Joyce Corporation Ltd
2010 ANNUAL REPORT
(cid:2)
Corporate Directory
Directors
Secretary
D A Smetana
Chairman
M A Gurry
T R Hantke
A Mankarios
K Gray
Notice of annual general meeting
The Annual General Meeting of Joyce Corporation Ltd
Principal registered office
will be held at Mosman Bay Room
Hyatt Regency Perth
99 Adelaide Terrace
PERTH, WA 6000
time:
date:
10am
30 November 2010
14 Collingwood Street,
OSBORNE PARK, WA,
AUSTRALIA, 6017
Tel: +61 8 9445 1055
Share register
Computershare Investor Services Pty Limited
Level 2, Reserve Bank Building,
45 St Georges Terrace
PERTH, WA 6000
Auditors
Solicitors
Bankers
Grant Thornton Audit Pty Ltd
Level 1
10 Kings Park Road
West Perth WA 6005
Australia
Norton Rose
BankWest Tower,
108 St Georges Terrace
Perth WA 6000
Australia
St George Bank
Level 11,
Central Park
152-158 St Georges Terrace
Perth, WA 6000
Australia
Stock exchange listings
Joyce Corporation Ltd shares are listed on the
Australian Securities Exchange (ASX ticker: JYC).
Website address
www.joycecorp.com.au
ABN:
80 009 116 269
Joyce Corporation Ltd 2010 Annual Report I PAGE 2
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ANNUAL REPORT CONTENTS
CORPORATE DIRECTORY .........................................................................................................................2(cid:2)
ANNUAL REPORT CONTENTS...................................................................................................................3(cid:2)
CHAIRMAN’S REPORT................................................................................................................................4(cid:2)
EXECUTIVE DIRECTOR’S REPORT ...........................................................................................................5(cid:2)
DIRECTORS’ REPORT ................................................................................................................................7(cid:2)
AUDITOR'S INDEPENDENCE DECLARATION .........................................................................................19(cid:2)
CORPORATE GOVERNANCE STATEMENT ............................................................................................20(cid:2)
STATEMENT OF COMPREHENSIVE INCOME.........................................................................................35(cid:2)
STATEMENT OF FINANCIAL POSITION...................................................................................................36(cid:2)
STATEMENT OF CASHFLOWS.................................................................................................................37(cid:2)
STATEMENT OF CHANGES IN EQUITY...................................................................................................38(cid:2)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS................................................................39(cid:2)
CORPORATE INFORMATION ......................................................................................................39(cid:2)
1.(cid:2)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................................39(cid:2)
2.(cid:2)
GOING CONCERN........................................................................................................................52(cid:2)
3.(cid:2)
FINANCIAL RISK MANAGEMENT ................................................................................................53(cid:2)
4.(cid:2)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS ......................................................59(cid:2)
5.(cid:2)
SEGMENT INFORMATION ...........................................................................................................59(cid:2)
6.(cid:2)
REVENUE, INCOME AND EXPENSES ........................................................................................62(cid:2)
7.(cid:2)
INCOME TAX ................................................................................................................................63(cid:2)
8.(cid:2)
DISCONTINUED OPERATIONS ...................................................................................................66(cid:2)
9.(cid:2)
EARNINGS PER SHARE ..............................................................................................................67(cid:2)
10.(cid:2)
CASH AND CASH EQUIVALENTS ...............................................................................................68(cid:2)
11.(cid:2)
TRADE AND OTHER RECEIVABLES...........................................................................................68(cid:2)
12.(cid:2)
INVENTORIES...............................................................................................................................69(cid:2)
13.(cid:2)
OTHER ASSETS ...........................................................................................................................69(cid:2)
14.(cid:2)
NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE ....................................................70(cid:2)
15.(cid:2)
OTHER FINANCIAL ASSETS .......................................................................................................70(cid:2)
16.(cid:2)
PLANT AND EQUIPMENT ............................................................................................................70(cid:2)
17.(cid:2)
INVESTMENT PROPERTY ...........................................................................................................71(cid:2)
18.(cid:2)
INTANGIBLE ASSETS ..................................................................................................................72(cid:2)
19.(cid:2)
TRADE AND OTHER PAYABLES .................................................................................................73(cid:2)
20.(cid:2)
INTEREST BEARING LOANS AND BORROWINGS ....................................................................74(cid:2)
21.(cid:2)
PROVISIONS ................................................................................................................................76(cid:2)
22.(cid:2)
CONTRIBUTED EQUITY...............................................................................................................77(cid:2)
23.(cid:2)
CAPITAL AND LEASING COMMITMENTS ...................................................................................78(cid:2)
24.(cid:2)
CONTINGENT LIABILITIES ..........................................................................................................79(cid:2)
25.(cid:2)
RELATED PARTY DISCLOSURES...............................................................................................80(cid:2)
26.(cid:2)
EVENTS AFTER REPORTING DATE ...........................................................................................81(cid:2)
27.(cid:2)
AUDITORS’ REMUNERATION......................................................................................................81(cid:2)
28.(cid:2)
DIVIDENDS ...................................................................................................................................81(cid:2)
29.(cid:2)
DIRECTOR AND EXECUTIVE DISCLOSURES............................................................................82(cid:2)
30.(cid:2)
RECONCILIATION OF NET LOSS AFTER TAX TO NET CASH FLOWS FROM OPERATIONS 85(cid:2)
31.(cid:2)
32.(cid:2)
PARENT ENTITY DISCLOSURES ................................................................................................86(cid:2)
DIRECTORS’ DECLARATION....................................................................................................................87(cid:2)
ASX ADDITIONAL INFORMATION ............................................................................................................90(cid:2)
Joyce Corporation Ltd 2010 Annual Report I PAGE 3
(cid:2)
CHAIRMAN’S REPORT
On behalf of the Board, it gives me great pleasure to provide my report to the shareholders of Joyce
Corporation Ltd for the year ended 30 June 2010 (“FY10”).
FY10 has proved to be a year of continuing restructure and transformation for Joyce Corporation Ltd and its
controlled entities (“Consolidated Entity”) as well as a year of recovery from the effects of the Global Financial
Crisis.
