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 2018
CONTENTS
- APPENDIX 4E
- ANNUAL REPORT
RESULTS FOR ANNOUNCEMENT TO THE MARKET
FOR THE PERIOD ENDED 30 JUNE 2018
PREVIOUS CORRESPONDING PERIOD 30 JUNE 2017
APPENDIX 4E
Revenue from ordinary activities
Up
14.2%
Profit from ordinary activities after income tax attributable to members
Down
60.5%
Net profit for the period attributable to members
Down
60.5%
to
to
to
$’000
562,301
1,564
1,564
2017
cents
0.937
0.933
5.12
2018
cents
0.370
0.368
5.14
Franked amount per
Amount per security
security at 30% tax
(cents)
(cents)
Nil
0.50
Nil
0.50
Basic earnings per share
Diluted earnings per share
Net tangible asset backing per ordinary share
DIVIDENDS
Interim dividend (fully franked)
Final dividend (fully franked)
Record date for determining entitlement to dividends
28 September 2018
Payment date of dividend
Total dividend payable
2 November 2018
$2,115,000
The Company’s Dividend Reinvestment Plan (DRP) will be in operation for this dividend. 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. Shares will be allotted or transferred under the DRP
for a price which is equal to the arithmetic average of the daily volume weighted average market price (rounded to the nearest whole cent) of all fully paid
shares of that class sold on the ASX (excluding special crossings and other categories reasonably determined by the Directors as distorting the fair market
value of the shares) during the ten trading days commencing on the second trading day following the relevant Record Date, determined by reference to
such information as the Directors approve for the purpose from time to time. None of this dividend is foreign sourced.
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
2018
BSA LIMITED
ANNUAL REPORT
BSA | Maintain has been providing Heating and Ventilation Air
Conditioning Services to Monash University – Clayton Campus, Victoria
for over 5 years. We proudly stand behind our self delivery model and
technical support of the site FM team with specialist services including
BMS and incident response for CO2 leaks. These are examples of our
customer partnership approach at Monash University, in a recent customer
survey BSA scored a 94% satisfaction rate.
2
BSA LIMITED ANNUAL REPORT 2018 CONTENTS
Chairman’s Report - 5
Managing Director’s Report - 6
Directors’ Report - 14
Remuneration Report - 17
Auditor’s Independence Declaration - 28
Financial Report - 30
Directors’ Declaration - 88
Independent Auditor’s Report - 89
Shareholder Information - 96
Corporate Directory - 98
3
BSA LIMITED ANNUAL REPORT 2018 KEY
HIGHLIGHTS
$562.3 million
Revenue
$9.0 million *
EBITDA
$1.6 million
NPAT
* Reconciliation on page 13
4
BSA | Maintain has been providing services to the JLL – Telstra Commercial
portfolio across the east coast of Australia since October 2017. The Service
Agreement includes delivery across all technical hard services including
preventative maintenance to air-conditioning and ventilation systems, BMS,
fire protection and electrical assets.
BSA LIMITED ANNUAL REPORT 2018 CHAIRMAN’S REPORT
Michael Givoni
Chairman
2018 has been a year of contrasts for BSA Limited and this is reflected
in our financial results. A detailed review of the results is outlined in the
BSA | Connect achieved solid results for FY2018, largely due to
our works on the nbn Operate and Maintain (OMMA) contract but
Managing Director’s Report, but the key Group numbers are:
operational efficiencies in other areas of the business unit also
Revenue $562.3 million (2017: $492.3 million)
EBITDA $9.0 million (2017: $11.1 million)
EBITDA excluding significant items $14.8 million (2017: $17.8 million)
NPAT $1.6 million (2017: $4.0 million profit)
NPAT excluding significant items $5.6 million (2017: $8.7 million)
Operating cash outflow $4.7 million (2017 outflow $0.8 million)
Basic earnings per share of 0.37 cents (2017: 0.94 cents)
Net Cash $7.0 million (2017: 13.5 million)
Final dividend declared 0.5 cents per share (2017: 0.5 cents)
contributed to the performance. Pleasingly the feedback from our
customers reaffirms that we are in the upper echelon of contractors in
this field. Our investment in new business development areas such as
solar and smart meters is also starting to pay dividends.
BSA | Maintain achieved improved revenue for the year and continued
to increase our overall geographic footprint.
Pleasingly, FY2018 has seen BSA achieve excellent results in the area
of workplace health and safety. BSA exceeded set targets across key
reporting metrics and continues the trend towards industry best practice.
We are pleased to announce a dividend of 0.5 cents per share will be paid
on 2 November 2018 for all shares on the register as at 28 September 2018.
The BSA Management Team underwent a significant restructure during
the latter half of 2018, with material delayering of the organisation. In
The market outlook remains stable for the sectors with our key priorities
addition to cost savings moving forward, this has allowed the Executive
being a drive to reduce our overheads, balanced with an ongoing focus
Management Team to be closer to critical business activities resulting in
on Business Development. As a consequence the Board is expecting
early identification of significant trends.
substantially improved performance in FY2019.
Good progress has been made on our major legacy issue, the new Royal
It also worth noting that we are already observing and expect
Adelaide Hospital Project. This project work has now been completed
further consolidation of participants in our three major business
and we expect to close out the remaining commercial issues in the
sectors and we need to be proactive to determine what role we
coming months.
ought play as a consequence.
As announced to the market in June 2018, the BSA | Build | HVAC
Business Unit has not performed to expectation during the year. The
BSA has continued to enjoy a supportive and strong relationship with
our financiers in FY2018. As announced during the year, the Group has
Board and Management team have implemented important initiatives
again extended its existing finance facilities through to 2020.
to address the underlying issues and the performance of this business
unit is trending upward. The bulk of the financial impacts relating to
On behalf of the Board of Directors, I would like to acknowledge the
the underperforming contracts in this business unit are contained
ongoing endeavours of our CEO, Nicholas Yates, the BSA executive
within FY2018. In summary terms, the key inhibitor to acceptable
team and their staff in FY2018.
performance in this business unit has been delays out of our control.
Nevertheless, unless we can negotiate acceptable legal terms that
I would like to thank my fellow Directors for their contribution to BSA
enables compensation for these events then we cannot continue to
and for their continued support.
bid for these contracts. As a market leader we need to demonstrate
the leadership necessary to redress the imbalance between risk and
return, or simply not participate.
The Fire business continues to perform very well. This business unit
secured its largest contract to date being the NorthConnex Project
Michael Givoni
within the year and this win underlines our ability to deploy our skills
Chairman
in the burgeoning infrastructure space.
29 August 2018
5
BSA LIMITED ANNUAL REPORT 2018 MANAGING DIRECTOR’S REPORT
Nicholas Yates
Managing Director and
Chief Executive Officer
OPERATIONAL AND FINANCIAL HIGHLIGHTS
AND OUTLOOK
an improved revenue result at a reduced EBITDA as the business
moved through the transitional stages of an internal restructure
and investment whilst achieving non-financial goals relating to
geographic and market footprint expansions.
The year also saw significant movement into new markets in line
with our strategy of the creation of new service lines. This success,
particularly in the energy space, validates the ability of BSA to diversify
into growing market sectors.
In addition, BSA has undergone a year of significant change,
commencing with a major restructure which saw the streamlining
of senior management teams, the removal of an entire management
layer and a refocus of business methodologies to realign with
our fundamental priorities and key strategic goals. The structural
FY2018 has produced a diverse range of results for BSA Limited.
changes have also impacted on our FY2018 results. However this
Overall, the Group achieved revenue of $562.3 million, which is a 14%
transformation places BSA in a good position to realise financial
improvement on FY2017. Group EBITDA for the year was $9.0 million,
savings and business efficiencies in future years.
(FY2017 $11.1 million) and net profit was $1.6 million (FY2017 $4.0 million).
The BSA | Connect business unit performed well, particularly
in relation to our works for nbn and achieved substantially
Significant effort has also continued in relation to closing out legacy
issues including the finalisation of the outstanding matter with the
NSW Office of State Revenue and progressing contract finalisation on
improved financial results across all metrics. In addition to solid
the new Royal Adelaide Hospital Project.
financial results, customer retention and safety have both been
areas of considerable success for this business unit. However,
A key focus for the business has been reorganisation of our Business
as foreshadowed in our market update in June 2018, the
underperformance of the BSA | Build | HVAC business, largely due to
project related factors beyond our control, have impacted the
Group result for the year. The BSA | Maintain business achieved
Development function, to ensure maximum returns from the
significant investment made in this area. This approach has begun
to yield results, with a number of contracts awarded in new markets
throughout the year.
6
BSA LIMITED ANNUAL REPORT 2018 GROWTH
a significant reduction in worker compensation claims (numbers,
duration & cost) and also associated premiums.
In line with our strategic goal to increase the proportion of annuity
style revenue for the Group, we have made further progress in this
BSA is now focusing upon Subcontractor reported injuries and how it
area, with annuity style revenue now 61% of total Group revenue.
BSA has entered FY2019 with a lower BSA | Build | HVAC order book
of $119m and an increased BSA | Build | Fire order book of $50m as
well as annualised recurring revenues of $273m.
can better partner with Subcontractors to avoid and reduce injuries on
its worksites.
The foundational work carried out in the past 3 years has continued
to place BSA on a path to best practice and a leader led Health and
Continued investment in our CEO Incubator Program and
Safety culture. A focus this year on the identification, management and
abovementioned Business Development focus has seen BSA enter two
mitigation of BSA ‘Significant Risk Activities’ has also allowed the Group
new markets in FY2018 – Solar and Energy Smart Metering, with small
to better understand and manage our hazard risk profile which has
contracts in both markets, that are anticipated to lead to further works
contributed to the improvement.
being awarded in these areas in the short to medium term.
HEALTH SAFETY, ENVIRONMENT & QUALITY (HSEQ)
Utilising the BSA Group Business Process Framework, HSEQ
Strategy and individual Business Unit documentation, the BSA
Group successfully achieved a transition to the new ISO Standards of
FY2018 has seen a sustained focus upon continual improvement in
Environment and Quality in April 2018.
Health and Safety and the systemisation of BSA processes.
BSA set itself a strong improvement target (20% TRIFR Reduction) with
COMMUNITY SUPPORT
regards to injury reporting (noting the continued focus upon TRIFR rather
During the year BSA, its subsidiaries and its employees, contributed to
than LTIFR as key evidence of a maturing safety and reporting culture)
a number of charity fundraisers including Property Industry Foundation,
and the management and prevention of injury escalations.
South Newcastle Rugby League, Royal Alexandra Hospital, Sydney
BSA was able to meet (and better) this target and saw a 60%
Together and for the first year, we held simultaneous morning teas
reduction in employee LTIs and a 20% reduction in employee MTIs
across the country as part of the ‘Australia’s Biggest Morning Tea’ in
(versus FY2017). Careful management combined with successful
support of the Cancer Council. We also continued our longstanding
Return to Work methodologies and suitable duty offerings has seen
support of Youngcare through the provision of services in-kind.
Uni Sport, Southern Districts Rugby, Light the Night, Ecosave, Telco
7
BSA LIMITED ANNUAL REPORT 2018 MANAGING DIRECTOR’S REPORT
BSA has been providing installation and
maintenance services for Foxtel since 1998 in
metro and regional locations across Australia.
BSA | CONNECT
BSA | Connect has capitalised on the significant mobilisations
undertaken in the previous years to deliver record work volumes,
A focus on operational efficiencies on the Optus contract contributed
well to the overall strong result. The relationship with Optus has been
revenues and profits in FY2018. The business delivered revenue growth
further strengthened with a number of smaller contract wins towards
of 34% which drove an EBITDA result of $18.5 million, representing a
the latter part of the year.
$9.0 million or 95% increase on the prior year.
In alignment with our strategy of entering emerging market segments,
A significant driver of this strong uplift in revenue and profitability
BSA commenced providing electricity metering field services for
was the growth in work volumes delivered on the nbn Operate and
Vector Advanced Metering Services Australia in August 2017, initially
Maintain (OMMA) contract which were 120% better than the previous
undertaking a small trial program and more recently successfully
year, however were tempered somewhat by the nbn Hybrid Fibre Coax
securing an evergreen contract for a much larger volume of metering
(HFC) rollout pause announced in late 2017. A continued focus on
improving customer outcomes and operational delivery saw
BSA | Connect deliver excellent operational performance on the nbn
OMMA contract during the year.
activities. In addition, in April 2018 BSA was awarded a 3 year contract
with Energy Australia for the supply and installation of residential
solar and battery systems.
Further pressure in traditional subscription television market volumes
as competition from streaming services intensifies has impacted
returns from the long-standing Foxtel contract. BSA | Connect
continues to be integral to the deployment of Foxtel’s “Command
BSA | Connect implemented structural changes towards the end
of FY2018 that will enable the business to further consolidate
its position in FY2019 as a leading national provider of
telecommunications operations & maintenance services and large
scale workforce management solutions that delivers improved
Centre” model to deliver efficiencies and greatly improve the end
customer value and more efficient, streamlined operations through
customer experience to counter those competitive threats.
the execution of its People, Process and System strategies.
8
BSA LIMITED ANNUAL REPORT 2018 BSA | Connect delivered excellent operational
performance on the nbn OMMA contract during the year.
Key areas of focus for FY2019 include:-
• Retaining and expanding services to existing telecommunications
customers via geographic and new services opportunities.
• Diversification of the telecommunications customer base targeting
both project and annuity based maintenance service contracts.
• Entry into the mobile telecommunications market in preparation for
5G opportunities.
• Establishment and growth within the fixed wireless network and
residential sector.
• Expansion of energy market services via geographic growth and
increased diversification of the customer base.
• Converting opportunities within adjacent sectors for delivery of work force
management systems and resources management solutions to scale.
•
Increased focus on identifying and converting opportunities within
Government departments related to telecommunications, energy and
Internet of Things (IOT) including Smart City end-to-end opportunities.
• Development of strategic partnerships enabling design, build, operate
and maintain services.
•
In all sectors BSA will be seeking to provide innovative solutions for its
customers creating opportunities to move up the value chain.
BSA | Connect
$249.4 million
Revenue
[2017: $186.5 million]
$18.5 million *
EBITDA
[2017: $9.5 million]
NB: Excludes Corporate Recharges
9
BSA LIMITED ANNUAL REPORT 2018 MANAGING DIRECTOR’S REPORT
BSA | MAINTAIN
BSA | Maintain has been servicing two News Corp Print
centre’s in QLD for the past 16 months, carrying out
preventative maintenance and corrective repairs as
required to the air conditioning & ventilation systems.
BSA | Maintain revenue increased, however EBITDA decreased as the
business unit invested in national contracts and the fire maintenance
Australia and regional NSW. Our expansion plans remain focused around
key multi-service delivery opportunities with plans progressing towards
business, together with a focus on achieving technical leadership
and discipline across all levels of BSA | Maintain while streamlining
operations and generating tangible cost savings.
a comprehensive national footprint including Tasmania by FY2020.
A key component for the growth and development of BSA | Maintain
as an industry leader in technical services is to strengthen our ability to
Our goal is to be recognised as the leader in client service delivery
resource technically-minded tradespeople. In this regard, we have this
across all stages of the asset lifecycle. In alignment with this goal,
year expanded our apprentice training initiative nationally to ensure
we have continued to expand our service offering through the
future growth will be supported by highly competent, client-focused
development of the Building Automation division, with established
field personnel for the ongoing delivery of superior service solutions.
footprints in WA, Victoria and Queensland, and work is underway to
finalise the expansion by entering NSW in early FY2019.
