APPENDIX 4E
Results for Announcement to
the Market and Annual Report
2020
BSA Limited
50 088 412 748
FOR THE YEAR ENDED 30 JUNE 2020
CONTENTS
- APPENDIX 4E
- ANNUAL REPORT
RESULTS FOR ANNOUNCEMENT TO THE MARKET
FOR THE PERIOD ENDED 30 JUNE 2020
PREVIOUS CORRESPONDING PERIOD 30 JUNE 2019
APPENDIX 4E
Revenue from ordinary activities
Up
3.5%
Profit from ordinary activities after income tax attributable to members
Down
27.5%
Net loss for the period attributable to members
Down
(658.1%)
to
to
to
$’000
486,107
7,802
(960)
2019
cents
2.523
2.511
3.42
2020
cents
1.811
1.805
1.36
Franked amount per
Amount per security
security at 30% tax
(cents)
(cents)
0.50
0.50
0.50
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
2 October 2020
Payment date of dividend
Total dividend payable
None of this dividend is foreign sourced.
3 November 2020
$2,163,000
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.
The last date for the receipt of an election notice for participation in the DRP is 16 October 2020.
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 consolidated financial statements.
BSA LIMITED RESULTS FOR ANNOUNCEMENT TO THE MARKET
BSA Limited
Annual Report
2020
2
BSA LIMITED ANNUAL REPORT 2020 CONTENTS
Chairman’s Report - 4
CEO Report - 6
Directors’ Report - 12
Remuneration Report - 15
Auditor’s Independence Declaration - 25
Financial Report - 26
Directors’ Declaration - 78
Independent Auditor’s Report - 79
Shareholder Information - 85
Corporate Directory - 88
Cover image: Architect’s impression of Wynyard Place, Sydney – George Street view courtesy of Multiplex Global.
BSA LIMITED ANNUAL REPORT 2020
3
CHAIRMAN’S
REPORT
Michael Givoni
Chairman
Firstly, I would like to acknowledge the unprecedented events of 2020 with the
ongoing impacts of the COVID-19 pandemic. As a result, we are all experiencing
significant adjustments in our daily lives. At BSA Limited, support for all of our
stakeholders (workforce, customers, suppliers, subcontractors and shareholders),
proactive risk management and adapting to changing business needs has been an
overriding priority. I would like to thank the Executive Leadership Team for their
dedication in providing and maintaining a safe working environment, rising to the
challenges faced from COVID-19 and remaining operational throughout.
BSA simplified its organisational structure during FY2020 to align the business in
terms of clients and capability. BSA | Maintain and BSA | Build | Fire were integrated
into BSA | Advanced Property Solutions (“APS”) and BSA | Connect repositioned
to BSA | Communication & Utility Infrastructure (“CUI”) to better reflect the
broadening of our service offering to our preferred markets.
On 13 August 2019 the BSA | Build | HVAC Major Projects was divested to Fredon
Air Pty Ltd and during the second half of the year all residual steps in the
transaction were concluded.
Beginning in September 2019, a review of BSA’s financing facilities was undertaken
as a result of operational changes associated with the divestment. On 1 May 2020,
BSA successfully refinanced its bank lending facilities, for three years, with the
Commonwealth Bank of Australia (CBA) on improved terms. We look forward to
forging a strong and prosperous relationship with CBA in the years ahead and
believe the new facilities position the business well for future growth.
In April 2020, faced with the challenging circumstances associated with COVID-19,
the Directors of BSA Limited provided the market with a trading update, announcing
the business was achieving internal forecasts and continued to tender for significant
volumes of new work. Due to the significant level of uncertainty prevailing at that
time, the Board felt it prudent to retract guidance and delay the payment of the
dividend until greater stability returned to the market.
On 16 June 2020, we announced that we would bring forward the previously
deferred payment of the FY2020 interim dividend to early July 2020 and confirmed
EBITDA guidance of $21m - $23m.
Pleasingly the end of financial year results show that we have achieved the higher
end of our revised guidance with strong cash backing and a solid balance sheet.
2020 KEY
HIGHLIGHTS*
$490.4
million
Revenue
$23.0
million
EBITDA
$7.8
million
Net Profit
* from Continuing Operations (refer page 11)
4
BSA LIMITED ANNUAL REPORT 2020 NorthConnex Tunnel Construction 90 metres below the surface.
BSA has installed over 18 kilometres of sprinkler deluge once
excavation was completed. - courtesy of NorthConnex.
High-level financial results are:
Revenue
EBITDA (continuing)
NPAT (continuing)
FY2020
$’000
FY2019
$’000
$490.4 million
$469.8 million
$23.0 million
$21.8 million
$7.8 million
$10.8 million
Operating cash inflow
$31.3 million
$18.3 million
Basic earnings per share of
1.81 cents
2.52 cents
Net cash
$32.7 million
$16.3 million
The Managing Director’s report outlines these results in more detail.
strong growth targets. We have confidence in the talent that has been
brought into the organisation, and more importantly their capacity to
execute on these plans.
On 2 September 2019, we welcomed Chris Halios-Lewis as a new
Non-Executive Director. Chris is currently Chief Financial Officer of the
WIN Group and brings significant experience in strategy, finance and
acquisitions to the BSA Board.
Graeme Barclay announced his retirement from the BSA Board and
stepped down on 16 December 2019. Graeme spent over four years on
the BSA Limited Board during which time he generously contributed
his depth of knowledge and experience. I thank Graeme for his
support throughout his tenure with BSA Limited and wish him well for
Key management and board changes in FY2020 include the
the future.
following:
Nicholas Yates retired from the position of Chief Executive Officer
the Executive Leadership Team for their continued support and
of BSA Limited on 9 March 2020, a role Nicholas held since 13 March
resilience in a challenging year. I also thank all BSA staff for their
2014. Nicholas has moved into a Non-Executive Director role with the
efforts and sacrifice, both personal and professional, in these
company and I thank Nicholas for his ongoing commitment, counsel
extraordinary times.
Finally, I would like to acknowledge my fellow Directors and
and leadership.
On 9 March this year, Tim Harris commenced his role as Chief
Executive Officer having previously been Deputy Chief Executive
Officer and Chief Operating Officer within the company. Arno
Becker was promoted to Chief Financial Officer at the same time.
The executive transition has been handled professionally. The new
Michael Givoni
Chairman
leadership team has already built a detailed three year strategy with
24 August 2020
5
BSA LIMITED ANNUAL REPORT 2020 MANAGING DIRECTOR’S REPORT
CEO
REPORT
Tim Harris
Managing Director and
Chief Executive Officer
OPERATIONAL AND FINANCIAL RESILIENCE
Amidst the backdrop of the COVID-19 pandemic, BSA has shown
resilience and tenacity in its core businesses, continuing to generate
annuity-like cash-backed profits and solid returns to shareholders.
Group revenue from continuing operations has increased 4.4% to
The division was only marginally impacted by COVID-19 as most of the
clients operate in essential services.
Advanced Property Solutions (APS) finalised the divestment in
BSA | Build | HVAC Major projects during the financial year in line with
our stated strategy. BSA | APS, specifically in maintenance services, was
impacted due to curtailed client spend on discretionary work, restricted
site access and enforced workplace shutdowns. Our construction related
operations were not impacted heavily and the pipeline of new work
remains strong, although timing of specific project commencements
remains uncertain.
As a group we continue to monitor government related stimulus and
capital expenditure as we look to FY2021.
WORKFORCE SAFETY
$490.4 million (2019: $469.8 million) with EBITDA 5.5% higher to
The safety of our people is squarely at the forefront of our priorities.
$23.0 million while net profit declined to $7.8 million (2019: $10.8
This was demonstrated through the effectiveness and efficiency of our
million). Operating cash inflow before interest and tax remained
response to COVID-19.
strong at $18.3m (excluding deferral measures) (2019: $19.1 million)
with Net Cash at year-end of $32.7 million strengthened by deferral
measures made available by government agencies to navigate
near-term uncertainty. Given the circumstances we are pleased with
how we closed out the year and look forward to getting started with
FY2021 delivery.
“Achieving sound financial results amidst the
unprecedented challenges brought by COVID-19,
FY2020 has shown us all the resilience and
strength of the BSA Group.”
Communications and Utility Infrastructure (CUI) continues to perform
and again has had a record year due to strong performances across all
of its major platforms.
6
In very short order, COVID-19 response plans were established and
disseminated across all locations with the majority of office based
personnel enabled to work from home in a matter of days. As the pandemic
evolves, we will continue to innovate and adapt to ensure a safe return
to the workplace in line with public health orders across the states and
territories. As a company, I am immensely proud of how we reacted, stood
together and supported each other through these unprecedented times
that have impacted many aspects of our personal and professional lives.
On operational safety we successfully undertook a number of initiatives
during the year centred on the pillars of:
• Systems
• Risk Management (Critical Risk Control)
• HSE Capability
• Health and Wellbeing.
BSA LIMITED ANNUAL REPORT 2020 CEO REPORT
During the year our technology team rolled out a world class field service
management solution in BSA | CUI. The technology supports a more
streamlined process, increased efficiency, scalability and improved end-
customer experience. BSA | APS will migrate to the same platform which
will underpin one of our key strategic objectives for FY2021 of data driven
asset management.
COMMUNITY SUPPORT
BSA Group continued to support a number of charities during the year
which include sizeable donations to the Australian Red Cross, NSW Rural
Fire Service and NSW WIRES. We have also supported the Australian
Bushfire Appeal following the devastating effects experienced across
Australia during the summer.
In conjunction with nbn we also supported National Reconciliation
week from 27 May 2020 to 3 June 2020.
DIVERSITY
BSA supports and recognises the importance of a workplace culture
that values diversity and inclusion. We are committed to a workforce
that reflects the membership of the communities in which it operates:
this includes reflecting gender diversity as well as individual gender
Architect’s impression of Wynyard
Place, Sydney – George Street
view courtesy of Multiplex Global.
These pillars form the cornerstone for Safety at BSA and have been
identity, sexual orientation, age, ethnicity, marital or family status,
integrated in our safety protocols. Australia Stop for Safety month in
religious beliefs, political beliefs, cultural background, socio-economic
October initiated a refresh of our “BSA Absolutes” and we also launched
status, perspectives, experience and education. By aspiring to reflect
our Stop Work Authority. Our long term performance of frequency rates
the diversity of the broader community, BSA recognises the benefits
continue to trend down for both Lost Time Injuries (LTIFR) and Total
that diversity brings to the organisation. We believe that a diverse
Recordable Injuries (TRIFR). LTIFR and TRIFR moved from 1.98 to 1.58
and inclusive workforce enables us to:
and 9.01 to 7.12 respectively.
• provide our clients with innovative and flexible solutions;
The key focus throughout FY2021 is to further integrate the BSA
• create a culture of continuous improvement; and
Safety Absolutes throughout our business which will be measured
• commit to doing the right thing above and beyond basic compliance.
through a critical control program.
BSA maintained accreditations to Office of Federal Safety
Commissioner (OFSC) and management system accreditations for
Quality (AS/NZS: 9001), Environment (ISO: 14001) and Health & Safety
(AS/NZS: 4801). A particular focus for the coming year will be the
transition to the International Standard for Health and Safety, ISO
45001 accreditation.
GROWTH
With the divestment in BSA | Build | HVAC Major Projects finalised
BSA turned its focus to extending current opportunities and targeting
complimentary markets. Organically we have continued to successfully
The company Diversity & Inclusion Policy has recently been reviewed to
take our commitment to creating a diverse and inclusive workplace a
step further. This will be achieved through four key approaches:
•
creating a workplace culture that embraces and respects diversity
and inclusion;
• addressing gender diversity in all areas of the organisation;
•
improving overall diversity in hiring; and
• committing to a series of transparent checks and balances.
Progress against the commitments that underpin these approaches will
be monitored by the CEO and the Board.
identify and secure new work and we are confident that our services will
Below is summary of our current workforce gender diversity
be in high demand once more certainty returns to the economy.
participation and targets currently established:
We are also targeting inorganic growth through potential strategic
acquisitions allowing us to enter complementary markets whilst
expanding our overall capability.
Our geographical footprint is viewed as a key competitive advantage and
we continue to expand into regional and remote Australia.
Group
Board
Executive Leadership Team
Current
Target March 2022
Female
Male
Female
0%
33%
100%
67%
14%
33%
Male
86%
67%
Business development continues to evolve to ensure that we pre-empt
client needs. Our core services offering of partnering with our clients
to offer end-to-end asset lifecycle solutions has not changed and we
The Company is a “relevant employer” under the Workplace Gender
Equality Act and company’s most recent “Gender Equality Indicators”,
as defined in and published under that Act are available on the
continue to refine and enhance our capabilities.
Company’s website.
7
BSA LIMITED ANNUAL REPORT 2020 CEO REPORT
BSA technician running
cable for Foxtel satellite dish
installation. Image courtesy
of BSA Limited.
COMMUNICATIONS & UTILITY
INFRASTRUCTURE (CUI)
BSA | Communications & Utility Infrastructure again achieved a record
year in terms of revenue and profit despite some COVID-19 impacts
Softness in the subscription television market continues as access to faster
broadband to support streaming services continues to improve and more
in Q4 FY2020 with more than 1 million tickets of work successfully
streaming competitors enter the market. As a result of these trends,
completed. The business achieved a revenue uplift of 8.5%, which
revenue generated from our long-standing Foxtel contract declined by
combined with the successful implementation of cost optimisation
22.4%. BSA has successfully been selected as Foxtel’s preferred single
programs delivered an EBITDA of $21.0 million, representing a $1.7
vendor partner for an initial 3 year term which will increase our national
million or 8.8% increase on the prior year.
geographic coverage from 50% to 100% once transition is complete in
BSA | CUI completed construction under the nbn Multi-technology
Integrated Master Agreement (MIMA), resulting in the reduction of year-
on-year revenue of $8.6 million. This revenue shortfall was more than
offset by a strong increase in activity under the nbn Operate and Maintain
1H FY2021. As part of this transition we will be working with the client
to implement a transformational future delivery methodology which
builds upon the current best-of-breed delivery model to drive further
improvements in operational delivery as well as cost efficiency.
(OMMA) contract, with revenue growth of $39.8 million (25.9%). This
growth was due to the business’s ability to rapidly mobilise a significant
BSA | CUI achieved significant revenue growth within the “smart”
electricity metering field services business throughout FY2020, increasing
increase in its technical workforce to successfully meet the nbn peak
revenue to $7.6 million (51% increase). It has now truly established itself in
connection requirements for the Hybrid Fibre Coax (HFC) and the Fibre
this market which will continue to grow through FY2021.
to the Curb (FTTC) rollout. This process was assisted by BSA’s strategic
investment in building an internal network workforce which completed
numerous network maintenance projects in the year.
As a key pillar of its People, Process and Systems strategy, BSA | CUI has
further capitalised on its significant investment in a world-class field service
management solution which has enabled the delivery of significantly more
BSA | CUI signed a 5 year renewal deal of the Optus Consumer contract
with revenue from this contract declining by 9.8% as a result of the
streamlined, scalable and efficient services and a greatly improved end-
customer experience. This has been progressively rolled out throughout
migration of Optus HFC broadband customers over to the nbn platform.
