think.build.connect.maintain
Appendix 4E - Results for
Announcement to the Market
and Annual Report
BSA Limited
50 088 412 748
FOR THE YEAR ENDED 30 JUNE 2016
1
BSA LIMITED APPENDIX 4E | PRELIMINARY FINAL REPORT 2015 CONTENTS
- APPENDIX 4E
- ANNUAL REPORT
$’000
511,856
(2,219)
(2,219)
2015
cents
1.11
1.10
3.94
2016
cents
(0.52)
(0.52)
3.63
Franked amount per
Amount per security
security at 30% tax
(cents)
(cents)
Nil
Nil
Nil
Nil
RESULTS FOR ANNOUNCEMENT TO THE MARKET
FOR THE PERIOD ENDED 30 JUNE 2016
PREVIOUS CORRESPONDING PERIOD 30 JUNE 2015
APPENDIX 4E
Revenue from ordinary activities
Down
5.9%
Loss from ordinary activities after income tax attributable to members
Down
157.3%
Net loss for the period attributable to members
Down
157.3%
to
to
to
Basic (loss) earnings per share
Diluted (loss) earnings per share
Net tangible asset backing per ordinary share
DIVIDENDS
Interim dividend (fully franked)
Final dividend (fully franked)
This report is based on the consolidated financial statements which have been audited by Deloitte Touche Tohmatsu, with the
Independent Auditor’s Report included in the financial statements.
BSA LIMITED RESULTS FOR ANNOUNCEMENT TO THE MARKET
think.build.connect.maintain
2016
BSA Limited
Annual Report
Eastlands Shopping Centre
BSA completed the mechanical services
upgrade and extension to one of Australia’s
premier shopping centres with Probuild.
2
BSA LIMITED ANNUAL REPORT 2016 CONTENTS
4 —
Chairman’s Report
6 —
Managing Director’s Report
14 —
Directors’ Report
17 —
Remuneration Report
29 —
Auditor’s Independence Declaration
30 —
Financial Report
89 —
Directors’ Declaration
90 —
Independent Auditor’s Report
92 —
Shareholder Information
94 —
Corporate Directory
3
BSA LIMITED ANNUAL REPORT 2016 CHAIRMAN’S REPORT
KEY
HIGHLIGHTS
$511.9 million
Revenue
$4.1 million *
EBITDA
$2.2 million
Net Loss
* Reconciliation on page 13
4
Michael Givoni
Chairman
For BSA Limited (BSA), financial year 2016 has been
a year of consolidation. The Group has maintained
emphasis in the areas of right-sizing, cost reduction
and focused investment in business development
resources. Whilst costs associated with consolidation
efforts have impacted the FY2016 results, they have
also led to an overall lower cost base, which is a
positive start to the FY2017 year.
BSA LIMITED ANNUAL REPORT 2016 The continuing expansion of the annuity
style revenue streams within the year has
been a real positive and strengthens the
future earnings of the company
The Group has made excellent progress on its business development
and marketing plans and investments made in this area have led to a
number of significant projects and contracts being secured across all
growth through business development and diversification of services
to existing clients. Over the last 12 months, BSA | Connect has won
significant contracts with nbn and Ericsson and continues to have
business units. In particular, the continuing expansion of the annuity
a strong pipeline. Along with operational excellence and continued
style revenue streams within the year has been a real highlight and
growth, the immediate focus for this business unit will be the
strengthens the future earnings of the company.
successful mobilisation of contracts secured.
Readers of the BSA 2016 Annual Report will notice a change in the BSA
branding, and a departure from the original business unit names. In line
BSA | Maintain has also undertaken a significant amount of rationalisation
during the year. Whilst the business unit revenue has increased, costs
with our business development focus, we have streamlined and simplified
associated with the rationalisation program have impacted results for this
the BSA branding. Our new branding is more in line with our existing
markets and will emphasise the BSA brand across all business units,
business unit. For the fourth year in a row, annuity revenue has increased,
as the team focused on building its recurring contracted maintenance
with less of a focus on the multiple business unit sub brands. In order to
works. A renewed emphasis on business development has yielded new
limit the expense associated with the rebranding program and reduce
contract wins in excess of $20 million including important contract
wastage, a decision was taken to soft launch the branding program, with
wins providing maintenance on Barangaroo and for Land & Housing
aspects being procured in line with normal business need, rather than
Corporation NSW Department portfolio.
blanket new brand procurement. I am pleased to announce our new
Business Unit Names:
•
•
•
•
BSA | Build (formerly Technical Design & Construction
Projects/TDCP)
BSA | Connect (formerly Technical Field Force Solutions/TFFS)
BSA | Maintain (formerly Technical Maintenance Services/TMS)
BSA | Think (new Business Initiative)
A detailed review of our results is provided within the Managing
Director’s report, however the key highlights are as follows:
Revenue $511.9 million (2015: $543.7 million)
EBITDA $4.1 million (2015:$14.2 million)
Net loss $2.2 million (2015 $3.9 million profit)
Operating cash flow $2.0 million (2015 $19.6 million)
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.
While the Board has resolved not to pay a final dividend for FY2016 this
position will be further reviewed during FY2017.
The market outlook for BSA’s operational sectors remains good. Each
Business Unit has developed a solid pipeline of opportunities and a
lower cost base across the board. Given the ongoing resolution of key
legacy issues, and continued focus on selective business development
the priority for the business in FY2017 is overall margin improvement.
Once again, BSA has enjoyed a strong and supportive relationship with
its financiers throughout FY2016 culminating in the renegotiation and
extension of working capital facilities to 31st December 2018 offering
Basic loss per share of 0.52 cents (2015: earnings per share of 1.11 cents)
improved stability and flexibility and we look forward to their continued
Net cash $18.5 million (2015: $18.4 million)
support in FY2017.
BSA | Build implemented a significant program of rightsizing and
consolidation during the year. Along with streamlining of the leadership
On behalf of the Board I would like to thank our Executive team and
their staff for their continued efforts and ongoing commitment to our
team, multiple brands in the Sydney market were amalgamated and
customers and shareholders.
rationalisation of fabrication facilities and other operations occurred
during the year. Significant one off commissioning and completion costs
at the new Royal Adelaide Hospital (nRAH) together with restructure
costs impacted the business performance during the year.
BSA | Build management continued its focus on functional disciplines,
risk mitigation and margin improvement. The business unit maintains a
strong forward order book and pipeline of opportunities.
BSA | Connect completed over 853,000 tickets of work during
FY2016. BSA’s heritage business unit has maintained its focus on
I would like to acknowledge my fellow Directors for their contribution to
BSA and for their support during FY2016.
Michael Givoni
Chairman
29 August 2016
5
BSA LIMITED ANNUAL REPORT 2016 MANAGING DIRECTOR’S REPORT
Nicholas Yates
Managing Director and
Chief Executive Officer
OPERATIONAL AND FINANCIAL HIGHLIGHTS
AND OUTLOOK
FY2016 has seen BSA undertake a significant program of work in the
areas of business rationalisation, rightsizing and cost reductions. The
year also saw an increased focus on business development and service
diversification as well as continued progress to close out remaining
legacy issues. While costs associated with these programs have
impacted the FY2016 results, they also provide a lower Group-wide
cost base, and a strong and sustainable platform for future growth and
improved earnings in FY2017 and beyond. This year’s results have also
been significantly impacted by legacy issue costs, particularly in relation
to the new Royal Adelaide Hospital (nRAH). BSA’s site works at nRAH
are due for completion in the first quarter of FY2017 and discussions
are continuing on resolving outstanding commercial issues. BSA is also
continuing to work towards resolution of issues with the NSW Office of
State Revenue, as previously reported.
BSA generated revenue of $511.9 million for the year (FY2015 $543.7
million), EBITDA of $4.1 million (FY2015 $14.2 million) and a net loss after
tax of $2.2 million (FY2015: profit of $3.9 million). Significantly, EBITDA
excluding significant items relating to restructure costs, legal costs
associated with legacy issues, nRAH commissioning and completion costs
and additional provisions for the NSW OSR issue stood at $18.6m.
The Group has continued to pay down debt and finished the year with a net
cash position of $18.5 million (FY2015 $18.4 million) which is a significant
improvement on the FY2016 H1 position ($9.2 million). Notably all term
debt facilities have now been repaid which represents a key milestone for
the Group and provides further capacity for future investment.
GROWTH
BSA enters FY2017 with a strong construction forward order book of
$175m (BSA | Build) and annualised recurring revenues of $303m
(BSA | Maintain & BSA | Connect) with further substantial wins with the
National Broadband Network (nbn) and Ericsson after 30th June 2016.
We expect to continue to build this forward workload pipeline whilst
maintaining a focus on implementing solid disciplines around bid
and contract management. Each Business Unit continues to refine its
approach to marketing and business development to drive further
growth and diversification opportunities. Further investment in business
development is planned during FY2017.
BSA | Build has a healthy forward order book and continues to source
a solid pipeline of opportunities throughout Australia. The business
is now focussing on the growth of its Fire business and the imminent
completion of the nRAH project.
6
BSA LIMITED ANNUAL REPORT 2016 As mentioned, BSA | Connect has won a significant amount of work
in the year and further wins already in the new year, particularly in
workplace through the “Walk the Talk” program, hazard identification
and management to create a greater understanding of the risks faced
relation to the nbn and it continues to bid for work across all the sectors
both strategically and operationally and the development of a forward
in which it operates. Our Registered Training Organisation, ‘Blue Sky
looking perspective through the tracking and reporting of the lead
Academy’ has expanded its training footprint into Tasmania and is heavily
indicators contained in our HSEQ strategy.
involved in training for nbn contracts. Diversification into the health and
community sectors continued, with Blue Sky Academy commencing
delivery of Aged Care training to a number of providers within the year.
BSA | Maintain has reinforced its position as a major provider to Tier
1 customers, and continued its focus on diversification of its offerings
to include multi service technical solutions through the provision of
mechanical, fire, plumbing, electrical and other building services.
NEW MARKET POSITIONING AND BRANDING
BSA | Connect achieved Federal Safety Commissioner (FSC)
Accreditation in January 2016 which represents a key milestone for
the group allowing the business unit to bid for additional work for
government funded projects.
COMMUNITY SUPPORT
During the year BSA, its subsidiaries and its employees, contributed to a
number of charity fundraisers including Buildcorp Foundation, CircusOZ,
Redkite, Love Mercy Foundation, Movember Foundation, the Royal
As referred to in the Chairman’s Report, BSA has taken the opportunity
Flying Doctor Service Outback Car Trek, the SNRLFC “Sleepy’s Cancer
to streamline and simplify our branding profile. Part of this rebranding
includes the creation of a new business initiative BSA | Think.
Day”, Toy’s for Kids Christmas Appeal, UN Women and Youngcare
Simpson Desert Challenge. We also continued our longstanding support
BSA | Think provides a platform and focus for us to capture the great
depth we have in technical expertise and smart solutions and make
of Youngcare through the provision of services in-kind.
this more readily available to our clients in a focused advisory and
GENDER DIVERSITY
consulting format.
BSA is committed to providing a workplace for all employees that is free
BSA | Think will showcase our ability to provide not only excellent on the
ground technical skills but also consulting advice and innovative solutions
from discrimination, harassment and bullying. BSA provides a working
environment that promotes diversity and encourages all employees to
to help solve bigger picture business issues including in the areas of:
reach their potential.
•
•
•
•
•
•
Asset management
BSA advises that the significant majority of employment positions
Design and Building Information Modelling (BIM)
throughout the Group consist of specific skill sets. BSA has a
Energy management and Sustainability
Cost planning
Project management
commitment to diversity that ensures the elimination of discrimination
against people based on gender, ethnic group, political or religious
affiliation, health status or disabilities. The over-arching principle
applied at BSA is that the most suitable person for a job is employed
Compliance and certification
where there is an existing vacancy.
HEALTH, SAFETY, ENVIRONMENT AND QUALITY
With its continued focus on Health and Safety, BSA has well and truly
exceeded the targeted 20% reduction in lost time injury frequency rate
(LTIFR), with a reduction of 30% LTIFR achieved in FY2016.
This trend is indicative of a maturing approach in 2016. This approach
has seen a change in focus to Total Recordable Injuries (TRI) and the
reporting of this frequency rate (TRIFR) across business units and as a
group. Along with the focus on this lagging indicator, a suite of leading
Current staff summary:
Board
Senior Executives
Managers and Professionals
Technical, Administration and
Other Staff
indicators have been identified and incorporated into the Group Strategy.