Throughout FY2018, the business unit has continued to retain and
During the year, BSA | Maintain has also continued to extend its
geographical footprint by opening additional service locations in South
expand service agreements in a wide range of industries across Australia
including commercial property, education, aged care, healthcare, state
and local government, defence, data centres and resources.
10
BSA LIMITED ANNUAL REPORT 2018 Our continued efforts to be recognised as experts
in asset management across all stages of the
equipment lifecycle has led to our first energy
management lifecycle contract, with Colliers
International on the 99 St Georges Terrace
Project in Perth, where the building upgrade has
been underpinned and funded through the
delivery of a multi-tiered service offering,
showcasing our expertise in building automation,
energy management and advisory. The offering
BSA | Maintain has secured a number of new
contracts including:
•
•
•
•
•
•
Curtin University (WA)
St John of God Hospital (WA)
Baptistcare Aged Care (WA)
Pan Pacific Hotel (WA)
Various Local Councils (WA)
AECOM Government Services Australia (NT)
will deliver significant financial returns to our
In addition, the following key contract extensions
client, funded through measurable savings in
have been secured during the financial year.
energy consumption.
This groundwork towards positioning
BSA | Maintain as an industry leader in complete
asset lifecycle management in every major
capital city across Australia is well-established
and has strongly positioned the business unit for
sustainable business growth.
As a result of further investment in business
•
•
•
•
Charter Hall (WA and SA)
University of Sydney (NSW)
Various Local Councils (WA)
Power and Water Corporation (NT)
In line with the wider BSA Group goal of increasing
the ratio of annuity revenue, a key focus for the BSA |
Maintain team entering FY2019 will be to achieve this
via further growth in the multiservice sector, energy
development activities during the year,
services and a continued push into new markets.
BSA | Maintain
$93.5 million
Revenue
[2017: $89.5 million]
$2.9 million *
EBITDA
[2017: $4.7 million]
NB: Excludes Corporate Recharges
BSA | Maintain currently supports Allianz Stadium and the SCG with the preventative maintenance and corrective
repair of all Air-Conditioning, Ventilation and Refrigeration systems. The contract commenced in October 2016
and is agreed for a period of thirty-six months with an option for one plus one in favour of the SCG Trust.
11
BSA LIMITED ANNUAL REPORT 2018 NorthConnex Tunnel Construction 90 metres
below the surface. BSA | Fire will install
over 18 kilometres of sprinkler deluge once
excavation is completed.
BSA | BUILD
The BSA | Build result was disappointing and while a number of
issues were outside our control we have also taken the opportunity
All businesses within BSA | Build continued to establish and maintain
their status as tier 1 solution providers with end-to-end in-house
to re-evaluate the operational structure of the business unit. As a
result, BSA | Build was further streamlined and refocused to optimise
our market offering of leading design and construct solutions in
capability in the Fire and HVAC sectors.
The new Royal Adelaide Hospital (nRAH) project reached
HVAC systems and Fire Protection. Geographically the business has
commercial acceptance during the financial year and accepted its
been present in all major state capital cities across Australia.
first patient on 14 August 2017. We have been focusing on remaining
In FY2018 the business unit carried out the consolidation of the
through the award of the design and construct contract for the
Sydney and Brisbane HVAC divisions and downsized the WA
Calvary Hospital worth $23.4 million.
operations. Whilst this restructuring activity has also impacted the
EBITDA result for the year, these changes are anticipated to result
As previously announced to the market, BSA Limited secured the
in a significant financial improvement in the HVAC divisions in
largest Fire Protection Services contract in its history in March 2018,
a significant market player in South Australia. This was achieved
FY2019 and beyond.
12
being the major infrastructure contract for the Project Management,
Procurement, Installation and Commissioning of the sprinkler deluge
BSA LIMITED ANNUAL REPORT 2018 MANAGING DIRECTOR’S REPORT
BSA | Build
$219.7 million
$6 million loss *
Revenue
EBITDA
[2017: $216.6 million]
[2017: $1.4 million]
NB: Excludes Corporate Recharges
provided by Mirvac and modelling undertaken in house provided
Mirvac with the technical and investment information to confidently
define the solution for solar energy generation at the ATP site.
Our FY2019 focus will include targeting projects with clients who
value our additional advisory services and ensuring that we continue
to work within our solid disciplinary foundation in the way we win,
execute and maintain our projects.
nRAH
BSA is now almost entirely demobilised and the defects liability
period has been completed. We are now looking to negotiate a final
contractual position and close out this longstanding legacy issue.
Nicholas Yates
Managing Director and
Chief Executive Officer
29 August 2018
DISCLOSING NON-IFRS FINANCIAL INFORMATION
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)
system for over 18km of main line road tunnel for the NorthConnex
Project. This flagship contract was secured via the application of
innovative design and market leading prefabrication principles
and innovative commercial/contractual structuring. This project
Profit/(loss) for the year from
continuing Operations
represents a significant milestone for the business and underpins not
Add back
only the strategy to be the market leader in fire protection services
Income tax expense/(benefit)
nationally, but also our strategic objective to enter the burgeoning
infrastructure market.
BSA has continued its efforts in relation to building business value
Finance costs
Interest revenue
Depreciation
propositions for customers across their asset lifecycles as well as
Amortisation expense
other value add services. Our Renewable Energy advisory service has
EBITDA
gained traction throughout the year. When Mirvac went to tender
for Solar integration works at their flagship Australian Technology
Park (ATP), BSA’s analysis based on a combination of energy data
Total Significant Items (note 6.4)
EBITDA excluding Significant Items
FY2018
A$’000
1,564
FY2017
A$’000
3,963
909
645
1,671
595
(24)
(166)
5,273
674
9,041
5,764
14,805
4,260
738
11,061
6,751
17,812
13
BSA LIMITED ANNUAL REPORT 2018
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 ended 30 June 2018
THE BOARD OF DIRECTORS AS AT 30 JUNE 2018
MICHAEL GIVONI
CHAIRMAN (NON-EXECUTIVE)
Mr Givoni has had extensive executive
experience in the business-to-business (B2B)
areas of commerce. His particular area of
expertise is in strategy, business development
and mergers and acquisitions. Michael has
held senior executive roles in listed companies including Spotless Group
Ltd. Prior to his executive career, Michael was a partner in a prominent
Melbourne legal practice. Michael joined BSA as a Non-Executive
Director on 23 March 2005 and was appointed as Chairman from 29
April 2015. He holds a number of other Non-Executive Director and
Chair roles in significant privately owned businesses including Winslow
Group, RSEA, First5Minutes and Buzz Products.
NICHOLAS YATES
MANAGING DIRECTOR AND CHIEF
EXECUTIVE OFFICER
Mr Yates graduated with a Bachelor of
Engineering (Mechanical) from the University
of Sydney and went on to forge an extensive
career in the building services and facilities
management industries. Commencing as a site engineer overseeing
mechanical services installations, Nicholas then progressed through
various management roles within Lend Lease and eventually moved
on to become CEO of APP Corporation Pty Limited, Australia’s leading
Construction Project Management consulting business. When APP
was acquired by Transfield Services, Mr Yates moved into a series
of leadership roles within Transfield Services, most recently Chief
Executive Officer, Infrastructure ANZ. Nicholas sits on the Boards of a
number of private companies and was appointed Managing Director
and Chief Executive Officer of BSA Limited on 13 March 2014.
PAUL TEISSEIRE
NON-EXECUTIVE DIRECTOR
Mr Teisseire is a professional independent
Non-Executive Director. He spent over 20
years in private practice as a corporate lawyer
specialising in business and corporate law with
a special interest in corporate governance.
He is a Non-Executive Director and Audit Committee Chairman of
Drake Supermarkets Pty Ltd and Chairman for the Flinders Centre for
Innovation in Cancer. Paul was appointed as a Non-Executive Director
on 23 March 2005 and is currently Chair of the Audit Committee.
MAX COWLEY
NON-EXECUTIVE DIRECTOR
Mr Cowley practised as Principal of Chartered
Accounting firm E M Cowley & Co for 47 years.
His years of corporate and financial experience
are extensive. Max is a director of WIN
Corporation Pty Ltd, Australia’s largest regional
television network and has been involved with that organisation from its
commencement and over the past 37 years. 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.
GRAEME BARCLAY
NON-EXECUTIVE DIRECTOR
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
MARK LOWE
NON-EXECUTIVE DIRECTOR
group for more than a decade in the role of Group CEO with responsibility
for financial performance, strategy, sales, corporate development,
international expansion, operations and capital structure.
Mr Lowe was appointed as a Director of
Mr Barclay also has senior executive level experience within
BSA on 1 August 2007 upon completion
investment banking and chartered accounting businesses, with
of the acquisition of the Triple ‘M’ Group.
responsibilities including property investment banking, corporate
Mark brings a wealth of knowledge to the
finance and corporate restructuring.
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 Barclay is a member of the Australian Institute of Company
Directors, a Fellow of the Financial Services Institute of Australasia
and is a qualified Chartered Accountant in Scotland and Australia/
NZ. Mr Barclay is currently a Non-Executive Director of Codan Limited
and of Axicom Group Holdco Pty Limited. Graeme was appointed as a
Non-Executive Director on 30 June 2015, and is currently Chair of the
Remuneration Committee.
14
BSA LIMITED ANNUAL REPORT 2018 DIRECTOR INDEPENDENCE
Company Secretary for Legend Corporation Limited, Erinbar Limited
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.
and UXA Resources Limited.
ENVIRONMENTAL REGULATION AND PERFORMANCE
In assessing the independence of Directors, the Board follows the ASX
guidelines as set out in the Corporate Governance Statement on the
BSA was not subject to any particular or significant environmental
regulations of the Commonwealth, individual states, or territories,
Company’s website.
during the financial year.
PERFORMANCE OF DIRECTORS
CORPORATE GOVERNANCE
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
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
website at www.bsa.com.au/pages/about/corporate-governance.html
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
REVIEW OF OPERATIONS
Information relating to the operations of BSA including a description
of principal activities, a review of operations, significant changes in
activities 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 5 to 13.
An 81 metre shaft that has been excavated to provide a
main access point to transport workers to the tunnel at
the NorthConnex Wilson Road Compound.
15
BSA LIMITED ANNUAL REPORT 2018 DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
As at 30 June 2018, 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
796,400
Nil
207,838
2,854,760
Nil
1,259,524
72,000,000*
Nil
Nil
680,012
Nil
Nil
10,315,403
Nil
Nil
Nil
Nil
50,000
*Max Cowley is a director of Birketu Pty Ltd which holds the 72,000,000 ordinary shares in BSA Limited.
At the date of this Annual Report, the only changes to the above directors’ interest in shares, rights or options are that the Share Rights for Michael Givoni and
Graeme Barclay have converted to Ordinary Shares.
16
BSA Operational Leadership Meeting
BSA LIMITED ANNUAL REPORT 2018 DIRECTORSHIPS HELD IN OTHER LISTED ENTITIES
Period of Appointment
Name of Company
Position Held (Non-Executive or 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
In consultation with external remuneration consultants, the
for each key management person of BSA Limited.
Group has structured an executive remuneration framework that is
The Company’s policy for determining the nature and amount of
remuneration for Board members and Senior Executives of the
market competitive and complementary to the reward strategy of
the organisation.
Company is as follows and is set out under the following main headings:
Alignment to shareholders’ interests:
A.
Principles used to determine the nature and amount
of remuneration
Details of remuneration
Service agreements
Cash bonuses
Share-based compensation
Remuneration Consultants
B.
C.
D.
E.
F.
The information provided in this remuneration report has been audited
as required by section 308(3C) of the Corporations Act 2001.
A.
PRINCIPLES USED TO DETERMINE THE NATURE AND
AMOUNT OF REMUNERATION
The objective of the Group’s executive reward framework is to ensure
reward for performance is competitive and appropriate for the results
delivered. The framework aligns executive reward with achievement of
strategic objectives, the creation of value for shareholders and conforms
to market practice for how the reward is paid. The Board ensures that
executives’ reward satisfies the following key criteria for good reward
governance practices:
•
•
•
•
•
Competitiveness and reasonableness;
Acceptability to shareholders;
Performance linkage/alignment of executive compensation;
Transparency; and
Capital management.
•
Has the achievement of target financial profit as a core
component of performance reward;
•
As well as focusing each executive on key performance metrics
relevant to the role; and
•
Attracts and retains high calibre executives.
Alignment to program participants’ interests:
•
•
•
•
Rewards capability and experience;
Reflects competitive reward for contribution to financial
performance;
Provides a clear structure for earning rewards; and
Provides recognition for contribution.
The framework provides a mix of fixed and variable at-risk pay for
executives and senior managers as well as additional long-term
incentives for the most senior executives. As executives gain seniority
and greater responsibility within the Group, the balance of this mix
shifts to a higher proportion of at-risk rewards.
The Board has established a Remuneration Committee that provides
advice on remuneration and incentive policies and practices, as well
as specific recommendations on remuneration packages and other
terms of employment for Executive Directors, other Senior Executives
and Non-Executive Directors. The Corporate Governance Statement
provides further information on the role of this committee.
17
BSA LIMITED ANNUAL REPORT 2018 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 2018:
Revenue
Net profit/(loss) before tax
Net profit/(loss) after tax
Share price at start of year
Share price at end of year
Final Dividend 1
Basic earnings per share
Diluted earnings per share
30 June 2018
30 June 2017
30 June 2016
30 June 2015
30 June 2014
$562.3m
$492.3m
$2.5m
$1.6m
$0.340
$0.305
$5.6m
$4.0m
$0.245
$0.340
$511.9m
($3.0)m
($2.2)m
$0.165
$0.245
$543.7m
$491.5m
$5.4m
$3.9m
$0.100
$0.165
($61.3)m
($54.8)m
$0.145
$0.100
0.50 cps
0.50 cps
0.00 cps
0.00 cps
0.00 cps
0.37 cps
0.37 cps
0.94 cps
(0.52) cps
1.11 cps
(23.97) cps
0.93 cps
(0.52) cps
1.10 cps
(23.97) cps
1 Declared after the end of the reporting period and not reflected in the financial statements and will be franked to 100% at 30% corporate income tax rate.
Non-Executive Directors
Fees and payments to Non-Executive Directors reflect the demands
that are made on, and the responsibilities of, the Directors.
The Chairman’s fees are determined independently to the fees of
•
•
•
Base pay and benefits, including superannuation;
Short-term performance incentives; and
Long-term incentives principally through participation in the
performance rights plan.
Non-Executive Directors based on the Director’s experience and
The combination of these components comprises the executive’s
comparative roles in the external market. The Chairman is not present
total remuneration.
at any discussions relating to determination of his own remuneration.
Base Pay
Directors’ and Chairman’s Fees
Base pay is structured as a total employment cost package which may
The current base remuneration for Directors was last reviewed and
be delivered as a combination of cash and prescribed non-financial
determined on 26 June 2012, therefore there has been no increase in
benefits at the executives’ discretion.
the base remuneration paid to a Director for six years. Directors’ fees are
inclusive of superannuation and include the requirement to sit on two
or more Board committees for the duration of their tenure. A Director’s
expected time commitment is a minimum ten hours per month. Directors
are reimbursed actual expenses or paid a per diem allowance for
attendance at the monthly meetings.
Executives are offered a competitive base pay that comprises the
fixed component of pay and rewards. Base pay for Senior Executives is
reviewed annually to ensure the executive’s pay is competitive with the
market and reflects the responsibilities of the position. An executive’s
pay is also reviewed on promotion. There are no guaranteed base pay
increases included in the Senior Executive terms of employment.