The Consolidated Entity achieved an underlying operating profit before tax from continuing operations in FY10
of $1.55 million, (2009: $2.74 million). Net assets per share at 30 Jun 2010 were $0.76 (2009 $1.32). The
overall result for the financial year has been adversely impacted by a number of non-recurring factors including
implementation of the Company’s new policy of reducing involvement in Company owned stores as well as the
settlement of all disputes with franchisees including associated legal costs and other provisions.
In consequence, in FY10, the Consolidated Entity incurred a loss of $8.15 million (2009: $1.33 million).
Nevertheless the difficult decisions made by the Board in FY10 will hold the Consolidated Entity in good stead
in the future and enable it to return to sustainable profitability in the shortest possible timeframe.
Joyce Corporation is now at an important juncture in its over 120-year history, having already transitioned from
being a manufacturer, to having a retail-import emphasis mainly in recent years. This transition has resulted in a
number of challenges for the Consolidated Entity. Having settled with franchisees after a three year impasse
and reached contractual agreement to sell our Queensland property, we are now in a position of looking forward
to future growth by expanding both our franchising network and our importing activities.
The settlement with franchisees includes a one-off repayment of $2.5 million. This will be is offset by an
increase in various income streams of approximately $1 million per annum, rising in line with sales growth from
existing and new franchises. Since executing the settlement deed the first additional franchise store in recent
times has been signed up in Victoria. This new store is expected to open in late 2010.
The Queensland property has been sold for $7.5 million with settlement having occurred on 28 September
2010. This leaves the Consolidated Entity with its very valuable 4.2 hectare site in Moorebank, Sydney which
may be re-zoned from industrial to commercial/ residential in due course. After the property settlement is
completed, net debt will be reduced by $7.1 million leaving the Consolidated Entity with a substantially reduced
gearing ratio. To assist in funding the new policy direction and settlement requirements, the Directors have
announced a rights issue by way of convertible notes. These funds will also assist with working capital
requirements.
Furthermore, to underpin the Consolidated Entity’s growth opportunities, as well as to maintain a conservative
balance sheet, a capital review will be undertaken shortly. Directors are committed to re commencing the
payment of dividends as soon as possible.
I express my thanks to Anthony Mankarios, my other fellow Board members and all of our dedicated employees
without whose efforts none of our achievements in this year of transformation would have been possible. Their
enthusiasm and commitment has driven Joyce Corporation Ltd forward and has contributed to the successful
resolution of all outstanding issues, as well to the smooth implementation of recent changes to our strategic
focus.
Finally, I would like to express my sincere appreciation to all shareholders for their support as Joyce
Corporation Ltd executes its strategic objectives and focuses on achieving a return to sustainable profitability.
Dan Smetana
Chairman
Joyce Corporation Ltd 2010 Annual Report I PAGE 4
(cid:2)
EXECUTIVE DIRECTOR’S REPORT
Joyce Corporation Ltd and its controlled entities (“Consolidated Entity”) made a net loss after tax of $8.15
million during the year ended 30 June 2010.
The Consolidated Entity's underlying profit before tax from continuing operations for the year ended 30 June
2010 was $1.55 million after allowing for significant non-recurring costs and provisions including the following:
CONSOLIDATED
2010
$000
2009
$000
Loss before tax per statement of comprehensive income –continuing operations.
(3,012)
(911)
Adjustments to arrive at underlying profit
Restructuring costs (including legal costs associated with franchisee actions)
Expenses relating to sale of Queensland property
Revaluation of investment property
Inventory obsolescence costs
Impairment of plant and equipment
Other
3,728
364
(76)
290
117
139
829
-
2,820
-
-
-
Underlying profit before tax – continuing operations
1,550
2,738
The Consolidated Entity's revenue from continuing operations for the period to 30 June 2010 was $22.0 million
(2009: $20.7 million) representing an encouraging year-on-year increase of 6.4%.
Strategic Actions
The Consolidated Entity has completed the following strategic actions during this financial year:
• Review and alignment of its future strategic direction;
• Group “Culture” re-alignment and change management implementation;
• Store closure direction and implementation of the closure of its SA Elizabeth branch loss making store;
• Arranging the sale of its QLD property to pay down debt and ensure a solid basis for future growth;
• Reviewing its future capital requirements;
• Negotiating and executing or settling all remaining legal disputes with franchisees including the Main
Action dispute; and
• Negotiating with new and existing Franchisees for new stores.
Company-owned Stores Operating Segment
During this financial year the Consolidated Entity maintained 15 Company-owned stores and 31 franchise
stores, a total of 46 stores nationwide.
The Consolidated Entity had, under previous administrations, entered into property leases in some poor
locations with some of the Company-owned stores. Some of these leases are now onerous, however, current
management has been able to negotiate exits from certain company stores and has received written
agreements for exits from a number of company stores. These efforts should help to improve the financial
performance of the Company-owned stores operating segment. Loss after tax from discontinued stores during
the year ended 30 June 2010 amounted to $5.3 million.
Franchise Stores Operating Segment
On 20 September 2010, the Consolidated Entity executed a Deed of Settlement in relation to the previous legal
action with franchisees. The terms of this Deed are consistent with provisions made by the Consolidated Entity
at 30 June 2010. They amount to a total settlement of $2.5 million plus legal costs with payments staged over
an 18 month period. In return the Consolidated Entity expects to receive replacement future income from
Franchisees of approximately $0.9 million next year and $1.0 million in future years based on forward forecasts.
Joyce Corporation Ltd 2010 Annual Report I PAGE 5
(cid:2)
EXECUTIVE DIRECTOR’S REPORT (CONTINUED)
Franchise Stores Operating Segment (continued)
The Consolidated Entity has received additional applications for new franchise stores and will market and grow
its franchise network nationally in the coming twelve months. The relevant agreements in respect of the first of
these new franchise stores have been executed subsequent to year-end. The new store is expected to open in
December 2010 in Melbourne. The Board anticipates this trend will lead to a strong base in the future which will
underpin the growth in years to come.