TOTAL
The foundational work carried out in late 2014/2015 has continued to
Percentage of Employment
Female
0%
9%
11%
21%
18%
Male
100%
91%
89%
79%
82%
place BSA on a path to best practice and a leader-led HSEQ culture.
BSA is also committed to recruiting, training and retaining talented
In the coming year, further work to strengthen the robust HSEQ
culture throughout BSA will focus on present and felt leadership in the
future leaders, with apprentice and trainee employees making up 8% of
our workforce.
7
BSA LIMITED ANNUAL REPORT 2016
MANAGING DIRECTOR’S REPORT
BSA | Connect
$205.7 million
Revenue
[2015: $215.4 million]
$7.7 million
EBITDA
[2015: 8.3 million]
NB: Excludes Corporate Recharges
8
BSA LIMITED ANNUAL REPORT 2016
BSA | Connect
(Formerly Technical Field Force Solutions / TFFS)
BSA | Connect has strengthened its market position as a leading national
provider of telecommunications operations and maintenance services
The nbn Operate and Maintain contract, awarded in December
2015, proved a highlight for the year. Since successfully mobilising
and large scale workforce management solutions through the winning
and mobilisation of multiple new telecommunications contracts during
the last 12 months. EBITDA reduced during the year due to net one off
operations across the four contract areas in New South Wales and
Victoria, BSA | Connect is completing an average of 500 work orders
per day including Fibre to the Node and Fibre to the Basement
costs of $969k relating to restructure costs, an additional OSR provision
activities. The nbn project team is gearing up to the delivery of more
taken during H1 FY2016 and other one off contract costs. In addition,
than 2,000 work orders per day by June 2017.
increased business development costs were incurred during the year.
During the year, BSA | Connect successfully launched the following,
recently awarded, projects:
•
nbn Operate and Maintain Services on fixed line technologies
in Sydney, South Melbourne, and Regional and Remote New
South Wales;
BSA | Connect supported longstanding client Optus with multiple
programs of work during the year including the HFC network rollout trial,
a door-to-door sales campaign and the previously mentioned Direct-to-
Home Satellite Services. Attention has also been directed into positioning
for medium and long term projects that will further diversify the services
offered to Optus in years to come.
•
Optus Direct-to-Home Satellite Equipment Installation and
Registered training organisation, Blue Sky Academy commenced delivery
Maintenance Services Australia-wide in association with the
of Aged Care training in the community services sector this year to
English Premier League (EPL); and
providers including KinCare and St Luke’s Aged Care. Training covered
•
nbn Approved Training Services through our RTO, Blue Sky
Academy for various delivery partners that are engaged by nbn
to build, operate and maintain the nbn network.
Health and safety remains BSA | Connect’s highest priority and the
business unit achieved Federal Safety Commissioner (FSC) Accreditation
in January 2016. The accreditation complements BSA’s certified
Integrated Management System and it has reinforced BSA’s capacity
to compete for government-funded projects, including nbn works. The
business unit has also achieved significant overall improvements to health
and safety performance goals.
BSA | Connect introduced a ‘Three Year Safety Strategy’, commencing
in FY2016, to enhance the business unit’s safety culture. At the end of
the financial year, the Foxtel project team celebrated achieving a notable
‘zero’ LTIFR over the 12-month period.
accredited units of competency, technical skills to improve worker safety
and refresher courses such as First Aid and CPR.
The business unit pursued numerous other opportunities with existing
and new clients during the second half. Following the FY2016 year
end, after an 18-month procurement process, on 14th July 2016, BSA |
Connect announced the signing of an additional contract with nbn to
deliver HFC Deployment Services in Brisbane and Melbourne with works
set to commence in August 2016. Soon after, on 8th August 2016, BSA |
Connect welcomed a new client, Ericsson, to its portfolio and is working
quickly to mobilise a delivery program for Fixed Wireless and Satellite
Connection Services Australia-wide.
Operational excellence, service diversification, margin improvement
and growth remain the key themes for BSA | Connect through
FY2017 and beyond.
BSA LIMITED ANNUAL REPORT 2016
9
MANAGING DIRECTOR’S REPORT
BSA | Maintain
BSA | Maintain
(Formerly Technical Maintenance Services / TMS)
BSA | Maintain revenue increased by 5.7% to $79.9 million as the division
focused on building its recurring contracted maintenance revenue.
EBITDA increased by 17.6% from the previous year to $2.0 million.
The business unit implemented a number of cost reduction and
restructure activities and the improved operating margins were as a
result of the partial impact of the rationalisation program as well as
from increased revenue during the year.
BSA | Maintain has achieved some significant new contract wins
during the year resulting in a substantial increase in the maintenance
contract order book. New business in excess of $20 million has been
generated, and includes new maintenance and services for:
•
•
•
•
•
•
•
Land and Housing Corporation NSW Portfolio
Roy Hill
Metronode
Global Switch
Barangaroo
Yarra Fertilisers
CBD buildings across major Australian capital cities
BSA | Maintain has also achieved contract extensions with existing
clients, including:
•
•
•
•
Monash University
Metropolitan Fire Brigade
Suncorp Stadium
Power and Water
BSA | Maintain has continued its strategy to diversify its recurring
contract base to offer multiple technical services to customers
through the provision of mechanical, fire, plumbing, electrical and
other building services and a number of the new wins are in this area
validating the ongoing strategy.
Initiatives have also commenced using predictive maintenance
software to assist customers achieve savings as part of our
maintenance solution. In addition, new services including energy
optimisation, automated monitoring and indoor air quality solutions
have been added to the suite of services available to customers.
A major upgrade of the asset management and customer reporting
systems has commenced with implementation due in the coming
year and this will provide additional capability to accommodate
business growth, engage customers through automation and access
to asset information.
$79.9 million
Revenue
[2015: $75.6 million]
$2.0 million
EBITDA
[2015: $1.7 million]
NB: Excludes Corporate Recharges
Harvey Norman
BSA | Maintain is delivering fire
maintenance services to Harvey Norman
sites around Australia.
10
BSA LIMITED ANNUAL REPORT 2016
BSA LIMITED ANNUAL REPORT 2016
11
MANAGING DIRECTOR’S REPORT
BSA | Build
$226.4 million
Revenue
[2015: $252.7 million]
($1.5 million)
EBITDA LOSS
[2015: profit $10.1 million]
NB: Excludes Corporate Recharges
Barangaroo - Is the largest commercial Fire
Protection Contract delivered in Australia.
BSA| Build | Fire is proud to be partners with Lend
Lease and its Joint Venture partner Premier Fire on
such a prestigious landmark site.
BSA | Build
(formerly known as Technical Design & Construction Projects or TDCP)
During 2016, BSA | Build was streamlined and refocused to offer market
leading design & construct solutions in Heating, Ventilation & Air
Conditioning (HVAC) systems and Fire Protection systems in the major
managers as part of the implementation of the turnaround strategy. All
businesses within BSA | Build continued to establish and maintain their
status as tier 1 solutions providers with end-to-end in-house capability in
state capital cities across Australia.
the Fire and HVAC sectors.
Significant restructuring occurred during the year including the
The new Royal Adelaide Hospital (nRAH) contract is now close to
consolidation of the two HVAC businesses in Sydney, consolidation of
substantial completion. The combination of complications with
three fabrication sites into two, rationalisation within other areas and
streamlining of the BSA | Build leadership team. The restructuring has
impacted the EBITDA during the year with net one off costs of $2.4m
commissioning, completion and project delays have led to significant
one off unexpected additional costs on the project of $7.5m in FY2016.
In addition significant legal costs were incurred relating to the resolution
incurred during the period although these changes are expected to
of commercial issues on the contract.
lead to improved performance in future years. The senior management
team was also strengthened through the external appointment of key
BSA has previously advised the market about unapproved variations
at nRAH and is still seeking to maximise its recovery of variations and
12
BSA LIMITED ANNUAL REPORT 2016 costs under its contractual arrangements and is continuing
to pursue cash reimbursement under Security of Payment
legislation or through finalisation of all these matters through a
commercial settlement.
The ongoing redesign and re-embedding of key functional disciplines
to facilitate enhanced project delivery, improved risk mitigation and
improved margins are expected to start delivering tangible results
in FY2017.
In FY2016 BSA | Build delivered works on a large number of landmark
projects in almost every state. Examples include:
•
•
•
The new Royal Adelaide Hospital (SA)
Pacific Fair Shopping Centre Redevelopment (QLD)
Eastland Shopping Centre Redevelopment (VIC)
• Westfield Hurstville Shopping Centre (NSW)
•
•
Barangaroo Towers (NSW)
Capital Square (WA)
•
•
•
Melbourne Convention Centre expansion & upgrade (VIC)
La Trobe University Donald Whitehead Building (VIC)
Macarthur Square Stage 4 Western Mall Extension (NSW)
• Williamtown NACC WE01 (Fire & HVAC) (NSW)
•
•
•
•
•
•
•
•
Global Switch East Stage 2 / 3 (HVAC & Fire) (NSW)
100 Mount Street (NSW)
Darling Square South West Plot (NSW)
University of Canberra Private Hospital (NSW)
Commonwealth Games Parklands (QLD)
Jupiters Casino New Suite Hotel (QLD)
Double Tree by Hilton (WA)
Latitude at Leighton Beach (WA)
• Whitford City Stage 1 (WA)
As part of BSA | Build’s strategic plans, initiatives are underway to
increase the business value proposition for customers by focussing
FY2017 has seen BSA | Build commence with a healthy Forward Order
Book of $175 million and a strong pipeline of opportunities across
on advisory and consulting services. When implemented successfully,
these will allow the business to further enhance its reputation as one of
Australia. During FY 2016 the business unit was awarded projects worth
Australia’s market leaders in HVAC and Fire systems, and will broaden
more than $100m including:
BSA’s service offering in the construction industry.
LOOKING FORWARD
As mentioned in the Chairman’s report, the market outlook for BSA’s
DISCLOSING NON-IFRS FINANCIAL INFORMATION
operational sectors remains good, and with the expected resolution of
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)
key legacy issues, recent significant contract wins and solid pipelines
across the Group, the outlook for FY2017 is positive.
Management will continue to drive organic growth by building on the
FY2016 success in business development and marketing programs.
The business is also focusing on improving margins and diversification
(Loss)/profit for the year from
continuing Operations
of service offerings to leverage existing client relationships.
Add back
On behalf of the BSA Board and myself I would like to thank the
Income tax expense/(benefit)
committed and talented BSA Team for their contributions in FY2016 and
Finance costs
I look forward to their continued support through FY2017.
As always, the BSA Board has continued to provide a strong level of
Interest revenue
Depreciation
support and guidance, and I extend my thanks to the BSA Chairman and
Amortisation expense
fellow Directors for their continued support and advice during the year.
EBITDA
Total Significant Items (note 8.5)
EBITDA excluding Significant Items
FY2016
A$’000
FY2015
A$’000
(2,219)
3,875
(795)
741
1,564
1,253
(96)
(294)
5,029
6,362
1,440
1,440
4,100
14,200
14,534
18,634
4,199
18,399
Nicholas Yates
Managing Director and
Chief Executive Officer
29 August 2016
13
BSA LIMITED ANNUAL REPORT 2016
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 2016.
THE BOARD OF DIRECTORS AS AT 30 JUNE 2016
A
D
B
E
C
F
A - MICHAEL GIVONI
CHAIRMAN (NON-EXECUTIVE)
D - 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.
Mr Givoni has had extensive executive experience in the business-to-
business (B2B) areas of commerce. His particular area of expertise is in
E - MAX COWLEY
NON-EXECUTIVE DIRECTOR
strategy, business development and mergers and acquisitions. Michael
Mr Cowley practised as Principal of Chartered Accounting firm E
has held senior executive roles in listed companies including Spotless
M Cowley & Co for 47 years. His years of corporate and financial
Group Ltd. Prior to his executive career, Michael was a partner in a
experience are extensive. Max is a director of WIN Corporation Pty
prominent Melbourne legal practice.
Michael joined BSA as a Non-Executive Director on 23 March 2005 and
was appointed as Chairman from 29 April 2015. He holds a number of
other Non-Executive Director and Advisory Board roles in prominent
privately owned businesses.
B - NICHOLAS YATES
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Ltd, Australia’s largest regional television network and has been
involved with that organisation from its commencement and over the
past 36 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 appointed as a Non-Executive Director on
14 April 2014.
F - GRAEME BARCLAY
NON-EXECUTIVE DIRECTOR
Mr Yates graduated with a Bachelor of Engineering (Mechanical)
from the University of Sydney and went on to forge an extensive
career in the building services and facilities management industries.
