wholly owned group members amounting to $10,170,000 (2013 - $9,130,000).
BSA LIMITED ANNUAL REPORT 2014
77
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 23 TRADE AND OTHER PAYABLES
Trade payables
Other payables
Work in progress
Amounts due to customers under construction contracts (see note 21)
Total Payables
2014
$’000
45,971
16,876
14,452
1,189
78,488
Consolidated
2013
$’000
39,560
13,974
16,719
279
70,532
The average credit period on purchases is 33.2 days. The Group has financial risk management policies in place to ensure that all payables are paid within appropriate commercial terms.
78 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Note
2014
$’000
Consolidated
2013
$’000
(c), 28(iii)
(c), 28(ii)
(a)
(c), 28(iii)
(c), 28(ii)
(a)
1,629
728
13,682
29
16,068
956
2,073
5,000
8,029
2,211
673
5,300
361
8,545
2,366
2,667
8,975
14,008
NOTE 24 BORROWINGS
CURRENT
Secured liabilities at amortised cost:
Hire purchase liabilities
Lease liabilities
Bank loans
Other
Total Borrowings
NON-CURRENT
Secured liabilities at amortised cost:
Hire purchase liabilities
Lease liabilities
Bank loans
Total Borrowings
(a)
The bank loans of the Group are secured by fixed and floating charges registered by mortgage debenture over assets and undertakings of the parent entity and its subsidiaries
along with interlocking guarantees and indemnities for $73,660,000 between the parent entity and its subsidiaries.
During the period the bank facilities were renegotiated with the Company's bank. The term facilities amounting to $10,300,000 were extended to 30 March 2016. The key remaining
facilities amounting to $59,500,000, which are reviewed annually as a matter of course, were extended to 30 November 2014.
The covenants within the bank borrowings have the following ratio as at 30 June 2014:
Monthly debt service cover greater than 0.433 times,
Monthly senior debt leverage ratio less than 4.148 times,
Monthly total leverage ratio less than 7.15 times, and
Monthly trading ratio greater than 0.896 times.
(b)
Included in Current Bank loans above are $8,382,000 working capital facilities that are subject to annual rollover with the bank and term debt amortisation payments of
$5,300,000 due prior to 30 June 2015.
BSA LIMITED ANNUAL REPORT 2014
79
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 24 BORROWINGS (CONTINUED)
Total financial assets pledged as security
CURRENT
Cash and cash equivalents
Trade and other receivables
Inventories
Tax assets
NON-CURRENT
Trade and other receivables
Investment in Joint Venture
Other financial assets
Property, plant & equipment
Deferred tax assets
Goodwill
Other intangible assets
2014
$’000
5,297
86,403
4,696
1,483
97,879
1,279
165
3
14,819
8,564
15,185
6,032
46,047
Consolidated
2013
$’000
2,009
85,190
5,202
1,206
93,607
1,279
-
3
17,866
1,981
55,185
7,473
83,787
(c)
Lease liabilities and hire purchase liabilities are effectively secured as the rights to the assets recognised in the financial statements revert to the financier in the event of default.
Actual interest rates for HP liabilities outstanding during the year ranged between 5.80% and 8.35%. Actual interest rates for lease liabilities outstanding during the year ranged
between 5.57% and 9.46%. Actual interest rates for bank loans outstanding during the year was 8.59%.
(d)
There were no defaults or breaches of any loan agreements during the current year.
143,926
177,394
80 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 25 PROVISIONS
Employee benefits
Other provisions (see below)
CURRENT
NON-CURRENT
Note
(i)
Other Provisions
Office of State
Revenue (ii)
Make Good (iii)
Note
Balance as at 1 Jul 2013
Transferred from Trade and other payables as at
1 July 2013
Transferred from Other liabilities
Additional provisions recognised
Balance as at 30 June 2014
-
2,000
-
-
2,000
-
-
242
17
259
(v)
2014
$’000
9,892
11,519
21,411
19,738
1,673
21,411
Project
Provisions
(iv)
-
500
-
8,760
Consolidated
2013
$’000
9,272
-
9,272
8,054
1,218
9,272
Total
-
2,500
242
8,777
9,260
11,519
(i)
The provision for employee benefits represents annual leave and vested and non-vested long service leave entitlements accrued.
(ii)
The provision for NSW Office of State Revenue (OSR) relates to the following:
BSA has previously advised the market about a possible payroll-tax related liability with the NSW Office of State Revenue (OSR). BSA has continued, along with our legal
representatives to constructively work with the OSR to ensure an equitable and timely conclusion to this matter. BSA has a provision in its FY14 accounts of $2,000,000 (FY13
$2,000,000) and at this time there is no further information that would suggest this provision should be changed.
(iii)
The provision for make good represents the estimated cost of work to comply with make good provisions in certain Group property leases.
(iv)
The provision for project provisions represents the expected cost of obligations under construction contracts recognised at the Directors’ best estimate of the expenditure to settle
the Group’s obligation. The FY14 result was impacted by specific project provisions taken up during the year.
(v)
Additional project provisions of $8,760,000 relating to legacy project issues provided during the current year.
BSA LIMITED ANNUAL REPORT 2014
81
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 26 ISSUED CAPITAL
(a)
Share capital
Ordinary shares - fully paid
(b)
Movements in ordinary share capital
Date
Details
1 July 2012
1 July 2013
Opening Balance
Opening Balance
30 June 2014
Balance
Note
(c)
Number of
Shares
228,861,202
228,861,202
228,861,202
Parent Entity
2014
Number of
Shares
2013
Number of
Shares
228,861,202
228,861,202
$’000
77,797
77,797
77,797
Changes to the Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore the Company does not have a
limited amount of authorised capital and issued shares do not have a par value.
(c)
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
(d)
Options
At 30 June 2014 no options were held over ordinary shares of the Company.
Share options granted under the Share Option Plan carry no rights to dividends and no voting rights. Further information relating to the BSA Limited Employee Option Plan,
including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set out in Note 31.
(e)
Executive Securities Plan
The Company has established an Executive Securities Plan as a mechanism to provide the Company’s key Executives with a direct equity involvement and incentive in the
Company which aligns them with the shareholders.
(f)
Dividend Reinvestment Plan
The Company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the
issue of new ordinary shares rather than by being paid in cash. The Dividend Reinvestment Plan has been suspended since the final dividend for 30 June 2012.