Capital Management
The completed settlement of our Queensland property on 30 September 2010 will enable the Consolidated
Entity’s to reduce its debt by $7.1 million, and thus reduce the gearing ratio to a more a conservative level of
approximately less than 40%. The Consolidated Entity will continue to own a significant future redevelopment
site in Moorebank, south west of Sydney. It currently receives subsidised rents from these properties which will
see a lift in valuation as the remaining subsidised rent period comes to an end.
The Consolidated Entity has announced plans to raise additional working capital by way of an entitlement issue
for convertible notes to raise $2.18 million in order to assist with the implementation of the Board’s strategy, as
well as to finalise payments of the legal settlements reached this year.
The Consolidated Entity dividend policy of paying up to 50% of net earnings in dividends is expected to be
maintained in the future. There will be no final dividend declared in respect of the year ended 30 June 2010.
The Board expects to renew dividend payments as soon as possible, in line with its policy, in the future.
Future Developments
The Consolidated Entity will pursue growth opportunities through the opening of additional franchise stores,
whilst growing its remaining Company-owned stores organically. During the next twelve months the
Consolidated Entity will focus on implementing its committed decision to exit loss making Company-owned
stores and on returning the Company-owned operating segment to profitability. Costs associated with these
decisions have been fully provided for at 30 June 2010. In consequence of these actions, as well as anticipated
growth in our franchise stores operating segments, we anticipate a return to significant profitability in the
forthcoming financial year subject to improved economic conditions prevailing.
The year ahead is anticipated to be a year of continuing transition and adjustment as we focus on our core
activities and explore our future expansion strategies.
Anthony Mankarios
Executive Director
Joyce Corporation Ltd 2010 Annual Report I PAGE 6
(cid:2)
DIRECTORS’ REPORT
Your Directors present their report on the Consolidated Entity, consisting of Joyce Corporation Ltd (“the
Company”) and the entities it controlled at the end of, or during, the year ended 30 June 2010.
DIRECTORS
The names of the Company’s Directors in office during the year ended 30 June 2010 and until the date of this
report are as below. Directors were in office for this entire period unless otherwise stated.
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr R Mahoney
SECRETARY
K Gray
T Hantke
J Armes
M McLean
PRINCIPAL ACTIVITIES
Chairman (non-executive)
Non-executive Director
Non-executive Director
Executive Director
Managing Director - resigned 12 March 2010
Appointed 19 January 2010
Appointed 6 November 2009, resigned 19 January 2010
Appointed 10 August 2009, resigned 6 November 2009
Resigned 10 August 2009
During the year the principal continuing activities of the Consolidated Entity consisted of being:
(a) The franchisor of the Bedshed chain of retail bedding stores; and
(b) An owner of a number of Bedshed retail stores.
No significant changes in the nature of the activities of the Consolidated Entity occurred during the year.
REVIEW AND RESULTS OF OPERATIONS
During the year ended 30 June 2010 (“the Financial Year”) the Consolidated Entity, achieved revenue from
continuing operations of $21,990,000 (2009: $20,663,000) representing a like-for-like growth of 6.4% and a loss
from continuing operations after taxation of $2,838,000 (2009: loss $535,000).
Underlying operating profit before tax – continuing operations
The underlying operations of the Consolidated Entity remain strong with an underlying profit recorded in the
Financial Year as demonstrated in the table below:
CONSOLIDATED
2010
$000
2009
$000
Loss before tax per statement of comprehensive income –continuing operations.
(3,012)
(911)
Adjustments to arrive at underlying profit
Restructuring costs (including legal costs associated with franchisee actions)
Expenses relating to sale of Queensland property
Revaluation of investment property
Inventory obsolescence costs
Impairment of plant and equipment
Other
3,728
364
(76)
290
117
139
829
-
2,820
-
-
-
Underlying profit before tax – continuing operations
1,550
2,738
Joyce Corporation Ltd 2010 Annual Report I PAGE 7
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
REVIEW AND RESULTS OF OPERATIONS (CONTINUED)
During the Financial Year operating profitability was impacted by a number of non-recurring factors including:
1. The closure of some unprofitable Company-owned stores; and
2. The settlement of the legal actions between the Consolidated Entity and its franchisee
The Consolidated Entity has brought to account a number of provisions for the cost of the above factors and
these provisions are the primary cause for the loss after taxation (continuing operations and overall) reported by
the Consolidated Entity for the Financial Year.
Closure of Company-owned stores
During the year ended 30 June 2010, the Consolidated Entity became committed to the closure of some
unprofitable company owned stores. In consequence the Directors have brought to account a number of
provisions to cover the associated costs of closing these stores. Some Company store closures are being
negotiated with landlords and surrender costs are anticipated to equate to inventory liquidation value.
Settlement of legal actions with franchisees
During the year ended 30 June 2010, the Consolidated Entity reached a settlement with franchisees of all
outstanding legal cases. The terms of the settlement deed have been finalised and the settlement deed was
signed on 20 September 2010. The Consolidated Entity has brought to account a provision for the related costs
of this settlement at 30 June 2010.
The Consolidated Entity is pleased to have reached this settlement which allows the Consolidated Entity to
move forward with expansion plans in accordance with its strategic vision.
Financial Position
At 30 June 2010 the Consolidated Entity had equity of $15,691,000 (2009: $24,243,000); cash and cash
equivalents of $4,180,000 (2009: $3,519,000) and unutilised debt facilities of $317,000 (2009: $53,000) (refer to
note 4 for further details).
On 28 September 2010 the sale of the Queensland property classified as ‘held for sale’ at 30 June 2010 was
completed. Proceeds from this sale are expected to allow the Consolidated Entity to reduce its interest bearing
loans and borrowings by approximately $7.1 million.
Bank Facility
The Board is pleased to advise that the Consolidated Entity has successfully renegotiated its debt funding
facility with the St George Bank. This outcome is indicative of St George Bank’s understanding and support of
the Consolidated Entity’s strategy.