Commencing as a site engineer overseeing mechanical services
Mr Barclay has extensive experience in executive leadership and
strategic development in areas that brings valuable skills to the BSA
board and company. Mr Barclay successfully led all aspects of a major
telecommunications group for more than a decade in the role of Group
installations, Nicholas then progressed through various management
CEO with responsibility for financial performance, strategy, sales, corporate
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, Mr Yates moved into a series of leadership
roles within Transfield Services, most recently Chief Executive Officer,
development, international expansion, operations and capital structure.
Mr Barclay also has senior executive level experience within investment
banking and accounting businesses, with responsibilities including property
investment banking, corporate finance and corporate restructuring.
Infrastructure ANZ. Nicholas sits on the Boards of a number of private
Mr Barclay is a member of the Australian Institute of Company Directors, a
companies and was appointed Managing Director and Chief Executive
Fellow of the Financial Services Institute of Australasia and is a Chartered
Officer of BSA Limited on 13 March 2014.
C - 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. Paul was
appointed as a Non-Executive Director on 23 March 2005.
Accountant in Scotland and Australia/NZ. Mr Barclay is currently a Director
and Non-Executive Chairman of Nextgen Group Holdings Pty Ltd and a
Non-Executive Director of Codan Limited. Graeme was appointed as a
Non-Executive Director on 30 June 2015. Graeme is also a Non-Executive
Director of Axicom Group Holdings Pty Limited.
14
BSA LIMITED ANNUAL REPORT 2016 DIRECTOR INDEPENDENCE
The Board considers three of BSA’s Directors independent, as defined
under the guidelines of the ASX Corporate Governance Council, being:
Michael Givoni, Paul Teisseire and Graeme Barclay.
In assessing the independence of Directors, the Board follows the ASX
guidelines as set out in the Corporate Governance Statement on the
Company’s website.
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
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.
ENVIRONMENTAL REGULATION AND PERFORMANCE
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 Statement which is available on the Company’s
web site at www.bsa.com.au/pages/about/corporate-governance.html
REVIEW OF OPERATIONS
Information relating to the operations of BSA including a description of
principal activities, a review of operations, significant changes in activities
Pacific Fair
and affairs during the year and likely future developments and prospects
can be found in the Chairman’s Report and Managing Director’s Report on
pages 4 to 13.
Jewel of Gold Coast shopping options, the picturesque
Resort Area and high end tenancies located centrally within
the recently completed Pacific Fair Redevelopment.
BSA | Build delivered mechanical services for this project.
15
BSA LIMITED ANNUAL REPORT 2016 DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
As at 30 June 2016, the following information is provided in relation to Directors:
Director
Special Responsibilities
Ordinary Share
Options
Share Rights
Michael Givoni
Non-Executive Director
Chairman of Board
Member of Remuneration Committee
Member of Audit Committee
Nicholas Yates
Executive Director
Managing Director
Max Cowley
Non-Executive Director
Member of Remuneration Committee
Member of Audit Committee
Paul Teisseire
Non-Executive Director
Member of Remuneration Committee
Chairman of Audit Committee
Mark Lowe
Non-Executive Director
Member of Remuneration Committee
Member of Audit Committee
Graeme Barclay
Non-Executive Director
Chairman of Remuneration Committee
Member of Audit Committee
636,400
Nil
Nil
2,727,273
Nil
1,116,667
66,000,000*
Nil
Nil
680,012
Nil
Nil
10,315,403
Nil
Nil
Nil
Nil
Nil
*Max Cowley is a director of Birketu Pty Ltd which holds the 66,000,000 ordinary shares in BSA Limited.
At the date of this Annual Report, there has been no change to the above directors’ interest in shares, rights or options.
16
BSA LIMITED ANNUAL REPORT 2016 DIRECTORSHIPS HELD IN OTHER LISTED ENTITIES
Period of Appointment
Name of Company
Position Held (Non-Executive or Executive Director)
Michael Givoni
Appointed 1 July 2002
The Venture Bank Limited
Non-Executive Director
Graeme Barclay
Appointed 1 February 2015
Codan Limited
Non-Executive Director
REMUNERATION REPORT - AUDITED
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:
A.
Principles used to determine the nature and amount
of remuneration
Details of remuneration
Service agreements
Cash bonuses
Share-based compensation
B.
C.
D.
E.
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
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.
Alignment to program participants’ interests:
•
•
•
•
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
delivered. The framework aligns executive reward with achievement of
blend of short and long-term incentives. As executives gain seniority
strategic objectives, the creation of value for shareholders and conforms
within the Group, the balance of this mix shifts to a higher proportion of
to market practice for delivery of the reward. The Board ensures that
at risk rewards.
the executive reward satisfies the following key criteria for good reward
governance practices:
Competitiveness and reasonableness;
Acceptability to shareholders;
The Board has established a 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
Performance linkage/alignment of Executive compensation;
provides further information on the role of this committee.
Transparency; and
Capital management
17
•
•
•
•
•
BSA LIMITED ANNUAL REPORT 2016
DIRECTORS’ REPORT
The table below sets out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the five years to
30 June 2016:
Revenue
Net profit/(loss) before tax
Net profit/(loss) after tax
Share price at start of year
Share price at end of year
Interim Dividend 1
Final Dividend 2
Basic earnings per share
Diluted earnings per share
30 June 2016
30 June 2015
30 June 2014
30 June 2013
30 June 2012
$543.7m
$491.5m
$474.2m
$491.8m
$511.9m
($3.0)m
($2.2)m
$0.17
$0.245
$5.4m
$3.9m
$0.10
$0.165
($61.3)m
($54.8)m
$0.15
$0.10
$2.8m
$3.8m
$0.20
$0.15
0.00 cps
0.00 cps
0.00 cps
0.50 cps
0.00 cps
0.00 cps
0.00 cps
0.00 cps
(0.52)cps
(0.52)cps
1.11 cps
(23.97) cps
1.10 cps
(23.97) cps
1.64 cps
1.60 cps
$8.2m
$5.8m
$0.20
$0.20
1.00 cps
1.00 cps
2.57 cps
2.51 cps
1 Franked to 100% at 30% corporate income tax rate.
2 Declared after the end of the reporting period and not reflected in the financial statements.
Non-Executive Directors
Fees and payments to Non-Executive Directors reflect the demands
which are made on, and the responsibilities of, the Directors. Non-
•
Long-term incentives through participation in the employee
share scheme, employee option plan and performance
rights plan.
Executive Directors’ fees and payments are reviewed annually by
The combination of these components comprises the Executive’s
the Board. The Board has also considered the advice of independent
total remuneration.
remuneration consultants to ensure Non-Executive Directors’ fees and
payments are appropriate and in line with the market.
Base Pay
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
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.
at any discussions relating to determination of his own remuneration.
Executives are offered a competitive base pay that comprises the
Directors’ fees
fixed component of pay and rewards. Base pay for Senior Executives is
reviewed annually to ensure the executive’s pay is competitive with the
The current base remuneration for Directors was last reviewed on 26
market and meets the responsibilities of the position. An executive’s
June 2012. Directors’ fees are inclusive of superannuation and include the
pay is also reviewed on promotion. There are no guaranteed base pay
requirement to sit on two or more Board committees for the duration of
increases included in the Senior Executive terms of employment.
their tenure. Directors are reimbursed actual expenses or paid a per diem
allowance for attendance at the monthly meetings.
Benefits
Non-Executive Directors’ fees are determined within an aggregate
Executives receive benefits including allowances.
Directors’ fee pool limit, which is periodically recommended for approval
Retirement benefits
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:
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
Base fees including superannuation
is paid.
Chairman
$170,829
Short-Term Incentives
Other Non-Executive Directors
$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
The Executive pay and reward framework has three components:
incentive (STI) depending on the accountabilities of the role and impact
Base pay and benefits, including superannuation;
Short-term performance incentives; and
on organisation and business unit performance. The maximum target
bonus opportunity is 30% of base salary.
•
•
18
BSA LIMITED ANNUAL REPORT 2016
For the year ended 30 June 2016, the targets linked to the STI plans
terms of the Loan Agreement, lend to the Executive such amount as the
were based on the group and individual business objectives. The
Executive has applied for in the Loan Application.
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 Remuneration Committee is responsible for assessing whether
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.
the targets are met. Targets are set at the beginning of the year
All shares are held in escrow until loans are fully repaid. An executive
and are assessed semi-annually. Short-term bonus payments are
shall not sell, mortgage, charge, assign or otherwise dispose of or
adjusted up or down in line with under or over achievement against
encumber any shares before payment or repayment of any amount
target performance levels. Because short-term targets cover several
outstanding to the Company in respect thereof.
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.
Options
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
No options were exercised during the year ended 30 June 2016.
of any invitation, all Plan Shares shall rank for dividends declared on
No amounts are unpaid on any shares issued on the exercise of options.
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
All options have expired as at 30 June 2016.
ordinary shares of the Company.
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.
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 2016.
All permanent employees (including Executive Directors) who were
Employee Performance Rights Plan
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
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.
scheme, measured as the weighted average market price on the day of
To achieve its corporate objectives, the Company needs to attract and
issue of the shares, was recognised in the statement of financial position
retain its key staff. The Board believes that awards made to selected
as share capital and as part of employee benefit costs.
eligible employees under the proposed plan will:
Offers under the scheme are at the discretion of the Company. No
offers were made to Directors of BSA Limited or other key management
•
Provide an incentive for the creation of, and focus on,
shareholder wealth;
personnel of the Group during the year ended 30 June 2016.
•
Enable the Company to recruit and retain the talented people
Executives Securities Loan
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
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.
19
BSA LIMITED ANNUAL REPORT 2016
DIRECTORS’ REPORT
The Board is cognisant that long-term equity-based reward for key
have a life terminating five (5) years after the grant date or such other
staff should be linked to the achievement by the Company of testing
date as determined by the Board.
performance hurdles.
The Board will prescribe the date when performance under the hurdle is
Rights granted to certain Plan participants in each grant will be at
measured for each tranche.
zero vesting value and will be subject to the following performance
conditions as determined by the Board:
On or after the end of the final measurement period and provided
any performance hurdle prescribed by the Board has been achieved
(i) Service condition of two to three years; or
and, where applicable, to the extent it has been achieved, the plan
(ii) The Company’s performance as measured by earnings per
participant may then acquire shares by exercising the rights.
share (EPS), being the EPS for the relevant Measurement Period
A right lapses if the vesting conditions are not met.
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
There is no Board policy in relation to the person limiting exposure to
risk in relation to the securities issued as part of the remuneration.
respect of the initial Measurement Period and service condition
There was no new issue of rights in the current year.
of three years.
The Company must achieve these performance conditions before the
rights vest.
B
DETAILS OF REMUNERATION
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
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.
eligible employee.
The Key Management Personnel of the Group are the following:
The specific terms of a particular grant, including any performance
(i) Chairman - Non-Executive
conditions, will be contained in the invitation and associated
Michael Givoni
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
(ii) Executive Directors
Nicholas Yates
(iii) Non-Executive Directors
Paul Teisseire
Max Cowley
Mark Lowe
Graeme Barclay
(iv) Chief Financial Officer
Nicholas Benson
20
BSA LIMITED ANNUAL REPORT 2016
Key Management Personnel of the Company and the Group
2016
Short-term
Benefits
Long-
term
Post Employment
Benefits
Share-based
payments
Cash,
Interest
Unwind
Long
Name
Fees
Bonus
Loans
Superannuation
Leave
Benefits
Rights
Rights
Total
Related
Salary &
Cash
on
Service
Termination
Performance
$
$
$
$
$
$
$
%
$
%
Non-Executive Directors
Michael Givoni
Paul Teisseire
Max Cowley
Mark Lowe
Graeme Barclay
156,008
83,616
87,230
311,230
83,616
Sub-total
721,700
Non-Executive Directors
Executive Directors
-
-
-
-
-
-
-
-
-
-
-
-
14,821
7,944
8,287
29,567
7,944
68,563
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
170,829
91,560
95,517
340,797
91,560
790,263
-
-
-
-
-
Nicholas Yates
659,422
268,000
-
20,010
8,554
-
-
-
955,986
28.03
Other Key
Management Personnel
Chief Financial Officer
Nicholas Benson
369,310
72,000
Total compensation
1,750,432
340,000
-
-
26,537
5,155
115,110
13,709
-
-
-
-
-
473,002
15.22
2,219,251
* During FY2016 Mark Lowe was contracted to the company within the BSA | Build business unit, to assist in driving improved performance from the business
unit. $224,000 of Mark Lowe’s remuneration relates to his role assisting BSA | Build during the year.
