Collins Foods Limited Annual Report 2013

FY2013 Annual Report · Collins Foods Limited
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ANNUAL REPORT 2013

COLLINS FOODS LIMITED
ABN 13 151 420 781

Contents
2  Chairman’s Message
4  CEO’s Report
6 

 Corporate Governance 
Statement

11  Directors’ Report
26   Auditor’s Independence 

Declaration

27  Consolidated Balance Sheet
28   Consolidated 

Income Statement
29   Consolidated Statement 

of Comprehensive Income

30   Consolidated Statement 
of Changes in Equity
31   Consolidated Statement 

Key dates 2013/2014
2012/13 full year results released
25 June 2013 

of Cash Flows

32   Notes to the Consolidated 
Financial Statements
80   Directors’ Declaration
81   Independent Auditor’s

Report

83   Shareholder Information
IBC Corporate Directory

2012/13 ﬁ nal dividend record date
5 July 2013

2012/13 ﬁ nal dividend payment date
19 July 2013

Annual General Meeting
4 September 2013

End of 2013/14 half year
13 October 2013

2013/14 half year results released
28 November 2013

2013/14 interim dividend record date
9 December 2013 

2013/14 dividend payment date
20 December 2013

End of 2013/14 full year
27 April 2014

COLLINS FOODS

1968
COLLINS FOODS 
OBTAINS KFC 
FRANCHISE IN QLD

1969

COLLINS FOODS OPENS 
FIRST KFC RESTAURANT 
IN KEDRON QLD

COLLINS FOODS 
INTRODUCES DRIVE-THRU 
FORMAT IN AUSTRALIA
1979

1985
COLLINS FOODS OPENS 
FIRST SIZZLER IN 
AUSTRALIA

1985
50TH KFC RESTAURANT 
OPENED

LAYING FOUNDATIONS 
FOR GROWTH

JAPAN (9)

CHINA (7)

Collins Foods Limited and its predecessors 
have a long and proud history of adapting 
to changes, innovating and laying new 
foundations for future growth.

THAILAND (40)

OUR FOUNDATIONS 
STRENGTHENED
–  Stronger senior management team
–  Operating and productivity improvement 

culture which delivers initiatives 

WESTERN AUSTRALIA (5)

QUEENSLAND
KFC (120) 
SIZZLER (19)

– Strong Yum! relationship
–  Remuneration framework further aligned 

to shareholder interests

–  Improved product innovation program 
–  Stronger Sizzler Asia platform
–  Solid pipeline for further restaurant 

growth in KFC in Queensland

COLLINS FOODS 
INTRODUCES FIRST KFC 
FOOD COURT RESTAURANT

1992
SIZZLER EXPANDS 
INTO ASIA

1989

2005
PACIFIC EQUITY 
PARTNERS ACQUIRES 
BUSINESS

2011

COLLINS FOODS LIMITED 
LISTS ON ASX

NEW SOUTH WALES
KFC (2) 
SIZZLER (3)

2013

COLLINS FOODS OWNS AND 
OPERATES 122 KFC AND 
27 SIZZLER RESTAURANTS 
IN AUSTRALIA, AND 
FRANCHISES 56 SIZZLER 
RESTAURANTS IN ASIA

Collins Foods Limited Annual Report 2013   1

 
CHAIRMAN’S
MESSAGE

Dear Shareholders
Following the disappointments of our ﬁ rst 
year as a listed company in 2011/12, I am 
very pleased to say that the 2012/13 year 
has seen a return to growth in both top line 
revenues and underlying earnings for the 
Collins Foods Group.

The Group’s revenues for the year were up 4.4% on prior 
year to $423.9 million, driven by strong sales growth from 
the Group’s Queensland network of KFC restaurants. This 
turnaround, achieved in a retail market which remained 
subdued, and in the face of increased competition, is a credit 
to the commitment and energy of the Collins team and its 
management. It gives us conﬁ dence that our KFC restaurants 
can continue to deliver strong and sustainable growth.

While the very strong performance of our KFC restaurants 
was enough to carry the Group into overall revenue growth, 
our Sizzler restaurants recorded store sales slightly below prior 
year levels. A comprehensive review of our Sizzler business was 
commenced during the year with the objective of returning 
the brand to revenue and proﬁ t growth in the short term, and 
re-positioning the brand and its presentation in the medium 
term. We regard Sizzler, both in Australia and overseas, as 
a potentially signiﬁ cant growth driver for the business in 
the years ahead.

Strong balance sheet and growing dividend
The Group has maintained its strong balance sheet throughout 
the year with comfortable gearing – net debt of $81 million 
and undrawn debt facilities of $40 million. 

With the business’ return to top-line growth and strong cash 
ﬂ ows, the Board has declared a ﬁ nal fully franked dividend for 
the 2013 ﬁ nancial year of 5.5 cents per share, in line with the 
Company’s dividend policy to pay at least 50% of statutory net 
proﬁ t after tax in dividends. This brings the total dividend for 
the 2013 ﬁ nancial year to 9.5 cents per share fully franked 
– a 46% increase on the 2012 year. 

Board changes
During the year Mr Stephen Copulos joined the board as 
a non-executive Director. In addition to being the Managing 
Director of the Copulos Group, a major shareholder of 
Collins Foods Limited, Stephen has more than 30 years’ 
experience with businesses and investments, and is currently 
the Chairman of QSR Pty Ltd which is the largest KFC 
franchisee in New South Wales. 

People make our business
Our business is all about our people, our team of more 
than 6,000 dedicated and hardworking employees across 
our KFC and Sizzler restaurants. 

At the corporate level, our Company is directed by a highly 
experienced management team led by Managing Director 
and Chief Executive Ofﬁ cer Kevin Perkins, who is also one 
of the Company’s largest shareholders. During the year our 
senior management team has been greatly strengthened 
by the appointment of Graham Maxwell as Chief Operating 
Ofﬁ cer and Group Chief Financial Ofﬁ cer. I would like to thank 
the management team and all our staff at Collins Foods for 
their commitment and dedication during a year in which the 
business faced signiﬁ cant challenges. We enter a new year 
much stronger due to the operational initiatives and strategies 
put in place during 2012/13 to address those challenges.

2  Collins Foods Limited Annual Report 2013

INNOVATION IS KEY IN AN INDUSTRY 
WITH INCREASING COMPETITION, AND 
WE ARE INVESTING SIGNIFICANTLY 
IN DEVELOPING AND TESTING NEW 
PRODUCT OFFERINGS.

Russell Tate
Chairman

Laying the foundations for growth
With the business continuing to face signiﬁ cant operational 
challenges stemming from a changing market landscape and 
competitor set, it is incumbent upon us to continually explore 
new strategies that will deliver long-term sustainable earnings 
growth and shareholder value. 

A number of operational initiatives have been adopted by 
management to counter the impact of rising input costs and 
minimise the extent to which increased costs need to be passed 
on to customers. These include productivity enhancements, 
energy saving initiatives and efforts to reduce food wastage, 
which should ultimately improve margins. 

Innovation is key in an industry with increasing competition, 
and we are investing signiﬁ cantly in developing and testing new 
product offerings with a particular focus on targeted value plays 
that resonate with an increasingly budget conscious consumer. 

A solid pipeline of new restaurant opportunities for KFC has 
been identiﬁ ed, and we continue to look for appropriate 
locations to expand our KFC network. As new restaurants 
continue to deliver strong returns for the business, it is 
important that we capitalise on these opportunities for 
proﬁ table growth. To maximise returns from our capital spend, 
we are continuing to look for ways to reduce the cost of new 
restaurant builds and refurbishments; while still improving our 
customer experience. 

For Sizzler, speciﬁ c strategies are being developed to improve 
value perceptions including menu changes and choice. You will 
see these roll out in the coming months, while work on the 
development of a new Sizzler model is ﬁ nalised.  

In closing I want to thank all of our shareholders for their 
continued support. The results of the past 12 months 
I believe demonstrate the resilience of our business through 
challenging times, and also highlight several attractive growth 
opportunities available to us. 

With a strong focus on the need to continue to grow the top 
line as we control costs through innovation and operational 
improvements, I believe we now have in place the right team 
and the right strategies to continue growing shareholder value. 

Collins Foods Limited Annual Report 2013   3

 
CEO’S
REPORT

The 2012/13 ﬁ nancial year was a challenging 
12 months for Collins Foods Group. Pleasingly, 
despite a difﬁ cult retail trading environment 
and rising input costs, we were able to 
generate top-line growth and a stronger 
result from underlying business operations.

The past year has been a tale of two businesses. Sales 
growth for the KFC business has improved dramatically 
following a lacklustre performance in the 2011/12 ﬁ nancial 
year. However, Sizzler has continued to be hampered by 
a subdued casual dining segment.

All of our team, from senior management to restaurant 
staff, have been focused on executing operational strategy 
initiatives to address the signiﬁ cant trading challenges our 
businesses faced. 

We have achieved major inroads in developing a range of 
efﬁ ciency and productivity enhancing measures to improve the 
performance of both our KFC and Sizzler businesses. I would 
like to take this opportunity to thank all of our team for their 
hard work and dedication over the past 12 months, and their 
commitment to strengthening our business for the future. 

Financial performance
Collins Foods generated revenues of $423.9 million for the 
ﬁ nancial period ended 28 April 2013 (FY13), up 4.4% on the 
prior corresponding ﬁ nancial period (FY12). This growth was 
largely driven by strong sales growth from the Group’s network 
of KFC restaurants. 

The Group generated Earnings Before Interest, Tax, 
Depreciation and Amortisation (EBITDA) of $47.2 million over 
FY13. This was down 5.0% on the prior year due largely to 
rising costs that placed increased pressure on margins. What 
made the past 12 months very challenging was our inability 
to pass on the full increase in input costs – food, energy and 
labour costs – given the subdued trading conditions. 

Net Proﬁ t after Tax (NPAT) was $16.4 million, up 43.9% 
on FY12. The FY12 result included signiﬁ cant costs and 
adjustments relating to the IPO and capital reconstruction 
of the Group. On a pro forma basis,* excluding these costs 
and adjustments in the prior corresponding period, NPAT 
was down 10.9%.

Whilst the FY12 result also included a number of one-off cost 
savings, FY13 has seen the introduction of the carbon tax, 
contributing to a large rise in energy costs. 

Excluding the impact of the prior period one-off costs savings 
and the carbon tax introduction, operational strategies have 
been effective to drive an improved result for our underlying 
business operations. Most pleasingly, the net proﬁ t result was 
in line with the directional outlook the company provided at 
the start of the ﬁ nancial year, even though many companies 
have been downgrading their earnings forecasts over the past 
12 months.

The Group generated operating cashﬂ ows of $41.2 million in 
FY13, up 15.7% on FY12. 

Operational performance
KFC
KFC same store sales were up 4.2%. This was a signiﬁ cant 
improvement from the prior year in which we recorded 
negative same store sales in the midst of weak trading 
conditions. The improvement has been driven by successful 
marketing campaigns, as well as recent promotional campaigns 
that targeted value plays. These campaigns have helped to 
re-engage customers with the brand, and also support sales 
growth without cannibalising existing sales. 

During the year we opened two new KFC restaurants. 
The early trading performance of these restaurants has been 
positive. We also completed the refurbishment of eight 
restaurants and rebuilt/relocated two restaurants during the 
year and while the returns on these have improved there is 
further room for improvement. 

Lower gross proﬁ t margins and increased costs of operations 
in KFC were largely the result of promotional discounting, 
and increased energy and labour costs. Productivity and 
improvement initiatives helped to combat the increases in input 
costs, and allowed us to absorb some of the cost increases. 

4  Collins Foods Limited Annual Report 2013

WE HAVE ACHIEVED MAJOR INROADS IN 
DEVELOPING A RANGE OF EFFICIENCY AND 
PRODUCTIVITY ENHANCING MEASURES TO 
IMPROVE THE PERFORMANCE OF BOTH OUR 
KFC AND SIZZLER BUSINESSES.

Kevin Perkins
Managing Director/CEO

Sizzler
Sizzler same store sales were down 2.4%. While this is an 
improvement on the prior year, it is still disappointing and 
we are focused on returning this business to same store sales 
growth. Price sensitivity and relevance continue to affect sales, 
while rising costs and an inability to pass on costs in full to our 
customers have reduced margins. 

Strong cost of sales controls and operational initiatives helped to 
counter the impact of reduced sales and increased input costs.

Sizzler franchise operations in Asia continue to expand, with 
three new franchised locations added to the network in FY13. 

We have initiated a review of all areas of the Sizzler business. 
The ﬁ rst part of the review has been to identify ways to 
stabilise Sizzler’s performance and develop strategies to drive 
a recovery to acceptable store proﬁ tability. 

The ﬁ rst part of the review is well progressed with key 
strategies emanating from the review being actioned. 

Key priorities for 2013/14 and outlook for the business
The quick service restaurant and casual dining landscapes have 
been changing over the past couple of years. With increasing 
competition, subdued retail demand, and rising costs, trading 
conditions remain challenging.

We believe that our strengthened focus on innovation, and 
operational efﬁ ciency initiatives, will be key growth drivers for 
the business going forward. 

Within both KFC and Sizzler we have introduced and continue 
to roll out a number of operational initiatives aimed at 
improving efﬁ ciency and productivity. These include ways to 
reduce energy consumption, and better manage staff rosters 
and job allocations to reduce labour costs; as well as reducing 
food wastage. Other initiatives include trialling digital menu 
boards, tandem drive-thrus, and online ordering for our KFC 
restaurants. We will continue to seek efﬁ ciencies that will help 
minimise the extent to which we need to pass on increasing 
input costs to our customers in order to maintain affordability 
and grow the top line. 

Product innovation is also a key focus. There are a number of 
new product launches and promotional campaigns planned 
for both businesses. Sizzler’s new ‘Flavours of the Orient’ 
menu was recently launched and will run through until the 
end of winter. KFC also recently launched its ‘Sweet Sesame 
Chicken’ product campaign, and will continue to promote 
‘non-fried’ options and a breakfast menu that is currently 
being trialled in several of our KFC restaurants.

A key focus for Sizzler will be implementing changes to 
the current menu formats to provide more ﬂ exible pricing 
options, and introducing a new range of value offerings that 
will resonate well with customers in the current environment. 
Our aim is to return Sizzler to same store sales growth over 
the 2013/14 ﬁ nancial year while also maintaining margins. 

In the second part of our review of the Sizzler business, we are 
undertaking a review of the Sizzler business model, restaurant 
layout and design, with the goal of achieving a cost efﬁ cient 
and ‘investable’ model. The aim of this review is to develop 
an economical restaurant format that delivers improved 
proﬁ tability and can be rolled out nationally over time. 

There is a solid pipeline of new KFC restaurants and 
refurbishments planned for the next 12 months to capitalise 
on attractive growth opportunities that we have identiﬁ ed. 
The increasing number of restaurants, combined with initiatives 
to continue growing same store sales, should drive growing 
revenues and earnings within our KFC business over the 
2013/14 ﬁ nancial year.

We have spent the past 12 months addressing the very 
substantial operating challenges and headwinds that the 
company faced. We have come out of this period with a 
stronger, more resilient business and are well placed to return 
to earnings growth over the next 12 months. 

* 

Pro forma measures which are unaudited differ from statutory presentation to 
reﬂ ect the full year impact of the operating and capital structure of the Group 
that was established upon the IPO and capital reconstruction, together with 
the elimination of IPO costs and related adjustments which were not expected 
to recur in the future.

Collins Foods Limited Annual Report 2013   5

 
CORPORATE 
GOVERNANCE
STATEMENT

Collins Foods Limited (the Company) and its Board of Directors 
strongly support high standards of corporate governance, 
recognising that the adoption of good corporate governance 
protects and enhances shareholder interests.

The following statement provides an overview of the 
Company’s governance practices and reports against the 
ASX Corporate Governance Principles and Recommendations 
(ASX Principles). The Company’s corporate governance 
practices were in place for the entire year and comply with 
the ASX Principles unless otherwise stated.

The Company’s corporate governance practices are 
reviewed regularly and will continue to be developed and 
reﬁ ned to meet the needs of the Company and taking 
account of best practice.

1. Lay solid foundations for management 
and oversight
The role of the Board
The Board’s primary role is the protection and enhancement of 
shareholder value in both the short and long term. Central to 
this role is the establishment of a clear framework delineating 
the responsibilities of the Board and management, to ensure 
the Company is properly managed.

The Board has identiﬁ ed the key functions which it has 
reserved for itself, which are set out in the Board Charter, 
a copy of which is available on the Company’s website.

The responsibilities of the Board include:

 – providing input to, and approval of, the Company’s 
strategic direction and budgets as developed by 
management;

 – directing, monitoring and assessing the Company’s 

performance against strategic and business plans, to 
determine if appropriate resources are available;
approving and monitoring capital management and major 
capital expenditure, acquisitions and divestments;

 –

 –

 – overseeing the establishment and implementation of risk 
management and internal control systems and reviewing 
the effectiveness of their implementation;
approving and monitoring internal and external ﬁ nancial 
and non-ﬁ nancial reporting, including reporting to 
shareholders, the ASX and other stakeholders;
appointment, performance assessment and, if appropriate, 
removal of the Chief Executive Ofﬁ cer (CEO);
approving the appointment and/or removal of the Chief 
Financial Ofﬁ cer (CFO) and Company Secretary and other 
members of the senior executive management team where 
appropriate; 

 –

 –

 – overseeing and contributing to the performance 

 –

assessment of members of the senior management 
executive team; and
ensuring ethical behaviour and compliance with the 
Company’s own governing documents, including the 
Company’s Code of Conduct.

6  Collins Foods Limited Annual Report 2013

The Board has established Committees to assist in carrying out 
its responsibilities and to review certain issues and functions in 
detail. The Board Committees are discussed at ‘2’ below.

Non-executive Directors are issued with formal letters of 
appointment governing their roles and responsibilities.

Delegations to Management
The Board has delegated responsibility for implementing the 
Company’s strategy as approved by the Board and for the day-
to-day management and administration of the Company to 
the CEO supported by the senior management executive team.

Management must supply the Board with information in 
a form, timeframe and quality that will enable the Board 
to discharge its duties effectively. Management reports to 
the Board at regular Board meetings, providing updates on 
initiatives and issues.

Senior management executives are issued with formal letters 
of appointment governing their roles and undergo a formal 
induction process.

Executive performance assessment
The Board approves criteria for assessing performance of the 
CEO and other senior management executives and monitoring 
and evaluating their performance.

The Remuneration and Nomination Committee is responsible 
to the Board for ensuring the performance of the CEO and 
other senior management executives is reviewed at least 
annually. The Committee reviews the performance of the CEO, 
while the CEO is responsible for performance reviews of senior 
management executives.

Performance evaluations for the CEO and other senior 
management executives were undertaken during the year 
in accordance with the above process.

2. Structure of the Board to add value
Board composition
Consistent with its Charter, the Company’s Board is comprised of 
Directors with diverse yet complementary skills and experience, 
enabling it to appropriately and effectively oversee all aspects of 
the Company’s operations and enhance performance.

Following the appointment of a new Board member in April 
this year, the Board is currently comprised of ﬁ ve Directors (the 
Company’s Constitution provides for a minimum of three and a 
maximum of ten Directors), which the Board believes to be an 
appropriate size to discharge its duties as well as be conducive 
to effective discussion and efﬁ cient decision making.

Four of the Company’s ﬁ ve Directors are non-executive 
Directors, including the Chairman, with one executive Director. 
This structure enables an appropriate balance to be struck 
between Directors with experience and knowledge of the 
business operations and Directors with an external perspective 
and a level of independence.

The Board is structured to maintain a majority of independent 
Directors, to ensure independent judgement is brought to bear 
on all decisions. Three of the Company’s four non-executive 
Directors, including the Chairman, are independent Directors.

The Chairman is elected by the Board and is responsible for 
leading the Board, ensuring Directors are properly briefed in all 
matters relevant to their roles and responsibilities, facilitating 
Board discussions and managing the Board’s relationship with 
the Company’s senior executives, including the CEO (a role 
which is exercised by a separate individual).

The CEO is responsible for implementing Company strategies 
and policies.

Details for each Director of the Company, including details of skills, 
experience and expertise are set out in the Directors’ Report.

Director independence and conﬂ icts of interest
A Director will be considered independent from the Company 
if he or she has no business or other relationship which could 
materially interfere with, or could reasonably be perceived 
to materially interfere with, the independent exercise of 
their judgement.

The Board requires each Director to disclose any new 
information, matter or relationship which could, or could 
reasonably be perceived to, impair the Director’s independence, 
as soon as these come to light. All material personal interests 
are veriﬁ ed at each Board meeting under a standing agenda 
item. Materiality is assessed on a case by case basis from the 
perspective of both the Company and the Director concerned.

The Board periodically assesses the independence of each 
Director, utilising independence criteria aligned with the 
ASX Principles. All of the non-executive Directors of the 
Company throughout the ﬁ nancial year and as at the date of 
this report have been determined to be independent Directors 
with the exception of Mr Copulos, who is not considered 
independent on the following basis:

 – Mr Copulos is Managing Director of the Copulos Group, 

a substantial shareholder in the Company.

In accordance with the Corporations Act 2001 (Cth) and the 
Constitution of the Company, Directors are restricted in their 
involvement when the Board considers and votes on any matter 
in which a Director has a material personal interest.

The Board also has procedures in place to ensure it operates 
independently of management. Non-executive Directors meet 
together periodically in the absence of executive Directors and 
other executives of the Company to discuss the operation of 
the Board and a range of other matters.

Board access to information and advice
Directors and Board Committees have the right to seek 
independent professional advice at the Company’s expense 
to assist them to discharge their duties. Whilst the Chairman’s 
prior approval is required, it may not be unreasonably withheld.

All Directors have access to the Company Secretary, who 
supports the effectiveness of the Board and is accountable 
to the Board on all governance matters. The appointment 
and removal of the Company Secretary is a matter for approval 
by the Board.

Selection, appointment and re-election of Directors
When it is assessed that a new Director should be appointed 
to the Board, as an outcome from size and composition review 
or succession planning, the Remuneration and Nomination 
Committee prepares a position brief identifying the skills 
required. These skills identiﬁ ed ensure a complementary mix 
of ﬁ nancial, legal, industry and listed entity knowledge and 
experience is maintained on the Board, having regard to the 
Company’s Diversity Policy. From this, a short list of candidates 
is prepared, from already identiﬁ ed individuals and/or 
independent search consultants.

The Board appoints the most suitable candidate who must 
stand for re-election at the next annual general meeting.

The Remuneration and Nomination Committee is also 
responsible for making recommendations whether or not 
Directors, whose term of ofﬁ ce is expiring, should be proposed 
for re-election at the Company’s next annual general meeting.

All Directors are expected to continue as Directors only for 
so long as they have the conﬁ dence of their fellow Board 
members and the conﬁ dence of the Company’s shareholders.

In accordance with the Constitution of the Company, no 
Director, except the Managing Director, shall hold ofﬁ ce for 
a continuous period in excess of three years or past the third 
annual general meeting following the Director’s appointment, 
whichever is the longer, without submitting for re-election.

Selected Directors are then offered for re-election at the 
next annual general meeting, with sufﬁ cient details to allow 
shareholders to make an informed decision on their election.

Commitment
The commitments of non-executive Directors are considered 
prior to a Director’s appointment to the Board and are reviewed 
each year as part of the annual performance assessment.

Prior to appointment or being submitted for re-election, each 
non-executive Director is required to speciﬁ cally acknowledge 
that they have and will continue to have the time available to 
discharge their responsibilities to the Company.

Commitment is required in relation to preparation and 
attendance at scheduled Board meetings, strategy workshops 
and non-scheduled meetings called to address speciﬁ c matters 
needing urgent attention.

Collins Foods Limited Annual Report 2013   7

 
CORPORATE 
GOVERNANCE
STATEMENT

Induction and education
Each new Director appointed undergoes a formal induction 
which provides them with information to enable them to 
actively participate in Board decision making as soon as possible, 
including information on the Company’s operations and Board 
and management roles, responsibilities and interactions.

Directors are provided access to continuing education to 
update and enhance their skills and knowledge.

Review of Board performance
In accordance with the Board Charter, the Board undertakes 
an annual Board evaluation.

The review involves consideration of the Board’s performance 
against the Board Charter, and sets forth the goals and 
objectives for the Board for the upcoming year.

The Remuneration and Nomination Committee oversees the 
evaluation of the performance of the Board and each Director, 
including an assessment of whether each Director has devoted 
sufﬁ cient time to their duties.

Performance evaluations for the Board and each Director 
were undertaken during the year in accordance with the 
above process.

Board Committees
To assist in undertaking its duties, the Board has established 
the following Committees:

 –
 –

the Audit and Risk Committee; and
the Remuneration and Nomination Committee.

Charters specify the responsibilities, composition, membership 
requirements, reporting processes and the manner in which 
the Committees are to operate. These Charters are reviewed 
on an annual basis. All matters determined by Committees are 
submitted to the Board as recommendations for Board decisions.

Details of Directors’ membership of each Committee and their 
attendance at meetings are set out in the Directors’ Report.

3. Promote ethical and responsible 
decision making
Code of Conduct
The Company’s commitment to maintaining ethical standards 
in its business activities is demonstrated in its values and its 
Code of Conduct which embraces these values. The Code 
of Conduct, which applies to all Directors and employees of 
the Company, contains policy statements and describes the 
standards of behaviour expected by the Company.

In summary, the Code requires that all Directors and employees 
perform their duties professionally, in compliance with laws and 
regulations; and act with the utmost integrity and objectivity, 
striving at all times to enhance the reputation and performance 
of the Company.

Employees are actively encouraged to report any breaches of 
the Code or other policies and procedures in place, and the 
Company has a Whistleblower Policy in place in support of this.

A copy of the Code of Conduct is available on the 
Company’s website.

Diversity Policy
The Company values and is proud of its strong and diverse 
workforce and is committed to supporting and further 
developing this diversity. Accordingly the Company has 
developed a Diversity Policy which outlines the Company’s 
diversity objectives in relation to gender, age, cultural 
background and ethnicity. It includes requirements for the 
Board to establish measureable objectives for achieving 
diversity, and for the Board to assess annually both the 
objectives and the Company’s progress in achieving them.

The Board has established the overarching objective of females 
representing at least 51% of the organisation’s workforce. 
The Board also endorses other objectives of the organisation’s 
businesses including measures in relation to female regional 
general manager levels, ﬂ exible working arrangements, and 
maternity and return to work arrangements.