FY2020 and will provide BSA with the platform for future growth.
8
BSA LIMITED ANNUAL REPORT 2020 CEO REPORT
KEY AREAS OF FOCUS FOR FY2021 INCLUDE:
• Continue current operational performance on existing core
contracts, adapting to client needs as markets and industries
evolve;
• Expansion into the wireless market;
• Continue to attract & retain a highly-skilled technical workforce to
provide BSA with a key competitive advantage and become the
Employer of Choice;
• Continue to invest in our market leading Customer Experience
Program;
• Capitalize on our leading edge technology implemented during
FY2020; and
• Review complimentary strategic acquisition targets.
BSA Technician
providing services to nbn
communications infrastructure.
Image courtesy of BSA Limited
BSA | CUI
$272.9 million
Revenue
[FY2019: $251.5 million]
$21.0 million *
EBITDA
[FY2019: $19.3 million]
* Excludes Corporate Recharges
BSA LIMITED ANNUAL REPORT 2019
BSA LIMITED ANNUAL REPORT 2020
9
9
BSA LIMITED ANNUAL REPORT 2020 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. Image
courtesy of NorthConnex
BSA | APS
$217.5
million
$8.6
million
Revenue
[FY2019: $218.3 million]
10
EBITDA
[FY2019: $9.5 million]
BSA LIMITED ANNUAL REPORT 2020 CEO REPORT
ADVANCED PROPERTY
SOLUTIONS (APS)
In FY2020, BSA | Build | Fire and BSA | Maintain were consolidated
into a single business and rebranded as BSA | Advanced Property
Solutions. This included recruiting an Executive General Manager with
deep industry experience and a track record of profitable growth.
We have restructured our management team to support provision of
We have successfully completed various projects, including the
following:
• NorthConnex Tunnel, Fire Suppression and HVAC Mechanical
• Grafton Correctional Facility, Fire Suppression
complete multi-services of all building systems, enabling us to become
The success of these projects and the new work won has solidified BSA
as a tier 1 provider for Fire Systems across infrastructure and complex
facilities in NSW and Qld and established BSA | APS as a true multi-
service provider nationally.
Tim Harris
Managing Director and
Chief Executive Officer
24 August 2020
DISCLOSING NON-IFRS FINANCIAL INFORMATION
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA)*
FY2020
$’000
7,802
3,055
1,762
(6)
6,891
3,484
22,988
2,892
25,880
FY2019
$’000
10,764
4,033
819
(11)
5,515
674
21,794
2,818
24,612
Profit for the year from continuing
operations
Add back
Income tax expense
Finance costs
Interest revenue
Depreciation expense
Amortisation expense
EBITDA
Total Significant Items (note 6.4)
EBITDA excluding Significant Items
* From continuing operations.
our customers’ trusted business partner for service of all hard assets on
their properties.
BSA | APS full year revenue decreased by ($0.8m) and EBITDA by
($0.9m), a decline of (9.5%). This decrease in revenue and profitability
was the result of the combination of investment in our geographic
expansion strategy for future growth, and the second half being
impacted by the COVID-19 pandemic, primarily in our maintenance
services of the retail and tertiary education sectors.
Looking forward, FY2021 will see a major investment in data driven
asset management, enabled through a world class technology platform.
This platform will allow BSA | APS to provide services to our customers
which reduce their overall costs, while at the same time increasing
uptime and reducing reactive service requirements.
Our Fire construction business continues to perform, including being
awarded the WestConnex Fire suppression systems on 12 November
2019. This marks the second major infrastructure project secured as we
establish ourselves as market leaders in this field. Our success in securing
this contract was made possible through our people, innovative design,
prefabrication principles, and track record of quality, on-time delivery.
Key new clients and projects for the year also include:
NEW CONSTRUCTIONS
• Westconnex Link 3A (M4-M5 Link), New Build - Fire Systems (NSW)
• Gold Coast Airport, New Build - Fire Systems (QLD)
• Estia Health, Energy Solutions (Australia wide)
• 50 Martin Place, New Build - Fire Suppression (NSW)
• Sydney Football Stadium, New Build - Fire Suppression (NSW)
• 80 Anne Street, New Build - Fire Suppression (QLD)
SERVICE CONTRACTS AND PROJECTS
• HMAS Cerberus, Barpa, Mechanical Upgrade (VIC)
• Health WA North and South Metropolitan, Fire Service (WA)
• Melbourne Convention Centre, HVAC Service (VIC)
• Think Commercial, Multi Service (QLD)
• Aldi Supermarket National Contract for Multi-Service provision
(Australia wide)
• 7-Eleven National Contract, Multi Service (Australia wide)
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 2020.
THE BOARD OF DIRECTORS AS AT 30 JUNE 2020
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
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.
held senior executive roles in listed companies including Spotless
He is a Non-Executive Director and Audit Committee Chairman of
Group Ltd. Prior to his executive career, Michael was a partner in a
Drake Supermarkets Pty Ltd and is a Non-Executive board member of
prominent Melbourne legal practice. Michael joined BSA as a Non-
Flinders Foundation Inc and a member of its Audit Committee. Paul
Executive Director on 23 March 2005 and was appointed as Chairman
was appointed as a Non-Executive Director on 23 March 2005 and is
from 29 April 2015. He holds a number of other Non-Executive
currently Chair of the Audit Committee.
Director and Chair roles in significant privately owned businesses
including Winslow Group, RSEA, First5Minutes and Buzz Products.
TIMOTHY HARRIS
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
Mr Harris has been with the company for over 3
years and has driven a program of operational
NICHOLAS YATES
NON-EXECUTIVE DIRECTOR
Mr Yates graduated with a Bachelor of
Engineering (Mechanical) from the University
of Sydney and went on to forge an extensive
career in the building services and facilities
management industries. Commencing as a site
excellence leading to steady increases in
engineer overseeing mechanical services installations, Nicholas then
margin, improving working capital performance
progressed through various management roles within Lend Lease and
and customer satisfaction. Tim has also built a strong leadership team
eventually moved on to become CEO of APP Corporation Pty Limited,
across both operations and support areas that has set a platform for
Australia’s leading Construction Project Management consulting
long term sustainable growth. Tim has over 25 years experience in senior
business. When APP was acquired by Transfield Services, Mr Yates
operational and finance roles both domestically and internationally. Prior
moved into a series of leadership roles within Transfield Services, most
to joining BSA, Tim was CFO of CPB (previously Leighton Contractors)
recently Chief Executive Officer, Infrastructure ANZ. Nicholas sits on the
and before that held senior executive roles at Westfield, Brookfield and
Boards of a number of private companies. He was appointed Managing
Transfield Services. Tim was appointed as Managing Director and Chief
Director and Chief Executive Officer of BSA Limited on 13 March 2014
Executive Officer on 9 March 2020.
and retired from that position on 9 March 2020. Nicholas remains on the
Board as a Non-Executive Director.
MARK LOWE
NON-EXECUTIVE DIRECTOR
Mr Lowe was appointed as a Director of
BSA on 1 August 2007 upon completion
of the acquisition of the Triple ‘M’ Group.
Mark brings a wealth of knowledge to the
Company from his 30 years’ experience in the
installation and maintenance of Air-Conditioning and Fire Protection
Services. He is a former Director of Construction Information
Systems Limited (NATSPEC) and a former National President of the
Air-Conditioning Mechanical Contractors Association of Australia.
Following his retirement from executive duties Mark was appointed a
Non-Executive Director on 2 March 2012 and is currently Chair of the
Remuneration Committee.
12
DAVID PRESCOTT
NON-EXECUTIVE DIRECTOR
Mr Prescott is the founder and Managing
Director of Lanyon Asset Management,
a value-oriented equities fund manager. He
has over 20 years investing and financial
analysis experience working for firms in Australia and the UK. Mr Prescott
was previously Head of Equities at institutional fund manager, CP2
(formerly Capital Partners). Mr Prescott has an Economics degree from
the University of Adelaide, a Graduate Diploma in Applied Finance and
Investment from the Securities Institute of Australia (FINSIA) and is a CFA
Charterholder. Mr Prescott was appointed as a Non-Executive Director on
3 June 2019.
BSA LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT
CHRISTOPHER HALIOS-LEWIS
NON-EXECUTIVE DIRECTOR
Mr Halios-Lewis has over 20 years accounting
and financial experience in auditing, public
practice and industry. He is currently Chief
Financial Officer and member of the Executive
team of the WIN Group and Birketu Pty Ltd
and has also held the positions of Group Financial Accountant, Finance
Manager and Financial Controller during ten years with WIN. Chris is
heavily involved with strategy, business development and acquisitions
and is Company Secretary for all WIN and Birketu companies, Illawarra
Community Foundation and a number of Joint Ventures with Prime Media.
Chris is currently an alternate director for MediaHub Pty Ltd, a joint venture
Financial Accountant at ASX listed Goodman Group. He graduated with a
Bachelor of Science Accounting degree with honours from University of
Wales, College, Cardiff in 1996 and having joined the audit team of Deloitte
in 1999, gained ACCA qualification in 2002. Mr Halios-Lewis was appointed
as a Non-Executive Director on 2 September 2019.
GRAEME BARCLAY
NON-EXECUTIVE DIRECTOR (RETIRED)
Mr Barclay successfully led all aspects of a
major telecommunications group for more
than a decade in the role of Group CEO with
responsibility for financial performance, strategy,
sales, corporate development, international
with ABC, a member of the Finance Committee of Free TV and director of
expansion, operations and capital structure. Graeme was appointed as a
Wollongong Wolves Football Club. Before joining WIN, Chris was Group
Non-Executive Director on 30 June 2015, and retired on 16 December 2019.
DIRECTOR INDEPENDENCE
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Board considers three of BSA’s Directors independent, as defined
BSA was not subject to any particular or significant environmental
under the guidelines of the ASX Corporate Governance Council, being:
regulations of the Commonwealth, individual states, or territories,
Michael Givoni, Paul Teisseire, and Mark Lowe.
during the financial year.
In assessing the independence of Directors, the Board follows the ASX
guidelines as set out in the Corporate Governance Statement on the
CORPORATE GOVERNANCE
Company’s website.
PERFORMANCE OF DIRECTORS
In accordance with Principle 1.6 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
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
each year. The evaluation of Directors is carried out in accordance
REVIEW OF OPERATIONS
with the process established by the Board, led by the Chairman of the
Remuneration Committee.
COMPANY SECRETARY
The following person held the position of Company Secretary at the
end of the financial year:
Mr Graham Seppelt - Mr Seppelt has had extensive experience as a
contract accountant and in corporate advisory roles. He is currently
Company Secretary for Erinbar Limited.
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 11.
13
BSA LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
As at 30 June 2020, the following information is provided in relation to Directors:
Director
Special Responsibilities
Ordinary Shares
Options
Share Rights
Michael Givoni
Non-Executive Director
Chairman of Board
Member of Remuneration Committee
Member of Audit Committee
Timothy Harris
1,461,828
Nil
Nil
Executive Director and Chief Executive Officer
375,391
Nil
671,056
Paul Teisseire
Non-Executive Director
Member of Remuneration Committee
Chairman of Audit Committee
Mark Lowe
Non-Executive Director
Chairman of Remuneration Committee
Member of Audit Committee
Nicholas Yates
Non-Executive Director
Member of Remuneration Committee
Member of Audit Committee
David Prescott
Non-Executive Director
Member of Remuneration Committee
Member of Audit Committee
Christopher Halios-Lewis
Non-Executive Director
Member of Remuneration Committee
Member of Audit Committee
680,012
Nil
Nil
10,315,403
Nil
Nil
4,200,958*
Nil
Nil
94,311,187*
Nil
Nil
73,175,760*
Nil
Nil
*David Prescott is Investment Manager of Lanyon Asset Management Pty Ltd which holds the 94,311,187 ordinary shares in BSA Limited.
*Christopher Halios-Lewis is Chief Financial Officer of Birketu Pty Ltd which holds the 73,175,760 ordinary shares in BSA Limited
* Since 30 June 2020, Nicholas Yates took up 52,525 ordinary shares as a result of allocation under the Company’s Dividend Reinvestment plan which takes his
total holding to 4,253,483 ordinary shares.
At the date of this Annual Report, there were no other changes in the interests of directors either for Ordinary Shares or Share Rights.
DIRECTORSHIPS HELD IN OTHER LISTED ENTITIES
Period of Appointment
Name of Company
Position Held (Non-Executive or Executive Director)
Nil
14
BSA LIMITED ANNUAL REPORT 2020 REMUNERATION REPORT
REMUNERATION REPORT - AUDITED
This remuneration report details the nature and amount of remuneration
for each key management person of BSA Limited.
The Company’s policy for determining the nature and amount of
remuneration for Board members and Senior Executives of the
Company is as follows and is set out under the following main headings:
A.
Principles used to determine the nature and amount
of remuneration
Details of remuneration
Service agreements
Cash bonuses
Share-based compensation
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:
In consultation with external remuneration consultants, the
Group has structured an executive remuneration framework that is
market competitive and complementary to the reward strategy of
the organisation.
Alignment to shareholders’ interests:
•
Has 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
•
•
•
•
•
Competitiveness and reasonableness;
provides further information on the role of this committee.
Acceptability to shareholders;
Performance linkage/alignment of executive compensation;
Transparency; and
Capital management.
15
BSA LIMITED ANNUAL REPORT 2020 REMUNERATION 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 2020:
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 20202
30 June 20192
30 June 20182
30 June 2017
30 June 2016
$490.4m
$469.8m
$427.9m
$492.3m
$10.9m
$7.8m
$0.320
$0.325
$14.8m
$10.8m
$0.305
$0.325
$13.3m
$8.8m
$0.340
$0.305
$5.6m
$4.0m
$0.245
$0.340
$511.9m
($3.0)m
($2.2)m
$0.165
$0.245
0.50 cps
0.50 cps
0.50 cps
0.50 cps
0.00 cps
1.81 cps
1.81 cps
2.52 cps
2.51 cps
2.09 cps
2.08 cps
0.94 cps
(0.52) cps
0.93 cps
(0.52) 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
2. Based on continuing operations
Non-Executive Directors
Executive Pay
Fees and payments to Non-Executive Directors reflect the demands
The Executive pay and reward framework has three components:
that are made on, and the responsibilities of, the Directors.
The Chairman’s fees are determined independently to the fees of
Non-Executive Directors based on the Director’s experience and
comparative roles in the external market. The Chairman is not present
at any discussions relating to determination of his own remuneration.
Directors’ and Chairman’s Fees
The current base remuneration for Directors was last reviewed and
determined on 26 June 2012, therefore there has been no increase in the
base remuneration paid to a Director for eight 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.
Non-Executive Directors’ fees are determined within an aggregate
Directors’ fee pool limit, which is periodically recommended for approval
by shareholders. The maximum currently stands at $600,000 per
annum and was last approved by shareholders at the Annual General
Meeting (AGM) on 26 November 2007. There has been no change to
the aggregate fee pool for Non-Executive Directors for approximately 11
•
•
•
Base pay and benefits, including superannuation;
Short-term performance incentives; and
Long-term incentives principally through participation in the
performance rights plan.