(g)
Rights
Information relating to the BSA Limited Performance Rights Plan, including details of rights issued, exercised and lapsed during the financial year and rights outstanding at the
end of the financial year, is set out in Note 31.
82 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 27 RESERVES AND ACCUMULATED LOSSES
(a)
Reserves
Cash flow hedging reserve
Share-based payments reserve
Cash flow hedging reserve
Opening balance
Gain/(Loss) recognised on cash flow hedges
Closing balance
2014
$’000
(6)
1,301
1,295
(41)
35
(6)
Consolidated
2013
$’000
(41)
1,354
1,313
(25)
(16)
(41)
The cash flow hedging reserve represents the cumulative portion of gains and losses on hedging instruments deemed effective in cash flow hedges. The cumulative deferred
gain or loss on the hedging instrument is reclassified to profit or loss only when the hedged transaction affects the profit or loss, or is included as a basis adjustment to the non-
financial hedged item, consistent with the relevant accounting policy.
Share-based payments reserve
Opening balance
Rights expense
Shares issued in satisfaction of performance conditions
Closing balance
1,354
42
(95)
1,301
1,522
(129)
(39)
1,354
The share-based payments reserve relates to share options and share rights granted to employees under the Employee Share Option Plan and the Employee Performance Rights
Plan. Further information about share-based payments to employees is set out in note 31.
The share-based payments reserve records items recognised as expenses on valuation of employee share options and rights.
(b)
Accumulated losses
Movements in accumulated losses were as follows:
Balance at beginning of year
Net loss for the year
Balance at end of year
(c)
Profit Reserve
Movements in profit reserve were as follows:
Balance at beginning of year
Net profit for the year
Dividends
Balance at end of year
(8,177)
(54,847)
(63,024)
3,862
-
-
3,862
(8,177)
-
(8,177)
3,532
3,763
(3,433)
3,862
BSA LIMITED ANNUAL REPORT 2014
83
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 27 RESERVES AND ACCUMULATED LOSSES (CONTINUED)
(d)
Dividends on equity instruments
Recognised amounts
Fully paid ordinary shares
Interim dividend:
Final dividend:
Unrecognised amounts
Fully paid ordinary shares
Final dividend:
Year ended 30/06/14
Year ended 30/06/13
Cents per share
Total ‘000
Cents per share
Total ‘000
-
-
-
-
-
-
0.50
1.00
1,144
2,289
-
-
The Directors have not recommended the payment of a final dividend in respect of the year ending 30 June 2014.
(e)
Franked credits
Franking account balance as at 30 June
2014
$’000
16,285
Consolidated
2013
$’000
17,361
84 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 28 CAPITAL AND LEASING COMMITMENTS
Note
2014
$’000
Consolidated
2013
$’000
(i)
Operating Lease Commitments
The Group leases various offices and warehouses under non-cancellable operating leases expiring within one to five years. The leases have varying terms, escalation clauses and
renewal rights. On renewal, the terms of the leases are renegotiated.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
(ii)
Finance Lease Commitments
4,797
4,090
-
8,887
4,254
9,907
-
14,160
The Group leases various plant and equipment with a carrying amount of $3,323,000 (2013: $3,895,000) under finance leases expiring within one to four years. Under the terms of
the leases, the Group has the option to acquire the leased assets after paying the residual amount on expiry of the leases.
Commitments in relation to finance leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Minimum lease payments
Less future finance charges
Total Lease Liability
Represented by:
Current liability
Non-current liability
(iii)
Hire Purchase Commitments
936
2,280
-
3,216
(415)
2,801
728
2,073
2,801
877
2,940
-
3,817
(477)
3,340
673
2,667
3,340
24
24
The Group has purchased various plant and equipment with a carrying amount of $1,362,000 (2013: $2,361,000) under hire purchase agreements expiring within one to four
years. Under the terms of the agreements, the Group has the option to acquire the assets after paying the residual amount on expiry of the agreements.
Commitments in relation to hire purchase agreements are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Minimum payments
Less future finance charges
Total Hire Purchase Liability
Represented by:
Current liability
Non-current liability
1,832
979
-
2,811
(226)
2,585
1,629
956
2,585
24
24
BSA LIMITED ANNUAL REPORT 2014
2,499
2,442
-
4,941
(364)
4,577
2,211
2,366
4,577
85
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 29 SEGMENT INFORMATION
(a)
AASB 8 Operating Segments
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision
maker in order to allocate resources to the segment and to assess its performance.
(b)
Products and services from which reportable segments derive their revenues
The Group is organised into the following reportable segments:
Technical Field Force Solutions (TFFS)
Technical Field Force Solutions provides contracting services to the telecommunications, subscription television and communication industries. The contracting services include
the delivery of bundled services over hybrid fibre coax network, the installation of subscription television, the installation of free to air television antennas and security systems.
Technical Design and Construction Projects (TDCP)
Technical Design and Construction Projects provides the design and installation of building services for commercial and industrial buildings including: Mechanical Services, Air
Conditioning, Heating and Ventilation, Refrigeration and Fire services.
Technical Maintenance Services (TMS)
Technical Maintenance Services provides the maintenance of building services for commercial and industrial buildings including: Mechanical Services, Air Conditioning, Heating
and Ventilation, Refrigeration and Fire services.
(c)
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable operating segments:
Technical Field Force Solutions
Technical Design and Construction Projects
Technical Maintenance Services
Other
Corporate costs including acquisition, legal and advisory
Finance costs
(Loss)/Profit before tax
Revenue
Year Ended
30 Jun 14
$’000
158,933
234,138
98,525
94
491,690
30 Jun 13
$’000
134,805
249,706
89,763
310
474,584
Segment Profit
Year Ended
30 Jun 14
$’000
30 Jun 13
$’000
(9,356)
(33,734)
(9,436)
-
(52,526)
(6,457)
(2,319)
3,660
3,521
2,631
-
9,812
(5,082)
(1,932)
(61,302)
2,798
Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year (2013: Nil)
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note 3. Segment profit/loss represents the profit/loss earned by
each segment without allocation of central administration costs and Directors’ salaries, investment income, gains and losses, finance costs and income tax expense. This is the
measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.