Information on the actual number and proportion of women 
employed by the organisation is set out below.

2013 Actual

2012 Actual

Number

%

Number

%

Number of women 
employees in the 
whole organisation

Number of women 
in senior executive1 
positions

Number of women 
on the Board

3,525

53%

3,466

53%

5

1

26%

20%

4

1

24%

25%

1 

Senior executives includes managers who hold roles designated as senior 
executive roles, and includes Key Management Personnel and other managers 
who report directly to the Managing Director/CEO.

A copy of the Diversity Policy is available on the Company’s 
website.

8  Collins Foods Limited Annual Report 2013

4. Safeguard integrity in ﬁ nancial reporting
Audit and Risk Committee
The Audit and Risk Committee has been established to assist 
the Board to focus on issues relevant to the integrity of the 
Company’s ﬁ nancial reporting.

The Committee operates in accordance with a Charter which 
is available on the Company’s website.

Its main responsibilities include:

 –

reviewing, assessing and recommending the Board approve 
the annual and half-year ﬁ nancial reports and all other 
ﬁ nancial information published by the Company or released 
to the market;

 – overseeing the implementation and effective operation of 
the Company’s Risk Management system by management; 

 – monitoring the adequacy and effectiveness of the 
Company’s internal control framework including 
administrative, operating, accounting and ﬁ nancial controls 
to produce reliable ﬁ nancial reporting information and 
compliance with legal and regulatory obligations; 

 – making recommendations to the Board on the 

appointment, reappointment or replacement and 
remuneration of the external auditors, their terms of 
engagement and scope of audits;

 – monitoring the effectiveness and independence of the 

external auditors;

 – determining whether or not a formal internal audit function 
should be in place and recommending the approval of 
the appointment (and if appropriate, the removal) of the 
internal auditor; and

 – monitoring and reviewing Management’s performance in 
establishing systems to provide for safe operations and for 
safety management in all the Company’s workplaces. 

In carrying out its responsibilities, the Committee is 
authorised to:

 – have access to, and meet with, auditors (external and 
internal), employees of the Company and any external 
advisors without executives or management of the 
Company being present; and
seek any information it requires from an employee (and 
all employees are directed to co-operate with any request 
made by the Committee) or external parties.

 –

Consistent with its Charter, the Audit and Risk Committee is 
currently comprised of four non-executive Directors, is chaired 
by an independent Chairperson who is not Chair of the 
Board and consists of a majority of independent Directors. 
All members of the Committee are ﬁ nancially literate and have 
an appropriate understanding of the industry in which the 
Company operates; and one member, Bronwyn Morris, has 
extensive experience and expertise in accountancy, as a former 
partner of a major accounting ﬁ rm. The Committee meets at 
least four times a year.

The background details of the Audit and Risk Committee 
members and attendance at Committee meetings are set out 
in the Directors’ Report.

External auditors
The Audit and Risk Committee reviews the effectiveness of the 
external auditors and makes assessments in relation to their 
continued independence at least annually.

PwC was appointed external auditor in 2005. It is PwC’s policy 
to rotate audit engagement partners on listed companies at 
least every ﬁ ve years.

An analysis of fees paid to the external auditors, including fees 
for non-audit services, is provided in the Directors’ Report and 
notes to the ﬁ nancial statements. It is the policy of PwC to 
provide an annual declaration of its independence to the Audit 
and Risk Committee.

The external auditor will attend the annual general meeting 
and be available to answer shareholder questions about the 
conduct of the audit and the preparation and content of the 
audit report.

Declaration by Management
The CEO and CFO provide formal assurance to the Board that 
the Company’s ﬁ nancial statements present a true and fair view 
of the Company’s ﬁ nancial condition and operational results.

5. Make timely and balanced disclosure
Continuous disclosure and shareholder 
communications
The Company has policies and procedures in place in relation 
to continuous disclosure and shareholder communications. 
These outline the Company’s commitment to providing 
all shareholders and investors with equal access to the 
Company’s information and disclosing all information that a 
reasonable person would expect to have a material effect on 
the share price to the ASX, in accordance with the continuous 
disclosure requirements of the Corporations Act 2001 and 
ASX Listing Rules. Copies of these policies are available on 
the Company’s website.

The Company Secretary has primary responsibility for all 
communications with the ASX, overseeing and co-ordinating 
all information disclosure to the ASX, shareholders and other 
relevant parties. All information released to the ASX is posted 
on the Company’s website.

All employees have a responsibility to report any potentially 
price or value sensitive information to the Company Secretary, 
who is then responsible for ensuring this information is 
advised to the Disclosure Committee which then makes 
recommendations to the Board.

The Company also has assigned Authorised Spokespersons 
for the Company, to ensure all public communications are 
within the bounds of information that is already in the public 
domain, and/or is not material.

Collins Foods Limited Annual Report 2013   9

 
CORPORATE 
GOVERNANCE
STATEMENT

6. Respect the rights of shareholders
The Company is committed to effective communication with its 
stakeholders and seeks to ensure that all stakeholders, market 
participants and the wider community are informed of its 
activities and performance. This commitment and supporting 
policies are set out in the Company’s Communication Policy 
which is available on the Company’s website.

Information is communicated to shareholders through the 
Company’s website, annual report, ASX announcements and 
media releases, dividend mailouts, email broadcasts and other 
means where appropriate.

The Company encourages attendance at, and participation in, 
general meetings.

The Company also periodically conducts investor brieﬁ ngs 
to its institutional investors, brokers and analysts.

7. Recognise and manage risk
Risk management is viewed by the Company as integral to its 
objective of creating and maintaining shareholder value and is 
the responsibility of all Directors and employees.

The Board is responsible for satisfying itself annually, or more 
frequently as required, that management has developed 
and implemented a sound system of risk management and 
internal control. The Board has delegated to the Audit and Risk 
Committee responsibility for the detailed work involved in this 
oversight role.

The Company undertakes its risk management activities 
utilising a Business Risk Management Framework, the 
methodology for which is consistent with the International 
Risk Management Standard ISO31000.

Key risk registers and business risk registers, utilising web 
enabled software, are maintained and regularly reviewed 
by management.

Those with assigned accountability for risks are required to sign 
off regularly that those risks have been managed effectively. 
Key risk registers are reviewed periodically, but at least twice 
annually by the Audit and Risk Committee. The overall results 
of this assessment are presented to the Board at its next 
meeting. The Board also considers risk management at every 
Board meeting and requests additional information as required.

Compliance programs operate to ensure the Company meets 
its regulatory obligations.

Management reports to the Board as to the effectiveness of 
the Company’s management of its material business risks on 
an annual basis.

The Board receives a written assurance from the CEO and 
the CFO that to the best of their knowledge and belief, the 
declaration provided by them in accordance with section 295A 
of the Corporations Act 2001 is founded on a sound system of 
risk management and internal control and that the system is 
operating effectively in relation to ﬁ nancial reporting risks.

10  Collins Foods Limited Annual Report 2013

Risk proﬁ le
Risks which the Company is subject to include:

economic and market environment changes;

 –
 – brand and reputation calamity;
 –
 –
 –
 –
 –
 – operational risks. 

supply chain disruption;
cessation of relationship with Yum! (franchisor of KFC);
adverse changes in government regulation;
a dramatic change in consumer sentiment;
strategic risks including failure of growth drivers; and

8. Remunerate fairly and responsibly
Remuneration and Nomination Committee
The Remuneration and Nomination Committee has been 
established to assist the Board and operates in accordance with 
a Charter which is available on the Company’s website.

Its main responsibilities, with respect to remuneration, include:

 –

reviewing and making recommendations to the Board 
with respect to the Company’s remuneration principles, 
framework and policy for senior executives and Directors;
 – providing advice in relation to remuneration packages of 
senior management executives, non-executive Directors 
and executive Directors;
reviewing and making recommendations to the Board 
with respect to Company incentive schemes, including the 
implementation and operation of equity-based incentive 
plans, bonus plans and other employee beneﬁ t programs; 
and 
reviewing the Company’s recruitment, retention and 
termination policies.

 –

 –

In carrying out its responsibilities, the Committee is authorised 
to obtain outside professional advice as it determines necessary 
and it has received brieﬁ ngs during the year from external 
remuneration experts on various matters.

Consistent with its Charter, the Remuneration and Nomination 
Committee is currently comprised of three non-executive 
Directors and one executive Director, is chaired by an 
independent Chairperson and consists of a majority of 
independent Directors.

The background details of the Remuneration and 
Nomination Committee members and attendance at 
Committee meetings are set out in the Directors’ Report.

Information on Directors’ and executives’ remuneration, 
including principles used to determine remuneration, 
is set out in the Directors’ Report under the heading 
‘Remuneration Report’.

DIRECTORS’
REPORT

Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Collins Foods 
Limited (the Company) and the entities it controlled at the end of, or during, the period ended 28 April 2013.

Directors
The names of the Directors of the Company during or since the end of the ﬁ nancial period are as follows:

Name

Russell Keith Tate

Kevin William Joseph Perkins

Newman Gerard Manion

Bronwyn Kay Morris

Stephen Copulos

Date of appointment

10 June 2011

15 July 2011

10 June 2011

10 June 2011

12 April 2013

Principal activities
During the period, the principal continuing activity of the Group was the operation, management and administration of restaurants. 
The Group operates in Australia and Asia, predominantly in Thailand, Japan and China. There were no signiﬁ cant changes in the 
nature of the Group’s activities during the period.

Operating and ﬁ nancial review
Group overview
The Group’s business is the operation, management and administration of restaurants, currently comprising two restaurant brands, 
KFC Restaurants and Sizzler Restaurants.

The Group operates 122 franchised KFC restaurants in Queensland and northern New South Wales, which compete in the quick 
service restaurant market, and owns and operates 27 Sizzler restaurants in Australia, which operate in the casual dining restaurant 
market. In addition, the Group is a franchisor of the Sizzler brand in South East Asia, with 56 franchised stores predominantly in 
Thailand, but also in China and Japan.

The KFC brand is owned globally by Yum! and is one of the world’s largest restaurant chains. The Group is the largest franchisee of 
KFC restaurants in Australia.

In the casual dining market in which it operates, Sizzler, competes with other casual dining concepts as well as pubs and clubs, fast 
food and home cooking. Sizzler is a small to modest sized market participant. 

The Group relies on the regular supply of a number of key input products in its operations. Of these, chicken is the most signiﬁ cant 
input product. The Group maintains relationships with a number of suppliers for its key inputs to help mitigate supply and supplier 
dependency risks.

Group ﬁ nancial performance
Key statutory ﬁ nancial metrics in respect of the current ﬁ nancial period and the prior ﬁ nancial period are summarised in the 
following table:

2012/13 

2011/12

% Change

Total revenue ($m)

423.9

406.0

Earnings before interest, tax, depreciation and amortisation (EBITDA) ($m)

Earnings before interest and tax (EBIT) ($m)

Proﬁ t before related income tax expense ($m)

Income tax (expense)/beneﬁ t ($m)

Net proﬁ t attributable to members (NPAT) ($m)

Earnings per share (EPS) (cents)

Total dividends paid/payable in relation to ﬁ nancial period (cents per share)

Net assets ($m)

Operating cash ﬂ ow ($m)

47.2

29.8

23.7

(7.3)

16.4

17.6

9.5

185.5

41.2

49.7

32.8

7.2

4.3

11.4

14.4

6.5

179.3

35.6

4.4%

(5.0%)

(9.1%)

229.2%

(269.8%)

43.9%

22.2%

46.2%

3.5%

15.7%

Collins Foods Limited Annual Report 2013   11

 
DIRECTORS’
REPORT

The Group’s net assets increased by 3.5% compared with the prior corresponding period, which is largely consistent with and 
attributable to the current ﬁ nancial period’s after tax proﬁ t less dividends paid.

After a reduction in debt levels during the prior corresponding period, borrowings of the Group have been maintained at the same 
levels during the period and the Group’s undrawn debt facilities of $39.8 million remain available.

The increase in net operating cash ﬂ ows from operations, of 15.7% on the prior corresponding period, reﬂ ects the ﬂ ow through 
effect from increased sales, lower interest payments from a reduced debt balance and lower interest rates, offset to an extent by 
increased tax payments, with tax losses of the prior period utilised in the current period. 

The 2011/12 result included signiﬁ cant one-off costs and adjustments relating to the Initial Public Offering (IPO) and capital 
reconstruction of the Group. On a pro forma basis, excluding these one-off costs and adjustments in the prior corresponding 
period, the comparison of key ﬁ nancial metrics is as follows:

Total revenue ($m)

Earnings before interest, tax, depreciation and amortisation (EBITDA) ($m)

Net proﬁ t attributable to members (NPAT) ($m)

Earnings per share (EPS) (cents)

2012/13 

2011/12

% Change

423.9

47.2

16.4

17.6

406.5

51.1

18.4

19.8

4.3%

(7.6%)

(10.9%)

(11.1%)

Pro forma measures which are unaudited differ from statutory presentation to reﬂ ect the full year impact of the operating and 
capital structure of the Group that was established upon the IPO and capital reconstruction, together with the elimination of 
IPO costs and related adjustments which were not expected to recur in the future.

NPAT has decreased by 10.9% this ﬁ nancial period, compared with the prior corresponding period pro forma, due largely to 
one-off cost savings generated in the prior period.

The other major cost impact on the Group this period has been the introduction of the carbon tax, which, along with general 
energy costs increases, has contributed to a 20% increase in energy costs.

Excluding the impact of the prior period one-off cost savings and the carbon tax introduction, operational strategies resulted in 
improved underlying business operations. Increased revenues generated (4.3% pro forma increase) coupled with cost controls 
and productivity and efﬁ ciency initiatives contributed to largely offset cost increases, including the impact of the carbon tax and 
increased administrative costs associated with operating as a publicly listed Company.

Review of operations
KFC Restaurants (KFC)
Revenues in KFC were up 5.8% on the prior corresponding period to $318.2 million, driven by increased restaurant numbers (+1) 
as well as positive same store sales growth (+4.2%).

Whilst retail conditions remain challenging, strong summer marketing campaigns, targeted value offers and new product offerings 
have proven successful in driving an increase in sales, predominantly in free standing and dual branded locations. Food court 
locations have continued to underperform compared to both historical performance and other locations.

KFC EBITDA was down $2.3 million (160bps) on the previous corresponding period pro forma, due to lower gross proﬁ t margins 
and increased costs of operations. Lower margin sales were a reﬂ ection of the continuing competitive trading environment, with 
promotional discounting a key instrument used to drive sales. The increases in the costs of operations were largely driven by 
increased energy costs resulting from the carbon tax and labour costs (including indirect labour restructuring costs of $0.7 million).

Other productivity and efﬁ ciency improvement initiatives, including a new service ﬂ ow operating platform, have also been key to 
controlling operating costs. These are discussed further in the strategy and performance section below. 

In meeting its restaurant refurbishment obligations with Yum! and investing in new restaurant capital, KFC invested $11.5 million 
in new restaurant and refurbishment capital. Returns on capital spend have shown improvement on the previous corresponding 
period but are still on average tracking below historical returns. 

12  Collins Foods Limited Annual Report 2013

Sizzler Restaurants (Sizzler)
Revenues in Sizzler were down 0.2% on the prior 
corresponding period pro forma to $105.6 million, with 
same store sales declining by 2.4%, which was lower than 
anticipated (our expectation was a 1.9% increase).

The retail conditions in the casual dining market have remained 
subdued and highly competitive. Whilst the Legendary Sizzler 
Salad Bar marketing campaign, targeted soft trade period 
promotions and key event promotions helped to drive sales, 
market feedback is that Sizzler needs to further improve its 
value proposition and relevance. We have developed strategies 
to address these issues which are outlined further under the 
strategy and future performance section below. 

Sizzler EBITDA was down $0.6 million (60bps) on the previous 
corresponding period pro forma, due largely to lower gross 
proﬁ t margins and increased costs of operations. Gross proﬁ t 
margins reﬂ ect levels of promotional discounting to drive 
sales countered by strong cost of sales controls in the face of 
reduced sales. The increase in the costs of operations were 
primarily driven by increased energy costs and labour costs. 

Sizzler franchise operations in Asia contributed an increase of 
$0.2 million to this result over the prior corresponding period 
pro forma, as a result of an increase in restaurant numbers and 
the application of full royalty rates.

Strategy and future performance
Group
The strategies and growth prospects for the Group’s existing 
business operations are outlined below. At a Group level, 
the short-term strategy is to support the existing businesses 
to deliver on their strategies. The medium-term strategy (or 
as opportunities arise) is to further build economies of scale 
and grow the Group’s returns. This could be through KFC 
expansion opportunities in other states and territories or the 
acquisition or development of other operations in the retail 
food and restaurant industry sector.

KFC Restaurants (KFC)
Whilst KFC expects the retail environment to remain 
challenging in the short term and upwards pressure on input 
costs to continue, more recent growth patterns of the sector in 
Queensland, and of the underlying KFC business, are expected 
to continue. 

Key strategies which underpin this growth are:

 –

implementing revised strategies for the management and 
operation of food courts;

the rollout of digital menu boards (trials underway);

 – developing a breakfast offering (trials underway);
 –
 – developing an electronic ordering solution;
 –

improving operational efﬁ ciencies through service ﬂ ow 
changes and the rollout of tandem drive-thrus;
implementing revised strategies to reduce utility usage and 
further reduce maintenance costs;

 –

 – opening new stores in underdeveloped territories/growth 

corridors (ﬁ ve to seven planned for the next ﬁ nancial period);
reducing the cost of new store builds and refurbishments; and
improving people capability. 

 –
 –

Sizzler Restaurants (Sizzler)
As indicated above, as a result of the proﬁ t decline and market 
feedback, we have instigated a review of all areas of the Sizzler 
business. The ﬁ rst part of the review has been to identify ways 
to stabilise Sizzler’s performance and develop strategies to drive 
a recovery to acceptable store proﬁ tability. The second part of 
the review is to review the format, layout and design for a cost 
efﬁ cient and ‘investable’ model.

The ﬁ rst part of the review is well progressed. The key 
strategies emanating from this review are: 

 –

 –

 –
 –

to provide greater menu choice and ﬂ exibility through 
unbundling the menu, allowing guests to build their meal 
through add-ons and trade-ups;
to deliver regular and exciting food news through menu 
changes and regular add-on products;
improving overall food quality and presentation; and 
Improving guest experience through an enhanced 
hospitality program and upgrading key touch points.

The second part of the review is expected to be completed 
during the second and third quarters of the ﬁ nancial period 
ending 27 April 2014.

In relation to its Asian operations, Sizzler’s strategy is to 
continue to expand the number of franchised site locations 
at an expected rate of ﬁ ve per year.

Collins Foods Limited Annual Report 2013   13

 
DIRECTORS’
REPORT

Material risks
The material risks faced by the Group that have the potential to have an effect on the ﬁ nancial prospects of the Group, disclosed 
above, and how the Group manages these risks, include:

 –

reduction in consumer demand – given our reliance on consumer discretionary spending, adverse changes to the general 
economic landscape in Australia or consumer sentiment for our products could impact our ﬁ nancial results. We address this risk 
through keeping abreast of economic and consumer data/research, innovative product development, broadening of the menu 
offering (i.e. to include grilled product offerings) and brand building; 

 – negative change to relationship with Yum! – given our obligations to Yum! through our Master Franchise Agreement and 

Facilities Action Deed, a negative change in the relationship could impact signiﬁ cantly our ability to open planned new stores, 
reduce the cost of new store builds and refurbishments and implement other growth and operational changes. We address this 
risk through maintaining a close working relationship with Yum!, having our team members sit on relevant KFC advisory groups 
and committees and monitoring compliance with obligations; 
safety – given we employ people to run and operate restaurants providing food products to the public, a health or safety 
incident in our operations or health incident of a supplier or involving the input products we use could impact our ﬁ nancial 
results. We address this risk through robust internal food safety and sanitation practices and occupational health and safety 
practices, audit programs, customer complaint processes, supplier partner selection protocols and communication policy 
and protocols;
failure of growth drivers – given that a number of growth drivers are in development stage, failure of these drivers to 
produce expected results could impact our ﬁ nancial results. We address this risk through having an experienced management 
team, robust project management processes involving trials and staged rollouts and regular strategic reviews; and

 –

 –

 – margin risk – given the highly competitive environment of the industry and high reliance on labour, produce, food and energy 
inputs, increases in the costs of these inputs could impact our ﬁ nancial results. We address this risk through brand building 
initiatives, keeping abreast of legislative changes, maintaining long-term supplier relationships, group supply arrangements with 
Yum!, productivity and service ﬂ ow initiatives, ﬂ exibility of operations and open communications with labour unions.

Dividends
Dividends paid to members during the ﬁ nancial period were as follows:

Final ordinary dividend for the ﬁ nancial period 
ended 29 April 2012

Interim ordinary dividend for the ﬁ nancial period 
ended 28 April 2013

Cents
per share

Total amount
$000

Franked/
Unfranked

Date of payment

6.5

4.0

6,045

Franked

27 July 2012

3,720

9,765

Franked

21 December 2012

In addition to the above dividends, since the end of the ﬁ nancial period, the Directors of the Company have declared the payment 
of a fully franked ﬁ nal dividend of 5.5 cents per ordinary share ($5.1 million) to be paid on 19 July 2013 (refer to Note 22 of the 
Financial Report).

Signiﬁ cant changes in the state of affairs
In the opinion of the Directors, there were no signiﬁ cant changes in the state of affairs of the Group that occurred during the 
ﬁ nancial period under review. 

Matters subsequent to the end of the ﬁ nancial period
There has not arisen in the interval between the end of the ﬁ nancial period and the date of this report, any item, transaction or 
event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect signiﬁ cantly the operations 
of the Group, the results of those operations, or the state of affairs of the Group, in future ﬁ nancial periods.

Likely developments and expected results of operations
The Group will continue to pursue the increase of proﬁ tability of its major business segments during the next ﬁ nancial period. 
Additional comments on expected results of operations of the Group are included in the review of operations section of 
this Report.

Environmental regulations
The Group is subject to environmental regulation in respect of the operation of its restaurant sites. To the best of the Directors’ 
knowledge, the Group complies with its obligations under environmental regulations and holds all licences required to undertake 
its business activities.

14  Collins Foods Limited Annual Report 2013

Information on Directors

Director

Experience, qualiﬁ cations and directorships

Russell Tate

Russell has over 30 years’ experience in senior executive and consulting roles in 
marketing and media. He was CEO of ASX listed STW Group Limited, Australia’s 
largest marketing communications group, from 1997 to 2006, Executive Chairman 
from 2006 to 2008 and Deputy Chairman (non-executive) from 2008 to 2011. 
He is currently Executive Chairman of Macquarie Radio Network, the owner of 
leading Sydney stations 2GB and 2CH.

 – B. Com (Econ.)

Other Directorships – current or held within last three years
 – Macquarie Radio Network Limited (Chairman, since 2009)
 – Central Coast (Gosford) Stadium (Chairman, since 2002)
 – One Big Switch Pty Ltd (Chairman, since 2012)
 –
 – Waratahs Rugby Limited (2009 to 2011)

STW Communications Group Limited (1994 to 2011)

Kevin Perkins

Kevin is a highly experienced manager in the Quick Service Restaurant (QSR) and 
casual dining segments of the Australian restaurant industry. He has had more 
than 33 years’ experience with the Collins Foods Group, having overseen its 
growth both domestically and overseas over that time.

Kevin is one of the franchisee presidents currently sitting on the KFC 
International Brand Council, an informal advisory group of Yum! franchisees.

Newman Manion Newman has had over 30 years’ experience in the food franchise industry, 

including over 29 years since 1982 in various roles with Yum! (Franchisor 
of KFC). Previously Newman served as a board member for KFC Japan 
(from 2005 to 2008), General Manager of KFC operations in Australia 
and New Zealand (from 1995 to 2004), Development Director of PepsiCo 
restaurants (including KFC) in Australia (from 1990 to 1995) and General 
Manager of KFC New Zealand (from 1988 to 1990).

Most recently Newman was Vice-President, Operations for Yum!’s Asian 
franchise business (from 2004 until 2010).

Special responsibilities

Independent 
non-executive Chair

Audit and Risk 
Committee Member

Remuneration 
and Nomination 
Committee Member

Managing Director

Remuneration 
and Nomination 
Committee Member

Independent non-
executive Director

Audit and Risk 
Committee Member

Remuneration 
and Nomination 
Committee Chair

Bronwyn Morris

Bronwyn is a Chartered Accountant with over 20 years’ experience in 
accounting, audit and corporate services. A former partner of KPMG, Bronwyn 
worked with that ﬁ rm and its predecessor ﬁ rms in Brisbane, London and the 
Gold Coast. For the last 16 years Bronwyn has been a full-time non-executive 
Director and has served on the boards of a broad range of companies, including 
Queensland Rail Limited, Stanwell Corporation Limited and Colorado Group 
Limited and is a former Councillor of Bond University. She currently serves as 
Chairman of, or a member of, the audit and risk committees with respect to 
a number of her board roles.

Independent 
non-executive Director

Audit and Risk 
Committee Chair

Remuneration 
and Nomination 
Committee Member

 – B. Com, FCA, FAICD
 – Councillor – Queensland division of the Australian Institute of 

Company Directors

Other Directorships – current or held within last three years
 – Care Australia (since 2007)
 – Royal Automobile Club of Queensland Limited (since 2008)
 – Children’s Health Foundation Queensland (Deputy Chair, since 2011)
 – Brisbane Club Limited (since 2007)
 –
 –
 – QIC Limited (2006 to 2012)
 – Gold Coast 2018 Commonwealth Games Bid Limited (2010 to 2012)

Prime Paciﬁ c Seafood Pty Ltd (since 2013)
Spotless Group Limited (2007 to 2012)

Collins Foods Limited Annual Report 2013   15

 
DIRECTORS’
REPORT

Director
Stephen Copulos

Experience, qualiﬁ cations and directorships
Stephen is the Managing Director of The Copulos Group, a major shareholder 
of Collins Foods. He is also currently the Chairman of QSR Pty Ltd, which is 
the largest KFC franchisee in New South Wales, and Chairman of ASX listed 
Crusader Resources Ltd. Stephen has over 30 years of experience in a variety 
of businesses and investments, in a wide range of industries including fast food, 
hospitality, manufacturing, mining and property development. 

Special responsibilities
Non-executive 
Director

Audit and Risk 
Committee Member

Stephen has over 14 years’ experience as a company director of both listed and 
unlisted public companies.

