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Yum ChinaCOLLINS
FOODS
LIMITED
ANNUAL REPORT 2015
COLLINS FOODS LIMITED
ABN 13 151 420 781
2015 has delivered a strong
financial result, and we are
well-placed to continue to
maximise growth opportunities.
Contents
3 Our financial performance
5 Our year in review
6
7
9
Chairman’s message
CEO’s report
Corporate Governance Statement
15 Directors’ Report
34
Auditor’s Independence Declaration
35 Consolidated Balance Sheet
36 Consolidated Income Statement
Key dates for 2015-2016
Thursday, 25 June 2015
Full year results released
37
Consolidated Statement of Comprehensive Income
Thursday, 9 July 2015
Final dividend record date
38
Consolidated Statement of Changes in Equity
Thursday, 23 July 2015
Final dividend payment date
39
Consolidated Statement of Cash Flows
Tuesday, 1 September 2015
2015 Annual General Meeting
40
Notes to the Consolidated Financial Statements
Sunday, 18 October 2015
FY16 half-year end
84 Directors’ Declaration
85
Independent Auditor’s Report
87 Shareholder Information
89 Corporate Directory
2
Wednesday, 2 December 2015 Half-year results released
Thursday, 10 December 2015
Interim dividend record date
Tuesday, 15 December 2015
Interim dividend payment date
Sunday, 1 May 2016
End of FY16
Collins Foods Limited Annual Report 2015 25
20
15
10
5
0
Our financial performance
Over the past 12 months Collins Foods Limited has
been firmly focused on growing its core business.
Revenue
Revenue (A$ million)
(A$ million)
571.6
423.9
425.1
600
500
400
300
200
Underlying NPAT
Statuatory NPAT ($ million)
(A$ million)
24.6
17.9
16.4
25
20
15
10
34.4%
100
Revenue was up 34.4%
on an underlying basis
compared to the previous
corresponding period.(a)
0
FY13
FY14
FY15
37.4%
5
Underlying NPAT was
up 37.4% to $24.6m
(FY14: $17.9m).(a)
0
FY13
FY14
FY15
4.8%
KFC Same Store Sales
Same store sales up, to 4.8%
(FY14: 0.8%).
37.5%
EBITDA
Underlying Earnings Before Interest,
Tax, Depreciation and Amortisation up,
to $67.4m (FY14: $49.0m).(a)
9.4%
Net operating cashflow
Net operating cashflow up,
to $49.1m (FY14: $44.9m).
Ô to $(10.4)m
Statutory NPAT
Statutory NPAT loss of $10.4m was heavily
impacted by a $37.5m non-cash, pre-tax
impairment charge on Sizzler Australia.
9.5%
Dividends
Total FY15 fully franked dividends
paid up, to 11.5 cps (FY14: 10.5 cps).
2.5 points
ROCE
Return on Capital Employed
up 2.5 points to 12.9% (FY14: 10.4%).
(a) Adjusted to exclude impact of WA/NT acquisition, non-cash impairments and other significant items in FY14.
FY15 includes an additional trading week (53 week year).
3
Collins Foods Limited Annual Report 2015
Japan
Sizzler (9)
Collins Foods
Strives to build the best restaurant
company in the world.
China
Sizzler (9)
Thailand
Sizzler (42)
Northern Territory
KFC (4)
Queensland
KFC (127)
Sizzler (18)
Western Australia
KFC (38)
Sizzler (5)
New South Wales
KFC (2)
Sizzler (3)
We are proud to have opened
six new KFC restaurants during the
year, bringing the total number of
all our restaurants in Australia to 197.
4
Collins Foods Limited Annual Report 2015 Our year in review
Our strengthened focus on driving sales with innovative
products and maximising operations performance has been
key to meeting the challenges of an evolving market.
KFC achieved solid growth as
a result of good sales growth
underpinned by innovative products,
disciplined cost management and
the strong performance of recent
new restaurant acquisitions.
´ We invested in new restaurant developments and
major remodels to provide customers a contemporary
restaurant design for an enhanced dining experience
– Built six new restaurants
– Nine major remodels in Queensland and seven
in Western Australia
–
Eight minor remodels across the network
´ Customers responded to a very successful summer
cricket marketing campaign
´ Product innovation was key in driving sales growth
across the KFC business
Based on performance, Sizzler has been
determined as non-core to Collins Foods
strategic growth.
We are excited about this innovative business
concept which is demonstrating great
growth potential.
´ Sizzler Australia continues to generate positive EBITDA
´ Two new Snag Stands opened in 2015 – Macquarie
´ We are proceeding with our plans to extend our
footprint in Asia in the coming year
Centre and Sunshine Plaza
´ Customers are responding to the Stands’ new format
´ One new Snag Stand to open in Pacific Fair in late 2015
5
Collins Foods Limited Annual Report 2015
Chairman’s message
Collins Foods Limited has delivered a very encouraging
financial performance in 2015. This is a result of our
disciplined approach to core business growth and our
unwavering focus on driving efficiencies across the business.
Overall, we achieved a 29.7% increase in revenue across the
business, driven by solid same store sales and new restaurant
openings within the KFC business, and better-than-expected
performance of the recently acquired Western Australia
and Northern Territory KFC restaurants. Good cost controls
enabled us to translate this revenue growth into strong EBITDA
growth of 33.5%.
Further, a $5.2m reduction in net debt to $122.8m in 2015
reaffirms our approach to steady business growth while
maintaining a strong balance sheet and reducing debt.
Our focus on innovation benefited the KFC business in
particular, and has been key to meeting the challenges of
a continually evolving market in which there is increased
competition, subdued retail demand and rising costs.
We achieved stronger sales by enhancing our existing network of
KFC restaurants, implementing attractive and innovative product
offerings, and running a successful summer marketing campaign.
Operational consistency, particularly in the areas of labour and
waste cost control and efficiency gains, further supported this
performance and we will continue to review the potential for
this model to be applied across all Collins Foods brands.
We will pursue all opportunities to build the KFC business
in the coming year by opening new restaurants and
enhancing our existing network with progressive major
remodels to ensure customers continue to receive an
enhanced dining experience.
The momentum and performance of our KFC business offset
disappointing results from Sizzler Australia which, despite
initially responding to the ‘Get Refreshed’ campaign and front-
of-house remodelling across some restaurants, reported a
disappointing 8.5% decline in same store sales across the year.
Sizzler Asia continued to contribute steady earnings growth.
After the key summer trading period we undertook a strategic
review of the Sizzler Australia business and, as a result,
the brand will no longer be considered core to the strategic
growth of Collins Foods. Moving forward, we will focus
on strategic investments to support further growth in the
performing KFC and Snag Stand brands and, when the time
is right, will pursue new growth opportunities.
While a limited number of Sizzler Australia restaurants will
close, we recognise consumers’ attachment to the Sizzler
brand and will monitor the remaining businesses on an
ongoing basis.
Snag Stand continues to deliver healthy sales growth and
receive positive consumer feedback. Patronage is growing and
the business is building a strong platform to support future,
sustainable growth. We will continue to pursue our solid
pipeline of eastern seaboard expansion opportunities under
a refined operational and economic model.
6
Collins Foods’ strong 2015 performance was delivered during a
year in which there were also a number of significant changes
to the Board and management team.
In March 2015, Russell Tate stepped down from the role of
Chairman after leading the Board since the Company’s listing
in 2011. I thank Russell for his excellent stewardship up to
this time. I am pleased that Russell remains on the Board as
an Independent Non-executive Director, a member of the
Board’s Audit and Risk Committee and the Remuneration
and Nomination Committee, ensuring his extensive Company
experience is retained.
The Company’s management will continue under the leadership
of Graham Maxwell as Managing Director & CEO. We welcomed
Graham as CEO following the resignation of Kevin Perkins in
September 2014. Graham was also appointed Managing Director
in March 2015.
Kevin Perkins has a 35 year history with Collins Foods –
29 years as Managing Director & CEO – and he remains
actively involved in the Company as an Executive Director.
During his leadership, Kevin played an integral role in
strengthening the Company for sustained growth. I would
like to take this opportunity to sincerely thank Kevin on behalf
of the Board, for his outstanding commitment over three
decades, and his ongoing dedication to seeing Collins Foods
reach its full potential. I also thank and commend Graham
Maxwell for the expertise and commitment he brings to Collins
Foods and for his work to ensure a seamless leadership change
during the period.
Thanks must also go to all of our staff for their commitment to
strengthening our business for the future and I look forward to
working with Graham and his team as he continues to inspire a
growing staff of more than 8,700 Australia wide, to deliver on
the Company’s growth strategy, underpinning strengthened
earnings growth and shareholder value.
In closing, thank you also to directors Newman Manion
and Bronwyn Morris for their professionalism and dedication
to the highest levels of governance of Collins Foods.
The Board looks forward to an exciting year ahead as we
focus on building upon the momentum achieved in 2015,
and supporting the management team as they pursue strategic
growth opportunities.
Robert Kaye SC
Independent Non-executive Chairman
Collins Foods Limited Annual Report 2015
CEO’s report
The 2015 financial year was a pleasing one for
Collins Foods. Overall we achieved strong sales
growth, increased margins, a strengthened balance
sheet and an improved return on capital employed.
Our achievements in 2015 are testament to the Company’s
steadfast commitment to maximising operational
performance, developing a solid growth platform, and
building further strength and resilience within the business.
KFC’s strong performance over the year demonstrated the
value of this approach, which was further supported by the
better-than-expected performance of the recently acquired
Western Australia and Northern Territory KFC restaurants.
Financial performance
Our strong financial performance in 2015 was delivered within
an increasingly competitive market, and is a direct result of
a focus on growth, diligent cost controls and maximising
efficiency gains.
Collins Foods reported revenue of $571.6m for the financial
period, up 29.7% on the prior year (FY14: $440.6m). The
strong growth in revenue was driven by the solid performance
of KFC, including same store sales growth of 4.8%, new
restaurant builds, and the inclusion (since March 2014) of the
KFC Western Australia and Northern Territory business.
Earnings Before Interest, Tax, Depreciation and Amortisation
(EBITDA) for the year was $67.4m up 33.5% on the prior year
(FY14: $50.5m). This improved earnings growth reflects strong
flow through of the additional revenue in conjunction with a
disciplined focus on cost management.
Underlying Earnings Before Interest and Tax (EBIT) was
$45.1m, up 46.4% from the prior year (FY14: $30.8m).
Underlying Net Profit After Tax (NPAT) for the year was
$24.6m, up from $17.9m when compared to 2014. A $37.5m
non-cash, pre-tax impairment charge on Sizzler Australia, due
to declining sales, and a $0.8m non cash impairment against
certain KFC restaurants, resulted in the company recording a
statutory NPAT loss of $10.4m. This has no impact on Collins
Foods funding covenants and does not impact Sizzler Asia.
Overall the Group generated net operating cash flows of
$49.1m. Net debt for the year finished down $5.2m at
$122.8m with the Net Leverage Ratio reducing to 1.83, down
from 2.22 in 2014. The full year dividend was 11.5cps fully
franked, and represents an increase of 9.5% on the prior year.
Return on capital employed increased 2.5 percentage points
to 12.9% reflecting the strong overall performance of
the business.
Operational performance
KFC
KFC achieved strong growth in underlying revenue of 46.7%
to $483.1m (FY14: $329.3m). Same store sales increased by
4.8% in the financial period and a further six new restaurants
were built.
Attractive product offerings, a continued focus on innovation,
and a successful summer cricket campaign boosted KFC sales
growth throughout the year. In addition, our disciplined focus
on cost control and extraction of further efficiency gains
resulted in continued margin improvement across the
KFC network.
We will continue to expand and upgrade our restaurant
portfolio to enhance our customers’ dining experience by
offering a contemporary restaurant design, convenience
and best-in-class customer service. Product innovation
supported with strategic value offerings will remain a focus
and social media will continue to play a key role in engaging
with our customers.
The successful integration of the KFC Western Australia
and Northern Territory businesses in 2014 contributed to
the brand’s outstanding performance in 2015 and we are
committed to exploring further strategic growth within KFC
in the coming period.
Sizzler
Sizzler Australia’s overall performance continued to decline
year-on-year. After careful consideration, following a strategic
review, Sizzler Australia will no longer be considered core to
Collins Foods strategic growth.
We believe this is a necessary course of action in order to
allow us to pursue more attractive growth opportunities for
the Collins Foods business.
Sizzler Australia is forecast to generate positive EBITDA in
2016 however no further growth capital will be invested in
the business. A limited number of restaurants will close in
2016 and the performance of remaining Australian restaurants
will be monitored closely.
This decision will not impact Sizzler Asia which continues
to contribute steady earnings. We will continue with our
plans to add to the portfolio by franchising more restaurants
across Asia.
7
Collins Foods Limited Annual Report 2015 Snag Stand
Snag Stand is continuing to establish itself as an innovative
business concept with great growth potential.
The new Macquarie Centre and Sunshine Plaza restaurants,
built around the new ‘dine-in’ format, were opened in 2015
and, in line with planned network expansion, the Pacific Fair
outlet remains on track to launch towards the end of the
|2015 calendar year.
Snag Stand is maintaining healthy sales and positive customer
feedback. We will adopt a considered approach as we
continue to refine and evolve the operational and economic
model for Snag Stand.
Corporate Social Responsibility
Collins Foods is committed to giving back to the communities
who support us, by making a difference through workplace
giving and corporate support of specific charities and causes.
In 2015 we were able to facilitate a donation through our
workplace giving program of $527,067 to support five
charities including Animal Welfare League, Breast Cancer
Network Australia, Children’s Hospitals Foundation Australia,
Good Beginnings Australia, and YoungCare. Of this figure,
employee donations totalled more than $300,000, with the
remainder comprising customer donations and $100,000
contributed by Collins Foods Limited.
Since 2008, Collins Foods has donated a total of more than
$2.9m to charitable causes through our workplace giving
program – an outstanding achievement and one of which
I am extremely proud and humbled.
In 2015, Collins Foods also contributed more than $52,000
to World Hunger, raised through in-store customer donations
and staff fundraising initiatives. As a group, we also provided
$10,000 to support relief efforts in Nepal following the
devastating earthquake in April 2015.
Board and management changes
I would like to take this opportunity to thank outgoing
Chairman, Russell Tate, and outgoing Managing Director
& CEO, Kevin Perkins, for their support and guidance over
the past few years. I look forward to continuing to work
with them and the rest of the Board under the leadership
of our new Chairman, Robert Kaye SC, as we progress the
Company’s strategic and operational objectives in 2015
and beyond.
In May 2015 we also welcomed Nigel Williams who joined
the executive team as Group Chief Financial Officer. Nigel
has more than 10 years’ experience in senior finance roles,
including five years as Financial Director of Starbucks UK,
and brings with him a wealth of experience and knowledge
to the business. I am confident that he will make a positive
contribution to Collins Foods.
Looking forward
Collins Foods will continue to focus on building its strong
platform to deliver further growth, both organically
and strategically over the next financial year. This will
be underpinned by our ongoing focus on operational
improvement and strategic management.
We will maintain a disciplined focus on the KFC business
with plans for eight new restaurant builds. In addition, we
will continue to focus on improving the performance of our
Western Australian and Northern Territory restaurant network
through the rollout of further operational improvements,
remodelling and upgrades to our existing restaurants.
In closing, a big thank you to all our employees across our
restaurants and the support centre for their dedication
and commitment to making Collins Foods a better company.
I look forward to an exciting year ahead as we continue to
focus on our key business priorities.
Graham Maxwell
Managing Director & CEO
8
Collins Foods Limited Annual Report 2015
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 refined 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 identified 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 financial
and non-financial reporting, including reporting to
shareholders, the ASX and other stakeholders;
´ appointment, performance assessment and, if appropriate,
removal of the Chief Executive Officer (CEO);
´ approving the appointment and/or removal of the
Chief Financial Officer (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.
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 Managing Director & 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
Managing Director & 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 Managing
Director & CEO and other senior management executives
is reviewed at least annually. The Committee reviews the
performance of the Managing Director & CEO, while the
Managing Director & CEO is responsible for performance
reviews of senior management executives.
Performance evaluations for the Managing Director & CEO
and other senior management executives were undertaken
during the year in accordance with the above process.