Non-Executive Directors’ fees are determined within an aggregate
Directors’ fee pool limit, which is periodically recommended for approval
Benefits
by shareholders. The maximum currently stands at $600,000 per
Executives receive benefits including allowances.
annum and was last approved by shareholders at the Annual General
Meeting (AGM) on 26 November 2007. There has been no change to the
Retirement Benefits
aggregate fee pool for non-executive directors for approximately 11 years.
All employees are eligible to participate in the Company’s default
The following fees have applied during the year to 30 June 2018:
superannuation fund. With the change in legislation as at 1 July 2005,
employees can exercise choice as to where their superannuation is paid.
Base fees
Chairman
Other Non-Executive Directors
$170,829
$91,560
Non-Executive Directors are entitled to participate in the non-executive
director Fee Sacrifice Equity Plan.
Retirement Allowances for Directors
There are no retirement schemes or retirement benefits, other than
statutory superannuation, paid to Non-Executive Directors.
Executive Pay
Short Term Incentives
Executive remuneration packages include a bonus based on a
combination of the Company achieving a pre-determined profit target
and certain pre-determined operational targets being met. Using a
profit target ensures variable at-risk reward is only available when
value has been created for shareholders and when achieved profit is
consistent with the business plan.
Each executive and senior manager with operational responsibilities
has a Short-Term Incentive (STI) depending on the accountabilities of
the role and impact on organisation and business unit performance.
The Executive pay and reward framework has three components:
The maximum target bonus opportunity is 80% of base salary.
18
BSA LIMITED ANNUAL REPORT 2018 To the extent an STI bonus is earned, 50% of the bonus is paid in cash,
The terms of the loan include a provision that no interest is payable by
and the other 50%, which can either be cash or performance rights, is
the Borrower under the Loan Agreement.
deferred for a period of two years.
All shares are to be held in escrow until loans are fully repaid. An
For the year ended 30 June 2018, the targets under the STI plans were
executive must not sell, mortgage, charge, assign or otherwise dispose
based on the group and individual business unit financial objectives. The
of or encumber any shares before payment or repayment of any loan
target achievement required performance in reducing operating cost and
outstanding to the Company.
increasing revenue to deliver an overall increase in EBITDA. The Group
targets apply to the whole of the management team.
Subject to the above restriction and to the terms of the loan from the
Company (if any), an executive shall from the Date of Allotment, be
The Remuneration Committee is responsible for assessing whether the
the absolute beneficial owner of the shares.
targets are met. Targets are set at the beginning of each financial year
and are set for the year. Short-term bonus payments are adjusted in line
with actual performance versus target performance levels. Because short-
term targets cover several operational areas of the business as well as the
overall Group target, a proportion of STI may be paid when operational
targets are achieved although the Group’s overall target may not be met.
Options
No options were exercised during the year ended 30 June 2018.
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.
No offers were made under the Executive Securities Plan to any Directors
or employees of BSA Limited during the year ended 30 June 2018.
The number of shares held in escrow, and the amount of the outstanding
No amounts are unpaid on any shares issued on the exercise of options.
loans, as at 30 June 2018 is set out in section E of this report.
All options have expired as at 30 June 2018.
Employee Performance Rights Plan
No options were granted to an executive, senior manager or director during
At the AGM held on 25 November 2008, shareholders approved the
the year.
Employee Share scheme
A scheme under which shares are able to be issued by the Company to
employees for no cash consideration was ratified by shareholders at 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.
2004 AGM. All permanent employees (including Executive Directors) who
To achieve its corporate objectives, the Company needs to attract
were continuously employed by the consolidated entity for a period of at
and retain key staff. The Board believes that awards made to selected
least one year were eligible to participate in the scheme. Employees could
eligible employees under this plan:
elect not to participate in the scheme.
•
Provide an incentive for the creation of, and focus on,
Under the scheme, eligible employees were offered $1,000 worth of
shareholder wealth;
fully-paid ordinary shares in BSA Limited for the Year Ended 30 June
•
Enable the Company to recruit and retain the talented people
2004 for no cash consideration. The market value of shares issued under
needed to achieve the Company’s business objectives;
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 costs.
•
Link the reward of key staff with the achievement of strategic
goals and the performance of the Company;
•
Align the financial interests of participants with those of
Offers under the scheme are at the discretion of the Company. No
Company shareholders; and
offers were made to any Director or employee of BSA Limited under the
Employee Share Scheme during the year ended 30 June 2018.
•
Ensure the remuneration packages of employees are consistent
with market practice.
Executives 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 interest in
the Company to better align them with the shareholders.
The number of securities to be offered, the time at which securities may
be offered from time to time to executives, and the price and terms of
payment are 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.
Vesting of rights or shares under this Plan requires the achievement of
appropriate performance or service hurdles to be determined by the Board:
(i) Service condition of a specified period; or
(ii) The Company’s performance as measured by earnings per
share (EPS), being the EPS for the relevant Measurement Period
as determined by the Board having regard to the financial
statements. Certain growth in EPS for the shares must be
attained in respect of each Measurement Period and pro-rata in
respect of the initial Measurement Period. The Company must
achieve these performance conditions before the rights vest.
This plan provided for the Company to provide loans to executives to
acquire shares. The maximum amount of any loan is not to exceed the
total subscription price for the shares applied for.
Once rights have been exercised by an eligible employee (subject to
relevant service or performance conditions being met), the Company
may make non-refundable contributions to either fund the purchase of
19
BSA LIMITED ANNUAL REPORT 2018 DIRECTORS’ REPORT
a new plan share, or to acquire on the ASX existing shares and transfer
of the BSA Employee Share Trust. The Company will contribute such
these to an eligible employee.
The specific terms of a particular grant, including any performance
conditions, will be contained in the invitation and associated
documentation sent to the eligible employee.
A right granted to a participant is not transferable and may not
otherwise be dealt with, except with the Board’s approval, or by
operation of law on death or legal incapacity.
funds as needed to acquire shares either on-market or a subscription
to a new issue as directed by the Board. These funds are recouped over
12 months from the directors’ fees that have been salary sacrificed to
acquire the Deferred Rights. The shares that result from the exercise of
Deferred Rights are Restricted Shares.
All shares acquired by Participants are subject to disposal restrictions
that prevent disposal until the earlier of 15 years from the date of
grant of rights and cessation of being a NED on the Board of BSA
Rights to acquire shares are not exercisable until the end of the final
or a subsidiary of the Company (which will be specified Disposal
measurement period, and until those rights have satisfied all vesting
Restrictions). During the period the Special Disposal Restrictions apply,
conditions and any performance hurdles established by the Board.
the Restricted Shares may not be sold or otherwise disposed. The
This is subject to a number of exceptions (including death, cessation
Company may impose a CHESS holding lock on Restricted Shares to
of employment, takeovers and schemes of arrangement). The rights
ensure the participant does not sell them earlier than permitted under
will have a specified life determined by the Board. All grants of rights
the Rules. The Company will advise each participant when it considers
will have a life terminating five (5) years after the grant date or such
the specified disposal restrictions cease to apply.
other date as determined by the Board.
Participants must not enter an arrangement with anyone if it would
On or after the end of the final measurement period and provided
have the effect of limiting their exposure to risk in relation to Deferred
any performance hurdle prescribed by the Board has been achieved
Rights or Restricted Shares.
and, where applicable, to the extent it has been achieved, the plan
participant may then acquire shares by exercising the rights.
Participants will be treated in a manner that does not advantage or
disadvantage them compared with other shareholders in the event of
A right lapses if the vesting conditions are not met.
bonus issues, rights issues and capital reorganisation.
During the year to 30 June 2018, 318,248 rights were granted to
If a participant ceases to be a NED of the Company or a subsidiary
executives, of which 100% are vested.
Fee Sacrifice Equity Plan for Individual Non-Executive Directors
of the Company any unexercised Restricted Rights will be exercised
automatically the day following cessation, and any Restricted Shares
held by a Participant that are subject to Specified Disposal Restrictions
The establishment of the BSA Fee Sacrifice Equity Plan for Individual
will cease to be subject to such restrictions on the day of cessation
Non-Executive Directors was approved by shareholders at the 2017
unless otherwise determined by the Board and notified to the
AGM. The plan establishes a mechanism for Non-Executive Directors
Participant in the Invitation.
(NEDS) to acquire shares in the Company by electing to salary sacrifice
a proportion of annual fees, on a voluntary basis, and is intended to
align their interests with shareholders.
During the year to 30 June 2018, non-executive directors elected to
acquire 257,838 Deferred Rights under this Fee Sacrifice Equity Plan.
All individuals holding NED roles in the Company or a subsidiary of the
B
DETAILS OF REMUNERATION
Company are eligible to become participants in the Plan.
The Company intends to invite each NED to voluntarily elect to
apply for rights under the Plan, to be funded by salary sacrificing
a proportion of Annual Board fees. While the Company intends
to issue invitations following the half-year and full-year results
announcements, the Board will determine in its sole discretion each
year whether to issue invitations.
Invitations will include such terms as the Board deems appropriate
including the date of the invitation, the number of Deferred Rights that
a participant is eligible to apply for, that the cost of each right/share is
based on the 10 day VWAP post a results announcement, the period
during which disposal restrictions will apply, and such other terms and
conditions as the Board determines.
Deferred Rights granted under this Plan will be fully vested on the date
of grant (being the date notified in a Notice of Grant).
Deferred Rights will be automatically exercised 90 days after grant
but may not be exercised earlier. On exercise of a right, the Board in
its discretion will either: a) issue shares to Participants or b) arrange
for shares to be acquired for the benefit of Participants by the trustee
20
Details of the remuneration of the Directors, the key management
personnel of the Group (as defined in AASB 124 Related Party
Disclosures) and specified executives of BSA and the BSA Group are set
out in the following tables.
The Key Management Personnel of the Group are the following:
(i) Chairman - Non-Executive
Michael Givoni
(ii) Executive Directors
Nicholas Yates
(iii) Non-Executive Directors
Paul Teisseire
Max Cowley
Mark Lowe
Graeme Barclay
(iv) Chief Financial Officer
Nicholas Benson
(v) Chief Operating Officer
Timothy Harris
BSA LIMITED ANNUAL REPORT 2018 Non-Executive Directors, key management personnel of the Group and other executives of the Company and the Group
2018
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
156,557
83,616
83,616
83,616
83,616
Sub-total
491,021
Non-Executive Directors
Executive Directors
-
-
-
-
-
-
-
-
-
-
-
-
14,272
7,944
7,944
7,944
7,944
46,048
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
170,829
91,560
91,560
91,560
91,560
537,069
-
-
-
-
-
Nicholas Yates
650,692
50,000
-
19,308
6,488
-
50,000
6.44
776,488
12.88
Other Key
Management Personnel
Chief Financial Officer
Nicholas Benson
395,030
50,000
Chief Operating Officer
Timothy Harris
541,533
63,544
Total compensation
2,078,276
163,544
-
-
-
25,000
3,355
-
-
-
473,385
10.56
21,494
9,417
-
95,050
13.00
731,038
21.69
111,850
19,260
-
145,050
2,517,980
Aerial view of new Grafton Correction Centre (NGCC).
BSA Fire will be providing infrastructure to this facility which
will accommodate 1,700 beds, feature state-of-the-art security
surveillance, as well as advanced rehabilitation services.
21
BSA LIMITED ANNUAL REPORT 2018
DIRECTORS’ REPORT
2017
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
83,616
107,616
83,616
Sub-total
514,472
Non-Executive Directors
Executive Directors
-
-
-
-
-
-
-
-
-
-
-
-
14,821
7,944
7,944
10,224
7,944
48,877
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
170,829
91,560
91,560
117,840
91,560
563,349
-
-
-
-
-
Nicholas Yates
643,449
50,000
-
19,308
12,835
-
-
-
725,592
6.89
Other Key
Management Personnel
Chief Financial Officer
Nicholas Benson
386,944
50,000
Total compensation
1,544,865
100,000
-
-
25,000
8,457
-
29,355
-
499,756
15.88
93,185
21,292
-
29,355
1,788,697
* During FY2017 Mark Lowe was contracted to the company within the BSA | Build business unit, to assist in driving improved performance from the business
unit. $24,000 of Mark Lowe’s remuneration relates to his role assisting BSA | Build during the year and was not directors fees.
Performance Income as a Proportion of Total Remuneration:
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 the
consolidated Group.
The Remuneration Committee will review the performance bonuses to gauge their effectiveness against achievement of the set goals, and adjust
future years’ incentives as they see fit.
C.
SERVICE AGREEMENTS
On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment.
The letter summarises the Board policies and terms, including compensation, relevant to the office of Director.
Remuneration and other terms of employment for the Managing Director and the other key management personnel are also formalised in
service agreements. Each of these agreements provide for the provision of performance-related cash bonuses, other benefits, car allowances,
and participation, when eligible, in the BSA Limited Option Plan and the BSA Employee Performance Rights Plan. Other major provisions of the
agreements relating to remuneration are set out below.
Executives are on contracts with no fixed end date.
22
BSA LIMITED ANNUAL REPORT 2018
The following table captures the notice periods applicable to termination of the employment of executives.
Termination notice period
6 Months
6 Months
26 Weeks
Executive Director
Chief Financial Officer
Chief Operating Officer
D.
CASH BONUSES
Bonuses vested as per the below table during the financial year ended 30 June 2018.
Key management personnel and executives are also entitled to a short-term cash incentive based on performance criteria described in section A
to this Remuneration Report. Details of these FY2018 short-term incentives recognised as remuneration, forfeited or available for vesting in future
financial years is outlined below.
Name
Other key management personnel (Group)
Nicholas Yates
Nicholas Benson
Timothy Harris
E
SHARE-BASED COMPENSATION
Executive Securities Loan
Set out below are summaries of Securities held in escrow:
Included in
Remuneration
% Vested in
current year
% Forfeited
in current year
50,000
50,000
63,544
100
100
100
-
-
-
Issue Price
Balance at Start
During the
During the Year Based on
Balance in Escrow
Granted
Released from Escrow
Amount
of Loan
Grant Date
(cents)
of the Year
Year
Full Loan Repayment
at End of the Year
provided
Number
Number
Number
Number
$
Consolidated and parent entity
13 Oct 2006
19 Jul 2007
11 Sep 2007
13 Sep 2007
14 Dec 2007
10 Feb 2009
Total
0.23
0.63
0.68
0.68
0.68
0.10
700,000
1,600,000
150,000
200,000
400,000
1,700,000
4,750,000
-
-
-
-
-
-
-
250,000
750,000
450,000
103,500
850,000
535,500
-
150,000
102,000
200,000
-
-
-
400,000
272,000
950,000
750,000
75,000
2,150,000
2,600,000
1,088,000
23
BSA LIMITED ANNUAL REPORT 2018 Employee Performance Rights Plan
Set out below are summaries of Rights issued to key management personnel under the plan:
Name
Grant Date
Date
Expiry Date
the Year
the Year
Year
the Year
Year
Date $
$
Vesting
at Start of
During
During the
During
End of the
at Grant
Fair Value
Number
Number
Number
Number
Balance
Granted
from Escrow
Forfeited
Escrow at
per Right
Aggregate
Released
Balance in
Fair Value
Consolidated and parent entity
Nicholas Yates
25 Nov 2014
30 Jun 2015
25 Nov 2019
1,116,667
Nicholas Benson
29 Nov 2016
6 Feb 2017
29 Nov 2021
90,322
Timothy Harris
29 Nov 2016
1 Sept 2017
29 Nov 2021
200,000
-
-
-
Nicholas Yates
28 Nov 2017
31 Jan 2018
28 Nov 2022
Timothy Harris
4 Dec 2017
4 Dec 2017
4 Dec 2022
-
-
142,857
175,391
-
(90,322)
-
-
-
Total
1,406,989
318,248
(90,322)
-
-
-
-
-
-
1,116,667
0.165
184,250
-
0.325
-
200,000
0.325
65,000
142,857
0.350
50,000
175,391
0.371
65,000
1,634,915
364,250
Rights are granted over ordinary shares and nil is payable on exercise.