Other Directorships – current or held within last three years
 – Crusader Resources Limited (Chairman, since 2013)
 –
Steelmin Limited (since 2011)
 – Medivac Limited (2007 to 2011)
 – Healthlinx Limited (2007 to 2011)

The relevant interest of each Director in the share capital issued by the Company, at the date of this report is as follows:

Name

Russell Tate

Kevin Perkins

Newman Manion

Bronwyn Morris

Stephen Copulos

Ordinary shares

20,001

7,340,833

20,001

5,001

12,000,000

Company Secretary
The Company Secretary is Rebecca Wiley who was appointed to the role on 29 June 2012. Rebecca has extensive experience 
in company secretarial, accounting, compliance and related ﬁ elds. A Chartered Accountant and Chartered Secretary, Rebecca’s 
prior roles include Company Secretary of Colorado Group Ltd.

Simon Perkins and David Nash also held the positions of joint Company Secretaries during the ﬁ nancial period. Simon Perkins 
was appointed Company Secretary on 15 July 2011 and David Nash was appointed joint Company Secretary on 11 October 2011. 
Both resigned from these positions on 29 June 2012.

Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the period ended 
28 April 2013, and the number of meetings attended by each Director, were:

Russell Tate 

Kevin Perkins

Newman Manion

Bronwyn Morris

Stephen Copulos

Full meetings of 
Directors

Audit and 
Risk Committee

Remuneration and 
Nomination Committee

Number of 
meetings 1

Meetings
attended

Number of
meetings1

Meetings 
attended

Number of
meetings1

Meetings
attended

8

8

8

8

–

8

8

8

8

–

6

*

6

6

–

6

*

6

6

–

4

4

4

1

*

4

4

4

–

*

1 

* 

Number of meetings represents the number of meetings held during the time the Director held ofﬁ ce or membership of a Committee during the period. 
No meetings were held after Stephen Copulos’ appointment on 12 April 2013 to 28 April 2013, the end of the period.
Not a member of the relevant Committee.

16  Collins Foods Limited Annual Report 2013

Remuneration Report
This Remuneration Report sets out remuneration information for the Group’s non-executive Directors, executive Directors and 
other Key Management Personnel in accordance with the requirements of the Corporations Act 2001 and its regulations. The 
information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001.

In the Group’s prior period Remuneration Report for the period ended 29 April 2012 (2012 Remuneration Report), the Board 
indicated its intention to introduce a Long Term Incentive Plan (LTIP), to further increase alignment of the Group’s remuneration 
structure with the long-term interests of shareholders. During the year, a LTIP has been designed and has since been approved 
by the Board, detail of which is outlined later in this report and will be discussed at the AGM. The LTIP is to apply for the ﬁ nancial 
period ending 27 April 2014 (2013/14) and does not impact the current ﬁ nancial period or its disclosures. 

Where comparative information is provided in this report, it includes information relating to Collins Foods Holding Pty Ltd 
(Former Parent) and the entities it controlled (Former Group) for the period from 2 May 2011 to 3 August 2011, combined with 
information relating to the current Group companies for the remainder of the comparative ﬁ nancial period.

This report contains the following sections:

A.  Key management personnel disclosed in this report.

B.  Remuneration governance.

C.  Use of remuneration consultants.

D.  Most recent AGM – Remuneration Report comments and voting.

E.  Non-executive Director remuneration.

F.  Executive remuneration principles and strategy.

G.  Remuneration structure and performance/shareholder wealth creation.

H.  Details of KMP remuneration.

I.  KMP service agreements.

A.  Key management personnel disclosed in this report
Key Management Personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling 
activities of the Group, including any Director of the Group.

KMP of the Group for the ﬁ nancial period are as follows:

Name

Position

Russell Tate

Newman Manion

Bronwyn Morris

Stephen Copulos

Kevin Perkins

Graham Maxwell

Martin Clarke

Phillip Coleman

John Hands

Simon Perkins

Non-executive Director

Non-executive Director

Non-executive Director

Non-executive Director (from 12 April 2013)

Executive Director

Chief Operating Ofﬁ cer and Group Chief Financial Ofﬁ cer (from 4 March 2013)

Chief Executive Ofﬁ cer – KFC

Chief Executive Ofﬁ cer – Sizzler (from 30 April 2012)

Chief Supply and Information Ofﬁ cer

Chief Financial Ofﬁ cer – Global (until 29 June 2012)

Details and disclosures relating to KMP who held ofﬁ ce in the prior ﬁ nancial period have been included in this report as required. 

Collins Foods Limited Annual Report 2013   17

 
DIRECTORS’
REPORT

Remuneration Report (continued)
B.  Remuneration governance
The Board has charged its Remuneration and Nomination 
Committee with responsibility for reviewing and monitoring 
key remuneration policies and practices of the Group and 
making recommendations to the Board.

More speciﬁ cally, the Committee is responsible for making 
recommendations to the Board on:

 –

 –

 –

 –

the Group’s remunerations principles, framework and 
policy for senior executives and Directors;
remuneration levels of senior management executives and 
executive Directors;
the operation of incentives plans and other employee 
beneﬁ t programs which apply to senior executives; and
remuneration for non-executive Directors.

The Remuneration and Nomination Committee operates in 
accordance with its Charter, a copy of which is available on 
the Company’s website.

In carrying out its responsibilities, the Committee is 
authorised to obtain external professional advice as it 
determines necessary.

C.  Use of remuneration consultants
During the year, the Committee engaged external 
remuneration specialists from Ernst & Young to assist with 
the design of a long-term incentive plan for the Group. For 
the purposes of the Corporations Amendment (Improving 
Accountability on Director and Executive Remuneration) 
Act 2011, the reports and information provided under 
this engagement did not contain any remuneration 
recommendations in relation to the KMP of the Group.

D.  Most recent AGM – Remuneration Report 
comments and voting
At the most recent AGM in 2012, no comments were made 
on the Remuneration Report with 94% of votes cast at the 
meeting in favour of the adoption of the Remuneration Report.

18  Collins Foods Limited Annual Report 2013

E.  Non-executive Director remuneration
The remuneration for non-executive Directors is set, taking into 
consideration factors including:

 –

the level of fees paid to Board members of other publicly 
listed Australian companies of similar size;
 – operational and regulatory complexity; and
 –

the responsibilities and workload requirements of each 
Board member.

Non-executive Directors’ remuneration comprises the 
following components:

 – Board and Committee Fees; and
 –

superannuation (compulsory contributions).

Board fees are structured by having regard to the responsibilities 
of each position within the Board. Board Committee fees 
are structured to recognise the differing responsibilities and 
workload associated with each Committee and the additional 
responsibilities of each Committee Chairman.

The Company’s Constitution allows for additional payments 
to be made to Directors where extra or special services are 
provided. No such payments were made during the period.

Non-executive Directors do not receive any performance or 
incentive-based pay. However, to promote further alignment 
with shareholders, the non-executive Directors are encouraged 
to hold shares in the Company.

All current Directors hold shares in the Company as outlined in 
tables displayed in this report.

Non-executive Directors’ fees and payments are reviewed 
annually by the Board. Non-executive Directors’ fees 
are determined within an aggregate limit (including 
superannuation contributions). In accordance with the 
Company’s Constitution, an initial limit was set by the Board 
on 15 July 2011 in the amount of $700,000.

During the year a review of the fees which had applied since 
the listing of the Company was undertaken with reference 
to external market data reports.

Only two minor changes were made. The fee for the 
Remuneration and Nomination Committee Chair role was 
increased by $5,000. Following her appointment to the 
Remuneration and Nomination Committee, Ms Morris 
requested that no change be made to her total fees and 
as a result the fee for the Audit and Risk Committee Chair 
role was reduced by $5,000. The following annual fees 
(excluding superannuation) have applied.

Position

Base fees

Chair (including all Committee memberships)

Other non-executive Directors

Additional fees

Audit and Risk Committee, Chair

Audit and Risk Committee, Member

Remuneration and Nomination Committee, Chair

Remuneration and Nomination Committee, Member

From 18 February 2013

From 10 June 2011 to
17 February 2013

$180,000

$85,000

$15,000

$5,000

$10,000

$5,000

$180,000

$85,000

$20,000

$5,000

$5,000

$5,000

F.  Executive remuneration principles and strategy
The performance of the Group is contingent upon the calibre of its Directors and executives. The Group’s remuneration framework 
is based upon the following key principles:

a policy that enables the Company to attract and retain valued Directors and executives who create value for shareholders;

 –
 – motivating for executives and executive Directors to pursue long-term growth and success of the Group, aligned with 

shareholder’s interests;

 – demonstrating a clear relationship between performance and remuneration;
 –
 –
 –
 –

regard to prevailing market conditions;
reﬂ ective of short-term and long-term performance objectives appropriate to the Company’s circumstances and goals;
transparency; and
fairness and acceptability to shareholders.

The remuneration for executives is structured, taking into consideration the following factors:

 –
 –
 –
 –

the Group’s remuneration principles;
the level and structure of remuneration paid to executives of other publicly listed Australian companies of similar size;
the position and responsibilities of each executive; and
appropriate benchmarks and targets to reward executives for Group and individual performance.

The executive remuneration framework components and their links to performance outcomes are outlined below:

Remuneration component

Vehicle

Purpose

Link to performance

Fixed Remuneration

Base pay and beneﬁ ts 
including superannuation

Short Term Incentive Plan 
(STIP)

Cash bonus payment

LTIP (with effect 
from ﬁ nancial period 
ending 27 April 2014)

Awards in the form of 
performance rights

To provide competitive 
ﬁ xed remuneration set with 
reference to position and 
responsibilities in the context 
of the market

Rewards executives for 
their contribution to the 
achievement of Group and/or 
divisional outcomes 

Group and individual 
performance assessments 
are considered in annual 
remuneration review

EBITDA targets must be met 
in order for bonus to be paid

Rewards executives for their 
contribution to the creation 
of shareholder value over the 
longer term

Earnings per share (EPS) 
targets over three year period 
must be met in order for 
rights to vest

The Group’s aim is to reward executives with an appropriate level and mix of remuneration to attract, retain and motivate them to 
build long-term value for the Group and its shareholders.

The introduction of the LTIP will change the remuneration mix for KMP, increasing the proportion of an executive’s target pay 
which is at risk.

Collins Foods Limited Annual Report 2013   19

 
 
DIRECTORS’
REPORT

Remuneration Report (continued)
The following diagrams summarise the CEO and other KMP executives’ target remuneration mix for the ﬁ nancial period.

CEO

Other KMP executives

59% Fixed

70% Fixed

41% STI

30% STI

The following diagrams show the anticipated range of remuneration mix for the current KMP by year three of the new LTIP. The 
effect of the transition is that an increasing percentage of the executive’s remuneration is ‘at risk’ and directly linked to Group 
performance in both the short and longer term.

CEO

Other KMP executives

57% Fixed

57% Fixed

37% STI

6% LTI

27% STI

16% LTI

Fixed remuneration
Fixed remuneration consists of base salary, superannuation contributions and other beneﬁ ts. Other beneﬁ ts include non-cash 
beneﬁ ts such as employee health insurance costs paid by the Group and car and other allowances. The Group pays fringe beneﬁ ts 
tax on these beneﬁ ts where required.

Fixed remuneration for executives is reviewed annually and on promotion and is benchmarked against market data for comparable 
roles in the market. There are no guaranteed base pay increases included in any executive’s contract. 

Variable remuneration
Short-term incentives
Incentives under the Group’s STIP are at risk components of remuneration for executives provided in the form of cash.

The STIP entitles executives to earn an annual cash reward payment if predeﬁ ned targets are achieved. The level of the incentive 
is set with reference to the accountabilities of the executive’s role and their ability to impact Group performance.

For the Managing Director/CEO the target STI opportunity percentage is 70% of base salary. For other executive KMPs, the 
average target STI opportunity percentage is approximately 50% of base salary.

For the period covered by this report, the primary key performance indicator common to all participants was EBITDA. The 
benchmark EBITDA level at which the target STI opportunity would become payable was 110% of the annual Group budgeted 
EBITDA (prior to allowing for any payments under the STIP). A proportion of target incentives would become payable on 
a sliding scale for achievement above a minimum EBITDA level up to a maximum EBITDA level. At the minimum EBITDA 
level of 101% of the annual Group Budgeted EBITDA, 5% of target STI opportunity would be payable. At the maximum 
EBITDA level of 125% of the annual Group Budgeted EBITDA, 220% of target STI opportunity would be payable.

For the CEO, the EBITDA benchmarks were set with reference to the actual EBITDA achieved for the year ended 29 April 2012, 
in place of the annual Group Budgeted EBITDA for the ﬁ nancial period. The CEO EBITDA benchmarks were at higher levels than 
the benchmarks applying to other KMP executives.

The Group’s ﬁ nancial performance for the ﬁ nancial period ended 28 April 2013 did not result in any KMP being eligible for 
a STIP payment. 

Incentive levels and performance targets are reviewed and determined annually by the Board on the advice of the Remuneration 
and Nomination Committee.

Long-term incentives
In the 2012 Remuneration Report, the Board recognised that the KMP share escrow arrangements were coming to an end and 
had instigated a review of long-term incentives with the view to the introduction of a new LTIP.

In conjunction with assistance provided by external remuneration specialists, the Board on advice of the Remuneration 
and Nomination Committee has approved an LTIP, as outlined below.

20  Collins Foods Limited Annual Report 2013

New LTIP summary
Why introduce a LTIP?

To ensure the Group’s remuneration framework is aligned with both the Group’s business 
strategy and the long-term interests of shareholders.

Who participates in the new LTIP?

The initial participants in the plan are KMP executives and other select senior executives. 

What form are the LTIP awards? 

What quantum of awards will 
participants receive under the LTIP?

When are the grants made?

When do the awards vest?

How is EPS measured? 

What EPS targets are required 
for vesting of awards?

Awards will be granted in the form of performance rights, which comprise rights to 
acquire ordinary shares in the Company for nil consideration, subject to achievement of 
predetermined vesting conditions.

A guiding principle for the initial grant is for awards to generally equate to 30% to 40% 
of a participant’s target STI opportunity, with the exception of the initial grant to Graham 
Maxwell. Under his contract of employment, Graham Maxwell is entitled to an initial 
grant equivalent to 1.5 times his base salary.

Performance rights will be granted annually at the sole discretion of the Board, with the 
ﬁ rst grant of awards to be made as soon as practicable after the Company’s 2013 AGM.

LTIP performance rights vest three years following the date of grant, subject to 
achievement of EPS targets. For the initial grant, performance will be tested following 
determination of the basic EPS for the ﬁ nancial period ending 1 May 2016, compared 
to the basic EPS for the ﬁ nancial period ended 28 April 2013.

EPS will be measured on an absolute basis, calculating the compound growth in the 
Company’s basic EPS attributable to ordinary equity holders of the Company over the 
performance period, with reference to the disclosed EPS in the Company’s annual audited 
ﬁ nancial reports. The Board retains a discretion to adjust the EPS performance condition 
to ensure that participants are not penalised nor provided with a windfall beneﬁ t arising 
from matters outside of management’s control that affect EPS (for example, excluding 
one-off non-recurrent items or the impact of signiﬁ cant acquisitions or disposals).

Performance rights will vest on a proportionate basis ranging from 20% to 100% of 
rights granted for achievement of a minimum EPS target up to a maximum EPS target. 
For the ﬁ rst grant of awards, the minimum EPS target is 6% compound annual growth 
rate (CAGR) and the maximum EPS target is 10% CAGR.

What happens if the awards 
do not vest?

To the extent that performance hurdles are not met at the end of the three year 
performance period, performance will not be re-tested and rights will lapse.

The Remuneration and Nomination Committee considered alternative performance measures, including market based measures, 
but after consideration of a variety of factors including the Group’s business objectives, the fact the Group is not a capital intensive 
business and the lack of a meaningful comparator group, determined that EPS was an appropriate measure. EPS aligns with the 
Group’s business objectives and shareholder interests, is straightforward, simple to communicate and a commonly used measure 
by other ASX listed companies. 

In relation to the setting of performance target levels, the Remuneration and Nomination Committee took into account the 
current structure and operation of the STIP under which target performance levels at which target rewards are payable are 
set at stretch levels.

Collins Foods Limited Annual Report 2013   21

 
DIRECTORS’
REPORT

Remuneration Report (continued)
G.  Remuneration structure and performance/shareholder wealth creation
The Group’s annual ﬁ nancial performance and indicators of shareholder wealth for the current ﬁ nancial period are listed below. 
As the Company listed on 4 August 2011 these performance measures have not been included for ﬁ nancial periods prior to the 
2011/12 period.

EBITDA ($m)

NPAT ($m)

Dividends paid/payable in relation to ﬁ nancial period (cents per share)

EPS (cents)

Change in share price ($)

Short-term incentive payments as % of target payments 

2012/13

2011/121

47.2

16.4

9.5

17.6

0.74

0%

51.12

18.42

6.5

19.82

(1.38)

0%3

1 

2 

3 

The performance measures for the 2011/12 ﬁ nancial period are based on results for the full ﬁ nancial period where available, as the Group’s ﬁ nancial results were 
prepared as a continuation of the Collins Foods Holding Pty Ltd consolidated group.
Represent pro forma measures. Pro forma measures which are unaudited differ from statutory presentation to reﬂ ect the full year impact of the operating and 
capital structure of the Group that was established upon the IPO and capital reconstruction, together with the elimination of IPO costs and related adjustments 
which were not expected to recur in the future.
Excluding special IPO bonuses.

Both the STIP and new LTIP are subject to achievement of pre-determined performance measures linked to the above 
ﬁ nancial metrics. 

H.  Details of KMP remuneration
Details of remuneration received by the Directors and other KMP of the Group for the current ﬁ nancial period are set out 
in the following table. 

Short-term employee beneﬁ ts

Post-employment beneﬁ ts

Long-term beneﬁ ts

Cash salary 
and fees
$

Non-monetary
beneﬁ ts
$

Other4
$

Super- 
annuation
$

Long service 
leave
$

2013

Name

Non-executive directors

Russell Tate

Newman Manion

Bronwyn Morris

Stephen Copulos1

Executive directors

Kevin Perkins

Other executive KMP

Graham Maxwell2

Martin Clarke

John Hands

Phillip Coleman

Simon Perkins3

Total Group

180,000

95,961

105,000

3,808

384,769

–

–

–

–

–

700,411

34,151

70,562

217,356

262,097

216,518

77,891

1,544,835

1,929,604

6,783

9,580

5,979

9,573

1,657

67,723

67,723

–

–

–

–

–

–

32,914

–

–

–

–

32,914

32,914

Total
$

196,200

104,598

114,450

3,808

419,056

16,200

8,637

9,450

–

34,287

–

–

–

–

–

67,208

11,967

813,737

8,501

18,180

22,248

17,100

6,106

139,343

173,630

1,026

6,136

5,878

14,850

1,131

40,988

40,988

119,786

251,252

296,202

258,041

86,785

1,825,803

2,244,859

1 

Appointed 12 April 2013. Mr Copulos’ remuneration is paid to a corporate entity under a Consulting Agreement with the Company for the provision of his services as 
a non-executive Director. 
Appointed 4 March 2013.
For period from 29 April 2012 to 29 June 2012 whilst Simon Perkins was a KMP of the Group. 

2 
3 
4  Other short-term employee beneﬁ ts relate to a sign on payment received on commencement of employment with the Group. 

22  Collins Foods Limited Annual Report 2013

 
 
 
 
 
 
 
 
 
 
All remuneration received was ﬁ xed in nature. No remuneration was received for at risk elements. 

Under the Group’s STIP, no bonus amounts vested with all entitlements forfeited as a result of performance criteria not being met.

Details of remuneration received by the Directors and other KMP of the Group (and former group) for the previous ﬁ nancial period 
are set out in the following table.

Short-term employee beneﬁ ts

Post-employment beneﬁ ts

Long-term beneﬁ ts

Cash salary
and fees
$

Cash
bonus6
$

Non-monetary
beneﬁ ts
$

Super-
annuation
$

Long service
leave
$

2012

Name

Non-executive directors

Russell Tate1

Newman Manion1

Bronwyn Morris1

Robert Koczkar2

Shannon Wolfers2

Executive directors

Kevin Perkins3

Simon Perkins4

Other executive KMP

Simon Perkins4

James Ryan 

Martin Clarke

John Hands

David Nash5

Adrian Argent5

Trevor McDonald5

Pamela Martin5

Phillip Coleman5

George Ryland5

Total Group

96,923

67,596

78,750

–

–

243,269

591,304

113,102

277,959

226,855

215,285

244,471

58,562

38,269

33,984

42,570

45,872

50,171

–

–

–

–

–

–

–

167,000

–

–

10,187

–

67,000

–

–

–

–

–

1,938,404

2,181,673

244,187

244,187

–

–

–

–

–

–

32,903

1,902

5,462

7,376

18,103

5,737

1,641

4,743

2,314

6,437

1,905

1,731

90,254

90,254

8,723

6,084

7,087

–

–

21,894

53,574

23,850

26,460

22,547

18,107

21,600

10,440

3,181

2,825

3,543

3,330

3,713

–

–

–

–

–

–

12,446

2,271

6,522

4,175

7,465

7,277

1,836

1,006

547

1,202

1,529

1,031

Total
$

105,646

73,680

85,837

–

–

265,163

690,227

308,125

316,403

260,953

269,147

279,085

139,479

47,199

39,670

53,752

52,636

56,646

193,170

215,064

47,307

47,307

2,513,322

2,778,485

1 
2 
3 
4 

5 
6 

Appointed 10 June 2011. Remuneration was paid from 4 August 2011. For Russell Tate, no remuneration was drawn for the ﬁ nal quarter of the ﬁ nancial period.
Resigned from Former Group on 3 August 2011.
Kevin Perkins did not draw any remuneration for the ﬁ nal quarter of the ﬁ nancial period.
Remuneration as an executive Director includes period to 3 August 2011 for Simon Perkin’s position in respect of the Former Group. Remuneration as an other executive 
KMP of the Group includes period from 4 August 2011.
Includes period from 1 May 2011 to 3 August 2011 for the executive’s position as KMP in respect of the Former Group.
The bonus payment to Martin Clarke relates to an entitlement paid and payable under an incentive scheme of the former group involving tracking stock, which was 
ﬁ nalised through the Group’s capital reconstruction (for which 50% of entitlements vested). All other bonus payments were for completion of the IPO/Group capital 
reconstruction (for which 100% of entitlements vested). For the Group’s annual short-term incentive scheme, no bonus amounts vested with all entitlements forfeited 
as a result of performance criteria not being met.

Collins Foods Limited Annual Report 2013   23

 
DIRECTORS’
REPORT

Remuneration Report (continued)
I.  KMP service agreements
Key details of the service agreements of Kevin Perkins, Managing Director/CEO and Graham Maxwell, COO and Group CFO are 
as follows:

three year contract commencing 4 August 2011 and 4 March 2013 respectively;

 –
 – may be terminated by either party after 30 months of the contract have expired with six months’ notice or payment in lieu of 

notice in the case of the Company; and
includes a restraint of trade period of 12 months.

 –

Key details of service agreements of any other person who was a KMP executive of the Group during the period are set out below. 
No agreements provide for any termination payments, other than payment in lieu of notice.

Name

Position

Contract duration

Martin Clarke

John Hands

CEO – KFC 

CSO/CIO 

Phillip Coleman

CEO – Sizzler

Simon Perkins

CFO – Global (until 29 June 2012)

Ongoing

Ongoing

Ongoing

Ongoing

Minimum notice period (months)

Termination
by Executive

Termination
by Group

1

2

2

3

3

12

12

12

1 

Provision is also made for the Group to be able to terminate these agreements on three months’ notice in certain circumstances of serious ill health or incapacity of 
the executive.

Indemniﬁ cation and insurance of ofﬁ cers
The Company’s Constitution provides that it must in the case of a person who is or has been a Director or Secretary of the Group, 
and may in the case of an ofﬁ cer of the Company, indemnify them against liabilities incurred whilst acting as such ofﬁ cers and 
the legal costs of that person to the extent permitted by law. The Company has entered into a Deed of Access, Indemnity and 
Insurance with each of the Company’s Directors and Company Secretaries.

No Director or ofﬁ cer of the Company has received beneﬁ ts under an indemnity from the Company during or since the end 
of the period.

The Company has paid a premium for insurance for ofﬁ cers of the Group. The cover provided by the insurance contract is 
customary for this type of insurance policy. Details of the nature of the liabilities covered or the amount of the premium paid 
in respect of this insurance contract are not disclosed as such disclosure is prohibited under the insurance contract.

Proceedings on behalf of the Company
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the 
Corporations Act 2001.

Non-audit services
During the period, the Company’s auditor (PricewaterhouseCoopers) performed other services in addition to its audit 
responsibilities. Whilst their main role is to provide audit services to the Company, the Company does employ their specialist advice 
where appropriate.

The Board of Directors has considered the position and, in accordance with advice received from the Audit and Risk Committee, is 
satisﬁ ed that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed 
by the Corporations Act 2001. The Directors are satisﬁ ed 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 for the following reasons:

 –

all non-audit services have been reviewed by the Audit and Risk 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, including not reviewing or auditing the 
auditor’s own work, not acting in a management or a decision making capacity for the Company, not acting as advocate for 
the Company or not jointly sharing economic risk or rewards.

24  Collins Foods Limited Annual Report 2013

During the period the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, 
its related practices and non-related audit ﬁ rms:

Other assurance services

PricewaterhouseCoopers Australian ﬁ rm

Agreed upon procedures in respect of franchisee sales

Store sales certiﬁ cates

Agreed upon procedures for covenant calculations

Total remuneration for assurance services

Taxation services

PricewaterhouseCoopers Australian ﬁ rm

Tax compliance services, including review of company tax returns

Tax advice and consulting

Network ﬁ rms of PricewaterhouseCoopers Australia

Tax compliance services, including review of company tax returns

Total remuneration for taxation services

Transaction services

PricewaterhouseCoopers Australian ﬁ rm

Transaction compliance services

Total remuneration for transaction services

Total remuneration for non-audit services

Auditor’s independence declaration

2013
$

2012
$

9,700

10,300

18,800

38,800

25,000

11,000

3,654

39,654

–

–

78,454

–

10,000

18,330

28,330

29,000

5,000

3,565

37,565

864,067

864,067

929,962

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out 
on page 26.

Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, 
relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in 
accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

Auditor
PricewaterhouseCoopers continues in ofﬁ ce in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of Directors.