21
BSA LIMITED ANNUAL REPORT 2016
DIRECTORS’ REPORT
2015
Short-term
Benefits
Cash,
Interest
Unwind
Long-
term
Post Employment
Benefits
Long
Share-based
payments
Name
Fees
Bonus
Loans
Superannuation
Leave
Benefits
Rights
Rights
Total
Related
Salary &
Cash
on
Service
Termination
Performance
$
$
$
$
$
$
$
%
$
%
Non-Executive Directors
Ross Johnston
131,162
(Retired 28 April 2015)
Paul Teisseire
Michael Givoni
Max Cowley
Mark Lowe *
Graeme Barclay
(Appointed 30 June 2015)
83,616
92,151
84,000
276,000
-
-
-
-
-
-
-
-
-
-
-
-
-
7,161
7,944
8,746
7,972
26,212
-
Sub-total
666,929
-
-
58,035
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
138,323
91,560
100,897
91,972
302,212
-
-
-
-
-
-
-
-
-
724,964
Non-Executive Directors
Executive Directors
Nicholas Yates
634,500 75,000
-
28,030
14,443
-
184,250
19.68
936,223
27.69
Other Key
Management Personnel
Chief Financial Officer
Nicholas Benson
335,000 36,000
Total compensation
1,636,429
111,000
-
-
25,000
7,051
-
-
-
403,051
8.93
111,065
21,494
-
184,250
2,064,238
* During FY2015 Mark Lowe was contracted to the company within the BSA | Build business unit, to assist in driving improved performance from the business
unit. $192,000 of Mark Lowe’s remuneration relates to his role assisting BSA | Build during the year.
22
BSA LIMITED ANNUAL REPORT 2016
Rights holdings
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.
Balance at
Net
Balance
the start of
Granted as
Rights
Change
at End of
Vested
but Not
Vested
Vesting
and
During
Rights
2016
the year
Compensation
Exercised
Other
Year
Exercisable
Exercisable
Year
Nicholas Yates
1,116,667
1,116,667
-
-
-
-
-
1,116,667
-
1,116,667
-
-
1,116,667
1,116,667
1,116,667
1,116,667
Balance at
Net
Balance
the start of
Granted as
Rights
Change
at End of
Vested
but Not
Vested
Vesting
and
During
Rights
2015
the year
Compensation
Exercised
Other
Year
Exercisable
Exercisable
Year
Nicholas Yates
-
-
1,116,667
1,116,667
-
-
-
-
1,116,667
1,116,667
-
-
-
-
-
-
Further details of schemes can be found in the Directors’ Report.
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.
Balance at
the start of
Rights
the year
Exercised
Other Changes
During the Year
Balance at the
Balance
End of the Year
Held Nominally
2016
Directors of BSA Limited
Ordinary Shares
Mark Lowe
Paul Teisseire
Michael Givoni
Graeme Barclay
Nicholas Yates
10,115,403
680,012
636,400
-
2,727,273
Ordinary Shares - Escrowed
Mark Lowe
200,000
Key Management Personnel
Ordinary Shares
Nicholas Benson
1,363,636
15,722,724
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,115,403
680,012
636,400
-
2,727,273
200,000
1,363,636
15,722,724
Max Cowley is a nominee director of Birketu Pty Ltd and is also a director of Birketu Pty Ltd. Birketu Pty Ltd holds shares in BSA Limited of
66,000,000 (2015: 66,000,000). Max Cowley has no beneficial interest in Birketu Pty Ltd.
-
-
-
-
-
-
-
-
23
BSA LIMITED ANNUAL REPORT 2016
DIRECTORS’ REPORT
2015
the year
Exercised
During the Year
End of the Year
Held Nominally
Balance at
the start of
Rights
Other Changes
Balance at the
Balance
Directors of BSA Limited
Ordinary Shares
Ross Johnston (Retired 28 April 2015)
1,209,315
Mark Lowe
Paul Teisseire
Michael Givoni
Graeme Barclay
Nicholas Yates
10,115,403
404,769
230,000
-
-
Ordinary Shares - Escrowed
Mark Lowe
200,000
Key Management Personnel
Ordinary Shares
Nicholas Benson
-
-
-
-
-
-
-
-
-
( 309,315)
-
275,243
406,400
-
2,727,273
900,000
10,115,403
680,012
636,400
-
2,727,273
-
200,000
1,363,636
1,363,636
-
-
-
-
-
-
-
-
Performance Income as a Proportion of Total Remuneration
Remuneration and other terms of employment for the Managing
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 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
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.
the consolidated Group.
All contracts with Executives may be terminated early by either party
The Remuneration Committee will review the performance bonuses
with three to six months’ notice.
to gauge their effectiveness against achievement of the set goals,
D
CASH BONUSES
and adjust future years’ incentives as they see fit, to ensure use of
the most cost effective and efficient methods.
C
SERVICE AGREEMENTS
Bonuses vested as per the below table during the financial year ended 30
June 2016.
Key management personnel and executives are also entitled to a short-
On appointment to the Board, all Non-Executive Directors enter into
term cash incentive based on performance criteria described in section
a service agreement with the Company in the form of a letter of
A to this Remuneration Report. Details of these FY2016 short-term
appointment. The letter summarises the Board policies and terms,
incentives recognised as remuneration, forfeited or available for vesting in
including compensation, relevant to the office of Director. A copy of the
future financial years is outlined below.
letter can be found on BSA Limited’s website.
Name
Key Management Personnel (Group)
Nicholas Yates
Nicholas Benson
Included in
Remuneration
% Vested in
current year
% Forfeited
in current year
268,000
72,000
100
100
-
-
24
BSA LIMITED ANNUAL REPORT 2016
E
SHARE-BASED COMPENSATION
Executives Securities Plan
Set out below are summaries of securities held in escrow:
Issue Price
Balance at Start
Granted During
During the Year Based on
Balance in Escrow at
Released from Escrow
Grant Date
(cents)
of the Year
Consolidated and parent entity
13 Oct 2006
19 Jul 2007
11 Sep 2007
13 Sep 2007
14 Dec 2007
10 Feb 2009
Total
Number
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
0.23
0.63
0.68
0.68
0.68
0.10
the Year
Number
Full Loan Repayment
End of the Year
Number
Number
-
-
-
-
-
-
-
-
-
-
-
-
-
-
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
Employee Performance Rights Plan
There were no Rights on issue to key management personnel under the plan at the end of the year.
REMUNERATION CONSULTANTS
During the year under review, the Board did not engage any remuneration consultants to review and make independent recommendations in relation
to the long-term and short- term incentive programs available to specific Key Management Personnel and Executive Management and no payments
were made during the year (2015: Nil) for that advice.
End of Audited Remuneration Report
25
BSA LIMITED ANNUAL REPORT 2016
DIRECTORS’ REPORT
MEETINGS OF DIRECTORS
The number of meetings of BSA’s Board of Directors and each Board committee held during the year ended 30 June 2016, and the number of
meetings attended by each Director were:
Board Meetings
Audit Committee Meetings
Remuneration Committee Meetings
Meetings Held
Meetings Held during
Meetings
Attended
during tenure
Meetings
in FY2016
Attended
tenure
in FY2016
Meetings
Attended
Meetings Held
during tenure
in FY2016
Michael Givoni
Nicholas Yates
Graeme Barclay
Max Cowley
Paul Teisseire
Mark Lowe
16
16
15
13
16
16
16
16
16
16
16
16
6
*
5
5
6
6
6
*
6
6
6
6
5
*
5
5
5
5
5
*
5
5
5
5
*Not a member of the relevant committee, but invited to attend the Audit Committee meetings
RETIREMENT, ELECTION AND CONTINUATION
IN OFFICE OF DIRECTORS
RIGHTS
As at the date of this report, the unissued ordinary shares of the
Directors are subject to retirement by rotation and election by
Company, under right, are as follows:
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.
Paul Teisseire and Max Cowley are the Directors who have been longest
in office and who, being eligible, offer themselves for re-election at the
2016 Annual General Meeting.
Grant Date
Date of
Expiry
Exercise
Price
Number
under
Right
Fair value
at grant
date
Number
under
Option*
Fair value
at grant
date
14 Nov 2011
14 Nov 2016
$0.00
621,000
$0.19
422,280
$0.19
25 Nov2014
25 Nov 2019
$0.00
1,116,667
$0.17
Nil
1,737,667
-
422,280
Nil
-
INDEMNIFYING OFFICERS OR AUDITORS
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
During the year ended 30 June 2016, 454,000 rights and 308,720
options granted under the BSA Limited Employee Performance Rights
Plan were cancelled because vesting conditions were not met. No
further shares have been issued since that date. No amounts are unpaid
on any of the shares.
Company, or of a related body corporate of the Company.
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.
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.
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 2016, 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.
26
BSA LIMITED ANNUAL REPORT 2016 484 St Kilda Road
BSA successfully completed a NABERS
central plant upgrade to a 30 year old
plant with the latest energy efficient
variable speed plant and equipment.
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
2016
$
2015
$
Company for all, or part, of those proceedings.
Amounts due for the financial year to Deloitte Touche Tohmatsu for:
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).
Auditing or reviewing the financial report
337,461
427,798
Taxation services
Other non-audit services
152,426
200,071
12,333
12,250
NON AUDIT SERVICES
AUDITORS INDEPENDENCE DECLARATION
The Company may decide to employ the auditor on assignments
The lead auditors’ independence declaration for the year ended 30 June
additional to their statutory audit duties where the auditor’s expertise
2016 as required under section 307c of the Corporations Act 2001 (Cth)
and experience with the Company and/or Group are important.
has been received and can be found on page 29 of this report.
Details of the amounts paid or payable to the auditor (Deloitte
Touche Tohmatsu) for audit and non-audit services during the year
ROUNDING OF AMOUNTS
are set out below.
The company is a company of the kind referred to in ASIC Corporations
The Board of Directors has considered the position and in accordance
(Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated
with the advice received from the Audit Committee, is satisfied that
24 March 2016, and in accordance with that Corporations Instrument
the provision of non-audit services by the auditor, as set out below,
amounts in the directors’ report and the financial statements are
did not compromise the auditor independence requirements of the
rounded off to the nearest thousand dollars, unless otherwise indicated.
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.
Signed in accordance with a resolution of the Board of Directors.