Joyce Corporation Ltd 2010 Annual Report I PAGE 8
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Consolidated Entity will look to further develop the Bedshed business through the expansion of its network
of franchised stores whilst seeking to improve the financial performance of Company-owned and operated
stores.
DIVIDENDS
Dividends paid or declared during the financial year are as follows:
Final unfranked ordinary dividend of 2.0 (2009: 3.0 cents) cents per share
Interim unfranked ordinary dividend of Nil (2009: 1.5 cents) cents per share
2010
$000
405
-
405
2009
$000
621
311
932
To date the directors will not be recommend the payment of a final dividend out of retained profits at 30 June
2010 (30 June 2009: Nil). The Board will continue to review the Company’s ability to pay dividends and expects
to proceed with the payments of regular dividends as soon as certain financial milestones are achieved.
SIGNIFICANT AFTER REPORTING DATE EVENTS
On 20 September 2010, the Consolidated Entity executed a Deed of Settlement in relation to the
previous legal action with franchisees. The terms of this Deed are consistent with provisions made by
the Consolidated Entity at 30 June 2010.
On 28 September 2010 the sale of the Queensland property classified as ‘held for sale’ at 30 June 2010
was completed.
On 30 September 2010, the Consolidated Entity announced a rights issue for convertible notes to raise
approximately $2.18 million to enable the Consolidated Entity to settle on the agreed legal settlements
with franchisees as well as for general working capital purposes.
Other than disclosed above no event has occurred since the reporting date to the date of this report that
has significantly affected, or may significantly affect:
(a)
(b)
(c)
the Consolidated Entity’s operations, or
the results of those operations, or
the Consolidated Entity’s state of affairs.
Joyce Corporation Ltd 2010 Annual Report I PAGE 9
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS
Mr D A Smetana Chairman - Non-executive. Age 66.
Dip Comm FCPA FAIM FAICD
Experience and expertise
Mr Smetana has been Chairman of Joyce Corporation Ltd since 1984. He is also the Chairman of Bedshed
Franchising Pty Ltd. He is a Director and President of the Industrial Foundation for Accident Prevention,
Director of Edge Employment Solutions Inc, Vice President and Councillor of the WA Federation of Police and
Community Youth Centres (Inc.), Director of Uranium Australia Ltd, a Director of St John of God Foundation
and Chairman of the St John of God Comprehensive Cancer Centre Fundraising Committee.
His past board memberships include: Deputy Chairman of Youth Focus Inc (1998 - 2007), Deputy Chairman
Western Power Corporation and Chairman of its Finance Committee until 2003, Chairman and National
Councillor of the Defence Reserves Support Council - WA (1997 - 2006), Director of WA Symphony Orchestra
until 2003.
His awards include the 2003 Centenary Medal for Service to Commerce and the Community, the 2007 Ian
Chisholm Award for Distinguished Service to Occupational Health & Safety and the 1998 WA Business
Executive of the Year award.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Board
Interests in shares and options
-
-
7,079,732 fully paid ordinary shares in Joyce Corporation Ltd.
380,000 partly paid (issued at $1.955 and paid to $1.215) ordinary shares in Joyce Corporation Ltd.
Mr M A Gurry. – Independent, Non-executive Director. Age 63.
Bachelor of Science Dip AICD FAICD FAIM SF Fin
Experience and expertise
Mr Gurry was Managing Director of HBF from 1995 to 2007 and prior to that he was President Asia Pacific of
the DMR Group Ltd, an international consulting firm. From 1996 to 1999 he was Vice President of the Asian
Association of Management Organisations, from 1997 to 1999 National President of the Australian Institute of
Management and from 1999 to 2008 Chairman of United Way WA Inc. Mr Gurry is Chairman of Foundation
Housing Limited, Deputy Chairman of the Forest Products Commission, and Chairman of Reignite Pty Ltd and
has served on numerous Boards including the Australian Health Insurance Association, The Australian
Information Industry Association, The West Australian Ballet and Integrated Group Ltd.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Audit Committee
Interests in shares and options
None
Joyce Corporation Ltd 2010 Annual Report I PAGE 10
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS (CONTINUED)
Mr T R Hantke. – Independent, Non-executive Director. Age 62.
Bachelor of Commerce, FAIM, FAICD
Experience and expertise
Mr Hantke is Managing Director of his own consulting practice, Franchising Solutions Pty Ltd. Prior to this he
was the CEO of Snap Franchising from 1988 - 2001. He has been a Director of Bedshed Franchising Pty Ltd
since February 2002 and was appointed to the Joyce Board in June 2006. He was a board member of the
Franchise Council of Australia 1989 - 1996; Member of Franchise Policy Council 1997 - 2002; is currently a
Member of the ACCC's Franchise Consultative Committee; Board Member of Lifeline WA and a National Board
Member of Lifeline Australia since 2002, and the Chairman of Co-operative Purchasing Services Pty Ltd. Mr
Hantke has extensive managerial experience in both small and large organisations and in various industries.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Remuneration Committee
Interests in shares and options
None
Mr A Mankarios. – Executive Director. Age 43.
B.Bus Chem Eng, FAICD, MBA (SGSM), CFTP
Experience and expertise
Anthony Mankarios has managed a number of companies of various sizes in a 24 year career. He was recently
the CEO of Oldfields Holdings Limited for an eight year period to 2010, and was also the CEO of Robertsons
Paints and Amazing Paints prior to this position. Mr Mankarios has also managed a number of smaller
investment and property companies. He was instrumental in the change management required at Joyce
Corporation Limited during the 2010 year. He was a non-executive Director of Joyce Corporation Ltd since
February 2008, before taking up an executive role at Bedshed in 2010. He is a business man with strong
familiarity in local and overseas manufacturing, retail and wholesale business of various sizes.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
Oldfields Holdings Ltd
Special responsibilities
Executive Director since the resignation of Mr R Mahoney.
Interests in shares and options
-
505,289 fully paid ordinary shares in Joyce Corporation Ltd.
Mr R Mahoney. – Managing Director – resigned 12 March 2010. Age 44.