The combination of these components comprises the executive’s
total remuneration.
Base Pay
Base pay is structured as a total employment cost package which may
be delivered as a combination of cash and prescribed non-financial
benefits at the executives’ discretion.
Executives are offered a competitive base pay that comprises the
fixed component of pay and rewards. Base pay for Senior Executives is
reviewed annually to ensure the executive’s pay is competitive with the
market and 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.
Benefits
Executives receive benefits including allowances.
years. The following fees have applied during the year to 30 June 2020:
Retirement Benefits
Base fees
Chairman
Other Non-Executive Directors
All employees are eligible to participate in the Company’s default
superannuation fund. Consistent with applicable legislation, employees
can exercise choice as to where their superannuation is paid.
$167,684
$91,560
Non-Executive Directors are entitled to participate in the Non-Executive
Incentives
Director Fee Sacrifice Equity Plan.
Retirement Allowances for Directors
Executive remuneration packages include an incentive based on
achievement of key performance indicators across safety, financial, people
and client metrics for BSA Group. An EBIT gateway must be achieved to
There are no retirement schemes or retirement benefits, other than
trigger payments under the plan to ensure variable at-risk reward is only
statutory superannuation, paid to Non-Executive Directors.
available when value has been created for shareholders. Executive incentive
participation % are determined depending on the accountabilities of the
16
BSA LIMITED ANNUAL REPORT 2020 REMUNERATION REPORT
role and the impact on the Group’s performance. The maximum target
attained in respect of each Measurement Period and pro-rata in
incentive opportunity is 60% of Total Fixed Remuneration.
respect of the initial Measurement Period.
To the extent an incentive is awarded, 50% of the incentive is paid in
Once rights have been exercised by an eligible employee (subject to
cash, and the other 50%, which, at board discretion, can be either cash
relevant service or performance conditions being met), the Company
or rights, is deferred.
The Remuneration Committee is responsible for assessing whether the
targets are met. Targets are set at the beginning of each financial year
may make non-refundable contributions to either fund the purchase of
a new plan share, or to acquire on the ASX existing shares and transfer
these to an eligible employee.
and are set for the year. Incentive payments are adjusted in line with
The specific terms of a particular grant, including any performance
actual performance versus target performance levels.
conditions, will be contained in the invitation and associated
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
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.
with a direct equity interest in the Company to better align them
Rights to acquire shares are not exercisable until the end of the final
with the shareholders.
No offers were made under the Executive Securities Plan to any Directors
or employees of BSA Limited during the year ended 30 June 2020.
measurement period, and until those rights have satisfied all vesting
conditions and any 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
The number of shares held in escrow and the amount of the outstanding
will have a specified life determined by the Board. All grants of rights
loans as at 30 June 2020 is set out in section E of this report.
will have a life terminating five (5) years after the grant date or such
The board has resolved there will no further issues to or loans made to
other date as determined by the Board.
any executives under this plan and has resolved to cancel this plan once
On or after the end of the final measurement period and provided
the remaining loans have been repaid to the Company.
any performance hurdle prescribed by the Board has been achieved
Employee Performance Rights Plan
At the AGM held on 25 November 2008, shareholders approved the
introduction of the BSA Employee Performance Rights Plan.
This incentive plan is designed to increase the motivation of eligible key
staff and to create a stronger link between increasing shareholder value
and employee reward.
and, where applicable, to the extent it has been achieved, the plan
participant may then acquire shares by exercising the rights.
A right lapses if the vesting conditions are not met.
During the year to 30 June 2020, 2,237,998 rights were granted to
executives of which 467,534 have vested, 208,109 vest on 27 November
2020 and 1,562,353 vest on 27 November 2021.
To achieve its corporate objectives, the Company needs to attract
Fee Sacrifice Equity Plan for Individual Non-Executive Directors
and retain key staff. The Board believes that awards made to selected
The establishment of the BSA Fee Sacrifice Equity Plan for Individual
eligible employees under this plan:
•
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;
Non-Executive Directors was approved by shareholders at the 2017
AGM. The plan establishes 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, and is intended to
align their interests with shareholders.
•
Link the reward of key staff with the achievement of strategic
All individuals holding NED roles in the Company or a subsidiary of the
goals and the performance of the Company;
Company are eligible to become participants in the Plan.
•
Align the financial interests of participants with those of
The Company intends to invite each NED to voluntarily elect to
Company shareholders; and
•
Ensure the remuneration packages of employees are consistent
with market practice.
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
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
(ii) The Company’s performance as measured by earnings per
a participant is eligible to apply for, that the cost of each right/share
share (EPS), being the EPS for the relevant Measurement Period
is based on the 10 day VWAP post either the half or full year results
as determined by the Board having regard to the financial
statements. Certain growth in EPS for the shares must be
announcement, the period during which disposal restrictions will apply,
and such other terms and conditions as the Board determines.
17
BSA LIMITED ANNUAL REPORT 2020 REMUNERATION REPORT
Deferred Rights granted under this Plan will be fully vested on the date
of the Company any unexercised Restricted Rights will be exercised
of grant (being the date notified in a Notice of Grant).
automatically the day following cessation, and any Restricted Shares
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
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.
of the BSA Employee Share Trust. The Company will contribute such
During the year to 30 June 2020, Non-Executive Directors elected to
funds as needed to acquire shares either on-market or a subscription
acquire 205,882 Deferred Rights under this Fee Sacrifice Equity Plan.
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
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
B.
DETAILS OF REMUNERATION
Details of the remuneration of the Directors, the key management
personnel of the Group (as defined in AASB 124 Related Party
Disclosures) and specified executives of BSA and the BSA Group
are set out in the following tables.
The Key Management Personnel of the Group are the
following:
(i) Chairman - Non-Executive
Michael Givoni
(ii) Non-Executive Directors
Paul Teisseire
Mark Lowe
Nicholas Yates
David Prescott
Chris Halios-Lewis (appointed 2 September 2019)
Graeme Barclay (resigned 15 December 2019)
(iii) Chief Executive Officer
Timothy Harris
(iv) Chief Financial Officer
Arno Becker
18
BSA technician preparing for pole work, installing drop cable and checking tap signal for power pair disconnection of drop cable on Optus HFC network.
Images courtesy of BSA Limited.
BSA LIMITED ANNUAL REPORT 2020 REMUNERATION REPORT
Non-Executive Directors, key management personnel of the Group and other executives of the Company and the Group
2020
Short-term
Benefits
Post
Long-term
Employment
Benefits
Share-based
payments
Cash,
Salary &
Long
Service
Termination
Performance
Name
Fees
Cash Bonus
Superannuation
Leave
Benefits
Rights
Rights
Total
Related
$
$
$
$
$
$
%
$
%
Non-Executive Directors
Michael Givoni
Paul Teisseire
Mark Lowe
David Prescott
Graeme Barclay1
Chris Halios-Lewis2
89,063
91,560
91,560
31,356
41,808
-
Sub-total
345,347
Non-Executive Directors
Other Key Management Personnel
Executive Director
-
-
-
-
-
-
-
8,461
7,944
7,520
2,979
6,128
-
33,032
-
-
-
-
-
-
-
-
-
-
-
-
-
-
70,000
41.78
167,524
-
-
-
-
-
-
-
-
-
-
99,504
99,080
34,335
47,936
-
70,000
448,379
-
-
-
-
-
-
Nicholas Yates3
356,356
247,285
21,003
3,559
394,749
-
-
1,022,952
24.17
Chief Executive Officer
Timothy Harris4
590,037
177,669
21,003
9,701
Chief Financial Officer
Arno Becker5
90,047
-
8,258
1,960
-
-
-
95,406
10.67
893,816
30.55
Total compensation
1,381,787
424,954
83,296
15,220
394,749
165,406
1 Resigned 15 December 2019.
2 Appointed 2 Septermber 2019.
3 Retired from the position on 9 March 2020.
4 Chief Executive Officer from 9 March 2020. Deputy Chief Executive Officer until 8 March 2020.
5 From 9 March 2020.
-
-
100,265
2,465,412
-
-
19
BSA LIMITED ANNUAL REPORT 2020
REMUNERATION REPORT
2019
Short-term
Benefits
Post
Long-term
Employment
Benefits
Share-based
payments
Cash, Salary
Long
Service
Termination
Performance
Name
& Fees
Cash Bonus
Superannuation
Leave
Benefits
Rights
Rights
Total
Related
$
$
$
$
$
$
%
$
%
Non-Executive Directors
Michael Givoni
Paul Teisseire
Max Cowley1
Mark Lowe
Graeme Barclay
David Prescott2
83,412
83,616
57,831
83,616
54,416
-
Sub-total
362,891
Non-Executive Directors
Executive Directors
Nicholas Yates
649,657
-
-
-
-
-
-
-
-
14,272
7,944
5,494
7,944
7,944
-
43,598
-
-
-
-
-
-
-
-
-
-
-
-
-
70,000
41.75
167,684
-
-
-
-
-
-
91,560
63,325
91,560
29,200
31.89
91,560
-
-
-
-
99,200
505,689
20,343
6,478
-
676,478
-
-
-
-
-
-
-
Other Key
Management Personnel
Deputy Chief
Executive Officer
Timothy Harris
572,738
50,000
20,531
9,960
Total compensation
1,585,286
50,000
84,472
16,438
1. Resigned on 8 February 2019.
2. Appointed 3 June 2019.
-
-
-
-
-
-
653,229
7.65
99,200
1,835,396
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 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.
All contracts with executives may be terminated early by either party with three to six months notice.
20
BSA LIMITED ANNUAL REPORT 2020
REMUNERATION REPORT
D.
CASH BONUSES
Bonuses vested as per the below table during the financial year ended 30 June 2020.
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 FY2020 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
Timothy Harris
Total
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
247,285
177,669
424,954
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
400,000
600,000
150,000
-
400,000
500,000
2,050,000
-
-
-
-
-
-
-
200,000
350,000
-
-
200,000
250,000
200,000
46,000
250,000
157,500
150,000
102,000
-
-
200,000
136,000
250,000
25,000
1,000,000
1,050,000
466,500
Employee Performance Rights Plan
Set out below are summaries of Rights issued to key management personnel under the plan:
Released
Balance in
Fair Value
Balance
Granted
from Escrow
Forfeited
Escrow at
per Right
Aggregate
at Start of
During
During the
During
End of the
at Grant
Fair Value
Name
Grant Date
Vesting Date
Expiry Date
the Year
the Year
Year
the Year
Year
Date $
Number
Number
Number
Number
Consolidated and parent entity
Nicholas Yates
25 Nov 2014
30 Jun 2015
25 Nov 2019
1,116,667
-
(1,116,667)
Nicholas Yates
28 Nov 2017
31 Jan 2018
28 Nov 2022
142,857
Timothy Harris
28 Jun 2019
30 Jun 2020
1 Mar 2024
175,391
-
-
(142,857)
(175,391)
Timothy Harris
27 Nov 2019
27 Nov 2021
26 Nov 2024
-
495,616
-
Total
1,434,915
495,616
(1,434,915)
-
-
-
-
-
-
-
-
495,616
495,616
0.165
0.350
0.371
0.385
Rights are granted over ordinary shares and nil is payable on exercise.
$
-
-
-
190,812
190,812
21
BSA LIMITED ANNUAL REPORT 2020 REMUNERATION REPORT
NED Fee Salary Sacrifice Plan
Set out below are summaries of Deferred Rights issued to Non-Executive Directors under the plan:
Name
Grant Date
Vesting Date
Expiry Date
the Year
the Year
Year
the Year
Year
Date
Fair Value
Number
Number
Number
Number
$
$
Released
Balance in
Fair Value
Balance
Granted
from Escrow
Forfeited
Escrow at
per Right
at Start of
During
During the
During
End of the
at Grant
Aggregate
Consolidated and parent entity
Michael Givoni
28 Mar 2020
28 Mar 2020
28 Mar 2034
Total
-
-
205,882
(205,882)
205,882
(205,882)
-
-
-
-
0.340
70,000
70,000
Rights are granted over ordinary shares and nil is payable on exercise.
Approval for the issues of securities under the NED Fee Salary Sacrifice Plan was obtained under Listing Rule 10.14.
F.
REMUNERATION CONSULTANTS
During the year ended 30 June 2020, 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 payable by the company to GRG for the provision of the remuneration recommendations in the 2020 financial year was
$21,250 (2019: $17,500).
End of Audited Remuneration Report
22
BSA LIMITED ANNUAL REPORT 2020 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 2020, 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 FY2020
Meetings
Attended
Meetings Held
Meetings Held
during tenure
Meetings
during tenure in
in FY2020
Attended
FY2020
Michael Givoni
Nicholas Yates
Graeme Barclay
Timothy Harris
Paul Teisseire
Mark Lowe
David Prescott
Christopher Halios-Lewis
17
17
6
7
17
16
17
14
17
17
6
7
17
17
17
14
2
*
1
*
2
2
2
1
2
*
1
*
2
2
2
1
6
1
3
*
5
6
6
5
6
2
3
*
6
6
6
5
*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.
Nicholas Yates retired as Managing Director on 9 March 2020 but
remains on the Board as a Non-Executive Director. Mark Lowe and
Nicholas Yates are the Directors who have been longest in office and
who, being eligible, offer themselves for re-election at the 2020 AGM.
Total
Grant Date
Date of Expiry
Exercise Price
Number
under Right
Fair value at
grant date
1 Mar 2019
1 Mar 2024
27 Nov 2019
26 Nov 2024
27 Nov 2019
26 Nov 2034
27 Nov 2019
26 Nov 2034
$0.00
$0.00
$0.00
$0.00
175,440
0.265
98,666
0.390
208,109
0.395
872,689
0.385
1,354,904
INDEMNIFYING OFFICERS OR AUDITORS
During the year ended 30 June 2020, 2,361,693 rights granted under the
During the year, the Company paid a premium for a contract insuring
BSA Limited Employee Performance Rights Plan were exercised.
all Directors, secretaries, Executive officers and officers of the
Company, and of each related body corporate of the Company. The
insurance does not provide cover for the independent auditors of the
Company, or of a related body corporate of the Company.
In accordance with usual commercial practice, the insurance contract
prohibits disclosure of details of the nature of the liabilities covered by
the insurance, the limit of indemnity and the amount of the premium
paid under the contract.
No liability has arisen under this indemnity as at the date of this report.
No person entitled to exercise the right had, or has, any right by virtue of
the right to participate in any share issue of any other body corporate.
23
BSA LIMITED ANNUAL REPORT 2020 DIRECTORS’ REPORT
PROCEEDINGS ON BEHALF OF THE COMPANY
AUDITOR’S 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
FY2020
FY2019
$
$
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
Auditing or reviewing the financial report
385,000
386,060
Company with leave of the court under section 237 of the Corporations
Taxation services
Act 2001 (Cth).
Other non-audit services
996,706
469,883
12,300
55,000
1,394,006
910,943
NON AUDIT SERVICES
The Company may decide to employ the auditor on assignments
additional to their statutory audit duties where the auditor’s expertise
and experience with the Company and/or Group are important.