Michael Givoni
Chairman
29 August 2016
27
BSA LIMITED ANNUAL REPORT 2016 Capital Square T1
30 Level Premium Grade Office Tower, 5 Star
Green Star and 5 Star NABERS, proposed
Woodside new headquarters
28
BSA LIMITED ANNUAL REPORT 2016 AUDITOR’S INDEPENDENCE DECLARATION
29
BSA LIMITED ANNUAL REPORT 2016 FINANCIAL REPORT
BSA LIMITED
ABN 50 088 412 748
31 —
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
32 —
Consolidated Statement of Financial Position
33 —
Consolidated Statement of Changes in Equity
34 —
Consolidated Statement of Cash Flows
35 —
Notes to the Financial Statements
89 —
Directors’ Declaration
90 —
Independent Auditor’s Report
92 —
Shareholder Information
30
BSA LIMITED ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
Investment revenue
Other gains and losses
Share of (losses)/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
Occupancy expenses
Finance costs
Other expenses
(Loss)/profit before tax
Income tax benefit/(expense)
(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 recognised on cash flow hedges
Total comprehensive income for the year, net of tax
Earnings per share for profit from continuing operations:
Basic (loss) earnings per share
Diluted (loss) earnings per share
Note
5
6
7
20
8.4
8.3
8.3
8.2
37
9.1
2016
$’000
511,856
96
120
(277)
(1,969)
(426,675)
(46,931)
(5,029)
(1,440)
(6,816)
(741)
(25,208)
Consolidated
2015
$’000
543,693
294
77
94
4
(455,844)
(44,448)
(6,362)
(1,440)
(6,375)
(1,253)
(23,001)
(3,014)
5,439
795
(1,564)
(2,219)
3,875
-
(2,219)
6
3,881
12
12
(0.52) cents
(0.52) cents
1.11 cents
1.10 cents
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
31
BSA LIMITED ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
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
Investment in Joint Venture
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Reserves
Accumulated losses
Profit Reserve
TOTAL EQUITY
Note
13
14
15
9.2
14
20
19
16
9.3
17
18
23
24
25
24
25
20
26
27
27
27
(a)
(b)
(c)
2016
$’000
21,490
77,795
2,731
-
102,016
1,957
-
3
7,723
7,795
15,185
3,152
35,815
137,831
70,593
1,895
21,684
94,172
1,094
1,052
17
2,163
96,335
41,496
97,592
1,410
(65,243)
7,737
41,496
Consolidated
2015
$’000
27,066
70,351
4,700
-
102,117
1,511
260
3
10,741
7,000
15,185
4,592
39,292
141,409
70,162
6,416
17,173
93,751
2,300
1,643
-
3,943
97,694
43,715
97,592
1,410
(63,024)
7,737
43,715
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
32
BSA LIMITED ANNUAL REPORT 2016
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Share-based
Payment
Cash Flow
Reserve
Hedge Reserve
$’000
$’000
Issued
Accumulated
Capital
$’000
Losses
$’000
77,797
(63,024)
-
-
-
21,345
(1,550)
-
-
97,592
-
-
-
-
-
-
-
-
-
-
-
(63,024)
(2,219)
-
(2,219)
-
-
Profit
Reserve
$’000
3,862
3,875
-
3,875
-
-
-
1,301
-
-
-
-
167
(58)
7,737
1,410
-
-
-
-
-
-
-
-
-
-
97,592
(65,243)
7,737
1,410
(6)
-
6
6
-
-
-
-
-
-
-
-
-
-
Balance at 1 July 2014
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Shares issued during period
Share issue costs
Share-based payment expense
Shares issued in satisfaction of
performance conditions
Balance at 30 June 2015
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
Balance at 30 June 2016
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Consolidated
Total
$’000
19,930
3,875
6
3,881
21,345
(1,550)
167
(58)
43,715
(2,219)
-
(2,219)
-
-
41,496
33
BSA LIMITED ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
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
Net cash generated by operating activities
30 (a)
Cash Flows from Investing Activities:
Proceeds from disposal of property, plant and equipment
Payment for plant and equipment
Net cash used in investing activities
Cash Flows From Financing Activities:
Proceeds from issue of shares
Payment for shares issued for vesting rights
Proceeds from borrowings
Repayment of borrowings
Payment of finance lease liabilities
Share issue costs paid
Net cash (used in)/generated by financing activities
Net (decrease)/increase in cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
13
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
2016
$’000
557,462
(554,781)
96
(741)
-
2,036
188
(1,406)
(1,218)
-
-
3,513
(8,329)
(1,578)
-
(6,394)
(5,576)
27,066
21,490
Consolidated
2015
$’000
612,309
(593,011)
102
(1,253)
1,483
19,630
76
(1,637)
(1,561)
21,345
(58)
-
(13,586)
(2,451)
(1,550)
3,700
21,769
5,297
27,066
34
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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 Amendments to AASBs and the new Interpretation that are mandatorily effective for the current year
In the current year, the Group has applied the following amendment to AASBs and a new Interpretation issued by the Australian Accounting Standards
Board (AASB) that is mandatorily effective for an accounting period that begins on or after 1 July 2015, and therefore relevant for the current year end.
AASB 2015-3 ‘Amendments to Australian Accounting arising from the
This amendment completes the withdrawal of references to AASB 1031 in all
Withdrawal of AASB 1031 Materiality’
Australian Accounting Standards and Interpretations, allowing that Standard
to effectively be withdrawn.
2.2 Standards and Interpretations on issue not yet adopted
As at the date of authorisation of the financial statements, the Standards and Interpretations that were issued but not yet effective are listed below.
Standard/Interpretation
AASB 9 ‘Financial Instruments’, and the relevant amending standards
AASB 15 ‘Revenue from Contracts with Customers’
Effective for annual
Expected to be
reporting periods
initially applied in the
beginning on or after
financial year ending
1 January 2018
30 June 2019
1 January 2018
30 June 2019
AASB 2014-3 ‘Amendments to Australian Accounting Standards – Accounting for Acquisitions of
1 January 2016
30 June 2017
Interests in Joint Operations’
AASB 2014-4 ‘Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of
1 January 2016
30 June 2017
Depreciation and Amortisation’
AASB 2014-9 ‘Amendments to Australian Accounting Standards – Equity Method in Separate Financial
1 January 2016
30 June 2017
Statements’
AASB 2014-10 ‘Amendments to Australian Accounting Standards – Sale or Contribution of Assets
1 January 2016
30 June 2017
between an Investor and its Associate or Joint Venture’
AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual Improvements to Australian
1 January 2016
30 June 2017
Accounting Standards 2012-2014 Cycle’
AASB 2015-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
1 January 2016
30 June 2017
AASB 101’
AASB 16 ‘Leases’
1 January 2019
30 June 2020
AASB 2016-1 ‘Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for
1 January 2017
30 June 2018
Unrealised Losses’
AASB 2016-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
1 January 2017
30 June 2018
AASB 107’
At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations were also in issue but not yet effective,
although Australian equivalent Standards and Interpretations have not yet been issued.
Classification and measurement of Share-based Payment Transactions (Amendment to AASB 2)
1 January 2018
30 June 2019
Management is currently assessing the impact, if any, of the adoption of the above Standards and Interpretations that were issued but not yet effective on BSA.
35
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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 29 August 2016.
3.2 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 102
‘Inventories’ or value in use in AASB 136 ‘Impairment of Assets’.
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 Corporations Instrument 2016/191, dated 24 March 2016, and in accordance with that Class Order
amounts in the Financial Report are rounded off to the nearest thousand dollars, unless otherwise indicated.
36
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.3 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.
The parent entity carries it’s investment in subsidiaries at cost less impairment (if any).
37
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.4 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.
38
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.5 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 3.4 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.
3.6 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.
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.
3.7 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.
3.7.1 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.
39
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.7.2 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 3.8 below
3.7.3 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.
3.8 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.
3.9 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.
3.9.1 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 3.10 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.
40
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.10 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.
3.11 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.
3.12 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 with a corresponding increase in equity. 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
3.13 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.13.1 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.
41
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.13.2 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 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. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.
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.
3.13.3 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,
in which case the current and deferred tax are also recognized 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.
3.13.4 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.
42
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.14 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.
3.15 Intangible assets
3.15.1 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.
3.15.2 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.
The following intangible assets were recognised separately from goodwill acquired during business combinations:
-
-
Customer relationships acquired during a business combination which were assessed to have a useful life of 9 years
Backlog of orders acquired during business combinations which were assessed to have useful lives of 1 to 9.5 years.
43
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.16 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.
3.17 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.
3.18 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.
3.18.1 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.
3.18.2 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.
44
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.19 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.
3.19.1 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.
3.19.2 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.
3.19.3 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.
3.20 Financial liabilities and equity instruments issued by the Group
3.20.1 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.
3.20.2 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.
3.20.3 Financial Liabilities
Financial liabilities are classified as ‘other financial liabilities’.
45
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.20.4 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.
3.21 Derivative financial instruments
From time to time 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.
3.21.1 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.
3.22 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.
46
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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 3.8. 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 2016 was $15,185,000 (30 June 2015: $15,185,000).
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
FY2016 accounts of $2,736,000 (FY2015 $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
47
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
48
2016
$’000
Consolidated
2015
$’000
21,969
183,715
306,172
24,641
190,764
328,288
511,856
543,693
2016
$’000
Consolidated
2015
$’000
96
-
96
96
96
2016
$’000
120
120
152
142
294
294
294
Consolidated
2015
$’000
77
77
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
Termination benefits
Other employee benefits
2016
$’000
Consolidated
2015
$’000
428,644
455,840
741
741
5,029
1,440
6,469
1,253
1,253
6,362
1,440
7,802
10,107
10,107
-
167
1,877
34,947
-
34,174
Total employee benefits expense
46,931
44,448
8.5
Significant Items
Non-recurring key project provisions, releases and write downs
Restructure costs
nRAH completion and commissioning costs
Other contract one-off items
Legal costs relating to legacy issues
Additional provision for NSW OSR issue i)
Other significant items
-
3,267
7,514
385
3,493
736
(861)
3,044
269
-
886
-
-
-
Total significant items ii)
14,534
4,199
i) Following on from continued progress relating to the NSW OSR issue, a further provision of $736,000 was taken in the FY2016 results.
ii) $14,534,000 (2015: $4,199,000) is included in the following categories in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income, ‘Subcontractors and raw materials’ ($12,847,000) (2015: $4,680,000), ‘Employee benefits expense’ ($1,197,000), ‘Other expenses’
($398,000) (2015: -$481,000), ‘Finance costs’ ($11,000) and ‘Depreciation expense’ ($81,000).
49
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
2016
$’000
Note
Consolidated
2015
$’000
-
-
-
(795)
(795)
-
-
-
1,564
1,564
1,564
Total income tax (benefit)/expense recognised in the current year relating to continuing operations
(795)
The benefit for the year can be reconciled to the accounting (loss)/profit as follows:
(Loss)/Profit from continuing operations
(3,014)
5,439
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
Other
(904)
138
-
(766)
(29)
(29)
1,632
24
(110)
1,546
18
18
Total income tax (benefit)/expense recognised in the current year relating to continuing operations
(795)
1,564
The tax rate used for the 2016 and 2015 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
50
-
-
-
-
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 9 INCOME TAXES (CONTINUED)
9.3
Deferred tax balances
2016
Temporary differences
Finance leases
Intangible assets
Employee benefits
Provisions
Doubtful debts
Tax loss carried forward
2015
Temporary differences
Finance leases
Intangible assets
Employee benefits
Provisions
Doubtful debts
Tax loss carried forward
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
(146)
(1,378)
3,525
2,800
758
1,441
7,000
53
433
(256)
1,294
(216)
(513)
795
(93)
(945)
3,269
4,094
542
928
7,795
Opening balance
Recognised in
profit or loss
Closing balance
(66)
(1,810)
3,287
3,576
1,098
2,479
8,564
(80)
432
238
(776)
(340)
(1,038)
(1,564)
(146)
(1,378)
3,525
2,800
758
1,441
7,000
30/06/2016
30/06/2015
$’000
$’000
7,795
-
7,795
7,000
-
7,000
51
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
The aggregate compensation made to Directors and other Key Management Personnel of the Company and the Group is set out below:
Compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
2016
$
Consolidated
2015
$
2,090,432
115,110
13,709
-
1,747,429
111,065
21,494
184,250
2,219,251
2,064,238
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 17 to 25 of this Annual Report.
52
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 11 AUDITORS’ REMUNERATION
Remuneration of the auditor of the Group for:
- Auditing or reviewing the Financial Report
- Taxation services
- Other non-audit services
The auditor of BSA Limited is Deloitte Touche Tohmatsu.
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
2016
$
337,461
152,426
12,333
Consolidated
2015
$
427,798
200,071
12,250
502,220
640,119
2016
Cents
(0.52)
(0.52)
Consolidated
2015
Cents
1.11
1.10
$’000
$’000
(2,219)
(2,219)
3,875
3,875
Number
Number
(b)
Weighted average number of ordinary shares outstanding during
422,907,346
350,446,030
the year used in calculating basic EPS
Weighted average number of options/rights outstanding
-
2,564,796
Weighted average number of ordinary shares outstanding during the year used in calculating diluted EPS
422,907,346
353,010,826
(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.
53
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
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
NON-CURRENT
Executive Share Plan receivables
Other Receivables
Trade receivables
2016
$’000
21,490
21,490
2016
$’000
5,381
(206)
5,175
1,408
1,328
56,115
(947)
7
13,332
1,377
72,620
Consolidated
2015
$’000
27,066
27,066
Consolidated
2015
$’000
8,908
(382)
8,526
1,142
194
49,200
(886)
65
11,242
868
61,825
77,795
70,351
313
1,644
1,957
1,511
-
1,511
Note
33 (c)
21
33(c)
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
The average credit period for the Group is 44 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.
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.