NED Fee Salary Sacrifice Plan
Set out below are summaries of Deferred Rights issued to Non Executive Directors under the plan:
Name
Grant Date
Date
Expiry Date
the Year
the Year
Year
the Year
Year
Date $
$
Vesting
at Start of
During
During the
During
End of the
at Grant
Fair Value
Number
Number
Number
Number
Balance
Granted
from Escrow
Forfeited
Escrow at
per Right
Aggregate
Released
Balance in
Fair Value
Consolidated and parent entity
Michael Givoni
3 May 2018
3 May 2018
3 May 2033
Graeme Barclay
3 May 2018
3 May 2018
3 May 2033
Total
-
-
-
207,838
50,000
257,838
-
-
-
-
-
-
207,838
0.337
70,000
50,000
0.337
16,840
257,838
86,840
Deferred Rights are granted over ordinary shares for the price specified as Fair Value per Deferred Right at the date of grant, and no further amount
is payable on the automatic exercise of the Right 90 days after grant.
F
REMUNERATION CONSULTANTS
During the year ended 30 June 2018, the Board continued to consider the advice obtained from Godfrey Remuneration Group (GRG) as independent
advisor in relation to the current structure of the Executive Performance Rights Plan and to the implementation of a Fee Salary Sacrifice Plan for
non-executive directors. The Board implemented the Fee Salary Sacrifice Plan following its approval at the 2017 AGM. No amendments have been
made to the Executive Performance Rights Plan.
The continuing engagement of GRG during the year by the Chairman of the Remuneration Committee was based on an agreed set of protocols that
have been followed by GRG, members of the Remuneration Committee and members of the key management personnel, governing the way in which
remuneration recommendations would be developed by GRG and provided to non-executive members of the Remuneration Committee.
These arrangements were implemented to ensure that GRG would be able to carry out its work, including information capture and the formation of its
recommendations free from undue influence by Executive directors or executive key management personnel about whom the recommendations may relate.
The Board undertook its own inquiries and review of the processes and procedures followed by GRG and is satisfied that their remuneration
recommendations were made free from such influence.
The Board and Remuneration Committee confirm that GRG made remuneration recommendations within the meaning of the Corporations Act
in respect of the structure of the Incentive Plans being considered. These remuneration recommendations were made in respect of elements of
remuneration and were not in respect of the quantum of the incentives to be provided.
The total consideration paid by the company to GRG for the provision of the remuneration recommendations in the 2018 financial year was
$18,500 (2017: $5,000).
24
End of Audited Remuneration Report
BSA LIMITED ANNUAL REPORT 2018 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 2018, and the number of
meetings attended by each Director were:
Board Meetings
Audit Committee Meetings
Remuneration Committee Meetings
Meetings
Attended
Meetings Held
during tenure
in FY2018
Meetings
Attended
Meetings Held
Meetings Held
during tenure
Meetings
during tenure in
in FY2018
Attended
FY2018
Michael Givoni
Nicholas Yates
Graeme Barclay
Max Cowley
Paul Teisseire
Mark Lowe
17
17
17
15
16
15
17
17
17
17
17
17
4
*
4
3
4
2
4
*
4
4
4
4
4
*
4
3
4
2
4
*
4
4
4
4
*Not a member of the relevant committees, but attended all the Audit Committee and Remuneration 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.
Graeme Barclay and Max Cowley are the Directors who have been
longest in office and who, being eligible, offer themselves for re-election
at the 2018 Annual General Meeting.
INDEMNIFYING OFFICERS OR AUDITORS
During the year, the Company paid a premium for a contract insuring
Grant Date
Date of Expiry
Exercise Price
Number
under Right
Fair value at
grant date
25 Nov 2014
25 Nov 2019
29 Nov 2016
29 Nov 2021
28 Nov 2017
4 Dec 2022
4 Dec 2017
4 Dec 2022
3 May 2018
3 May 2033
$0.00
$0.00
$0.00
$0.00
$0.00
1,116,667
200,000
142,857
175,391
$0.165
$0.325
$0.350
$0.371
257,838
$0.3368
1,892,753
all Directors, secretaries, Executive officers and officers of the
During the year ended 30 June 2018, 90,322 rights granted under the
Company, and of each related body corporate of the Company. The
BSA Limited Employee Performance Rights Plan were exercised. Since
insurance does not provide cover for the independent auditors of the
that date, 257,838 rights have been converted to Restricted Ordinary
Company, or of a related body corporate of the Company.
Shares. No amounts are unpaid on any of the shares.
In accordance with usual commercial practice, the insurance contract
No person entitled to exercise the right had, or has, any right by virtue of
prohibits disclosure of details of the nature of the liabilities covered by
the right to participate in any share issue of any other body corporate.
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 2018, 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.
25
BSA LIMITED ANNUAL REPORT 2018 BSA | Maintain provides Fire services to the
International Convention Centre Hotel, Sydney.
26
BSA LIMITED ANNUAL REPORT 2018 DIRECTOR’S REPORT
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
FY2018
FY2017
$
$
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).
NON AUDIT SERVICES
The Company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s expertise
and experience with the Company and/or Group are important.
Details of the amounts paid or payable to the auditor (Deloitte
Touche Tohmatsu) for audit and non-audit services during the year
Auditing or reviewing the financial report
353,390
366,765
Taxation services
Other non-audit services
299,708
125,963
17,250
12,329
670,348
505,057
AUDITORS INDEPENDENCE DECLARATION
The lead auditors’ independence declaration for the year ended 30 June
2018 as required under section 307c of the Corporations Act 2001 (Cth)
has been received and can be found on page 28 of this report.
are set out below.
ROUNDING OF AMOUNTS
The Board of Directors has considered the position and in accordance
with the advice received from the Audit Committee, is satisfied that
the provision of non-audit services by the auditor, as set out below,
did not compromise the auditor independence requirements of the
Corporations Act 2001 (Cth) for the following reasons:
The company is a company of the kind referred to in ASIC Corporations
(Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated
24 March 2016, and in accordance with that Corporations Instrument
amounts in the directors’ report and the financial statements are
rounded off to the nearest thousand dollars, unless otherwise indicated.
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 2018
BSA | Build | Allstaff completed works at Plenty Valley Shopping Centre including the design,
engineering, drafting, supply, installation and commissioning of the mechanical services systems
for the redevelopment, comprising of 16 retail tenancies and back-of house areas.
27
BSA LIMITED ANNUAL REPORT 2018 AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
ACN: 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1217 Australia
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
The Board of Directors
BSA Limited
3 Thomas Holt Drive
Macquarie Park NSW 2113
29 August 2018
Dear Directors,
BSA Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of BSA Limited.
As lead audit partner for the audit of the consolidated financial report of BSA Limited for the year
ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
AG Collinson
Partner
Chartered Accountants
28
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
28
BSA LIMITED ANNUAL REPORT 2018
BSA | Connect delivered a commercial scale Solar PV system at an
Estia Health centre, this includes works of design, engineering, project
managing and commissioning of the system and is part of a staged
rollout of more than 30 aged care centres.
29
BSA LIMITED ANNUAL REPORT 2018 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
88 —
Directors’ Declaration
89 —
Independent Auditor’s Report
96 —
Shareholder Information
30
BSA LIMITED ANNUAL REPORT 2018 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Revenue
Investment revenue
Other gains and losses
Share of profits of joint ventures
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
Profit before tax
Income tax expense
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 earnings per share
Diluted earnings per share
Note
2018
$’000
Consolidated
2017
$’000
5
18
6.1
6.1
6.3
6.2
6.2
35
7.1
562,301
492,317
24
269
71
(633)
(444,025)
(64,394)
(5,273)
(674)
(7,096)
(645)
(37,452)
166
387
-
(557)
(398,279)
(45,803)
(4,260)
(738)
(6,699)
(595)
(30,305)
2,473
5,634
(909)
1,564
-
1,564
(1,671)
3,963
-
3,963
10
10
0.370 cents
0.368 cents
0.937 cents
0.933 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 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Investments in Joint Ventures
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
Investments in Joint Ventures
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Reserves
Accumulated losses
Profit Reserve
TOTAL EQUITY
Note
11
12
13
12
18
17
14
7.2
15
16
21
22
23
22
23
18
24
25
25
25
(a)
(b)
(c)
2018
$’000
12,670
106,224
1,541
120,435
946
170
-
14,736
5,215
15,185
1,740
37,992
158,427
92,066
2,083
12,058
106,207
3,621
3,481
81
7,183
113,390
45,037
97,562
1,568
(65,243)
11,150
45,037
Consolidated
2017
$’000
16,432
99,043
2,174
117,649
2,248
-
3
9,522
6,124
15,185
2,414
35,496
153,145
88,320
1,664
14,381
104,365
1,263
1,992
81
3,336
107,701
45,444
97,564
1,423
(65,243)
11,700
45,444
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
32
BSA LIMITED ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Profit
Reserve
$’000
Share-based
Payment
Reserve
$’000
Issued
Accumulated
Capital
$’000
Losses
$’000
97,592
(65,243)
-
-
-
-
-
-
-
-
-
Balance at 1 July 2016
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Share-based payment expense
Shares issued in satisfaction of performance conditions
(28)
Balance at 30 June 2017
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Share-based payment expense
Shares issued in satisfaction of performance conditions
Dividends paid
Balance at 30 June 2018
97,564
(65,243)
-
-
-
-
(2)
-
-
-
-
-
-
-
97,562
(65,243)
7,737
3,963
-
3,963
-
-
11,700
1,564
-
1,564
-
-
(2,114)
11,150
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Consolidated
Total
$’000
41,496
3,963
-
3,963
54
(69)
45,444
1,564
-
1,564
145
(2)
(2,114)
1,410
-
-
-
54
(41)
1,423
-
-
-
145
-
-
1,568
45,037
33
BSA LIMITED ANNUAL REPORT 2018 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
Note
Cash Flows From Operating Activities:
Cash receipts from customers
Payments to suppliers and employees
Interest received
Dividend received
Interest and other costs of finance paid
Net cash generated by/(used in) operating activities
28 (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:
Payment for shares issued for vesting rights
Proceeds from borrowings
Repayment of borrowings
Repayment of executive loans
Payment of finance lease liabilities
Share issue costs paid
Dividends paid to owners of the Company
Net cash used in financing activities
Net decrease in cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
2018
$’000
619,043
(613,759)
24
200
(845)
4,663
420
(6,135)
(5,715)
-
4,626
(4,532)
724
(1,412)
(2)
(2,114)
(2,710)
(3,762)
16,432
12,670
Consolidated
2017
$’000
539,854
(540,202)
166
-
(596)
(778)
467
(4,050)
(3,583)
(41)
3,801
(3,718)
-
(711)
(28)
-
(697)
(5,058)
21,490
16,432
34
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 27.
NOTE 2 APPLICATION OF NEW AND REVISED STANDARDS
2.1 New and amended accounting standards adopted by the Group
In the current year, the Group has applied a number of new and revised accounting standards issued by the Australian Accounting Standards Board (AASB)
that are mandatorily effective for an accounting period that begins on or after 1 July 2017:
-
-
-
-
AASB 1048 Interpretation of Standards;
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses (AASB 112);
AASB 2016-2 Amendments to Australia Accounting Standards – Disclosure Initiative: Amendments to AASB 107; and
AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle
Adoption of these standards has not resulted in any material changes to the Group’s financial statements.
2.2 New accounting standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations have been identified as those which may impact the Group in the period of initial
application. The Group is required to disclose known or reasonably estimable information relevant to assessing the possible impact that the application of
the new accounting standard will have on the Group’s financial statements.
a) AASB 9 Financial Instruments
AASB 9 Financial Instruments (revised December 2014) and AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9
(December 2014).
This standard replaces AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 includes revised guidance on the classification and
measurement of financial instruments, including a new expected credit loss model for calculation of impairment on financial assets, and new general
hedge accounting requirements. It also carries forward guidance on recognition and derecognition of financial instruments from AASB 139. The standard
will become mandatory for reporting periods beginning on or after 1 January 2018. The Group does not intend to early adopt the standard. Retrospective
application is required with some exceptions. Restatement of comparatives is not required, however, the comparative period can be restated if it can be
done so without the use of hindsight.
Accordingly, the Group has undertaken an assessment of the classification and measurement impacts of the new standard and estimated the
following impacts:
-
-
-
-
-
the Group does not expect the new standard to have a significant impact on the classification of its financial assets;
the Group does not hold any financial liabilities at fair value through profit or loss and as such there is no impact of the new standard on financial
liabilities;
AASB 9 will require extensive new disclosures, in particular surrounding credit risk and expected credit losses;
management are currently assessing whether any specific project finance obligations would require the recognition of expected credit losses; and
the increase in the loss allowance on financial assets is not expected to be significant.
35
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 2 APPLICATION OF NEW AND REVISED STANDARDS (CONTINUED)
b) AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers, AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15, AASB 2015-8
Amendments to Australian Accounting Standards – Effective Date of AASB 15, and AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications
to AASB 15.
AASB 15 establishes a comprehensive framework for determining the timing and quantum of revenue recognised. It replaces existing guidance, including AASB 118
Revenue and AASB 111 Construction Contracts. The core principle of AASB 15 is that an entity shall recognise revenue when control of a good or service transfers to
a customer. This standard will become mandatory for reporting periods beginning on or after 1 January 2018. The standard permits either a full retrospective or a
modified retrospective approach for the adoption.
The Group assessed the potential impacts of the new standard on the business units of the Group. The following is an evaluation of potential impacts from
adopting the new standard on future financial reporting.
Significant judgments and estimates are used in determining the impact, such as the assessment of the probability of customer approval of variations and
acceptance of claims, estimation of project completion date and assumed levels of project execution productivity. In making this assessment we have considered,
for applicable contracts, the individual status of legal proceedings, including arbitration and litigation. The implementation project is ongoing and therefore all
impacts are current estimates, which are subject to finalisation prior to final implementation.
Construction revenue
The contractual terms and the way in which the Group operates its construction contracts is predominantly derived from projects containing one
performance obligation. Contracted revenue will continue to be recognised over time, however the new standard provides new requirements for variable
consideration such as incentives, as well as accounting for claims and variations as contract modifications which all impart a higher threshold of probability
for recognition. Revenue is currently recognised when it is probable that work performed will result in revenue whereas under the new standard, revenue is
recognised when it is highly probable that a significant reversal of revenue will not occur for these modifications.
Services revenue
Services revenue arises from maintenance and other services supplied to infrastructure assets and facilities which may involve a range of services and
processes. On adoption of AASB 15, there will be no change in the timing of recognition and measurement of revenue. As with construction revenue,
incentives, variations and claims exist which are subject to the same higher threshold criteria of only recognising revenue to the extent it is highly probable
that a significant reversal of revenue will not happen.
Contract claims and variations
Revenue in relation to variations, such as a change in the scope of the contract, will only be included in the transaction price when the variation is
enforceable and the amount becomes highly probable. Variations will be recognised when client instruction has been received in line with customary
business practice in the sector.
Revenue in relation to claims, where the Group has an enforceable right between the parties, is only included in the transaction price when the amount
claimable becomes highly probable. This is a higher threshold than is required by current accounting standards.
In making this assessment, the Group considers a number of factors including nature of the claim, formal or informal acceptance by the customer of the
validity of the claim, stage of negotiations, legal opinion on the enforceability of the claim under the contract, or the historical outcome of similar claims to
determine whether the ”highly probable” threshold has been met.