2. Structure 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.
9
Collins Foods Limited Annual Report 2015 Corporate Governance
Statement
2. Structure the Board to add value
(continued)
The Board is comprised of six Directors (the Company’s
Constitution provides for a minimum of three and a
maximum of 10 Directors), which the Board believes to be an
appropriate size to discharge its duties as well as be conducive
to effective discussion and efficient decision making.
Four of the Company’s six Directors are Non-executive
Directors, including the Chairman, with two Executive
Directors. 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. All four of the Company’s 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 Managing Director & CEO (a role which is exercised by a
separate individual).
The Managing Director & 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 conflicts 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 verified 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 financial year and as at the date of
this report have been determined to be independent.
10
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 identified ensure
a complementary mix of financial, 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 identified
individuals and/or independent search consultants.
The Board appoints the most suitable candidate who
must stand for election or 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 office 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 confidence of their fellow Board
members and the confidence of the Company’s shareholders.
In accordance with the Constitution of the Company, no
Director, except the Managing Director, shall hold office 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 sufficient details to allow
shareholders to make an informed decision on their election.
Collins Foods Limited Annual Report 2015 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 specifically 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 specific
matters needing urgent attention.
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 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
sufficient time to his or her duties.
Performance evaluations for the Board and each Director
were undertaken during the year in accordance with the
above process by an independent third party.
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 of Conduct 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 of Conduct 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.
A copy of the Whistleblower Policy is also 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 measurable 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, flexible
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.
Number of women
employees in the whole
organisation
Number of women in
senior executive1 positions
Number of women on
the Board
2015 Actual
2014 Actual
Number
% Number
%
4374
51
4,370
8
1
38
17
6
1
51
30
20
1
Senior executives includes managers who hold roles designated as senior
executive roles, as well as 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.
11
Collins Foods Limited Annual Report 2015 Corporate Governance
Statement
4. Safeguard integrity in financial 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 financial 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 financial reports and all other
financial 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 financial controls
to produce reliable financial 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.
12
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 all members are Independent Directors.
All members of the Committee are financially literate and
have an appropriate understanding of the industry in which
the Company operates; one member, Bronwyn Morris, has
extensive experience and expertise in accountancy, as a
former partner of a major accounting firm. The Committee
meets at least four times a year. During the financial year, the
Committee met four times.
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 five 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 Financial 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 Managing Director & CEO and Group CFO provide
formal assurance to the Board that the Company’s financial
statements present a true and fair view of the Company’s
financial condition and operational results.
Collins Foods Limited Annual Report 2015 5. Make timely and balanced disclosure
Continuous disclosure and shareholder communication
The Company has policies and procedures in place in relation
to continuous disclosure and shareholder communication.
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 communication is
within the bounds of information that is already in the public
domain, and/or is not material.
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 briefings
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 Managing
Director & 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 financial reporting risks.
13
Collins Foods Limited Annual Report 2015 Corporate Governance
Statement
Risk profile
The material risks faced by the Group that have the potential
to have an effect on the financial prospects of the Group and
how the Group manages these risks, include:
´ Reduction in consumer demand – given the Group’s
reliance upon consumer discretionary spending, adverse
changes to the general economic landscape in Australia
or consumer sentiment for the Company’s products could
impact its financial results. This risk is addressed 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;
´ Supply chain disruption – disruption to the supply
chain could impact upon the Group’s ability to operate
restaurants. This risk is addressed through use of multiple
suppliers where possible with a diverse geographic base
with multiple distribution routes;
´ Negative change to relationship with Yum! – given
the Company’s obligations to Yum! through its Master
Franchise Agreement and Facilities Action Deed, a negative
change in the relationship could impact significantly the
Company’s ability to open planned new stores, manage the
cost of new store builds and refurbishments and implement
other growth and operational changes. This risk is
addressed through maintaining a close working relationship
with Yum!, having the Company’s team members sit
on relevant KFC advisory groups and committees and
monitoring compliance with obligations;
´ Safety – given the number of people employed to run and
operate restaurants providing food products to the public,
a health or safety incident in the Group’s operations or
health incident of a supplier involving the Group’s input
products, could impact the Group’s financial results. This
risk is addressed 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 continue to be at development stage, failure
of these drivers to produce expected results could impact
upon the Group’s financial results. This risk is addressed
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 upon the Group’s financial results. This risk
is addressed through brand building initiatives, keeping
abreast of legislative changes, maintaining long term
supplier relationships, group supply arrangements with
Yum!, productivity and service flow initiatives, flexibility of
operations and open communication with labour unions.
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 benefit programs;
and
´ reviewing the Company’s recruitment, retention and
termination policies.
In carrying out its responsibilities, the Remuneration and
Nomination Committee is authorised to obtain outside
professional advice as it determines necessary and it has
received briefings during the year from external remuneration
experts on various matters.
Consistent with its Charter, the Remuneration and
Nomination Committee is chaired by an independent
Chairperson and all members are independent Directors.
The Committee meets at least three times a year. During the
financial year, the Committee met four times.
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’.
14
Collins Foods Limited Annual Report 2015 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 3 May 2015.
Directors
The names of the Directors of the Company during or since the end of the financial period are as follows:
Name
Robert Kaye SC
Graham Maxwell
Kevin William Joseph Perkins
Bronwyn Kay Morris
Newman Gerard Manion
Russell Keith Tate
Stephen Copulos
* Resigned 1 October 2014
Date of appointment
7 October 2014
25 March 2015
15 July 2011
10 June 2011
10 June 2011
10 June 2011
12 April 2013*
Principal activities
During the period, the principal 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 significant changes in
the nature of the Group’s activities during the period.
Operating and financial review
Group overview
The Group’s business is the operation, management and administration of restaurants, currently comprising three restaurant
brands, KFC Restaurants, Sizzler Restaurants and Snag Stand joint venture outlets.
At the end of the period, the Group operated 171 franchised KFC restaurants in Queensland, northern New South Wales,
Western Australia and Northern Territory which compete in the Quick Service Restaurant market. The Group owns and operates
26 Sizzler restaurants in Australia, which operate in the casual dining restaurant market. It is also a franchisor of the Sizzler brand
in South East Asia, with 60 franchised stores predominantly in Thailand, but also in China and Japan. Snag Stand operates six
corporate owned outlets and one franchised outlet.
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 taverns and clubs,
fast food and home cooking. Sizzler is a small to modest sized market participant.
Snag Stand is a small early stage company competing in the fast casual dining market. Other operators in the fast casual dining
market include Grill’d Burgers and Guzman Y Gomez.
15
Collins Foods Limited Annual Report 2015 Group financial performance
Key statutory financial metrics in respect of the current financial period and the prior financial period are summarised in the
following table:
Statutory financial metrics
Total revenue ($m)
Earnings before interest, tax, depreciation, amortisation and impairment
(adjusted EBITDA) ($m)
Earnings before interest and tax (EBIT) ($m)
Profit/(loss) before related income tax expense ($m)
Income tax (expense)/benefit ($m)
Net profit/(loss) attributable to members (NPAT) ($m)
Earnings per share (EPS) basic (cents per share)
Total dividends paid/payable in relation to financial period (cents per share) (1)
Net assets ($m)
Net operating cash flow ($m)
2015
571.6
67.4
6.8
(2.5)
(7.9)
(10.4)
(11.1)
11.5
171.3
49.1
2014
440.6
Change
29.7%
50.5
26.9
20.9
(6.9)
14.0
15.1
10.5
191.4
44.9
33.5%
(74.7%)
(112.0%)
14.5%
(173.9%)
(173.5%)
9.5%
(10.5%)
9.4%
(1) Dividends paid/payable is inclusive of dividends declared since the end of the relevant reporting period.
The Group’s total revenues increased by 29.7% to $571.6m mainly due to the acquisition of the Western Australian KFC
business and strong like-for-like sales growth across the KFC business.
This jump in total revenues combined with good business controls flowed through to significantly increased EBITDA for the year
of $67.4m, up 33.5% on prior year and improved net operating cash flow of $49.1m, up 9.4%.
Statutory EBIT, NPAT, EPS and Net Assets were down due to a significant item of $38.3m. This item was a (non-cash) pre-tax
impairment charge, of which $37.5m related to the Sizzler Australia business.
Underlying financial metrics excluding significant items which occurred in the current period are summarised as follows:
Underlying financial metrics
Total revenue ($m)
Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) ($m)
Net profit attributable to members (NPAT) ($m)
Earnings per share (EPS) basic (cents)
2015
571.6
67.4
24.6
26.4
2014
425.1
49.0
17.9
19.2
Change
34.4%
37.5%
37.4%
37.4%
The notable increase in the underlying financial metrics shown above is a reflection of the strong sales growth and good cost
controls referred to above. These are discussed further in the review of underlying operations below.
The impact of significant items on the statutory results are summarised below:
Impact of significant items
Net profit attributable to members (NPAT) ($m)
2015 statutory
Significant
items (1)
2015
underlying
(10.4)
34.9
24.6
(1) The statutory results of the current period include the impact of impairment of Sizzler goodwill, Sizzler brand and property, plant and equipment totalling $34.9m after
tax, of which $34.4m related to the Sizzler Australia business and $0.5m related to KFC Queensland.
16
Directors’ ReportCollins Foods Limited Annual Report 2015 Review of underlying operations
KFC Restaurants
There has been a strong overall performance across the
KFC business.
Revenues in KFC were up 46.7% on the prior corresponding
period to $483.1m, driven by the acquisition of the Western
Australian and Northern Territory restaurants, increased
restaurant numbers as well as positive mid single digit same
store sales growth.
Strong product promotions including a successful summer
cricket campaign, targeted value offers, new product
offerings and continuing to drive social media and community
engagement have proven successful in delivering an increase
in sales across all restaurant formats.
KFC EBITDA was up $24.2m (+48.3%) on the previous
corresponding period. Higher profit margins (+20bps)
were achieved despite the continuing competitive trading
environment and the increases in key input costs, particularly
labour rates.
Margin improvements were primarily the result of continued
improvements to labour productivity and other efficiency
initiatives. 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 $29.4m
in new restaurant, refurbishment and systems capital. Returns
on capital spend have shown improvement on the previous
corresponding period.
Sizzler Restaurants
Revenues in Sizzler were down 7.6% on the prior
corresponding period to $88.5m, with same store sales in
Australia declining 8.5%.
The retail conditions in the casual dining market have
remained challenging and increasingly competitive. During the
period, Sizzler Australia completed the roll out of the “Get
Refreshed” initiatives, designed to return Sizzler Australia to
positive growth. In addition to “Get Refreshed”, the front
of house of three restaurants (Cleveland, Caboolture and
Mermaid Beach) were remodelled. A “light” remodel was also
carried out to the front of house of one restaurant (Ipswich).
Whilst showing some signs of improvement, which we
believe in part can be attributed to the roll out of “Get
Refreshed”, the performance of Sizzler Australia has been
below expectations for the period. Consequently, the board
has agreed that this brand is no longer considered core to
the strategic growth of the Group. Sizzler EBITDA was down
$3.3m (–42.6%) on the previous corresponding period,
due largely to lower gross profit margins on lower sales
together with increased costs of operations. Gross profit
margins reflect menu pricing and promotional discounting
to drive sales countered by strong cost of sales and labour
productivity controls in the face of reduced sales.
Sizzler franchise operations in Asia contributed an increase
of $0.4m to this result over the prior corresponding period
driven by increased royalty revenue. There were no net new
restaurant builds in the period (one relocation in China).
Snag Stand
The focus of the joint venture management team has been
upon continuing the development and refinement of the
Snag Stand concept. During the period, two new Snag Stands
were opened, one at Macquarie Centre, Sydney and the other
at Sunshine Plaza, Maroochydore. Both have delivered healthy
sales and positive consumer feedback since opening.
Strategy and future performance
Group
The medium term strategy is to consolidate the KFC Western
Australia and Northern Territory acquisition, continue to
further build economies of scale and grow the Group’s
returns to enhance shareholder value. This could be through
further 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
Whilst KFC expects the retail environment to remain
competitive with upward pressure on input costs continuing,
more recent strong growth patterns, particularly in
Queensland, have been encouraging. Future focus will
be top line growth through strong product offerings and
enhanced in-store customer experience, and opening of
new stores in conjunction with disciplined cost control
driving improved returns.
Sizzler Restaurants
Sizzler Australia instigated a review of all areas of the business
following completion of the rollout of “Get Refreshed” and
the summer marketing campaign. The “Get Refreshed”
strategy was designed to contemporise the Sizzler brand and
re-engage with our guests.
While some improvement in sales trends has been
experienced, there has not been a return to positive same
store sales growth. In addition, while the sales performance
of remodelled restaurants has improved, returns on this
investment are below internal benchmarks. Accordingly,
it has been determined that the Sizzler Australia business is
no longer core to strategic growth in Australia. Furthermore,
there will be no further growth capital invested in this
business. The business will be consolidated over the
upcoming year with a small reduction in the number of
restaurants. The ongoing performance of the business will
be closely monitored and appropriate action taken as and
when necessary.
In relation to its Asian operations, Sizzler’s strategy is to
continue to expand the number of franchised site locations
with up to four new restaurants anticipated to be opened
during the next financial year.
Snag Stand
Our joint venture investment in the start-up company Snag
Stand is a small investment in an innovative concept and
provides an opportunity to invest in the fast casual dining
sector. The Snag Stand Group has been focused on improving
operational performance in existing outlets as well as
developing a pipeline for growth. The business operating
model is being further refined with a focus on brand
development, new store growth and operations efficiency.
17
Collins Foods Limited Annual Report 2015 Material risks
The material risks faced by the Group that have the potential to have an effect on the financial 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 financial 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;
´ Supply chain disruption – disruption to the supply chain could impact on our ability to operate restaurants. We address this
risk through use of multiple suppliers where possible with a diverse geographic base with multiple distribution routes;
´ 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 significantly our ability to open planned new stores,
manage 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 financial
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 continue to be at development stage, failure of these
drivers to produce expected results could impact our financial 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 financial 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 flow initiatives, flexibility of operations and open communication with labour unions.
Dividends
Dividends paid to members during the financial period were as follows:
Final ordinary dividend for the financial period
ended 27 April 2014
Interim ordinary dividend for the financial period
ended 12 October 2014
Total
Cents
per share
Total amount
$000
Franked/
Unfranked
Date of
payment
6.0
5.0
11.0
5,580
Franked
18 July 2014
4,650
10,230
Franked 22 December 2014
In addition to the above dividends, since the end of the financial period, the Directors of the Company have declared the
payment of a fully franked final dividend of 6.5 cents per ordinary share ($6.0m) to be paid on 23 July 2015 (refer to Note 22 of
the Financial Report).
Significant changes in the state of affairs
In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that occurred during the
financial period under review.
Matters subsequent to the end of the financial period
There has not arisen in the interval between the end of the financial 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 significantly the
operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial periods.
18
Directors’ ReportCollins Foods Limited Annual Report 2015 Likely developments and expected results of operations
The Group will continue to pursue the increase of profitability of its major business segments during the next financial 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.
Information on Directors
Director
Experience, qualifications and directorships
Robert Kaye SC
Robert is the Independent, Non-executive Chairman. He is also Chairman
of ASX listed PaperlinX Limited and a Non-executive Director of ASX listed
Magontec Limited.
In 1978, Robert was admitted to legal practice and prior to this, was employed
as a solicitor at Allen Allen & Hemsley Solicitors. Thereafter, he pursued his
legal career at the NSW Bar and was appointed Senior Counsel in 2003,
practising in commercial law. He has been involved extensively in an array
of commercial matters both advisory and litigious in nature and served on
a number of NSW Bar Association committees including the Professional
Conduct Committee.
Other listed entity directorships –
current or held within last three years
PaperlinX Limited (2012 – current)
Magontec Limited (2013 – current)
Special responsibilities
Independent
Non-executive Chair
Audit and Risk
Committee Member
Remuneration and
Nomination Committee
Member
Graham Maxwell
Graham is an experienced senior executive of corporate and franchise
businesses, predominantly in fast moving consumer goods and fast foods,
both in Australia and internationally. He is a commercially astute management
professional with proven success in leveraging and growing businesses
through their brands. Graham was a Director – International, Ingredients and
Private Label at SPC Ardmona (a division of Coca-Cola Amatil), and prior to
this Graham spent over six years working for Yum! Brands in a number of
capacities. His last position with Yum! Brands was as Managing Director for
KFC Southern Africa.