Russell Tate
Chairman

Brisbane
25 June 2013

Collins Foods Limited Annual Report 2013   25

 
AUDITOR’S
INDEPENDENCE
DECLARATION

26  Collins Foods Limited Annual Report 2013

CONSOLIDATED
BALANCE SHEET

As at 28 April 2013

Current assets

Cash and cash equivalents

Receivables

Inventories

Total current assets

Non-current assets

Property, plant and equipment

Intangible assets, net

Deferred tax assets, net

Receivables

Investment accounted for using the equity method

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Current tax liabilities

Derivative ﬁ nancial instruments

Provisions

Total current liabilities

Non-current liabilities

Borrowings

Derivative ﬁ nancial instruments

Provisions

Total non-current liabilities

Total liabilities

Net assets

Equity

Contributed equity

Reserves

Retained earnings/(accumulated losses)

Total equity

The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.

Note

2013
$000

2012
$000

7

8

9

10

11

12

13

14

15

16

17

18

16

19

20

21

22

23,556

3,829

4,406

31,791

59,149

234,506

14,717

30

593

308,995

340,786

39,813

4,157

743

3,750

48,463

19,243

1,820

4,272

25,335

57,549

235,818

14,741

317

501

308,926

334,261

45,318

0

19

3,553

48,890

104,710

104,480

254

1,864

106,828

155,291

185,495

83

1,540

106,103

154,993

179,268

182,098

182,098

(213)

3,610

163

(2,993)

185,495

179,268

27  Collins Foods Limited Annual Report 2013

Collins Foods Limited Annual Report 2013   27

 
CONSOLIDATED
INCOME STATEMENT

For the reporting period ended 28 April 2013

Revenue

Cost of sales

Gross proﬁ t

Selling, marketing and royalty expenses

Occupancy expenses

Restaurant related expenses

Administration expenses

Other expenses

Other income

Proﬁ t from continuing operations before ﬁ nance income, ﬁ nance costs and 
income tax (EBIT)

Finance income

Finance costs

Share of net proﬁ t of associate accounted for using the equity method

Proﬁ t from continuing operations before income tax

Income tax (expense)/beneﬁ t

Proﬁ t from continuing operations

Net proﬁ t attributable to members of Collins Foods Limited

Basic earnings per share

Diluted earnings per share

Weighted average basic ordinary shares outstanding

Weighted average diluted ordinary shares outstanding 

The above Consolidated Income Statement should be read in conjunction with the accompanying Notes.

Note

4

5

4

5

5

14

6

34

34

34

34

2013
$000

2012
$000

423,885

(201,711)

222,174

(89,514)

(33,327)

(42,830)

(25,488)

(2,096)

858

29,777

204

(6,386)

92

23,687

(7,319)

16,368

16,368

405,970

(192,587)

213,383

(83,814)

(31,378)

(42,699)

(32,381)

(1,756)

11,400

32,755

790

(26,453)

87

7,179

4,250

11,429

11,429

17.60cps

17.60cps

14.40cps

14.40cps

93,000,003

79,365,556

93,000,003

79,365,556

28  Collins Foods Limited Annual Report 2013

CONSOLIDATED STATEMENT 
OF COMPREHENSIVE INCOME

For the reporting period ended 28 April 2013

Net proﬁ t attributable to members of Collins Foods Limited

Other comprehensive income/(expense):

Exchange difference upon translation of foreign operations

Cash ﬂ ow hedges

Income tax relating to components of other comprehensive income

Other comprehensive (expense)/income for the reporting period, net of tax

Note

21

21

6

2013
$000

2012
$000

16,368

11,429

201

(824)

247

(376)

260

(139)

42

163

Total comprehensive income for the reporting period

15,992

11,592

Total comprehensive income for the reporting period is attributable to:

Owners of the parent

15,992

11,592

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.

Collins Foods Limited Annual Report 2013   29

 
(Accumulated
losses)/
retained
earnings
$000

(14,422)

11,429

0

 Total
Equity
$000

41,108

11,429

163

11,429

11,592

0

0

131,993

(5,425)

(2,993)

179,268

(2,993)

16,368

0

179,268

16,368

(376)

0

0

163

163

0

0

163

163

0

(376)

(376)

16,368

15,992

0

(213)

(9,765)

3,610

(9,765)

185,495

CONSOLIDATED STATEMENT 
OF CHANGES IN EQUITY

For the reporting period ended 28 April 2013

Contributed
Equity
$000

Note

Reserves
$000

2012
Beginning of the reporting period

Proﬁ t for the reporting period

Other comprehensive income

Total comprehensive income for 
the reporting period

Transactions with owners in their 
capacity as owners:

Shares issued during the reporting period

Less capital raising costs (net of tax)

End of the reporting period

2013
Beginning of the reporting period

Proﬁ t for the reporting period

Other comprehensive expense

Total comprehensive income for 
the reporting period

Transactions with owners in their 
capacity as owners:

Dividends provided for or paid

End of the reporting period

55,530

0

0

0

131,993

(5,425)

182,098

182,098

0

0

0

0

182,098

20

20

22

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.

30  Collins Foods Limited Annual Report 2013

CONSOLIDATED STATEMENT
OF CASH FLOWS

For the reporting period ended 28 April 2013

Cash ﬂ ows from operating activities:

Receipts from customers

Payments to suppliers and employees

GST paid

Interest received – external parties

Interest received – related parties

Interest and other borrowing costs paid

Income tax (paid)/received

Net operating cash ﬂ ows 

Cash ﬂ ows from investing activities:

Payment for acquisition of subsidiary, net of cash acquired

Purchase of franchise rights

Payments for plant and equipment

Net investing cash ﬂ ows

Cash ﬂ ow from ﬁ nancing activities:

Proceeds from borrowings – bank loan facilities

Repayment of borrowings and other obligations

Loans advanced – related parties

Repayment of lending – related parties

Reﬁ nance fees paid

Dividends paid

Proceeds from share issue

Repurchase of shares

Costs associated with IPO

Net ﬁ nancing cash ﬂ ows

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the reporting period

Effects of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at the end of the reporting period

Non-cash ﬁ nancing and investing activities

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.

Note

2013
$000

2012
$000

465,598

(388,856)

(26,629)

231

0

(6,202)

(2,922)

41,220

0

(90)

(17,918)

(18,008)

0

(64)

0

281

0

(9,765)

0

(9,377)

0

(18,925)

4,287

19,243

26

23,556

446,000

(371,831)

(22,995)

354

86

(16,204)

215

35,625

502

(88)

(18,797)

(18,383)

105,000

(262,530)

(139)

0

(696)

0

201,740

(60,371)

(24,711)

(41,707)

(24,465)

43,708

0

19,243

30

33

22

7

31

Collins Foods Limited Annual Report 2013   31

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 1. Statement of signiﬁ cant 
accounting policies
The principal accounting policies adopted by the Company 
and its subsidiaries (Group) in the preparation of the ﬁ nancial 
report are set out below. These policies have been consistently 
applied, unless otherwise stated.

Basis of preparation
These ﬁ nancial statements have been prepared as a general 
purpose ﬁ nancial report in accordance with Australian 
Accounting Standards, other authoritative pronouncements 
of the Australian Accounting Standards Board, Urgent Issues 
Group Interpretations and the Corporations Act 2001.

Collins Foods Limited is a for proﬁ t entity for the purpose 
of preparing the Consolidated Financial Statements, was 
incorporated on 10 June 2011 and undertook an initial public 
offering on 4 August 2011. The proceeds of the initial public 
offering were used to acquire Collins Foods Holding Pty Limited 
and its controlled entities and SingCo Trading Pte Ltd and its 
controlled entities.

The Group utilises a ﬁ fty-two, ﬁ fty-three week reporting 
period ending on the Sunday nearest to 30 April. The 2013 
reporting period comprised the ﬁ fty-two weeks which ended 
on 28 April 2013 (2012 was a ﬁ fty-two week reporting 
period ended on 29 April 2012).

The ﬁ nancial statements have also been prepared under the 
historical cost convention, as modiﬁ ed by the revaluation 
of available-for-sale ﬁ nancial assets, ﬁ nancial assets and 
liabilities (including derivative instruments) at fair value 
through proﬁ t or loss.

The ﬁ nancial report has been prepared on a going concern 
basis which contemplates continuity of normal business 
activities and the realisation of assets and the settlement of 
liabilities in the ordinary course of business. Whilst the Group 
is in a net current liability position, the accounts continue 
to be prepared on a going concern basis on the grounds 
that future cash ﬂ ow projections will be sufﬁ cient to meet 
operational needs and longer-term growth. In addition, 
the Group has access to sufﬁ cient unused credit facilities 
with its banking syndicate.

Capital reconstruction
In the 2012 reporting period Collins Foods Limited determined 
that the acquisition of Collins Foods Holding Pty Limited 
(Former Parent Entity) by its wholly owned subsidiary did not 
represent a business combination as outlined in Australian 
Accounting Standard AASB3 (AASB3) for accounting purposes. 
The appropriate accounting treatment for recognising the new 
group structure was on the basis that the transaction was 
a form of capital reconstruction and group reorganisation. 
Therefore, the ﬁ nancial information has been prepared 
using the principles of a reverse acquisition by Collins Foods 
Holding Pty Limited of Collins Foods Limited. Accordingly, 
the consolidated ﬁ nancial statements have been prepared as 
a continuation of the ﬁ nancial statements of the accounting 
acquirer, Collins Foods Holding Pty Limited.

32  Collins Foods Limited Annual Report 2013

As a result:

 –

 –

 –

The retained earnings of the Group represent the retained 
earnings of Collins Foods Holding Pty Limited from the date 
of its incorporation, plus the results of all other controlled 
entities from the date of their acquisition.
The Consolidated Balance Sheet comprises the existing 
consolidated net assets of Collins Foods Holding Pty Limited 
and its controlled entities measured at their historical 
cost plus the fair value of the net assets of the other 
combining entities.
The comparatives for the Consolidated Income Statement 
and Consolidated Statement of Cash Flows comprise the 
resulting consolidated statements of Collins Foods Holding 
Pty Limited and its controlled entities, plus the results of 
the other controlled entities of the Group from the date 
of their acquisition.

Compliance with IFRS
The Consolidated Financial Statements of the Group comply 
with International Financial Reporting Standards (IFRS) as issued 
by the International Accounting Standards Board (IASB).

Principles of consolidation
The Consolidated Financial Statements include the ﬁ nancial 
statements of the parent entity, Collins Foods Limited (the 
Company) and its subsidiaries (see Note 23 on subsidiaries). 
All transactions and balances between companies in the 
Group are eliminated on consolidation. Subject to the capital 
reconstruction noted above, the term ‘Group’ used throughout 
these ﬁ nancial statements means the parent entity and its 
subsidiaries. Subsidiaries are all those entities over which the 
Group has the power to govern the ﬁ nancial and operating 
policies, generally accompanying a shareholding of more than 
one-half of the voting rights. Where an entity began to be 
controlled during the reporting period, the results are included 
only from the date control commenced. Where a subsidiary 
ceased to be controlled during the reporting period, the results 
are included only through to the date control ceased. Except 
as noted above in relation to the capital reconstruction, the 
acquisition method of accounting is used to account for the 
acquisition of subsidiaries by the Group. Consistent accounting 
policies are employed in the preparation and presentation of 
the consolidated ﬁ nancial statements.

Associates
Associates are all entities over which the Group has 
signiﬁ cant inﬂ uence but not control or joint control, generally 
accompanying a shareholding of between 20% and 50% of 
the voting rights. Investments in associates are accounted for 
using the equity method of accounting, after initially being 
recognised at cost. 

The Group’s share of its associates’ post-acquisition proﬁ ts 
or losses is recognised in proﬁ t or loss, and its share of
post-acquisition other comprehensive income is recognised in 
other comprehensive income. The cumulative post-acquisition 
movements are adjusted against the carrying amount of the 
investment. Dividends receivable from associates are recognised 
as reduction in the carrying amount of the investment.

When the Group’s share of losses in an associate equals 
or exceeds its interest in the associate, including any other 
unsecured long-term receivables, the Group does not recognise 
further losses, unless it has incurred obligations or made 
payments on behalf of the associate. 

Unrealised gains on transactions between the Group and its 
associates are eliminated to the extent of the Group’s interest 
in the associates. Unrealised losses are also eliminated unless 
the transaction provides evidence of an impairment of the 
asset transferred. Accounting policies of associates have been 
changed where necessary to ensure consistency with the 
policies adopted by the Group.

Revenue recognition
Revenue is measured at the fair value of the consideration 
received or receivable. Revenue from the sale of goods is 
recognised when the Group has passed control of the goods 
to the customer, interest income is recognised on a time 
proportion basis using the effective interest method and 
traineeship income is recognised as revenue when the right to 
receive payment is established. Revenue arising from the sale 
of property, plant and equipment is recognised when the risks 
and rewards have been transferred, which is considered to 
occur on settlement.

Segment reporting
Operating segments are reported in a manner consistent with 
the internal reporting provided to the chief operating decision 
maker. The chief operating decision maker, who is responsible 
for allocating resources and assessing the performance of the 
operating segments, has been identiﬁ ed as the Managing 
Director/Chief Executive Ofﬁ cer.

Deferred tax assets and liabilities are offset when there is 
a legally enforceable right to offset current tax assets and 
liabilities and when the deferred tax balances relate to the 
same taxation authority. Current tax assets and liabilities are 
offset where the entity has a legally enforceable right to offset 
and intends either to settle on a net basis, or to realise the asset 
and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts 
recognised directly in equity are also recognised directly 
in equity.

Tax consolidation
The Company and its wholly-owned Australian controlled 
entities have implemented the tax consolidation legislation 
as of 23 June 2011. The Former Parent Entity and its wholly-
owned Australian controlled entities implemented the tax 
consolidation legislation as of 15 April 2005. The Company, as 
the head entity in the tax consolidated group and its wholly-
owned Australian controlled entities continue to account 
for their own current and deferred tax amounts. These tax 
amounts are measured as if each entity in the tax consolidated 
group continues to be a stand alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, the 
Company also recognises the current tax liabilities (or assets) 
and the deferred tax assets arising from unused tax losses and 
unused tax credits assumed from controlled entities in the 
tax consolidated group. Assets or liabilities arising under the 
tax funding agreement with the tax consolidated entities are 
recognised as amounts receivable from or payable to other 
entities in the Group. Details about the tax funding agreement 
are disclosed in Note 6.

Income tax
The income tax expense or revenue for the period is the tax 
payable on the current period’s taxable income based on the 
national income tax rate adjusted by changes in deferred tax 
assets and liabilities attributable to temporary differences 
between the tax bases of assets and liabilities and their carrying 
amounts in the ﬁ nancial statements, and to unused tax losses.

Foreign currency translation
Items included in the ﬁ nancial statements of each of the 
Group entities are measured using the currency of the primary 
economic environment in which the entity operates (the 
functional currency). The Consolidated Financial Statements 
are presented in Australian dollars, which is the functional and 
presentation currency of the Company.

Transactions in foreign currencies are converted at the 
exchange rates in effect at the dates of each transaction. 
Amounts payable to or by the Group in foreign currencies 
have been translated into Australian currency at the exchange 
rates ruling on balance date. Gains and losses arising from 
ﬂ uctuations in exchange rates on monetary assets and liabilities 
are included in the Consolidated Income Statement in the 
period in which the exchange rates change, except when 
deferred in equity as qualifying cash ﬂ ow hedges.

Deferred tax assets and liabilities are recognised for temporary 
differences at the tax rates expected to apply when the assets 
are recovered or liabilities are settled, based on those tax rates 
which are enacted or substantively enacted. The relevant tax 
rates are applied to the cumulative amounts of deductible and 
taxable temporary differences to measure the deferred tax 
asset or liability.

Deferred tax assets are recognised for deductible temporary 
differences and unused tax losses only if it is probable that 
future taxable amounts will be available to utilise those 
temporary differences and losses.

Deferred tax liabilities and assets are not recognised for 
temporary differences between the carrying amount and tax 
bases of investments in controlled entities where the parent 
entity is able to control the timing of the reversal of the 
temporary differences and it is probable that the differences 
will not reverse in the foreseeable future.

Collins Foods Limited Annual Report 2013   33

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 1. Statement of signiﬁ cant accounting 
policies (continued) 
Employee entitlements
Provision has been made in the accounts for beneﬁ ts accruing 
to employees up to balance date, such as annual leave, 
long service leave and bonuses. No provision is made for 
non-vesting sick leave as the anticipated pattern of future sick 
leave taken indicates that accumulated non-vesting leave will 
never be paid. Annual leave provisions are measured at their 
nominal amounts using the remuneration rates expected to 
apply at the time of settlement and are classiﬁ ed in provisions. 
Long service leave provisions are measured as the present 
value of expected future payments to be made in respect of 
services provided by employees up to reporting date using 
the projected unit credit method. Expected future payments 
are discounted using market yields at reporting date on 
national government bonds with terms to maturity that match 
estimated future cash outﬂ ows.

All on-costs, including superannuation, payroll tax, workers’ 
compensation premiums and fringe beneﬁ ts tax are included 
in the determination of provisions.

Cost of sales
For the purposes of the Consolidated Income Statement, cost 
of sales includes the carrying amount of inventories sold during 
the reporting period and an estimated allocation of labour 
incurred in relation to preparing those inventories for sale.

Occupancy expenses
Occupancy expenses include: ﬁ xed rentals, contingent rentals, 
land tax, outgoings and depreciation relating to buildings and 
leasehold improvements.

Restaurant related expenses
Restaurant related expenses include: utilities, maintenance, 
labour and on-costs (except those allocated to cost of sales), 
cleaning costs, depreciation of plant and equipment (owned 
and leased) located in restaurants and amortisation of KFC 
franchise rights.

Cash and cash equivalents
For the purposes of the Consolidated Statement of Cash 
Flows, cash includes cash on hand, at call deposits with banks 
or ﬁ nancial institutions, and other short-term, highly liquid 
investments in money market instruments that are readily 
convertible to known amounts of cash and which are subject 
to an insigniﬁ cant risk of changes in value.

Derivatives
Derivatives are initially recognised at fair value on the date 
a derivative contract is entered into and are subsequently 
re-measured to their fair value. The method of recognising 
the resulting gain or loss depends on whether the derivative 
is designated as a hedging instrument, and if so, the nature 
of the item being hedged. The Group designates certain 
derivatives as either cash ﬂ ow hedges or fair value hedges.

34  Collins Foods Limited Annual Report 2013

The Group documents at the inception of the transaction 
the relationship between hedging instruments and hedged 
items, as well as its risk management objective and strategy 
for undertaking various hedge transactions. The Group also 
documents its assessment, at hedge inception and on an 
ongoing basis, of whether the derivatives that are used in 
hedging transactions have been and will continue to be highly 
effective in offsetting changes in fair value or cash ﬂ ows of 
hedged items.

Changes in the fair value of derivatives that are designated and 
qualify as fair value hedges are recorded in the Consolidated 
Income Statement, together with any changes in the fair 
value of the hedged asset or liability that are attributable to 
the hedged risk. The effective portion of changes in the fair 
value of derivatives that are designated and qualify as cash 
ﬂ ow hedges is recognised in other comprehensive income and 
accumulated in reserves in equity. The gain or loss relating 
to the ineffective portion is recognised immediately in the 
Consolidated Income Statement. Changes in fair value of 
any derivative instrument that does not qualify for hedge 
accounting are recognised immediately in the Consolidated 
Income Statement.

Amounts accumulated in equity are recycled in the 
Consolidated Income Statement in the periods when the 
hedged item will affect proﬁ t or loss. However, when the 
forecast transaction that is hedged results in the recognition of 
a non-ﬁ nancial asset or a non-ﬁ nancial liability, the gains and 
losses previously deferred in equity are transferred from equity 
and included in the measurement of the initial cost or carrying 
amount of the asset or liability.

When a hedging instrument expires or is sold or terminated, 
or when a hedge no longer meets the criteria for hedge 
accounting, any cumulative gain or loss existing in equity at 
that time remains in equity and is recognised when the forecast 
transaction is ultimately recognised in the Consolidated Income 
Statement. When a forecast transaction is no longer expected 
to occur, the cumulative gain or loss that was reported 
in equity is immediately transferred to the Consolidated 
Income Statement.

Borrowings
Bank loans are initially recognised at fair value, net of 
transaction costs incurred. Borrowings are subsequently 
measured at amortised cost. Any difference between the 
proceeds (net of transaction costs) and the redemption amount 
is recognised in the Consolidated Income Statement over the 
period of the borrowings using the effective interest method. 
Fees paid on the establishment of loan facilities, which are 
not transaction costs relating to the actual draw-down of the 
facility, are capitalised and amortised on a straight-line basis 
over the term of the facility.

Borrowing costs
Borrowing costs incurred for the construction of any qualifying 
asset are capitalised during the period of time that is required 
to complete and prepare the asset for its intended use or sale. 
Other borrowing costs are expensed.

Where settlement of any part of cash consideration is deferred, 
the amounts payable in the future are discounted to their 
present value as at the date of exchange. The discount rate 
used is the entity’s incremental borrowing rate, being the 
rate at which a similar borrowing could be obtained from an 
independent ﬁ nancier under comparable terms and conditions.

Contingent consideration is classiﬁ ed either as equity or a 
ﬁ nancial liability. Amounts classiﬁ ed as a ﬁ nancial liability are 
subsequently remeasured to fair value with changes in fair 
value recognised in proﬁ t or loss.

Impairment of assets
Goodwill and intangible assets that have an indeﬁ nite useful 
life are not subject to amortisation and are tested annually 
for impairment, or more frequently if events or changes in 
circumstances indicate that they might be impaired. Other 
assets are reviewed for impairment whenever events or 
changes in circumstances indicate that the carrying amount 
may not be recoverable. An impairment loss is recognised for 
the amount by which the asset’s carrying amount exceeds its 
recoverable amount. The recoverable amount is the higher 
of an asset’s fair value less costs to sell and value in use. For 
the purposes of assessing impairment, assets are grouped at 
the lowest levels for which there are separately identiﬁ able 
cash ﬂ ows (cash generating units). If, in a subsequent Period, 
the amount of the impairment loss decreases and the 
decrease can be related objectively to an event occurring 
after the impairment was recognised, the reversal of the 
previously recognised impairment loss is recognised in the 
Consolidated Income Statement.

Receivables
Trade and related party receivables are recognised initially at 
fair value and subsequently measured at amortised cost, less 
any provision for doubtful debts. Trade receivables are generally 
due for settlement no more than 30 days from the date of 
recognition. Collectability of trade and related party receivables 
is reviewed on an ongoing basis. Debts which are known to be 
uncollectable are written off. A provision for doubtful debts 
is raised when there is objective evidence that the Group will 
not be able to collect all amounts due. The amount of the 
impairment loss is recognised in the Consolidated Income 
Statement within other expenses. When a receivable for 
which an impairment allowance has been recognised becomes 
uncollectable in a subsequent period, it is written off against 
the allowance account. Subsequent recoveries of amounts 
previously written off are credited against other expenses in 
the Consolidated Income Statement.

Inventories
Inventories are valued at the lower of cost and net realisable 
value. Cost is assigned on a ﬁ rst-in ﬁ rst-out basis and includes 
expenditure incurred in acquiring the stock and bringing it to 
the existing condition and location.

Business combinations
Except as set out above in relation to the capital reconstruction 
in respect of the acquisition of the Former Parent Entity by CFG 
Finance Pty Limited, the acquisition method of accounting is 
used to account for all business combinations regardless of 
whether equity instruments or other assets are acquired. Cost is 
measured as the fair value of the assets given, shares issued or 
liabilities incurred or assumed at the date of exchange. Where 
equity instruments are issued in an acquisition, the value of the 
instruments is their published market price as at the date of 
exchange unless, in rare circumstances, it can be demonstrated 
that the published price at the date of exchange is an unreliable 
indicator of fair value and that other evidence and valuation 
methods provide a more reliable measure of fair value. On 
an acquisition-by-acquisition basis, the Group recognises any 
non-controlling interest in the acquiree either at fair value or 
at the non-controlling interest’s proportionate share of the 
acquiree’s net identiﬁ able assets. Transaction costs arising on 
the issue of equity instruments are recognised directly in equity. 
Transaction costs arising from business combinations are 
expensed as incurred.

Identiﬁ able assets acquired and liabilities and contingent 
liabilities assumed in a business combination are measured 
initially at their fair values at the acquisition date, irrespective 
of the extent of any non-controlling interest. The excess of the 
cost of acquisition over the fair value of the Group’s share of 
the identiﬁ able net assets acquired is recorded as goodwill. 
If the cost of acquisition is less than the fair value of the net 
assets of the subsidiary acquired, the difference is recognised 
directly in the Consolidated Income Statement, but only after a 
reassessment of the identiﬁ cation and measurement of the net 
assets acquired.

Collins Foods Limited Annual Report 2013   35

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 1. Statement of signiﬁ cant accounting 
policies (continued) 
Property, plant and equipment
All property, plant and equipment is recorded at historical 
cost less depreciation. Historical cost includes expenditure 
that is directly attributable to the acquisition of the items. 
Subsequent costs are included in the asset’s carrying amount 
or recognised as a separate asset, as appropriate, only when it 
is probable that future economic beneﬁ ts associated with the 
item will ﬂ ow to the Group and the cost of the item can be 
measured reliably.

Property, plant and equipment, excluding freehold land, is 
depreciated at rates based upon the expected useful economic 
life as follows:

Method

Life

Buildings

Straight line

20 years

Leasehold 
improvements

Plant and 
equipment

Software

Equipment under 
ﬁ nance lease

Straight line

Straight line

Straight line

Primary term 
of lease

8 years

3 years

Straight line

4–8 years

Leasehold improvements are depreciated over the unexpired 
period of the primary lease or the estimated life of the 
improvement, whichever is the shorter. Finance leased assets are 
depreciated over the shorter of the asset’s estimated useful life 
and the lease term.

The assets’ residual values and useful lives are reviewed, and 
adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its 
recoverable amount if the asset’s carrying amount is greater 
than its estimated recoverable amount.

The gain or loss on disposal of all non-current assets is 
determined as the difference between the carrying amount of 
the asset at the time of disposal and the proceeds on disposal, 
and is included in the Consolidated Income Statement of the 
Group in the reporting period of disposal.