86 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 29 SEGMENT INFORMATION (CONTINUED)
(d)
Segment assets and liabilities
Segment assets
Technical Field Force Solutions
Technical Design and Construction Projects
Technical Maintenance Services
Year Ended
30 Jun 14
$’000
86,105
54,083
3,738
30 Jun 13
$’000
100,561
60,311
16,522
Consolidated assets
143,926
177,394
Segment liabilities
Technical Field Force Solutions
Technical Design and Construction Projects
Technical Maintenance Services
Consolidated liabilities
57,977
53,775
12,244
44,073
42,592
15,934
123,996
102,599
For the purposes of monitoring segment performance and allocating resources between segments.
*
*
All assets, except cash, are allocated to reportable segments. In 2014, cash is allocated to TFFS, who operate the Group's treasury. Goodwill is allocated to reportable segments as
described in note 17. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments; and
All liabilities are allocated to reportable segments. Liabilities for which reportable segments are jointly liable are allocated in proportion to segment assets.
(e)
Other segment information
Continuing operations
Technical Field Force Solutions
Technical Design and Construction Projects
Technical Maintenance Services
Depreciation and amortisation
Additions to non-current assets
Year Ended
Year Ended
30 Jun 14
$’000
30 Jun 13
$’000
30 Jun 14
$’000
30 Jun 13
$’000
2,994
2,379
2,956
8,329
3,055
2,528
2,859
8,442
2,500
420
1,034
3,954
5,149
1,570
2,892
9,611
In addition to the depreciation and amortisation reported above, impairment losses of $40,000,000 (2013: nil) were recognised in respect of goodwill. These impairment losses
were attributable to the following reportable segment.
Impairment losses recognised for the year in respect for goodwill
Technical Field Force Solutions
Technical Design and Construction Projects
Technical Maintenance Services
30 Jun 14
$’000
30 Jun 13
$’000
11,490
18,957
9,553
40,000
-
-
-
-
BSA LIMITED ANNUAL REPORT 2014
87
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 29 SEGMENT INFORMATION (CONTINUED)
(f)
Geographical information
The Group only operates in Australia.
The Group’s revenue from continuing operations from external customers and information about its non-current assets by geographical location are detailed below.:
Revenue from external customers
Year ended
Non-current assets
Year Ended
30 Jun 14
$’000
491,791
491,791
30 Jun 13
$’000
474,584
474,584
30 Jun 14
46,047
46,047
30 Jun 13
$’000
83,787
83,787
Australia
(g)
Information about major customers
The Group has a number of customers to whom it provides both products and services. The Group supplies a single external customer in the Technical Field Force Solutions
segment who accounts for 22% of external revenue (2013:18%). The Group’s next most significant client is in the Technical Design and Construction segment and accounts for 7%
of external revenue (2013: 13%).
88 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 30 CASH FLOW INFORMATION FOR THE PERIOD
(a)
Reconciliation of (loss}/profit to net cash flows from operating activities for the year
(Loss)/Profit for the year
Depreciation
Amortisation
Impairment of Intangibles
Share-based payment expense
Net (profit) on sale of non-current assets
Change in operating assets and liabilities
Decrease/(increase) in trade receivables
Decrease/(increase) in inventories
Increase in deferred tax asset
(Increase)/decrease in other operating assets
Increase/(decrease) in trade payables
Increase/(decrease)in other operating liabilities
(Increase) in tax receivable
Increase in provisions
Net cash generated/(used by) operating activities
2014
$’000
(54,847)
6,888
1,441
40,000
42
(84)
6,660
506
(6,583)
(7,873)
6,411
1,158
(277)
12,139
5,581
2014
$’000
Consolidated
2013
$’000
3,763
7,002
1,440
-
(129)
(47)
(9,636)
(2,161)
(538)
3,638
(1,362)
(12,894)
(5,878)
278
(16,524)
Consolidated
2013
$’000
(b)
(i)
Non-cash transactions
During the year the consolidated entity acquired plant and equipment with an aggregate value of $470,000 (2013:$3,942,000) by means of finance leases. These acquisitions are
not reflected in the cash flow statement.
(c)
Working Capital Facilities
Credit facility
Amount utilised
Unused credit facility
The major facility is summarised as follows:
A working capital facility which covers the financial requirements of the day to day operations of the Group.
(d)
Master Asset Finance Facility
Total asset finance facility
Used at balance date
Total unused Master Asset Finance Facility
27,000
(8,382)
18,618
7,500
(5,386)
2,114
16,000
-
16,000
10,500
(7,917)
2,583
BSA LIMITED ANNUAL REPORT 2014
89
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 30 CASH FLOW INFORMATION FOR THE PERIOD (CONTINUED)
(e)
Loan facilities
Loan facilities
Amount utilised
Unused loan facility
The major facilities are summarised as follows:
Acquisition Finance Loans
2014
$’000
10,300
(10,300)
-
Consolidated
2013
$’000
14,636
(14,636)
-
Loan 1 is for $2,375,000 and is fully drawn and has an expiry date of 30 March 2016. The current interest rate is 8.59% (2013: 8.77%) Loan 2 is for $1,625,000 and is fully drawn
and has an expiry date of 30 March 2016. The current interest rate is 8.59% (2013: 8.77%). Loan 3 is for $6,300,000 and has an expiry date of 30 March 2016. The current interest
rate is 8.59% (2013: 8.77%).
Finance will be provided under the facility provided the Company and the consolidated entity has not breached any borrowing requirements and the required financial ratios are met.
During the year, the Company and the consolidated entity have not breached any borrowing requirements.
(f)
Guarantees
Guarantees to the value of $23,328,000 were utilised at 30 June 2014 (2013: $23,276,000), are secured by fixed and floating charge to the bank over the assets of the Company
together with guarantees in favour of the parent given by all controlled entities.
(g)
Surety Bonds
Surety Bonds of which $13,703,000 were utilised at 30 June 2014 (2013: $23,606,000), are unsecured.
NOTE 31 SHARE-BASED PAYMENTS
(a)
Employee Option Plan
The establishment of the BSA Limited Employee Option Plan was approved by shareholders at the 2004 AGM. Staff eligible to participate are those who are full-time or
permanent part-time employees of any company in the Group, including an Executive Director and Non-Executive Director of the company and whom the Board of Directors has
sole discretion to determine to be eligible to participate but does not include a person who has a relevant interest in greater than 5% of the issued ordinary share capital of the
Company.