FAIM, MAICD
Experience and expertise
Mr Mahoney was the Managing Director of Bedshed Franchising Pty Ltd and Joyce Corporation Ltd from
January 2007 until March 2010. Prior to joining Joyce and Bedshed Mr Mahoney worked for Shell Oil in various
executive positions in Europe, New Zealand and Australia. Latterly Mr Mahoney was the Strategic Projects
Manager for the Retail Division in Australia.
Joyce Corporation Ltd 2010 Annual Report I PAGE 11
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS (CONTINUED)
Experience and expertise (continued)
His previous role was as the General Manager of the Shell retail business in New Zealand. Mr Mahoney has
over twenty years’ experience in retail management in various countries and has also served on several Boards
in New Zealand.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Managing Director until his resignation on 12 March 2010.
Interests in shares and options
None.
COMPANY SECRETARY
The Company Secretary is Mr K Gray, CPA.
Mr Gray was appointed to the position of Chief Financial Officer and Company Secretary on 19 January 2010.
Mr Gray is a CPA and a very experienced Chief Financial Officer and Company Secretary having acted in these
roles with a number of listed companies in the past.
Previous Company Secretaries’ details are as follows:
Name
From
To
Qualifications
T R Hantke^
J Armes
M Mclean
6/10/09
10/8/09
1/7/09
19/1/10
6/11/10
10/8/09
B.Com, FAIM, FAICD
CA
CPA
^ Temporary position held until the appointment of Mr Gray.
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and of each Board committee held during the
year ended 30 June 2010, and the numbers of meetings attended by each Director were:
Meetings of committees
Full meeting
of Directors
A
11
11
11
11
7
B
11
11
11
11
7
Audit
Remuneration
A
4
4
4
4
-
B
4
4
4
4
-
A
-
1
7
7
1
B
-
1
7
7
1
D A Smetana
M A Gurry
T R Hantke
A Mankarios
R Mahoney
A =
B =
Number of meetings attended
Number of meetings held during the time the Director held office or was a member of the
committee during the year
Joyce Corporation Ltd 2010 Annual Report I PAGE 12
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT -AUDITED
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration.
B. Service agreements
C. Details of remuneration
D. Share-based compensation
E. Link between remuneration policy and Company performance
The information provided in this remuneration report is also included in the financial report which has been
audited as required by section 308(3C) of the Corporations Act 2001.
A. Principles used to determine the nature and amount of remuneration
Remuneration Committee
The Remuneration Committee Charter establishes the role of the Remuneration Committee which is to review
and make recommendations on Board and executive Director remuneration: senior management remuneration;
executive share plan participation; human resource and remuneration policies; and senior management
succession planning, appointments and terminations.
The main responsibilities of the Remuneration Committee includes reviewing and making recommendations on
remuneration policies for the company including, in particular, those governing the directors, Managing Director
and senior management.
The Remuneration Committee comprises a majority of non-executive directors and at least three members. The
Chairman of the committee is appointed by the Board and must be a non-executive director.
The Remuneration Committee is required to meet as and when required by the Chairman. The committee may
invite persons deemed appropriate to attend meetings and may take such independent advice as it considers
appropriate. Any committee member may request the Chairman call a meeting.
The Remuneration Committee is required to assess its effectiveness periodically. In addition the Charter is
required to be revised annually and updated as required.
Remuneration Policies
The objective of the Consolidated Entity’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with achievement
of strategic objectives and the creation of value for shareholders, and conforms to market practice for delivery of
reward. The Board ensures that executive reward satisfies the following key criteria for good reward
governance practices:
• competitiveness and reasonableness;
• acceptability to shareholders;
• performance linkage / alignment of executive compensation;
• transparency; and
• capital management.
In consultation with external remuneration consultants, where appropriate, the Consolidated Entity has
structured an executive remuneration framework that is market competitive and complementary to the reward
strategy of the organisation.
Joyce Corporation Ltd 2010 Annual Report I PAGE 13
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT - AUDITED (CONTINUED)
A. Principles used to determine the nature and amount of remuneration (continued)
Alignment to shareholders’ interests:
• has economic profit as a core component of plan design;
• focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share
price, and delivering constant return on assets as well as focusing the executive on key
non-financial drivers of value; and
• attracts and retains high calibre executives.
Alignment to program participants’ interests:
• rewards capability and experience;
• reflects competitive reward for contribution to growth in shareholder wealth;
• provides a clear structure for earning rewards; and
• provides recognition for contribution.
Non-executive Directors
Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities
of, the Directors. Non-executive Directors’ fees and payments are reviewed annually by the Board. The Board
considers, where appropriate, the advice of independent remuneration consultants to ensure non-executive
Directors’ fees and payments are appropriate and in line with the market. The Chairman’s fees are determined
independently to the fees of non-executive Directors based on comparative roles in the external market. The
Chairman is not present at any discussions relating to determination of his own remuneration.
The current base remuneration was last reviewed with effect from 30 June 2010. The Chairman's remuneration
is inclusive of committee fees and other non-executive Directors who are members of a committee do not
receive additional yearly fees.
Non-executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically
recommended for approval by shareholders. The maximum currently stands at $400,000 per annum and was
approved by shareholders at the Annual General Meeting on 20 November 2006.
Executive pay
Fixed Remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to
the position and is competitive in the market. Fixed remuneration is reviewed annually by the Remuneration
Committee and the process involves the review of Consolidated Entity and individual performance, and relevant
comparative remuneration in the market.
Variable Remuneration - Short Term Incentives
The goals consist of a number of key performance indicators (KPI's) covering both financial and non-financial,
corporate and individual measures of performance. Included in the measures are contributions to net profit
before tax, cash targets and departmental functional KPI's. At the end of the financial year the Board assesses
the actual performance of the Consolidated Entity, the relevant segment and individual against the KPIs set at
the beginning of the financial year. Should the Consolidated Entity achieve the set KPIs, the Board will reward
the key management personnel with a bonus during the salary review. A percentage of a pre-determined
maximum amount is awarded depending on results. No bonus is awarded where performance falls below the
minimum.