Impact on transition – Contract claims and variations:
As a result of the change to a higher threshold of approval of claims or variations and the highly probable threshold for the estimation of the amount to be
recognised as revenue, under AASB 15 it is estimated that there will be an adjustment to opening retained earnings at 1 July 2018 of $4.5 million after tax.
Tender costs & contract costs
Costs incurred during the tender/bid process will be expensed, unless they are incremental to obtaining the contract and the Group expects to recover
those costs or where they are explicitly chargeable to the customer regardless of whether the contract is obtained.
Impact on transition – Tender costs and contract costs:
As a result under AASB 15 there will be an estimated adjustment to opening retained earnings at 1 July 2018 of $3.5 million after tax.
36
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 2 APPLICATION OF NEW AND REVISED STANDARDS (CONTINUED)
Conclusion
The expectation is that the above adjustments, across all controlled entities, are accounted for as a cumulative catch up on the original contract under AASB
15. Whilst the Group’s analysis is still on going, based on the current assessment an adjustment in reserves attributable to BSA shareholders and to non-
controlling interest to the opening balance at 1 July 2018 will be recognised.
Transition
The Group plans to adopt AASB 15 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial
application (i.e. 1 July 2018). As a result, under AASB 15 there will be an adjustment to the opening balance of the Group’s equity.
c)
AASB 16 Leases
AASB 16 Leases specifies how to recognise, measure and disclose leases. The standard provides a single lessee accounting model, requiring lessees to
recognise right-of-use assets and lease liabilities for almost all leases. Lessor accounting remains similar to the current standard – i.e. lessors continue to
classify leases as finance or operating leases. AASB 16 applies to annual reporting periods beginning on or after 1 January 2019 and replaces AASB 117
Leases and the related interpretations.
As at the reporting date, the Group has non-cancellable operating lease commitments of $9.7 million, refer to Note 26: Capital and Leasing Commitments.
The Group manages its owned and leased assets to ensure there is an appropriate level of equipment to meet its current obligations and to tender for
new work. The decision as to whether to lease or purchase an asset is dependent on a broad range of considerations at the time including financing, risk
management and operational strategies following the anticipated completion of a project.
Some of the operating leases currently held expire prior to the implementation of the standard and decisions on future leases will be made as projects are
tendered for. As such, the Group has not finalised its quantification of the effect of the new standard, however the following impacts are expected:
-
the total assets and liabilities on the balance sheet will increase with a decrease in total net assets, due to the reduction of the capitalised asset
being on a straight line basis whilst the liability reduces by the principal amount of repayments. Net current assets will show a decrease due to an
element of the liability being disclosed as a current liability;
-
-
the straight-line operating lease expense will be replaced with a depreciation charge for the right-of-use assets and interest expense on lease
liabilities;
interest expenses will increase due to the unwinding of the effective interest rate implicit in the lease. Interest expense will be greater earlier in a
leases life due to the higher principal value causing profit variability over the course of a lease life. This effect may be partially mitigated due to a
number of leases held in the Group at different stages of their terms; and
-
repayment of the principal portion of all lease liabilities will be classified as financing activities.
d)
Other new accounting standards
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial statements:
-
-
-
-
AASB 2014-10 Amendments to Australian Accounting Standards: Sale or Contribution of Assets Between an Investor and its Associate or Joint
Venture;
AASB 2017-1 Amendments to Australian Accounting Standards – Transfers of Investment Property, Annual Improvements 2014-2016 Cycle and
Other Amendments;
AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration; and
AASB Interpretation 23 Uncertainty Over Income Tax Treatments , AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty
over Income Tax Treatments.
37
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 purpose 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 consolidated financial statements were authorised for issue by the Directors on 29 August 2018.
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 2 or value in use in AASB 136.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair
value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
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.
38
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 its investment in subsidiaries at cost less impairment (if any).
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.
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 12 Income Taxes and AASB 19 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 (see note 3.12); 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 AASB.
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.
39
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see
above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have affected the amounts recognised as of that date.
3.5 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.
The Group’s policy for goodwill arising on the acquisition of an associate and a joint venture is described at note 3.6 below.
3.6 Interests in Associates and Joint Ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require
unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of
accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with AASB 5. Under
the equity method, an investment in an associate or 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 associate or joint venture. When the Group's share of
losses of an associate or a joint venture exceeds the Group's interest in that associate or joint venture (which includes any long-term interests that, in substance,
form part of the Group's net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are
recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.
An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate
or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group's share of
the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the
investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment,
is recognised immediately in profit or loss in the period in which the investment is acquired.
The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in
an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance
with AASB 136 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal)
with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is
recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the
investment is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a financial
asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance
with AASB 139. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued, and the fair
value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain
or loss on disposal of the associate or joint venture.
40
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate or joint venture on the
same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously
recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or
liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.
The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint
venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.
When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to
profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership
interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint
venture are recognised in the Group's consolidated financial statements only to the extent of interests in the associate or joint venture that are not related
to the Group.
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
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.
41
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.8 Construction contracts and work in progress
When the outcome of a construction contract can be estimated reliably, revenue and costs are 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 costs incurred for work performed to date relative to the
estimated total contract costs, except where this would not be representative of the stage of completion. 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 the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is
probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
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.
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.
42
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 29.
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.
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.
43
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 17. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the
tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate taxpayer
within group’ approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax
consolidation. Current tax liabilities and assets and deferred tax assets arising from un-used tax losses and relevant tax credits of the members of the tax-
consolidated group are recognised by the Company (as head entity in the tax-consolidated group).
Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or received by
the Company and each member of the Group in relation to the tax contribution amounts paid or payable between the parent entity and the other members
of the tax-consolidated group in accordance with the arrangement.
3.14 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.
44
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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. An
impairment loss recognised for goodwill is not reversed in subsequent periods.
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.
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.
45
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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’.
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.
46
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 33.
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.
47
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 judgments, 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. Variations in contract work and claims are
included to the extent that the amount can be measured reliably and its receipt is considered probable. Claims and variations can be both approved and not
approved by the customer. Where the claim and/or variation are not approved by the customer, estimates are made in relation to the claim and/or variation
position and management assesses the recovery at each reporting period.
4.1.2 Recoverability 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 2018 was $15,185,000 (30 June 2017: $15,185,000).
See note 15 for details.
4.1.3 Payroll Tax Liability
Following the settlement of the NSW Office of State Revenue (OSR), BSA has entered into a repayment plan with the NSW OSR. The provision for this matter
at the end of FY18 stands at $3,421,000 (FY:$5,236,000).
See Note 23 for details.
NOTE 5 REVENUE
The following is an analysis of the Group's revenue from continuing operations
Revenue from sale of goods
Revenue from the rendering of services
Contract revenue
Total Revenue
2018
$’000
2,822
224,282
335,197
Consolidated
2017
$’000
6,778
170,484
315,055
562,301
492,317
48
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 6 PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS
Profit/(Loss) for the year from continuing operations has been arrived at after charging/(crediting):
6.1
Cost of sales
444,658
398,836
2018
$’000
Consolidated
2017
$’000
6.2
Depreciation and amortisation expense
Depreciation of property, plant and equipment
Amortisation of intangible assets
Total depreciation and amortisation expense
6.3
Employee benefits expense
Post employment benefits
Superannuation
Share-based payments (see note 29)
Equity-settled share-based payments
Termination benefits
Other employee benefits
5,273
674
5,947
4,260
738
4,998
12,117
9,814
145
54
1,973
50,159
1,234
34,701
Total employee benefits expense
64,394
45,803
6.4
Significant Items
Business reorganisation and restructure costs
nRAH completion and commissioning costs and settlement impact
Legal and professional fees relating to legacy issues
Additional provision for NSW OSR issue
Total significant items
3,970
784
1,010
-
5,764
1,234
1,891
1,126
2,500
6,751
$5,764,000 (2017: $6,751,000) is included in the following categories in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income, 'Subcontractors and raw materials' ($2,200,000) (2017: $4,391,000), 'Employee benefits expense' ($2,554,000 (2017: $1,234,000) and
'Other expenses' ($1,010,000) (2017: $1,126,000).
49
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 7 INCOME TAXES
7.1
Income tax recognised in profit or loss
In respect of the current year
In respect of prior years
Deferred tax
In respect of the current year
Total income tax expense recognised in the current year relating to continuing operations
2018
$’000
Note
Consolidated
2017
$’000
-
-
-
909
909
909
(70)
-
(70)
1,741
1,741
1,671
The expense for the year can be reconciled to the accounting profit as follows:
Profit from continuing operations
2,473
5,634
Income tax expense calculated at 30%
Adjusted for:
Non-deductible expenses
Adjustments recognised in the current year in relation to the current tax of prior years
Other
Total income tax expense recognised in the current year relating to continuing operations
742
124
866
43
43
909
1,690
18
1,708
(37)
(37)
1,671
The tax rate used for the 2018 and 2017 reconciliations above is the corporate tax rate of 30% payable by Australian corporate entities on taxable
profits under Australian tax law.
50
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 7 INCOME TAXES (CONTINUED)
7.2
Deferred tax balances
2018
Temporary differences
Finance leases
Intangible assets
Employee benefits
Provisions
Doubtful debts
Tax loss carried forward
2017
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
12
(724)
3,405
1,890
543
998
6,124
176
202
244
(850)
228
(909)
(909)
188
(522)
3,649
1,040
771
89
5,215
Opening balance
Recognised in
profit or loss
Closing balance
(93)
(945)
3,269
4,094
542
928
7,795
105
221
136
(2,204)
1
70
(1,671)
12
(724)
3,405
1,890
543
998
6,124
30/06/2018
30/06/2017
$’000
$’000
5,215
-
5,215
6,124
-
6,124
51
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 7 INCOME TAXES (CONTINUED)
7.3
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 17. 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 8 KEY MANAGEMENT PERSONNEL
The aggregate compensation made to directors and other key management personnel of the Company and the Group is set out below:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
2018
$
2,241,820
111,850
19,260
145,050
Consolidated
2017
$
1,644,865
93,185
21,292
29,355
2,517,980
1,788,697
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 27 of this Annual Report.
NOTE 9 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.
Increase in taxation for FY2018 is in relation to ($232,000) Research and Development issue. See note 36.
52
2018
$
Consolidated
2017
$
353,390
299,708
17,250
366,765
125,963
12,329
670,348
505,057
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 10 EARNINGS PER SHARE
Basic profit/(loss) per share
Diluted profit/(loss) per share
(a)
Reconciliation of Earnings to Profit
Profit/(Loss)
Profit/(Loss) used to calculate basic EPS and dilutive EPS
2018
Cents
0.370
0.368
1,564
1,564
Consolidated
2017
Cents
0.937
0.933
3,963
3,963
Number
Number
(b)
Weighted average number of ordinary shares outstanding during the year used
422,933,082
422,907,346
in calculating basic EPS
Weighted average number of options/rights outstanding
1,607,509
1,654,946
Weighted average number of ordinary shares outstanding during the year used in calculating diluted EPS
424,540,591
424,562,292
(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 Employee
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 29.
NOTE 11 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
2018
$’000
12,670
12,670
Consolidated
2017
$’000
16,432
16,432
53
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 12 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)
Accrued Revenue
Prepayments
NON-CURRENT
Executive Share Plan receivables
Other Receivables
Trade receivables
Note
31 (c)
19
31 (c)
2018
$’000
6,338
(352)
5,986
29,577
332
56,252
(828)
13,470
1,435
100,238
Consolidated
2017
$’000
8,186
(160)
8,026
21,424
329
54,874
(978)
14,075
1,293
91,017
106,224
99,043
582
364
946
1,332
916
2,248
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 47 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 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 12 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
5,855
339
-
-
144
6,338
Amounts due from customers under construction contracts
Not past due
Past due [30] days
Past due [30-60] days
Past due [60-90] days
Past due [>90] days
Total
Total
$’000
38,208
9,612
1,849
1,646
4,937
56,252
5,986
8,186
2018
Amount
Amount Not
Impaired
Impaired
$’000
-
208
-
-
144
352
2018
$’000
-
-
-
-
828
828
$’000
5,855
131
-
-
-
$’000
38,208
9,612
1,849
1,646
4,109
Amount
Amount Not
Impaired
Impaired
Consolidated
2017
Amount
Amount Not
Impaired
Impaired
$’000
$’000
-
-
-
65
95
160
7,111
693
202
15
5
8,026
Consolidated
2017
Amount
Amount Not
Impaired
Impaired
$’000
-
-
-
-
978
978
$’000
32,043
14,352
1,607
1,374
4,520
53,986
Total
$’000
7,111
693
202
80
100
Total
$’000
32,043
14,352
1,607
1,374
5,498
55,424
54,874
As at 30 June 2018, the Group had current trade receivables of $1,180,000 (2017: $1,138,000) 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
Closing balance
NOTE 13 INVENTORIES
CURRENT
Inventories of finished goods and work in progress at net realisable value
Consolidated
2017
$’000
1,153
405
(420)
1,138
Consolidated
2017
$’000
2,174
2,174
2018
$’000
1,138
76
(34)
1,180
2018
$’000
1,541
1,541
The cost of inventories recognised as an expense includes $589,000 (2017:$457,000) in respect of write-down of inventory to net realisable value.
55
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 14 PROPERTY, PLANT AND EQUIPMENT
Plant &
Equipment
Under Finance
Leasehold
Plant &
Lease & Hire
Make
Assets
Under
Land
Buildings
Improvements
Equipment
Purchase
Good
Construction
Total
$’000
$’000
$’000
$’000
$’000
$'000
$’000
Cost
Balance as at 30 June 2016
253
410
3,230
Additions
Disposals
Transfers *
-
-
-
-
-
-
64
(4)
1
31,373
3,313
(1,720)
15
11,308
1,101
(851)
(16)
263
987
-
-
-
46,837
673
6,138
-
-
(2,575)
-
Balance as at 30 June 2017
253
410
3,291
32,981
11,542
1,250
673
50,400
Additions
Disposals
Transfers *
-
-
-
-
-
-
Balance as at 30 June 2018
253
410
3,504
(796)
-
4,095
(1,204)
408
(393)
2,522
10,638
-
(2,393)
-
-
(2,508)
-
35,689
14,433
1,265
687
58,645
Accumulated depreciation and impairment
Balance as at 30 June 2016
Additions
Disposals
Transfers *
Balance as at 30 June 2017
Additions
Disposals
Transfers *
Balance as at 30 June 2018
-
-
-
-
-
-
-
-
-
72
16
-
-
88
17
-
-
27,478
2,363
(1,669)
(83)
8,548
1,255
(823)
83
263
166
-
-
3,209
28,089
9,063
429
527
-
-
2,782
(693)
-
1,530
(1,156)
-
105
3,736
30,178
9,437
-
-
-
-
-
-
-
-
-
39,114
4,260
(2,496)
-
40,878
5,273
(2,242)
-
43,909
687
14,736
673
9,522
417
(393)
-
453
812
821
Net Book Value as at 30 June 2018
Net Book Value as at 30 June 2017
253
253
305
322
2,172
82
5,511
4,892
4,996
2,479
* Transfers between categories
14.1
The following useful lives are used in the calculation of depreciation:
Buildings
Leasehold improvements
Plant and equipment
25 years
4 - 5 years
3 - 10 years
Plant and equipment under finance
3 - 5 years
lease
109
-
2,508
5,908
2,753
460
(4)
-
14.2
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 22).
56
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 15 NON-CURRENT ASSETS - GOODWILL
$'000
Cost
Closing carrying value
2018
2017
BSA | Connect
BSA | Build
BSA | Maintain
Consolidated
-
-
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, which includes both BSA | Build | Fire and BSA | Build | HVAC. The cash flows are discounted using the
weighted average cost of capital with mid-year discounting.