Details of the amounts paid or payable to the auditor (Deloitte Touche
Tohmatsu) for audit and non-audit services during the year are set out
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June
2020 as required under section 307c of the Corporations Act 2001 (Cth)
has been received and can be found on page 25 of this report.
below.
ROUNDING OF AMOUNTS
The Board of Directors has considered the position and in accordance
The Company is a company of the kind referred to in ASIC Corporations
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:
(Rounding in Financial/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
24 August 2020
24
BSA nbn Technicians.
Image courtesy of BSA Limited
BSA LIMITED ANNUAL REPORT 2020 Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
AUDITOR’S INDEPENDENCE DECLARATION
The Board of Directors
BSA Limited
Level 7, 3 Thomas Holt Drive
Macquarie Park NSW 2113
24 August 2020
Dear Directors,
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Auditor’s Independence Declaration to 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.
The Board of Directors
BSA Limited
As lead audit partner for the audit of the consolidated financial report of BSA Limited for the year
Level 7, 3 Thomas Holt Drive
ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no
Macquarie Park NSW 2113
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
24 August 2020
audit; and
Dear Directors,
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
Auditor’s Independence Declaration to 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.
DELOITTE TOUCHE TOHMATSU
As lead audit partner for the audit of the consolidated financial report of BSA Limited for the year
ended 30 June 2020, 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
AG Collinson
Partner
Chartered Accountants
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
AG Collinson
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
25
BSA LIMITED ANNUAL REPORT 2020
FINANCIAL REPORT
BSA LIMITED
ABN 50 088 412 748
27 —
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
28 —
Consolidated Statement of Financial Position
29 —
Consolidated Statement of Changes in Equity
30 —
Consolidated Statement of Cash Flows
31 —
Notes to the Financial Statements
78 —
Directors’ Declaration
79 —
Independent Auditor’s Report
85 —
Shareholder Information
26
BSA LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Revenue
Investment revenue
Other income, gains and losses
Changes in inventories of finished goods and work in progress
Subcontractor and raw materials used
Employee benefits expense
Depreciation expenses
Amortisation expenses
Finance costs
Other expenses
Note
5
4.2
6.1
6.1
6.3
6.2
6.2
2020
$’000
2019
$’000
486,107
469,484
6
4,312
750
(368,667)
(61,224)
(6,891)
(3,484)
(1,762)
(38,290)
11
284
(230)
(357,170)
(54,424)
(5,515)
(674)
(819)
(36,150)
Profit from continuing operations, before tax
10,857
14,797
Income tax expense
7.1
(3,055)
(4,033)
Profit for the year from continuing operations, after tax
7,802
10,764
Discontinued Operations
Loss from discontinued operations, after tax
16.2
(8,762)
(10,592)
(Loss) / profit for the year
(960)
172
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
-
(960)
-
172
1.811 cents
1.805 cents
2.523 cents
2.511 cents
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
27
BSA LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Contract assets
Inventories
Assets held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant & equipment
Deferred tax assets
Goodwill
Other intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Current tax liabilities
Provisions
Liabilities associated with assets held for sale
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
Provisions
Investments in joint ventures
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Parent entity interest
Issued capital
Reserves
Accumulated losses
Profit reserve
TOTAL EQUITY
Note
11
12
16.3
11
13
7.2
14
15
18
12
19
20
21
16.3
20
21
22
23(a)
23(b)
23(c)
2020
$’000
37,742
57,570
3,550
1,748
-
100,610
-
20,628
7,611
11,185
7,418
46,842
147,452
73,495
2,482
2,116
5,384
1,582
13,854
-
98,913
8,966
7,285
-
16,251
115,164
32,288
100,390
1,368
(74,368)
4,898
32,288
2019
$’000
21,941
58,963
12,835
1,311
17,414
112,464
432
13,877
8,982
11,185
3,526
38,002
150,466
62,873
14,092
1,766
1,087
2,806
11,730
12,695
107,049
2,820
4,596
67
7,483
114,532
35,934
98,894
1,868
(74,032)
9,204
35,934
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
28
BSA LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Profit
Reserve
$’000
Share-based
Payment
Reserve
$’000
Consolidated
Total
$’000
Note
Issued
Accumulated
Capital
$’000
Losses
$’000
97,562
(65,243)
11,150
1,568
45,037
-
-
(8,269)
(520)
-
-
-
-
(8,269)
(520)
97,562
(74,032)
11,150
1,568
36,248
-
-
-
1,332
-
-
-
-
-
-
98,894
(74,032)
172
172
-
(1,245)
(873)
9,204
-
-
299
1
-
1,868
172
172
299
88
(873)
35,934
23(d)
2.1
-
624
-
-
624
98,894
(73,408)
9,204
1,868
36,558
-
-
-
1,496
-
(960)
(960)
-
-
-
100,390
(74,368)
-
-
-
(528)
(3,778)
4,898
-
-
398
(898)
-
1,368
(960)
(960)
398
70
(3,778)
32,288
Balance at 30 June 2018
Opening balance adjustment on initial
application of AASB 15
Opening balance adjustment on initial
application of AASB 9
Balance at 1 July 2018
Profit for the year
Total comprehensive income for the year
Share-based payment expense
Shares issued during period (including DRP)
Dividends paid
Balance at 30 June 2019
Opening balance adjustment on initial
application of AASB 16
Balance at 1 July 2019
Loss for the year
Total comprehensive income for the year
Share-based payment expense
Shares issued during period (including DRP)
22(b) & 23(d)
Dividends paid or payable
Balance at 30 June 2020
23(d)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
29
BSA LIMITED ANNUAL REPORT 2020 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Cash Flows From Operating Activities:
Cash receipts from customers
Payments to suppliers and employees
Cash receipts from government assistance
Interest received
Interest and other costs of finance paid
Income tax paid
Note
2020
$'0001
536,514
(506,007)
2,665
6
(1,237)
(656)
Net cash generated by operating activities
26(a)
31,285
Cash Flows From Investing Activities:
Proceeds from disposal of property, plant and equipment
Proceeds from sale of assets previously held for sale
Payments related to assets previously held for sale
Payments for plant and equipment
Payments for software assets
Net cash used in investing activities
Cash Flows From Financing Activities:
Payments for shares issued for vesting rights
Proceeds from borrowings
Repayment of borrowings
Repayment of executive loans
Payments of finance lease liabilities
Dividends paid to owners of the Company
Net cash used in financing activities
Net increase in cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
13
15
23(d)
4,400
181
(4,415)
(2,974)
(7,389)
(10,197)
-
3,156
(2,806)
359
(4,373)
(1,623)
(5,287)
15,801
21,941
37,742
Consolidated
2019
$’0001
641,665
(622,511)
-
11
(819)
-
18,346
781
-
-
(7,035)
-
(6,254)
1
2,485
(1,569)
-
(2,865)
(873)
(2,821)
9,271
12,670
21,941
1 The above Consolidated Statement of Cash Flows includes both continuing and discontinued operations. Amounts related to discontinued operations are
disclosed in Note 16.2.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
30
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 25.
NOTE 2 APPLICATION OF NEW AND REVISED STANDARDS
2.1 New and amended accounting standards adopted by the Group
AASB 16 Leases (AASB 16)
In the current year, the Group has applied AASB 16 Leases on a modified retrospective basis which came into effect 1 July 2019. Details of the new
requirements of AASB 16 as well as the impact on the Group’s consolidated financial statements are described below.
AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for leases, excluding
those that are classified as short-term leases or leases for low value assets, under a single on-balance sheet model similar to the accounting for finance
leases under AASB 117 Leases (AASB 117). Lessor accounting under AASB 16 is substantially unchanged from previous accounting under AASB 117 and has
no material impact to the Group.
AASB 16 requires contracts that contain leases for terms of more than 12 months to be recognised as assets measured as the present value of the expected
future lease payments under the lease and any associated end of lease costs (make good) or upfront incentives as a liability measured by the present
value of future lease payments and interest implicit in the lease. Over the term of the lease, the lease asset is depreciated on a straight-line basis over the
term while the liability is reduced as payments are made and increased by applicable interest amounts. Prior to AASB 16, operating lease payments were
expensed without recognition of an asset or liability for the total amounts payable over the lease term.
The Group applied the practical expedient in AASB 16 Appendix paragraph C3 that enables the Group to grandfather previous assessments, such that only
leases that are leases on date of transition on 1 July 2019 are required to be assessed as a lease under AASB 16. The Group also applied a practical expedient
for short term leases with an aggregate expense of $77,000 recognised in the year.
Impact on application of AASB 16
The Group has applied AASB 16, using the modified approach, with the cumulative effect of initially applying the standard adjusted in the opening balance
of equity and comparative figures are therefore not restated. The opening equity adjustment due to the application of the new standard is analysed by
financial statement line item below.
As reported
AASB 16 Transition
Opening Balance
30 June 2019
Adjustments
$'000
$'000
1 July 2019
$'000
Impact on assets and equity at 1 July 2019:
Property, plant and equipment (leased assets)
Deferred tax assets
Total net assets impact
Borrowings - lease liabilities
Provisions - lease incentives
Total liabilities impact
Accumulated losses
Total equity impact
4,127
8,982
13,109
3,907
1,033
4,940
(74,032)
(74,032)
7,962
28
7,990
8,399
(1,033)
7,366
624
624
12,089
9,010
21,099
12,306
-
12,306
(73,408)
(73,408)
31
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2 APPLICATION OF NEW AND REVISED STANDARDS (CONTINUED)
Impact on the consolidated statement of profit and loss
Had AASB 16 Leases not been applied and the financial statements were still produced under previous guidance, AASB 16 Leases and related
interpretations, the financial report for the year ended 30 June 2020 would have been impacted as follows:
•
the statement of financial position as at 30 June 2020 would be impacted by reversing $13.5 million of adjustments to total assets and $14.4 million to
total liabilities;
•
the effect on depreciation, interest and occupancy expenses for the 12 months to 30 June 2020 would be $3.6 million, $0.5 million and $(3.8) million,
respectively; and
•
the effect on both basic earnings per share and diluted earnings per share was insignificant.
Right of Use Liabilities
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under
the principles of AASB 117 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the
Group’s incremental borrowing rate as of 1 July 2019. The Group's weighted average incremental borrowing rate applied to the lease liabilities as at
1 July 2019 was 5.5%.
1 July 2019
$'000
9,516
8,442
3,907
(43)
12,306
1 July 2019
$'000
2,403
9,903
12,306
1 July 2019
$'000
6,113
5,976
12,089
30 June 2020
$'000
5,384
8,966
14,350
30 June 2020
$'000
7,208
6,269
13,477
Operating lease commitments as at 30 June 2019
Discounted using Group's incremental borrowing rate at date of initial application
Add: finance leases recognised as at 30 June 2019
Less: short-term lease recognised on straight-line basis as expense
Lease liability recognised as at 1 July 2019
Of which were:
Current lease liabilities
Non-current lease liabilities
Right of Use Assets
The recognised right-of-use assets relate to the following types of assets
Of which were:
Properties
Motor vehicles
Total right-of-use assets
32
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2 APPLICATION OF NEW AND REVISED STANDARDS (CONTINUED)
2.1 New and amended accounting standards adopted by the group (continued)
Practical expedients
Other than the adoption of AASB 16 Leases, no new standards or amendments to accounting standard applicable to reporting periods commencing after 1 July
2019 are expected to have a significant impact on the Group's consolidated financial statements.
While these standards introduce new disclosure requirements, they do not materially affect the Group’s accounting policies or any of the amounts recognised
in the financial statements.
The Group has used the following practical expedients as permitted under AASB 16:
•
•
•
•
the use of a single discount rate to a portfolio of leases with similar characteristics;
previous assessments on whether leases are onerous were relied upon;
initial direct costs excluded in the measurement of the right-of-use asset on date of initial application; and
operating leases with remaining lease terms of less than 12 months expensed as short term leases;
The Group also elected not to reassess whether a contract is, or contains a lease at the date of initial application.
For contracts executed before 1 July 2019, the Group relied on its assessment made under AASB 117 and Interpretation 4 Determining whether an Arrangement
contains a Lease.
Variable lease payments
No lease payments are based on variables that require estimation.
2.2 Accounting policies newly applied
The following new or amended policies were applied in this financial report:
Lease recognition
Contracts are assessed as containing a lease where right of control over identifiable assets over a period of time is conveyed in exchange for consideration.
For such leases, the Group recognises a right-of-use asset and a right-of-use liability unless the lease is short term or of minor value where lease payments are
recorded as an operating expense evenly over the lease.
The Group's lease portfolio is extensive with leases mainly for business premises, plant equipment and motor vehicles.
Presentation and measurement of right of use assets
Right of use assets recognised by the Group are presented within Property, Plant and Equipment along with owned assets by asset class. Initially, the right-of-
use asset is measured with reference to the value determined for the associated right-of-use liability (refer below) less direct costs and any lease incentives.
Expected end of lease costs such as make good are included in the right-of-use asset value determined at lease inception.
Over the lease term (including extended terms where judged appropriate) right-of-use assets are depreciated and periodically assessed for impairment.
Depreciation begins when control of the leased asset by the Group occurs up until the date when control ends. In the event of changes to the lease, the right-
of-use asset is remeasured with reference to the re-measurement of the right-of-use liability and the other factors considered at inception or new factors.
Presentation and measurement of right of use liabilities
Right of use liabilities recognised by the Group are presented within borrowings (current and non-current). Initially the right-of-use liability is measured as the
present value of future lease payments discounted using an interest rate implicit in the lease or the Group's incremental borrowing rate. Future lease payments
may be influenced by lease incentives, incremental increases during the lease term, extension options (where reasonably certain that will occur) and residual
value guarantees expected to be paid.
Over the lease term, payments made reduce the right-of-use liability balance while applicable interest is recognised monthly as interest expense and increases
the liability balance.
Remeasurement of the right of use liabilities occurs when substantive elements of the lease change such as changes to the lease term or variation to amounts
payable under the lease.
2.3 Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial report, the Standards and Interpretations that were issued but not yet effective are listed below.
• AASB 2014-10 ‘Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an investor and its Associate or Joint Venture
[AASB 10 & AASB 128]’, AASB 2015-10 ‘Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128’ and
AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections”
The directors of the Group do not anticipate that the application of these amendments, will have a material impact on the Group’s consolidated financial statements.
33
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 24 August 2020.
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 116, 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.
34
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the business less accumulated impairment
losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is
expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit
may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce
the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in
the unit. Any impairment loss for goodwill is recognised directly in profit or loss in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
3.5 Revenue recognition
Revenue is recognised when control is transferred at an amount that is highly probable that a significant reversal of revenue will not occur.
3.5.1 Services revenue
The Group performs installation and maintenance services for a variety of different industries. Contracts entered into can cover installation and servicing
of related assets which may involve various different processes. The total transaction price is allocated across each service or performance obligation and,
where linked, the construction of the relevant asset. The transaction price is allocated to each performance obligation based on contracted prices. The total
transaction price may include variable consideration.