54
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 14 TRADE AND OTHER RECEIVABLES (CONTINUED)
Age analysis of trade receivables that are past due but not impaired at the reporting date
Not past due
Past due [30] days
Past due [30-60] days
Past due [60-90] days
Past due [>90] days
Total
Total
$’000
4,206
633
223
155
164
5,381
Amounts due from customers under construction contracts
2016
Amount
Amount Not
Impaired
Impaired
$’000
4,206
633
223
10
103
5,175
$’000
-
-
-
145
61
206
2016
Not past due
Past due [30] days
Past due [30-60] days
Past due [60-90] days
Past due [>90] days
Total
Total
$’000
40,889
6,518
2,515
1,661
4,532
56,115
Amount
Amount Not
Impaired
Impaired
$’000
-
-
-
-
947
947
$’000
40,889
6,518
2,515
1,661
3,585
55,168
Consolidated
2015
Amount
Amount Not
Impaired
Impaired
$’000
5,012
3,103
165
-
246
8,526
Consolidated
$’000
-
3
-
68
311
382
2015
Amount
Amount Not
Impaired
Impaired
$’000
-
-
-
-
886
886
$’000
36,814
6,538
2,211
1,092
1,659
48,314
Total
$’000
5,012
3,106
165
68
557
8,908
Total
$’000
36,814
6,538
2,211
1,092
2,545
49,200
As at 30 June 2016, the Group had current trade receivables of $1,153,000 (2015: $1,268,000) 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
Inventories of finished goods and work in progress at net realisable value
Consolidated
2015
$’000
3,218
2,094
(1,415)
(2,629)
1,268
Consolidated
2015
$’000
4,700
4,700
2016
$’000
1,268
474
(589)
-
1,153
2016
$’000
2,731
2,731
The cost of inventories recognised as an expense includes $395,000 (2015: $324,000) in respect of write-down of inventory to net realisable value.
55
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 16 PROPERTY, PLANT AND EQUIPMENT
Plant &
Equipment
Under Finance
Leasehold
Plant &
Lease & Hire
Land
Buildings
Improvements
Equipment
Purchase
$’000
$’000
$’000
$’000
$’000
Make
Good
$'000
Total
$’000
Cost
Balance as at 1 July 2014
253
410
Additions
Disposals
Transfers *
-
-
-
-
-
-
3,186
37
-
-
29,109
10,603
234
43,795
1,601
(385)
32
629
(96)
(32)
17
-
-
2,284
(481)
-
Balance as at 30 June 2015
253
410
3,223
30,357
11,104
251
45,598
Additions
Disposals
Transfers *
-
-
-
-
-
-
7
-
-
1,401
(479)
94
659
(361)
(94)
12
-
-
2,079
(840)
-
Balance as at 30 June 2016
253
410
3,230
31,373
11,308
263
46,837
Accumulated depreciation and impairment
Balance as at 1 July 2014
Additions
Disposals
Transfers
Balance as at 30 June 2015
Additions
Disposals
Transfers *
Balance as at 30 June 2016
Net Book Value as at 30 June 2016
Net Book Value as at 30 June 2015
* Transfers between categories
-
-
-
-
-
-
-
-
-
253
253
39
16
-
-
55
17
-
-
72
338
355
1,701
575
-
-
21,171
3,922
(385)
19
5,918
1,767
(96)
(19)
147
82
-
-
28,976
6,362
(481)
-
2,276
24,727
7,570
229
34,857
477
-
-
3,111
(442)
82
2,753
27,478
477
947
3,895
5,630
1,390
(330)
(82)
8,548
2,760
3,534
34
-
-
263
-
22
5,029
(772)
-
39,114
7,723
10,741
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 parent entity and its subsidiaries' assets have been pledged as security for bank loans (see note 24).
56
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 17 NON-CURRENT ASSETS - GOODWILL
$'000
Cost
Balance at the beginning of year
2016
2015
Balance at end of year
2016
2015
Accumulated impairment losses
Balance at the beginning of year
2016
2015
Impairment losses recognised in the year
2016
2015
Balance at end of year
2016
2015
Closing carrying value
2016
2015
BSA | Connect
BSA | Build
BSA | Maintain
Consolidated
13,025
13,025
13,025
13,025
34,142
34,142
34,142
34,142
9,553
9,553
9,553
9,553
56,720
56,720
56,720
56,720
(13,025)
(13,025)
(18,957)
(18,957)
(9,553)
(9,553)
(41,535)
(41,535)
-
-
-
-
-
-
-
-
(13,025)
(13,025)
(18,957)
(18,957)
(9,553)
(9,553)
(41,535)
(41,535)
-
-
15,185
15,185
-
-
15,185
15,185
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 3.0% for BSA | Build. The cash flows are discounted using the weighted average cost of capital with mid-year discounting.
57
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 17 NON-CURRENT ASSETS - GOODWILL (CONTINUED)
The following assumptions were used in the value-in-use calculations:
BSA | Build
2017
2018
2019
Terminal Year
Growth Rate
(2.25%)
3.00%
3.00%
3.00%
WACC/
Discount
Rate
12.50%
12.50%
12.50%
12.50%
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 used historical weighted average growth 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.
Management 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
BSA | Build - 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 $9,674,000 and a 5% increase in the overall revenue growth would result in an increase in enterprise value by
$9,674,000. 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.
Gross Margin: Revenue less Costs of Goods Sold (Direct Costs)
BSA | Build - In a sensitivity analysis, Management estimates that a 1% reduction in gross margin would cause a reduction in enterprise value
of $14,600,000 and an improvement in gross margin of 1% would increase the enterprise value by $14,600,000. 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.
As at 30 June 2016 the value-in-use amount for BSA | Build exceeds the carrying value by $33,409,000.
58
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 17 NON-CURRENT ASSETS - GOODWILL (CONTINUED)
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:
BSA | Build – A sensitivity in adversely impacting working capital based on collecting debtors five days later and paying creditors two days earlier,
and WIP reducing two days would reduce enterprise value by $6,649,000.
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 (BSA | Build)
results in a potential reduction in enterprise value for BSA | Build of $15,134,000.
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.
59
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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.
Customer
Relationships
$’000
Order
Backlog
$’000
Total
$’000
16,979
-
16,979
-
16,979
(10,947)
(1,440)
(12,387)
(1,440)
(13,827)
10,079
-
10,079
-
10,079
(5,642)
(674)
(6,316)
(674)
(6,990)
3,089
3,152
3,763
4,592
Cost
Balance as at 1 July 2014
Acquisitions through business combinations
Balance at 30 June 2015
Acquisitions through business combinations
Balance at 30 June 2016
Accumulated amortisation and impairment
Balance as at 1 July 2014
Amortisation expense
Balance at 30 June 2015
Amortisation expense
Balance at 30 June 2016
Net Book Value as at 30 June 2016
Net Book Value as at 30 June 2015
6,900
-
6,900
-
6,900
(5,305)
(766)
(6,071)
(766)
(6,837)
63
829
The following useful lives are used in the calculation of amortisation.
Customer relationships
Order backlog
9 years
1 to 9.5 years
60
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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:
2016
$’000
3
3
Consolidated
2015
$’000
3
3
Principal
Percentage owned (%)
Activity
Country of incorporation
2016
2015
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
-
-
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%
BSA | Build
BSA | Build
BSA | Build
BSA | Build
BSA | Build
BSA | Build
BSA | Connect
BSA | Connect
BSA | Connect
BSA | Maintain
BSA | Connect
BSA | Connect
BSA | Build
BSA | Build
BSA | Build
BSA | Build
BSA | Build
BSA | Connect
BSA | Maintain
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.
61
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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:
Principal Activity
BSA | Connect
BSA | Build
BSA | Maintain
Place of incorporation
and operation
Australia
Australia
Australia
NOTE 20 DETAILS OF JOINT VENTURE
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
Triple M and Premier Fire JV Co Limited Installation of fire services
Australia
Number of wholly-owned
subsidiaries
2016
2015
6
11
2
19
6
11
2
19
Proportion of ownership
interest and voting power
held by the group
2016
50%
2015
50%
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 material 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 AASBs (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)
2016
$’000
3,272
-
(3,306)
-
696
-
-
2015
$’000
2,777
-
(2,258)
-
1,310
-
-
62
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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)
2016
$’000
19,212
(554)
-
(554)
-
(554)
-
-
-
-
(131)
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
2016
$’000
(34)
50%
-
-
(17)
NOTE 21 AMOUNTS DUE FROM (TO) 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)
Advances received from customers for contract work amounted to $8,188,000 (30 June 2015: Nil).
2016
$’000
311,804
(263,877)
47,927
56,115
(8,188)
47,927
2015
$’000
15,428
188
-
188
-
188
-
-
-
-
-
2015
$’000
519
50%
-
-
260
2015
$’000
340,065
(290,865)
49,200
49,200
-
49,200
63
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
Profit/(Loss) for the year
Other comprehensive income for the year, net of tax
Items that may be reclassified subsequently to profit or loss:
Gain recognised on cash flow hedges
Total comprehensive income for the year, net of tax
2016
$’000
29,083
80,573
109,656
25,865
959
26,824
82,832
97,592
(39,306)
23,136
1,410
-
82,832
(3,880)
-
(3,880)
Consolidated
2015
$’000
49,458
81,727
131,185
41,978
2,495
44,473
86,712
97,592
(35,426)
23,136
1,410
-
86,712
988
6
994
(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.
57,164
73,660
(d)
Contingent Liabilities
Under the above cross guarantee, BSA Limited, as the parent entity, guarantees all contingent liabilities of the wholly owned subsidiaries.
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 $7,501,000
(2015: $10,120,000) directly relating to the parent. Guarantees secured by cross guarantee by all group members amounted to $39,420,000
(2015:$33,357,000).
64
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
Note
2016
$’000
39,414
8,299
14,692
8,188
70,593
Consolidated
2015
$’000
31,501
24,629
14,032
-
70,162
The average credit period on purchases is 29 days. The Group has financial risk management policies in place to ensure that all payables are paid
within the pre-agreed credit terms.
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
Note
2016
$’000
Consolidated
2015
$’000
(b), 28(iii)
(b), 28(ii)
(a)
(b), 28(iii)
(b), 28(ii)
(a)
487
1,099
-
309
1,895
879
215
-
1,094
622
669
5,125
-
6,416
741
1,559
-
2,300
(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 $57,164,000 between the parent entity and its subsidiaries.
During the period the bank facilities were renegotiated with the Company’s bank. Facilities amounting to $51,500,000 were extended to 31
December 2018.
The covenants within the bank borrowings have the following ratios as at 30 June 2016:
Quarterly interest cover ratio greater than 3.5 times,
Quarterly total leverage ratio less than 3.75 times.
65
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
2016
$’000
21,490
77,795
2,731
-
102,016
1,957
-
3
7,723
7,795
15,185
3,152
35,815
Consolidated
2015
$’000
27,066
70,351
4,700
-
102,117
1,511
260
3
10,741
7,000
15,185
4,592
39,292
(b)
Lease liabilities and hire purchase liabilities are effectively secured as the rights to the assets recognised in the financial statements and revert to the
financier in the event of default.
Actual interest rates for HP liabilities outstanding during the year ranged between 4.56% and 7.64%. Actual interest rates for lease liabilities outstanding
during the year ranged between 4.94% and 7.07%. Actual interest rates for bank loans outstanding during the year was 5.22%.
(c)
There were no defaults or breaches of any loan agreements during the current year.
137,831
141,409
66
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 25 PROVISIONS
Employee benefits
Other provisions (see below)
CURRENT
NON-CURRENT
Note
(i)
Other Provisions
Balance at 1 July 2015
Additional provisions recognised
Balance at 30 June 2016
Office
of State
Revenue (ii)
2,000
736
2,736
Make
Good (iii)
274
6
280
2016
$’000
9,428
13,308
22,736
21,684
1,052
22,736
Contract
Provisions
(iv)
6,615
3,677
10,292
Consolidated
2015
$’000
9,927
8,889
18,816
17,173
1,643
18,816
Total
8,889
4,419
13,308
(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 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 FY2016 accounts of $2,736,000 (FY2015: $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 obligations 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 FY2016 result was impacted by specific provisions taken up during the year.
67
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 26 ISSUED CAPITAL
(a)
Share capital
Ordinary shares - fully paid
(b)
Movements in ordinary share capital
Date
Details
Parent Entity
2016
2015
Number of
Number of
Shares
Shares
422,907,346
422,907,346
Note
(c)
Number of
Issue Price
Shares
$
$’000
1 July 2014
Opening Balance
22 October 2014
Issue of shares under the Share Placement offer for cash
228,861,202
34,329,180
19 November 2014
Issue of shares under the Rights offer for cash
(g)
155,626,055
1 December 2014
Issue of shares by way of placement to Executives for cash
(f)
4,090,909
0.11
0.11
0.11
Less: transaction costs arising on shares issued
1 July 2015
Opening Balance
30 June 2016
Balance
-
422,907,346
422,907,346
77,797
3,776
17,119
450
(1,550)
97,592
97,592
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 2016 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.