At 30 June 2018 the company has assessed both internal and external indicators of impairment, including completing the value-in-use models, and
did not identify any indicators of impairment.
The key assumptions used in the value-in-use calculations as at 30 June 2018 and 30 June 2017 were as follows:
- growth rate used to extrapolate cash flows beyond the forecast period: 3.0% for BSA | Build (2017: 3.0%);
- pre-tax discount rate: 12.5% (2017: 12.5%) and
- divisional Revenue, EBIT, working capital adjustments and maintenance capital expenditure
Impact of possible changes to key assumptions
Given the performance of the BSA | Build business in the year ended 30 June 2018, there is increased sensitivity of impairment to changes in the
key inputs in the impairment model. The key assumptions in the impairment model are the discount rate, terminal growth rate percentage, and
EBITDA percentage. Below is set out the assumptions used in the impairment model and the assumption required for there to be no headroom from
the model to the carrying value if just that assumption was changed.
Key Assumptions
Discount Rate
Terminal Growth %
EBITDA Margin %
FY 2018 Management Assumptions
Breakeven Assumption
12.5%
3.0%
1.0%
13.0%
2.20%
0.8%
In the event of the above combined scenario occurring under a value-in-use model, management expect that action would be taken to mitigate the
impact of one or more of the variables.
57
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 16 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
Order Backlog
$’000
$’000
Cost
Balance as at 30 June 2016
Acquisitions through business combinations
Balance at 30 June 2017
Acquisitions through business combinations
Balance at 30 June 2018
Accumulated amortisation and impairment
Balance as at 30 June 2016
Amortisation expense
Balance at 30 June 2017
Amortisation expense
Balance at 30 June 2018
Net Book Value as at 30 June 2018
Net Book Value as at 30 June 2017
The following useful lives are used in the calculation of amortisation.
6,900
-
6,900
-
6,900
(6,837)
(63)
(6,900)
-
(6,900)
-
-
10,079
-
10,079
-
10,079
(6,990)
(675)
(7,665)
(674)
(8,339)
1,740
2,414
Customer relationships
Order backlog
9 years
1 to 9.5 years
Total
$’000
16,979
-
16,979
-
16,979
(13,827)
(738)
(14,565)
(674)
(15,239)
1,740
2,414
58
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 17 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
ACN 085 921 615 Pty Ltd
Satellite Receiving Systems (QLD) Pty Limited
BSA Equity Plans Pty Limited
(Formerly ACN 066 496 893 Pty Ltd)
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:
2018
$’000
-
-
Consolidated
2017
$’000
3
3
Principal
Activity
Place of incorporation
2018
2017
Percentage owned (%)
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 | Maintain
BSA | Maintain
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.
59
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 17 OTHER FINANCIAL ASSETS (CONTINUED)
17.1
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
Number of wholly-owned
subsidiaries
and operation
2018
2017
Australia
Australia
Australia
6
9
4
19
6
9
4
19
NOTE 18 DETAILS OF JOINT VENTURES
Details of the Group’s joint ventures at the end of the reporting period is as follows:
Place of incorporation and
Proportion of ownership
interest and voting power
held by the group
Name of Joint Venture
Principal Activity
principal place of business
2018
Triple M and Premier Fire JV Co Limited Installation of fire services
Australia
BSAF Joint Venture
Supply, installation and commissioning
Australia
50%
50%
of mechanical services
2017
50%
0%
BSAF Joint Venture is an unincorporated entity and there is no contractual arrangement or any other facts and circumstances that indicate that the
parties to the joint arrangement have rights to the assets and obligations for the liabilities of the joint arrangement. Accordingly, BSAF Joint Venture
is a newly formed joint venture of the Group.
The above joint ventures are accounted for using the equity method in these consolidated financial statements.
Summarised financial information in respect of the Group's material joint ventures are set out below. The summarised financial information below
represents amounts shown in the joint ventures' 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
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)
60
2018
$’000
681
(843)
-
225
-
-
2017
$’000
1,040
(1,202)
-
482
-
-
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 18 DETAILS OF JOINT VENTURE (CONTINUED)
Triple M and Premier Fire JV Co Limited
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
2018
$’000
4,161
-
-
-
-
-
Dividends received from the joint venture during the year
(200)
The above profit/(loss) for the year include the following:
Depreciation and amortisation
Interest income
Interest expenses
Income tax expense (income)
-
-
-
86
Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the
consolidated financial statements:
Triple M and Premier Fire JV Co Limited
Net liabilities 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
BSAF Joint Venture
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)
2018
$’000
(162)
50%
-
-
(81)
2018
$’000
1,974
-
(1,634)
-
2
-
-
2017
$’000
-
-
-
-
-
-
-
-
-
-
-
2017
$’000
(162)
50%
-
-
(81)
2017
$’000
-
-
-
-
-
-
-
61
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 18 DETAILS OF JOINT VENTURE (CONTINUED)
BSAF Joint Venture
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)
2018
$’000
1,795
142
-
142
-
142
-
-
-
-
-
Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the
consolidated financial statements:
BSAF Joint Venture
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
2018
$’000
340
50%
-
-
170
NOTE 19 AMOUNTS DUE FROM (TO) CUSTOMERS UNDER CONSTRUCTION CONTRACTS
2017
$’000
-
-
-
-
-
-
-
-
-
-
-
2017
$’000
-
-
-
-
-
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 12)
Advances received from customers for contract work amounted to Nil (30 June 2017: Nil)
62
2018
$’000
335,286
(279,034)
56,252
56,252
56,252
Consolidated
2017
$’000
317,397
(262,523)
54,874
54,874
54,874
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 20 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
Accumulated losses
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
2018
$’000
39,486
43,625
83,111
31,781
4,375
36,156
46,955
97,562
(77,546)
25,371
1,568
-
46,955
4,348
-
4,348
2017
$’000
42,492
40,560
83,052
36,176
2,298
38,474
44,578
97,564
(77,546)
23,137
1,423
-
44,578
(38,239)
-
(38,239)
(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
57,164
(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 $9,333,000 (2017: $8,754,000
directly relating to the parent. Guarantees secured by cross guarantee by all group members amounted to $41,242,000 (2017:$42,670,000).
63
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 21 TRADE AND OTHER PAYABLES
Trade payables
Other payables
Work in progress
Total Payables
NOTE 22 BORROWINGS
CURRENT
Secured liabilities at amortised cost:
Hire purchase liabilities
Lease liabilities
Other
Total borrowings
NON-CURRENT
Secured liabilities at amortised cost:
Hire purchase liabilities
Lease liabilities
Total borrowings
Note
2018
$’000
37,573
30,383
24,110
92,066
Note
2018
$’000
(a), 26(iii)
(a), 26(ii)
(a), 26(iii)
(a), 26(ii)
714
626
743
2,083
1,158
2,463
3,621
Consolidated
2017
$’000
41,771
27,809
18,740
88,320
Consolidated
2017
$’000
718
297
649
1,664
1,135
128
1,263
The Group has Banking Facilities amounting to $54,500,000 which have an expiry date of 31 December 2020 and Banking Facility amounting
to $12,500,000 which have an expiry date of 31 October 2019 .
The covenants within the bank borrowings have the following ratios as at 30 June 2018:
Quarterly interest cover ratio greater than 3.5 times,
Quarterly total leverage ratio less than 2.25 times
There were no breaches of the above covenants during the year.
64
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 22 BORROWINGS (CONTINUED)
Total assets pledged as security
CURRENT
Cash and cash equivalents
Trade and other receivables
Inventories
NON-CURRENT
Trade and other receivables
Investment in Joint Ventures
Other financial assets
Property, plant & equipment
Deferred tax assets
Goodwill
Other intangible assets
2018
$’000
12,670
106,224
1,541
120,435
946
170
-
14,736
5,215
15,185
1,740
37,992
158,427
Consolidated
2017
$’000
16,432
99,043
2,174
117,649
2,248
-
3
9,522
6,124
15,185
2,414
35,496
153,145
(a)
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 hire purchase liabilities outstanding during the year ranged between 4.47% and 5.31%. Actual interest rates for lease liabilities
outstanding during the year ranged between 4.93% and 5.97%. There were no bank loans outstanding at year end.
(b)
(c)
There were no defaults or breaches of any loan agreements during the current year.
Reconciliation of liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising
from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated statement of cash
flows as cash from financing activities.
Hire purchase and finance lease liabilities
Other borrowings
Non-cash
changes
Financing
New finance
cash flows
leases
1 July 2017
(i)
(note 28(b))
30 June 2018
$’000
$’000
$’000
$’000
2,278
649
2,927
(1,412)
94
(1,318)
4,095
-
4,095
4,961
743
5,704
(i)
The cash flows from other borrowings make up the net amount of proceeds from borrowings and repayment of borrowings in the statement of cash flows.
65
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 23 PROVISIONS
Employee benefits
Other provisions (see below)
CURRENT
NON-CURRENT
Note
(i)
Other Provisions
Balance at 1 Jul 2017
Additional provisions recognised
Paid
Provisions reversed
Balance at 30 June 2018
Office
of State
Revenue (ii)
5,236
-
(1,815)
-
3,421
Make
Good (iii)
1,362
-
-
(29)
1,333
2018
$’000
10,152
5,387
15,539
12,058
3,481
15,539
Contract
Provisions
(iv)
33
600
-
-
633
Consolidated
2017
$’000
9,742
6,631
16,373
14,381
1,992
16,373
Total
6,631
600
(1,815)
(29)
5,387
(i)
The provision for employee benefits represents annual leave and vested and non-vested long service leave entitlements accrued.
(ii)
The provision for Office of State Revenue (OSR) primarily relates to the following:
Following the settlement of the NSW OSR issue, BSA has entered into a repayment plan with the NSW OSR. The provision for this matter at the
end of FY18 stands at $3,421,000 (FY17: $5,236,000).
(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.
66
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 24 ISSUED CAPITAL
(a)
Share capital
Note
(c)
Ordinary shares - fully paid
(b)
Movements in ordinary share capital
Date
Details
1 July 2017
Opening Balance
Exercise of Performance Rights
Less: transaction costs arising on shares issued
30 June 2018
Balance
Parent Entity
2018
2017
Number of
Number of
Shares
Shares
422,997,668
422,907,346
Number of
Shares
$’000
422,907,346
97,564
90,322
-
-
(2)
422,997,668
97,562
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 2018 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 29.
(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.
(g)
Employee Performance Rights Plan
Information relating to the BSA Limited Employee 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 29.
(h)
Fee Sacrifice Equity Plan
Information relating to the BSA Limited Employee 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 29.
67
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 25 RESERVES AND ACCUMULATED LOSSES
(a)
Reserves
Share-based payments reserve
Share-based payments reserve
Opening balance
Rights expense
Shares issued in satisfaction of performance conditions
Closing balance
2018
$’000
1,568
1,568
1,423
145
-
1,568
Consolidated
2017
$’000
1,423
1,423
1,410
54
(41)
1,423
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 29.
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
(65,243)
-
(65,243)
11,700
1,564
(2,114)
11,150
(65,243)
-
(65,243)
7,737
3,963
-
11,700
68
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 25 RESERVES AND ACCUMULATED LOSSES (CONTINUED)
(d)
Dividends on equity instruments
Year ended 30/06/18
Year ended 30/06/17
Cents per share
Total ‘000
Cents per share
Total ‘000
Recognised amounts
Fully paid ordinary shares
Interim dividend:
-
-
Final fully franked dividend of 0.5 (2017:Nil) cents per
fully paid ordinary share franked at the rate of 30%
paid 2 November 2017
0.50
2,114
-
-
-
-
Unrecognised amounts
Fully paid ordinary shares
Final dividend
0.50
2,115
0.50
2,114
On 29 August 2018 the Directors declared a fully franked dividend of 0.50 cent per share to the holders of fully paid ordinary shares in respect of
the financial year ended 30 June 2018, to be paid to shareholders on 2 November 2018. This dividend has not been included as a liability in these
consolidated financial statements. The dividend will be paid to all shareholders on the Register of Members on 28 September 2018. The total
estimated dividend to be paid is $2,115,000.
(e)
Franking credits
Franking account balance as at 30 June
Franking credits that will attach to the payment of dividends proposed or declared before
the financial report was authorised for issue but not recognised as a distribution to equity
holders during the period.
Net franking credits available
2018
$’000
15,464
(906)
14,558
Consolidated
2017
$’000
16,285
(902)
15,383
69
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 26 CAPITAL AND LEASING COMMITMENTS
Note
2018
$’000
Consolidated
2017
$’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
3,951
5,771
-
9,722
2,956
6,540
-
9,496
(ii)
Finance Lease Commitments
The Group leases various plant and equipment with a carrying amount of $3,718,000 (2017: $728,000) 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
725
2,729
-
3,454
(365)
3,089
626
2,463
3,089
326
137
-
463
(38)
425
297
128
425
22
22
(iii)
Hire Purchase Commitments
The Group has purchased various plant and equipment with a carrying amount of $1,278,000 (2017: $1,751,000) 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
70
771
1,261
-
2,032
(160)
1,872
714
1,158
1,872
798
1,235
-
2,033
(180)
1,853
718
1,135
1,853
22
22
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 27 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 and energy industries. The
contracting services include the delivery of bundled services over fixed line multi-technology services and networks and the installation of Subscription
Television as well as Smart Meter and Solar Installations.
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. In addition the business provides energy and other technical advisory 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, Fire, Electrical, Building Repairs and Energy 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
30 Jun 18
$’000
249,356
219,742
93,472
24
562,594
30 Jun 17
$’000
186,531
216,626
89,547
166
492,870
Segment Profit/Loss
Year Ended
30 Jun 18
$’000
30 Jun 17
$’000
16,442
(6,767)
1,226
-
10,901
8,043
352
2,762
-
11,157
Corporate costs including acquisition, legal and advisory
(7,783)
(4,928)
Finance costs
Profit before tax
(645)
(595)
2,473
5,634
Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year (2017: 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.
71
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 27 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 18
$’000
48,082
78,823
31,522
30 Jun 17
$’000
50,260
73,934
28,951
158,427
153,145
39,254
53,074
21,062
40,711
49,019
17,971
113,390
107,701
For the purposes of monitoring segment performance and allocating resources between segments.
All assets, except cash, are allocated to reportable segments. In 2018 and 2017, cash is allocated to BSA | Connect, who operate the Group's treasury.
Goodwill is allocated to reportable segments as described in note 15. 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 18
$’000
30 Jun 17
$’000
30 Jun 18
$’000
30 Jun 17
$’000
3,463
777
1,707
2,041
1,034
1,923
9,345
564
729
3,974
715
1,449
5,947
4,998
10,638
6,138
FY2018 additions include capitalised fitout costs for NSW office refurbishments ($1,895,000). $1,553,000 was returned by the owner under the
property lease agreement.
72
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 27 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 18
$’000
562,594
562,594
30 Jun 17
$’000
492,870
492,870
30 Jun 18
$’000
37,922
37,922
30 Jun 17
$’000
35,496
35,496
(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 24% of external revenue (2017:17%). The Group's next most significant client is in the BSA | Connect
segment and accounts for 9% of external revenue (2017: 10%).