Leases
Leases of property, plant and equipment where the Group 
has substantially all the risks and rewards of ownership, are 
classiﬁ ed as ﬁ nance leases. Finance leases are capitalised 
at the lease’s inception at the lower of the fair value of the 
leased property and the present value of the minimum lease 
payments. The corresponding rental obligations, net of ﬁ nance 
charges, are included in other long-term payables. Finance 
lease payments are allocated between interest expense 
and reduction of lease liability over the term of the lease. 
The interest expense is determined by applying the interest 
rate implicit in the lease to the outstanding lease liability at the 
beginning of each lease payment period. Finance leased assets 
are depreciated on a straight line basis over the shorter of the 
asset’s estimated useful life and the lease term.

Where the risks and rewards of ownership are retained by 
the lessor, leased assets are classiﬁ ed as operating leases 
and are not capitalised. Rental payments are charged to the 
Consolidated Income Statement on a straight line basis over 
the period of the lease.

Goodwill
Goodwill represents the excess of the cost of an acquisition 
over the fair value of the Group’s share of the net identiﬁ able 
assets of the acquired subsidiary at the date of acquisition. 
Goodwill is not amortised. Instead, goodwill is tested for 
impairment annually, or more frequently if events or changes 
in circumstances indicate that it might be impaired, and is 
carried at cost less accumulated impairment losses. Goodwill 
is allocated to cash generating units for the purpose of 
impairment testing.

Deferred franchise rights
Costs associated with franchise licences which provide a beneﬁ t 
for more than one reporting period are deferred and amortised 
over the remaining term of the franchise licence. Capitalised 
costs associated with renewal options for franchise licences 
are deferred and amortised over the renewal option period. 
The unamortised balance is reviewed each balance date and 
charged to the Consolidated Income Statement to the extent 
that future beneﬁ ts are no longer probable.

Other intangibles – Sizzler brand
Sizzler brand intangibles which are owned and registered by 
the Group are considered to have a useful life of 20 years and 
are amortised accordingly. These intangibles will be tested 
for impairment whenever events or changes in circumstances 
indicate that the carrying amount may not be recoverable. 
Sizzler brand intangibles are carried at amortised cost less 
impairment losses.

36  Collins Foods Limited Annual Report 2013

Investments and other ﬁ nancial assets
The Group classiﬁ es its ﬁ nancial assets in the following 
categories: loans and receivables, held-to-maturity investments 
and available-for-sale ﬁ nancial assets. The classiﬁ cation 
depends on the purpose for which the investments were 
acquired. Management determines the classiﬁ cation of 
its investments at initial recognition and re-evaluates this 
designation at each reporting date.

All investments and other ﬁ nancial assets with the exception 
of held-to-maturity investments and loans and receivables 
are measured at fair value. Held-to-maturity investments and 
loans and receivables are measured at amortised cost. At 
initial recognition, the Group measures a ﬁ nancial asset at 
its fair value plus, in the case of a ﬁ nancial asset not at fair 
value through proﬁ t or loss, transaction costs that are directly 
attributable to the acquisition of the ﬁ nancial asset. Transaction 
costs of ﬁ nancial assets carried at fair value through proﬁ t 
or loss are expensed in proﬁ t or loss. Changes in fair value 
are either taken to the Consolidated Income Statement or an 
equity reserve.

Loans and receivables are non-derivative ﬁ nancial assets with 
ﬁ xed or determinable payments that are not quoted in an 
active market. They are included in current assets, except 
for those with maturities greater than 12 months after the 
reporting date which are classiﬁ ed as non-current assets. 
Loans and receivables are included in current receivables 
(Note 8) and non-current receivables (Note 13) in the 
Consolidated Balance Sheet.

Available-for-sale ﬁ nancial assets comprise principally of
non-marketable securities. They are included in non-current 
assets unless management intends to dispose of the investment 
within 12 months of the end of the reporting period. 
Investments are designated as available-for-sale if they do not 
have determinable payments and management intends to hold 
them for the medium to long term.

Accounts payable
These amounts represent liabilities for goods and services 
provided prior to the end of the reporting period and which 
are unpaid. The amounts are unsecured and are usually paid 
within 30 days of recognition.

Provisions
Provisions for legal claims and make good obligations are 
recognised when the Group has a present legal or constructive 
obligation as a result of past events, it is probable that an 
outﬂ ow of resources will be required to settle the obligation 
and the amount can be reliably estimated. Provisions are not 
recognised for future operating losses.

As the Group is required to restore the leased premises of 
certain retail stores to their original condition upon exit, an 
annual review of leased sites is conducted to revise its estimate 
of the provision required. However, as leases are traditionally 
renewed, the Group only recognises a provision for those 

restaurants where make good costs will result in a probable 
outﬂ ow of funds. The provision recognised is the present value 
of the estimated expenditure required to remove any leasehold 
improvements and decommissioning costs. The discount rate 
used to determine the present value is a pre-tax rate that 
reﬂ ects current market assessments of the time value of money 
and the risks speciﬁ c to the liability.

Goods and services tax
Revenues, expenses and assets are recognised net of the 
amount of goods and services tax (GST) except:

 – 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
for receivables and payables which are recognised inclusive 
of GST.

 –

The net amount of GST payable to the taxation authority is 
included as part of trade and other payables (see Note 15).

Cash ﬂ ows are included in the Consolidated Statement of 
Cash Flows on a gross basis. The GST component of cash 
ﬂ ows arising from investing and ﬁ nancing activities which 
is recoverable from, or payable to, the taxation authority is 
classiﬁ ed as operating cash ﬂ ows.

Share-based payment transactions
The Group currently has no share-based compensation 
beneﬁ ts. Share-based compensation beneﬁ ts were provided 
by the Former Parent Entity to employees (including 
executive directors) via either the Tracking Stock Bonus 
Plan or Performance Shares. Information relating to these 
schemes is set out in Notes 19 and 20 respectively.

Performance Shares were an equity settled share-based 
incentive to reward certain employees for their efforts in 
improving the Former Parent Entity’s performance and as 
such were considered to have been issued in exchange for 
services. Employees who subscribed for Performance Shares 
were required to pay an initial subscription price equal to the 
fair market value of the shares at issuance date. Therefore, the 
holders were not provided with any beneﬁ ts at issuance as they 
were liable to the Former Parent Entity for the fair value of the 
shares at that date. Accordingly, no amount was recorded 
as an expense in relation to these shares as the services 
were provided.

The Tracking Stock Bonus Plan was a cash-settled share-based 
incentive plan which rewarded eligible employees for their 
efforts in improving the Former Parent Entity’s performance 
and as such was considered to be in exchange for services. An 
employee beneﬁ t expense and a liability was recognised as the 
Former Parent Entity received the services for the fair value of 
the services. The fair value of the liability was re-measured at 
each reporting date with changes in the fair value recorded 
through proﬁ t and loss.

Collins Foods Limited Annual Report 2013   37

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 1. Statement of signiﬁ cant accounting 
policies (continued) 
Non-current assets (or disposal groups) held for sale 
and discontinued operations
Non-current assets (or disposal groups) are classiﬁ ed as held 
for sale and stated at the lower of their carrying amount and 
fair value less costs to sell if their carrying amount will be 
recovered principally through a sale transaction rather than 
through continuing use. An impairment loss is recognised for 
any initial or subsequent write-down of the asset (or disposal 
group) to fair value less costs to sell. A gain is recognised for 
any subsequent increases in fair value less costs to sell of an 
asset (or disposal group), but not in excess of any cumulative 
impairment loss previously recognised. A gain or loss not 
previously recognised by the date of sale of the non-current 
asset (or disposal group) is recognised at the date of 
de-recognition.

Non-current assets (including those that are part of a 
disposal group) are not depreciated or amortised while they 
are classiﬁ ed as held for sale. Interest and other expenses 
attributable to the liabilities of a disposal group classiﬁ ed 
as held for sale continue to be recognised. Non-current 
assets classiﬁ ed as held for sale and the assets of a disposal 
group classiﬁ ed as held for sale are presented separately 
from other assets in the Consolidated Balance Sheet. The 
liabilities of a disposal group classiﬁ ed as held for sale are 
presented separately from other liabilities in the Consolidated 
Balance Sheet.

A discontinued operation is a component of the entity that 
has been disposed of or is classiﬁ ed as held for sale and that 
represents a separate major line of business or geographical 
area of operations, is part of a single coordinated plan to 
dispose of such a line of business or area of operations, or is a 
subsidiary acquired exclusively with a view to resale. The results 
of discontinued operations are presented separately on the face 
of the Consolidated Income Statement.

Financial risk management
The Group’s activities expose it to a variety of ﬁ nancial 
risks; market risk (including price risk), credit risk, liquidity 
risk and cash ﬂ ow interest rate risk. The Group’s overall risk 
management approach focuses on the unpredictability of 
ﬁ nancial markets and seeks to minimise potential adverse 
effects on the ﬁ nancial performance of the Group. The Group 
uses derivative ﬁ nancial instruments such as interest rate swaps 
to hedge certain risk exposures.

The Board of Directors has delegated speciﬁ c authorities to 
the central ﬁ nance department in relation to ﬁ nancial risk 
management. The ﬁ nance department identiﬁ es, evaluates and 
hedges ﬁ nancial risks in close co-operation with the Group’s 
operating units. The Board has provided written policies 
covering the management of interest rate risk and the use of 
derivative ﬁ nancial instruments. All signiﬁ cant decisions relating 
to ﬁ nancial risk management require speciﬁ c approval by the 
Board of Directors.

38  Collins Foods Limited Annual Report 2013

Financial guarantee contracts
Financial guarantee contracts are recognised as a ﬁ nancial 
liability at the time the guarantee is issued. The liability is 
initially measured at fair value and subsequently at the higher 
of the amount determined in accordance with AASB 137 
Provisions, Contingent Liabilities and Contingent Assets, 
and the amount initially recognised less the cumulative 
amortisation, where appropriate.

The fair values of ﬁ nancial guarantees are determined as the 
present value of the difference in net cash ﬂ ows between the 
contractual payments under the debt instrument, and the 
payments that would be required without the guarantee, or 
the estimated amount that would be payable to a third party 
for assuming the obligation.

Where guarantees in relation to loans or other payables of 
subsidiaries or associates are provided for no compensation, 
the fair values are accounted for as a contribution and 
recognised as part of the cost of the investment.

Contributed equity
Debt and equity instruments are classiﬁ ed as either liabilities 
or equity in accordance with the substance of the contractual 
arrangement. Ordinary shares are classiﬁ ed as equity. 
Incremental costs directly attributable to the issue of new 
shares or options are shown in equity as a deduction, net of 
tax, from proceeds.

Where any Group company purchases the Company’s equity 
instruments, for example as the result of a share buy-back 
or a share-based payment plan, the consideration paid, 
including any directly attributable incremental costs (net of 
income taxes) is deducted from equity attributable to the 
owners. Where such ordinary shares are subsequently reissued, 
any consideration received, net of any directly attributable 
incremental transaction costs and the related income tax 
effects, is included in equity attributable to the owners.

Dividends
Provision is made for the amount of any dividend declared, 
being appropriately authorised and no longer at the discretion 
of the Company, on or before the end of the reporting period 
but not distributed at balance date.

Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:

 –
the proﬁ t attributable to owners of the Company,
 – by the weighted average number of ordinary shares 

outstanding during the ﬁ nancial period.

Diluted earnings per share
Diluted earnings per share adjusts the ﬁ gures used in the 
determination of basic earnings per share to take into account:

 –

 –

the after income tax effect of interest and other ﬁ nancing 
costs associated with dilutive potential ordinary shares, and
the weighted average number of additional ordinary shares 
that would have been outstanding assuming the conversion 
of all dilutive potential ordinary shares.

Rounding of amounts
The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, 
relating to the ‘rounding off’ of amounts in the ﬁ nancial report. Amounts in the ﬁ nancial report have been rounded off in 
accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

Standards issued but not yet effective
Australian Accounting Standards that have recently been issued or amended but are not yet effective and have not been adopted 
for the annual reporting period ended 28 April 2013, are as follows:

AASB amendment

Affected standards

AASB 2009-11 
AASB 2010-7 
AASB 2012-6

AASB 2011-4

AASB 13 and 
AASB 2011-8

AASB 2011-9

AASB 10 

AASB 11

AASB 119, AASB 
2011-10 and 
AASB 2011-11

AASB 9 Financial Instruments, AASB 2009-11 Amendments 
to Australian Accounting Standards arising from AASB 9 
and AASB 2010-7 Amendments to Australian Accounting 
Standards arising from AASB 9 (December 2010) and 
AASB 2012-6 Amendments to Australian Accounting 
Standards – Mandatory Effective Date of AASB 9 and 
Transition Disclosures

AASB 2011-4 Amendments to Australian Accounting 
Standards to Remove Individual Key Management 
Personnel Disclosure Requirements

AASB 13 Fair Value Measurement and AASB 2011-8 
Amendments to Australian Accounting Standards arising
from AASB 13

AASB 2011-9 Amendments to Australian Accounting 
Standards – Presentation of Items of Other 
Comprehensive Income

Application date 
of standard*

Application date 
for the Group*

01-January-2015

04-May-2015

01-July-2013

28-April-2014

01-January-2013

29-April-2013

01-July-2012

29-April-2013

AASB 10 Consolidated Financial Statements

01-January-2013

29-April-2013

AASB 11 Joint Arrangements

Revised AASB 119 Employee Beneﬁ ts, AASB 2011-10 
Amendments to Australian Accounting Standards arising from 
AASB 119 (September 2011) and AASB 2011-11 Amendments 
to AASB 119 (September 2011) arising from Reduced 
Disclosure Requirements

01-January-2013

29-April-2013

01-January-2013

29-April-2013

AASB 2012-3 

Offsetting Financial Assets and Financial Liabilities

AASB 2012-2

Disclosures – Offsetting Financial Assets and 
Financial Liabilities

AASB 12 Disclosure of Interests in Other Entities, 
revised AASB 127 Separate Financial Statements, 
AASB 128 Investments in Associates and Joint Ventures

AASB 112, 
Revised AASB 
127 and Revised 
AASB 128

AASB 2012-5

01-July-2014

01-July-2013

04-May-2015

28-April-2014

01-January-2013

29-April-2013

Amendments arising from the 2009-2011 annual 
improvements project

01-January-2013

29-April-2013

*   Application date is for annual reporting periods beginning on or after the date shown in the above table.

Collins Foods Limited Annual Report 2013   39

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 2. Critical accounting estimates and judgements
Signiﬁ cant accounting judgements, estimates and assumptions
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including 
expectations of future events that may have a ﬁ nancial impact on the Group and that are believed to be reasonable under 
the circumstances.

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future 
events. The key estimates and assumptions that have a signiﬁ cant risk of causing a material adjustment to the carrying 
amounts of certain assets and liabilities within the next annual reporting period are:

Impairment of goodwill
The Group determines whether goodwill with indeﬁ nite useful lives are impaired at least on an annual basis. This requires an 
estimation of the recoverable amount of the cash generating units to which the goodwill with indeﬁ nite useful lives relate. 
The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill with indeﬁ nite useful 
lives are discussed in Note 11.

Review for impairment triggers of the brand and property, plant and equipment assets
The Group reviews annually whether the triggers indicating a risk of impairment exist. The recoverable amounts of cash generating 
units have been determined based on value-in-use calculations. These calculations require the use of estimates (refer Note 11).

Note 3. Segment information
Description of segments
Management has determined the operating segments based on the reports reviewed by the Managing Director/Chief Executive 
Ofﬁ cer that are used to make strategic decisions. Management has identiﬁ ed three reportable segments: KFC Restaurants, 
competing in the quick service restaurant market, Sizzler Restaurants, competing in the full service restaurant market and Shared 
Services which performs a number of administrative and management functions for the Group’s KFC and Sizzler Restaurants.

Segment information provided to the executive committee
The following is an analysis of the revenue and results by reportable operating segment for the periods under review:

KFC
Restaurants
$000

Sizzler
Restaurants
$000

Shared
Services
$000

All other
segments
$000

318,245 

44,700 

11,419 

0 

105,640 

10,090 

4,186 

(1)

300,758

47,431

11,206

3,732

0

0

105,212 

10,391 

3,706 

0

0

405

0 

(8,062)

1,836 

6,188 

0

(6,739)

2,042

0

(10,671)

25,264 

0 

494 

4 

(5)

0

335

5

0

0

(6)

Total
$000

423,885 

47,222 

17,445 

6,182 

7,319 

405,970 

51,418 

16,959 

3,732 

(10,671)

25,663 

(4,250)

2013
Total segment revenue

Adjusted EBITDA

Depreciation, amortisation and impairment

Finance costs – net(i)

Income tax expense

2012
Total segment revenue

Adjusted EBITDA

Depreciation, amortisation and impairment

KFC franchise rights written off

Reversal of provisions

Finance costs – net(i)

Income tax beneﬁ t

(i)  Refer Note 5 for a detailed breakdown.

40  Collins Foods Limited Annual Report 2013

The following is an analysis of the Group’s assets and liabilities by reportable operating segment.

The amounts provided to the Board with respect to total assets and liabilities are measured in a manner consistent with that of the 
ﬁ nancial statements. The values are allocated based on the operations of the segment.

2013
Assets

Inter-segment eliminations

Liabilities

Inter-segment eliminations

2012
Assets

Inter-segment eliminations

Liabilities

Inter-segment eliminations

KFC
Restaurants
$000

Sizzler
Restaurants
$000

Shared
Services
$000

All other
segments
$000

Total
$000

384,208

(143,572)

240,636 

4,729 

0 

4,729 

389,949 

(152,200)

237,749 

3,647 

0 

3,647

72,010

(11,480)

60,530 

1,755 

(111)

1,644 

69,522 

(6,389)

63,133 

3,060 

(1,798)

1,262

35,006

0 

35,006 

303,499 

(154,487)

149,012 

30,301 

0 

30,301 

307,704 

(157,570)

150,134

4,614

0 

4,614 

360 

(454)

(94)

3,857 

(779)

3,078 

(50)

0 

(50)

495,838

(155,052)

340,786 

310,343 

(155,052)

155,291 

493,629 

(159,368)

334,261 

314,361 

(159,368)

154,993

Other segment information
Segment revenue
There are no sales between segments. The revenue from external parties reported to the Board is measured in a manner consistent 
with that in the Consolidated Income Statement.

Revenue from external customers is derived from the sale of food in KFC and Sizzler Restaurant outlets.

Adjusted EBITDA
The Board assesses the performance of the operating segments based on a measure of adjusted EBITDA. This measurement basis 
excludes the effects of reorganisation and IPO income and expenditure from the operating segments including restructuring costs 
and legal expenses. Impairment of property, plant, equipment and franchise rights are excluded to the extent they are isolated 
non-recurring events relating to individual restaurants. Net ﬁ nance costs (including the impact of derivative ﬁ nancial instruments) 
are not allocated to segments as ﬁ nancing activities are driven by the central treasury function, which manages the cash position of 
the Group.

Collins Foods Limited Annual Report 2013   41

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 3. Segment information (continued)

A reconciliation of adjusted EBITDA to proﬁ t from continuing operations before income tax is provided as follows:

Adjusted EBITDA

Finance costs – net

Release of related party ﬁ nancial liability – retirement plan

Investment services fees

Tracking stock

Costs of the IPO expensed

Depreciation

Amortisation

Impairment of property, plant and equipment

Impairment of KFC franchise rights

KFC franchise rights written off

Share of net proﬁ t of associate accounted for using the equity method

Proﬁ t from continuing operations before income tax

Note 4. Revenue and other income

Revenue from continuing operations

Sales revenue

Sale of goods

Other Revenue

Franchise revenue from external parties

Total revenue

Other income

Traineeship income

Other

Reversal of impairment of related party receivable(i)

Gain on release of guarantee of related party ﬁ nancial liability – retirement plan(i)

Total other income

2013
$000

47,222 

(6,182)

0 

0 

0 

0 

(15,672)

(1,572)

(162)

(39)

0 

92 

23,687 

2012
$000

51,418 

(25,663)

10,671 

(264)

235 

(8,614)

(14,288)

(1,512)

(976)

(183)

(3,732)

87 

7,179 

2013
$000

2012
$000

421,385

421,385

2,500

423,885

332

526

0

0

858

404,177

404,177

1,793

405,970

290

330

109

10,671

11,400

(i) 

 These items of reorganisation and IPO income occurred as part of the capital reconstruction of the Group and its related parties in the lead up to, and in association with, 
the initial public offering of Collins Foods Limited.

42  Collins Foods Limited Annual Report 2013

Note 5. Expenses

Proﬁ t from continuing operations before income tax includes the following speciﬁ c expenses:

Depreciation, amortisation and impairment:

Depreciation:

Buildings 

Leasehold improvements

Plant and equipment

Equipment under ﬁ nance lease

Amortisation of:

Franchise rights

Sizzler brand – Australia

Sizzler brand – Asia

Impairment of:

Property, plant and equipment

KFC franchise rights

Total depreciation, amortisation and impairment

Finance income and costs:

Interest income:

Interest from external parties

Interest from related parties

Interest expense:

Finance lease interest

Bank loan interest

Interest on undesignated cash ﬂ ow hedges

Transfer from cash ﬂ ow hedge reserve

Amortisation of borrowing costs

Borrowing costs written off on loan extinguishment(i)

Net ﬁ nance costs

Employee beneﬁ ts expense:

Wages and salaries

Deﬁ ned contribution superannuation expense

Employee entitlements

Total employee beneﬁ ts expense

Operating lease rentals:

Minimum lease payments

Contingent rentals

Total rent expense relating to operating leases

2013
$000

2012
$000

73

8,363

7,236

0

73

7,412

6,612

191

15,672

14,288

385

563

624

1,572

162

39

201

17,445

(204)

0

0

5,920

187

49

230

0

6,182

473

563

476

1,512

976

183

1,159

16,959

(334)

(456)

41

13,135

1,910

(26)

1,371

10,022

25,663

108,783

102,626

8,413

7,559

124,755

21,485

1,634

23,119

7,751

6,784

117,161

20,023

1,685

21,708

Collins Foods Limited Annual Report 2013   43

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 5. Expenses (continued)

KFC franchise rights written off(i)

Inventory write-downs

Costs of the IPO expensed(i)

Other expenses:

Net loss on disposal of property, plant and equipment

Bank transaction fees

Other miscellaneous expenses

2013
$000

0

55

0

209

842

1,045

2,096

2012
$000

3,732

24

8,614

116

714

926

1,756

(i) 

These items of reorganisation and IPO expense were incurred as part of the capital reconstruction of the Group and its related parties in the lead up to, and in association 
with, the initial public offering of Collins Foods Limited.

Note 6. Income tax

Income tax expense/(beneﬁ t)

Current tax

Deferred tax

Under/(over) provided in prior reporting periods

Income tax expense/(beneﬁ t) is attributable to:

Proﬁ t from continuing operations(i)

Aggregate income tax expense/(beneﬁ t)

Deferred income tax expense/(revenue) included in income tax expense comprises:

Increase in deferred tax assets (Note 12)

Decrease in deferred tax liabilities (Note 12)

Numerical reconciliation of income tax expense/(beneﬁ t) to prima facie tax payable:

Proﬁ t from continuing operations before income tax expense/(beneﬁ t)

Tax at the Australian tax rate of 30%

Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:

Non-deductible entertainment

Other non-deductible expenses

R&D claim – net of non-deductible expenses

Withholding tax credits not brought to account

Non-assessable income received 

Gain on release of guarantee of related party ﬁ nancial liability – retirement plan

Tax asset base adjustment(ii)

Amounts over provided in prior reporting periods

Income tax expense/(beneﬁ t)

(i)   The prior reporting period tax beneﬁ t includes $6.6 million associated with the IPO and capital restructuring costs.
(ii)   As discussed below the tax base of certain assets was adjusted as a result of the application of Tax Consolidation legislation.

44  Collins Foods Limited Annual Report 2013

2013
$000

7,042

271

6

7,319

7,319

7,319

612

(341)

271

23,687

7,106

11

251

0

387

(442)

0

7,313

0

6

7,319

2012
$000

344

(4,530)

(64)

(4,250)

(4,250)

(4,250)

(3,696)

(834)

(4,530)

7,179

2,153

46

923

(22)

276

(192)

(3,201)

(17)

(4,169)

(64)

(4,250)

Tax expense/(income) relating to items of other comprehensive income

Cash ﬂ ow hedges (Note 12)

Tax losses

Unused capital tax losses for which no deferred tax asset has been recognised

Potential tax beneﬁ t @ 30%

All unused tax losses were incurred by Australian entities.

Amounts recognised directly in equity

Aggregate current and deferred tax arising in the reporting period and not recognised in net proﬁ t 
or loss or other comprehensive income but directly debited or credited to equity:

Current tax – credited directly to equity

Net deferred tax – credited directly to equity

2013
$000

(247)

(247)

2012
$000

(42)

(42)

61,276

18,383

61,276

18,383

0

0

0

465

1,860

2,325

Tax consolidation
The Former Parent Entity and its wholly-owned Australian controlled entities implemented the tax consolidation legislation 
on 15 April 2005. Additional controlled entities were added to the Tax Consolidated Group on 17 October 2005 upon them 
becoming wholly-owned Australian controlled entities (Former Tax Consolidated Group). The accounting policy on implementation 
of the legislation is set out in Note 1.

The Company and its wholly-owned Australian controlled entities implemented the tax consolidation legislation on 23 June 2011 
(Tax Consolidated Group). Additional controlled entities, which had previously formed the Former Tax Consolidated Group, were 
added to the Tax Consolidated Group on 4 August 2011 upon them becoming wholly-owned Australian controlled entities (Current 
Tax Consolidated Group). As a consequence, the Company was required to determine an allocable cost amount under Australian 
income tax law and the tax base of certain assets was adjusted appropriately. The accounting policy on implementation of the 
legislation is set out in Note 1.

On adoption of the tax consolidation legislation, the entities in the Current Tax Consolidated Group entered into a tax sharing 
agreement which, in the opinion of the directors, limits the joint and several liability of the wholly-owned entities within the 
Current Tax Consolidated Group in the case of a default by the Company.

The entities in the Current Tax Consolidated Group have also entered into a tax funding agreement (Current Tax Funding 
Agreement) under which the wholly-owned entities of that group fully compensate the Company for any current tax payable 
assumed and are compensated by the Company for any current tax receivable and deferred tax assets relating to unused tax 
losses or unused tax credits that are transferred to the Company under the tax consolidation legislation. The funding amounts 
are determined by reference to the amounts recognised in the wholly-owned entities’ ﬁ nancial statements.

The amounts receivable/payable under the Current Tax Funding Agreement are due upon receipt of the funding advice from the 
Company, which is issued as soon as practicable after the end of each reporting period. The Company may also require payment 
of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current 
intercompany receivables or payables.