68
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
2016
$’000
-
1,410
1,410
-
-
-
Consolidated
2015
$’000
-
1,410
1,410
(6)
6
-
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
1,410
-
-
1,410
1,301
167
(58)
1,410
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
(63,024)
(2,219)
(65,243)
7,737
-
-
7,737
(63,024)
-
(63,024)
3,862
3,875
-
7,737
69
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 27 RESERVES AND ACCUMULATED LOSSES (CONTINUED)
(d)
Dividends on equity instruments
Year ended 30/06/16
Year ended 30/06/15
Cents per share
Total ‘000
Cents per share
Total ‘000
Recognised amounts
Fully paid ordinary shares
Interim dividend:
Final dividend:
Unrecognised amounts
Fully paid ordinary shares
Final dividend:
-
-
-
-
-
-
The Directors have not recommended the payment of a final dividend in respect of the year ending 30 June 2016.
(e)
Franked credits
Franking account balance as at 30 June
2016
$’000
16,285
-
-
-
-
-
-
Consolidated
2015
$’000
16,285
70
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 28 CAPITAL AND LEASING COMMITMENTS
Note
2016
$’000
Consolidated
2015
$’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
4,438
1,483
-
5,921
4,248
3,773
-
8,021
The Group leases various plant and equipment with a carrying amount of $1,501,000 (2015: $2,386,000) 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
1,218
318
-
1,536
(222)
1,314
1,099
215
1,314
817
1,751
-
2,568
(340)
2,228
669
1,559
2,228
24
24
The Group has purchased various plant and equipment with a carrying amount of $1,177,000 (2015: $1,148,000) 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
562
939
-
1,501
(135)
1,366
487
879
1,366
24
24
623
822
-
1,445
(82)
1,363
622
741
1,363
71
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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:
BSA | Connect
BSA | Connect 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.
BSA | Build
BSA | Build 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.
BSA | Maintain
BSA | Maintain 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 segment:
BSA | Connect
BSA | Build
BSA | Maintain
Other
Revenue
Year Ended
Segment Profit/Loss
Year Ended
30 Jun 16
$’000
205,731
226,392
79,853
96
512,072
30 Jun 15
$’000
215,436
252,740
75,594
294
544,064
30 Jun 16
$’000
6,183
(3,285)
(312)
-
2,586
30 Jun 15
$’000
6,786
8,031
(1,038)
-
13,779
Corporate costs including acquisition, legal and advisory
(4,859)
(7,087)
Finance costs
(Loss)/Profit before tax
(741)
(1,253)
(3,014)
5,439
Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year (2015: 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.
72
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 29 SEGMENT INFORMATION (CONTINUED)
(d)
Segment assets and liabilities
Segment assets
BSA | Connect
BSA | Build
BSA | Maintain
Consolidated assets
Segment liabilities
BSA | Connect
BSA | Build
BSA | Maintain
Consolidated liabilities
Year Ended
30 Jun 16
$’000
37,936
80,406
19,489
30 Jun 15
$’000
56,236
72,897
12,276
137,831
141,409
33,768
52,950
9,617
42,805
48,825
6,064
96,335
97,694
For the purposes of monitoring segment performance and allocating resources between segments.
All assets, except cash, are allocated to reportable segments. In 2016, cash is allocated to BSA | Connect, 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
BSA | Connect
BSA | Build
BSA | Maintain
Depreciation and amortisation
Additions to non-current assets
Year Ended
Year Ended
30 Jun 16
$’000
30 Jun 15
$’000
30 Jun 16
$’000
30 Jun 15
$’000
2,357
1,811
2,301
2,955
2,076
2,771
731
920
428
1,244
608
432
6,469
7,802
2,079
2,284
73
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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:
Australia
Revenue from external customers
Non-current assets
Year ended
Year Ended
30 Jun 16
$’000
512,072
512,072
30 Jun 15
$’000
544,064
544,064
30 Jun 16
$’000
35,815
35,815
30 Jun 15
$’000
39,292
39,292
(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
BSA | Connect segment who accounts for 26% of external revenue (2015:22%). The Group’s next most significant client is in the BSA | Build segment
and accounts for 8% of external revenue (2015: 7%).
74
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 30 CASH FLOW INFORMATION FOR THE PERIOD
(a)
Reconciliation of profit/(loss) to net cash flows from operating activities for the year
(Loss)/Profit for the year
Depreciation
Amortisation
Share-based payment expense
Net (profit) on sale of non-current assets
Change in operating assets and liabilities
(Increase)/decrease in trade receivables
Decrease/(increase) in inventories
(Increase)/decrease in deferred tax asset
(Increase)/decrease in other operating assets
Increase/(decrease) in trade payables
(Decrease)/increase in other operating liabilities
Decrease in tax receivable
Increase/(decrease) in provisions
Net cash generated by operating activities
2016
$’000
(2,219)
5,029
1,440
-
(120)
(5,580)
1,969
(795)
(2,311)
7,913
(7,210)
-
3,920
2,036
Consolidated
2015
$’000
3,875
6,362
1,440
167
(77)
14,143
(4)
1,564
1,677
(14,473)
6,066
1,483
(2,593)
19,630
(b)
Non-cash transactions
During the year the consolidated entity acquired plant and equipment with an aggregate value of $659,000 (2015:$629,000) by means of finance
leases. These acquisitions are not reflected in the cash flow statement.
(c)
Credit Standby Arrangements with Banks
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 Facilities
Total asset finance facility
Amount utilised
Total unused Master Asset Finance Facility
2016
$’000
20,000
-
20,000
5,000
(2,679)
2,321
Consolidated
2015
$’000
20,000
-
20,000
5,000
(3,591)
1,409
75
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 30 CASH FLOW INFORMATION FOR THE PERIOD (CONTINUED)
(e)
Loan facilities
Loan facilities
Amount utilised
Unused loan facility
2016
$’000
-
-
-
Consolidated
2015
$’000
5,125
(5,125)
-
The major facilities are summarised as follows:
Acquisition Finance Loans
All Acquisition Finance Loans have been fully repaid as at 30 June 2016.
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 $20,424,000 were utilised at 30 June 2016 (2015: $21,195,000) and 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 $18,996,000 were utilised at 30 June 2016 (2015: $12,162,000), 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 twelve 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 2016 (2015: 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 (2015: nil), which
relates, in full, to equity-settled share-based payment transactions.
76
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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 Consolidated Statement of Financial Position 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 2016 (2015: 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:
Consolidated and parent entity
Issue Price
Balance at Start
Granted During
Released from Escrow
Balance in Escrow
Grant Date
Expiry Date
(cents)
of the Year
13 Oct 2006
19 Jul 2007
11 Sep 2007
13 Sep 2007
14 Dec 2007
10 Feb 2009
Total
n/a
n/a
n/a
n/a
n/a
n/a
0.23
0.63
0.68
0.68
0.68
0.10
Number
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
the Year
Number
During the Year
at End of the Year
Number
Number
-
-
-
-
-
-
-
-
-
-
-
-
-
-
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
77
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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)
(ii)
Service condition of three years; or
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.
78
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 31 SHARE-BASED PAYMENTS (CONTINUED)
Consolidated and parent entity
Grant
Date
Exercise
Date
Expiry
Date
Exercise
Price
(cents)
Balance
at Start
of the
Year
Under
Right
Balance
at Start
of the
Year
Under
Option
Granted
During
the Year
Under
Right
Granted
During
the Year
Under
Option
Exercised
During
the Year
Under
Right
Exercised
During
the Year
Under
Option
Cancelled
During
the Year
Under
Right
Cancelled
During
the Year
Under
Option
Balance
in Escrow
at End of
the Year
Under
Right
Balance
in Escrow
at End of
the Year
Under
Option
Number
Number Number Number
Number
Number
Number
Number
Number
Number
24 Aug 10
24 Aug 13
24 Aug15
14 Nov 11
14 Nov 14
14 Nov 16
25 Nov 14
30 Jun 15
25 Nov 17
Total
-
-
-
454,000
308,720
621,000
422,280
1,116,667
-
2,191,667
731,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(454,000)
(308,720)
-
-
-
-
-
-
621,000
422,280
1,116,667
-
(454,000)
(308,720)
1,737,667
422,280
NOTE 32 EVENTS OCCURRING AFTER THE BALANCE 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:
2016
$
Consolidated Entity
2015
$
Rent was paid to The Day Street Unit Trust in which M Lowe, a Director, has a beneficial
178,496
165,140
interest
Outstanding balances arising from purchases of services
No balances are outstanding at the reporting date in relation to transactions with related parties (2015: Nil).
79
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 33 RELATED PARTY TRANSACTIONS (CONTINUED)
(b)
Equity instrument disclosures relating to Key Management Personnel
(i) Rights holdings
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.
Balance at
Net
Balance
the start of
Granted as
Rights
Change
at End of
Vested
but Not
Vested
Vesting
and
During
Rights
2016
the year
Compensation
Exercised
Other
Year
Exercisable
Exercisable
Year
Nicholas Yates
1,116,667
1,116,667
-
-
-
-
-
1,116,667
-
1,116,667
-
-
1,116,667
1,116,667
1,116,667
1,116,667
Balance at
Net
Balance
the start of
Granted as
Rights
Change
at End of
Vested
but Not
Vested
Vesting
and
During
Rights
2015
the year
Compensation
Exercised
Other
Year
Exercisable
Exercisable
Year
Nicholas Yates
-
-
1,116,667
1,116,667
-
-
-
-
1,116,667
1,116,667
-
-
-
-
-
-
Further details of schemes can be found in the Directors’ Report.
80
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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.
Balance at
the start of
Rights
the year
Exercised
Other Changes
During the Year
Balance at the
Balance
End of the Year
Held Nominally
2016
Directors of BSA Limited
Ordinary Shares
Mark Lowe
Paul Teisseire
Michael Givoni
Graeme Barclay
Nicholas Yates
10,115,403
680,012
636,400
-
2,727,273
Ordinary Shares - Escrowed
Mark Lowe
200,000
Key Management Personnel
Ordinary Shares
Nicholas Benson
1,363,636
15,722,724
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,115,403
680,012
636,400
-
2,727,273
200,000
1,363,636
15,722,724
-
-
-
-
-
-
-
-
Max Cowley is a nominee director of Birketu Pty Ltd and is also a director of Birketu Pty Ltd. Birketu Pty Ltd holds shares in BSA Limited of
66,000,000 (2015: 66,000,000). Max Cowley has no beneficial interest in Birketu Pty Ltd.
2015
the year
Exercised
During the Year
End of the Year
Held Nominally
Balance at
the start of
Rights
Other Changes
Balance at the
Balance
Directors of BSA Limited
Ordinary Shares
Ross Johnston (Retired 28 April 2015)
1,209,315
Mark Lowe
Paul Teisseire
Michael Givoni
Graeme Barclay
Nicholas Yates
10,115,403
404,769
230,000
-
-
Ordinary Shares - Escrowed
Mark Lowe
200,000
Key Management Personnel
Ordinary Shares
Nicholas Benson
-
-
-
-
-
-
-
-
-
( 309,315)
-
275,243
406,400
-
2,727,273
900,000
10,115,403
680,012
636,400
-
2,727,273
-
200,000
1,363,636
1,363,636
12,159,487
4,463.237
16,622.724
-
-
-
-
-
-
-
-
-
81
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 33 RELATED PARTY TRANSACTIONS (CONTINUED)
(c)
Executive Securities Loans
Balance at
Notional
Notional
Interest
End of Year
Interest Charged
Not Charged
Provision for
Impairment
Number of
Individuals
$000
$000
$000
$000
Opening
Balance
$000
1,705
1,473
1,473
1,477
2,552
2,656
2,487
2,437
1,029
833
807
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
1,734
1,705
1,473
1,473
1,477
2,552
2,656
2,487
2,437
1,029
833
29
232
90
90
93
44
334
171
148
63
26
-
-
-
-
-
-
-
-
-
-
-
Individuals with loans above $100,000 in reporting period
Opening
Notional Interest Charged Using
Balance at End
2016
Balance
Effective Interest Rate Method
Brendan Foley
Ray Larkin
Leaston Paull
Bryce Wood
Peter Tripodi *
Younis Tehfe
$
579,242
223,011
223,011
189,339
143,750
132,733
$
10,823
4,217
4,217
3,580
-
2,640
of Year
$
590,065
227,228
227,228
192,919
143,750
135,373
* Balance at year end stated at actual date to the terms of the loans
Opening
Notional Interest Charged Using
Balance at End
2015
Balance
Effective Interest Rate Method
Brendan Foley
Ray Larkin
Leaston Paull
Bryce Wood
Peter Tripodi *
Younis Tehfe
$
490,499
188,844
188,844
160,332
143,750
112,397
$
88,743
34,167
34,167
29,007
-
20,336
* Balance at year end stated at actual due to the terms of the loans.
of Year
$
579,242
223,011
223,011
189,339
143,750
132,733
-
-
-
-
-
-
-
-
-
-
-
11
11
11
11
11
13
13
13
13
6
1
Highest Balance
During Period
$
590,065
227,228
227,228
192,919
143,750
135,373
Highest Balance
During Period
$
579,242
223,011
223,011
189,339
143,750
132,733
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 to 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.