NOTE 28 CASH FLOW INFORMATION FOR THE PERIOD
(a)
Reconciliation of profit/(loss) to net cash flows from operating activities for the year
Profit for the year
Depreciation
Amortisation
Share-based payment expense
Net profit on sale of non-current assets
Change in operating assets and liabilities
Decrease/(increase) in trade receivables
Decrease in inventories
Decrease in deferred tax asset
Decrease/(increase) in other operating assets
(Decrease)/increase in trade payables
(Decrease)/increase in other operating liabilities
(Decrease) in provisions
Net cash generated by/(used by) operating activities
2018
$’000
1,564
5,273
674
145
(269)
512
633
909
(7,115)
(4,198)
7,369
(834)
4,663
Consolidated
2017
$’000
3,963
4,260
738
54
(387)
(1,695)
557
1,672
(19,586)
2,357
13,652
(6,363)
(778)
(b)
Non-cash transactions
During the year the consolidated entity acquired plant and equipment with an aggregate value of $4,095,000 (2017:$1,101,000) by means of finance
leases. These acquisitions are not reflected in the consolidated statement of cash flows.
73
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 28 CASH FLOW INFORMATION FOR THE PERIOD (CONTINUED)
(c)
Credit Standby Arrangements with Banks
Credit facility
Amount utilised
Unused credit facility
This facility is summarised as follows:
A Working Capital Facility which covers the financial requirements of the day to day operations of the Group.
(d)
Credit Standby Arrangements with Banks
Credit facility
Amount utilised
Unused credit facility
2018
$’000
20,000
-
20,000
12,500
-
12,500
This facility is summarised as follows:
A Corporate Recievables Facility which covers the financial requirements of the day to day operations of the Group.
(e)
Master Asset Finance Facilities
Total asset finance facility
Amount utilised
Total unused Master Asset Finance Facility
8,000
(4,961)
3,039
Consolidated
2017
$’000
20,000
-
20,000
-
-
-
5,000
(2,277)
2,723
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 $24,902,000 were utilised at 30 June 2018 (2017: $24,028,000), 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 $16,341,000 were utilised at 30 June 2018 (2017: $18,642,000), are unsecured.
74
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 29 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 2018 (2017: 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 (2017: nil), which
relates, to equity-settled share-based payment transactions under the Employee Option Plan.
(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 2018 (2017: 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 24(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 their acceptance, and where appropriate their 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.
75
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 29 SHARE-BASED PAYMENTS (CONTINUED)
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
250,000
750,000
-
200,000
-
950,000
2,150,000
Number
450,000
850,000
150,000
-
400,000
750,000
2,600,000
(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 with those of Company shareholders; and
Ensure the remuneration packages of employees are consistent with market practice.
Securities may be offered under the Plan and the Board has discretion to determine who is offered the opportunity to participate.
Generally, securities are subject to a holding restriction and cannot be traded unless certain performance conditions are met or as otherwise
specified at the time of the relevant award after acquisition by the participant.
Rights to acquire shares will not be exercisable until the end of the final measurement period, and until those rights have satisfied all vesting conditions
and all performance hurdles established by the Board. This is subject to a number of exceptions (including death, cessation of employment, takeovers
and schemes of arrangement). The rights have a specified life determined by the Board. The initial grant of rights (the Grant Date) will have a life
terminating five years after the Grant Date or such other date as determined by the Board (the Expiry Date).
Rights granted to certain participants in the initial grant will be at zero vesting value and will be subject to the following performance conditions as
determined by the Board:
(i)
Service conditions as determined by the Board.
(ii) The Company's performance as measured by earnings per share ("EPS") being the EPS for the relevant Measurement Period as determined
by the Board having regard to the financial statements. Certain growth in EPS for the shares must be attained in respect of each
Measurement Period and pro rata in respect of each Measurement Period and service condition of three years.
76
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 29 SHARE-BASED PAYMENTS (CONTINUED)
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 current plan company is BSA Limited ACN 088 412 748 or any other Company that the Board may approve from time to time. After rights are
exercised, the plan company will subscribe for new shares or acquire shares in the ordinary course of trading on the ASX for participants, as directed
from time to time by the Board.
Consolidated and parent entity
Grant
Date
Exercise
Date
Expiry
Date
Exercise
Price
(cents)
Balance at Start
of the Year Under
Right
Granted During
the Year Under
Right
Exercised During
the Year Under
Right
Cancelled During
the Year Under
Right
Balance in Escrow
at End of the Year
Under Right
Number
Number
Number
Number
Number
25 Nov 14
30 Jun 15
25 Nov 19
29 Nov 16
6 Feb 17
29 Nov 21
29 Nov 16
1 Sep 17
29 Nov 21
28 Nov 17
4 Dec 17
4 Dec 22
4 Dec 17
4 Dec 17
4 Dec 22
Total
-
-
-
-
-
1,116,667
90,322
200,000
-
-
1,406,989
-
-
-
142,857
175,391
318,248
-
(90,322)
-
-
-
(90,322)
-
-
-
-
-
-
1,116,667
-
200,000
142,857
175,391
1,634,915
Fee Sacrifice Equity Plan to Individual Non-Executive Directors
The establishment of the BSA Fee Sacrifice Equity Plan to Individual Non-Executive Directors was approved by shareholders at the 2017 AGM.
The plan is to establish a mechanism for Non-Executive Directors (NEDS) to acquire shares in the Company by electing to salary sacrifice a
proportion of annual fees, on a voluntary basis that will align their interests with shareholders and does not create any financial or governance
concerns for shareholders.
All individuals holding NED roles in the Company or a subsidiary of the Company are eligible to become participants in the Plan.
Each year, the Company intends to invite each NED to voluntarily elect to apply for rights under the Plan, to be funded by salary sacrificing a
proportion of Annual Board fees. While the Company intends to issue invitations annually, the Board will determine at its sole discretion each year
whether to issue an invitation.
Invitations will include such terms as the Board deems appropriate including the date of the invitation, the number of Deferred Rights that a participant
is eligible to apply for, that the price of a Deferred Right shall be nil (ignoring the amount of the fee sacrificed), that the exercise price shall be nil, the
period during which disposal restrictions will apply, and such other terms and conditions as the Board determines.
Deferred Rights granted under this Plan will be fully vested on the date of grant (being the date notified in a Notice of Grant)
Deferred Rights will be automatically exercised 90 days after grant but may not be exercised earlier. On exercise of a right, the Board in its discretion will
either: a) issue shares to Participants or b) arrange for shares to be acquired for the benefit of Participants by the trustee of the BSA Employee Share
Trust. The Company will contribute such funds as needed to acquire shares either on-market or a subscription to a new issue as directed by the Board.
The shares that result from the exercise of Deferred Rights are Restricted Shares.
77
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 29 SHARE-BASED PAYMENTS (CONTINUED)
All shares acquired by Participants are subject to disposal restrictions that prevent disposal until the earlier of 15 years from the date of grant of rights
and cessation of being a NED on the Board of BSA or a subsidiary of the Company (which will be specified Disposal Restrictions). During the period the
Special Disposal Restrictions apply, the Restricted Shares may not be sold or otherwise disposed. The Company may impose a CHESS holding lock on
Restricted Shares to ensure the participant does not sell them earlier than permitted under the Rules. The Company will advise each participant when it
considers the specified disposal restrictions cease to apply.
Participants must not enter an arrangement with anyone if it would have the effect of limiting their exposure to risk in relation to Deferred Rights or
Restricted Shares.
Participants will be treated in a manner that does not advantage or disadvantage them compared with other shareholders in the event of bonus issues,
rights issues and capital reorganisation.
If a participant ceases to be a NED of the Company or a subsidiary of the Company any unexercised Deferred Rights will be exercised automatically
the day following cessation, and any Restricted Shares held by a Participant that are subject to Specified Disposal Restrictions will cease to be
subject to such restrictions on the day of cessation unless otherwise determined by the Board and notified to the Participant in the Invitation.
Grant
Date
Exercise
Date
Expiry
Date
Exercise Price
(cents)
Balance at Start
of the Year
Under Right
Granted During
the Year Under
Right
Exercised During
the Year Under
Right
Cancelled During
the Year Under
Right
Balance in
Escrow at End of
the Year Under
Right
Number
Number
Number
Number
Number
3 May 17
3 May 18
3 May 33
-
Total
-
-
257,838
257,838
-
-
-
-
257,838
257,838
NOTE 30 EVENTS OCCURRING AFTER THE BALANCE DATE
The Directors are not aware of any significant events since the end of the reporting period.
NOTE 31 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:
2018
$
Consolidated Entity
2017
$
Rent was paid to The Day Street Unit Trust in which M Lowe, a Director,
173,604
178,496
has a beneficial interest
78
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 31 RELATED PARTY TRANSACTIONS (CONTINUED)
Outstanding balances arising from purchases of services
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated Entity
Purchase of services
Rent payable for premises from Director
2018
$
14,875
(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.
2017
$
-
Rights
2018
the year
Compensation
Exercised
Other
Year
Exercisable
Exercisable
Year
Balance at
Net
Balance
the start of
Granted as
Rights
Change
at End of
Vested
but Not
Vested
Vesting
and
During
Nicholas Yates
Nicholas Benson
Timothy Harris
Michael Givoni
Graeme Barclay
1,116,667
142,857
-
90,322
-
( 90,322)
200,000
175,391
-
-
207,838
50,000
-
-
-
-
-
-
-
-
1,259,524
-
375,391
207,838
50,000
1,406,989
576,086
( 90,322)
-
1,892,753
-
-
-
-
-
-
1,259,524
142,857
-
-
375,391
175,391
207,838
207,838
50,000
50,000
1,892,753
576,086
Rights
2017
the year
Compensation
Exercised
Other
Year
Exercisable
Exercisable
Year
Balance at
Net
Balance
the start of
Granted as
Rights
Change
at End of
Vested
but Not
Vested
Vesting
and
During
Nicholas Yates
Nicholas Benson
Timothy Harris
1,116,667
-
-
-
90,322
200,000
1,116,667
290,322
-
-
-
-
-
-
-
-
1,116,667
90,322
200,000
1,406,989
-
-
-
-
1,116,667
-
90,322
90,322
200,000
200,000
1,406,989
290,322
Further details of schemes can be found in the Directors’ Report.
79
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 31 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
2018
Directors of BSA Limited
Ordinary Shares
Mark Lowe
Paul Teisseire
Michael Givoni
Graeme Barclay
Nicholas Yates
10,115,403
680,012
796,400
-
2,727,273
Ordinary Shares - Escrowed
Mark Lowe
200,000
Key Management Personnel
Ordinary Shares
Nicholas Benson
Timothy Harris
1,363,636
-
15,882,724
-
-
-
-
-
-
-
-
-
-
-
-
-
10,115,403
680,012
796,400
-
127,487
2,854,760
200,000
90,322
-
1,453,958
-
217,809
16,100,533
-
-
-
-
-
-
-
-
-
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
72,000,000 (2017: 67,204,000). Max Cowley has no beneficial interest in Birketu Pty Ltd.
2017
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
Mark Lowe
Paul Teisseire
Michael Givoni
Graeme Barclay
Nicholas Yates
Ordinary Shares - Escrowed
Mark Lowe
Key Management Personnel
Ordinary Shares
Nicholas Benson
80
10,115,403
680,012
636,400
-
2,727,273
200,000
1,363,636
-
-
-
-
-
-
-
-
-
160,000
-
-
-
-
10,115,403
680,012
796,400
-
2,727,273
200,000
1,363,636
15,722,724
-
160,000
15,882,724
-
-
-
-
-
-
-
-
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 31 RELATED PARTY TRANSACTIONS (CONTINUED)
(c)
Executive Securities Loans
Balance at
Notional
Notional Interest
Provision for
End of Year
Interest Charged
Not Charged
Impairment
Number of
Individuals
$000
$000
$000
$000
Opening
Balance
$000
1,661
1,734
1,705
1,473
1,473
1,477
2,552
2,656
2,487
2,437
1,029
833
807
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
914
1,661
1,734
1,705
1,473
1,473
1,477
2,552
2,656
2,487
2,437
1,029
833
(13)
1
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
2018
Balance
Effective Interest Rate Method
Brendan Foley *
Ray Larkin
Leaston Paull
Bryce Wood
Peter Tripodi *
Younis Tehfe
$
590,412
227,362
227,362
193,032
143,750
135,453
$
3,087
( 6,855)
( 6,855)
( 6,262)
-
( 6,134)
of Year
$
30,755
220,507
220,507
186,770
142,500
129,319
* Balance at year end stated at actual date to the terms of the loans
Opening
Notional Interest Charged Using
Balance at End
2017
Balance
Effective Interest Rate Method
Brendan Foley
Ray Larkin
Leaston Paull
Bryce Wood
Peter Tripodi *
Younis Tehfe
$
590,065
227,228
227,228
192,919
143,750
135,373
$
347
134
134
113
-
80
of Year
$
590,412
227,362
227,362
193,032
143,750
135,453
74
74
-
-
-
-
-
-
-
-
-
-
-
8
11
11
11
11
11
11
13
13
13
13
6
1
Highest Balance
During Period
$
590,412
227,362
227,362
193,032
143,750
135,453
Highest Balance
During Period
$
590,412
227,362
227,362
193,032
143,750
135,453
* Balance at year end stated at actual date to the terms of the loans
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 continuing, with a recovery of $1,250 in the year.
81
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 32 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
2018
$’000
Consolidated
2017
$’000
12,670
16,432
105,735
100,001
Financial Assets at amortised cost
118,405
116,433
Financial liabilities
Financial liabilities held at amortised cost
Trade and other payables
Borrowings
81,914
5,704
78,578
2,927
Financial liabilities at amortised cost
87,618
81,505
NOTE 33 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 polices and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the
objectives and policies to the Group's finance function. The Group's risk management policies and objectives are therefore designed to minimise
the potential impacts of these risks on the results of the Group where such impacts may be material. The Board receives monthly reports from the
Finance Department through which it reviews the effectiveness of the processes put in place and the objectives and policies it sets. The overall
objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility.
Further details regarding these policies are set out below.
82
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 33 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 4% of gross monetary assets at balance date. Concentration of credit risk to
any other counterparty did not exceed 7% of gross monetary assets at balance date.
The maximum exposure to credit risk at balance date is as follows:
Receivables
2018
$’000
107,170
107,170
Included in loans and receivables, the most significant customer accounts for 6.6% of trade receivables at 30 June 2018 (2017: 6.6%).
The maximum exposure to credit risk at balance date by country is as follows:
Australia
2018
$’000
107,170
107,170
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
2018
$’000
29,408
51,204
26,558
107,170
Consolidated
2017
$’000
101,291
101,291
Consolidated
2017
$’000
101,291
101,291
Consolidated
2017
$’000
35,792
41,628
23,871
101,291
The Group's most significant outstanding balance is a BSA | Build customer, accounts for $2,798,000 of trade receivables at 30 June 2018.
At 30 June 2017, the Group's most significant customer was a BSA | Build customer which accounted for $4,210,000.
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.
83
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 33 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
Debtor Finance Facility
Used at balance date:
Corporate Market Loan
Debtor Finance Facility
Unused at balance date:
Corporate Market Loan
Debtor Finance Facility
Master Asset Finance Facility *
Total facilities:
Used at balance date
Total unused Master Asset Finance Facility
Total unused Facilities at balance date
2018
$’000
20,000
12,500
32,500
-
-
-
20,000
12,500
32,500
8,000
4,961
3,039
35,539
Consolidated
2017
$’000
20,000
-
20,000
-
-
-
20,000
-
20,000
5,000
2,278
2,722
22,722
In addition to the above arrangements the consolidated entity has a bank guarantee facility of $26,500,000 (2017: $26,500,000) which was utilised
to $24,902,000 (2017: $24,028,000).
In addition to the above facilities the consolidated entity has a surety bond facility with Swiss Re International SE of $30,000,000 (2017: $30,000,000)
which was utilised to $16,341,000 (2017: $18,642,000).