Collins Foods Limited Annual Report 2013   45

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 7. Current assets – cash and cash equivalents

Cash at bank and on hand

Cash at bank and on hand has an average ﬂ oating interest of 2.8% (2012: 4.0%).

Note 8. Current assets – receivables

Trade receivables

Interest receivable

Prepayments

2013
$000

23,556

23,556

2013
$000

2,002

0

1,827

3,829

2012
$000

19,243

19,243

2012
$000

1,168

27

625

1,820

Information concerning the effective interest rate and credit risk of both current and non-current receivables is set out in the
non-current receivables note (Note 13).

Note 9. Current assets – inventories

Raw materials and stores, at cost

Provision for diminution in value

2013
$000

4,416

(10)

4,406

2012
$000

4,287

(15)

4,272

Inventories recognised as an expense during the reporting period ended 28 April 2013 amounted to $139,698,000
(2012: $134,048,000).

46  Collins Foods Limited Annual Report 2013

Note 10. Non-current assets – property, plant and equipment

2013
$000

2012
$000

Freehold land

Cost

Opening balance

Additions

Transfers from construction in progress

Closing balance

Buildings

Cost

Opening balance

Additions

Transfers from construction in progress

Closing balance

Accumulated depreciation

Opening balance

Depreciation

Closing balance

Net book value

Leasehold improvements

Cost

Opening balance

Additions

Transfers from construction in progress

Disposals

Closing balance

Accumulated depreciation and impairment

Opening balance

Depreciation

Impairment charge

Disposals

Closing balance

Net book value

Plant and equipment

Cost

Opening balance

Additions

Transfers from construction in progress

Transfers from equipment under ﬁ nance lease

Disposals

Closing balance

3,534

1,299

72

4,905

1,573

261

11

1,845

(603)

(73)

(676)

1,169

71,353

2,362

5,396

(988)

78,123

(43,671)

(8,363)

(96)

902

(51,228)

26,895

56,295

3,529

2,255

0

(1,483)

60,596

3,534

0

0

3,534

1,567

6

0

1,573

(530)

(73)

(603)

970

59,549

2,118

10,206

(520)

71,353

(36,169)

(7,412)

(567)

477

(43,671)

27,682

42,977

4,620

4,337

6,266

(1,905)

56,295

Collins Foods Limited Annual Report 2013   47

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 10. Non-current assets – property, plant and equipment (continued)

Accumulated depreciation and impairment

Opening balance

Depreciation

Impairment charge

Transfers from equipment under ﬁ nance lease

Disposals

Closing balance

Net book value

Equipment under ﬁ nance lease

Cost

Opening balance

Transfers to plant and equipment

Closing balance

Accumulated depreciation

Opening balance

Depreciation

Transfers to plant and equipment

Closing balance

Net book value

Construction in progress

Cost

Opening balance

Additions

Transfers to leasehold improvements and plant and equipment

Disposals

Closing balance

Total property, plant and equipment, net

2013
$000

2012
$000

(32,203)

(7,236)

(66)

0

1,390

(38,115)

22,481

0

0

0

0

0

0

0

0

1,271

10,192

(7,734)

(30)

3,699

59,149

(22,474)

(6,612)

(409)

(4,549)

1,841

(32,203)

24,092

6,266

(6,266)

0

(4,358)

(191)

4,549

0

0

2,381

13,442

(14,543)

(9)

1,271

57,549

48  Collins Foods Limited Annual Report 2013

Note 11. Non-current assets – intangible assets

Goodwill
Cost

Opening balance
Purchase of controlled entities
Foreign currency translation

Closing balance

Net book value

Franchise rights

Cost

Opening balance
Additions
KFC franchise rights written off(i) (refer Note 5)

Closing balance

Accumulated amortisation and impairment

Opening balance
KFC franchise rights written off(i) (refer Note 5)
Amortisation
Impairment charge

Closing balance

Net book value

Sizzler brand – Australia

Cost

Opening balance
Closing balance

Accumulated amortisation
Opening balance
Amortisation

Closing balance

Net book value

Sizzler brand – Asia

Cost

Opening balance
Purchase of controlled entities (refer Note 33)
Foreign currency translation

Closing balance

Accumulated amortisation
Opening balance
Foreign currency translation
Amortisation

Closing balance

Net book value

Total intangible assets, net

2013
$000

2012
$000

211,565
0
15

211,580

211,580

210,675
873
17

211,565

211,565

5,232
90
0

5,322

(485)
0
(385)
(39)

(909)

4,413

11,261
11,261

(3,594)
(563)

(4,157)

7,104

12,315
0
204

12,519

(476)
(10)
(624)

(1,110)

11,409

234,506

8,026
5,232
(8,026)

5,232

(4,123)
4,294
(473)
(183)

(485)

4,747

11,261
11,261

(3,031)
(563)

(3,594)

7,667

0
12,080
235

12,315

0
0
(476)

(476)

11,839

235,818

(i) 

Effective upon completion of the IPO a subsidiary of the Company entered into new KFC franchise arrangements with the franchisor, resulting in a requirement to 
write off previously capitalised KFC franchise rights.

Collins Foods Limited Annual Report 2013   49

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 11. Non-current assets – intangible assets (continued)
Impairment test for indeﬁ nite life intangibles
Allocation of Goodwill

Segment

Carrying value

KFC Restaurants

Sizzler Restaurants

2013
$000

2012
$000

2013
$000

2012
$000

183,529

183,529

28,051

28,036

Goodwill is tested for impairment at a cash generating unit level. The recoverable amount of a cash generating unit is determined 
based on value-in-use calculations. Management recognises that there are various reasons that the estimates used in the 
assumptions may vary. For all cash generating units, there are no reasonable and likely changes in assumptions which would result 
in an impairment.

Key assumptions used for value-in-use calculations

KFC Restaurants

Sizzler Restaurants

2013

The cash ﬂ ows by restaurant have been estimated after 
applying growth rates from the commencement of 2014 
through to the end of the 2018 reporting period which 
average 2.9%.

The cash ﬂ ows by restaurant have been estimated 
after applying growth rates from the commencement 
of 2014 through to the end of the 2018 reporting 
period which average 2.1%.

Management believes that these growth percentages are 
reasonable considering the growth that has been seen in 
this operating segment during the 2013 and prior reporting 
periods and are considered reasonable in comparison with 
industry predictions of 2.5% to 3%. A pre-tax discount 
rate of 12.9% has been applied to years one to ﬁ ve. An 
indeﬁ nite terminal cash ﬂ ow calculation has been applied 
for cash ﬂ ows beyond year ﬁ ve, using the year ﬁ ve cash 
ﬂ ow as a base. The growth rate of 2.75% has been used in 
determining the terminal value, which does not exceed the 
long-term average growth rate for the industry segment in 
which the restaurants operate.

Management believes that these growth percentages 
are reasonable considering the growth that has 
been seen in this operating segment during the 
2013 and prior reporting periods and are considered 
reasonable in comparison with industry predictions 
of 2.5% to 3%. A pre-tax discount rate of 13.9% 
has been applied to years one to ﬁ ve. An indeﬁ nite 
terminal cash ﬂ ow calculation has been applied for 
cash ﬂ ows beyond year ﬁ ve, using the year ﬁ ve cash 
ﬂ ow as a base. The growth rate of 2.5% has been 
used in determining the terminal value, which does 
not exceed the long-term average growth rate for the 
industry segment in which the restaurants operate.

2012

The cash ﬂ ows by restaurant have been estimated after 
applying growth rates from the commencement of 2013 
through to the end of the 2017 reporting period which 
average 0.4%.

The cash ﬂ ows by restaurant have been estimated 
after applying growth rates from the commencement 
of 2013 through to the end of the 2017 reporting 
period which average 1.3%.

Management believes that these growth percentages are 
reasonable considering the growth that has been seen in 
this operating segment during the 2012 and prior reporting 
periods, adjusted to reﬂ ect an estimated increase in 
energy, supply chain and transport costs arising from the 
introduction of the Clean Energy Legislation (Clean Energy 
Act 2011 and supporting legislation) from 1 July 2012. 
A pre-tax discount rate of 13.8% has been applied to years 
one to ﬁ ve. An indeﬁ nite terminal cash ﬂ ow calculation 
has been applied for cash ﬂ ows beyond year ﬁ ve, using 
the year ﬁ ve cash ﬂ ow as a base. The growth rate of 3% 
has been used in determining the terminal value, which 
does not exceed the long-term average growth rate for 
the industry segment in which the restaurants operate.

Management believes that these growth percentages 
are reasonable considering the growth that has 
been seen in this operating segment during the 
2012 and prior reporting periods, adjusted to reﬂ ect 
an estimated increase in energy, supply chain and 
transport costs arising from the introduction of the 
Clean Energy Legislation (Clean Energy Act 2011 and 
supporting legislation) from 1 July 2012. A pre-tax 
discount rate of 15% has been applied to years one 
to ﬁ ve. An indeﬁ nite terminal cash ﬂ ow calculation 
has been applied for cash ﬂ ows beyond year ﬁ ve, 
using the year ﬁ ve cash ﬂ ow as a base. The growth 
rate of 3% has been used in determining the terminal 
value, which does not exceed the long-term average 
growth rate for the industry segment in which the 
restaurants operate.

50  Collins Foods Limited Annual Report 2013

Note 12. Non-current assets – deferred tax assets, net

Deferred tax assets

The balance comprises temporary differences attributable to:

Amounts recognised in proﬁ t or loss:

2013
$000

2012
$000

Depreciation

Employee beneﬁ ts

Provisions

Receivables

Capitalised costs

Tax losses

Amounts recognised in other comprehensive income:

Cash ﬂ ow hedges

Deferred tax assets

Movements:

Opening balance

Credited to the Consolidated Statement of Changes in Equity

(Charged)/credited to the Consolidated Income Statement (Note 6)

Credited/(charged) to other comprehensive income (Note 6)

Closing balance

Deferred tax assets to be recovered within 12 months

Deferred tax assets to be recovered after more than 12 months

Deferred tax liabilities

The balance comprises temporary differences attributable to:

Amounts recognised in proﬁ t or loss:

Inventories

Franchise fees/Sizzler brand

Prepayments

Deferred tax liabilities

Movements:

Opening balance

Acquisition of subsidiaries (see Note 33)

Credited to the Consolidated Income Statement (Note 6)

Closing balance

Deferred tax liabilities to be recovered within 12 months

Deferred tax liabilities to be recovered after more than 12 months

Deferred tax assets

Deferred tax liabilities

Deferred tax assets, net

14,308

3,135

1,290

86

1,668

0

20,487

289

20,776

21,141

0

(612)

247

20,776

5,912

14,864

20,776

644

5,394

21

6,059

6,400

0

(341)

6,059

1,140

4,919

6,059

20,776

(6,059)

14,717

14,070

3,036

548

35

2,606

804

21,099

42

21,141

15,031

2,372

3,696

42

21,141

5,119

16,022

21,141

639

5,737

24

6,400

5,180

2,054

(834)

6,400

1,138

5,262

6,400

21,141

(6,400)

14,741

Collins Foods Limited Annual Report 2013   51

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 13. Non-current assets – receivables

Loans to related parties

Provision for impairment of loans to related parties

Security deposits

2013
$000

5

(5)

0

30

30

2012
$000

286

0

286

31

317

Fair values
The fair values of the non-current receivables of the company equate to their carrying values as disclosed above. Where applicable 
the interest rates charged are market variable rates (refer to table below on interest rate risk).

Interest rate risk
The Group’s exposure to interest rate risk and the average interest rate by maturity period is set out in the following table:

Average interest rate

Floating 

Fixed

Floating
interest
rate
$000

Notes

Fixed interest
maturing in:

5 years
or less
$000

More than
5 years
$000

2013
Trade and interest receivables

Other receivables

2012
Trade and interest receivables

Related party receivables

Other receivables

8

13

8

13

13

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Non-
interest
bearing
$000

2,002

30

2,032

1,195

286

31

1,512

Total
$000

2,002  

30  

2,032  

1,195  

286  

31  

1,512  

Credit risk
There is no concentration of credit risk with respect to external current and non-current receivables.

52  Collins Foods Limited Annual Report 2013

 
 
 
 
 
 
 
 
 
 
Note 14. Non-current assets – investment accounted for using the equity method

Interest in associate

Opening balance

Acquisition of investment accounted for using the equity method 

Share of net proﬁ t of associate accounted for using the equity method

Closing balance

Summarised ﬁ nancial information of associate

Assets:

Current assets

Cash and cash equivalents

Receivables

Total assets

Liabilities:

Current liabilities

Trade and other payables

Total liabilities

Net assets

Equity:

Retained earnings

Note 15. Current liabilities – trade and other payables

Trade payables and accruals – unsecured

Other payables(i)

Total payables

(i) 

The prior reporting period includes $9.3 million of consideration payable for the re-purchase of the Former Parent Entity.

Note 16. Derivative ﬁ nancial instruments

Current liabilities

Interest rate swap contracts – cash ﬂ ow hedges

Non-current liabilities

Interest rate swap contracts – cash ﬂ ow hedges

2013
$000

593

593

501

0

92

593

537

76

613

20

20

593

2012
$000

501

501

0

414

87

501

491

27

518

17

17

501

593

501

2013
$000

30,952

8,861

39,813

2012
$000

27,330

17,988

45,318

2013
$000

743

254

2012
$000

19

83

Instruments used by the Group
The Group is party to derivative ﬁ nancial instruments in the normal course of business in order to hedge exposure to ﬂ uctuations in 
interest rates in accordance with the Group’s ﬁ nancial risk management policies (refer Note 1).

Collins Foods Limited Annual Report 2013   53

 
 
 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 16. Derivative ﬁ nancial instruments (continued)
Interest rate swap contracts – cash ﬂ ow hedges
On 4 August 2011 the existing loan facilities of the Group were repaid and the related interest rate swap contracts settled. 
As at that date a subsidiary of the Company, CFG Finance Pty Limited, entered into a $135 million Syndicated Facility Agreement 
(Syndicated Facility) and a $10 million Working Capital Facility Agreement (Working Capital Facility). The Syndicated Facility 
was drawn to $105 million on 4 August 2011. On 10 November 2011 the Group entered into an $80 million interest rate swap 
contract to hedge a designated portion of the interest rate exposure of this facility.

Bank loans of the Group currently bear variable interest at BBSY which at balance date was 3.1% (2012: 4.38%) plus margins which 
vary with the gearing of the Group. At balance date, the weighted average margin was 1.9% (2012: 1.9%). It is the policy of the 
Group to protect a designated portion of the loans from exposure to increasing interest rates. Accordingly, the Group has entered 
into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at ﬁ xed rates.

Swaps currently in place cover approximately 76% (2012: 76%) of the loan principal outstanding and are timed to expire as each 
loan repayment falls due. The ﬁ xed interest rate is 3.71% (2012: 3.71%) and the variable rates are BBSY which at balance date 
was 3.1% (2012: 4.38%).

The notional principal amounts and periods of expiry of the interest rate swap contracts are as follows:

Less than 1 year

1–2 years

2–3 years

Notional Principal Amount

2013
$000

0

80,000

0

80,000

2012
$000

0

0

80,000

80,000

The contracts require settlement of net interest receivable or payable each 30 days. The settlement dates coincide with the dates on 
which interest is payable on the underlying debt. The contracts are settled on a net basis.

The derivative ﬁ nancial instrument entered into on 10 November 2011 was designated as a cashﬂ ow hedge at inception, as 
such, the gain or loss from remeasuring the hedging instrument at fair value is recognised in other comprehensive income and 
deferred in equity in the hedging reserve, to the extent that the hedge was effective. The fair value amounts deferred in equity 
are subsequently reclassiﬁ ed into the proﬁ t and loss when the hedged interest expense is recognised. The derivative ﬁ nancial 
instruments settled on 4 August 2011 were not designated as cashﬂ ow hedges at inception, as such, the gain or loss from 
remeasuring the hedging instruments at fair value was recognised within ﬁ nance costs.

At balance date these contracts were payables with a fair value of $1 million (2012: payables totalling $0.1 million).

Credit risk exposures
At 28 April 2013 the contracts gave rise to payables for unrealised losses on derivative instruments of $1 million (2012: $0.1 million) 
for the Group from interest rate swap contracts. Management has undertaken these contracts with the Australia and New Zealand 
Banking Group Limited which is an AA rated ﬁ nancial institution.

Interest rate risk exposures
Refer to Note 18 and Note 32 for the Group’s exposure to interest rate risk on interest rate swaps.

Note 17. Current liabilities – provisions

Employee entitlements

Make good provision

Total current liabilities – provisions

54  Collins Foods Limited Annual Report 2013

2013
$000

3,633

117

3,750

2012
$000

3,485

68

3,553

Note 18. Non-current liabilities – borrowings

Bank loan – unsecured

Fees on bank loan – capitalised

Total non–current liabilities – borrowings

Available ﬁ nancing facilities

Restricted access was available at balance date to the following lines of credit:

Credit standby arrangements:

Total facilities

Working capital facility

Revolving cash advance facility – Facility A

Revolving cash advance facility – Facility B

Used at balance date

Working capital facility

Revolving cash advance facility – Facility A

Revolving cash advance facility – Facility B

Unused at balance date

Working capital facility

Revolving cash advance facility – Facility A

Revolving cash advance facility – Facility B

Bank loan facilities excluding credit standby arrangements:

Total facilities less mandatory scheduled or prepaid repayments made

Used at balance date

Unused at balance date

2013
$000

2012
$000

105,000

105,000

(290)

(520)

104,710

104,480

10,000

5,000

25,000

40,000

179

0

0

179

9,821

5,000

25,000

39,821

105,000

105,000

0

10,000

5,000

25,000

40,000

227

0

0

227

9,773

5,000

25,000

39,773

105,000

105,000

0

On 4 August 2011 the existing loan facilities of the Group were repaid. As at that date a subsidiary of the Company, CFG Finance 
Pty Limited, entered into a $135 million Syndicated Facility Agreement (Syndicated Facility) and a $10 million Working Capital Facility 
Agreement (Working Capital Facility). The Syndicated Facility was drawn to $105 million on 4 August 2011 and these funds were 
utilised to partly repay the loan facilities of the Group that existed at that date. The balance of the repayment of the loan facilities 
that existed at that date was funded by the proceeds from shares issued by the Company on 4 August 2011. 

Facilities drawn on 4 August 2011
Facility A and Facility B
 –

 –

The Syndicated Facility comprises Facility A and Facility B for $110 million and $25 million respectively. The Syndicated Facility 
provides for a three-year term expiring on 3 August 2014. There are no scheduled repayments for Facility A or Facility B. 
Conditions exist regarding the voluntary repayment of debt. The balance as at the end of the reporting period for Facility A was 
$105 million (2012: $105 million), while Facility B remained undrawn.
The rate of interest under Facility A and Facility B was BBSY which at balance date was 3.1% (2012: 4.38%) plus the applicable 
margin of between 1.5% and 2.2% depending upon the gearing ratio of the Company. At balance date, the margin applicable 
was 1.9% (2012: 1.9%). There is a commitment fee calculated daily and payable on the undrawn commitment of between 
0.75% and 1.1% (depending upon the gearing ratio of the Company). At balance date, this commitment fee rate was 0.95% 
(2012: 0.95%) and was payable quarterly in arrears.

Collins Foods Limited Annual Report 2013   55

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

 –

The rate of interest under Facility A and Facility B was 
BBSY plus the applicable margin of between 3.25% 
and 4.25% for Facility A and between 3.5% and 4.5% 
for Facility B depending upon the gearing ratio of the 
Company. Under the Mezzanine Facility, the rate of interest 
was 8% ﬁ xed rate cash pay interest due quarterly and 
8% ‘PIK’ interest which was capitalised quarterly. 

Capital expenditure facility 
 –

The amended Senior Facilities also provided for a 
$30 million capital expenditure facility, Facility C, which 
could only be used for the purpose of permitted capital 
expenditures and could be utilised provided the drawing 
would not result in a breach of leverage ratio covenants. 
The rate of interest on Facility C was BBSY plus the 
applicable margin of between 3.5% and 4.5%, depending 
upon the gearing ratio of the Company. There was a fee 
applicable to any undrawn portion of Facility C equal to 
65% of the applicable margin. The fee was calculated daily 
and was payable quarterly in arrears.

Working Capital 
 –

 –

 –

The amended Working Capital Facility was only to be used 
for general working capital purposes and was allocated to 
a $5 million revolving cash advance facility, a $4.8 million 
overdraft facility, a $3 million leasing facility and a 
$0.2 million letter of credit facility. Any undrawn amount 
under either option could be reallocated at any time by 
the borrowers to either of the other options.
There was a line fee calculated daily and payable on the 
leasing facility total commitment of between 1.75% and 
2.75% (depending upon the gearing ratio of the Company). 
The remaining facilities of the Amended Working Capital 
Facility attracted a line fee calculated daily of between 
2.1% and 2.8% (depending upon the gearing ratio of 
the Company). 
The rate of interest for cash advances under the revolving 
facility of the Amended Working Capital Facility was BBSY 
plus the applicable margin. The interest rate applicable 
to the overdraft facility was the ‘Overdraft Base Rate’, 
a weekly average of the 30 day BBSY rate plus the 
applicable margin. Fees on letters of credit issued under 
the Amended Working Capital Facility were at a rate of 
75% of the applicable margin. The applicable margin for 
the purposes of the cash advance, overdraft and letters of 
credit facility was between 1.14% and 1.49% (depending 
upon the gearing ratio of the Company). The rate of 
interest for the leasing facility was speciﬁ c to each 
drawdown under the facility and was the base rate based 
upon the cost of funds to the lender at the time of the 
drawdown plus a margin of 1.5%.

 –

 –

Note 18. Non-current liabilities – borrowings 
(continued)
Working Capital
 –

The Working Capital Facility provides for the same three-year 
term as the Syndicated Facility, expiring on 3 August 2014. 
It was initially allocated to a $2 million revolving cash advance 
facility, a $6.7 million overdraft facility, a $1 million leasing 
facility and a $0.3 million letter of credit facility. Any undrawn 
amount under either option can be reallocated at any time by 
the borrowers to either of the other options. On 10 August 
2011 the allocation was amended to a $9.7 million overdraft 
facility and a $0.3 million letter of credit facility.
Letters of credit of $0.2 million (2012: $0.2 million) were 
drawn under the Working Capital Facility as at balance date. 
The remainder of the Working Capital Facility was undrawn 
at that date. There is a commitment fee calculated daily 
and payable on the undrawn commitment of between 
0.75% and 1.1% (depending upon the gearing ratio of the 
Company). At balance date, this commitment fee rate was 
0.95% (2012: 0.95%) and was payable quarterly in arrears.
The rate of interest for cash advances under the revolving 
advance facility of the Working Capital Facility is BBSY plus the 
applicable margin. The interest rate applicable to the overdraft 
facility is the ‘Overdraft Base Rate’, a weekly average of the 30 
day BBSY rate, and at balance date was 3.4% (2012: 4.3%) 
plus the applicable margin. Fees on letters of credit issued 
under the Working Capital Facility are at a rate of 75% of the 
applicable margin. The applicable margin for the purposes 
of the cash advance, overdraft and letters of credit facility is 
between 1.5% and 2.2% (depending upon the gearing ratio 
of the Company). At balance date, the applicable margin was 
1.9% (2012: 1.9%). The rate of interest for the leasing facility 
is speciﬁ c to each drawdown under the facility and is the base 
rate based upon the cost of funds to the lender at the time 
of the drawdown plus a margin of 1.5%. At balance date the 
leasing facility remains undrawn.

The Syndicated Facility and Working Capital Facility are 
subject to certain ﬁ nancial covenants and restrictions such as 
net leverage ratios, interest coverage ratios and others which 
management believe are customary for these types of loans. 
The Company and its subsidiaries (other than subsidiaries 
outside of the Closed Group) were registered guarantors of 
all the obligations in respect of these loan facilities.

Facilities repaid on 4 August 2011
Facility A, Facility B and Mezzanine Facility 
 –

The amended Senior Facility comprised Facility A and 
Facility B for $36 million and $135 million respectively. 
The amended senior facility provided for a three-year 
term expiring on 28 June 2013. The amended Mezzanine 
Facility was for $70 million and had a three-and-a-half 
year term expiring on 28 December 2013. Scheduled 
repayments were set out for Facility A over the term of 
the loan. Conditions existed regarding the voluntary 
and mandatory repayment of debt. These facilities 
were fully repaid on 4 August 2011.

56  Collins Foods Limited Annual Report 2013

The amended Senior, Mezzanine and Working Capital Facilities were subject to certain ﬁ nancial covenants and restrictions such 
as interest coverage ratios, proﬁ tability ratios and others which Management believes are customary for these types of loans. 
The Former Parent Entity and its subsidiaries (other than dormant subsidiaries) were registered guarantors of all the obligations in 
respect of these loan facilities. These facilities were secured by ﬁ rst mortgages over the Group’s freehold land and buildings and 
a ﬂ oating charge over the other assets. Upon repayment of these loan facilities on 4 August 2011, these mortgages and charges 
were released.

Interest rate risk exposures
The following table summarises interest rate risk for the Group, together with effective interest rates as at the end of the reporting 
period. Sensitivity to interest rate risk is set out in Note 32.

Fixed interest
maturing in:

Average interest rate

Floating
interest
rate
$000

Notes

5 years
or less
$000

More than
5 years
$000

Non-
interest
bearing
$000

Total
$000

Floating 

Fixed

15

18

16

15

18

16

0

105,000

0

0

(80,000)

80,000

25,000 

80,000

0

105,000

0

0

(80,000)

80,000

25,000

80,000

0

0

0

0

0

0

0

0

39,813

39,813

0

0

105,000

0

3.1%

3.1%

3.7%

39,813

144,813

45,547

45,547

0

0

105,000

0

4.4%

4.4%

3.7%

45,547

150,547

2013
Trade and other payables

Borrowings

Derivative ﬁ nancial instruments*

2012
Trade and other payables

Borrowings

Derivative ﬁ nancial instruments*

*   Notional principal amounts.

Fair value
The carrying amounts and fair values of borrowings at balance date are:

Bank loan (net of establishment costs)

2013

2012

Carrying 
amount
$000

104,710

104,710

Fair 
value
$000

105,050

105,050

Carrying
amount
$000

104,480

104,480

Fair 
value
$000

105,050

105,050

The fair value of the bank loan is inclusive of costs which would be incurred on settlement of the liability and is based upon 
market prices.