82
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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
2016
$’000
Consolidated
2015
$’000
21,490
27,066
78,375
71,862
Financial Assets at amortised cost
99,865
98,928
Financial liabilities
Financial liabilities held at amortised cost
Trade and other payables
Borrowings
61,165
2,989
70,162
8,716
Financial liabilities at amortised cost
64,154
78,878
NOTE 35 FINANCIAL RISK MANAGEMENT
(a)
General objectives, policies and processes
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 policies 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.
83
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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 11% of gross monetary assets at balance date. Concentration of credit risk to
any other counterparty did not exceed 8% of gross monetary assets at balance date.
The maximum exposure to credit risk at balance date is as follows:
Receivables
2016
$’000
79,752
79,752
Consolidated
2015
$’000
71,862
71,862
Included in loans and receivables, the most significant customer accounts for 5.9% of trade receivables at 30 June 2016 (2015:10.0%).
The maximum exposure to credit risk at balance date by country is as follows:
Australia
2016
$’000
79,752
79,752
The maximum exposure to credit risk for cash and trade receivables at balance date by type of customer is as follows:
BSA | Connect
BSA | Build
BSA | Maintain
2016
$’000
23,939
38,498
17,315
79,752
Consolidated
2015
$’000
71,862
71,862
Consolidated
2015
$’000
26,571
34,032
11,259
71,862
The Group’s most significant customer, a BSA | Build customer, accounts for $3,665,000 of trade receivables at 30 June 2016. At 30
June 2015, the Group’s most significant customer was a BSA | Connect customer which accounted for $5,694,000.
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.
84
BSA LIMITED ANNUAL REPORT 2016 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 35 FINANCIAL RISK MANAGEMENT (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:
Credit stand-by arrangements
Total facilities:
Corporate Market Loan
Overdraft Facility
Multi-Option Facility
Debtor Finance Facility
Used at balance date:
Corporate Market Loan
Overdraft Facility
Multi-Option Facility
Debtor Finance Facility
Unused at balance date:
Corporate Market Loan
Overdraft Facility
Multi-Option Facility
Debtor Finance Facility
Bank loans
Total facilities:
Used at balance date
Unused at balance date
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
2016
$’000
20,000
-
-
-
20,000
-
-
-
-
-
20,000
-
-
-
20,000
-
-
-
20,000
5,000
2,680
2,320
22,320
Consolidated
2015
$’000
4,000
-
16,000
20,000
-
-
-
-
4,000
-
16,000
20,000
5,125
5,125
-
20,000
5,000
3,591
1,409
21,409
In addition to the above arrangements the consolidated entity has a bank guarantee facility of $26,500,000 (2015: $26,500,000) which was utilised to
$20,424,000 (2015: $21,195,000). In addition to the above facilities the consolidated entity has a surety bond facility with Swiss Re International SE of $20,000,000
(2015: $20,000,000) which was utilised to $18,996,000 (2015: $12,162,000). Refer Note 24(a) for details of terms of financing arrangements.
85
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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 2016
Bank loans
Other
Trade creditors
Other payables
Finance lease and hire purchase liabilities
TOTAL
30 June 2015
Bank loans
Other
Trade creditors
Other payables
Finance lease and hire purchase liabilities
TOTAL
Carrying
Contractual Cash
Amount
$’000
-
309
39,414
53,915
2,680
96,318
Flows
$’000
-
309
39,414
53,915
3,037
96,675
Carrying
Contractual Cash
Amount
$’000
5,125
-
31,501
57,477
3,591
97,694
Flows
$’000
5,294
-
31,501
57,477
4,013
98,285
< 6
mths
$’000
-
309
39,414
53,915
890
94,528
< 6
mths
$’000
1,894
-
31,501
57,477
720
91,592
6- 12
mths
$’000
-
-
-
-
890
890
6- 12
mths
$’000
3,400
-
-
-
720
4,120
1-3
years
$’000
-
-
-
-
1,257
1,257
1-3
years
$’000
-
-
-
-
2,573
2,573
> 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 2016
Trade debtors
Other receivables
TOTAL
30 June 2015
Trade debtors
Other receivables
TOTAL
86
Carrying
Contractual Cash
Amount
$’000
5,175
74,577
79,752
Flows
$’000
5,381
75,641
81,022
Carrying
Contractual Cash
Amount
$’000
8,526
63,336
71,862
Flows
$’000
8,908
64,222
73,130
< 6
mths
$’000
5,381
72,356
77,737
< 6
mths
$’000
8,908
62,517
71,425
6- 12
mths
$’000
-
1,328
1,328
6- 12
mths
$’000
-
194
194
1-3
years
$’000
-
-
-
1-3
years
$’000
-
-
-
> 3
years
$’000
-
1,957
1,957
> 3
years
$’000
-
1,511
1,511
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
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. As at 30 June 2016 there were no bank borrowings.
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
Carrying Amount AUD
+2% of AUD IR
-2% of AUD IR
2016
Borrowings AUD
Tax effect (30%)
After tax increase/(decrease)
$’000
-
-
-
Profit
$’000
Other Equity
$’000
Profit
$’000
Other Equity
$’000
-
-
-
-
-
-
-
-
-
-
-
-
The above analysis assumes all other variables remain constant.
The same analysis was performed for the period ended 2015.
Consolidated
Carrying Amount AUD
+2% of AUD IR
-2% of AUD IR
2015
Borrowings AUD
Tax effect (30%)
After tax increase/(decrease)
$’000
5,125
-
5,125
Profit
$’000
Other Equity
$’000
Profit
$’000
Other Equity
$’000
103
(31)
72
-
-
-
(103)
31
(72)
-
-
-
The above analysis assumes all other variables remain constant.
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 sheet date is shown on page 88:
87
BSA LIMITED ANNUAL REPORT 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 36 FINANCIAL RISK MANAGEMENT (CONTINUED)
Gearing ratios
Net (cash) / debt
Total equity
Total Gearing Ratio
2016
$’000
(18,501)
41,496
(44.59%)
Consolidated
2015
$’000
(18,350)
43,715
(41.98%)
Gearing levels have decreased due to a strong focus on working capital management. It is the Board’s intention to monitor gearing levels going
forward to ensure flexibility. 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.
NOTE 37 OTHER EXPENSES
Bad debt and debt collection (recovery)/expenses
Motor vehicle expenses
Travel and entertainment
Other
Total Other Expenses
NOTE 38 CONTINGENT LIABILITIES
Note
2016
$’000
399
3,239
2,350
19,220
25,208
Consolidated
2015
$’000
(661)
3,135
2,319
18,208
23,001
(i) 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 $39,420,000 (2015: $33,357,000).
(ii) On 27 June 2016 the Company received a certificate of finding under section 27J of the Industry Research and Development Act 1986 from
Innovation Australia. The certificate of finding outlines Innovation Australia’s view that none of the activities claimed in previous years by BSA
as Research and Development are “Core R&D activities” for the purpose of the Income Tax Assessment Acts.
BSA has filed a section 30C internal review of the section 27J finding.
In the event that BSA is unsuccessful in challenging the finding through appropriate mechanisms, the Company may be denied tax deductions
previously claimed totalling approximately $2m (tax effected) of tax relating to prior years tax concessions claimed.
Based on expert advice the directors are of the opinion that the activities fall within the legislative requirements for R&D claims to be made
under the Income Tax Assessment Acts, that the documents submitted to Innovation Australia support and are consistent with the claims made
and that therefore BSA is in a defendable position against the Innovation Australia finding under s27J.
Accordingly, BSA has not made any provision in relation to this matter in these financial statements.
NOTE 39 CORPORATE INFORMATION
The Financial Report of BSA Limited for the year ended 30 June 2016 was authorised for issue in accordance with a resolution of the Directors on
29 August 2016 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
88
BSA LIMITED ANNUAL REPORT 2016 DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2016
The Directors declare that:
(a)
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;
(b)
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;
(c)
In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
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.
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.
Michael Givoni
Chairman
Sydney
29 August 2016
89
BSA LIMITED ANNUAL REPORT 2016
INDEPENDENT AUDITOR’S REPORT
90
BSA LIMITED ANNUAL REPORT 2016 INDEPENDENT AUDITOR’S REPORT
91
BSA LIMITED ANNUAL REPORT 2016 SHAREHOLDER INFORMATION
THE SHAREHOLDER INFORMATION SET OUT BELOW WAS APPLICABLE AS AT 31 JULY 2016
A. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
Number of
Holders
Ordinary
Shares
Number of
Holders
Options
of Holders
Rights
Number
Performance
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and above
165
506
301
694
244
74,151
1,617,935
2,404,836
26,878,215
391,932,209
1,910
422,907,346
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
3
4
-
-
-
87,360
2,072,587
2,159,947
There were 283 (2015: 391) 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
Ordinary Shares
Number
Percentage
Held
of Issued
AUST EXECUTOR TRUSTEES LTD
80,472,334
19.03%
BIRKETU PTY LTD
CITICORP NOMINEES PTY LIMITED
HGT INVESTMENTS PTY LTD
BNP PARIBAS NOMS PTY LTD
NATIONAL NOMINEES LIMITED
SAMLOWE PTY LTD
SANDHURST TRUSTEES LTD
MR GREG MULLANE
RUMDAB PTY LTD
ACK PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
METANOMSKI INVESTMENTS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
AVANTEOS INVESTMENTS LIMITED
CTSF PTY LTD
EDINGTON PTY LIMITED
TALOOMBI PTY LTD
VBS EXCHANGE PTY LTD
EML INVESTMENTS PTY LIMITED
66,000,000
59,625,991
22,373,659
18,000,000
14,386,163
10,115,403
9,529,677
7,548,743
6,370,655
4,762,975
4,529,617
3,650,000
2,948,219
2,727,273
1,775,945
1,769,376
1,721,257
1,671,599
1,609,499
15.61%
14.10%
5.29%
4.26%
3.40%
2.39%
2.25%
1.78%
1.51%
1.13%
1.07%
0.86%
0.70%
0.64%
0.42%
0.42%
0.41%
0.40%
0.38%
Top 20 Shareholders
321,588,385
76.05%
92
BSA LIMITED ANNUAL REPORT 2016
SHAREHOLDER INFORMATION
THE SHAREHOLDER INFORMATION SET OUT BELOW WAS APPLICABLE AS AT 31 JULY 2016
C. SUBSTANTIAL SHAREHOLDERS
Substantial shareholders in the Company are set out below:
Ordinary Shares
AUST EXECUTOR TRUSTEES LTD
BIRKETU PTY LTD
NAOS ASSET MANAGEMENT LIMITED
HGT INVESTMENTS PTY LTD
D. VOTING RIGHTS
Number Held
Percentage
80,472,334
66,000,000
56,696,771
22,373,659
19.03%
15.61%
13.41%
5.29%
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.
93
BSA LIMITED ANNUAL REPORT 2016 CORPORATE DIRECTORY
BSA Limited - Corporate
BSA | Build
Share Registry
Registered Office (Sydney)
7 Figtree Drive
Head Office (Sydney)
Level 3, Quad 2, 6 Parkview Drive
Computershare Investor Services
GPO Box 2975
Sydney Olympic Park NSW 2127
Sydney Olympic Park NSW 2127
Melbourne VIC 3001 Australia
P
F
E
W
+61 2 8748 2400
+61 2 8748 2577
corporate@bsa.com.au
www.bsa.com.au
P
F
+61 2 9763 6200
+61 2 9763 6201
BSA | Connect
Head Office (Sydney)
7 Figtree Drive
Sydney Olympic Park NSW 2127
P
F
+61 2 8748 2400
+61 2 8748 2577
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
BSA | Maintain
Banker
Head Office (Sydney)
Level 3, Quad 2, 6 Parkview Drive
Sydney Olympic Park NSW 2127
P
F
+61 2 9763 6200
+61 2 9763 6201
National Australia Bank
255 George Street
Sydney NSW 2000
www.bsa.com.au
94
BSA LIMITED ANNUAL REPORT 2016