Refer Note 22 and Note 28 for details of terms of financing arrangements.
* Under this facility is an allowance of $2.7m for a letter of credit facility.
84
BSA LIMITED ANNUAL REPORT 2018 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 33 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 2018
Other
Trade payables
Other payables
Finance lease and hire purchase liabilities
TOTAL
30 June 2017
Other
Trade payables
Other payables
Finance lease and hire purchase liabilities
Carrying
Contractual Cash
Amount
$’000
743
37,573
70,032
4,961
113,309
Flows
$’000
743
37,573
70,032
5,486
113,834
Carrying
Contractual Cash
Amount
$’000
649
41,771
62,922
2,278
Flows
$’000
649
41,771
62,922
2,496
< 6
mths
$’000
743
37,573
70,032
748
109,096
< 6
mths
$’000
649
41,771
62,922
562
TOTAL
107,620
107,838
105,904
6- 12
mths
$’000
-
-
-
748
748
6- 12
mths
$’000
-
-
-
562
562
1-3
years
$’000
-
-
-
3,990
3,990
1-3
years
$’000
-
-
-
1,372
1,372
> 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 2018
Trade receivables
Other receivables
TOTAL
30 June 2017
Trade receivables
Other receivables
TOTAL
Carrying
Contractual Cash
Amount
$’000
5,986
101,184
107,170
Flows
$’000
6,338
102,013
108,351
Carrying
Contractual Cash
Amount
$’000
8,026
93,265
101,291
Flows
$’000
8,186
93,070
101,256
< 6
mths
$’000
6,338
100,734
107,072
< 6
mths
$’000
8,186
91,409
99,595
6- 12
mths
$’000
-
85
85
6- 12
mths
$’000
-
119
119
1-3
years
$’000
-
-
-
1-3
years
$’000
-
-
-
> 3
years
$’000
-
1,194
1,194
> 3
years
$’000
-
1,542
1,542
85
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 33 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 2018 there were no bank borrowings.
NOTE 34 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 below :
Gearing ratios
Net (cash) / debt
Total equity
Total Gearing Ratio
2018
$’000
(6,966)
45,037
(15.47%)
Consolidated
2017
$’000
(13,505)
45,444
(29.72%)
Gearing levels were maintained at a healthy position at 30 June 2018. It is the Board's intention to monitor gearing levels going forward to ensure
flexibility. There have been no 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 35 OTHER EXPENSES
Note
2018
$’000
248
2,691
1,680
2,915
3,857
3,889
3,166
4,806
-
14,200
37,452
Consolidated
2017
$’000
471
2,709
1,182
2,124
3,242
2,716
2,423
1,569
2,500
11,369
30,305
Bad debt and debt collection expenses
Communications
Insurance
Legal
Motor vehicle expenses
Travel and entertainment
Recruitment and Training
Temporary Staff
Increase OSR Provision
Other
Total Other Expenses
86
BSA LIMITED ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 36 CONTINGENT LIABILITIES
(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 $41,242,000 (2017:$42,670,000).
(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 certain activities claimed in respect of the 2012, 2013
and 2014 years by BSA as Research and Development are not “Core R&D activities” for the purpose of the Income Tax Assessment Acts.
The section 30C internal review of the section 27J finding filed by BSA has confirmed the original findings. The matter is now being taken to the
Administrative Appeals Tribunal (AAT).
In the event that BSA is unsuccessful in challenging the finding through appropriate mechanisms, the Company may be denied tax credits
previously claimed totalling approximately $2m (tax effected) of tax relating to prior year's 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
(iiI) Following the settlement of the NSW OSR issue, BSA is currently working with other State Revenue Authorities on outstanding matters. In
relation to these discussions, BSA has made provisions at 30 June 2018 based on current available information.
NOTE 37 CORPORATE INFORMATION
The Financial Report of BSA Limited for the year ended 30 June 2018 was authorised for issue in accordance with a resolution of the Directors on
29 August 2018 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 Securities Exchange.
The Financial Report is presented in Australian currency.
The address of the registered office and principal place of business is:
Level 7, 3 Thomas Holt Drive
Macquarie Park NSW 2113
87
BSA LIMITED ANNUAL REPORT 2018
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2018
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 17 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.
On behalf of the Directors.
Michael Givoni
Chairman
Sydney
29 August 2018
88
BSA LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of BSA Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of BSA Limited (the “Company”) and its subsidiaries (the
“Group”), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company, would be in the same terms if given to the directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
89
89
BSA LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Key Audit Matter
How the scope of our audit responded to
the Key Audit Matter
Recognition of revenue related to construction
contracts
Our procedures included, but were not limited
to:
Refer to Note 3.8 ‘Construction contracts and
work in progress’, Note 4 ’Critical accounting
judgements and key sources of estimation
uncertainty’, Note 5 ‘Revenue’, and Note 27
‘Segment Information’.
Included in the Group’s consolidated statement
of profit or loss and other comprehensive
income for the year ended 30 June 2018 is
revenue relating to construction contracts of
$335.2 million.
The Group's primary source of revenue is from
construction projects. Revenue is derived from
a number of contracts and recognised based on
the stage of completion of each contract. Stage
of completion of the construction work is
determined with reference
the work
completed,
i.e. the percentage of work
performed up to the reporting date with
respect to the total anticipated contract work
to be performed.
to
Evaluating management’s processes and
controls in respect of the recognition of
contract revenue, including;
-
-
obtaining an understanding of the key
controls in particular the estimation
and review of costs to complete; and
are
the
undertaken by Group management on
a monthly basis.
reviews
project
that
Attending a sample of project review
meetings to enhance our understanding of
the Group’s contracting processes, the
consistency of their application, and to
discuss directly with project management
the key risks and opportunities in relation to
individual contracts;
Selecting a sample of contracts for testing
using a combination of quantitative and
qualitative factors which may indicate that a
greater level of judgement is required in
recognising revenue;
The recognition of revenue is dependent on the
following key factors:
determination of stage of completion;
estimation of total contract revenue and
contract cost including the estimation of
cost contingencies;
determination of contractual entitlement
and assessment of the probability of
customer approval of variations and
acceptance of claims; and
estimation of project completion date.
For the sample of contracts selected the
procedures included:
-
-
-
-
-
the
documentation
forecast costs
obtaining an understanding of the
contract terms and conditions and
inspecting signed contracts to evaluate
whether contract terms were reflected
in management’s estimate of forecast
costs and revenue;
challenging
to
complete, as well as inspection of
supporting
for
contracted costs;
testing on a sample basis contractual
entitlement, variations and claims
recognised in contract revenue;
for loss making contracts, recalculating
the expected loss at completion and
verifying that the entire loss was
recorded; and
basis
evaluating
liquidated
significant exposures
damages for late delivery of contract
works.
sample
on
to
a
Assessing
the appropriateness of
the
disclosures in the consolidated financial
statements.
90
90
BSA LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Collectability of trade receivables and amounts
due
from customers under construction
contracts
Our procedures included, but were not limited
to:
Refer to Note 32 ‘Financial Instruments’ and
Note 12 ‘Trade and other receivables’ and Note
19 ‘Amounts due from (to) customers under
construction contracts’.
Included in the Group’s consolidated statement
of financial position as at 30 June 2018 is
amounts
under
construction contracts of $56.3 million.
customers
from
due
The Group recognises amounts due from
customers under construction contracts in
respect of the progressive valuation of work
completed as well as trade receivables which
represent amounts invoiced to customers.
Credit
trade
risk and collectability of
receivables are subject to estimation and
judgement and are required to be monitored
by management on an ongoing basis.
due
from
customers
Amounts
under
construction contracts (or work in progress)
are amounts due to the Group from customers
that have not been invoiced. Some of these
project receivables are made up of claims and
variations, both approved and not approved by
the customer. Management assesses the
likelihood of recovery prior to recognising the
amount due from the customer.
Evaluating management’s processes and
controls in respect of the collectability of
trade receivables and amounts due from
customers under construction contracts;
Assessing the completeness and accuracy of
the aged debtor and work in progress
reports at year end and on a sample basis
where applicable agreeing to the subsequent
receipt of cash;
the probability of
For the trade receivable balances that were
not collected prior to the issue of the
financial statements, evaluating on a sample
basis
recovery of
outstanding amounts by reference to the
negotiations,
status
contract
of
correspondence with
customers,
external and internal legal advice and
historical
documentation,
supporting
supporting
and
recoveries
documentation;
other
the
Testing on a sample basis that unbilled work
in progress amounts at year end were
subsequently billed to the customer;
challenging
For the work in progress amounts that were
not billed to the customer by the end of our
audit,
management’s
assessment of the recoverability of these
amounts via
inquiry of management,
inspection of internal and external legal
advice, or inspection of subsequent billing
approved by the client; and
Assessing
the appropriateness of
the
disclosures in the consolidated financial
statements.
91
91
BSA LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Litigation and claims
Our procedures included, but were not limited
to:
Refer to Note 23 ‘Provisions’ and Note 36
‘Contingent Liabilities’.
Included in the Group’s consolidated statement
of financial position at 30 June 2018 is
provisions related to litigation and claims of
$5.4 million.
The Group is party to legal proceedings
brought by third parties as a result of normal
business operations. Management have
assessed each of these legal matters and
determined, with the assistance of external
legal counsel where relevant, whether there is
a requirement
for expected
to provide
exposures or disclose a contingent liability in
the consolidated financial report.
Evaluating management’s processes and
controls to assess the likely financial impact
of legal proceedings;
Obtaining the Group’s litigation reports and
making enquiries about the status of
litigation matters with Group management
and external legal advisors;
Reviewing minutes of meetings of those
charged with governance to identify their
legal proceedings as
consideration of
relevant and correspondence between the
Group and its external legal advisors;
Assessing management’s determination of
for potential
recorded
the provisions
litigation losses; and
Assessing
the appropriateness of
the
disclosures in the consolidated financial
statements.
Recoverability of goodwill
In conjunction with valuation experts, our
procedures included, but were not limited to:
Refer to Note 4 ’Critical accounting judgements
and key sources of estimation uncertainty’ and
Note 15 ‘Non-current assets – goodwill’.
Included in the Group’s consolidated statement
of financial position at 30 June 2018 is goodwill
relating to BSA | Build of $15.2 million.
Management has assessed the recoverable
amount of the goodwill relating to BSA | Build
utilising discounted cash flow models which
incorporate significant judgement in respect of
assumptions such as discount rates and future
contract wins, as well as economic
assumptions such as growth rates.
Evaluating the discounted cash flow model
developed by management to assess the
recoverable amount of the goodwill, including
critically
following
assumptions:
-
-
flows and capital
assessing
the
discount rate;
forecasted cash
expenditure;
growth rates; and
terminal growth rate.
-
-
Evaluating market related assumptions in
respect of the discount rate by reference to
external data;
Testing on a sample basis the mathematical
accuracy of the cash flow model;
Reviewing the budget approved by senior
management and the Board;
Assessing
the historical
of
forecasting of the Group in relation to cash
flows of cash generating units;
accuracy
Performing sensitivity analysis on a number
of assumptions, including discount rate and
forecast profitability; and
Assessing the appropriateness of the relevant
financial
in the consolidated
disclosures
statements.
92
92
BSA LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2018, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
intentional omissions,
involve collusion,
fraud may
from error, as
misrepresentations, or the override of internal control.
forgery,
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
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BSA LIMITED ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group audit. We
remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 17 to 24 of the Directors’ Report for
the year ended 30 June 2018.
In our opinion, the Remuneration Report of BSA Limited, for the year ended 30 June 2018, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
AG Collinson
Partner
Chartered Accountants
Sydney, 29 August 2018
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BSA LIMITED ANNUAL REPORT 2018
BSA | Build Plenty Valley - The chilled water and heating hot water plantroom for the
redevelopment consists of 1200kw of cooling capacity and 400kw of heating output.
95
BSA LIMITED ANNUAL REPORT 2018 SHAREHOLDER INFORMATION
THE SHAREHOLDER INFORMATION SET OUT BELOW WAS APPLICABLE AS AT 31 JULY 2018
A. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and above
Number of
Holders
177
519
283
801
220
Ordinary
Shares
67,072
1,637,178
2,231,401
35,206,557
383,855,460
2,000
422,997,668
Number of
Holders
Options
of Holders
Rights
Number
Performance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
3
4
-
-
-
-
-
-
50,000
1,842,753
1,892,753
There were 254 (2017: 194) 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
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
BIRKETU PTY LTD
SANDHURST TRUSTEES LTD
HGT INVESTMENTS PTY LTD
SAMLOWE PTY LTD
MR GREG MULLANE
FF OKRAM PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
EMELWIN PTY LTD
EDINGTON PTY LIMITED
TALOOMBI PTY LTD
CTSF PTY LTD
MR NICHOLAS JOHN BENSON
BNP PARIBAS NOMINEES PTY LTD
MISS YAN LI
VANWARD INVESTMENTS LIMITED
MR RICHARD EWAN BROMLEY MEWS
MR GRAEME LESLIE HERRING + MRS JOAN HERRING
MS SUE ELIZABETH MCGREGOR
Top 20 Shareholders
96
Ordinary Shares
Number
Percentage
Held
of Issued
108,109,686
80,368,559
72,000,000
15,694,540
14,870,544
10,115,403
7,548,743
6,021,401
5,771,734
2,854,760
1,769,376
1,721,257
1,675,945
1,453,958
1,407,418
1,200,000
1,194,807
1,162,949
1,090,656
1,000,000
337,031,736
25.56%
19.00%
17.02%
3.71%
3.52%
2.39%
1.78%
1.42%
1.36%
0.67%
0.42%
0.41%
0.40%
0.34%
0.33%
0.28%
0.28%
0.27%
0.26%
0.24%
79.66%
BSA LIMITED ANNUAL REPORT 2018 SHAREHOLDER INFORMATION
THE SHAREHOLDER INFORMATION SET OUT BELOW WAS APPLICABLE AS AT 31 JULY 2018
C. SUBSTANTIAL SHAREHOLDERS
Substantial shareholders in the Company are set out below:
Ordinary Shares
THE TRUST COMPANY LIMITED
NAOS ASSET MANAGEMENT LIMITED
BIRKETU PTY LTD
D. VOTING RIGHTS
Number Held
Percentage
87,382,061
74,127,210
72,000,000
20.66%
17.52%
17.02%
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.
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BSA LIMITED ANNUAL REPORT 2018 CORPORATE DIRECTORY
BSA Limited - Corporate
BSA | Build
Registered Office (Sydney)
Level 7, 3 Thomas Holt Drive
Macquarie Park NSW 2113
P
F
E
W
+61 2 8748 2400
+61 2 8748 2577
corporate@bsa.com.au
www.bsa.com.au
Head Office (Sydney)
Level 7, 3 Thomas Holt Drive
Macquarie Park NSW 2113
P
F
+61 2 9763 6200
+61 2 9763 6201
BSA | Connect
Head Office (Sydney)
Level 7, 3 Thomas Holt Drive
Macquarie Park NSW 2113
P
F
+61 2 8748 2400
+61 2 8748 2577
BSA | Maintain
Head Office (Sydney)
Level 7, 3 Thomas Holt Drive
Macquarie Park NSW 2113
P
F
+61 2 9763 6200
+61 2 9763 6201
Share Registry
Computershare Investor Services
GPO Box 2975
Melbourne VIC 3001 Australia
P
P
F
1300 85 05 05
+61 3 9415 4000
+61 3 9473 2500
Auditor
Deloitte Touche Tohmatsu
225 George Street
Sydney NSW 2000
Banker
National Australia Bank
255 George Street
Sydney NSW 2000
www.bsa.com.au
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BSA LIMITED ANNUAL REPORT 2018