Collins Foods Limited Annual Report 2013   57

 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 18. Non-current liabilities – borrowings (continued)
Maturities of ﬁ nancial liabilities
The tables below analyse the Group’s ﬁ nancial liabilities into relevant maturity groupings based on their contractual maturities for:

all non-derivative ﬁ nancial liabilities; and

 –
 – net and gross settled derivative ﬁ nancial instruments for which the contractual maturities are essential for an understanding of 

the timing of the cash ﬂ ows.

The amounts disclosed in the table are the contractual undiscounted cash ﬂ ows. Balances due within 12 months equal their 
carrying balances as the impact of discounting is not signiﬁ cant. For interest rate swaps the cash ﬂ ows have been estimated using 
forward interest rates applicable at the end of each reporting period.

Contractual maturities 
of ﬁ nancial liabilities

At 28 April 2013

Non-derivatives

Trade and other payables

Borrowings

Total non-derivatives

Derivatives

Net settled (interest rate swaps)

At 29 April 2012

Non-derivatives

Trade and other payables

Borrowings

Total non-derivatives

Derivatives

Total
contractual
cash ﬂ ows

$000

39,813

112,437

152,250

(1,020)

Carrying
amount
(assets)/
liabilities

$000

39,813

104,710

144,523

(997)

$000

0

0

0

0 

0

0

0

0 

$000

$000

$000

Less than
1 year 

$000

Between 1
and 2 years

$000

Between 2
and 5 years

$000

Over
5 years

$000

39,813

5,863

45,676

(757)

$000

45,547

6,057

51,604

0

106,574

106,574

(263)

$000

0

6,057

6,057

0

112,667

112,667

Net settled (interest rate swaps)

(21)

(116)

29 

Note 19. Non-current liabilities – provisions

Employee entitlements

Tracking stock bonus plan

Make good provision

0

0

0

0 

45,547

124,781

170,328

45,547

104,480

150,027

(108)

(102)

2013
$000

1,784

0

80

1,864

2012
$000

1,324

55

161

1,540

The non-current provision for employee entitlements in respect of long service leave includes all conditional entitlements for which 
provision is made, but where employees have not yet completed the required period of service. Upon completion of the required 
period of service the Group no longer has an unconditional right to defer settlement of these obligations and as such the obligation 
is then presented as a current liability.

58  Collins Foods Limited Annual Report 2013

 
 
 
 
Note 20. Contributed equity

Balance

Shares issued during the period(i)

Capital reconstruction (refer Note 1)

Less capital raising costs (net of tax)

Balance

Balance

1 May 2011

4 August 2011

4 August 2011

4 August 2011

29 April 2012

28 April 2013

Parent entity

Shadow equity
$000

Share capital
$000

Total equity
$000

6,611

0

(6,611)

0

0

0

48,919

131,993

6,611

(5,425)

182,098

182,098

55,530

131,993

0

(5,425)

182,098

182,098

(i) 

Proceeds from share issue $201.7 million less repurchase of shares $69.7 million (including $60.4 million paid in cash consideration on 4 August 2011 and
$9.3 million paid on 26 June 2012).

Share capital

Ordinary shares – fully paid

Equity of current parent company
Movements in ordinary share capital during the reporting period were as follows:

Details

Ordinary shares, fully paid

Balance

Balance

Parent entity

2013 Shares

2012 Shares

93,000,003

93,000,003

93,000,003

93,000,003

Date

Number 
of shares

29 April 2012

93,000,003

28 April 2013

93,000,003

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 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. Upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a 
limited amount of authorised capital.

Collins Foods Limited Annual Report 2013   59

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 20. Contributed equity (continued)
Equity of former parent company 
Movements in share capital were as follows:

Details

Ordinary shares

Balance

Capital reconstruction (refer Note 1)

Balance

Active ordinary shares

Balance

Conversion from passive ordinary shares

Capital reconstruction (refer Note 1)

Balance

Passive ordinary shares

Balance

Conversion to active ordinary shares

Capital reconstruction (refer Note 1)

Balance

Active preferred ordinary shares

Balance

Conversion from passive preferred ordinary shares

Capital reconstruction (refer Note 1)

Balance

Passive preferred ordinary shares

Balance

Conversion to active preferred ordinary shares

Capital reconstruction (refer Note 1)

Balance

A-Class performance shares

Balance

Capital reconstruction (refer Note 1)

Balance

B-Class performance shares

Balance

Capital reconstruction (refer Note 1)

Balance

Deferred shares

Balance

Capital reconstruction (refer Note 1)

Balance

60  Collins Foods Limited Annual Report 2013

Date

Number of shares

1 May 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

8 June 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

8 June 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

8 June 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

8 June 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

4 August 2011

29 April 2012 and 28 April 2013

2

(2)

0

31,639,342

893

(31,640,235)

0

3,163,934,200

(893)

(3,163,933,307)

0

17,200,833

29,692,271

(46,893,104)

0

1,720,083,300

(29,692,271)

(1,690,391,029)

0

2,942,500

(2,942,500)

0

2,942,500

(2,942,500)

0

200,000

(200,000)

0

Movements in shadow equity during the reporting period were as follows:

Details

Date

Number of shares

Shadow equity units which represent active ordinary shares

Balance

Capital reconstruction (refer Note 1)

Balance

Shadow equity units which represent passive ordinary shares

Balance

Capital reconstruction (refer Note 1)

Balance

Shadow equity units which represent active preferred
ordinary shares

Balance

Capital reconstruction (refer Note 1)

Balance

Shadow equity units which represent passive preferred 
ordinary shares

Balance

Capital reconstruction (refer Note 1)

Balance

1 May 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

4 August 2011

29 April 2012 and 28 April 2013

1 May 2011

4 August 2011

29 April 2012 and 28 April 2013

4,359,653

(4,359,653)

0

435,965,300

(435,965,300)

0

177,689

(177,689)

0

17,768,900

(17,768,900)

0

Active ordinary shares 
Active ordinary shares entitled the holder to participate, subject to the Umbrella Deed, in the dividends and proceeds on winding 
up of the Former Parent Entity in proportion to the number of shares held. On a show of hands every holder of active ordinary 
shares present at a meeting in person or by proxy was entitled to one vote. Upon a poll, the voting rights attaching to each share 
were determined by a formula which operated such that the holders of active ordinary shares and the holders of active preferred 
ordinary shares held by non-institutional investors were entitled (in aggregate) to the balance of voting rights not exercisable by 
institutional investors.

Passive ordinary shares
Passive ordinary shares did not entitle the holder to participate in the dividends and proceeds on winding up of the Former Parent 
Entity. Holders of passive ordinary shares were not entitled to vote at a meeting in person or by proxy. Upon a poll no voting rights 
attached to these shares. 

Active preferred ordinary shares
Active preferred ordinary shares entitled the holder to participate, subject to the Umbrella Deed, in the dividends and proceeds 
on winding up of the Former Parent Entity in proportion to the number of shares held. On a show of hands every holder of 
active preferred ordinary shares present at a meeting in person or by proxy was entitled to one vote. Upon a poll the voting rights 
attaching to each share were determined by a formula which, subject to the Umbrella Deed, operated such that the holders of 
active ordinary shares and the holders of active preferred ordinary shares held by non-institutional investors were entitled (in 
aggregate) to the balance of voting rights not exercisable by institutional investors. Subject to the Umbrella Deed, institutional 
investors were always entitled to 52% of the total aggregate voting rights of the Former Parent Entity and its related corporation, 
Sizzler USA Holdings Inc. Subject to the terms of the Former Parent Entity constitution, Active Preferred Ordinary Shares were 
redeemable in certain situations with the occurrence of a Recapitalisation Event or in connection with an Exit Event.

Passive preferred ordinary shares
Passive preferred ordinary shares did not entitle the holder to participate in the dividends and proceeds on winding up of the 
Former Parent Entity. Holders of passive preferred ordinary shares were not entitled to vote at a meeting in person or by proxy. 
Upon a poll no voting rights attached to these shares. 

Deferred shares 
Deferred shares did not entitle the holder to participate in the dividends and proceeds on winding up of the Former Parent Entity. 
Holders of deferred shares were not entitled to vote at a meeting in person or by proxy. Upon a poll no voting rights attached to 
these shares. 

Collins Foods Limited Annual Report 2013   61

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 20. Contributed equity (continued)
Umbrella Deed
The Former Parent Entity and a related corporation, Sizzler USA 
Holdings Inc, in conjunction with the shareholders of the Former 
Parent Entity and the related corporation, had entered into 
the Umbrella Deed. This deed provided a mechanism whereby 
the value of each Active Ordinary Share and Active Preferred 
Ordinary Share was based on the combined value of the Former 
Parent Entity and the related corporation. The deed also provided 
a mechanism to restore the relative equity interests of each 
shareholder in the event of a sell down in the Former Parent 
Entity or the related corporation. This mechanism utilised either 
the conversion of Active Ordinary Shares to Passive Ordinary 
Shares, Active Preferred Ordinary Shares to Passive Preferred 
Ordinary Shares or Passive Ordinary Shares to Active Ordinary 
Shares, or Passive Preferred Ordinary Shares to Active Preferred 
Ordinary Shares to restore equilibrium.

A-Class performance shares
A-Class performance shares did not entitle the holder to 
participate in the dividends and proceeds on winding up of 
the Former Parent Entity. Holders of A-Class performance 
shares were not entitled to vote at a meeting in person or by 
proxy. Upon a poll no voting rights attached to these shares. 
Upon the attainment of certain internal rate of return hurdles, 
A-Class performance shares were capable of conversion, when 
an exit event occurred, into active ordinary shares or active 
preferred ordinary shares.

B-Class performance shares
B-Class performance shares did not entitle the holder to 
participate in the dividends and proceeds on winding up of the 
Former Parent Entity. Holders of B-Class performance shares 
were not entitled to vote at a meeting in person or by proxy. 
Upon a poll no voting rights attached to these shares. Every 
year 20% of the B-Class performance shares became capable 
of conversion, when an exit event occurred, into active ordinary 
shares or active preferred ordinary shares. Upon the attainment 
of certain internal rate of return hurdles, this conversion was 
accelerated.

As the holders of Performance Shares had paid the fair value 
of the shares at the date of issuance, the employees had 
been provided no net beneﬁ t and no amount was recorded 
as an expense in relation to these shares as these employees 
provided services. 

Shadow equity
In conjunction with the reﬁ nancing of its bank loans on 
29 June 2010, the Former Parent Entity entered into a 
shadow equity deed with three co-investor funds (who were 
also mezzanine debt providers under the reﬁ nanced bank loan 
facilities) in relation to its ordinary share classes. The extent 
of shadow equity units granted was measured by reference 
to the number of underlying ordinary shares it represented. 

One unit of shadow equity represented one share of the 
relevant share class. The co-investors were issued certiﬁ cates 
(underpinned by shadow equity deeds and the shareholder 
agreements) stating the number of units of shadow equity that 
had been granted and the underlying ordinary share classes to 
which each unit related.

The holders of shadow equity were entitled to dividends, 
returns of capital and other distributions equivalent to those of 
the ordinary share classes to which the shadow equity related. 
Such distributions become mandatory only in the event that 
such distributions were declared in respect of the underlying 
ordinary share classes. If the Former Parent Entity issued any 
ordinary classes of shares to the existing shareholders, the co-
investors were offered the right to increase the number of units 
of shadow equity they held by paying the subscription price 
that they would have paid if they had held the relevant shares.

In the event that the number of issued shares was changed 
by a reorganisation of the Former Parent Entity’s capital 
conducted as a consolidation of capital, a sub-division of 
capital or a pro-rated cancellation of capital (‘Reconstruction’) 
(except the permitted share buy-backs which occurred on 
23 September 2010) the number of units of shadow equity 
held by each co-investor would be proportionately adjusted to 
ensure the number of such units of shadow equity represented 
the same percentage of the Former Parent Entity’s share capital 
following that Reconstruction as it would have represented if 
that Reconstruction had not taken place.

In the event of an exit event, the Former Parent Entity was 
required to pay each co-investor an equivalent payment to 
the payment received by the shareholders for the sale of their 
shares per the ordinary share class to which the shadow equity 
related. An exit event was deﬁ ned as:

 –

 –

 –

 –

The date on which a prospectus is lodged with the 
Australian Securities and Investments Commission, the U.S. 
Securities and Exchange Commission, or any other relevant 
regulatory body in relation to a listing of the Former Parent 
Entity’s shares.
The date on which an agreement for the sale of the share 
capital of the Former Parent Entity is completed.
The date on which, following a trade sale of the Former 
Parent Entity and following the passing of a resolution 
of shareholders to approve the distribution and payment 
to shareholders of the proceeds of sale that are available 
for distribution or payment to shareholders, whether 
in a winding up, by return of capital, share buy-back or 
otherwise, a ﬁ nal determination is made of the amount 
that will be paid to shareholders.
The date on which the original investors no longer hold any 
shares in connection with a recapitalisation.

62  Collins Foods Limited Annual Report 2013

The co-investors did not have the right to appoint any directors to the Board. The co-investors did not have the right to vote or 
participate at a meeting of shareholders (other than as an observer). However, no resolution of shareholders would be carried if the 
relevant resolution would not have been carried if the co-investors’ shadow equity had entitled them to vote as if the co-investors 
were management shareholders and they notiﬁ ed the Former Parent Entity in writing before the resolution that they would have 
voted against the resolution. However, if a resolution was not carried, but would have been carried if the co-investors’ shadow 
equity had entitled them to vote as if the co-investors were management shareholders and they notiﬁ ed the Former Parent Entity 
in writing before the resolution that they would have voted in favour of the resolution, the relevant resolution would be deemed to 
have been carried.

Any transaction or change to the terms of the capital structure of the Former Parent Entity varying the rights attaching to the 
shadow equity held by the co-investors could not occur without the prior written consent of one or more of the co-investors. If the 
Former Parent Entity was to be wound up, the proceeds of the winding up were to be distributed to the shareholders in accordance 
with their respective proportions, taking into account any payments that must be made to the co-investors.

Note 21. Reserves

Hedging – cash ﬂ ow hedges

Foreign currency translation

Movements in hedging reserve – cash ﬂ ow hedges:

Opening balance

Revaluation – gross

Deferred tax (Note 12)

Transfer to net proﬁ t – gross

Deferred tax (Note 12)

Closing balance

Movements in foreign currency translation reserve:

Opening balance

Exchange ﬂ uctuations arising on net assets of foreign operations

Closing balance

2013
$000

(674)

461

(213)

(97)

(894)

268

70

(21)

(674)

260

201

461

2012
$000

(97)

260

163

0

(102)

31

(37)

11

(97)

0

260

260

Nature and purpose of reserves
Hedging reserve – cash ﬂ ow hedges:
The hedging reserve is used to record gains or losses on a hedging instrument in a cash ﬂ ow hedge that are recognised in other 
comprehensive income, as described in Note 1. Amounts are recognised in proﬁ t and loss when the associated hedged transaction 
affects proﬁ t and loss.

Collins Foods Limited Annual Report 2013   63

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 22. Retained earnings/(accumulated losses)

Retained earnings/(accumulated losses):

Opening balance

Net proﬁ t

Dividend provided for or paid

Closing balance

Dividends:

Dividends paid of $0.105 per fully paid share:

Franking credits available for the subsequent reporting period based on a tax rate of 30%

2013
$000

2012
$000

(2,993)

16,368

(9,765)

3,610

9,765

9,765

44,010

(14,422)

11,429

0

(2,993)

0

0

44,583

The above amount represents the balance of the franking account as at the end of the reporting period, adjusted for:

 –
 –
 –

franking credits that will arise from the payment of income tax payable as at the end of the reporting period;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and 
franking credits that may be prevented from being distributed in the subsequent reporting period.

The consolidated amounts include franking credits that would be available to the parent entity if distributable proﬁ ts of subsidiaries 
were paid as dividends.

Since the end of the reporting period, the Directors of the Company have declared the payment of a fully franked ﬁ nal dividend 
of 5.5 cents per ordinary share ($5.1 million) to be paid on 19 July 2013. The aggregate amount of the dividend to be paid on 
that date, but not recognised as a liability at the end of the reporting period, is $5,115,000.

64  Collins Foods Limited Annual Report 2013

Note 23. Subsidiaries and Deed of Cross Guarantee
The Consolidated Financial Statements at 28 April 2013 include the following subsidiaries. The reporting period end of all 
subsidiaries is the same as that of the parent entity.

Name of controlled entity

CFG Finance Pty Limited

Collins Foods Holding Pty. Limited

Collins Foods Finance Pty. Limited

Collins Foods Group Pty. Ltd. 

Collins Restaurants Queensland Pty. Ltd.

Collins Restaurants NSW Pty. Ltd. 

Sizzler Restaurants Group Pty. Ltd. 

Collins Restaurants Management Pty. Ltd. 

Collins Property Development Pty. Ltd.

Club Sizzler Pty. Ltd.

Collins Foods Australia Pty. Ltd.

Collins Finance and Management Pty. Ltd.

Sizzler South Paciﬁ c Pty. Ltd.

SingCo Trading Pte Ltd

Sizzler International Marks LLC

Sizzler Asia Holdings LLC

Sizzler South East Asia LLC

Sizzler New Zealand LLC

Sizzler Restaurant Services LLC

Notes

(b) (d)

(b) (d)

(b)

(b)

(b)

(b)

(b)

(b)

(b)

(b)

(b)

(b)

(c)

(e)

(e)

(e)

(e) (f)

(e) (f)

(e) (f)

Place of 
incorporation

Name Acronym

2013

2012

% of shares held

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Nevada, USA

Singapore

Delaware, USA

Delaware, USA

Delaware, USA

Delaware, USA

Delaware, USA

CFGF

CFH

CFF

CFG

CRQ

CRN

SRG

CRM

CPD

CSP

CFA

CFM

SSP

SingCo

SIM

SAH

SSEA

SNZ

SRS

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

Notes
(a)  Collins Foods Limited is domiciled in Brisbane, Australia. The Registered ofﬁ ce is located at 16 Edmondstone Street, Newmarket QLD 4051.
(b)  These companies have entered into a deed of cross guarantee dated 23 February 2012 with Collins Foods Limited which provides that all parties to the deed will 

guarantee to each creditor payment in full of any debt of each company participating in the deed on winding up of that company. As a result of Class Order 98/1418 
issued by the Australian Securities and Investments Commission, these companies are relieved from the requirement to prepare ﬁ nancial statements.

(c)  Sizzler South Paciﬁ c Pty. Ltd. (SSP) is a company with no net assets. The directors have resolved to liquidate this company. This company is not an Australian registered 

company and is not covered by the Class Order 98/1418. 

(d)  Collins Foods Limited and CFG Finance Pty Limited were not incorporated within the previous corresponding period; however, as at 1 May 2011, a subsidiary of the 

Company, Collins Foods Holdings Pty Limited, was holding company of the group acquired by the Company on 4 August 2011.

(e)  SingCo Trading Pte Ltd and its subsidiaries were purchased by CFG Finance Pty Limited on 4 August 2011. These companies are not Australian registered companies and 

are not covered by the Class Order 98/1418. 

(f)  Originally incorporated in Nevada, upon conversion to a LLC became registered in Delaware. 

Collins Foods Limited Annual Report 2013   65

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 23. Subsidiaries and Deed of Cross Guarantee (continued)
The Consolidated Income Statement, Consolidated Statement of Comprehensive Income and summary of movements in 
consolidated retained proﬁ ts of the entities in the Class Order 98/1418 ‘closed group’ are as follows:

As there are no other parties to the Deed of Cross Guarantee, that are controlled by Collins Foods Limited, the below also 
represents the ‘Extended Closed Group’.

Consolidated Income Statement

Sales revenue

Cost of sales

Gross proﬁ t

Selling, marketing and royalty expenses

Occupancy expenses

Restaurant related expenses

Administration expenses

Other expenses

Other income

Finance revenue

Finance costs

Proﬁ t from continuing operations before income tax

Income tax (expense)/beneﬁ t

Proﬁ t from continuing operations

Statement of Consolidated Comprehensive Income

Proﬁ t from continuing operations

Other comprehensive income:

Exchange difference upon translation of foreign operations

Cash ﬂ ow hedges

Income tax relating to components of other comprehensive income

Other comprehensive income for the reporting period, net of tax

Closed Group

2013
$000

2012
$000

421,385

(201,711)

219,674

(89,514)

(33,327)

(42,830)

(24,281)

(2,070)

858

202

(6,386)

22,326

(6,992)

15,334

404,177

(192,587)

211,590

(83,790)

(31,378)

(42,699)

(31,418)

(1,716)

11,291

1,196

(26,453)

6,623

4,480

11,103

15,334

11,103

201

(824)

247

(376)

260

(139)

42

163

Total comprehensive income for the reporting period

14,958

11,266

Total comprehensive income for the reporting period is attributable to:

Owners of the parent

Summary of movements in consolidated retained proﬁ ts

Retained proﬁ ts/(losses) at the beginning of the reporting period

Proﬁ t for the reporting period

Dividends provided for or paid

Retained earnings/(accumulated losses) at the end of the reporting period

14,958

11,266

(3,261)

15,334

(9,765)

2,308

(14,364)

11,103

0

(3,261)

66  Collins Foods Limited Annual Report 2013

The Consolidated Balance Sheet of all entities in the Class Order 98/1418 ‘closed group’ as at the end of the reporting period is 
as follows:

Current assets

Cash and cash equivalents

Receivables

Inventories

Total current assets

Non-current assets

Property, plant and equipment

Intangible assets, net

Deferred tax assets, net

Receivables

Other ﬁ nancial assets

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Current tax liabilities

Derivative ﬁ nancial instruments

Provisions

Total current liabilities

Non-current liabilities

Borrowings

Derivative ﬁ nancial instruments

Provisions

Total non-current liabilities

Total liabilities

Net assets

Equity

Contributed equity

Reserves

Retained proﬁ ts/(accumulated losses)

Total equity

Closed Group

2013
$000

2012
$000

23,223

3,748

4,406

31,377

59,149

222,032

16,680

30

9,827

307,718

339,095

39,729

4,157

743

3,750

48,379

18,804

3,450

4,272

26,526

57,549

223,040

16,762

31

9,827

307,209

333,735

45,234

0

19

3,553

48,806

104,710

104,480

254

1,864

106,828

155,207

183,888

83

1,540

106,103

154,909

178,826

182,098

182,098

(518)

2,308

(11)

(3,261)

183,888

178,826

Collins Foods Limited Annual Report 2013   67

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 24. Commitments for expenditure

Capital commitments

Property, plant and equipment:

Aggregate capital expenditure contracted for at balance date but not recognised as 
liabilities, payable

7,621

5,112

Closed Group

2013
$000

2012
$000

Operating Leases

Operating leases relate to land, buildings and equipment with lease terms ranging from 
three to 25 years and expire on varying dates through 2027. The Company has the right 
to extend many of these leases and many contain market review clauses. Certain leases 
require contingent rent, determined as a percentage of sales, when annual sales exceed 
speciﬁ ed levels.

Operating lease commitments:

Aggregate lease expenditure contracted for at balance date but not recognised as 
liabilities, payable:

Not later than one year

Later than one year but not later than ﬁ ve years

Later than ﬁ ve years

Less recoverable Goods and Services Tax

Minimum lease payments

24,984

60,563

22,103

107,650

(9,783)

97,867

24,311

63,377

19,309

106,997

(9,727)

97,270

68  Collins Foods Limited Annual Report 2013

Note 25. Related parties
Parent entity
The parent entity and ultimate parent entity within the Group is Collins Foods Limited.

Key management personnel
Key management personnel include the directors for the parent entity and directors and executives for the Group. All disclosures 
relating to key management personnel are disclosed in Note 26.

Subsidiaries
The ownership interests in subsidiaries are set out in Note 23.

Transactions between entities within the Group during the reporting period consisted of loans advanced and repaid, interest 
charged and received, operating expenses paid, non-current assets purchased and sold, and tax losses transferred. These 
transactions were undertaken on commercial terms and conditions.

Transactions with related parties
All transactions with related parties are conducted on commercial terms and conditions.

Transaction type

Class of related party

Whole Dollars

2013
$

2012
$

Loans to related parties

Interest receivable

Other transactions

Operating expenses paid for

Acquisition of loan owing by related party 

Acquisition of a related party receivable

Related entity(i)

Related entity(i)

Related entity(i)

Related entity – Associate

Reversal of a provision for impairment of a related party receivable

Related entity – Associate

0

0

0

0

0

Loan repayment from a related party

Provision for impairment of a related party receivable

Aggregate unsecured amounts receivable from, 
and payable to, related parties at balance date:

Related entity – Associate

Related entity – Associate

(281,206)

(4,794)

410,104

139,428

11,921,786

177,012

108,988

0

0

Non-current assets – Receivables

Related entity – Associate

0

286,000

(i)   Prior to acquisition of related party (refer Note 33).

Collins Foods Limited Annual Report 2013   69

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 26. Key Management Personnel compensation and equity instrument disclosures
Key Management Personnel compensation

Short-term employee beneﬁ ts 
Post-employment beneﬁ ts 
Long-term beneﬁ ts 

2,030,241
173,630
40,988

2,516,114
215,064
47,307

2,244,859

2,778,485

Detailed remuneration disclosures are provided in the remuneration report included in the Directors’ Report.

Equity instrument disclosures relating to Key Management Personnel
Shareholdings
The numbers of shares in the Company (and the Former Parent Company) held during the ﬁ nancial period by the Directors of 
the Company (and Former Parent Company) and the Key Management Personnel of the Group (and former group), including their 
personally related parties, are set out below. There were no shares granted during the reporting period as compensation or as a 
result of exercise of options or rights.

2013
Ordinary Shares

Directors
Russell Tate
Newman Manion
Bronwyn Morris
Kevin Perkins
Stephen Copulos

Other Key Management Personnel
Graham Maxwell
Martin Clarke
John Hands
Phillip Coleman
Simon Perkins

Balance
at start of period

Changes during the period1

Balance at the end of the period

20,001
20,001
5,001
7,340,833
–

–
126,262
210,409
11,571
168,402

–
–
–
–
12,000,000

–
–
–
–
(168,402)

20,001
20,001
5,001
7,340,833
12,000,000

–
126,262
210,409
11,571
–

1 

Changes include recognition/de-recognition of shares held upon becoming/ceasing to be a Director or other KMP of the Group. 