B. Service Agreements
This remuneration report outlines the director and executive remuneration arrangements of the Company and
the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Joyce Corporation Ltd 2010 Annual Report I PAGE 14
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
B. Service Agreements (continued)
For the purposes of this report, Key Management Personnel (“KMP”) of the Consolidated Entity are defined as
those persons having authority and responsibility for planning, directing, and controlling the major activities of
the Company and the Consolidated Entity, directly or indirectly, including any Director (whether executive or
otherwise) of the Company and includes the executives in the Consolidated Entity receiving the highest
remuneration.
For the purposes of this report, the term "executive" encompasses the Chief Executive, Executives and
Company Secretary of the Consolidated Entity.
Details of key management personnel (including the executives of the Consolidated Entity):
Mr D A Smetana
Mr M A Gurry
Mr T R Hantke
Mr A Mankarios
Mr R Mahoney
Mr G Culmsee
Mr K Gray
Mr J Armes
Mr M McLean
Ms S Freedman
Mr S Jones
Director and Chairman
Director
Director
Director
Managing Director – resigned 12 March 2010
Chief Operating Officer
Chief Financial Officer & Company Secretary – appointed 19 January 2010
Chief Financial Officer & Company Secretary - appointed 10 August 2009, resigned 6
November 2009
Chief Financial Officer & Company Secretary - resigned 28 August 2009
National Marketing Manager
National Merchandise Manager – resigned 28 February 2010
The employment conditions of all specified executives are formalised in contracts of employment. Other than
the Managing Director, who was employed by Joyce Corporation Ltd all other executives are permanent
employees of Bedshed Franchising Pty Ltd.
Managing Director
The former Managing Director, Mr Mahoney, was employed under a rolling contract until his resignation on 12
March 2010. The terms of that employment contract can be found in the Consolidated Entity’s annual report for
the year ended 30 June 2009.
A replacement Managing Director had not been appointed at the date of this Annual Report.
Other Executives
All executives have rolling contracts. The Consolidated Entity can terminate each contract by providing two
months written notice or providing payment in lieu of the notice period (based on the fixed component of the
executives’ remuneration). The Consolidated Entity may terminate an executive for serious misconduct without
notice. Where termination with cause occurs the executive is only entitled to that portion of remuneration that is
fixed up to the date of termination.
Joyce Corporation Ltd 2010 Annual Report I PAGE 15
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT - AUDITED (CONTINUED)
C. Details of remuneration
Short-term
Post-Employment
Total
Share
based
payment
Salary &
Fees
$000
Cash
Bonus
$000
Non-
Monetary
benefits
$000
Superann
uation
$000
Retirement
benefits
$000
Options
$000
$000
30 June 2010
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr R Mahoney
Mr G Culmsee
Mr K Gray
Mr J Armes
Mr M McLean
Ms S Freedman
Mr S Jones
281
32
62
66
282
173
69
48
37
126
177
Total Remuneration:
1,353
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26
6
-
2
-
17
11
35
5
-
33
15
7
4
4
11
19
51
144
30 June 2009
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr R Mahoney
Mr G Culmsee
Mr M McLean
Ms S Freedman
Mr S Jones
23
-
67
55
273
125
117
126
143
-
-
-
-
122
-
5
23
24
-
-
-
-
-
23
14
-
25
Total Remuneration:
929
174
62
D. Share-based compensation
119
73
6
-
50
13
40
13
22
336
-
-
-
-
157
-
-
-
25
-
-
182
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
292
67
67
66
472
214
82
52
68
137
213
1,730
142
73
73
55
445
161
176
162
214
1,501
There was no share-based compensation of Key Management Personnel during the year ended 30 June 2010
(2009: Nil).
Joyce Corporation Ltd 2010 Annual Report I PAGE 16
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
E. Link between remuneration policy and Company performance
The Consolidated Entity provided executives with variable remuneration in the form of short-term incentives as
described in Part A of the Remuneration Report. These incentives are payable upon the achievement of certain
goals covering both financial and non-financial, corporate and individual measures of performance. Included in
the measures are contributions to net profit before tax, cash targets and departmental functional KPI's.
The following table shows the gross revenue, profits and dividends for the last five years for the Consolidated
Entity, as well as the share price at the end of the respective financial years.
Revenue (a)
Net Profit (a)
Share Price at Year-end $
Dividends (Cents) Paid
2010
$000
28,089
(8,147)
0.40
2.0
2009
$000
2008
$000
2007
$000
27,906
(1,329)
0.41
4.50
18,068
2,066
1.08
9.00
15,092
3,197
1.26
9.50
2006
$000
7,157
4,451
1.03
11.50
(a) Revenue and net profit in respect of the 2010 and 2009 financial years include discontinued operations. The
2010 financial performance has been impacted by a number of non-recurring provisions associated with
closure of some unprofitable Company-owned stores and the settlement of legal actions with franchisees.
Both matters position the Consolidated Entity well for achieving a return to profitability and its growth
strategy in the future.
The sale of the Joyce Foam business in November 2005 resulted in the 2006 financials being restated to
exclude the foam businesses. Joyce Corporation Ltd acquired 100% of Bedshed Franchising Pty Ltd in April
2006, having previously held a 49% shareholding.
End of Remuneration Report.
LOANS TO DIRECTORS AND EXECUTIVES
There were no loans outstanding to Directors and executives as at 30 June 2010.
INSURANCE OF OFFICERS
During the financial year, Joyce Corporation Ltd paid a premium to insure the Directors and secretaries of the
Company and its Australian-based controlled entities, and senior executives of the Consolidated Entity. A
clause in the relevant insurance policy prevents the disclosure of the amount of the premium.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of entities in the Consolidated Entity, and any other
payments arising from liabilities incurred by the officers in connection with such proceedings. This does not
include such liabilities that arise from conduct involving a willful breach of duty by the officers or the improper
use by the officers of their position or of information to gain advantage for themselves or someone else or to
cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the
insurance against legal costs and those relating to other liabilities.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for
the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
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.