3.5.2 Installation and servicing fees
Performance obligations are fulfilled at a point in time as the benefits provided to our customers under this category of work type do not transfer to the
customer until the completion of the service and as such revenue is recognised upon completion.
Customers are in general invoiced on a monthly basis for an amount that is calculated on either a schedule of rates or a cost plus basis that are aligned with
the stand alone selling prices for each performance obligation. Payment is received following invoice on normal commercial terms.
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BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.5.3 Construction revenue
The Group 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. Contracts entered into may be for the construction of one or several separate inter-linked pieces of
large infrastructure. The construction of each individual piece of infrastructure is generally taken to be one performance obligation. Where contracts are
entered for the building of several projects the total transaction price is allocated across each project based on stand-alone selling prices. The transaction
price is normally fixed at the start of the project. It is normal practice for contracts to include bonus and penalty elements based on timely construction or
other performance criteria known as variable consideration, discussed below.
The performance obligation is fulfilled over time and as such revenue is recognised over time. As work is performed on the assets being constructed they
are controlled by the customer and have no alternative use to the Group, with the Group having a right to payment for performance to date.
Generally, contracts identify various inter-linked activities required in the construction process. Revenue is recognised on an input basis.
Revenue earned is typically invoiced monthly or in some cases on achievement of milestones or to match major capital outlay. Invoices are paid on normal
commercial terms, which may include the customer withholding a retention amount until finalisation of the construction. Certain construction projects
entered into receive payment prior to work being performed in which case revenue is deferred on the consolidated statement of financial position.
3.5.4 Variable consideration
It is common for contracts to include performance bonuses or penalties assessed against the timeliness or cost effectiveness of work completed or other
performance related KPIs. Where consideration in respect of a contract is variable, the expected value of revenue is recognised when the uncertainty
associated with the variable consideration is highly probable of being resolved (known as constraint requirements). The Group assesses the constraint
requirements on a periodic basis when estimating the variable consideration to be included in the transaction price. The estimate is based on all available
information including historic performance. Where modifications in design or contract requirements are entered into, the transaction price is updated
to reflect these. Where the price of the modification has not been confirmed, an estimate is made of the amount of revenue to recognise whilst also
considering the constraint requirement.
3.5.5 Contract fulfilment costs
Costs incurred prior to the commencement of a contract may arise due to mobilisation/site setup costs, feasibility studies, environmental impact studies
and preliminary design activities as these are costs incurred to fulfil a contract. Where these costs are expected to be recovered, they are capitalised
and amortised over the course of the contract consistent with the transfer of service to the customer. Where the costs, or a portion of these costs, are
reimbursed by the customer, the amount received is recognised as deferred revenue and allocated to the performance obligations within the contract and
recognised as revenue over the course of the contract.
3.5.6 Financing components
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer is significant
and therefore there aren't expected to be financing components within the contracts. As a consequence, the Group does not adjust any of the transaction
prices for the time value of money.
3.5.7 Loss making contracts
A provision is made for the difference between the expected cost of fulfilling a contract and the expected unearned portion of the transaction price where
the forecast costs are greater than the forecast revenue.
3.5.8 Interest revenue
Interest revenue is recognised on an accruals basis.
3.5.9 Dividend income
Dividend income is recognised when the dividend is declared.
3.5.10 Government grants
Amounts received in the form of government grants are recognised as other income when received, unless specific conditions apply in which case the grant
income is recognised as and when such performance conditions are met.
36
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.6 Contract assets and liabilities
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.
3.7 Right of use assets and liabilities
Lease recognition
Contracts are assessed as containing a lease where right of control over identifiable assets over a period of time is conveyed in exchange for consideration. For such
leases, the Group recognises a right-of-use asset and a right-of-use liability unless the lease is short term or of minor value where lease payments are recorded an
operating expense evenly over the lease.
The Group's lease portfolio is extensive with leases mainly for business premises, plant equipment and motor vehicles.
Presentation and measurement of right of use assets
Right of use assets recognised by the Group are presented within Property, Plant and Equipment along with owned assets by asset class. Initially, the right-of-use
asset is measured with reference to the value determined for the associated right-of-use liability (refer below) less direct costs and any lease incentives. Expected
end of lease costs such as make good are included in the right-of-use asset value determined at lease inception.
Thoughout the lease term (including extended terms where judged appropriate) right-of-use assets are depreciated and periodically assessed for impairment.
Depreciation begins when control of the leased asset by the Group occurs up until the date when control ends. In the event of changes to the lease, the right-of-use
asset is remeasured with reference to the remeasurement of the right-of-use liability and the other factors considered at inception or new factors.
Presentation and measurement of right of use liabilities
Right of use liabilities recognised by the Group are presented within borrowings (current and non-current). Initially the right-of-use liability is measured as the present
value of future lease payments discounted using an interest rate implicit in the lease or the Group's incremental borrowing rate. Future lease payments of leases
may be influenced by lease incentives, incremental increases during the lease term, extension options (where reasonably certain that will occur) and residual value
guarantees expected to be paid.
Over the lease term, payments made reduce the right-of-use liability balance while applicable interest is recognised monthly as interest expense and increases the
liability balance.
Remeasurement of the right of use liabilities occurs when substantive elements of the lease change such as changes to the lease term or variation to amounts
payable under the lease.
3.8 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.
37
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.9 Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that
settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the
time of settlement.
Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be made by the
Group in respect of services provided by employees up to reporting date.
3.10 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 27.
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.
3.11 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.11.1 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.
3.11.2 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
38
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
3.11.3 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 recognised in other comprehensive income or directly in equity. Where current tax or deferred tax arises from
the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
3.11.4 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 7.3. 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.
3.12 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.
Right of use assets 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.
3.13 Intangible assets
3.13.1 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.
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BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.13.2 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.
3.14 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.
3.15 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.
3.16 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.
3.16.1 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.
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BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.16.2 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.
3.17 Financial Assets
Financial assets are classified as either those measured at fair value, with adjustments to fair value through the change in Other Comprehensive Income
(FVTOCI) or through Profit or Loss (FVTPL); and those measured at amortised cost.
3.17.1 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.
3.17.2 Trade and other receivables
Trade and other receivables are carried at original invoice amount, less expected credit losses provided for. Collectability of trade and other receivables is reviewed
on an ongoing basis. Individual debts that are determined to be uncollectable are written off when identified.
3.17.3 Impairment of financial assets
Trade and other receivables are subject to AASB 9’s Expected Credit Losses model for recognising and measuring impairment of financial assets.
The simplified approach has been applied for all trade and other receivables that do not have a significant financing component. For these receivables, the
age of outstanding balances have been analysed and historical default percentages adjusted for other current observable data has been applied as a means
to estimate lifetime Expected Credit Losses using a provision matrix approach.
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.
3.18 Financial liabilities and equity instruments issued by the Group
3.18.1 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.
3.18.2 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.
3.18.3 Financial Liabilities
Financial liabilities are classified as ‘other financial liabilities’.
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BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.18.4 Other Financial Liabilities
Other financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective
yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying on initial recognition.
3.19 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 presented in the consolidated statement of cash flow on a gross basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows.
NOTE 4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in note 3, the Directors are required to make 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 described in note 3.5.3. 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
Goodwill is not amortised but assessed for impairment at least once a year (and when there is evidence of impairment). The Group uses a Fair Value Less
Costs to Sell (FVLCTS) method to assess impairment. This method determines the amount which the business to which the goodwill relates to could be
sold for (less sale related expenses).
The recoverable amount determined from the FVLCTS assessment is then compared to the carrying amount of assets to determine if there is any
impairment. Impairment testing is complex and involves the following key judgements:
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BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED)
- Impairment is tested at a cash generating unit (CGU) level; which is the lowest level at which the Group generates discrete and separate cash inflows and
outflows. The Group considers this to be at the Fire Build CGU level; which is a component of the Advanced Property Solutions segment as disclosed in note 25.
- The calculation of FVLCTS models is complex and involves a significant number of judgements regarding future performance and the price which an
external party would pay to purchase businesses similar to those operated by the Group. The disclosures in note 14 outline the key assumptions and the
outcome of impairment testing completed.
See note 14 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 FY2020 stands at $1,328,000 (FY2019: $1,843,000).
See note 21 for details.
4.2 COVID-19 impact
On 27 February 2020, the Australian government declared COVID-19 a national pandemic. The Governor General of Australia on 18 March 2020 soon after
declared COVID-19 a Human Biosecurity Emergency. Governmental measures aimed at suppressing the transmission of coronavirus in Australia have had a
consequential impact on economic activity generally across the markets in which BSA conducts business.
Other income during FY2020 of $4,312,000 related to: $3,890,000 government assistance (JobKeeper wage subsidy) utilised in accordance with
government guidelines to maintain BSA’s workforce; and other gains, including gains on sale of plant and equipment, of $422,000.
Commonwealth and State government initiatives aimed at alleviating cash flow pressures, including the deferment of indirect tax payments, have applied to
BSA during FY2020. Refer note 18.
The assessment of expected credit losses included a consideration of the possible implications that COVID-19 may have on customer’s ability to pay.
Refer note 11.
The assessment of the recoverable value of goodwill included a consideration of the possible implications that COVID-19 may have on future economic
value of the relevant cash-generating unit. Refer note 14.
The operations of the Group demonstrate a high degree of resilience due to the sizeable proportion of the business that qualify as an essential service.
NOTE 5 REVENUE
The following is an analysis of the Group's revenue from continuing operations
BSA | Communications & Utility Infrastructure
BSA | Advanced Property Solutions
2020
$’000
272,924
213,183
Consolidated
2019
$’000
251,462
218,022
Total Revenue
486,107
469,484
43
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
367,917
357,400
2020
$’000
Consolidated
2019
$’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 27)
Equity-settled share-based payments
Termination benefits
Other employee benefits
6,891
3,484
10,375
5,515
674
6,189
9,854
8,721
333
299
665
50,372
1,408
43,996
Total employee benefits expense
61,224
54,424
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
Total significant items
-
-
2,892
2,892
9,128
61
1,410
10,599
Significant items for FY2020 include $nil associated with discontinued operations (FY2019: $7,781,000).
44
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 7 INCOME TAXES
7.1
Income tax recognised in profit or loss
Income tax expense
Current tax expense
Deferred tax relating to the origination and reversal of temporary differences
Income tax is attributable to:
Profit from continuing operations (as reported in the consolidated statement of
profit or loss)
Loss from discontinued operations (refer Note 16.2)
The expense for the year can be reconciled to the accounting loss as follows:
Profit from continuing operations, before tax
Loss from discontinued operations, before tax (refer to Note 16.2)
(Loss)/profit before income tax expense
Income tax expense calculated at 30%
Adjusted for:
Other non deductible items (goodwill impairment)
Other
Adjustments recognised in the current year in relation to the current tax of prior years
(Over)/under provision
Total income tax expense recognised in the current year relating to continuing operations
2020
$’000
Note
Consolidated
2019
$’000
879
-
879
3,055
(2,176)
879
10,857
(10,938)
(81)
(24)
1,199
(296)
879
-
-
879
2,806
1
2,807
4,033
(1,226)
2,807
14,797
(11,818)
2,979
894
1,394
-
2,288
519
519
2,807
The tax rate used for the 2020 and 2019 reconciliations above is the corporate tax rate of 30% payable by Australian corporate entities on taxable
profits under Australian tax law.
45
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 7 INCOME TAXES (CONTINUED)
7.2
Deferred tax balances
Temporary differences
Finance leases
Intangible assets
Employee benefits
Provisions (adjusted for AASB 15 and AASB 9)
Expected credit losses (adjusted for AASB 15 and AASB 9)
7.3
Tax consolidation
Relevance of tax consolidation to the Group
2020
$’000
300
(118)
3,416
3,384
629
7,611
Consolidated
2019
$’000
140
(320)
4,144
3,866
1,152
8,982
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 16. 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.
46
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
Termination benefits
Share-based payments
2020
$
1,806,741
83,296
15,220
394,749
165,406
2,465,412
Consolidated
2019
$
1,635,286
84,472
16,438
-
99,200
1,835,396
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 15 to 22 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.
2020
$
385,000
996,706
12,300
Consolidated
2019
$
386,060
469,883
55,000
1,394,006
910,943
47
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 10 EARNINGS PER SHARE
(a)
Profit for the period attributable to shareholders of the parent entity used in
earnings per share (EPS)
Continuing operations
Discontinued operations
2020
$'000
7,802
(8,762)
(960)
Consolidated
2019
$'000
10,764
(10,592)
172
Number
Number
(b)
Weighted average number of ordinary shares outstanding during the year used
430,911,121
426,587,199
in calculating basic EPS
Weighted average number of options/rights outstanding
1,434,964
2,050,196
Weighted average number of ordinary shares outstanding during the year used in calculating diluted EPS
432,346,085
428,637,395
(c)
Basic earnings per share
Continuing operations
Discontinued operations
(d)
Diluted earnings per share
Continuing operations
Discontinued operations
Cents
Cents
1.811
(2.033)
(0.222)
1.805
(2.027)
(0.222)
2.523
(2.483)
0.040
2.511
(2.471)
0.040
(e)
Information concerning the classification of securities
Options/Rights
Options granted to employees under the BSA Limited Employee Option Plan and rights granted to employees under the BSA Limited Employees
Performance Rights Plan are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share
to the extent to which they are dilutive. The options/rights have not been included in the determination of basic earnings per share. Details relating
to the options and rights are set out in note 27.
48
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 11 TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
Expected credit losses
Executive Share Plan receivables
Accrued revenue
Prepayments
NON-CURRENT
Executive Share Plan receivables
Trade receivables
2020
$’000
41,289
(2,096)
39,193
367
16,475
1,535
18,377
57,570
-
-
Consolidated
2019
$’000
48,323
(1,705)
46,618
294
10,303
1,748
12,345
58,963
432
432
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 32 days (2019: 38 days). No interest is charged on overdue receivables. Expected credit losses 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.
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
2020
Amount
Amount Not
Impaired
Impaired
$’000
14
349
161
19
1,553
2,096
$’000
16,411
15,210
3,750
1,949
1,873
39,193
Total
$’000
16,425
15,559
3,911
1,968
3,426
41,289
Consolidated
2019
Amount
Amount Not
Impaired
Impaired
$’000
6
579
278
23
819
$’000
39,267
2,831
1,822
942
1,756
Total
$’000
39,273
3,410
2,100
965
2,575
48,323
1,705
46,618
As at 30 June 2020, the Group had current trade receivables of $2,096,000 (2019: $1,705,000) that were impaired. The amounts relate to customer
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
2020
$’000
1,705
699
(308)
2,096
Consolidated
2019
$’000
1,180
559
(34)
1,705
49
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 12 CONTRACT ASSETS AND LIABILITIES
Contract assets
Contract liabilities
2020
$’000
3,550
(2,482)
Consolidated
2019
$’000
12,835
(14,092)
Contract assets primarily relate to the Group’s right to consideration for construction work completed but not invoiced at the balance sheet date. The
contract assets are transferred to trade receivables when the amounts are certified by the customer. On most contracts certificates are issued by the
customer on a monthly basis.