Balance at start of 
period (Former Parent 
Company Shares)1

Capital
Reconstruction2

Purchase of
Shares

Balance at 
the end of the period 
(Company Shares) 

–

–

–

–

–

–

18,291,011
1,829,101,100
455,000

(11,290,178)
(1,829,101,100)
(455,000)

153,426 
15,342,600

*
*

20,001

20,001

5,001

340,000
–
–

*
*

20,001

20,001

5,001

7,340,833
–
–

–
–

2012

Directors
Russell Tate
Ordinary
Newman Manion
Ordinary
Bronwyn Morris
Ordinary
Kevin Perkins

Active/Ordinary
Passive
Performance
Robert Koczkar

Active/Ordinary
Passive

70  Collins Foods Limited Annual Report 2013

2012

Other Key Management Personnel
Simon Perkins
  Active/Ordinary

Passive
Performance

  Deferred
James Ryan
  Active/Ordinary

Passive
Performance

Martin Clarke
  Active/Ordinary

Passive
Performance

John Hands
  Active/Ordinary

Passive
Performance

David Nash 
  Active/Ordinary

Passive
Performance

Adrian Argent
  Active/Ordinary

Passive
Performance
Trevor McDonald
  Active/Ordinary

Passive
Performance

Pamela Martin
  Active/Ordinary

Passive
Performance
Phillip Coleman
  Active/Ordinary

Passive
Performance

George Ryland
  Active/Ordinary

Passive
Performance

Balance at start of 
period (Former Parent 
Company Shares)1

Capital
Reconstruction2

Purchase of
Shares

Balance at 
the end of the period 
(Company Shares) 

1,803,931
180,393,100
400,000
200,000

1,535,227
153,522,700
400,000

270,505
27,050,500
65,000

1,126,951
112,695,100
200,000

518,917
51,891,700
200,000

749,873
74,987,300
200,000

262,501
26,250,100
65,000

766,987
76,698,700
200,000

495,792
49,579,200
200,000

234,250
23,425,000
200,000

(1,635,529)
(180,393,100)
(400,000)
(200,000)

(1,356,080)
(153,522,700)
(400,000)

(144,243)
(27,050,500)
(65,000)

(916,542)
(112,695,100)
(200,000)

*
*
*

*
*
*

*
*
*

*
*
*

*
*
*

*
*
*

–
–
–
–

–
–
–

–
–
–

–
–
–

*
*
*

*
*
*

*
*
*

*
*
*

*
*
*

*
*
*

168,402
–
–
–

179,147
–
–

126,262
–
–

210,409
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

* 
1 

Directors or other KMP of former group. Ceased to be Directors or other KMP on 3 August 2011.
Shares held in Collins Foods Holding Pty Limited (the Former Parent Company), which were either active ordinary shares, active preferred ordinary shares, A-class 
or B-class performance shares or deferred shares (refer Note 20 for a description of the rights attaching to these share classes).

2  Movements in the capital reconstruction include the conversion of Passive Ordinary Shares to Active Ordinary Shares; the conversion of Passive Preferred Ordinary Shares 

to Active Preferred Ordinary Shares on 8 June 2011 (refer Note 20); the exchange of active share classes by certain shareholders of the Former Parent Company for cash 
consideration; the exchange of active share classes by certain shareholders of the Former Parent Company for shares in the Company in the ratio of 2.29 active shares for each 
ordinary share in the Company (the total cash consideration received or receivable by KMP for active share classes in the capital reconstruction was $10,328,893); the exchange 
of passive ordinary share classes by all shareholders of the Former Parent Company for nil consideration on 4 August 2011; the exchange of A-class performance shares in the 
Former Parent Company for nil consideration and B-class performance shares for cash consideration (the total cash consideration received or receivable by KMP for performance 
share classes in the capital reconstruction was $82,548); and the exchange of deferred shares for nil consideration.

Collins Foods Limited Annual Report 2013   71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 26. Key Management Personnel 
compensation and equity instrument 
disclosures (continued)
Loans with Directors and Director-related entities
As of the end of the reporting period, there were no loans 
with Directors and Director-related entities. As of the end of 
the prior reporting period, there were no loans with Directors 
and Director-related entities.

Other transactions with Key Management Personnel
Directors and other Key Management Personnel of the Group, 
and their personally related entities, may purchase goods from 
the Company or its controlled entities from time to time. These 
transactions are made using terms available to other employees 
of the Group and customers generally.

The Directors and other Key Management Personnel of the 
former group were shareholders of SingCo Trading Pte Ltd, 
which the Group acquired on 4 August 2011 on terms for 
one dollar from these shareholders, consideration deemed 
fair and reasonable by all parties to the transaction. Further 
details relating to the acquisition are set out in Note 33.

The Managing Director/CEO, Kevin Perkins, is a Director and 
major shareholder of Sizzler USA Acquisition Inc. Collins Foods 
Finance Pty Ltd, a subsidiary within the former Group, sold 
the preference shares it held in Sizzler USA Holdings, Inc. to 
Sizzler USA Acquisition Inc. on 2 June 2011 for one US dollar, 
consideration deemed fair and reasonable by all parties to 
the transaction.

Note 27. Superannuation
The Group maintains two superannuation plans which cover 
substantially all of its employees. Each participating employer 
entity in the Group has a legal obligation to contribute to the 
plans or other plans as chosen by the employees. The default 
plans chosen by the employer entity are as follows:

 – Management employees – a non-contributory accumulated 
beneﬁ ts scheme which is administered by Plum Financial 
Services Limited.
Staff – non-contributory accumulated beneﬁ ts plans which 
are administered by Westpac Financial Services Group 
Limited, Sunsuper or Australian Retirement Fund.

 –

Note 28. Contingencies
Contingent liabilities
The parent entity and certain controlled entities indicated in 
Note 23 have entered into deeds of cross guarantee under 
which the parent entity has guaranteed any deﬁ ciencies of 
funds on winding up of the controlled entities which are party 
to the deeds. At the date of this statement there are reasonable 
grounds to believe that the Company will be able to meet any 
obligations or liabilities to which it is, or may become, subject 
by virtue of the deeds.

As described in Note 18, CFG Finance Pty. Limited (a subsidiary) 
and several other related entities entered into Syndicated and 
Working Capital credit facilities. As a consequence of this, the 
Company and its subsidiaries (other than subsidiaries outside 
the Closed Group) became registered guarantors of all the 
obligations in respect of these loan facilities. 

72  Collins Foods Limited Annual Report 2013

Note 29. Remuneration of auditors
During the reporting period the following fees were paid or payable for services provided by the auditor of the parent entity, 
its related practices and non-related audit ﬁ rms:

Assurance services

Audit services

PricewaterhouseCoopers Australian ﬁ rm

 Audit and review of ﬁ nancial reports and other audit work under the
Corporations Act 2001

  Audit and review of ﬁ nancial reports and other audit work for foreign subsidiary

  Network ﬁ rms of PricewaterhouseCoopers Australia

  Audit and review of ﬁ nancial reports and other audit work for foreign subsidiary

Other assurance services

PricewaterhouseCoopers Australian ﬁ rm

Agreed upon procedures in respect of franchisee sales

Store sales certiﬁ cates

Agreed upon procedures for covenant calculations

Total remuneration for assurance services

Taxation services

PricewaterhouseCoopers Australian ﬁ rm

Tax compliance services, including review of company tax returns

Tax advice and consulting

Network ﬁ rms of PricewaterhouseCoopers Australia

Tax compliance services, including review of company tax returns

Total remuneration for taxation services

Transaction services

PricewaterhouseCoopers Australian ﬁ rm

Transaction compliance services

Total remuneration for transaction services

Total remuneration for services

Whole Dollars

2013
$

2012
$

280,090

20,300

20,600

320,990

9,700

10,300

18,800

38,800

313,810

20,000

20,000

353,810

0

10,000

18,330

28,330

359,790

382,140

25,000

11,000

3,654

39,654

29,000

5,000

3,565

37,565

0

0

864,067

864,067

399,444

1,283,772

It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where 
PricewaterhouseCoopers’ expertise and experience with the Group are important. These assignments are principally tax advice, 
due diligence reporting on acquisitions and capital raisings, or where PricewaterhouseCoopers is awarded assignments on a 
competitive basis. It is the Company’s policy to seek competitive tenders for all major consulting projects.

Collins Foods Limited Annual Report 2013   73

 
 
 
 
 
 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 30. Notes to the Consolidated Statement of Cash Flows
Reconciliation of proﬁ t from continuing operations to net cash inﬂ ow from operating activities

Proﬁ t from continuing operations

Adjustments for non-cash income and expense items:

Depreciation, amortisation and impairment

KFC franchise rights written off

Loss on disposal of property, plant and equipment

Borrowing costs written off on loan extinguishment

Amortisation of borrowing costs

Transfer to/(from) provisions:

Provision for diminution in value of inventory

Reversal of provision for diminution in value of inventory

Provision for employee entitlements

Reversal of impairment of related party receivable

Impairment of related party receivable

Release of related party ﬁ nancial liability – retirement plan

Movement in:

Income tax payable

Deferred tax balances

Fringe beneﬁ ts tax payable

Goods and services tax payable

Changes in assets and liabilities:

(Increase)/decrease in assets:

Receivables

Inventory

Prepayments and other assets

Receivables from related parties

Share of proﬁ ts of associate

Increase/(decrease) in liabilities:

Trade payables and accruals

Financing activities included in loss from continuing operations:

Costs associated with Initial Public Offer

Net operating cash ﬂ ows

Note 31. Non-cash ﬁ nancing and investing activities

Acquisition of plant and equipment by means of leases

Total acquisition by means of leases

74  Collins Foods Limited Annual Report 2013

2013
$000

2012
$000

16,368

11,429

17,445

0

209

0

230

0

(5)

553

0

5

0

4,157

240

70

(82)

(806)

(129)

(1,200)

0

(92)

16,959

3,732

116

10,022

1,371

4

0

(13)

(109)

0

(10,671)

(544)

(3,493)

97

340

222

244

1,670

(410)

(87)

4,257

(6,789)

0

41,220

11,535

35,625

2013
$000

0

0

2012
$000

1,717

1,717

Related party transactions are conducted on commercial terms 
and conditions. Recoverability of these transactions is assessed 
on an ongoing basis. 

Credit risk further arises in relation to ﬁ nancial guarantees given 
to certain parties (see Notes 18 and 23 for details).

Liquidity risk
The Group manages liquidity risk by maintaining adequate 
reserves, banking facilities and reserve banking facilities by 
continuously monitoring forecast and actual cash ﬂ ows. This 
approach enables the Group to manage short, medium and 
long-term funding and liquidity management as reported 
in Note 18. Non-interest bearing liabilities are due within six 
months. For maturities of interest bearing liabilities and interest 
rate swaps of the Group, refer to Notes 16 and 18.

Fair value estimation
The fair values of ﬁ nancial assets and ﬁ nancial liabilities are 
estimated for recognition and measurement or for disclosure 
purposes. The fair value of ﬁ nancial instruments is determined 
using estimated discounted cash ﬂ ows and market conditions 
existing at each balance date. The fair value of interest rate 
swaps is calculated as the present value of the estimated 
cash ﬂ ows.

The carrying values less impairment provision of receivables 
and payables are assumed to approximate their fair values due 
to their short-term nature. The fair value for ﬁ nancial liabilities 
for disclosure purposes is estimated by discounting the future 
contractual cash ﬂ ow at the current market interest rate that is 
available to the Group for similar ﬁ nancial instruments. The fair 
value of current borrowings approximates the carrying amount, 
as the impact of discounting is not signiﬁ cant.

The fair value of ﬁ nancial assets and ﬁ nancial liabilities 
must be estimated for recognition and measurement or 
for disclosure purposes.

Note 32. Financial risk management
The Group’s activities expose it to a variety of ﬁ nancial risks: 
Market risk (including currency risk, interest risk and price 
risk), liquidity risk and limited credit risk. The Group’s overall 
risk management program focuses on the unpredictability of 
ﬁ nancial markets and seeks to minimise potential adverse effects 
on the ﬁ nancial performance of the Group. The Group’s activities 
expose it primarily to the ﬁ nancial risk of changes in interest rates 
and it utilises interest rate swaps to manage its interest rate risk 
exposure. The use of ﬁ nancial instruments is governed by the 
Group’s policies approved by the Board of Directors, and they 
are not entered into for speculative purposes.

Market risk
Foreign exchange risk
During 2013 and 2012, the ﬁ nancial instruments of the Group 
and the parent entity were denominated in Australian dollars 
apart from certain bank accounts, trade receivables and trade 
payables in respect of the Group’s Asian operations following 
its acquisition which were denominated in foreign currencies 
at the Group level. Management has decided not to hedge 
this foreign exchange risk exposure. The Group’s exposure to 
foreign currency risk is disclosed in the tables below.

Cash ﬂ ow and interest rate risk
The Group’s main interest rate risk arises from long-term 
borrowings. Borrowings issued at variable rates expose the 
Group to cash ﬂ ow interest rate risk while borrowings issued 
at ﬁ xed rates expose the Group to fair value interest rate 
risk. Information about the Group’s variable rate borrowings, 
outstanding interest rate swap contracts and an analysis of 
maturities at the reporting date is disclosed in Note 18.

Price risk
The Group manages commodity price risk by forward 
contracting prices on key commodities and by being actively 
involved in relevant supply co-operatives.

Credit risk
Credit risk arises from cash and cash equivalents, derivative 
ﬁ nancial instruments, deposits with banks, other trade 
receivables and with related parties. The Group has adopted 
a policy of only dealing with creditworthy counterparties and, 
in the situation of no independent rating being available, will 
assess the credit quality of the customer taking into account its 
ﬁ nancial position, past experience and other factors. 

Trade receivables consist of a small number of customers and 
ongoing review of outstanding balances is conducted on a 
periodic basis. The balance outstanding (disclosed in Notes 8 
and 13) is not past due nor impaired (2012: nil past due). The 
credit risk on liquid funds and derivative ﬁ nancial instruments is 
limited as the counterparties are banks with high credit ratings 
assigned by international credit-rating agencies. 

Collins Foods Limited Annual Report 2013   75

 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 32. Financial risk management (continued)
AASB 7 Financial Instruments disclosures require presentation of fair value measurements using the following fair value 
measurement hierarchy:

 – quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
 –

inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or 
indirectly (derived from prices) (level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

 –

The following tables present the Group’s assets and liabilities measured and recognised at fair value.

Assets

Derivative ﬁ nancial instruments

Liabilities

Derivative ﬁ nancial instruments

At 28 April 2013

At 29 April 2012

Level 1
$000

Level 2
$000

Level 3
$000

Level 1
$000

Level 2
$000

Level 3
$000

0

0

0

997

0

0

0

0

0

102

0

0

For assets that are measured using quoted prices in active markets, fair value is the published market price per unit multiplied by the 
number of units held without consideration of transaction costs. The fair values of the derivative ﬁ nancial instruments are estimated 
using the net present value of a series of cash ﬂ ows on both the ﬁ xed and variable components of the interest rate swaps. These 
cash ﬂ ows are based on yield curves which take into account the contractual terms of the derivatives, including the period to 
maturity and market-based parameters such as interest rates and volatility. Management incorporated non-performance risk by 
adjusting the present value of each liability position utilising an estimation of credit risk.

The following table summarises the sensitivity of the Group’s ﬁ nancial assets and ﬁ nancial liabilities to interest rate risk and foreign 
exchange risk only, as the Group is not exposed to other price risks:

Interest Rate Risk

Foreign Exchange Risk

–1%

 +1%

–20%

+20%

Carrying 
amount
$000

Proﬁ t
$000 

Equity
$000

Proﬁ t
$000 

Equity
$000

Proﬁ t
$000 

Equity
$000

Proﬁ t
$000 

Equity
$000

28 April 2013
Financial assets

Cash and cash equivalents

Trade and other receivables

23,556 

2,002 

Financial liabilities

Trade and other payables

Current tax liabilities

Borrowings

39,813 

4,157 

105,000 

Derivative ﬁ nancial instruments

997 

Total increase/(decrease)

(165) 

0 

0 

0 

175 

0 

10 

0 

0 

0 

0 

0 

(733) 

(733) 

165 

0 

0 

0 

(175) 

0

(10) 

0 

0 

0 

0 

0 

733 

733 

67 

38 

(10) 

0 

0 

0 

95 

0 

0 

0 

0 

0 

0 

0 

(67) 

(38) 

10 

0 

0 

0 

(95) 

0 

0 

0 

0 

0 

0 

0 

76  Collins Foods Limited Annual Report 2013

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Rate Risk

Foreign Exchange Risk

–1%

 +1%

–20%

+20%

Carrying 
amount
$000

Proﬁ t
$000 

Equity
$000

Proﬁ t
$000 

Equity
$000

Proﬁ t
$000 

Equity
$000

Proﬁ t
$000 

Equity
$000

29 April 2012
Financial assets

Cash and cash equivalents

19,243 

(135) 

Trade and other receivables

Related party receivables

Financial liabilities

Trade and other payables

Borrowings

1,195 

286 

45,547 

105,000 

Derivative ﬁ nancial instruments

102 

Total increase/(decrease)

0 

0 

0 

175 

0 

40 

0 

0 

0 

0 

0 

(1,256) 

(1,256) 

135 

0 

0 

0 

(175) 

0 

0 

0 

0 

0 

0 

1,256 

88 

34 

57 

(10) 

0 

0 

(40) 

1,256 

169 

0 

0 

0 

0 

0 

0 

0 

(88) 

(34) 

(57) 

10 

0 

0 

(169) 

0 

0 

0 

0 

0 

0 

0 

Note 33. Business combinations
Summary of acquisition
On 4 August 2011, CFG Finance Pty. Limited, a subsidiary of the Company, acquired 100% of the issued share capital of SingCo 
Trading Pte Ltd for one dollar. The primary reason for the acquisition was to ensure the Group has control of all Sizzler trademarks 
in the Australasian region.

The assets and liabilities arising from the acquisition are as follows:

Cash

Receivables

Other intangibles – Sizzler brand

Interest in associate

Trade and other payables

Deferred tax liability, net

Net identiﬁ able (liabilities) acquired

Goodwill

Fair Value
$000

502

338

12,080

414

(12,153)

(2,054)

(873)

873

Acquisition-related costs
Nominal acquisition-related costs were incurred in the purchase of SingCo Trading Pte Ltd and are included in administration 
expenses in the Consolidated Income Statement.

Revenue and proﬁ t contribution
The acquired business contributed revenues of $1.8 million and net proﬁ t of $0.3 million to the Group for the period 4 August 2011 
to 29 April 2012. If the acquisition had occurred on 2 May 2011, the contributed revenue for the reporting period ended 29 April 
2012 would have been $2.4 million with a corresponding net proﬁ t of $0.1 million (after intercompany interest of $0.9 million).

Collins Foods Limited Annual Report 2013   77

 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED 
FINANCIAL STATEMENTS

Note 34. Earnings per share

Basic earnings per share

From continuing operations

Diluted earnings per share

From continuing operations

(a) Basic earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic 
earnings per share are as follows:

Proﬁ t for the reporting period

Earnings used in the calculation of basic EPS from continuing operations

2013
cents

17.60

17.60

17.60

17.60

2013
$000

2012
cents

14.40

14.40

14.40

14.40

2012
$000

16,368

16,368

2013
Number 
of shares

11,429

11,429

2012
Number
of shares

Weighted average number of ordinary shares for the purpose of basic EPS

93,000,003

79,365,556

(b) Diluted earnings per share

The earnings and weighted average number of ordinary shares used in the calculation 
of diluted earnings per share are as follows:

Proﬁ t for the reporting period

Earnings used in the calculation of basic EPS from continuing operations

2013
$000

2012
$000

16,368

16,368

2013
Number 
of shares

11,429

11,429

2012
Number
of shares

Weighted average number of ordinary shares for the purpose of basic EPS

93,000,003

79,365,556

Due to the capital reconstruction accounted for using the principles of reverse acquisition referred to in Note 1, the capital structure 
of the Group changed on 4 August 2011. Immediately prior to the IPO there were 5,397,214,219 Collins Foods Holdings Pty Limited 
shares and shadow equity units which represented shares on issue. Following the IPO there were 93,000,003 Collins Foods Limited 
shares on issue. For the prior period, the weighted average number of shares (79,365,556 shares) has been calculated using an 
exchange ratio, as deﬁ ned in the relevant accounting standard, relevant to the transaction’s share price to determine the number 
of equivalent and relevant shares outstanding from the start of the period to 4 August 2011.

78  Collins Foods Limited Annual Report 2013

Note 35. Parent entity ﬁ nancial information
Summary ﬁ nancial information
The individual ﬁ nancial statements for the parent entity show the following aggregate amounts:

Balance Sheet

Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Net assets

Shareholder’s equity

Issued capital(i)

Retained earnings/(Accumulated losses)

Proﬁ t/(loss) for the reporting period

Total comprehensive income/(expense)

2013
$000

2012
$000

89

242,144

242,233

4,906

8,787

13,693

90

242,712

242,802

0

18,499

18,499

228,540

224,303

228,426

114

228,540

14,001

14,001

228,426

(4,122)

224,303

(4,122)

(4,122)

(i)  Represents share capital of the parent entity. This differs from the share capital of the Group due to the capital reconstruction (refer Note 1).

Guarantees entered into by the parent entity
The parent entity has provided unsecured ﬁ nancial guarantees in respect of bank loan facilities amounting to $105 million 
as stated in Note 18. In addition, there are cross guarantees given by the parent entity as described in Note 23. All controlled 
entities will together be capable of meeting their obligations as and when they fall due by virtue to the deed of cross guarantee 
dated 23 February 2012. No liability was recognised by the parent entity in relation to these guarantees, as their fair value is 
considered immaterial.

Contingent liabilities of the parent entity
Except as described above in relation to guarantees, the parent entity did not have any contingent liabilities as at 28 April 2013.

Collins Foods Limited Annual Report 2013   79

 
DIRECTORS’
DECLARATION

In the Directors’ opinion:

(a) 

the ﬁ nancial statements and notes set out on pages 27 to 79 are in accordance with the Corporations Act 2001, including:

(i) 

(ii) 

 complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting 
requirements; and
 giving a true and fair view of the consolidated entity’s ﬁ nancial position as at 28 April 2013 and of its performance 
for the period ended on that date; and

(b) 

(c) 

 there are reasonable grounds to believe that Collins Foods Limited will be able to pay its debts as and when they become 
due and payable; and

 at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group 
identiﬁ ed in Note 23 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue 
of the Deed of Cross Guarantee described in Note 23.

Note 1 conﬁ rms that the ﬁ nancial statements also comply with International Financial Reporting Standards as issued by the 
International Accounting Standards Board.

The Directors have been given the declarations by the chief executive ofﬁ cer and the chief ﬁ nancial ofﬁ cer required by 
section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the Directors.

This report is made in accordance with a resolution of Directors.

Russell Tate
Director

Brisbane 
25 June 2013

80  Collins Foods Limited Annual Report 2013

 
 
INDEPENDENT
AUDITOR’S REPORT

Collins Foods Limited Annual Report 2013   81

 
INDEPENDENT
AUDITOR’S REPORT

82  Collins Foods Limited Annual Report 2013

SHAREHOLDER
INFORMATION

The shareholder information set out below was applicable as at 20 June 2013.

A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:

Holding

1–1,000

1,001–5,000

5,001–10,000

10,001–100,000

100,001 and over

There were 49 holders of less than a marketable parcel of ordinary shares.

B. Equity security holders
The names of the 20 largest holders of the only class of quoted equity securities are listed below:

Citicorp Nominees Pty Limited

JP Morgan Nominees Australia Limited

HSBC Custody Nominees (Australia) Limited 

HSBC Custody Nominees (Australia) Limited

National Nominees Limited

Mr Kevin Perkins

Spacetime Pty Ltd 

UBS Wealth Management Australia Nominees Pty Ltd

Hooks Enterprises Pty Ltd 

Mrs Heather Lynnette Grace

Brazil Farming Pty Ltd

Michael Kemp Pty Ltd 

Plymouth Pty Ltd

Adrian Mark Argent

Ward McKenzie Pty Ltd

Perkins Family Investment Corporation Pty Ltd

SM & RW Brown Pty Ltd 

Avanteos Investments Limited <2477966 DNR A/C>

JP Morgan Nominees Australia Limited 

Mr John Hands

Number of 
shareholders 
of ordinary 
shares

1,137

1,894

682

495

41

Ordinary shares

Number
held

Percentage of
issued shares

11,583,000

10,710,138

10,678,000

10,434,836

8,160,492

7,000,833

1,322,000

1,088,558

560,000

547,801

500,000

410,000

400,000

350,014

305,000

300,000

270,000

240,847

224,925

210,409

12.45%

11.52%

11.48%

11.22%

8.77%

7.53%

1.42%

1.17%

0.60%

0.59%

0.54%

0.44%

0.43%

0.38%

0.33%

0.32%

0.29%

0.26%

0.24%

0.23%

Collins Foods Limited Annual Report 2013   83

 
SHAREHOLDER
INFORMATION

C. Substantial holders
Substantial holders (including associate holdings) in the Company, based on the most recent substantial holder notices lodged with 
the Company and the ASX, are set out below:

Allan Gray Australia Pty Ltd

Copulos Group

Kevin Perkins

National Australia Bank Limited

Commonwealth Bank of Australia

Pengana Capital Limited

D. Restricted Securities
3,500,417 ordinary shares are subject to voluntary escrow as follows:

Number of ordinary shares subject to escrow

3,500,417

Ordinary shares

Number
held

Percentage 

17,455,661

11,500,000

7,000,833

5,900,563

5,521,063

5,000,000

18.77%

12.37%

7.53%

6.35%

5.94%

5.38%

Date the escrow period ends

28 June 2013

E. Ordinary shares voting rights
On a show of hands every member present at a meeting in person or by proxy shall have one vote. Upon a poll, each share shall 
have one vote.

84  Collins Foods Limited Annual Report 2013

 
CORPORATE
DIRECTORY

Directors
Russell Tate, Chair
Kevin Perkins, Managing Director/CEO
Newman Manion
Bronwyn Morris
Stephen Copulos

Company Secretary
Rebecca Wiley

Principal Registered Ofﬁ ce in Australia
16-20 Edmondstone Street,
Newmarket QLD 4051

Share Register
Link Market Services
Level 15, 324 Queen Street,
Brisbane QLD 4000
T 1300 554 474

Auditor
PricewaterhouseCoopers
Riverside Centre,
123 Eagle Street,
Brisbane QLD 4000

Stock Exchange Listings
Collins Foods Limited shares are listed on the Australian Securities Exchange.

Website Address
www.collinsfg.com.au