The exercise price and exercise period applicable to any options to be offered under the Option Plan will, at or before the time of issuing an invitation to eligible employees to
subscribe for options, be determined by the Board in its absolute discretion.
Subject to any restrictions in the Listing Rules or the Corporations Act 2001, the Board may in its absolute discretion impose on the options such other terms as it considers appropriate.
As soon as practicable after receipt of a valid notice of exercise of an option together with the exercise price the Company will allot the appropriate number of ordinary shares. Any
shares issued on the exercise of the options granted pursuant to the resolution will be officially quoted and will rank equally with all other shares on issue in the Company and all the
rights and entitlements of the holders in respect of those shares will be identical to the rights and entitlements of the holders of the currently issued shares in the Company.
Options can only be exercised after three years if the employee remains in the employment of the Company and the option will then expire two years after this date. If the
employee terminates their employment within the three years, the option is exercisable for 12 months from the date after termination. If the Company is subject to a takeover the
option will vest and be exercisable for a period of three months.
Options may not be transferred, though prior to issue a nominee may be advised for consideration by the Board.
There were no options outstanding at 30 June 2014 (2013: Nil).
Fair value of options granted
There have been no options granted since 25 November 2004.
There is no employee benefits expense in the Consolidated Statement of Profit or Loss and Other Comprehensive Income (2013: nil), which relates, in full, to
equity-settled share-based payment transactions.
90 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 31 SHARE-BASED PAYMENTS (CONTINUED)
(b)
Employee Share Scheme
A scheme under which shares were issued by the Company to employees for no cash consideration was ratified by shareholders at the 2004 AGM. All permanent employees
(including Executive Directors) who were continuously employed by the consolidated entity for a period of at least one year were eligible to participate in the scheme. Employees
could elect not to participate in the scheme.
Under the scheme, eligible employees were offered $1,000 worth of fully-paid ordinary shares in BSA Limited for the Year Ended 30 June 2004 for no cash consideration. The
market value of shares issued under the scheme, measured as the weighted average market price on the day of issue of the shares, was recognised in the balance sheet as share
capital and as part of employee benefit cost.
Offers under the scheme are at the discretion of the Company. No offers were made during year the ended 30 June 2014 (2013: Nil).
Shares under the scheme may not be sold until the earlier of three years after issue or cessation of employment with the consolidated entity. In all other aspects the shares rank
equally with other fully-paid ordinary shares on issue (see note 26(c)).
The number of shares issued to participants in the scheme is the offered amount divided by the weighted average price at which the Company's shares are traded on the
Australian Stock Exchange during the five trading days immediately before the date of the offer.
(c)
Executive Securities Plan
The establishment of the BSA Executive Securities Plan was approved by shareholders at the 2005 AGM. The Plan was established as a mechanism to provide the Company's key
Executives with a direct equity involvement and incentive in the Company which aligns them with the shareholders.
The number of securities to be offered and the time at which securities may be offered from time to time to Executives and the price and terms of payment, shall be determined by
the Board in its discretion.
The Board may at such times as it determines invite any Executive to be a member of the Plan.
If an Executive to whom an invitation has been issued forwards to the Company a duly completed Loan Application and the Transfer Documents together with his acceptance, and
where appropriate his Application for Shares, then the Company shall, in accordance with the terms of the Loan Agreement, lend to the Executive such amount as the Executive has
applied for in the Loan Application.
The maximum amount of any Loan shall be the total subscription price for the shares applied for.
No interest is payable by the borrower under the Loan Agreement.
An Executive shall not sell, mortgage, charge, assign or otherwise dispose of or encumber any shares before payment or repayment of any amount outstanding to the Company in
respect thereof.
Subject to the above restriction and to the terms of the Loan Agreement (if any) deemed to be entered into by the Executive, an Executive shall from the Date of Allotment, be the
absolute beneficial owner of the shares.
Unless the Directors of the Company otherwise provide in the terms of any Invitation, all Plan Shares shall rank for dividends declared on or after the Date of Allotment and shall
in all respects rank equally with and have the same rights and entitlements as all other fully paid ordinary shares of the Company.
Under the Loan Agreement, the borrower shall repay the balance outstanding of the Outstanding Principal when the borrower ceases to be an employee or Director of the Lender.
BSA Limited has adopted the policy of having a rolling three year maturity date for all Executives who do not have a termed employment contract.
Set out below are summaries of securities accepted under the plan:
Grant Date
Expiry Date
Issue Price
(cents)
Balance at Start
of the Year
Granted During
the Year
Released from Escrow
During the Year
Balance in Escrow at
End of the Year
Number
Number
Number
Number
Consolidated and parent entity
13 Oct 2006
19 Jul 2007
11 Sep 2007
13 Sep 2007
14 Dec 2007
10 Feb 2009
Total
0.23
0.63
0.68
0.68
0.68
0.10
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
BSA LIMITED ANNUAL REPORT 2014
91
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 31 SHARE-BASED PAYMENTS (CONTINUED)
(d)
Employee Performance Rights Plan
The establishment of the BSA Employee Performance Rights Plan was approved by shareholders at the 2008 AGM. The Plan was established to reward selected eligible employees
and to:
•
•
•
•
•
Provide an incentive for the creation of, and focus on, shareholder wealth;
Enable the Company to recruit and retain the talented people needed to achieve the Company's business objectives;
Link the reward of key staff with the achievement of strategic goals and the performance of the Company;
Align the financial interests of participants in the Plan with those of Company shareholders; and
Ensure the remuneration packages of employees are consistent with market practice.
Securities may be offered under the Plan and the Board has discretion to determine who is offered the opportunity to participate.
Generally, securities are subject to a holding restriction and cannot be traded unless certain performance conditions are met or as otherwise specified at the time of the relevant
award after acquisition by the participant.
Rights to acquire shares will not be exercisable until the end of the final measurement period, and until those rights have satisfied all vesting conditions and all performance
hurdles established by the Board. This is subject to a number of exceptions (including death, cessation of employment, takeovers and schemes of arrangement). The rights have a
specified life determined by the Board. The initial grant of rights (the Grant Date) will have a life terminating five years after the Grant Date or such other date as determined by
the Board (the Expiry Date).