Managing Director
& CEO
Other listed entity directorships –
current or held within last three years
None other than Collins Foods Limited.
Kevin Perkins
Kevin is a highly experienced executive in the Quick Service Restaurant (QSR)
and casual dining segments of the Australian restaurant industry. He has had
more than 30 years’ experience with the Collins Foods Group, having overseen
its growth both domestically and overseas over that time.
Executive Director
Kevin is the Non-executive Chairman of Sizzler USA Acquisition, Inc. He holds
approximately 55% of the common stock in Sizzler USA Acquisition, Inc.
Sizzler USA Acquisition, Inc operates or franchises Sizzler restaurants across
the United States and Puerto Rico. The operations of Collins Foods and Sizzler
USA Acquisition, Inc are separate.
Other listed entity directorships –
current or held within last three years
None other than Collins Foods Limited.
19
Collins Foods Limited Annual Report 2015 Director
Experience, qualifications and directorships
Newman Manion
Newman has over 30 years’ experience in the food franchise industry,
including various roles with Yum! (Franchisor of KFC) since 1982. 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). Newman has also been appointed
as a Director of each of the Snag Stand group entities.
Other listed entity directorships –
current or held within last three years
None other than Collins Foods Limited.
Special responsibilities
Independent
Non-executive Director
Remuneration and
Nomination Committee
Chair
Audit and Risk
Committee Member
Bronwyn Morris
B. Com, FCA, FAICD
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 firm and its predecessor firms in Brisbane,
London and the Gold Coast. For nearly 20 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,
Spotless Group Limited, QIC Limited, Gold Coast 2018 Commonwealth
Games Bid Limited and Colorado Group Limited and is a former Councillor
of Bond University.
Independent
Non-executive Director
Audit and Risk
Committee Chair
Remuneration and
Nomination Committee
Member
She currently serves as Chairman of, or a member of, the Audit and Risk
Committees with respect to a number of her Board roles. Bronwyn is a
Director of Royal Automobile Club of Queensland Limited (since 2008), RACQ
Insurance Limited (since 2014), Queensland Local Government Superannuation
Board (LG Super) (since 2013, Chairman since 2014), Fyfe Group Holdings Pty
Ltd (since 2013) and Care Australia (since 2007).
Other listed entity directorships –
current or held within last three years
Spotless Group Limited (2007 to 2012)
Russell Tate
B. Com (Econ.)
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 the merged
Macquarie Radio Network and Fairfax Radio Network, the owner of leading
Sydney stations 2GB and 2CH and a Director of One Big Switch Pty Ltd
(since 2012).
Independent
Non-executive Director
Audit and Risk
Committee Member
Remuneration and
Nomination Committee
Member
Other listed entity directorships –
current or held within last three years
Macquarie Radio Network Limited (Chairman, since 2009)
20
Directors’ ReportCollins Foods Limited Annual Report 2015 The relevant interest of each Director in the share capital issued by the Company, at the date of this report is as follows:
Name
Robert Kaye SC
Graham Maxwell
Kevin Perkins
Newman Manion
Bronwyn Morris
Russell Tate
Ordinary
shares
Performance
Rights
–
–
7,340,833
20,001
5,001
20,001
–
448,389
103,859
–
–
–
Company Secretary
Frances Finucan LLB (Hons), BA (Modern Asian Studies), Grad Dip ACG, AGIA, MQLS
The Company Secretary is Frances Finucan who was appointed to the role on 17 July 2013. Frances has over 13 years’ experience
in legal, commercial and corporate governance working in legal, regulatory and company secretarial roles in Australia.
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the period ended
3 May 2015, and the number of meetings attended by each Director, were:
Full meetings of Directors
Audit and Risk Committee
Remuneration and
Nomination Committee
Number of
meetings (1)
Meetings
attended
Number of
meetings (1)
Meetings
attended
Number of
meetings (1)
Meetings
attended
Robert Kaye SC
Graham Maxwell
Kevin Perkins
Bronwyn Morris
Newman Manion
Russell Tate
Stephen Copulos
9
1
19
19
19
19
9
9
1
19
19
19
19
8
2
*
*
4
4
4
*
2
*
*
4
4
3
*
2
*
3
4
4
4
*
(1) Number of meetings represents the number of meetings held during the time the Director held office or membership of a Committee during the period.
*
Not a member of the relevant Committee.
2
*
3
4
4
3
*
21
Collins Foods Limited Annual Report 2015 Remuneration Report
This Remuneration Report sets out remuneration information for the Group’s Non-executive Directors, Executive Directors and
other Key Management Personnel (KMP) 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.
At its 2013 Annual General Meeting, shareholders approved the introduction of the Collins Foods Limited Executive and
Employee Incentive Plan (LTIP).
This report contains the following sections:
A. Key Management Personnel disclosed in this report.
B. Remuneration governance.
C. Most recent AGM – remuneration report comments and voting.
D. Non-executive Director remuneration.
E. Executive remuneration principles and strategy.
F. Remuneration structure and performance/shareholder wealth creation.
G. Details of Key Management Personnel remuneration.
H. Key Management Personnel service agreements.
I. Details of share based compensation.
J. Equity instruments held by Key Management Personnel.
K. Loans to Key Management Personnel.
L. Other transactions with Key Management Personnel.
A. Key Management Personnel disclosed in this report
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 financial period are as follows:
Name
Robert Kaye SC
Graham Maxwell
Kevin Perkins
Bronwyn Morris
Newman Manion
Russell Tate
Position
Independent Non-executive Chairman (appointed as Director on 7 October 2014)
Managing Director & CEO (appointed as a Director on 25 March 2015)
Executive Director
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Stephen Copulos
Non-executive Director (resigned on 1 October 2014)
Martin Clarke
John Hands
CEO – KFC
Chief Supply and Information Officer
Details and disclosures relating to KMPs who held office in the prior financial period have been included in this report
as required.
22
Directors’ ReportCollins Foods Limited Annual Report 2015 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 specifically, 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 benefit 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. Most recent AGM – remuneration report comments and voting
At the most recent Annual General Meeting in 2014, no comments were made on the Remuneration Report with 84.16% of
votes cast at the meeting in favour of the adoption of the Remuneration Report.
D. 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. An additional payment of $30,000 was made to Newman Manion in recognition of additional responsibilities
performed in relation to his oversight of the Group’s investment in the Snag Stand group entities. This additional payment made
to Newman Manion is not in relation to his role as a Director of the Company and as such, are not additional Director’s fees.
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.
Directors’ share holdings in the Company are outlined in section J of 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. There were no changes made during the reporting
period in relation to Non-executive Directors’ fees.
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
2015
$
180,000
85,000
15,000
5,000
10,000
5,000
23
Collins Foods Limited Annual Report 2015 Remuneration Report (continued)
E. 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 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;
´ reflective 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 benefits
including superannuation
Short Term Incentive Plan
(STIP)
Cash bonus payment
Long Term Incentive
Plan (LTIP) (approved by
shareholders at the 2013
Annual General Meeting)
Awards in the form of
performance rights
To provide competitive
fixed 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 an 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 has changed the remuneration mix for KMP, resulting in a proportion of an executive’s target pay
being at risk.
The following diagrams show the anticipated range of remuneration mix for the current KMP by year three of the LTIP (assuming
annual grants under the LTIP). The effect of the introduction of the LTIP is that a percentage of the executive’s remuneration is
‘at risk’ and directly linked to Group performance in both the short and longer term.
CEO
65% Fixed
Other KMP executives
74% Fixed
24
30% STI
5% LTI
22% STI
4% LTI
Directors’ ReportCollins Foods Limited Annual Report 2015 Fixed remuneration
Fixed remuneration consists of base salary, superannuation contributions and other benefits. Other benefits include non-cash
benefits such as employee health insurance costs paid by the Group and car and other allowances. The Group pays fringe
benefits tax on these benefits 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 is no guaranteed increase to base pay 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 predefined 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 Short Term Incentive (STI) opportunity percentage is 50% of base salary. For other
executive KMP, 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 101% 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, 15% of target STI opportunity would be payable. At the maximum
EBITDA level of 110% of the annual Group Budgeted EBITDA, 150% of target STI opportunity would be payable.
The EBITDA benchmarks were set with reference to the annual Group Budgeted EBITDA for the year ended 3 May 2015.
The Group’s financial performance for the financial period ended 3 May 2015 resulted in all Executive Directors and KMP being
eligible for a STI payment, refer details of KMP remuneration below.
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
At the Company’s 2013 Annual General Meeting, shareholders approved the introduction of the LTIP. A summary of the LTIP
approved by shareholders appears below.
LTIP summary
Why was the LTIP
introduced?
Who participates in
the LTIP?
What form are the
LTIP awards?
What quantum
of awards will
participants receive
under the LTIP?
When are the grants
made?
When do the
performance rights
vest?
To ensure the Group’s remuneration framework is aligned with both the Group’s business strategy and
the long term interests of shareholders.
The initial participants in the plan are KMP and other select senior executives.
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.
Performance rights are granted annually at the sole discretion of the Board, with grants of awards made
as soon as practicable following the Company’s Annual General Meeting.
LTIP performance rights vest three years following the date of grant, subject to achievement of EPS targets.
For the FY15 grant, performance will be tested following determination of the basic EPS for the financial
period ending 29 April 2018, compared to the basic EPS for the financial period ended 3 May 2015.
How is EPS measured? 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 financial reports. The Board retains a discretion
to adjust the EPS performance condition to ensure that participants are not penalised nor provided with
a windfall benefit arising from matters outside of management’s control that affect EPS (for example,
excluding one-off non-recurrent items or the impact of significant acquisitions or disposals).
What EPS targets are
required for vesting of
performance rights?
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 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
performance rights
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 the rights will lapse.
25
Collins Foods Limited Annual Report 2015 Remuneration Report (continued)
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 are set at stretch levels.
F. Remuneration structure and performance/shareholder wealth creation
The Group’s annual financial performance and indicators of shareholder wealth for the current financial period are listed below.
EBITDA ($m) (1)
NPAT ($m) (1)
Dividends paid/payable in relation to financial period (cents per share) (2)
EPS basic (cents) (1)
EPS basic (cents) (1) – compound growth on 2013 base
EPS basic (cents) (1) – growth on 2014 base
Change in share price ($)
Short term incentive payments as % of target payments
2015
67.4
24.6
11.5
26.4
22.5%
37.4%
0.40
150%
2014
49.0
17.9
10.5
19.2
9.3%
–
0.13
8%
(1) Represents underlying measures after adjustment for other significant items disclosed in the Group financial performance above.
(2) Dividends paid/payable is inclusive of dividends declared since the end of the relevant reporting period.
Both the STIP and LTIP are subject to achievement of pre-determined performance measures linked to the above
financial metrics.
26
Directors’ ReportCollins Foods Limited Annual Report 2015 G. Details of Key Management Personnel remuneration
Details of remuneration received or receivable by the Directors and other KMP of the Group for the current financial period are
set out in the following table.
2015*
Name
Short term employee benefits
Post-
employment
benefits
Long term benefits
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Other (1)
$
Super-
annuation
$
Long service
leave
$
Performance
Rights
$
63,692
166,154
100,000
107,019
38,571
475,436
Non-executive Directors
Robert Kaye SC (2)
Russell Tate (2) (3)
Newman Manion (3)
Bronwyn Morris
Stephen Copulos (3) (6)
Executive Directors
Graham Maxwell (4)
Kevin Perkins (5)
Other executive KMP
Martin Clarke
John Hands
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30,000
–
–
5,722
–
–
9,935
–
30,000
15,657
592,032
427,339
483,904
362,414
1,019,371
846,318
292,674
303,601
274,592
156,303
596,275
430,895
12,510
13,200
25,710
12,951
9,690
22,641
48,351
–
–
–
–
–
–
36,111
72,276
108,387
33,191
24,732
57,923
30,000
181,967
Total
$
69,414
166,154
130,000
116,954
38,571
521,093
–
–
–
–
–
–
195,436
1,319,993
46,818
934,732
242,254
2,254,725
26,527
16,637
672,712
516,938
43,164
1,189,650
285,418 3,965,468
–
–
–
–
–
–
–
12,685
12,685
32,777
5,975
38,752
51,437
Total Group
2,091,082
1,277,213
*
The reporting period of 28 April 2014 to 3 May 2015 is a period representing 53 weeks, compared to the comparative reporting period 29 April 2013 to 27 April 2014
representing 52 weeks.
(1) Other short term employee benefits relate to consulting fees paid in relation to oversight of the Group’s investment in the Snag Stand group entities.
(2) Russell Tate retired as Chairman and Robert Kaye SC assumed the role of Independent Non-executive Chairman with effect from 25 March 2015. Mr Tate continues as an
Independent Non-executive Director and member of the Audit and Risk Committee, and Remuneration and Nomination Committee.
(3) Remuneration is/was paid to a corporate entity under a Consulting Agreement with the Company for the provision of his services as a Non-executive Director.
(4) Remuneration paid to Graham Maxwell reflects his role as Group CFO and Chief Operating Officer for the period 28 April 2014 to 28 September 2014 and his role as
Managing Director & CEO for the period 29 September 2014 to 3 May 2015.
(5) Remuneration paid to Kevin Perkins reflects his role as Managing Director & CEO for the period 28 April 2014 to 28 September 2014 and his role as Executive Director for
the period 29 September 2014 to 3 May 2015.
(6) Remuneration was paid to Stephen Copulos until the date of his resignation as a Director of the Company, on 1 October 2014.
27
Collins Foods Limited Annual Report 2015 Remuneration Report (continued)
Details of remuneration received or receivable by the Directors and other KMP of the Group for the previous financial period are
set out in the following table.
2014
Name
Short term employee benefits
Post-
employment
benefits
Long term benefits
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Long service
leave
$
Performance
Rights
$
Non-executive Directors
Russell Tate (3)
Newman Manion (3)
Bronwyn Morris
Stephen Copulos (3)
180,000
100,000
105,000
90,000
475,000
Executive Director
Kevin Perkins
728,523
Other executive KMP
Graham Maxwell
Martin Clarke
John Hands
Phillip Coleman (1)
Total Group
434,030
235,902
251,408
175,570
1,096,910
2,300,433
82,598
82,598
–
–
–
–
–
–
–
82,598
–
–
–
–
–
–
–
33,572
16,868
21,297
11,568
8,771
58,504
92,076
Other (2)
$
–
14,671
–
–
–
–
9,672
–
14,671
9,672
Total
$
180,000
114,671
114,672
90,000
499,343
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
68,787
12,446
31,212
874,540
36,835
27,178
23,682
14,405
–
7,955
6,505
3,624
107,012
10,701
594,745
385,631
7,134
300,297
–
202,370
102,100
18,084
124,847 1,483,043
14,671
180,559
30,530
156,059 2,856,926
(1) Resigned with effect from 16 February 2014.
(2) Other short term employee benefits relate to consulting fees paid in relation to oversight of the Group’s investment in the Snag Stand group entities.
(3) Remuneration was paid to a corporate entity under a Consulting Agreement with the Company for the provision of his services as a Non-executive Director.
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows.
Name
Executive Directors
Graham Maxwell
Kevin Perkins
Other executive KMP
Martin Clarke
John Hands
Fixed remuneration
2015
2014
2015
At risk – STI
2014
At risk – LTI (1)
2015
2014
49%
56%
55%
67%
82%
96%
76%
98%
36%
39%
41%
30%
–
–
21%
–
15%
5%
4%
3%
18%
4%
3%
2%
(1) Since LTI are provided exclusively by way of performance rights, the percentages disclosed also reflect the value of remuneration consisting of performance rights, based
on the value of performance rights expensed during the reporting period. Where applicable, the expenses include negative amounts for expenses reversed during the
reporting period due to failure to satisfy the vesting conditions.
28
Directors’ ReportCollins Foods Limited Annual Report 2015 H. Key Management Personnel service agreements
Key details of the service agreements of Graham Maxwell, Managing Director & CEO, and Kevin Perkins, Executive Director are
as follows:
´ agreement has effect and executive’s employment under their respective service agreement will continue until terminated in
accordance with the agreement (12 months’ notice is required by either party or payment in lieu of notice in the case of the
Company for Graham Maxwell, and three months’ notice is required by either party or payment in lieu of notice in the case of
the Company for Kevin Perkins); and
´ includes a restraint of trade period of 12 months, excluding Sizzler, USA in the case of Kevin Perkins.