The contract liabilities primarily relate to the advance consideration received from customers in respect of performance obligations which have not yet been
fully satisfied and for which revenue has not been recognised. All contract liabilities held at 30 June 2020 are expected to satisfy performance obligations in
the next 12 months.
Significant changes in the contract assets and the contract liabilities during the period are as follows:
2020
Consolidated
2019
Contract
Contract
Contract
Contract
assets
liabilities
assets
liabilities
$'000
$'000
$'000
$'000
Opening balance
Effect of change in accounting policies
Reclassifications
As restated
Revenue recognised:
12,835
(14,092)
-
-
-
-
12,835
(14,092)
-
(11,814)
56,252
44,438
performance obligations satisfied in the current year
206,885
9,636
213,143
adjustments to performance obligations satisfied in previous years
-
1,974
Cash received for performance obligations not yet satisfied
Amounts transferred to trade receivables
Closing balance
(1,944)
(214,226)
-
-
-
-
(244,746)
3,550
(2,482)
12,835
(14,092)
-
-
(24,110)
(24,110)
9,204
814
-
-
The following table includes revenue expected to be recognised in the future related to performance obligations that are unsatisfied or partially
unsatisfied at the balance sheet date:
Work in hand - continuing operations
Work in hand includes estimates of future revenue streams for existing contracts. Final volumes may be higher or lower than present estimates.
Future years
$'000
290,837
50
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 13 PROPERTY, PLANT AND EQUIPMENT
Right
Leasehold
of Use
Right of
Improve-
Plant &
assets -
Use assets
Make
Assets
Under
Consolidated
Land Buildings
ments
Equipment
premises
- vehicles
Good
Construction
Total
Cost
$’000
$’000
$’000
$’000
$’000
$'000
$'000
$'000
$’000
Balance as at 30 June 2018
253
410
5,908
35,689
Additions
Disposals
Reclassed as Held for Sale
Transfers
-
-
-
-
-
-
-
-
153
4,094
(355)
(1,495)
(117)
(2,846)
-
391
Balance as at 30 June 2019
253
410
5,589
35,833
-
-
-
-
-
-
14,433
1,265
557
58,515
526
169
(1,843)
(180)
(1,048)
-
-
-
-
-
-
4,942
(3,873)
(4,011)
(391)
-
12,068
1,254
166
55,573
Initial adoption of AASB 16
Additions
Disposals
Transfers
-
-
-
-
-
-
-
-
-
-
7,367
5,976
(1,254)
1,108
1,714
2,817
745
-
-
(2,037)
(216)
(3,535)
166
-
-
Balance as at 30 June 2020
253
410
6,697
35,676
9,968
15,254
Accumulated depreciation
Balance as at 30 June 2018
Additions
Disposals
Reclassed as Held for Sale
Transfers
Balance as at 30 June 2019
Initial adoption of AASB 16
Additions
Disposals
Transfers
Balance as at 30 June 2020
-
-
-
-
-
-
-
-
-
-
-
105
16
-
-
-
3,736
30,178
672
(351)
(117)
-
2,498
(1,495)
(2,741)
-
121
3,940
28,440
-
-
-
-
-
-
-
16
-
-
-
1,718
-
-
-
1,966
(245)
-
745
2,015
-
-
9,437
1,857
453
472
(1,804)
(180)
(1,040)
-
-
-
-
(745)
1,176
(641)
-
137
5,658
30,161
2,760
8,985
-
-
-
-
-
-
-
-
-
-
12,089
71
6,455
-
(5,788)
(166)
-
71
68,329
-
-
-
-
-
43,909
5,515
(3,830)
(3,898)
-
-
-
-
-
-
-
6,891
(886)
-
47,701
71
20,628
8,450
745
-
41,696
509
166
13,877
Net Book Value as at 30 June 2020
Net Book Value as at 30 June 2019
253
253
273
289
1,039
1,649
5,515
7,393
7,208
-
6,269
3,618
13.1
The following useful lives are used in the calculation of depreciation:
Buildings
Leasehold improvements
Plant and equipment
Right of Use - Premises
Right of Use - Vehicles
13.2
Assets held as security
25 years
4 - 5 years
3 - 10 years
1 - 5 years
3 - 5 years
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 19).
51
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 14 NON-CURRENT ASSETS - GOODWILL
Cost
Closing carrying value
2020
2019
Goodwill relates to BSA | Build | Fire.
Consolidated
$'000
11,185
11,185
The assessment of impairment of goodwill is based on a Fair Value Less Cost of Disposal (FVLCOD) model. The model includes the following key
assumptions:
• EBITDA for the CGU is broadly consistent with the 30 June 2021 financial year budgeted EBITDA.
• EBITDA multiples for arm’s length transactions of businesses similar in size and nature to the business units within recent financial periods.
The resulting FVLCOD model is consistent with a level 3 instrument in the fair value hierarchy. No reasonably possible changes would unfavourably
impact the model to the extent that the related goodwill would be impaired.
52
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 15 NON-CURRENT ASSETS - OTHER INTANGIBLE ASSETS
Intangible assets, other than goodwill, have finite lives. The current amortisation for intangible assets is included under depreciation and
amortisation expense per the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
Cost
Balance as at 30 June 2018
Additions
Balance at 30 June 2019
Additions
Transfers
Disposals
Balance at 30 June 2020
Accumulated amortisation and impairment
Balance as at 30 June 2018
Amortisation expense
Balance at 30 June 2019
Amortisation expense
Disposals
Balance at 30 June 2020
Order Backlog
Software
Construction
$’000
$’000
$’000
Assets Under
10,079
-
10,079
-
-
-
10,079
(8,339)
(674)
(9,013)
-
-
-
1,099
7,059
(164)
7,994
-
-
-
(674)
(2,810)
-
151
(9,687)
(2,659)
130
2,330
2,460
6,290
(7,059)
-
1,691
-
-
-
-
-
-
Total
$’000
10,209
2,330
12,539
7,389
-
(164)
19,764
(8,339)
(674)
(9,013)
(3,484)
151
(12,346)
Net Book Value as at 30 June 2020
392
5,335
1,691
7,418
Net Book Value as at 30 June 2019
1,066
-
2,460
3,526
The following useful lives are used in the calculation of amortisation:
Order backlog
Software
1 to 9.5 years
2 to 5 years
53
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16 OTHER FINANCIAL ASSETS
(a)
Shares in subsidiaries
Details of Group Companies
Parent Entity:
BSA Limited
Ultimate Parent Entity:
BSA Limited
Name of Subsidiary
Mr Broadband Pty Limited
BSA Advanced Property Solutions (Holdings) Pty Ltd (formerly BSA Maintain
(Holdings) Pty Limited, formerly Allstaff Airconditioning Holdings Pty Limited)
BSA Advanced Property Solutions (VIC) Pty Ltd (formerly BSA Maintain (VIC) Pty
Limited, formerly Allstaff Airconditioning (VIC) Pty Limited)
BSA Advanced Property Solutions (NSW) Pty Ltd (formerly BSA Maintain (NSW)
Pty Limited, formerly Allstaff Airconditioning (NSW) Pty Limited)
BSA Advanced Property Solutions (ACT) Pty Ltd (formerly BSA Maintain (ACT)
Pty Limited, formerly Allstaff Airconditioning (ACT) Pty Limited)
BSA Advanced Property Solutions (ECR) Pty Ltd (formerly 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)
BSA | APS
BSA | APS
BSA | APS
BSA | APS
BSA | APS
BSA | APS
BSA | CUI
BSA | CUI
BSA | CUI
BSA Advanced Property Solutions (NT) Pty Ltd (formerly MEC Services Pty Limited)
BSA | APS
BSA Transmission Solutions Pty Limited
066 059 809 Pty Limited
Triple M Group Pty Limited
BSA Advanced Property Solutions (NSW & ACT) Pty Ltd (formerly Triple M
Mechanical Services Pty Limited)
BSA Advanced Property Solutions (Essential Services) Pty Ltd (formerly Triple M
Mechanical Services (Qld) Pty Limited)
BSA | CUI
BSA | CUI
BSA | APS
BSA | APS
BSA | APS
BSA Advanced Property Solutions (FIRE) Pty Ltd (formerly Triple M Fire Pty Limited)
BSA | APS
BSA Advanced Property Solutions (Administration) Pty Ltd (formerly Triple M
Mechanical Services (Administration) Pty Limited)
BSA Networks Pty Limited
BSA | APS
BSA | CUI
BSA Advanced Property Solutions (WA) Pty Ltd (formerly BurkeAir Pty Limited)
BSA | APS
Principal
Place of
Percentage owned (%)
Activity
incorporation
2020
2019
Australia
Australia
Australia
Australia
-
-
-
-
100%
100%
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
100%
100%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Australia
100%
100%
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
(b)
Deed of Cross Guarantee
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.
54
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16 OTHER FINANCIAL ASSETS (CONTINUED)
16.1
Composition of the Group
Information about the composition of the Group at the end of the reporting year is as follows:
Principal Activity
and operation
2020
2019
Place of incorporation
Number of wholly-owned
subsidiaries
Communications & Utility Infrastructure
Advanced Property Solutions
Australia
Australia
6
13
19
6
13
19
16.2
Discontinued operations
BSA | Build | HVAC
On 13 August 2019, BSA outlined to the ASX it had agreed to sell the New South Wales and Victorian divisions of its HVAC Build Major Projects
business to Fredon Air Pty Limited (Fredon).
In addition, BSA noted the wind down of operations where it retained lump sum contractor risk except for the:
• HVAC Build Minor Projects business, which will be retained in its entirety and operated within BSA's APS division going forward, and
•
Fire Build Business, which is being strategically retained as a profitable and high growth service offering.
BSA disclosed the operations which were either due to be sold or wound-down as discontinued operations in its 30 June 2019 financial report. The
completion of the sale of the operations to Fredon was announced to the ASX on 2 September 2019 and other operations with lump sum contract risk
continue to be wound-down over the current financial period. The discontinued operations recorded for the year ended - 30 June 2020 are as follows:
Analysis of loss for the year from discontinued operations
BSA | Build | HVAC
Revenue from the sale of goods and services
Expenses
Loss on disposal
Loss before interest and tax
Net financing costs
Loss before tax
Income tax benefit (note 7.1)
Loss for the period from discontinued operations
Cash flows from / (used in) discontinued operations
BSA | Build | HVAC
Net cash inflow/(outflow) from operating activities
Net cash inflow/(outflow) from investing activities
Net cash inflow/(outflow) from financing activities
2020
$’000
Consolidated
2019
$’000
3,484
(11,901)
(2,488)
(10,905)
(33)
(10,938)
2,176
(8,762)
2020
$’000
(623)
(15)
-
(638)
100,817
(112,602)
-
(11,785)
(33)
(11,818)
1,226
(10,592)
2019
$’000
(7,129)
(133)
(33)
(7,295)
55
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16 OTHER FINANCIAL ASSETS (CONTINUED)
16.3
Assets held for sale
BSA | Build | HVAC | NSW & VIC
At 30 June 2019, the assets and liabilities relating to the BSA | Build | HVAC business have been classified as held for sale.
Property, plant and equipment
Other assets
Total assets classified as held for sale
Total liabilities directly associated with assets held for sale
2020
$'000
-
-
-
-
Consolidated
2019
$'000
113
17,301
17,414
12,695
56
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 17 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
Total equity
(b)
Financial Performance
Profit/(Loss) for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year, net of tax
2020
$’000
71,109
46,842
117,951
70,351
15,312
85,663
32,288
100,390
(82,188)
12,718
1,368
32,288
(5,493)
(5,493)
Consolidated
2019
$’000
58,487
35,618
94,105
51,572
6,599
58,171
35,934
98,894
(77,546)
12,718
1,868
35,934
(10,539)
(10,539)
(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 $6,915,000 (2019: $5,047,000
directly relating to the parent. Guarantees secured by cross guarantee by all group members amounted to $33,405,000 (2019:$38,409,000).
57
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 18 TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Other payables
Total Payables
NOTE 19 BORROWINGS
CURRENT
Total current borrowings
Total non-current borrowings
Total borrowings
2020
$’000
21,810
51,685
73,495
2020
$’000
2,116
-
2,116
Consolidated
2019
$’000
32,808
30,065
62,873
Consolidated
2019
$’000
1,766
-
1,766
The Group has Banking Facilities amounting to $43,500,000 which have an expiry date of 17 June 2023.
During FY2020, the Group refinanced through securing new facilities with Commonwealth Bank of Australia (CBA). At 30 June 2020, pre-existing
facilities held with National Australia Bank (NAB) remained though in the process of being closed down.
58
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 19 BORROWINGS (CONTINUED)
Total assets pledged as security
CURRENT
Cash and cash equivalents
Trade and other receivables
Assets held for sale
Inventories
NON-CURRENT
Trade and other receivables
Property, plant & equipment
Deferred tax assets
2020
$’000
37,742
61,120
-
1,748
100,610
-
20,628
7,611
28,239
128,849
Consolidated
2019
$’000
21,941
71,798
17,414
1,311
112,464
432
13,877
8,982
23,291
135,755
(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 HP 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 defaults or breaches of any loan agreements during the current year.
Reconciliation of liabilities arising from financing activities
(b)
(c)
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.
Lease liabilities
Other borrowings
Non-cash financing
Financing
cash flows
New AASB 16
leases
AASB 16
adoption
30 June 2019
(note 2)
30 June 2020
$’000
$’000
$’000
$’000
$’000
3,907
1,766
5,673
(4,373)
350
(4,023)
6,417
8,399
-
-
6,417
8,399
14,350
2,116
16,466
(d)
The cash flows from other borrowings make up the net amount of proceeds from borrowings and repayment of borrowings in the consolidated statement of
cash flows.
59
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 20 LEASE LIABILITIES
Current lease liabilities
Non-current lease liabilities
2020
$’000
5,384
8,966
Consolidated
2019
$’000
1,087
2,820
14,350
3,907
At 30 June 2020, there were $2,906,000 (2019: $3,907,000) of finance and hire purchase liabilities as determined under the accounting standard
AASB 117 Leases that applied prior to 1 July 2019.
Extension options
Certain leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable contract period.
Where practicable, the Group seeks to include extension options (by the Group not the lessor) in new leases to provide operational flexibility.
The Group has assessed at lease commencement whether it is reasonably certain to exercise the extension options, and where it is reasonably
certain, the extension period has been included in the lease liability.
Periodically, the Group reassesses whether it is reasonably certain that extension options will be exercised if there is a significant event or change in
circumstances.
Residual value guarantees and buy out options
Certain lease contracts may include an option to buy-out the asset at the end of the lease term or include contingent rental guarantees where the
Group could be exposed to the variability of returns in relation to return conditions at lease expiry.
The Group includes payments for contingent rental guarantees or buy-out options only if it is reasonably certain that those payments will occur at
the end of the lease term.
The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances
within its control.