Rights granted to certain participants in the initial grant will be at zero vesting value and will be subject to the following performance conditions as determined by the Board:
(i) Service condition of three years; or
(ii) The Company's performance as measured by earnings per share ("EPS") being the EPS for the relevant Measurement Period as determined by the Board having regard to
the financial statements. Certain growth in EPS for the shares must be attained in respect of each Measurement Period and pro rata in respect of each Measurement Period and
service condition of three years.
The Board will prescribe the date when performance under the hurdle is measured for each tranche.
On or after the end of the final measurement period and provided any performance hurdle prescribed by the Board has been achieved and, where applicable, to the extent it has
been achieved, the Plan Participant may then acquire shares by exercising the rights.
A right lapses if it is not exercised by the Expiry Date.
The Exercise Price (if any) will be an amount determined by the Board from time to time, fixed at the date of grant or determined by application of methodology
approved by the Board.
Once Rights have been exercised by an Eligible Employee (subject to certain Performance Conditions being met), the Company may make non-refundable contributions to the Plan
Company to either:
- fund the purchase of a new Plan Share; or
- the acquisition on the ASX of an existing share and transfer to the participant of that share, to which the Participant is entitled under the rights.
The plan company is Computershare Plan Co Pty Limited ACN 098 404 696 or any other Company that the Board may approve from time to time. After rights are exercised, the
plan company will subscribe for new shares or acquire shares in the ordinary course of trading on the ASX for participants, as directed from time to time by the Board.
Consolidated and parent entity
Grant Date
Exercise Date
Expiry Date
Issue Price
(cents)
Balance at Start
of the Year
Granted During
the Year
Released from
Escrow During the
Year
Cancelled During
the Year
Balance in Escrow at
End of the Year
Number
Number
Number
Number
Number
10 Feb 2009
10 Feb 2012
10 Feb 2014
29 Sep 2009
29 Sep 2012
29 Sep 2014
24 Aug 2010
24 Aug 2013
24 Aug 2015
14 Nov 2011
14 Nov 2014
14 Nov 2016
-
-
-
Total
115,000
986,967
1,365,500
3,096,000
5,563,467
-
-
-
-
-
(115,000)
(78,967)
(457,500)
(74,000)
-
(454,000)
(454,000)
(1,973,000)
-
454,000
454,000
1,049,000
(725,467)
(2,881,000)
1,957,000
92 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 32 EVENTS OCCURING AFTER THE BALANCE SHEET DATE
The Directors are not aware of any significant events since the end of the reporting period.
NOTE 33 RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions no more favourable than those to other parties unless otherwise stated.
(a)
Transactions with related parties:
Rent was paid to The Day Street Unit Trust in which M Lowe, a Director, has a beneficial interest
108,000
2014
$
Consolidated Entity
2013
$
96,000
Outstanding balances arising from purchases of services
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Purchase of services
Rent for premises from Director
(b)
Equity instrument disclosures relating to key management personnel
(i) Rights holdings
-
192,000
The numbers of rights over ordinary shares in the Company held during the financial year by each Director of BSA Limited and other key management personnel of the Group,
including their personally related parties, are set out below.
2014
Stephen Nash
Karl Nixon
2013
Stephen Nash
Karl Nixon
Balance at
Start of Year
Granted as
Compensation
Rights
Exercised
Net Change
Other
Balance at End
of Year
Vested but Not
Exercisable
Vested and
Exercisable
Rights Vesting
During Year
1,360,000
1,521,000
2,881,000
-
-
-
-
-
-
( 1,360,000)
( 1,521,000)
( 2,881,000)
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
start of year
Granted as
Compensation
Rights
Exercised
Net Change
Other
Balance at end
of year
Vested but not
exercisable
Vested and
exercisable
Rights vesting
during year
1,360,000
1,521,000
2,881,000
-
-
-
-
-
-
-
-
-
1,360,000
1,521,000
2,881,000
-
-
-
-
-
-
-
-
-
Further details of schemes can be found in the Directors' Report.
BSA LIMITED ANNUAL REPORT 2014
93
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 33 RELATED PARTY TRANSACTIONS (CONTINUED)
(ii) Share holdings
The numbers of shares in the Company held during the year by each Director of BSA Limited and other key management personnel of the Group, including their personally related
parties, are set out below. There were no shares granted during the reporting period as compensation.
Rights
Exercised
Other Changes
During the Year
Balance at the
End of the Year
Balance
Held Nominally
-
-
-
-
-
-
-
-
-
-
-
-
63,057,156
( 58,333,195)
1,209,315
10,115,403
404,769
230,000
-
-
-
-
63,057,156
63,057,156
-
-
-
-
200,000
4,723,961
75,216,643
63,057,156
Rights
Exercised
Other Changes
During the Year
Balance at the
End of the Year
Balance
Held Nominally
-
-
-
-
-
-
-
-
( 425,000)
-
-
-
( 58,333,195)
58,333,195
1,209,315
10,115,403
404,769
230,000
-
-
-
-
-
-
58,333,195
58,333,195
-
200,000
-
( 425,000)
70,492,682
58,333,195
2014
Directors of BSA Limited
Ordinary Shares
Ross Johnston
Mark Lowe
Paul Teisseire
Michael Givoni
Max Cowley
Daniel Collis
Ordinary Shares - Escrowed
Mark Lowe
2013
Directors of BSA Limited
Ordinary Shares
Ross Johnston
Mark Lowe
Paul Teisseire
Michael Givoni
Max Cowley
Daniel Collis
Ordinary Shares - Escrowed
Mark Lowe
Balance at
the start of
the year
1,209,315
10,115,403
404,769
230,000
-
58,333,195
200,000
70,492,682
Balance at
the start of
the year
1,634,315
10,115,403
404,769
230,000
58,333,195
-
200,000
70,917,682
94 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 33 RELATED PARTY TRANSACTIONS (CONTINUED)
(c)
Executive Securities Loans
Opening
Balance
$000
Balance at
End of Year
$000
Notional
Interest
Charged
$000
Notional
Interest
Not Charged
$000
Provision for
Impairment
$000
Number of
Individuals
1,473
1,477
2,552
2,656
2,487
2,437
1,029
833
807
1,473
1,473
1,477
2,552
2,656
2,487
2,437
1,029
833
90
90
93
44
334
171
148
63
26
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
11
11
13
13
13
13
6
1
2014
2013
2012
2011
2010
2009
2008
2007
2006
Individuals with loans above $100,000 in reporting period
2014
Opening Balance
Notional Interest Charged Using
Effective Interest Rate Method
Balance at End
of Year
Highest Balance
During Period
Brendan Foley
Ray Larkin
Leaston Paull
Bryce Wood
Peter Tripodi *
Younis Tehfe
$
490,499
188,844
188,844
160,332
143,750
112,397
* Balance at year end stated at actual date to the terms of the loans
$
34,334
13,219
13,219
11,223
-
7,868
$
490,499
188,844
188,844
160,332
143,750
112,397
$
490,499
188,844
188,844
160,332
143,750
112,397
2013
Opening Balance
Notional Interest Charged Using
Effective Interest Rate Method
Balance at End
of Year
Highest Balance
During Period
Brendan Foley
Ray Larkin
Leaston Paull
Bryce Wood
Peter Tripodi *
Younis Tehfe
$
490,499
188,844
188,844
160,332
147,500
112,397
* Balance at year end stated at actual due to the terms of the loans.