Key details of service agreements of any other person who was a KMP 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
Martin Clarke
Chief Executive Officer – KFC
John Hands
Chief Supply and Information Officer
Contract
duration
Ongoing
Ongoing
Minimum notice period (months)
Termination by
Executive
Termination by
Group (1)
1
2
3
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.
I. Details of share based compensation
Performance Rights
For each Performance Right included in the tables on pages 27 and 28, the percentage of the available Performance Right
that was paid, or that vested, the reporting period, and the percentage that was forfeited because the person did not meet
the service and performance criteria, is set out below. The minimum value of the Performance Rights yet to vest is nil, as the
Performance Rights will be forfeited if the KMP fail to satisfy the vesting conditions (see page 25). The maximum value of the
Performance Rights yet to vest has been determined as the amount of the grant date fair value of the Performance Rights that is
yet to be expensed.
Name
Current year LTI
entitlement
Awarded Forfeited
Financial
Year
granted
No.
granted
Value per
share
$
Vested
%
Vested
number
Forfeited
Kevin Perkins
Graham Maxwell
Martin Clarke
John Hands
100%
100%
100%
100%
100%
100%
100%
–
–
–
–
–
–
–
2014 103,859
2014 356,088
2015
2014
2015
2014
2015
92,301
35,608
27,690
23,739
15,691
1.50
1.50
1.89
1.50
1.89
1.50
1.89
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Performance Rights
Financial
years in
which rights
may vest
2017
2017
2018
2017
2018
2017
2018
Max value
yet to vest
$
39,015
133,765
69,835
13,376
20,950
8,918
11,871
29
Collins Foods Limited Annual Report 2015 Remuneration Report (continued)
J. Equity instruments held by Key Management Personnel
Shareholdings
The numbers of shares in the Company held during the financial period by the Directors of the Company and the KMP of the
Group, including their personally related parties, are set out below. There were no shares, other than Performance Rights,
granted during the reporting period as compensation or as a result of exercise of options or rights.
ORDINARY SHARES
2015
Directors
Russell Tate
Newman Manion
Bronwyn Morris
Kevin Perkins
Stephen Copulos
Robert Kaye SC
Other KMP
Graham Maxwell
Martin Clarke
John Hands
2014
Directors
Russell Tate
Newman Manion
Bronwyn Morris
Kevin Perkins
Stephen Copulos
Other KMP
Graham Maxwell
Martin Clarke
John Hands
Phillip Coleman
Balance
at start of period
Changes
during the period (1)
Balance
at end of period
20,001
20,001
5,001
7,340,833
12,000,000
–
–
126,262
210,409
20,001
20,001
5,001
7,340,833
12,000,000
–
126,262
210,409
11,571
–
–
–
–
(12,000,000)
–
–
–
–
–
–
–
–
–
–
–
–
(11,571)
20,001
20,001
5,001
7,340,833
–
–
–
126,262
210,409
20,001
20,001
5,001
7,340,833
12,000,000
–
126,262
210,409
–
(1) Changes include recognition/de-recognition of shares held upon becoming/ceasing to be a Director or other KMP of the Group.
30
Directors’ ReportCollins Foods Limited Annual Report 2015 PERFORMANCE RIGHTS
2015
Kevin Perkins
Graham Maxwell
Martin Clarke
John Hands
2014
Kevin Perkins
Graham Maxwell
Martin Clarke
John Hands
Phillip Coleman
Balance
at start of
reporting
period
103,859
356,088
35,608
23,739
–
–
–
–
–
Granted as
compensation
Vested
Other
changes (1)
–
92,301
27,690
15,691
103,859
356,088
35,608
23,739
22,552
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(22,552)
Balance at
end of
reporting
period
103,859
448,389
63,298
39,430
103,859
356,088
35,608
23,739
–
Vested
Unvested
–
–
–
–
–
–
–
–
–
103,859
448,389
63,298
39,430
103,859
356,088
35,608
23,739
–
(1) Changes include recognition/de-recognition of shares held upon becoming/ceasing to be a Director or other KMP of the Group.
There were no performance rights issued as at 28 April 2013. For further information on Performance Rights refer Note 27.
Performance Rights
Performance Rights of Collins Foods Limited issued at the date of this report are as follows:
Date performance rights granted
Expiry date
Exercise price of Performance Rights
Number of Performance Rights granted
13 September 2013 (1)
1 October 2013 (1)
13 November 2014 (1)
25 July 2016
25 July 2016
26 July 2017
Nil
Nil
Nil
103,859
427,304
149,797
680,960
(1)
Included in these Performance Rights were Performance Rights granted as remuneration to the Executive Directors and the five most highly remunerated officers during
the reporting period. Details of Performance Rights granted to KMP are disclosed on page 29.
In addition, the following Performance Rights were granted to officers who were among the five highest remunerated officers
of the company and the Group, but are not KMP and hence not disclosed in the Remuneration Report:
Name of officer
David Nash
Date granted
Exercise price of performance rights
Number of performance rights granted
13 October 2013
12 November 2014
Nil
Nil
11,869
13,845
No Performance Rights were granted to the Directors or any of the five highest remunerated officers of the Company since the
end of the financial year.
K. Loans to Key Management Personnel
As of the end of the reporting period, there were no loans with Directors, Director-related entities or other KMP. As of the end
of the prior reporting period, there were no loans with Directors, Director-related entities or other KMP.
L. Other transactions with Key Management Personnel
Directors and other KMP 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.
Indemnification and insurance of officers
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 officer of the Company, indemnify them against liabilities incurred (whilst acting as such
officers) and the legal costs of that person to the extent permitted by law. During the period, the Company has entered into a
Deed of Indemnity, Insurance and Access with each of the Company’s Directors, CFO Australia and Company Secretary.
No Director or officer of the Company has received benefits under an indemnity from the Company during or since the end
of the period.
The Company has paid a premium for insurance for officers 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.
31
Collins Foods Limited Annual Report 2015 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 satisfied 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 satisfied that the provision of non-audit services by the auditor, as set
out below, did not compromise the auditor independence requirements of the Corporations Act 2001 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.
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 firms:
2015
$
2014
$
10,506
20,620
–
31,126
31,000
24,750
4,793
60,543
10,300
20,216
–
30,516
25,000
6,000
4,348
35,348
–
–
–
–
91,669
65,864
Other assurance services
PricewaterhouseCoopers Australian firm
Store sales certificates
Agreed upon procedures for covenant calculations
Network firms of PricewaterhouseCoopers Australia
Agreed upon procedures in respect of franchisee sales
Total remuneration for assurance services
Taxation services
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of company tax returns
Tax advice and consulting
Network firms of PricewaterhouseCoopers Australia
Tax compliance services, including review of company tax returns
Total remuneration for taxation services
Transaction services
PricewaterhouseCoopers Australian firm
Transaction compliance services
Total remuneration for transaction services
Total remuneration for non-audit services
32
Directors’ ReportCollins Foods Limited Annual Report 2015 Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out
on page 34.
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 office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors.
Robert Kaye SC
Chairman
Brisbane
25 June 2015
33
Collins Foods Limited Annual Report 2015 Auditor’s
Independence
Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Collins Food Limited for the year ended 3 May 2015, I declare that to
the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Collins Food Limited and the entities it controlled during the period.
Steven Bosiljevac
Partner
PricewaterhouseCoopers
Brisbane
25 June 2015
PricewaterhouseCoopers, ABN 52 780 433 757
Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
34
Collins Foods Limited Annual Report 2015 Consolidated
Balance Sheet
As at 3 May 2015
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
Investments accounted for using the equity method
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings/(Accumulated losses)
Total equity
Note
7
8
9
10
11
12
13
14
15
16
17
18
16
19
20
21
22
2015
$000
42,234
6,232
4,657
53,123
79,477
248,400
24,840
1,493
1,613
355,823
408,946
56,466
3,638
1,873
4,613
66,590
2014
$000
36,983
2,812
4,914
44,709
72,518
280,692
19,858
438
2,481
375,987
420,696
51,015
5,045
1,070
4,012
61,142
164,551
164,381
2,762
3,754
171,067
237,657
171,289
182,098
1,446
(12,255)
171,289
401
3,400
168,182
229,324
191,372
182,098
939
8,335
191,372
The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.
35
Collins Foods Limited Annual Report 2015
Consolidated
Income Statement
For the reporting period ended 3 May 2015
Revenue
Cost of sales
Gross profit
Selling, marketing and royalty expenses (1)
Occupancy expenses (1)
Restaurant related expenses (1)
Administration expenses (1)
Other expenses (1)
Other income
Profit from continuing operations before finance income, finance costs and
income tax (EBIT)
Finance income
Finance costs
Share of net profit/(loss) of joint ventures accounted for using the equity method
Profit/(loss) from continuing operations before income tax
Income tax expense
Profit/(loss) from continuing operations
Net profit/(loss) 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
Note
4
5
4
5
5
14
6
36
36
36
36
2015
$000
571,593
(272,955)
298,638
(117,937)
(47,171)
(56,170)
(39,701)
(31,753)
943
6,849
602
(9,081)
(868)
(2,498)
(7,862)
(10,360)
(10,360)
2014
$000
440,557
(209,968)
230,589
(92,305)
(36,506)
(43,500)
(29,680)
(2,518)
848
26,928
422
(6,444)
38
20,944
(6,919)
14,025
14,025
(11.14) cps
(11.14) cps (2)
15.08 cps
15.03 cps
93,000,003
93,000,003 (2)
93,000,003
93,320,121
(1)
Impairment charges included in expenses are as follows: selling marketing expenses $140,000; occupancy expenses $2,472,000; restaurant related expenses $2,236,000;
administration expenses $6,279,000 and other expenses $27,146,000 (2014: occupancy expenses $1,373,000 and restaurant related expenses $730,000).
(2) Shares attached to performance rights granted to employees are not considered to be potential ordinary shares, as including such securities in the calculation would
result in a decreased loss per share therefore being anti-dilutive. Hence the diluted earnings per share is equal to the basic earnings per share.
The above Consolidated Income Statement should be read in conjunction with the accompanying Notes.
36
Collins Foods Limited Annual Report 2015 Consolidated Statement
of Comprehensive Income
For the reporting period ended 3 May 2015
Net profit/(loss) attributable to members of Collins Foods Limited
Items that may be reclassified to profit or loss
Other comprehensive income/(expense):
Exchange difference upon translation of foreign operations
Cash flow hedges
Income tax relating to components of other comprehensive income
Other comprehensive income for the reporting period, net of tax
Note
21
21
6
2015
$000
2014
$000
(10,360)
14,025
2,404
(3,132)
939
211
1,288
(423)
127
992
Total comprehensive income/(expense) for the reporting period
(10,149)
15,017
Total comprehensive income/(expense) for the reporting period is attributable to:
Owners of the parent
(10,149)
15,017
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
37
Collins Foods Limited Annual Report 2015 Consolidated Statement
of Changes in Equity
For the reporting period ended 3 May 2015
2014
Beginning of the reporting period
Profit for the reporting period
Other comprehensive income
Total comprehensive income for the reporting period
Transactions with owners in their capacity as owners:
Share-based payments
Dividends provided for or paid
End of the reporting period
2015
Beginning of the reporting period
Profit/(loss) for the reporting period
Other comprehensive income
Total comprehensive income/(expense)
for the reporting period
Transactions with owners in their capacity as owners:
Share-based payments
Dividends provided for or paid
End of the reporting period
Note
Contributed
Equity
$000
182,098
–
–
–
–
–
182,098
$000
182,098
–
–
–
–
–
22
22
(Accumulated
losses)/retained
earnings
Reserves
$000
(213)
–
992
992
160
–
939
$000
939
–
211
211
296
–
Total
Equity
$000
185,495
14,025
992
15,017
160
(9,300)
$000
3,610
14,025
–
14,025
–
(9,300)
8,335
191,372
$000
8,335
(10,360)
–
$000
191,372
(10,360)
211
(10,360)
(10,149)
–
(10,230)
(12,255)
296
(10,230)
171,289
182,098
1,446
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
38
Collins Foods Limited Annual Report 2015 Consolidated Statement
of Cash Flows
For the reporting period ended 3 May 2015
Cash flows from operating activities:
Receipts from customers
Payments to suppliers and employees
GST paid
Interest received – external parties
Interest and other borrowing costs paid
Income tax paid
Net operating cash flows
Cash flows from investing activities:
Payment for acquisition of subsidiary, net of cash acquired
Payment for acquisition of share in joint venture
Purchase of franchise rights
Payments for plant and equipment
Payments for acquisition costs
Net investing cash flows
Cash flow from financing activities:
Proceeds from borrowings – bank loan facilities
Loans advanced – related parties
Refinance fees paid
Dividends paid
Net financing cash flows
Net increase 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 financing and investing activities
Note
2015
$000
2014
$000
627,516
(523,203)
(33,279)
629
(8,834)
(13,685)
49,144
–
–
(489)
(32,488)
–
(32,977)
–
(1,060)
–
(10,230)
(11,290)
4,877
36,983
374
42,234
483,673
(400,567)
(25,636)
389
(6,081)
(6,928)
44,850
(55,453)
(1,850)
(1,241)
(20,575)
(2,187)
(81,306)
60,000
(400)
(496)
(9,300)
49,804
13,348
23,556
79
36,983
31
35
22
7
32
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.
39
Collins Foods Limited Annual Report 2015 Note 1: Statement of significant
accounting policies
The principal accounting policies adopted by the Company
and its subsidiaries (Group) in the preparation of the
financial report are set out below. These policies have been
consistently applied, unless otherwise stated.
Basis of preparation
These financial statements have been prepared as a general
purpose financial 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 profit entity for the purpose of
preparing the Consolidated Financial Statements and was
incorporated on 10 June 2011.
The Group utilises a fifty-two, fifty-three week reporting
period ending on the Sunday nearest to 30 April. The 2015
reporting period comprised the fifty-three weeks which
ended on 3 May 2015 (2014 was a fifty-two week reporting
period which ended on 27 April 2014).
The financial statements have also been prepared under the
historical cost convention, as modified by the revaluation of
financial assets and liabilities (including derivative instruments).
The financial 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 flow projections will be sufficient to meet
operational needs and longer term growth. In addition,
the Group has access to unused credit facilities with its
banking syndicate.
Compliance with International Financial Reporting
Standards
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 financial
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. The term ‘Group’
used throughout these financial statements means the
parent entity and its subsidiaries. Subsidiaries are all those
entities over which the Group has the power to govern the
financial 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. 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 financial statements.
Joint ventures
Under AASB 11 Joint Arrangements, investments in joint
arrangements are classified as either joint operations or
joint ventures. The classification depends on the contractual
rights and obligations of each investor, rather than the legal
structure of the joint arrangement. The Group has two joint
ventures. Investments in joint ventures are accounted for
using the equity method of accounting, after initially being
recognised at cost in the Consolidated Balance Sheet.
Under the equity method of accounting, the investments
are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post-acquisition profits or
losses of the investee in profit or loss, and the Group’s share
of movements in other comprehensive income of the investee
in other comprehensive income. Dividends received or
receivable from joint ventures are recognised as a reduction in
the carrying amount of the investment.
When the Group’s share of losses in an equity accounted
investment equals or exceeds its interest in the entity,
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 other entity.
40
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Unrealised gains on transactions between the Group and
its joint ventures are eliminated to the extent of the Group’s
interest in the entities. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of
the asset transferred. Accounting policies of equity accounted
investees 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.
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 identified as the Managing
Director & CEO.
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 financial statements, and to unused
tax losses.
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 in the
respective jurisdiction. 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.
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 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.
Foreign currency translation
Items included in the financial 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
fluctuations 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 flow hedges.
The results and financial position of foreign operations
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
´ assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that
balance sheet;
´ income and expenses for each income statement and
statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the
transactions); and
´ all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated
as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or
any borrowings forming part of the net investment are repaid,
the associated exchange differences are reclassified to profit
or loss, as part of the gain or loss on sale.
41
Collins Foods Limited Annual Report 2015 Note 1: Statement of significant
accounting policies (continued)
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of
the foreign operation and translated at the closing rate.
Employee entitlements
Provision has been made in the accounts for benefits accruing
to employees up to balance date, such as annual leave, long
service leave and incentives. 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 and incentive provisions that are
expected to be settled wholly within twelve months after the
end of the reporting period are measured at their nominal
amounts using the remuneration rates expected to apply at
the time of settlement and are classified in provisions. Long
service leave, annual leave and incentive provisions that are
not expected to be settled wholly within twelve months after
the end of the reporting period 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 outflows.