60
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 21 PROVISIONS
Employee benefits
Other provisions (see below)
CURRENT
NON-CURRENT
Note
(i)
Other Provisions
Balance at 30 June 2019
Additional provisions recognised
Provisions reversed
Utilised
Balance at 30 June 2020
Office
of State
Revenue (ii)
1,843
1,045
-
(1,560)
1,328
Make
Good (iii)
1,346
214
(14)
(28)
1,518
Leases
(iv)
2,540
-
-
(734)
1,806
2020
$’000
11,375
9,764
Consolidated
2019
$’000
8,664
7,662
21,139
16,326
13,854
7,285
11,730
4,596
21,139
16,326
Contract
Provisions
(v)
1,933
4,159
-
(980)
5,112
Total
7,662
5,418
(14)
(3,302)
9,764
(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 FY2020 stands at $1,328,000 (FY2019: $1,843,000).
(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 leases relates to onerous lease costs.
(v)
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.
61
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 22 ISSUED CAPITAL
(a)
Share capital
Ordinary shares - fully paid
(b)
Movements in ordinary share capital
Date
Details
30 June 2019
Opening Balance
2 September 2019
Exercise of Performance Rights
26 September 2019
Exercise of Performance Rights
3 October 2019
Exercise of Performance Rights
2 November 2019
Dividend Reinvestment Plan
30 June 2020
Exercise of Non Executive Director rights
Note
(c)
Parent Entity
2020
2019
Number of
Number of
Shares
Shares
431,859,368
428,241,404
Number of
Shares
$’000
428,241,404
98,894
553,301
1,259,524
368,868
1,230,389
205,882
208
535
155
528
70
30 June 2020
Balance
431,859,368
100,390
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 2020 no options were held over ordinary shares of the Company.
(e)
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.
(f)
Employee Performance Rights Plan
Information relating to the BSA Limited Performance Rights Plan, including details of rights issued, exercised and lapsed during the financial year
and rights outstanding at the end of the financial year, is set out in Note 27.
(g)
Fee Sacrifice Equity Plan
Information relating to the BSA Limited Fee Sacrifice Equity Plan to Individual Non-Executive Directors, 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 27.
62
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 23 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
2020
$’000
1,368
1,368
1,868
398
(898)
Consolidated
2019
$’000
1,868
1,868
1,568
299
1
Closing balance
1,368
1,868
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 27.
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
Opening balance adjustment AASB 16 application
Opening balance adjustment AASB 15 application
Opening balance adjustment AASB 9 application
As restated
Net profit for the year, continuing operations
Net loss after tax, discontinued operations
(74,032)
624
-
-
(73,408)
7,802
(8,762)
(65,243)
-
(8,269)
(520)
(74,032)
-
-
Balance at end of year
(74,368)
(74,032)
(c)
Profit Reserve
Movements in profit reserve were as follows:
Balance at beginning of year
Net profit for the year, continuing operations
Net loss after tax, discontinued operations
Dividends
Balance at end of year
9,204
-
-
(4,306)
11,150
10,764
(10,592)
(2,118)
4,898
9,204
63
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 23 RESERVES AND ACCUMULATED LOSSES (CONTINUED)
(d)
Dividends on equity instruments
Recognised amounts
Fully paid ordinary shares
Interim dividend:
Final fully franked dividend of 0.5 (2019: 0.5) cents per
fully paid ordinary share franked at the rate of 30%
Unrecognised amounts
Fully paid ordinary shares
Final dividend
2020
Consolidated
2019
Cents per share
Total $‘000
Cents per share
Total $‘000
0.50
0.50
2,154
2,152
-
0.50
-
2,118
0.50
2,163
0.50
2,152
On 24 August 2020 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 2020, to be paid to shareholders on 3 November 2020. 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 2 October 2020. The total estimated dividend to be paid is $2,163,000.
The Group has a Dividend Reinvestment Plan (DRP) in place. The DRP was in place for the distribution made in November 2019. The distribution resulted
in $1,623,000 being paid in cash and $528,000 being raised by the DRP through the issue of 1.228 million securities at $0.43 in November 2019. In the prior
year, the distribution resulted in $873,000 being paid in cash and $1,245,000 being raised by the DRP through the issue of 4.610 million securities at $0.27 in
November 2018.
(e)
Franking credits
Franking account balance as at 30 June
Franking credits that will arise from the payment of income tax payable as at the reporting date
2020
$’000
13,905
475
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
(1,847)
holders during the period.
Consolidated
2019
$’000
14,558
255
(908)
Net franking credits available
12,533
13,905
64
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 24 CAPITAL AND LEASING COMMITMENTS
(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
NOTE 25 SEGMENT INFORMATION
(a)
AASB 8 Operating Segments
2020
$’000
312
494
-
806
Consolidated
2019
$’000
3,636
5,880
-
9,516
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 | Communications & Utility Infrastructure (CUI)
BSA | CUI provides services to the telecommunications, subscription television and utility industries. These services include the delivery of bundled
services over fixed line multi-technology networks, the installation of subscription television and the installation of smart meters.
BSA | Advanced Property Solutions (APS)
BSA | APS provides the design, installation, maintenance, and optimisation of building services for all hard assets in commercial and industrial buildings
and properties, including: Fire Detection and Suppression, Mechanical Services, Heating, Ventilation, Air Conditioning, Refrigeration, Electrical, and
Building Management Systems (BMS).
(c)
Segment revenues and results
The following is an analysis of the Group’s revenue and results by reportable operating segment:
Revenue
Year Ended
Segment Profit/Loss
Year Ended
BSA | CUI
BSA | APS
Other
Significant items
Reported EBITDA
Depreciation and amortisation
Finance costs
Profit before tax from continuing operations
Income tax expense - continuing operations
Profit after tax from continuing operations
2020
$’000
272,924
217,501
-
490,425
2019
$’000
251,462
218,317
-
469,779
2020
$’000
21,047
8,562
(3,729)
25,880
(2,892)
22,988
(10,375)
(1,756)
10,857
(3,055)
7,802
2019
$’000
20,690
9,784
(5,862)
24,612
(2,818)
21,794
(6,189)
(808)
14,797
(4,033)
10,764
Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year (2019: Nil).
65
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 25 SEGMENT INFORMATION (CONTINUED)
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. This is the measure reported to the chief
operating decision maker for the purposes of resource allocation and assessment of segment performance.
(c)
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 | CUI segment who accounts for 39% of external revenue (2019: 28%). The Group's next most significant client is in the BSA | CUI segment and
accounts for 7% of external revenue (2019: 8%).
NOTE 26 CASH FLOW INFORMATION FOR THE PERIOD
(a)
Reconciliation of (loss)/profit to net cash flows from operating activities for the year
(Loss)/Profit for the year
Goodwill on sale of non-current assets
Depreciation
Amortisation
Interest on ROU liabilities
Share-based payment expense
Net profit on sale of non-current assets
Change in operating assets and liabilities
Decrease in trade receivables
(Increase)/decrease in inventories
Decrease/(increase) in deferred tax asset
Decrease in other operating assets
Decrease in trade payables
Increase in other operating liabilities
(Decrease)/increase in tax provision
Increase in provisions
Net cash generated by operating activities
2020
$’0001
(960)
4,000
6,891
3,484
524
398
(412)
7,424
(750)
1,371
3,583
(10,997)
13,140
(1,224)
4,813
31,285
Consolidated
2019
$’0001
172
-
5,515
674
-
299
(307)
6,976
230
(3,767)
3,057
(4,766)
6,669
2,807
787
18,346
1 The above Consolidated Statement of Cash Flows includes both continuing and discontinued operations. Amounts related to discontinued
operations are disclosed in Note 16.2.
(b)
Credit Standby Arrangements with Banks
Working capital facility
Amount utilised
Unused credit facility
This facility is summarised as follows:
2020
$’000
43,500
-
43,500
Consolidated
2019
$’000
32,500
-
32,500
A cash advance facility and a borrowing base facility which covers the financial requirements of the day to day operations of the Group.
66
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 26 CASH FLOW INFORMATION FOR THE PERIOD (CONTINUED)
(c)
Master Asset Finance Facilities
Total asset finance facility
Amount utilised
Total unused Master Asset Finance Facility
(d)
Guarantees
2020
$’000
3,050
(2,909)
141
Consolidated
2019
$’000
8,000
(3,907)
4,093
Guarantees to the value of $14,664,000 were utilised at 30 June 2020 (2019: $18,440,000), 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.
(e)
Surety Bonds
Surety Bonds of which $18,741,000 were utilised at 30 June 2020 (2019: $19,969,000), are unsecured.
NOTE 27 SHARE-BASED PAYMENTS
(a)
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.
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.
67
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 27 SHARE-BASED PAYMENTS (CONTINUED)
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
Consolidated and parent entity
26 Mar 20
26 Mar 20 26 Mar 34
Total
(b)
Employee Performance Rights Plan
-
-
-
-
205,882
(205,882)
205,882
(205,882)
-
-
-
-
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.
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.
68
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 27 SHARE-BASED PAYMENTS (CONTINUED)
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.
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
Consolidated and parent entity
30 Jun 15
30 Jun 15
25 Nov 19
28 Nov 17
4 Dec 17
4 Dec 22
1 Oct 18
1 Oct 18
1 Oct 23
1 Mar 19 30 June 20
1 Mar 24
30 Aug 19
30 Aug 19
30 Aug 24
27 Nov 19
27 Nov 19
26 Nov 34
1 Feb 19
1 Feb 19
1 Feb 24
27 Nov 19
27 Feb 20
26 Nov 24
27 Nov 19
9 Sep 20
26 Nov 34
27 Nov 19
27 Nov 20
26 Nov 34
27 Nov 19
9 Sep 21
26 Nov 34
27 Nov 19
27 Nov 21
26 Nov 34
-
-
-
-
-
-
-
-
-
-
-
-
1,116,667
142,857
553,301
175,440
-
-
-
-
-
-
368,868
1,185,282
(1,116,667)
(142,857)
(553,301)
-
(368,868)
-
380,000
-
(180,000)
-
-
-
-
-
98,666
100,001
108,108
101,370
275,703
2,237,998
-
-
-
-
-
Total
2,368,265
(c)
Executive Securities Plan
-
-
-
-
-
(689,666)
(200,000)
-
-
-
-
-
-
-
-
175,440
-
495,616
-
98,666
100,001
108,108
101,370
275,703
(2,361,693)
(889,666)
1,354,904
The establishment of the BSA Executive Securities Plan was approved by shareholders at the 2005 AGM. The Plan was established as a
mechanism to provide the Company's key executives with a direct equity involvement and incentive in the Company which aligns them with the
shareholders.
The number of securities to be offered and the time at which securities may be offered from time to time to executives and the price and terms of
payment, shall be determined by the Board in its discretion.
The Board may at such times as it determines invite any executive to be a member of the Plan.
If an Executive to whom an invitation has been issued forwards to the Company a duly completed Loan Application and the Transfer Documents
together with his acceptance, and where appropriate his Application for Shares, then the Company shall, in accordance with the terms of the Loan
Agreement, lend to the Executive such amount as the Executive has applied for in the Loan Application.
The maximum amount of any Loan shall be the total subscription price for the shares applied for.
No interest is payable by the borrower under the Loan Agreement.
An Executive shall not sell, mortgage, charge, assign or otherwise dispose of or encumber any shares before payment or repayment of any amount
outstanding to the Company in respect thereof.
Subject to the above restriction and to the terms of the Loan Agreement (if any) deemed to be entered into by the Executive, an Executive shall
from the Date of Allotment, be the absolute beneficial owner of the shares.
Unless the Directors of the Company otherwise provide in the terms of any Invitation, all Plan Shares shall rank for dividends declared on or after the Date of
Allotment and shall in all respects rank equally with and have the same rights and entitlements as all other fully paid ordinary shares of the Company.
69
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 27 SHARE-BASED PAYMENTS (CONTINUED)
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:
Issue Price
Balance at Start
Granted During
Released from Escrow
Balance in Escrow at
Consolidated and parent entity
Grant Date
Expiry Date
(cents)
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
of the Year
Number
400,000
600,000
150,000
-
400,000
500,000
2,050,000
the Year
Number
-
-
-
-
-
-
-
During the Year
End of the Year
Number
200,000
350,000
-
-
200,000
250,000
1,000,000
Number
200,000
250,000
150,000
-
200,000
250,000
1,050,000
NOTE 28 EVENTS OCCURRING AFTER THE BALANCE DATE
On 7 July 2020, the interim dividend declared on 25 February 2020 was paid to shareholders as at the record date of 27 March 2020.
On 10 August 2020, BSA was served with legal proceedings in relation to its contracting arrangement, specifically to independent contractors and whether
they are properly characterised as such. BSA’s position on the matter, as outlined on 9 December 2019, remains unchanged. BSA intends to vigorously
defend against these proceedings.
On 24 August 2020, the Director’s declared a dividend of 0.50 cents per share.
Other than as detailed above, the Directors are not aware of any significant events since the end of the reporting period.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those to other parties unless
otherwise stated.
NOTE 29 RELATED PARTY TRANSACTIONS
(a)
Transactions with related parties:
Rent was paid to The Day Street Unit Trust in which M Lowe, a Director, has a beneficial interest.
2020
$
-
Outstanding balances arising from purchases of services
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Purchase of services
Rent payable for premises from Director
70
2020
$
-
Consolidated
2019
$
74,170
Consolidated
2019
$
14,875
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 29 RELATED PARTY TRANSACTIONS (CONTINUED)
(b)
Equity instrument disclosures relating to Key Management Personnel
(i) Rights holdings
The numbers of rights over ordinary shares in the Company held during the financial year by each Director of BSA Limited and other key
management personnel of the Group, including their personally related parties, are set out below.
Balance at
the start of
Granted as
Rights
Change
Balance at
Net
Rights
Vested
but Not
Vested
Vesting
and
During
2020
the year
Compensation
Exercised
Other
End of Year
Exercisable
Exercisable
Year
Michael Givoni
Timothy Harris
Nicholas Yates
-
205,882
(205,882)
175,440
1,259,524
495,616
-
-
(1,259,524)
-
-
-
-
671,056
-
1,434,964
701,498
(1,465,406)
-
671,056
-
-
-
-
-
-
-
-
205,882
175,440
-
381,322
Balance at
the start of
Granted as
Rights
Change
Balance at
Net
Rights
Vested
but Not
Vested
Vesting
and
During
2019
the year
Compensation
Exercised
Other
End of Year
Exercisable
Exercisable
Year
Michael Givoni
Timothy Harris
Nicholas Yates
Graeme Barclay
207,838
375,391
1,259,524
251,708
(459,546)
175,440
(375,391)
-
-
50,000
105,000
(155,000)
1,892,753
532,148
(989,937)
-
-
-
-
-
175,440
1,259,524
-
1,434,964
-
-
-
-
-
-
1,259,524
251,708
-
-
-
105,000
1,259,524
356,708
Further details of schemes can be found in the Directors’ Report.