$
34,334
13,219
13,219
11,223
-
7,868
$
490,499
188,844
188,844
160,332
143,750
112,397
$
490,499
188,844
188,844
160,332
147,500
112,397
The above current loans represent unsecured loans to purchase shares in BSA Limited which was passed at a meeting of members held on 12 December 2005. The shares were
issued between 13 October 2006 and 10 February 2009 at values ranging from 10.0 cents per share and 68.0 cents per share. The loans are repayable on the termination of each
individual from the Company and do not bear interest. These loans have been booked into the accounts at net present value on a rolling three year basis.
At the discretion of the Board, the above loan to Peter Tripodi was not repaid at the termination date. The outstanding principal is now due and receivable and actions to recover
are under way.
BSA LIMITED ANNUAL REPORT 2014
95
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 34 FINANCIAL INSTRUMENTS
Fair value of financial instruments carried at amortised cost
The Directors consider that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair values.
Financial Assets
Cash and cash equivalents
Loans and receivables
Trade and other receivables
Financial Assets at amortised cost
Financial liabilities
Financial liabilities held at amortised cost
Trade and other payables
Borrowings
Financial liabilities at amortised cost
NOTE 35 FINANCIAL RISK MANAGEMENT
(a)
General objectives, policies and processes
2014
$’000
Consolidated
2013
$’000
5,297
2,009
87,682
92,979
78,488
24,097
102,585
86,469
88,478
70,532
22,553
93,085
In common with all other businesses, the Group is exposed to financial risks that arise. This note describes the Group’s objectives, policies and processes for managing those risks
and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used
to measure them from previous periods unless otherwise stated in this note.
The principal financial instruments from which financial instrument risk arises are:
- Trade receivables;
- Cash at bank;
- Bank overdrafts;
- Trade and other payables; and
- Borrowings.
The Board has overall responsibility for the determination of the Group’s risk management objectives and polices and, whilst retaining ultimate responsibility for them, it has
delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group’s Finance function. The
Group’s risk management policies and objectives are therefore designed to minimise the potential impacts of these risks on the results of the Group where such impacts may
be material. The Board receives monthly reports from the Finance department through which it reviews the effectiveness of the processes put in place and the objectives and
policies it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility.
Further details regarding these policies are set out below.
96 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 35 FINANCIAL RISK MANAGEMENT (CONTINUED)
(b)
Credit Risk
Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Group incurring a financial loss. This usually occurs when
debtors fail to settle their obligations owing to the Group.
Trade receivables consist of a large number of customers. The Group does not have significant credit risk exposure to any single counterparty or group of counterparties having
similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities. Concentration of credit risk to the largest counterparty did
not exceed 12% of gross monetary assets at balance date. Concentration of credit risk to any other counterparty did not exceed 10% of gross monetary assets at balance date.
The maximum exposure to credit risk at balance date is as follows:
Receivables
Included in loans and receivables, the most significant customer accounts for 13.3% of trade receivables at 30 June 2014 (2013:9.4%).
The maximum exposure to credit risk at balance date by country is as follows:
Australia
The maximum exposure to credit risk for cash and trade receivables at balance date by type of customer is as follows:
Technical Field Force Solutions
Technical Design and Construction Projects
Technical Maintenance Services
2014
$’000
87,682
87,682
2014
$’000
87,682
87,682
2014
$’000
29,482
49,531
8,669
87,682
Consolidated
2013
$’000
86,469
86,469
Consolidated
2013
$’000
86,469
86,469
Consolidated
2013
$’000
25,812
47,111
13,546
86,469
The Group’s most significant customer, a Technical Design and Construction Projects customer, accounts for $10,221,000 of trade receivables at 30 June 2014. At
30 June 2013, the Group’s most significant customer was a Technical Design and Construction Projects customer which accounted for $8,416,000.
All major customers are credit worthy, as detailed above
The Group has significant concentration of credit risk as all loans and lease liabilities are with the one financial institution.
BSA LIMITED ANNUAL REPORT 2014
97
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 35 FINANCIAL RISK MANAGAMENT (CONTINUED)
(c)
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the
management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The table below sets out details of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk.
Financing arrangements
The following financing facilities were available at balance date:
2014
$’000
11,000
16,000
27,000
-
8,382
8,382
11,000
7,618
18,618
10,300
10,300
-
18,618
7,500
5,386
2,114
20,732
Consolidated
2013
$’000
-
16,000
16,000
-
-
-
-
16,000
16,000
14,275
14,275
-
16,000
10,500
7,917
2,583
18,583
Working Capital Facilities
Total facilities:
Multi Option Facility
Debtor Finance Facility
Used at balance date:
Multi-Option Facility
Debtor Finance Facility
Unused at balance date:
Multi-Option Facility
Debtor Finance Facility
Total unused Working Capital Facility
Bank loans
Total facilities:
Used at balance date
Total unused Term Loans
Total unused credit facilities at balance date
Master Asset Finance Facility
Total facilities:
Used at balance date
Total unused Master Asset Finance Facility
Total unused Facilities at balance date
Refer Note 24(a) for details of terms of financing arrangements.
98 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 35 FINANCIAL RISK MANAGEMENT (CONTINUED)
Maturity Analysis - Group
The following table details the Group’s remaining contractual maturity for its financial liabilities with agreed repayment periods. The table has been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. To
the extent that interest flows are at floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based
on the earliest date on which the Group may be required to pay.