All on-costs, including superannuation, payroll tax, workers’
compensation premiums and fringe benefits 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: fixed 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.
42
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 financial 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 insignificant 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 flow hedges or fair value hedges.
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 flows 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 flow 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 profit or loss. However, when the
forecast transaction that is hedged results in the recognition
of a non-financial asset or a non-financial liability, the gains
and losses previously 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.
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 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.
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 first-in first-out basis and includes
expenditure incurred in acquiring the stock and bringing it to
the existing condition and location.
Business combinations
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 identifiable 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.
Identifiable 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 identifiable 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 identification and measurement of the
net assets acquired.
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 financier under comparable terms
and conditions.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair
value recognised in profit or loss.
Impairment of assets
Goodwill and intangible assets that have an indefinite 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
in the Consolidated Income Statement 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 identifiable cash
flows (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.
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 benefits associated with the
item will flow to the Group and the cost of the item can be
measured reliably.
43
Collins Foods Limited Annual Report 2015 Note 1: Statement of significant
accounting policies (continued)
Property, plant and equipment, excluding freehold land,
is depreciated at rates based upon the expected useful
economic life as follows:
Buildings
Method
Life
Straight line 20 years
Leasehold improvements Straight line Primary term of lease
Plant and equipment
Straight line 8 years
Software
Straight line 3 years
Leasehold improvements are depreciated over the unexpired
period of the primary lease or the estimated life of the
improvement, whichever is the shorter.
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
classified as finance leases. Finance leases are capitalised at
the lease’s commencement 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 finance charges, are included in other current and non-
current 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 classified 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 identifiable
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
benefit 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 benefits 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.
Investments and other financial assets
The Group classifies its financial assets in the following
categories: loans and receivables, held-to-maturity
investments and available-for-sale financial assets.
The classification depends on the purpose for which the
investments were acquired. Management determines the
classification of its investments at initial recognition and
re-evaluates this designation at each reporting date.
All investments and other financial 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 financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss. Changes
in fair value are either taken to the Consolidated Income
Statement or an equity reserve.
44
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Loans and receivables are non-derivative financial assets with
fixed 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 classified 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 financial assets 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 outflow 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 outflow 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 reflects current market assessments of
the time value of money and the risks specific 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 flows are included in the Consolidated Statement of
Cash Flows on a gross basis. The GST component of cash
flows arising from investing and financing activities which
is recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
Share-based payment transactions
Share-based compensation benefits are provided to certain
employees via the Collins Foods Limited Executive and
Employee Long Term Incentive Plan. Information relating
to this plan is set out in Note 27.
The fair value of performance rights granted under the
Collins Foods Limited Executive and Employee Long Term
Incentive Plan is recognised as an employee benefit expense
with a corresponding increase in equity. The total amount to
be expensed is determined by reference to the fair value of
the performance rights granted, which includes any market
performance conditions and the impact of any non-vesting
conditions, but excludes the impact of any service and
non-market performance vesting conditions.
Non-market vesting conditions are included in assumptions
about the number of performance rights that are expected
to vest. The total expense is recognised over the vesting
period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each
period, the entity revises its estimates of the number of
performance rights that are expected to vest based on the
non-market vesting conditions. It recognises the impact of the
revision to original estimates, if any, in profit and loss, with a
corresponding adjustment to equity.
Non-current assets (or disposal groups) held for sale
and discontinued operations
Non-current assets (or disposal groups) are classified 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 classified as held for sale. Interest and other expenses
attributable to the liabilities of a disposal group classified
as held for sale continue to be recognised. Non-current
assets classified as held for sale and the assets of a disposal
group classified as held for sale are presented separately
from other assets in the Consolidated Balance Sheet.
The liabilities of a disposal group classified 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 classified 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 financial
risks; market risk (including price risk), credit risk, liquidity
risk and cash flow interest rate risk. The Group’s overall risk
management approach focuses on the unpredictability of
financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. The Group
uses derivative financial instruments such as interest rate
swaps to hedge certain risk exposures.
45
Collins Foods Limited Annual Report 2015 Note 1: Statement of significant
accounting policies (continued)
The Board of Directors has delegated specific authorities to
the central finance department in relation to financial risk
management. The finance department identifies, evaluates
and hedges financial 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 financial instruments. All significant decisions
relating to financial risk management require specific approval
by the Board of Directors.
Contributed equity
Debt and equity instruments are classified as either liabilities
or equity in accordance with the substance of the contractual
arrangement. Ordinary shares are classified 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 profit attributable to owners of the Company,
´ by the weighted average number of ordinary shares
outstanding during the financial period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account:
´ the after income tax effect of interest and other financing
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
98/100, issued by the Australian Securities and Investments
Commission, relating to the ‘rounding off’ of amounts in
the financial report. Amounts in the financial report have
been rounded off in accordance with that Class Order
to the nearest thousand dollars, or in certain cases, the
nearest dollar.
New and amended standards adopted by the group
The Group applied the following standards and amendments
for first time for their annual reporting period commencing
28 April 2014:
´ AASB 2011-4: Amendments to Australian Accounting
Standards to Remove Individual Key Management
Personnel Disclosure Requirements; and
´ AASB 2013-3: Limited amendment of impairment
disclosures.
46
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 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 3 May 2015, are as follows:
AASB amendment
Affected standards
Annual improvements project –
2010 – 2012 cycle
Annual improvements project –
2011 – 2013 cycle
AASB 2014-1
Part B
AASB 2015-1 Annual
Improvements 2012-2014
AASB 2 Share-based payment, AASB 3 Business
combinations, AASB 8 Operating segments, AASB 13 Fair
value measurement, AASB 116 + 138 Property plant and
equipment + intangible assets and AASB 124 Related
party disclosures
AASB 1 Presentation of financial statements, AASB 3
Business combinations, AASB 13 Fair value measurement
and AASB 140 Investment property
Defined benefit plans – employee contributions
(amendments to AASB 119)
AASB 5 Non-current assets held for sale and
discontinued operations, AASB 7 Financial instruments:
Disclosures, AASB 119 Employee benefits and AASB 134
Interim financial reporting
Application date
of standard
Application date
for the Group
1 July 2014
4 May 2015
1 July 2014
4 May 2015
1 July 2014
4 May 2015
1 January 2016
2 May 2016
AASB 2015-2
Disclosure Initiative: Amendments to AASB 101
1 January 2016
2 May 2016
AASB 9
AASB 15
Financial Instruments
1 January 2018
30 April 2018
Revenue from contracts with customers
1 January 2018
30 April 2018
Note 2: Critical accounting estimates and judgements
Significant 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 financial 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 significant 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 indefinite 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 indefinite useful lives relate.
The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill with indefinite 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).
47
Collins Foods Limited Annual Report 2015 Note 3: Segment information
Description of segments
Management has determined, following the integration of the KFC Western Australia and Northern Territory restaurants,
the operating segments based on the reports reviewed by the Managing Director & CEO that are used to make strategic
decisions. Hence three reportable segments have been identified: 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 Managing Director & CEO
The following is an analysis of the revenue and results by reportable operating segment for the periods under review:
KFC Restaurants
Sizzler
Restaurants
Shared Services
All other
segments
2015
Total segment revenue
Adjusted EBITDA (1)
Depreciation, amortisation and impairment
Finance costs – net (2)
Income tax expense
2014
Total segment revenue
Adjusted EBITDA (1)
Depreciation, amortisation and impairment
Finance costs – net (2)
Income tax expense
(1) Refer below for a description and reconciliation of Adjusted EBITDA.
(2) Refer Note 5 for a detailed breakdown.
$000
483,112
74,396
17,948
(12)
$000
344,751
51,689
13,241
(1)
$000
88,481
4,479
39,557
(2)
$000
95,806
7,801
5,845
(1)
$000
–
(12,004)
2,667
8,495
$000
–
(9,473)
1,610
6,031
$000
–
522
14
(2)
$000
–
507
13
(7)
Total
$000
571,593
67,393
60,186
8,479
7,862
$000
440,557
50,524
20,709
6,022
6,919
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 financial statements. The values are allocated based on the operations of the segment.
2015
Assets
Inter-segment eliminations
Liabilities
Inter-segment eliminations
2014
Assets
Inter-segment eliminations
Liabilities
Inter-segment eliminations
48
KFC Restaurants
Sizzler
Restaurants
Shared Services
$000
480,322
(159,349)
320,973
16,603
(4,641)
11,962
$000
457,421
(145,368)
312,053
12,863
(3,713)
9,150
$000
40,931
(13,596)
27,335
2,232
–
2,232
$000
73,263
(14,681)
58,582
1,322
–
1,322
$000
55,022
–
55,022
392,420
(168,993)
223,427
$000
45,686
–
45,686
375,417
(156,569)
218,848
All other
segments
$000
6,305
(689)
5,616
36
–
36
$000
4,608
(233)
4,375
4
–
4
Total
$000
582,580
(173,634)
408,946
411,291
(173,634)
237,657
$000
580,978
(160,282)
420,696
389,606
(160,282)
229,324
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 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 costs associated with the acquisition of Collins Restaurants West Pty Ltd and the investment in the
Snag Stand Group. Impairment of property, plant, equipment, franchise rights, brand assets and goodwill are also excluded to
the extent they are isolated non-recurring events. Net finance costs (including the impact of derivative financial instruments) are
not allocated to segments as this type of activity is driven by the central treasury function, which manages the cash position of
the Group.
A reconciliation of Adjusted EBITDA to profit/(loss) from continuing operations before income tax is provided as follows:
Adjusted EBITDA
Finance costs – net
Long term incentive provision
Performance Rights
Costs of acquisitions expensed
Depreciation
Amortisation
Impairment of property, plant and equipment
Impairment of KFC franchise rights
Impairment of Sizzler brand – Australia
Impairment of Sizzler goodwill
Share of net profit/(loss) of joint ventures accounted for using the equity method
Profit/(loss) 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
Total other income
2015
$000
67,393
(8,479)
(63)
(296)
–
(20,350)
(1,563)
(4,720)
(128)
(6,279)
(27,146)
(868)
(2,498)
2014
$000
50,524
(6,022)
(474)
(160)
(2,253)
(16,924)
(1,682)
(2,103)
–
–
–
38
20,944
2015
$000
2014
$000
568,494
437,808
3,099
571,593
2,749
440,557
282
661
943
329
519
848
49
Collins Foods Limited Annual Report 2015 Note 5: Expenses
Profit/(loss) from continuing operations before income tax includes the following specific expenses:
Depreciation, amortisation and impairment
Depreciation:
Buildings
Leasehold improvements
Plant and equipment
Amortisation of:
Franchise rights
Sizzler brand – Australia
Sizzler brand – Asia
Impairment of:
Buildings
Leasehold improvements
Plant and equipment
KFC franchise rights
Sizzler brand – Australia
Sizzler goodwill
Total depreciation, amortisation and impairment
Finance income and costs
Interest income:
Interest from external parties
Interest from related parties
Finance income
Interest expense:
Bank loan interest
Interest on cash flow hedges
Transfer from cash flow hedge reserve
Amortisation of borrowing costs
Finance costs
Net finance costs
50
2015
$000
2014
$000
120
10,958
9,272
20,350
551
262
750
88
8,877
7,959
16,924
419
563
700
1,563
1,682
830
1,642
2,248
128
6,279
27,146
38,273
60,186
(527)
(75)
(602)
7,734
1,155
22
170
9,081
8,479
–
1,373
730
–
–
–
2,103
20,709
(408)
(14)
(422)
5,471
771
36
166
6,444
6,022
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Employee benefits expense
Wages and salaries
Defined contribution superannuation expense
Employee entitlements
Total employee benefits expense
Operating lease rentals
Minimum lease payments
Contingent rentals
Total rent expense relating to operating leases
Inventory write-downs
Costs of acquisitions expensed (1)
Long term incentive provision
Performance Rights
Net loss on disposal of property, plant and equipment
Bank transaction fees
2015
$000
2014
$000
139,973
10,852
10,357
161,182
29,794
1,547
31,341
182
–
63
296
411
1,767
110,311
8,564
7,800
126,675
23,006
1,429
24,435
103
2,253
474
160
130
1,198
(1) These items of expenditures were incurred as part of the acquisition of Collins Restaurants West Pty Ltd and the investment in the Snag Stand Group. They include stamp
duty, legal costs and other costs directly attributable to those transactions.
51
Collins Foods Limited Annual Report 2015 Note 6: Income tax
Income tax expense/(benefit)
Current tax
Deferred tax
Under provided in prior reporting periods
Income tax expense is attributable to:
Profit from continuing operations
Aggregate income tax expense
Deferred income tax expense/(benefit) included in income tax expense comprises:
(Increase)/decrease in deferred tax assets (Note 12)
Increase/(decrease) in deferred tax liabilities (Note 12)
Numerical reconciliation of income tax expense/(benefit) to prima facie tax payable
Profit/(loss) from continuing operations before income tax expense
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
Non-deductible accounting loss on impairment of goodwill
Withholding tax credits not brought to account
Non-assessable income received
Amounts under provided in prior reporting periods
Income tax expense
Tax expense/(income) relating to items of other comprehensive income
Cash flow hedges (Note 12)
Tax losses
2015
$000
12,271
(4,409)
–
7,862
7,862
7,862
(2,479)
(1,930)
(4,409)
(2,498)
(749)
16
569
8,143
463
(580)
7,862
–
7,862
(939)
(939)
2014
$000
7,578
(687)
28
6,919
6,919
6,919
(977)
290
(687)
20,944
6,283
9
663
–
424
(488)
6,891
28
6,919
(127)
(127)
Unused capital tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
All unused tax losses were incurred by Australian entities.
61,276
18,383
61,276
18,383
52
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Tax consolidation
The Company and its wholly-owned Australian controlled entities implemented the tax consolidation legislation on 23 June
2011. Additional controlled entities were added to the tax consolidated group on 4 August 2011 upon them becoming
wholly-owned Australian controlled entities (Tax Consolidated Group). On 7 March 2014, following the acquisition of Collins
Restaurants West Pty Ltd, further controlled entities were added to the 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 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
Tax Consolidated Group in the case of a default by the Company.
The entities in the Tax Consolidated Group have also entered into a 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’ financial statements.
The amounts receivable/payable under the 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.
Note 7: Current assets – cash and cash equivalents
Cash at bank and on hand
Cash at bank and on hand has an average floating interest of 1.9% (2014: 2.4%).
Note 8: Current assets – receivables
Trade receivables
Interest receivable
Prepayments
2015
$000
42,234
42,234
2014
$000
36,983
36,983
2015
$000
1,893
5
4,334
6,232
2014
$000
648
32
2,132
2,812
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
2015
$000
4,772
(115)
4,657
2014
$000
4,922
(8)
4,914
Inventories recognised as an expense during the reporting period ended 3 May 2015 amounted to $188,851,000
(2014: $145,108,000).