71
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 29 RELATED PARTY TRANSACTIONS (CONTINUED)
(b) Equity instrument disclosures relating to Key Management Personnel (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
the year
Rights
Exercised
Other Changes
During the Year
Balance at the
Balance
End of the Year
Held Nominally
2020
Directors of BSA Limited
Ordinary Shares
Michael Givoni
Timothy Harris
Paul Teisseire
Mark Lowe
Nicholas Yates
David Prescott1
Chris Halios-Lewis2
Graeme Barclay
Ordinary Shares - Escrowed
Mark Lowe
200,000
1,255,946
205,882
375,391
680,012
10,115,403
2,907,625
-
-
155,000
-
-
-
-
-
-
-
1,461,828
375,391
680,012
10,115,403
1,259,524
86,334
4,253,483
-
-
-
-
-
-
-
-
-
-
155,000
200,000
15,689,377
1,465,406
86,334
17,241,117
-
-
-
-
-
-
-
-
-
-
1 David Prescott is Investment Manager of Lanyon Asset Management Pty Ltd which holds 94,311,187 ordinary shares in BSA Limited.
2 Chris Halios-Lewis is CFO and Company Secretary of Birketu Pty Ltd. Birketu Pty Ltd holds shares in BSA Limited of 73,175,760. Chris Halios-Lewis
has no beneficial interest in Birketu Pty Ltd.
Balance at
the start of
the year
Rights
Exercised
Other Changes
During the Year
Balance at the
Balance
End of the Year
Held Nominally
2019
Directors of BSA Limited
Ordinary Shares
Michael Givoni
Paul Teisseire
Mark Lowe
Graeme Barclay
Nicholas Yates
796,400
680,012
10,115,403
459,546
-
-
-
155,000
2,854,760
-
-
Ordinary Shares - Escrowed
Mark Lowe
200,000
Key Management Personnel
Ordinary Shares
Timothy Harris
-
14,646,575
375,391
989,937
72
-
-
-
-
52,865
-
-
52,865
1,255,946
680,012
10,115,403
155,000
2,907,625
200,000
375,391
15,689,377
-
-
-
-
-
-
-
-
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 30 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
2020
$’000
Consolidated
2019
$’000
37,742
21,941
56,035
57,647
Financial Assets at amortised cost
93,777
79,588
Financial liabilities
Financial liabilities held at amortised cost
Trade and other payables
Borrowings
Lease liabilities
62,120
2,116
14,350
54,209
1,766
3,907
Financial liabilities at amortised cost
78,586
59,882
NOTE 31 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.
73
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 31 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 5% of gross monetary assets at balance date. Concentration of credit risk to
any other counterparty did not exceed 1% of gross monetary assets at balance date.
The maximum exposure to credit risk at balance date is as follows:
Receivables
2020
$’000
57,570
57,570
Consolidated
2019
$’000
59,395
59,395
Included in loans and receivables, the most significant customer accounts for 6.4%% of trade receivables at 30 June 2020 (2019: 16.5%).
The maximum exposure to credit risk at balance date by country is as follows:
Australia
2020
$’000
57,570
57,570
The maximum exposure to credit risk for cash and trade receivables at balance date by type of customer is as follows:
BSA | CUI
BSA | APS
2020
$’000
26,421
31,149
57,570
Consolidated
2019
$’000
59,395
59,395
Consolidated
2019
$’000
31,278
28,117
59,395
All major customers are credit worthy, as detailed above.
The Group has a high concentration of credit risk as loans and financing arrangements are typically operated with one financial
institution at a given time.
(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.
74
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 31 FINANCIAL RISK MANAGEMENT (CONTINUED)
Financing arrangements
The following financing facilities were available at balance date:
Credit stand-by arrangements
Total facilities:
Corporate Market Loan
Cash Advance Facility
Borrowing Base Facility
Debtor Finance Facility
Used at balance date:
Corporate Market Loan
Cash Advance Facility
Borrowing Base Facility
Debtor Finance Facility
Unused at balance date:
Corporate Market Loan
Cash Advance Facility
Borrowing Base Facility
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
2020
$’000
-
6,000
37,500
-
43,500
-
-
-
-
-
-
6,000
37,500
-
43,500
3,050
2,909
141
43,641
Consolidated
2019
$’000
20,000
-
-
12,500
32,500
-
-
-
-
-
20,000
-
-
12,500
32,500
8,000
3,907
4,093
36,593
In addition to the above arrangements the consolidated entity has a bank guarantee facility of $26,500,000 (2019:$26,500,000) which was utilised
to $14,664,000 (2019: $18,440,000).
In addition to the above facilities the consolidated entity has a surety bond facility with Swiss Re International SE of $30,000,000 (2019:$30,000,000)
which was utilised to $18,741,000 (2019: $19,969,000).
During FY2020, the Group refinanced through securing new facilities with Commonwealth Bank of Australia (CBA). At 30 June 2020, pre-existing
facilities held with National Australia Bank (NAB) remained though in the process of being closed down.
Refer Note 19 for details of terms of financing arrangements.
75
BSA LIMITED ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 31 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 2020
Other
Trade payables
Other payables
Lease liabilities
TOTAL
30 June 2019
Other
Trade payables
Other payables
Lease liabilities
TOTAL
Carrying
Contractual Cash
Amount
$’000
2,116
21,810
72,824
14,350
111,100
Flows
$’000
2,116
21,810
72,824
15,426
112,176
Carrying
Contractual Cash
Amount
$’000
1,766
32,808
46,391
3,907
84,872
Flows
$’000
1,766
32,808
46,391
4,411
85,376
< 6
mths
$’000
2,116
21,810
72,824
2,705
99,455
< 6
mths
$’000
1,766
32,808
46,391
690
81,655
6- 12
mths
$’000
-
-
-
2,705
2,705
6- 12
mths
$’000
-
-
-
690
690
Consolidated
> 3
years
$’000
-
-
-
-
-
> 3
years
$’000
-
-
-
-
-
1-3
years
$’000
-
-
-
10,015
10,015
1-3
years
$’000
-
-
-
3,031
3,031
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.
Carrying
Contractual Cash
Amount
$’000
39,193
21,927
61,120
Flows
$’000
41,289
21,927
63,216
Carrying
Contractual Cash
Amount
$’000
46,618
25,612
72,230
Flows
$’000
48,323
25,613
73,936
< 6
mths
$’000
41,289
21,560
62,849
< 6
mths
$’000
48,323
24,887
73,210
Consolidated
6- 12
mths
1-3
years
> 3
years
$’000
$’000
$’000
-
-
-
6- 12
mths
$’000
-
-
-
-
-
-
1-3
years
$’000
-
-
-
-
367
367
> 3
years
$’000
-
726
726
Financial Assets
30 June 2020
Trade receivables
Other receivables
TOTAL
30 June 2019
Trade receivables
Other receivables
TOTAL
76
BSA LIMITED ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 32 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)/debt1
Total equity
Total gearing ratio
2020
$’000
(32,720)
32,288
(101.34%)
Consolidated
2019
$’000
(16,268)
35,934
(45.27%)
1 Excludes right of use lease liabilities. Includes finance leases had AASB 117 Leases been applied.
Gearing levels were maintained at a healthy position at 30 June 2020. 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 33 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 $33,405,000 (2019:$38,409,000).
(ii) Following the settlement of the NSW OSR issue, BSA is currently working with other State Revenue Authorities on outstanding matters.
(iii) Certain claims, including those arising out of construction contracts, have been made by, or against, controlled entities in the ordinary course of
business. The Directors do not consider the outcome of any of these claims will be materially different to the position taken in the financial accounts of
the Group.
NOTE 34 CORPORATE INFORMATION
The Financial Report of BSA Limited for the year ended 30 June 2020 was authorised for issue in accordance with a resolution of the Directors on
24 August 2020 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
77
BSA LIMITED ANNUAL REPORT 2020 DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2020
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 16 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
24 August 2020
78
BSA LIMITED ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
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 2020, 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 BSA Limited or 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 2020 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 & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (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.
Key Audit Matter
Recognition of revenue on Fire Build
construction contracts
Refer to Note 3.5.3 ‘Construction revenue,
Note 4 ’Critical accounting judgements and
key sources of estimation uncertainty’, Note
‘Discontinued
5
‘Revenue’, Note 16.2
How the scope of our audit responded to the
Key Audit Matter
Our procedures included, but were not limited to:
•
Evaluated management’s processes and
controls over the recognition of contract
revenue, including;
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
79
BSA LIMITED ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
Page 2
Operations’ and Note 25
Information’.
‘Segment
in
Included
the Group’s consolidated
statement of profit or loss and other
comprehensive income for the year ended
30 June 2020 is revenue relating to Fire
Build construction contracts totalling $94.0
million, as included in the APS segment.
-
-
obtained an understanding of the key
controls, in particular the estimation and
review of costs to complete; and
understood the project review control
that is undertaken by Group management
on a monthly basis.
•
For a sample of contracts selected based on
quantitative and qualitative characteristics our
procedures included:
One of the Group's significant sources of
revenue is from Fire Build 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 to the work
completed, i.e. the percentage of work
performed up
reporting date
compared to the total anticipated contract
work to be performed.
the
to
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.
-
-
-
-
-
the
forecast
reflected
terms were
obtained an understanding of the contract
terms and conditions and
inspected
signed contracts to evaluate whether
contract
in
management’s estimate of forecast costs
and revenue;
costs
to
challenged
complete, as well as
inspection of
supporting documentation for contracted
costs such as materials, subcontractors
and labour;
tested contractual entitlement, variations
and claims
in contract
recognised
revenue;
for loss making contracts, recalculated
the expected loss at completion and
verified that the appropriate loss was
recorded; and
evaluated
to
liquidated damages for late delivery of
contract works.
exposures
significant
• Assessed
the
appropriateness
of
the
disclosures in the financial statements.
Collectability of
contract assets
trade receivables and
Our procedures included, but were not limited to:
•
Evaluated management’s processes and
controls over
trade
receivables and contact assets;
the collectability of
• Assessed the completeness and accuracy of the
aged debtor (including ageing analysis) and
work in progress reports at year end, and on a
sample basis, agreed to the subsequent receipt
of cash;
•
For the trade receivable balances that were not
collected prior to the issue of the financial
statements, evaluated on a sample basis the
probability of recovery of outstanding amounts
by reference to the status of contract
the
negotiations,
customers, external and internal legal advice
and supporting documentation, historical
recoveries
supporting
documentation;
correspondence with
other
and
• Confirmed that unbilled work in progress
amounts at year end were subsequently billed
to the customer;
to Note 11
Refer
‘Trade and other
receivables’, Note 12 ‘Contract assets and
liabilities’
‘Financial
Instruments’
and Note
30
in
Included
the Group’s consolidated
statement of financial position as at 30 June
2020 are contract assets totalling $3.6
million and trade receivables totalling $41.2
million.
The Group recognises contract assets in
respect of the progressive valuation of work
completed as well as trade receivables which
represent amounts invoiced to customers.
Contract assets (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.
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•
Credit risk and collectability of trade
receivables and amounts due
from
customers under construction contracts are
subject to estimation and judgement and
to be monitored by
are
management on an ongoing basis.
required
to
For the work in progress amounts that were not
the customer we challenged
billed
management’s
the
recoverability of these amounts via inquiry of
management,
internal and
inspection of
inspection of
legal advice, or
external
subsequent billing approved by the client; and
assessment
of
• Assessed
the
appropriateness
of
the
disclosures in the financial statements.
Litigation and claims
Our procedures included, but were not limited to:
Refer to Note 21 ‘Provisions’ and Note 33
‘Contingent Liabilities’.
•
Evaluated management’s processes and
controls to assess the likely financial impact of
legal proceedings;
• Obtained the Group’s litigation reports and
making enquiries about the status of litigation
matters with Group management and external
legal advisors;
• Reviewed minutes of meetings of those
charged with governance to identify their
consideration of legal proceedings as relevant
and correspondence between the Group and its
external legal advisors;
• Assessed management’s determination of the
provisions recorded for potential litigation
losses and claims; and
• Assessed
of
disclosures in the financial statements.
appropriateness
the
the
in
Included
the Group’s consolidated
statement of financial position at 30 June
2020 are provisions related to litigation and
claims totalling $6.4 million.
The Group is party to legal proceedings and
claims 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
legal counsel where relevant,
external
whether there is a requirement to provide
for expected exposures or disclose a
contingent
in the consolidated
financial report.
liability
Judgement is applied when determining the
likely settlement of litigation and claims. The
most significant legal claims are related to:
•
Payroll tax liability with the State
Revenue Office (OSR) in New South
Wales, Queensland and Victoria;
• Research & development (R&D) tax
concession; and
• Class action in relation to the Group’s
contracting arrangements.
Discontinued Operations
Our procedures included but were not limited to:
Refer
Operations’.
to Note
16.2
‘Discontinued
• Assessed the appropriateness of the amounts
classified as discontinued operations;
to dispose
During the prior financial year, a decision
was made
the Heating,
Ventilation and Air Conditioning (HVAC)
component of the Build division. This has
a
consequently
discontinued operation for the year ended
30 June 2020.
classified
been
as
Accounting and presentation of discontinued
operations contain several judgments that
affect the presentation of the consolidated
profit or loss statement, which can affect:
•
The allocation of revenue and costs
• Agreed the aggregate carrying value of the
disposed net assets from the underlying
accounting
the consolidated
records
financial statements;
to
•
Evaluated and challenged the estimates and
judgements within management’s assessment
of the onerous lease provisions and residual
liabilities to be retained by the Group. This
included reviewing and assessing contracts and
lease agreements, the amounts allocated to
discontinued operations, and the discount rate
used in the calculation of the onerous lease
provision;
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between continuing and discontinued
operations;
• Allocation of intangible assets related to
brands and goodwill for the business
disposed of;
• Settlement of employee liabilities;
• Accounting for onerous leases and exit
costs to be settled by the Group; and
Taxation implications relating to the
discontinued operations.
•
• Assessed the appropriateness of the allocation
of the goodwill to the discontinued operations;
• Assessed the appropriateness of the allocation
of overhead expenses to the discontinued
operations;
• Assessed the related taxation balances; and
• Assessed
the
disclosures
statements.
appropriateness
the
in
included
of
the
financial
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 2020 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
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
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BSA LIMITED ANNUAL REPORT 2020
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• 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.
•
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’s 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, actions
taken to eliminate threats or safeguards applied.
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 15 to 22 of the Directors’ Report for
the year ended 30 June 2020.
In our opinion, the Remuneration Report of BSA Limited, for the year ended 30 June 2020, complies
with section 300A of the Corporations Act 2001.
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BSA LIMITED ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
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.
Page 6
DELOITTE TOUCHE TOHMATSU
AG Collinson
Partner
Chartered Accountants
Sydney, 24 August 2020
84
BSA LIMITED ANNUAL REPORT 2020
SHAREHOLDER INFORMATION
THE SHAREHOLDER INFORMATION SET OUT BELOW WAS APPLICABLE AS AT 31 JULY 2020
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
Ordinary
Shares
192
561
285
698
202
1,938
61,005
1,731,446
2,218,287
28,827,270
399,804,314
432,642,322
Percentage
Number of
Performance
Percentage
Held
0.01
0.40
0.51
6.66
92.42
100.00
Holders
Rights
Held
5
-
-
2
1
8
451,387
33.31
-
-
232,461
671,056
-
-
17.16
49.53
1,354,904
100.00
There were 239 (2019: 221) 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
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BIRKETU PTY LTD
SANDHURST TRUSTEES LTD
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