The table below includes the weighted average effective interest rate and a reconciliation to the carrying amount in the Statement of Financial Position as an example of summary
quantitative data about exposure to interest rates at the end of the reporting period that an entity may provide internally to management personnel.
Financial Liabilities
30 June 2014
Bank loans
Other
Trade creditors
Other payables
Finance lease liabilities
TOTAL
30 June 2013
Bank loans
Other
Trade creditors
Other payables
Finance lease liabilities
TOTAL
Carrying
Amount
$’000
18,682
29
45,971
53,928
5,386
123,996
Carrying
Amount
$’000
14,275
361
39,560
40,244
7,917
102,357
Contractual Cash
Flows
$’000
20,032
29
45,971
53,928
6,027
125,987
Contractual Cash
Flows
$’000
15,293
361
39,560
40,244
8,758
104,216
< 6
mths
$’000
11,806
29
45,971
53,928
1,384
113,118
< 6
mths
$’000
3,189
361
39,560
40,244
1,688
85,042
6- 12
mths
$’000
2,950
-
-
-
1,384
4,334
6- 12
mths
$’000
3,073
-
-
-
1,688
4,761
1-3
years
$’000
5,276
-
-
-
3,259
8,535
1-3
years
$’000
9,031
-
-
-
5,382
14,413
> 3
years
$’000
-
-
-
-
-
-
> 3
years
$’000
-
-
-
-
-
-
The following table details the Group’s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of
the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the
Group’s liquidity risk management as the liquidity is managed on a net asset and liability basis.
Financial Assets
30 June 2014
Trade debtors
Other receivables
TOTAL
30 June 2013
Trade debtors
Other receivables
TOTAL
Carrying
Amount
$’000
10,269
77,413
87,682
Carrying
Amount
$’000
11,315
75,154
86,469
Contractual Cash
Flows
$’000
10,706
80,195
90,901
Contractual Cash
Flows
$’000
11,399
75,751
87,150
< 6
mths
$’000
10,706
78,723
89,429
< 6
mths
$’000
11,399
74,279
85,678
6- 12
mths
$’000
-
1
1
6- 12
mths
$’000
-
1
1
1-3
years
$’000
-
192
192
1-3
years
$’000
-
192
192
> 3
years
$’000
-
1,279
1,279
> 3
years
$’000
-
1,279
1,279
BSA LIMITED ANNUAL REPORT 2014
99
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 35 FINANCIAL RISK MANAGEMENT (CONTINUED)
(d)
Market Risk
Interest rate risk
The Group’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The risk is managed by the
Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to
align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
Sensitivity Analysis
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period.
For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 2%
increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change
in interest rates.
Consolidated
2014
Borrowings AUD
Tax effect (30%)
After tax increase/(decrease)
Carrying Amount AUD
+2% of AUD IR
-2% of AUD IR
$’000
18,682
-
18,682
Profit
$’000
Other Equity
$’000
374
(112)
262
-
-
-
Profit
$’000
(374)
112
(262)
Other Equity
$’000
-
-
-
The above analysis assumes all other variables remain constant.
The same analysis was performed for the period ended 2013.
Consolidated
2013
Borrowings AUD
Tax effect (30%)
After tax increase/ (decrease)
Carrying Amount AUD
+2% of AUD IR
-2% of AUD IR
$’000
14,636
-
14,636
Profit
$’000
293
(88)
205
Other Equity
$’000
-
-
-
Profit
$’000
(293)
88
(205)
Other Equity
$’000
-
-
-
The above analysis assumes all other variables remain constant.
Interest rate swap contracts
Under interest rate swap contracts, the Group agrees to exchange the difference between the fixed and floating rate interest amounts calculated on agreed notional principal amounts.
Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt and the cash flow exposures on the issued variable rate debt.
The fair value of interest rate swaps at the end of the reporting period is determined by discounting the future cash flows using the curves at the end of the reporting period and the
credit risk inherent in the contract, and is disclosed below. The average interest rate is based on the outstanding balances at the end of the reporting period.
The following tables detail the notional principal amounts and remaining terms of interest rate swap contracts outstanding at the end of the reporting period:
100 BSA LIMITED ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 35 FINANCIAL RISK MANAGEMENT (CONTINUED)
Cash flow hedges
Outstanding receive floating
pay fixed contracts
Average Contracted
Fixed Interest Rate
Notional Principal Value
Fair Value
Less than 1 year
1 to 2 years
2014
%
8.59
8.59
2013
%
8.77
8.77
2014
$’000
-
4,488
4,488
2013
$’000
7,138
-
7,138
2014
$’000
-
(6)
(6)
2013
$’000
(41)
-
(41)
The interest rate swaps settle on a quarterly basis. The floating rate on the interest rate swaps is the local interbank rate of Australia. The Group will settle the difference between
the fixed and floating interest rate on a net basis.
All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges in order to reduce the Group's
cash flow exposure resulting from variable interest rates on borrowings. The interest rate swaps and the interest payments on the loan occur simultaneously and the amount
accumulated in equity is reclassified to profit or loss over the period that the floating rate interest payments on debt affect profit or loss.
Cash flow hedges are regarded as a Level 2 financial instrument. Level 2 fair value measurements are those derived from inputs other than quoted prices that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
NOTE 36 CAPITAL RISK MANAGEMENT
In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through a combination of capital
growth and distributions. In order to achieve this objective, the Group seeks to maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain
a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims,
either through altering its dividend policy, new share issues or the reduction of debt, the Group considers not only its short-term position but also its long-term operational and
strategic objectives.
It is the Group’s policy to review its gearing ratio to ensure adequate funds are available to meet its obligations. The Group’s gearing ratio at the balance date is shown below :
Gearing ratios
Net (cash) / debt
Total equity
Total Gearing Ratio
2014
18,800
19,930
94.33%
Consolidated
2013
20,544
74,795
27.47%
Gearing levels have increased due to impairment of intangible assets and non-recurring project provisions and profit reductions. It is the Board’s intention to monitor gearing
levels going forward. There have been no other significant changes to the Group’s capital management objectives, policies and processes in the year nor has there been any
change in what the Group considers to be its capital.