53
Collins Foods Limited Annual Report 2015 Note 10: Non-current assets – property, plant and equipment
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
Impairment charge
Disposals
Closing balance
Net book value
Leasehold improvements
Cost
Opening balance
Acquisition through controlled entity purchased
Additions
Transfers from construction in progress
Disposals
Closing balance
Accumulated depreciation and impairment
Opening balance
Depreciation
Impairment charge
Disposals
Closing balance
Net book value
54
2015
$000
2014
$000
4,905
4,905
–
–
–
–
4,905
4,905
1,872
1,845
17
6
27
–
1,895
1,872
(764)
(120)
(830)
–
(1,714)
181
94,502
–
1,361
18,584
(1,110)
113,337
(60,353)
(10,958)
(1,642)
1,062
(71,891)
41,446
(676)
(88)
–
–
(764)
1,108
78,123
5,414
1,515
10,613
(1,163)
94,502
(51,228)
(8,877)
(1,373)
1,125
(60,353)
34,149
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Plant and equipment
Cost
Opening balance
Acquisition through controlled entity purchased
Additions
Transfers from construction in progress
Disposals
Closing balance
Accumulated depreciation and impairment
Opening balance
Depreciation
Impairment charge
Disposals
Closing balance
Net book value
Construction in progress
Cost
Opening balance
Acquisition through controlled entity purchased
Additions
Transfers to leasehold improvements and plant and equipment
Disposals
Closing balance
Total property, plant and equipment, net
2015
$000
2014
$000
72,216
–
3,869
7,190
(1,183)
82,092
(44,451)
(9,272)
(2,248)
970
(55,001)
27,091
4,591
–
27,193
(25,780)
(150)
5,854
79,477
60,596
4,935
4,427
4,683
(2,425)
72,216
(38,115)
(7,959)
(730)
2,353
(44,451)
27,765
3,699
4
16,204
(15,296)
(20)
4,591
72,518
55
Collins Foods Limited Annual Report 2015 Note 11: Non-current assets – intangible assets
Goodwill
Cost
Opening balance
Purchase of controlled entities
Foreign currency translation
Closing balance
Accumulated impairment
Opening balance
Impairment
Closing balance
Net book value
Franchise rights
Cost
Opening balance
Purchase of controlled entities
Additions
Closing balance
Accumulated amortisation and impairment
Opening balance
Amortisation
Impairment charge
Closing balance
Net book value
Sizzler brand – Australia
Cost
Opening balance
Closing balance
Accumulated amortisation
Opening balance
Impairment
Amortisation
Closing balance
Net book value
56
2015
$000
2014
$000
256,876
–
186
211,580
45,199
97
257,062
256,876
–
(27,146)
(27,146)
–
–
–
229,916
256,876
6,661
–
489
7,150
(1,328)
(551)
(128)
(2,007)
5,143
11,261
11,261
(4,720)
(6,279)
(262)
(11,261)
–
5,322
98
1,241
6,661
(909)
(419)
–
(1,328)
5,333
11,261
11,261
(4,157)
–
(563)
(4,720)
6,541
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Sizzler brand – Asia
Cost
Opening balance
Foreign currency translation
Closing balance
Accumulated amortisation
Opening balance
Foreign currency translation
Amortisation
Closing balance
Net book value
Total intangible assets, net
Impairment test for goodwill
Allocation of Goodwill
Cash generating unit
KFC Restaurants
QLD/NSW
2015
$000
2014
$000
KFC Restaurants
WA/NT
2015
$000
2014
$000
Carrying value
183,529
183,529
45,199
45,199
2015
$000
2014
$000
13,865
2,578
16,443
(1,923)
(429)
(750)
(3,102)
13,341
12,519
1,346
13,865
(1,110)
(113)
(700)
(1,923)
11,942
248,400
280,692
Sizzler Australia
Restaurants
2015
$000
–
2014
$000
27,146
Sizzler Asia
2014
$000
1,002
2015
$000
1,188
Goodwill is tested for impairment at a cash generating unit level. The recoverable amount of a cash generating unit is
determined based on the higher of fair market value less cost to sell and value-in-use calculations. Management recognises that
there are various reasons that the estimates used in the assumptions may vary. For the KFC cash generating units, there are no
reasonable and likely changes in assumptions which would result in an impairment.
During the reporting period ended 3 May 2015, the above cash generating units were tested for impairment in accordance
with AASB 136. As at 12 October 2014, due to declining revenues and profitability in Sizzler Australia, the recoverable amount
of goodwill and brand assets of Sizzler Australia was assessed to be nil. Accordingly, impairment charges were recognised for
these assets relating to this cash generating unit. During the reporting period ended 3 May 2015, individual restaurant assets
were also tested for impairment in accordance with AASB 136. In the event that the carrying value of these assets was higher
than the recoverable amount (measured as the higher of fair value less costs to sell and value in use) an impairment charge was
recognised in the Consolidated Income Statement as set out in the table below.
Impairment of assets recognised during the reporting period
Goodwill allocated to Sizzler Australia
KFC franchise rights
Sizzler brand – Australia
Sizzler Australia Restaurants
Buildings
Leasehold improvements
Plant and equipment
KFC Restaurants
Leasehold improvements
Plant and equipment
2015
$000
27,146
128
6,279
830
1,442
1,800
200
448
38,273
2014
$000
–
–
–
–
1,176
730
197
–
2,103
57
Collins Foods Limited Annual Report 2015 Note 11: Non-current assets – intangible assets (continued)
Key assumptions used for value-in-use calculations
KFC Restaurants
The cash flows by restaurant have been estimated after applying growth rates from the commencement of the 2016 financial
year through to the end of the 2020 reporting period which average 2.8%. The year one projections have been aligned to the
division’s specific cash flows reflected in the 2016 budget.
Management believe that these growth percentages are reasonable considering the growth that has been seen in this operating
segment during the 2015 and prior reporting periods. A pre-tax discount rate of 12.0% has been applied to the cash flows.
An indefinite terminal cash flow calculation has been applied for cash flows beyond 2020, using that year’s cash flow 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.
Sizzler Australia Restaurants
The cash flows for the Sizzler Australia Restaurants from the beginning of the 2017 financial year to the end of the 2020
reporting period have been estimated at an average decline of 7.7%, reflecting the recent trends experienced in this operating
segment together with initiatives intended to improve operating margins. The projection for 2016 has been aligned to the
division’s specific cash flows reflected in the budget prepared in May 2015.
A pre-tax discount rate of 20.0% (27 April 2014: 12.5%) has been applied to the cash flows. An indefinite terminal cash flow
calculation has been applied for cash flows beyond 2020, using that year’s cash flow as a base. No growth has been used in
determining the terminal value, which is less than the long term average growth rate for the industry.
Sizzler Asia
The cash flows for the Sizzler Asia cash generating unit have been estimated after applying growth rates from the
commencement of the 2016 financial year through to the end of the 2020 reporting period which average 3.5%. The year one
projections have been aligned to the cash flows reflected in the 2016 budget.
Management believe that these growth percentages are reasonable considering the growth that has been seen in this cash
generating unit during the 2015 and prior reporting periods. A pre-tax discount rate of 12.5% has been applied to the cash
flows. An indefinite terminal cash flow calculation has been applied for cash flows beyond 2020, using that year’s cash flow as
a base. The growth rate of 3.5% has been used in determining the terminal rate which does not exceed the long term average
growth rate for the casual dining industry segment.
58
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Note 12: Non-current assets – deferred tax assets, net
Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Depreciation
Employee benefits
Provisions
Receivables
Capitalised costs
Amounts recognised in other comprehensive income:
Cash flow hedges
Deferred tax assets
Movements:
Opening balance
Acquisition of subsidiary (Note 35)
(Charged)/credited to the Consolidated Income Statement (Note 6)
Credited 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 profit or loss:
Inventories
Intangibles
Prepayments
Deferred tax liabilities
Movements:
Opening balance
Foreign exchange revaluation
Charged/(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
2015
$000
2014
$000
21,593
4,448
2,109
–
761
28,911
1,355
30,266
26,848
–
2,479
939
30,266
9,181
21,085
30,266
706
4,452
268
5,426
6,990
366
(1,930)
5,426
2,026
3,400
5,426
30,266
(5,426)
24,840
19,121
4,106
1,504
175
1,526
26,432
416
26,848
21,417
4,327
977
127
26,848
7,690
19,158
26,848
680
6,233
77
6,990
6,700
–
290
6,990
1,293
5,697
6,990
26,848
(6,990)
19,858
59
Collins Foods Limited Annual Report 2015 Note 13: Non-current assets – receivables
Loan to related party – joint venture
Security deposits
2015
$000
1,460
33
1,493
2014
$000
400
38
438
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:
Fixed interest maturing in:
Average interest rate
More than
5 years
Non-interest
bearing
2015
Trade and interest receivables
Related party receivables
Other receivables
2014
Trade and interest receivables
Related party receivables
Other receivables
Notes
Floating
interest rate
8
13
13
8
13
13
$000
–
1,460
–
1,460
$000
–
400
–
400
5 years
or less
$000
–
–
–
–
$000
–
–
–
–
$000
$000
–
–
–
–
–
–
–
–
$000
1,898
–
33
1,931
$000
680
–
38
718
Floating
Fixed
7.7%
8.2%
Total
$000
1,898
1,460
33
3,391
$000
680
400
38
1,118
Credit risk
There is no concentration of credit risk with respect to external current and non-current receivables.
60
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015
Note 14: Non-current assets – investments accounted for using the equity method
Interests in individually immaterial joint ventures
Name of entity
Place of incorporation
Acronym
% of ownership interest
Sizzler China Pte Ltd
Snag Holdings Pty Ltd
Interest in individually immaterial joint ventures
Interests in individually immaterial joint ventures
Singapore
Australia
SCP
SNG
2015
50
50
2014
50
50
Sizzler China Pte Ltd
Snag Holdings Pty Ltd
Total joint ventures
2015
$000
1,042
2014
$000
800
2015
$000
571
2014
$000
1,681
2015
$000
1,613
2014
$000
2,481
Opening balance
800
593
1,681
–
2,481
593
Acquisition of investment accounted for using
the equity method
Share of net profit of joint venture accounted
for using the equity method
Closing balance
–
242
1,042
–
207
800
–
1,850
–
1,850
(1,110)
571
(169)
1,681
(868)
1,613
38
2,481
Summarised financial information of individually immaterial joint ventures
ASSETS:
Current assets:
Cash and cash equivalents
Receivables
Inventories
Total current assets
Non-current assets:
Cash and cash equivalents
Property, plant and equipment
Intangible assets, net
Total non-current assets
Total assets
LIABILITIES:
Current liabilities:
Trade and other payables
Provisions
Borrowings
Total current liabilities
Non-current liabilities:
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY:
Contributed equity
Retained earnings
Total Equity
Group’s share in %
Group’s share in $
Goodwill
Carrying amount
2,070
1,503
63
–
154
–
2,133
1,657
–
–
–
–
–
–
–
–
2,133
1,657
49
–
–
49
–
–
49
57
–
–
57
–
–
57
121
129
55
305
173
1,105
35
1,313
1,618
670
534
–
1,204
1,460
1,460
2,664
2,084
1,600
(1,046)
–
2,084
2,084
50%
1,042
–
1,042
–
1,600
1,600
50%
800
–
800
2,402
(3,448)
(1,046)
50%
(523)
1,094
571
844
89
54
987
168
1,098
49
1,315
2,302
419
109
200
728
400
400
1,128
1,174
2,402
(1,228)
1,174
50%
587
1,094
1,681
2,191
192
55
2,347
243
54
2,438
2,644
173
1,105
35
1,313
3,751
719
534
–
1,253
1,460
1,460
2,713
1,038
2,402
(1,364)
1,038
519
1,094
1,613
168
1,098
49
1,315
3,959
476
109
200
785
400
400
1,185
2,774
2,402
372
2,774
1,387
1,094
2,481
61
Collins Foods Limited Annual Report 2015 Note 15: Current liabilities – trade and other payables
Trade payables and accruals – unsecured
Other payables
Total payables
Note 16: Derivative financial instruments
Current liabilities
Interest rate swap contracts – cash flow hedges
Non-current liabilities
Interest rate swap contracts – cash flow hedges
2015
$000
43,382
13,084
56,466
2014
$000
39,281
11,734
51,015
2015
$000
2014
$000
1,873
1,070
2,762
401
Instruments used by the Group
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations
in interest rates in accordance with the Group’s financial risk management policies (refer Note 1).
Interest rate swap contracts – cash flow hedges
A subsidiary of the Company, CFG Finance Pty Limited, is the primary borrower under a $165.0m Syndicated Facility Agreement
(Syndicated Facility) and a $10.0m Working Capital Facility Agreement (Working Capital Facility). The Syndicated Facility is drawn
to $165.0m (2014: $165.0m), $65.0m is available to 31 October 2016 and $100.0m is available to 31 October 2018.
Bank loans of the Group currently bear variable interest at BBSY which at balance date was 2.18% (2014: 2.69%) plus margins
which vary with the leverage of the Group. At balance date, the weighted average margin was 2.03% (2014: 1.73%).
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 (Swap Contract) under which it is obliged to receive interest at variable
rates and to pay interest at fixed rates. During the reporting period ended 27 April 2014, the Group entered into the following
Swap Contracts to hedge a designated portion of the interest rate exposure of the facility:
´ on 7 August 2013 a $45.5m Swap Contract, which commenced on 5 August 2014, with a maturity date of 31 October 2016;
´ on 7 August 2013 a $28.0m Swap Contract, which commenced on 5 August 2014, with a maturity date of 31 October 2018; and
´ on 13 March 2014 a $48.0m Swap Contract, which commenced on 4 April 2014, with a maturity date of 31 October 2018.
Swap Contracts currently in place cover approximately 74% (2014: 78%) of the loan principal outstanding and are timed to
expire as each loan repayment falls due. The variable rates are BBSY which at balance date was 2.18% (2014: 2.69%). The fixed
interest rates are as follows:
´ $45.5m Swap Contract: 3.18% (2014: 3.18%);
´ $28.0m Swap Contract: 3.68% (2014: 3.68%); and
´ $48.0m Swap Contract: 3.70% (2014: 3.70%).
62
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 The notional principal amounts and periods of expiry of the Swap Contracts are as follows:
Less than 1 year
1–2 years
2–3 years
3–4 years
4–5 years
Notional principal amount
2015
$000
–
45,500
2014
$000
80,000
–
–
45,500
76,000
–
121,500
–
76,000
201,500
The Swap Contracts require settlement of net interest receivable or payable each month. The settlement dates coincide with the
dates on which interest is payable on the underlying debt. The Swap Contracts are settled on a net basis.
The derivative financial instruments were designated as cash flow hedges at inception, as such, the gain or loss from
remeasuring the hedging instruments at fair value is recognised in other comprehensive income and deferred in equity in the
hedging reserve, to the extent that the hedges were effective. The fair value amounts deferred in equity are subsequently
reclassified into the profit and loss when the hedged interest expense is recognised. At balance date these contracts were
payables with a fair value of $4.6m (2014: payables totalling $1.5m).
Credit risk exposures
At 3 May 2015, the Swap Contracts gave rise to payables for unrealised losses on derivative instruments of $4.6m (2014: $1.5m)
for the Group. Management has undertaken these contracts with the Australia and New Zealand Banking Group Limited which
is an AA rated financial institution.
Interest rate risk exposures
Refer to Note 18 and Note 33 for the Group’s exposure to interest rate risk on Swap Contracts.
Note 17: Current liabilities – provisions
Employee entitlements
Make good provision
Total current liabilities – provisions
2015
$000
3,853
760
4,613
2014
$000
3,934
78
4,012
63
Collins Foods Limited Annual Report 2015 Note 18: Non-current liabilities – borrowings
Bank loan – unsecured
Fees on bank loan – capitalised
Total non–current liabilities – borrowings
Available financing 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 A1
Revolving cash advance facility – Facility A2
Revolving cash advance facility – Facility B
Used at balance date
Working capital facility
Revolving cash advance facility – Facility A1
Revolving cash advance facility – Facility A2
Revolving cash advance facility – Facility B
Unused at balance date
Working capital facility
Revolving cash advance facility – Facility A1
Revolving cash advance facility – Facility A2
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
2015
$000
2014
$000
165,000
165,000
(449)
(619)
164,551
164,381
10,000
10,000
–
–
–
–
–
–
10,000
10,000
876
–
–
–
876
319
–
–
–
319
9,124
9,681
–
–
–
–
–
–
9,124
9,681
165,000
165,000
–
165,000
165,000
–
A subsidiary of the Company, CFG Finance Pty Limited, is the primary borrower under a $165.0m Syndicated Facility Agreement
(Syndicated Facility) and a $10.0m Working Capital Facility Agreement (Working Capital Facility).
64
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Facilities
Facility A1, Facility A2 and Facility B
´ The Syndicated Facility comprises Facility A1, Facility A2 and Facility B for $65.0m, $40.0m and $60.0m respectively (2014:
Facility A1, Facility A2 and Facility B for $65.0m, $40.0m and $60.0m respectively). Facility A1 expires on 31 October 2016,
Facility A2 and Facility B expire on 31 October 2018. There are no scheduled repayments for Facility A1, Facility A2 or Facility B.
Conditions exist regarding the voluntary repayment of debt. As at the end of the reporting period Facility A1, Facility A2 and
Facility B were fully drawn (2014: fully drawn).