Joyce Corporation Ltd 2010 Annual Report I PAGE 17
(cid:2)
DIRECTORS’ REPORT (CONTINUED)
PERFORMANCE IN RELATION TO ENVIRONMENTAL REGULATION
Joyce Corporation holds licences issued by the Environmental Protection Authority and various other authorities
throughout Australia. These licences regulate the management of air and water quality, the storage and
carriage of hazardous materials and disposal of wastes associated with the Consolidated Entity’s properties.
There have been no material known breaches associated with the Consolidated Entity’s licence conditions.
NON-AUDIT SERVICES
The Board of Directors, in accordance with advice from the audit committee, is satisfied that the provision of
non-audit services during the year is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not
compromise the external auditor’s independence for the following reasons:
• all non-audit services are reviewed and approved by the audit committee prior to commencement to
•
ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided does not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the
Accounting Professional Ethical Standards Board.
The following fees for non-audit services were paid / payable to the external auditors during the year ended 30
June 2010:
Taxation services
$
37,000
37,000
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 19.
AUDITORS
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations
Act 2001.
D A Smetana
Chairman
Perth, 30 September 2010
Joyce Corporation Ltd 2010 Annual Report I PAGE 18
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Grant Thornton Audit Pty Ltd ACN 130 913 594, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389.
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member
firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services
independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation.
Joyce Corporation Ltd 2010 Annual Report I PAGE 19
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Joyce Corporation Ltd (“the Company”) is responsible for the corporate
governance of the Company. The Board monitors the business affairs of the Company on behalf of the
shareholders by whom they are elected and to whom they are accountable.
The Company has made it a priority to adopt systems of control and accountability as the basis for the
administration of corporate governance. Some of these policies and procedures are summarised in this
statement. Commensurate with the spirit of the August 2007 ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations ("Principles & Recommendations"), the
Company has followed each recommendation where the Board has considered the recommendation to be
an appropriate benchmark for its corporate governance practices. Where the Company's corporate
governance practices follow a recommendation, the Board has made appropriate statements reporting on
the adoption of the recommendation. Where, after due consideration, the Company's corporate
governance practices depart from a recommendation, the Board has offered full disclosure and reason for
the adoption of its own practice.
Further information about the Company's charters, policies and procedures may be found at the
Company's website at www.joycecorp.com.au, under the section marked Governance.
The Company has not established (and therefore has not made publicly available) a formal Nomination
Committee Charter, Policy and Procedure for Selection and (Re) Appointment of Directors, or Procedure
for Selection, Appointment and Rotation of External Auditor. Where applicable, the Company's "If Not,
Why Not" disclosure for each of the Recommendations to which this charter and the policies and
procedures relate, is provided below.
Disclosure – Principles & Recommendations
The Company reports below on how it has followed (or otherwise departed from) each of the Principles &
Recommendations during the year ended 30 June 2010 ("Reporting Period").
Principle 1: Lay Solid Foundation for Management and Oversight
Recommendation 1.1:
Companies should establish the functions reserved to the Board and those delegated to senior executives
and disclose those functions.
Disclosure:
The Board and senior management of the Company are committed to acting responsibly, ethically and
with high standards of integrity as the Company strives to create shareholder value. The Board accepts
responsibility for the overall corporate governance of the Company and has consequently developed and
adopted corporate governance practices and policies
throughout
management and governance.
that have been
implemented
The Company has established the functions reserved to the Board and is in the process of formalising
these functions in a Board Charter. The Board's primary role is the optimisation of Company performance
and protection and enhancement of shareholder value. Its functions and responsibilities includes setting
strategic and policy direction, monitoring performance against strategy, identifying principal risks and
opportunities and ensuring risk management systems are established and reviewed, approving and
monitoring financial reports, capital management, compliance, significant business transactions and
investments, appointing senior management and monitoring performance, remuneration, development and
succession, adopting procedures to ensure the business of the Company is consistent with Company
values, continuous disclosure compliance, ensuring effective shareholder communication, ensuring the
Board remains appropriately skilled, reviewing and approving corporate governance systems and
enhancing and protecting the Company's reputation.
The Board is also governed by the Company's constitution, and on appointment each Director is provided
with a formal letter of appointment setting out key terms and conditions of the appointment their duties and
responsibilities, the role of the Board and committees, the Company's constitution and the Company's
policies.
Joyce Corporation Ltd 2010 Annual Report I PAGE 20
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 1: Lay Solid Foundation for Management and Oversight (continued)
The Company has established the functions delegated to senior executives and will set out these
functions in its Board Charter. Senior executives are responsible for supporting the Managing Director and
assisting the Managing Director in implementing the running of the general operations and financial
business of the Company, in accordance with the delegated authority of the Board.
Recommendation 1.2:
Companies should disclose the process for evaluating the performance of senior executives.
Disclosure:
Evaluation of the Managing Director is carried out by the Remuneration Committee each year together
with the ongoing monitoring of management and Company performance, with informal discussions
undertaken as required. The Managing Director conducts a formal review each year assessing the
performance of Senior Executives and reports back to the Board.
Recommendation 1.3:
Companies should provide the information indicated in the “Guide to reporting on Principle 1.”
Disclosure:
The Remuneration Committee conducted an evaluation of the Managing Director in March 2010. The
Chairman conducted an evaluation of Senior Executives in June 2010. The performance evaluation was
undertaken in accordance with the process disclosed above.
Principle 2: Structure the Board to add value
Recommendation 2.1:
A majority of the Board should be independent Directors.
Disclosure:
The Board is currently comprised of four Directors with three being non-executive Directors, including the
Chairman and one executive Director. The Company does not comply with this recommendation, as two of
the four Directors are considered independent.
The independent Directors of the Company are:
•
•
Mr M Gurry (Non-Executive Director and Chairman of the Audit Committee)
Mr T Hantke (Non-Executive Director and Chairman of the Remuneration Committee)
The Board regularly assesses the independence of each Director with the intention to have a majority of
Directors being independent. Each Director is required to provide to the Board all relevant information to
assist the Board in this regard.