BSA LIMITED ANNUAL REPORT 2014
101
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
NOTE 37 OTHER EXPENSES
Bad debt and debt collection expenses
Motor vehicle expenses
Travel and entertainment
Other
Total Other Expenses
NOTE 38 CONTINGENT LIABILITIES
Note
2014
3,005
3,498
3,479
19,013
28,995
Consolidated
2013
11
2,937
2,940
16,470
22,358
Guarantees established in favour of National Australia Bank Limited and Swiss Re International SE for guarantees issued to various clients for satisfactory contract performance,
secured by cross guarantees from all wholly owned group members amounting to $37,031,000 (2013 - $46,882,000).
NOTE 39 CORPORATE INFORMATION
The Financial Report of BSA Limited for the year ended 30 June 2014 was authorised for issue in accordance with a resolution of the Directors on 22 September 2014 and covers
the consolidated entity consisting of BSA Limited and its subsidiaries as required by the Corporations Act 2001. BSA Limited is a company limited by shares incorporated in
Australia and whose shares are publicly traded on the Australian Stock Exchange.
The financial report is presented in Australian currency.
The address of the registered office and principal place of business is:
7 Figtree Drive
Sydney Olympic Park NSW 2127
102 BSA LIMITED ANNUAL REPORT 2014
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2014
The Directors declare that:
(a)
(b)
(c)
In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
In the Directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards, as
stated in note 3.1 to the financial statements;
In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 (Cth),
including compliance with accounting standards and giving a true and fair view of the financial position and performance of the
consolidated entity; and
(d)
The Directors have been given the declarations required by s.295A of the Corporations Act 2001 (Cth).
At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the
deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in
accordance with the deed of cross guarantee.
In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order
applies, as detailed in note 19 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are, or
may become, subject by virtue of the deed of cross guarantee.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001 (Cth).
On behalf of the Directors.
Ross Johnston
Chairman
Sydney
22 September 2014
BSA LIMITED ANNUAL REPORT 2014
103
INDEPENDENT AUDITOR’S REPORT
104 BSA LIMITED ANNUAL REPORT 2014
INDEPENDENT AUDITOR’S REPORT
BSA LIMITED ANNUAL REPORT 2014
105
SHAREHOLDER INFORMATION
THE SHAREHOLDER INFORMATION SET OUT BELOW WAS APPLICABLE AS AT 31 AUGUST 2014
A. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and above
Number
of
Holders
163
556
339
869
262
2,189
Ordinary
Shares
79,534
1,791,732
2,716,984
34,336,103
189,936,849
228,861,202
Number
of
Holders
Number
of
Holders
Performance
Rights
Options
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
2
12
-
-
-
480,000
1,477,000
1,957,000
There were 493 (2013: 483) holders of less than a marketable parcel of ordinary shares.
B. EQUITY SECURITY HOLDERS
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name of Holder
BIRKETU PTY LTD
AUST EXECUTOR TRUSTEES LTD
MR GREG MULLANE
SETLOBE PTY LTD
RUMDAB PTY LTD
HGT INVESTMENTS PTY LTD
SAMLOWE PTY LTD
CTSF PTY LTD
MR DAVID CAMPBELL
TALOOMBI PTY LTD
MR BRENDAN GERARD FOLEY
AJ HARDWICK INVESTMENTS PTYLTD
MR ROSS JAMES JOHNSTON + MRS DENISE ANN JOHNSTON
EDINGTON PTY LIMITED
MS SUE ELIZABETH MCGREGOR
MR FRED SALOME
VBS EXCHANGE PTY LTD
MR PAUL RHYS ANDREWS
MR PETER JOHN STIRLING + MRS ROSALIND VERENA STIRLING
CITICORP NOMINEES PTY LIMITED
Top 20 Shareholders
106 BSA LIMITED ANNUAL REPORT 2014
Ordinary Shares
Number
Held
Percentage
of Issued
63,057,156
15,720,157
7,548,743
7,392,405
6,370,655
6,000,000
2,722,998
1,775,945
1,750,000
1,721,257
1,702,617
1,250,000
1,209,315
1,053,200
1,000,000
1,000,000
994,999
980,000
905,000
883,895
27.55%
6.87%
3.30%
3.23%
2.78%
2.62%
1.19%
0.78%
0.76%
0.75%
0.74%
0.55%
0.53%
0.46%
0.44%
0.44%
0.43%
0.43%
0.40%
0.39%
125,038,342
54.64%
SHAREHOLDER INFORMATION
Number Held
Percentage
63,057,156
15,720,157
27.55%
6.87%
C. SUBSTANTIAL SHAREHOLDERS
Substantial shareholders in the Company are set out below:
Ordinary Shares
BIRKETU PTY LTD
AUST EXECUTOR TRUSTEES LTD
D. VOTING RIGHTS
The voting rights attaching to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person, or by proxy, shall have one vote and upon a poll each share shall have one vote.
(b) Option over an ordinary share
No voting rights.
(c) Rights over an ordinary share
No voting rights.
BSA LIMITED ANNUAL REPORT 2014
107
CORPORATE DIRECTORY
BSA Limited - Corporate
Registered Office (Sydney)
7 Figtree Drive
Sydney Olympic Park NSW 2127
P
F
E
W
+61 2 8748 2400
+61 2 8748 2577
corporate@bsa.com.au
www.bsa.com.au
Share Registry
Computershare Investor Services
GPO Box 2975
Melbourne VIC 3001 Australia
P
P
F
1300 85 05 05
+61 3 9415 4000
+61 3 9473 2500
Auditor
Deloitte Touche Tohmatsu
Eclipse Tower
Level 19, 60 Station Street
Parramatta NSW 2150
Banker
National Australia Bank
255 George Street
Sydney NSW 2000
Technical Design
and Construction Projects
Head Office (Sydney)
Level 3, Quad 2, 8 Parkview Drive
Sydney Olympic Park NSW 2127
P
F
+61 2 9763 6200
+61 2 9763 6201
Technical
Field Force Solutions
Head Office (Sydney)
7 Figtree Drive
Sydney Olympic Park NSW 2127
P
F
+61 2 8748 2400
+61 2 8748 2577
Technical
Maintenance Services
Head Office (Sydney)
Level 3, Quad 2, 8 Parkview Drive
Sydney Olympic Park NSW 2127
P
F
+61 2 9763 6200
+61 2 9763 6201
www.bsa.com.au