´ The rate of interest under Facility A1, Facility A2 and Facility B was BBSY which at balance date was 2.18% (2014: 2.69%) plus,
depending upon the leverage ratio of the Group, the applicable margin for Facility A1 of between 1.35% and 1.85%, and
Facility A2 and Facility B of between 1.65% and 2.15% (2014: Facility A1 of between 1.35% and 1.85%, and Facility A2 and
Facility B of between 1.65% and 2.15%). At balance date, the margin applicable for Facility A1 was 1.85% (2014: 1.55%) and
for Facility A2 and Facility B was 2.15% (2014: 1.85%). There is a commitment fee calculated daily and payable on the undrawn
commitment of between 0.65% and 0.92% in respect of Facility A1 and 0.83% and 1.08% in respect of Facility A2 and Facility
B depending upon the leverage ratio of the Group (2014: Facility A1 0.65% and 0.92% and Facility A2 and Facility B 0.83%
and 1.08%). At balance date, this commitment fee rate was 0.93% for Facility A1 (2014: 0.78%) and 1.08% for Facility A2 and
Facility B (2014: 0.93%) and was payable quarterly in arrears.
Working capital
´ The Working Capital Facility commitment is for a total of $10.0m and expires on 31 October 2018. At balance date the Working
Capital Facility was allocated as follows: $9.0m for the overdraft facility and $1.0m for the letter of credit facility (2014: $9.6m
overdraft facility and $0.4m 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.
´ Letters of credit of $0.9m (2014: $0.3m) 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 0.83% and 1.08% depending upon the leverage ratio of the Group (2014: 0.83% and 1.08%).
At balance date, this commitment fee rate was 1.08% (2014: 0.93%) 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 2.18% (2014: 2.69%) 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 1.65% and 2.15% depending upon the leverage ratio of the
Group (2014: 1.65% and 2.15%). At balance date, the applicable margin was 2.15% (2014: 1.85%).
The Syndicated Facility and Working Capital Facility are subject to certain financial covenants and restrictions such as net
leverage ratios, interest coverage ratios and others which management believe are customary for these types of loans. During
the reporting period ended 3 May 2015, the Group maintained compliance with the financial covenants and restrictions of these
facilities. 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.
65
Collins Foods Limited Annual Report 2015 Note 18: Non-current liabilities – borrowings (continued)
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 33.
2015
Trade and other payables
Borrowings
Derivative financial instruments (1)
Derivative financial instruments (2)
Derivative financial instruments (3)
2014
Trade and other payables
Borrowings
Derivative financial instruments (4)
Derivative financial instruments (1)
15
18
16
16
16
15
18
Notes
Floating
interest rate
Fixed interest
maturing in:
More than
5 years
Non-interest
bearing
5 years
or less
$000
–
–
48,000
45,500
28,000
–
–
80,000
48,000
$000
–
165,000
(48,000)
(45,500)
(28,000)
$000
–
165,000
(80,000)
(48,000)
43,500
121,500
$000
$000
$000
–
–
–
–
–
–
–
–
–
–
–
–
–
Average interest rate
excluding margin
Floating
Fixed
Total
$000
56,466
165,000
2.2%
–
–
–
2.2% 3.7%
2.2% 3.2%
2.2% 3.7%
$000
56,466
–
–
–
–
56,466
$000
51,015
221,466
$000
51,015
–
–
–
165,000
2.7%
–
–
2.7% 3.7%
2.7% 3.7%
51,015
216,015
–
–
–
–
2.7% 3.2%
2.7% 3.7%
Derivatives with future commencement dates:
Derivative financial instruments (2)
Derivative financial instruments (3)
37,000
128,000
(45,500)
45,500
(28,000)
28,000
(1) Notional principal amount commenced 4 April 2014, maturing 31 October 2018
(2) Notional principal amount commenced 5 August 2014, maturing 31 October 2016.
(3) Notional principal amount commenced 5 August 2014, maturing 31 October 2018.
(4) Notional principal amount matured 5 August 2014.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities for:
´ all non-derivative financial liabilities; and
´ net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of
the timing of the cash flows.
66
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of discounting is not significant. For Swap Contracts the cash flows have been estimated using
forward interest rates applicable at the end of each reporting period.
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Total contractual
cash flows
Carrying amount
(assets)/liabilities
$000
$000
$000
$000
$000
Contractual maturities
of financial liabilities
2015
Non-derivatives
Trade and other payables
Borrowings
Total non-derivatives
Derivatives
Net settled (Swap Contracts)
2014
Non-derivatives
Trade and other payables
Borrowings
Total non-derivatives
Derivatives
Less than
1 year
$000
56,466
8,638
65,104
(1,959)
$000
51,015
8,365
59,380
–
72,078
72,078
(1,457)
$000
–
8,277
8,277
–
108,282
108,282
(1,845)
$000
–
181,239
181,239
Net settled (Swap Contracts)
(1,097)
(620)
216
Note 19: Non-current liabilities – provisions
Employee entitlements
Make good provision
–
–
–
56,466
188,998
245,464
56,466
164,551
221,017
–
$000
(5,261)
$000
(4,635)
$000
–
–
–
–
51,015
197,881
248,896
51,015
164,381
215,396
(1,501)
(1,471)
2015
$000
3,359
395
3,754
2014
$000
3,265
135
3,400
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.
Note 20: Contributed equity
Balance
Balance
Share capital
Ordinary shares – fully paid
Date
27 April 2014
3 May 2015
Parent entity
Share capital
$000
182,098
182,098
Total equity
$000
182,098
182,098
Parent entity
2015 Shares
93,000,003
2014 Shares
93,000,003
Equity of parent company
Movements in ordinary share capital during the reporting period were as follows:
Details
Ordinary shares – fully paid
Balance
Balance
Date
Number of shares
27 April 2014
3 May 2015
93,000,003
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.
Long Term Incentive Plan
Information relating to the Long Term Incentive Plan including details of Performance Rights issued under this Plan which may
convert into ordinary shares is set out in Note 27.
67
Collins Foods Limited Annual Report 2015
Note 21: Reserves
Hedging – cash flow hedges
Foreign currency translation
Share-based payments
Movements in hedging reserve – cash flow hedges:
Opening balance
Revaluation – gross
Deferred tax (Note 12)
Transfer to net profit – gross
Deferred tax (Note 12)
Closing balance
Movements in foreign currency translation reserve:
Opening balance
Exchange fluctuations arising on net assets of foreign operations
Closing balance
Movements in share-based payments reserve:
Opening balance
Valuation of performance rights
Closing balance
2015
$000
(3,163)
4,153
456
1,446
(970)
(3,165)
950
33
(11)
(3,163)
1,749
2,404
4,153
160
296
456
2014
$000
(970)
1,749
160
939
(674)
(475)
143
52
(16)
(970)
461
1,288
1,749
–
160
160
Nature and purpose of reserves
Hedging reserve – cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in
other comprehensive income, as described in Note 1. Amounts are recognised in profit and loss when the associated hedged
transaction affects profit and loss.
Share-based payments reserve – Performance Rights
The share-based payments reserve is used to recognise the issuance date fair value of Performance Rights issued to employees
under the Long Term Incentive Plan but not yet vested.
Foreign currency translation reserve
Exchange differences arising on translation are recognised in other comprehensive income and accumulated in a separate
reserve within equity.
68
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Note 22: Retained earnings/(accumulated losses)
Retained earnings/(accumulated losses):
Opening balance
Net profit/(loss)
Dividend provided for or paid
Closing balance
Dividends:
Dividends paid of $0.11 (2014: $0.10) per fully paid share
Franking credits available for the subsequent reporting period based on a tax rate of 30%
2015
$000
2014
$000
8,335
(10,360)
(10,230)
(12,255)
10,230
10,230
54,316
3,610
14,025
(9,300)
8,335
9,300
9,300
49,590
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 profits 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 final dividend
of 6.5 cents per ordinary share ($6.0m) to be paid on 23 July 2015. 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 $6,045,000.
69
Collins Foods Limited Annual Report 2015 Note 23: Subsidiaries and Deed of Cross Guarantee
The Consolidated Financial Statements at 3 May 2015 include the following subsidiaries. The reporting period end of all
subsidiaries is the same as that of the parent entity. (a)
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.
Collins Restaurants West Pty. Ltd.
Fiscal Nominees Company 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 Pacific 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 relating to the above table:
Notes
Place of incorporation
Acronym
% of shares held
2015
2014
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(c)
(d)
(d)
(d)
(d) (e)
(d) (e)
(d) (e)
Australia
Australia
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
CRW
FNC
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
100
100
100
100
(a) Collins Foods Limited is domiciled in Brisbane, Australia. The Registered office is located at 16 Edmondstone Street, Newmarket Qld 4051.
(b) These companies have entered into or acceded to 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 financial statements.
(c) Sizzler South Pacific 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) These companies are not Australian registered companies and are not covered by the Class Order 98/1418.
(e) Originally incorporated in Nevada, upon conversion to a LLC became registered in Delaware.
70
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 The Consolidated Income Statement, Consolidated Statement of Comprehensive Income and summary of movements in
consolidated retained profits 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 profit
Selling, marketing and royalty expenses
Occupancy expenses
Restaurant related expenses
Administration expenses
Other expenses
Share of net profit of joint ventures accounted for using the equity method
Other income
Finance income
Finance costs
Profit/(loss) from continuing operations before income tax
Income tax expense
Profit/(loss) from continuing operations
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
Profit/(loss) from continuing operations
Other comprehensive income/(expense):
Cash flow hedges
Income tax relating to components of other comprehensive income
Other comprehensive income/(expense) for the reporting period, net of tax
Closed Group
2015
$000
2014
$000
568,494
(272,955)
295,539
(117,937)
(47,171)
(83,316)
(38,215)
(4,549)
(1,110)
943
600
(9,081)
(4,297)
(7,457)
(11,754)
437,808
(209,968)
227,840
(92,305)
(36,506)
(43,500)
(28,319)
(2,425)
(169)
848
421
(6,444)
19,441
(6,561)
12,880
(11,754)
12,880
(3,132)
939
(2,193)
(423)
127
(296)
Total comprehensive income/(expense) for the reporting period
(13,947)
12,584
Total comprehensive income/(expense) for the reporting period is attributable to:
Owners of the parent
SUMMARY OF MOVEMENTS IN CONSOLIDATED RETAINED EARNINGS/(ACCUMULATED LOSSES)
Retained earnings/(accumulated losses) at the beginning of the reporting period
Profit/(loss) for the reporting period
Dividends provided for or paid
Retained earnings/(accumulated losses) at the end of the reporting period
(13,947)
12,584
5,888
(11,754)
(10,230)
(16,096)
2,308
12,880
(9,300)
5,888
71
Collins Foods Limited Annual Report 2015 Note 23: Subsidiaries and Deed of Cross Guarantee (continued)
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
Investments accounted for using the equity method
Other financial assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits/(accumulated losses)
Total equity
72
Closed Group
2015
$000
38,906
5,962
4,657
49,525
79,476
233,055
27,248
1,493
571
9,827
351,670
401,195
56,709
3,638
1,873
4,613
66,833
2014
$000
36,341
2,614
4,914
43,869
72,518
267,172
21,985
438
1,681
9,827
373,621
417,490
52,005
5,045
1,070
4,012
62,132
164,551
164,381
2,762
3,754
171,067
237,900
163,295
182,098
(2,707)
(16,096)
163,295
401
3,400
168,182
230,314
187,176
182,098
(810)
5,888
187,176
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Note 24: Commitments for expenditure
Capital commitments
Property, plant and equipment:
2015
$000
2014
$000
Aggregate capital expenditure contracted for at balance date but not recognised as
liabilities, payable
1,323
5,801
Operating Leases
Operating leases relate to land, buildings and equipment with lease terms ranging from
3 to 25 years and expire on varying dates through 2033. 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
specified levels.
Operating lease commitments:
Aggregate lease expenditure contracted for at balance date but not recognised as
liabilities, payable:
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
Less recoverable goods and services tax
Minimum lease payments
33,593
86,529
40,386
160,508
(14,590)
145,918
31,951
73,668
34,599
140,218
(12,745)
127,473
Note 25: Related parties
Parent entity
The parent entity and ultimate parent entity within the Group is Collins Foods Limited.
Key Management Personnel
KMP include the Directors for the parent entity and Directors and executives for the Group. Disclosures relating to the
compensation of KMP are included in either Note 26 or in the Remuneration Report included in the Directors’ Report.
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
Loans to related parties
Loan advanced to a related party
Interest received or receivable
Class of related party
Whole dollars
2015
$
2014
$
Related entity – joint venture
1,460,000
400,000
Related entity – joint venture
75,000
14,000
Note 26: Key Management Personnel compensation
KMP compensation
Short term employee benefits
Post-employment benefits
Long term benefits
Share-based payments
Whole dollars
2015
$
2014
$
3,446,646
2,489,778
181,967
180,559
51,437
30,530
285,418
156,059
3,965,468
2,856,926
Detailed remuneration disclosures are provided in the Remuneration Report included in the Directors’ Report.
73
Collins Foods Limited Annual Report 2015 Note 27: Share-based payments
Long Term Incentive Plan – Performance Rights
The establishment of the Company’s Long Term Incentive Plan (LTIP) was approved by shareholders at the 2013 Annual General
Meeting. The LTIP is designed to provide long term incentives for employees, including Executive Directors to motivate them to
build long term value for the Company and its shareholders. Under the Plan, participants are granted Performance Rights over
shares. Participation in the Plan is at the Board’s discretion. The number of Performance Rights is calculated by dividing the dollar
value of the participant’s long term incentive by the volume weighted average price of the shares for the five days prior to the
date of offer of the Performance Rights.
Unless otherwise determined by the Board in its discretion, Performance Rights are issued for nil consideration. The amount of
Performance Rights that will vest depends upon the achievement of certain vesting conditions, including the satisfaction of a
minimum 12 month term of employment and the achievement of earnings per share (EPS) growth targets by the Company.
The EPS growth targets must be achieved over a three year performance period. Performance Rights will automatically vest on
the business day after the Board determines the Vesting Conditions have all been satisfied (Vesting Determination Date).
If in the opinion of the Board a change of control event has occurred, or is likely to occur, the Board may declare a Performance
Right to be free of any Vesting Conditions and, if so, the Company must issue or transfer shares in accordance with the LTIP
rules. In exercising its discretion, the Board will consider whether measurement of the Vesting Conditions (on a pro-rata basis) up
to the date of the change of control event is appropriate in the circumstances.
The Performance Rights will automatically exercise on the Vesting Determination Date unless that date occurs outside a Trading
Window permitted under the Company’s Securities Trading Policy, in which case the Performance Rights will exercise upon the
first day of the next Trading Window following the Vesting Determination Date. Upon exercise of the Performance Rights, the
Company must issue or procure the transfer of one share for each Performance Right, or alternatively may in its discretion elect
to pay the cash equivalent value to the participant. In the event of a capital reconstruction or bonus issue of securities by the
Company, the number of shares issued for each Performance Right will be proportionately adjusted. Subject to a reconstruction
or bonus issue, Performance Rights do not carry the right to participate in any new issue of securities including pro-rata issues.
If the Company conducts a rights issue, the exercise price (if any) of the Performance Rights will be adjusted in accordance with
ASX Listing Rules as at the date the Performance Rights were issued.
Performance Rights will lapse on the first to occur of:
´ the expiry date;
´ the Vesting Conditions not being satisfied by the Vesting Determination Date;
´ unless the Board otherwise determines, by the cessation of the employment of the employee to whom the offer of
Performance Rights was made. The Board determination will depend upon the reason for employment ceasing (resignation,
dismissal for cause, death or illness).
Performance Rights when issued under the LTIP are not entitled to receive a dividend and carry no voting rights.
Set our below are summaries of Performance Rights issued under the LTIP:
Number of Performance Rights
As at 28 April 2013
Issued during the reporting period
Exercised during the reporting period
Lapsed during the reporting period
As at 27 April 2014
Issued during the reporting period
Exercised during the reporting period
Lapsed during the reporting period
As at 3 May 2015
Vested and exercisable at 27 April 2014
Vested and exercisable at 3 May 2015
74
–
553,715
–
22,552
531,163
149,797
–
–
680,960
–
–
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 All Performance Rights issued during the reporting period ended 27 April 2014 have an expiry date of 25 July 2016 and were
issued with an exercise price of nil. All Performance Rights issued during the reporting period ended 3 May 2015 have an expiry
date of 26 July 2017 and were issued with an exercise price of nil.
Fair value of Performance Rights issued
The assessed fair value at issuance date of Performance Rights issued during the reporting period ended 3 May 2015 was an
average of $1.89 per right. The assessed fair value at issuance date of Performance Rights issued during the reporting period
ended 27 April 2014 was an average of $1.50. The fair value at issuance date has been determined using a discounted cash flow
model that takes into account the share price at issuance date, the term of the right, the expected dividend yield and the risk
free interest rate for the term of the rights.
The model inputs for rights issued during the reporting period ended 3 May 2015 included:
´ issuance date 13 November 2014;
´ share price: $2.22;
´ expected dividend yield: 5.25%;
´ risk-free interest rate: 2.65%.
Note 28: 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 benefits scheme which is administered by Plum Financial
Services Limited.
´ Staff – non-contributory accumulated benefits plans which are administered by Westpac Financial Services Group Limited,
Sunsuper or Australian Retirement Fund.
Note 29: 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 deficiencies 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.
75
Collins Foods Limited Annual Report 2015 Note 30: 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 firms:
Assurance services
Audit services:
PricewaterhouseCoopers Australian firm
Audit and review of financial reports and other audit work under the
Corporations Act 2001
Audit and review of financial reports and other audit work for foreign subsidiary
Network firms of PricewaterhouseCoopers Australia
Audit and review of financial reports and other audit work for foreign subsidiary
Other assurance services:
PricewaterhouseCoopers Australian firm
Store sales certificates
Agreed upon procedures for covenant calculations
Network firms of PricewaterhouseCoopers Australia
Agreed upon procedures in respect of franchisee sales
Total remuneration for assurance services
Taxation services
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of company tax returns
Tax advice and consulting
Network firms of PricewaterhouseCoopers Australia
Tax compliance services, including review of company tax returns
Total remuneration for taxation services
Total remuneration for services
Whole dollars
2015
$
2014
$
292,712
32,820
25,930
351,462
10,506
20,620
–
31,126
382,588
31,000
24,750
4,793
60,543
306,973
32,176
23,061
362,210
10,300
20,216
–
30,516
392,726
25,000
6,000
4,348
35,348
443,131
428,074
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.
.
76
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Note 31: Notes to the Consolidated Statement of Cash Flows
Reconciliation of profit/(loss) from continuing operations to net cash inflow from operating activities
Profit/(loss) from continuing operations
Adjustments for non-cash income and expense items:
Depreciation, amortisation and impairment
Loss on disposal of property, plant and equipment
Amortisation of borrowing costs
Non-cash employee benefits expense share-based payments
Transfer to/(from) provisions:
Reversal of provision for diminution in value of inventory
Provision for employee entitlements
Movement in:
Income tax payable
Deferred tax balances
Fringe benefits tax payable
Goods and services tax payable
Changes in assets and liabilities:
(Increase)/decrease in assets:
Receivables
Inventory
Prepayments and other assets
Share of profits of joint ventures
Increase in liabilities:
Trade payables and accruals
Investing activities included in profit from continuing operations:
Costs associated with acquisitions
Net operating cash flows
Note 32: Non-cash financing and investing activities
Non-cash financing and investing activities
Total non-cash financing and investing activities
2015
$000
2014
$000
(10,360)
14,025
60,186
20,709
411
170
296
107
(201)
(1,407)
(4,410)
(55)
732
(1,218)
150
(2,197)
868
130
166
160
(2)
769
888
(897)
23
1,015
1,384
1,270
240
(38)
6,072
2,821
–
49,144
2,187
44,850
2015
$000
–
–
2014
$000
–
–
77
Collins Foods Limited Annual Report 2015 Note 33: Financial risk management
The Group’s activities expose it to a variety of financial risks: Market risk (including currency risk, interest risk and price risk),
credit risk and liquidity risk. In addition, the Group manages its capital base. The Group’s overall risk management program
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance
of the Group. The Group’s activities expose it primarily to the financial risk of changes in interest rates and it utilises Swap
Contracts to manage its interest rate risk exposure. The use of financial instruments is governed by the Group’s policies
approved by the Board of Directors, and are not entered into for speculative purposes.
Market risk
Foreign exchange risk
During 2015 and 2014, the financial 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 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 flow 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 flow interest rate risk while borrowings issued at fixed rates expose the Group to fair value interest rate risk. Information
about the Group’s variable rate borrowings, outstanding Swap Contracts and an analysis of maturities at the reporting date is
disclosed in Notes 16 and 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 financial instruments, deposits with banks, other trade receivables
and receivables from 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 financial
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 Note 8) is not past due, nor impaired (2014: nil past due). The credit risk on
liquid funds and derivative financial instruments is limited as the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
Related party transactions are conducted on commercial terms and conditions. Recoverability of these transactions are assessed
on an ongoing basis.
Credit risk further arises in relation to financial guarantees given to certain parties, refer to 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 flows. 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 Swap Contracts of the Group, refer to Notes 16 and 18.
Capital management
The Group manages its capital by maintaining a strong capital base. The Group assesses its capital base by reference to its
gearing ratio, which it defines as net debt divided by total capital. Net debt is calculated as borrowings (excluding capitalised
fees) less cash and cash equivalents. Total capital is calculated as total equity as shown in the balance sheet plus net debt.
At balance date, the gearing ratio was 42% (2014: 40%).
78
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk and
foreign exchange risk only, as the Group is not exposed to other price risks:
Interest rate risk and foreign exchange risk
Interest rate risk
Foreign exchange risk
–1%
+1%
–20%
+20%
Carrying amount
$000
Profit
$000
Equity
$000
Profit
$000
Equity
$000
Profit
$000
Equity
$000
Profit
$000
Equity
$000
2015
Financial assets
56,466
3,638
165,000
305
4,635
–
(1)
(2,317)
(2,317)
$000
$000
$000
$000
Cash and cash equivalents
42,234
(296)
Trade and other receivables
Related party receivables
1,898
1,460
Financial liabilities
Trade and other payables
Current tax liabilities
Borrowings
Derivative financial
instruments
Total increase/(decrease)
2014
Financial assets
Financial liabilities
Trade and other payables
Current tax liabilities
Borrowings
Derivative financial
instruments
Total increase/(decrease)
Cash and cash equivalents
36,983
(259)
Trade and other receivables
Related party receivables
680
400
51,015
5,045
165,000
259
–
(10)
–
–
–
(3)
–
–
–
–
–
–
–
–
296
–
10
–
–
(305)
–
1
–
–
–
–
–
–
259
–
3
–
–
(259)
–
–
–
–
–
–
2,317
2,317
$000
–
–
–
–
–
–
1,471
–
(3)
(2,881)
(2,881)
–
3
2,881
2,881
666
54
–
(9)
–
–
–
711
$000
128
40
–
(9)
–
–
–
159
–
–
–
–
–
–
–
–
$000
–
–
–
–
–
–
–
–
(666)
(54)
–
9
–
–
–
(711)
$000
(128)
(40)
–
9
–
–
–
(159)
–
–
–
–
–
–
–
–
$000
–
–
–
–
–
–
–
–
Note 34: Recognised fair value measurements
Fair value hierarchy
Judgements and estimates are made in determining the fair values of assets and liabilities that are recognised and measured
at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value,
the Group has classified such assets and liabilities into the three levels prescribed under the accounting standards.
An explanation of each level follows underneath the table below.
The following table presents the Group’s assets and liabilities measured and recognised at fair value.
Assets
Derivative financial instruments
Liabilities
Derivative financial instruments
Level 1
$000
–
–
2015
Level 2
$000
–
4,635
Level 3
$000
Level 1
$000
–
–
–
–
2014
Level 2
$000
–
1,471
Level 3
$000
–
–
There were no transfers between Levels 1 and 2 or Levels 2 and 3 during the reporting period. The Group’s policy is to recognise
transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
79
Collins Foods Limited Annual Report 2015 Note 34: Recognised fair value measurements (continued)
Level 1
The fair value of assets and liabilities traded in active markets (such as publicly traded derivatives, and trading and available-for-
sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used is the current
bid price. These assets and liabilities are included in Level 1.
Level 2
The fair value of assets and liabilities that are not traded in active markets (for example over the counter derivatives) is
determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an asset or liability are observable, the asset or liability is included
in Level 2.
Level 3
If one or more of the significant inputs is not based on observable market data, the asset or liability is included in Level 3.
Valuation techniques used to determine fair values
Specific valuation techniques used to value assets and liabilities include:
´ the fair value of Swap Contracts is calculated as the present value of the estimated future cash flows based on observable yield
curves; and
´ the fair value of the remaining assets and liabilities is determined using discounted cash flow analysis.
Disclosed fair values
The Group also has assets and liabilities which are not measured at fair value, but for which fair values are disclosed in the notes
to the financial statements.
Receivables
Due to the short term nature of the current receivables, their carrying amount is assumed to be the same as their fair value.
For the majority of non-current receivables, the fair values are not materially different to their carrying amounts, since the
interest on those receivables is close to current market rates.
Trade and other payables
Due to the short term nature of the trade and other payables, their carrying amount is assumed to be the same as their fair value.
Borrowings
The fair value of borrowings is as follows:
2015
Carrying
amount
$000
Fair
value
$000
Discount
rate
%
Carrying
amount
$000
2014
Fair
value
$000
Discount
rate
%
Bank loan (net of borrowing costs)
164,551
159,459
6 164,381 159,081
6
The fair value of non-current borrowings is based on discounted cash flows using the rate disclosed in the table above. They
are classified as Level 3 values in the fair value hierarchy due to the use of unobservable inputs, including the credit risk of
the Group.
80
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Valuation processes
The finance department of the Group engages a third party expert valuation firm that performs the valuation of derivative
financial instruments that are required to be measured, recognised and disclosed in the financial statements, at fair value.
This includes Level 3 fair values. The finance department reports directly to the Group Chief Financial Officer (CFO) and the
Audit and Risk Committee. Discussions of valuation processes and results are held between the CFO, Audit and Risk Committee
and the finance department at least once every six months, in line with the Group’s half-year reporting periods.
The main Level 3 inputs used by the Group are derived and evaluated as follows:
´ discount rates for financial assets and financial liabilities are determined using a capital asset pricing model, to calculate a
pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset.
Changes in Level 2 and Level 3 fair values are analysed at the end of each reporting period during the half-year valuation
discussion between the CFO, Audit and Risk Committee and the finance department. As part of this discussion the finance
department presents a report that explains the reason for the fair value movements.
Note 35: Business combinations
Summary of acquisition
On 7 March, 2014, Fiscal Nominees Company Pty Ltd, a subsidiary of the Company, acquired 100% of the issued share capital
of Competitive Foods Pty Ltd for $55.6m, a franchisee of KFC restaurants in Western Australia and the Northern Territory.
Subsequent to the acquisition the name of this Company was changed to Collins Restaurants West Pty Ltd. The primary reason
for the acquisition was to expand operations in the Quick Service Restaurant market, and consolidate the Company’s position as
the largest KFC franchisee in Australia.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
The fair values of the assets and liabilities of the business acquired as at the date of acquisition are as follows:
Cash
Receivables
Inventories
Property, plant and equipment
Intangible assets
Deferred tax asset, net
Trade and other payables
Provisions
Net identifiable assets acquired
Goodwill
Net assets acquired
$000
55,605
Fair value
$000
152
616
1,777
10,353
98
4,327
(6,102)
(815)
10,406
45,199
55,605
The goodwill is attributable to the workforce and the profitability of the acquired business. It will not be deductible for
tax purposes.
Acquisition related costs
Significant acquisition related costs amounting to $2.1m were incurred in connection with the purchase of Collins Restaurants
West Pty Ltd and are included in administration expenses in the Consolidated Income Statement.
Purchase consideration – cash flow
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration
Less balances acquired
Cash
Outflow of cash – investing activities
2015
2014
–
–
–
55,605
152
55,453
81
Collins Foods Limited Annual Report 2015 Note 35: Business combinations (continued)
Revenue and profit contribution
The acquired business contributed revenues of $15.4m and net profit of $0.4m (excluding costs of acquisition expensed) to the
Group for the period 7 March 2014 to 27 April 2014. If the acquisition had occurred on 29 April 2013, the contributed revenue
for the year ended 27 April 2014 would have been $109.8m with a corresponding net profit of $3.0m.
Note 36: Earnings per share
Basic earnings per share
From continuing operations
Diluted earnings per share
From continuing operations
2015
cents
(11.14)
2014
cents
15.08
(11.14) (1)
15.03
(1) Shares attached to performance rights granted to employees are not considered to be potential ordinary shares, as including such securities in the calculation would
result in a decreased loss per share therefore being anti-dilutive. Hence the diluted earnings per share is equal to the basic earnings per share.
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:
Profit/(loss) for the reporting period
Earnings used in the calculation of basic earnings per share from continuing operations
Weighted average number of ordinary shares for the purpose of
basic earnings per share
2015
$000
(10,360)
(10,360)
2014
$000
14,025
14,025
2015
Number of shares
2014
Number of shares
93,000,003
93,000,003
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:
Profit/(loss) for the reporting period
Earnings used in the calculation of diluted earnings per share from continuing operations
2015
$000
(10,360)
(10,360)
2014
$000
14,025
14,025
2015
Number of shares
2014
Number of shares
Weighted average number of ordinary shares for the purpose of diluted earnings per share
93,000,003 (1)
93,320,121
(1) Shares attached to performance rights granted to employees are not considered to be potential ordinary shares, as including such securities in the calculation would
result in a decreased loss per share therefore being anti-dilutive. Hence the diluted earnings per share is equal to the basic earnings per share.
82
Notes to the Consolidated Financial StatementsCollins Foods Limited Annual Report 2015 Note 37: Parent entity financial information
Summary financial information
The individual financial 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 (1)
Reserves
(Accumulated loss)/retained earnings
Profit for the reporting period
Total comprehensive income
2015
$000
112
239,848
239,960
4,803
6,528
11,331
2014
$000
108
241,424
241,532
5,626
6,485
12,111
228,629
229,421
228,426
228,426
456
(253)
160
835
228,629
229,421
9,142
9,142
10,021
10,021
(1) Represents share capital of the parent entity. This differs from the share capital of the Group due to the capital reconstruction of the Group treated as a reverse
acquisition in the 2012 reporting period.
Guarantees entered into by the parent entity
The parent entity has provided unsecured financial guarantees in respect of bank loan facilities amounting to $165.0m 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 3 May 2015.
83
Collins Foods Limited Annual Report 2015 Directors’
Declaration
In the Directors’ opinion:
´ the Financial Statements and notes set out on pages 35 to 83 are in accordance with the Corporations Act 2001, including:
–
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 financial position as at 3 May 2015 and of its performance for the
period ended on that date;
´ 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
identified 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 confirms that the Financial 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 Officer and the Chief Financial Officer 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.
Robert Kaye SC
Chairman
Brisbane
25 June 2015
84
Collins Foods Limited Annual Report 2015 Independent
Auditor’s Report
Independent auditor’s report to the members of Collins Foods
Limited
Report on the financial report
We have audited the accompanying financial report of Collins Foods Limited (the company), which
comprises the consolidated balance sheet as at 3 May 2015, the consolidated income statement and
consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the period 28 April 2014 to 3 May 2015, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration for Collins Foods
Limited (the consolidated entity). The consolidated entity comprises the company and the entities it
controlled at the period’s end or from time to time during the financial period.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the consolidated
entity’s preparation and fair presentation of the financial report in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
In our opinion:
PricewaterhouseCoopers, ABN 52 780 433 757
Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
85
Collins Foods Limited Annual Report 2015 Independent
Auditor’s Report
(a)
the financial report of Collins Foods Limited is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the consolidated entity's financial position as at 3 May 2015
and of its performance for the period ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
(b)
the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 22 to 31 of the directors’ report for the
period ended 3 May 2015. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Collins Foods Limited for the period ended 3 May 2015
complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Steven Bosiljevac
Partner
Brisbane
25 June 2015
86
Collins Foods Limited Annual Report 2015 Shareholder
Information
Shareholder information that has not been stated elsewhere in the Annual Report is set out below. The shareholder information
set out below was applicable as at the close of trading on 17 June 2015.
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
Total
Number of shareholders
of ordinary shares
Number of holders of
Performance Rights
1,390
2,142
679
522
43
4,776
–
–
–
3
2
5
There were 197 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:
Ordinary shares
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
HSBC Custody Nominees (Australia) Limited
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