The Board will continue to monitor developments and consider any guidelines that may be issued with
respect to the maximum tenure of Directors in order to meet ‘independence’ guidelines.
Explanation for Departure:
Following the resignation of Mr R Mahoney, the Company’s former Managing Director in March 2010, Mr
A Mankarios has become an Executive Director thus precluding him from being considered an
independent Director for the purposes of this recommendation.
Joyce Corporation Ltd 2010 Annual Report I PAGE 21
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 2: Structure the Board to add value (continued)
Recommendation 2.2:
The Chair should be an independent Director.
Disclosure:
The Chairman is not considered independent due to the size of the shareholding in his control.
Explanation for Departure:
The Board has decided to continue with Mr D Smetana as Chairman in recognition of his considerable
experience with the Company and expertise that complements the skills and experience of the other
Board members. The Company deals with the lack of independence of the Chairman by ensuring that
conflicts of interest are adequately disclosed and the Chairman abstains from voting on matters where
they have, or it is perceived they have a beneficial interest in the outcome of the matters.
Recommendation 2.3:
The roles of the Chair and Managing Director should not be exercised by the same individual.
Disclosure:
The Managing Director was Mr R Mahoney until 12 March 2010 who was not Chair of the Board. A
replacement for Mr R Mahoney has not yet been found.
Recommendation 2.4:
The Board should establish a Nomination Committee.
Disclosure:
The Company has not established a separate Nomination Committee.
Explanation for Departure:
The Board considers the present Directors are able to discharge the responsibilities of a Director, having
regards to the law and the highest standards of governance. Should a vacancy exist, for whatever reason,
or where considered that the Board would benefit from the services of a new Director, the Board will select
appropriate candidates with relevant qualifications, skills and experience. The Board has not established a
separate Nomination Committee as, due to the Company's size, the simplicity of its operations, the
Board's size and the cost effectiveness of the Board's current operations, the Board considers such a
separate Nomination Committee is not warranted or commercially viable and its functions and
responsibilities can be adequately and efficiently discharged by the Board as a whole. The Board
assesses the experience, knowledge and expertise of potential Directors before any appointment is made.
Items that are usually required to be discussed by a Nomination Committee are marked as separate
agenda items at Board meetings when required. The Board deals with any conflicts of interest that may
occur when convening in the capacity of Nomination Committee by ensuring the Director with conflicting
interests is not party to the relevant discussions.
Recommendation 2.5:
Companies should disclose the process for evaluating the performance of the Board, its committees and
individual Directors.
Disclosure:
The Company has adopted self-evaluation processes to measure Board performance. The performance of
all Directors is assessed through analysis and review by, and discussion with, the Chair on issues relating
to individual Directors' attendance at and involvement in Board meetings, interaction with management,
performance of allocated tasks and any other matters identified by the Chair or other Directors. Evaluation
of any Board committees is conducted on a similar basis. Due to the Board's assessment of the
effectiveness of these processes, the Board has not formalised qualitative performance indicators to
measure individual Director’s performance.
Joyce Corporation Ltd 2010 Annual Report I PAGE 22
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 2: Structure the Board to add value (continued)
Recommendation 2.6:
Companies should provide the information indicated in the “Guide to reporting on Principle 2.”
Disclosure:
Skills, Experience, Expertise and Term of Office of each Director
The composition of the Board has been determined on the basis of providing the Company with the benefit
of a broad range of commercial, administrative and financial skills, combined with an appropriate level of
experience at a senior corporate level. The names and further information regarding the skills, experience,
qualifications, relevant expertise and term of office of the Directors are set out in the most recent Directors’
Report.
Board Access to Information and Independent Advice
All Directors have access to employees and, subject to the law, access to all Company records and
information held by employees and external advisers. The Board receives regular detailed financial and
operational reports from senior management to enable it to carry out its duties.
Consistent with ASX Principle 2, the Company allows each Director to seek individual external advice at
the expense of the Company.
Committees of the Board
The Board has established an Audit Committee and a Remuneration Committee to assist the Board in the
discharge of its responsibly.
Further information about the Audit Committee is provided in the statement under Principal 4: Safeguard
Integrity in Financial Reporting.
Further information about the Remuneration Committee is provided in the statement under Principal 8:
Remunerate Fairly and Responsibility.
Identification of Independent Directors
The policy on Director Independence defines an independent Director as a non-executive Director (not a
member of management) and free of any business or other relationship that could materially interfere with,
or could reasonably be perceived to materially interfere with the independent exercise of their judgment.
In determining the independent status of a Director the Board considers whether the Director:
•
•
•
•
•
is a substantial shareholder of the Company or an officer of, or otherwise associated directly or
indirectly with, a substantial shareholder the Company;
is employed, or has previously been employed in an executive capacity by the Company or
another group member, and there has not been a period of at least three years between ceasing
such employment and serving on the Board;
has within the last three years been a principal of a material professional adviser or a material
consultant to the Company, or another group member, or an employee materially associated with
the service provider;
is a material supplier or customer of the Company, or another group member, or an officer of or
otherwise associated directly or indirectly with a material supplier or customer;
has a material contractual relationship with the Company or another group member, other than as
a Director of the Company.
Materiality for these purposes is determined on both a quantitative and qualitative bases. An amount of
over 5% of annual turnover or 5% of the individual Director’s net assets is considered material for these
purposes.
Joyce Corporation Ltd 2010 Annual Report I PAGE 23
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 2: Structure the Board to add value (continued)
Nomination Matters
The full Board carries out the role of the Nomination Committee. The full Board did not officially convene
as a Nomination Committee during the Reporting Period, however the Board discusses nominated-related
matters from time to time during the year as required. The explanation for departure set out under
Recommendation 2.4 above explains how the functions of the Nomination Committee are performed.
Performance Evaluation
During the Reporting Period no review or evaluation of the performance of the Board, individual Directors
and applicable Committees was undertaken in accordance with the process disclosed at Recommendation
2.5.
Selection and (Re)/Appointment of Directors
The Company has not established (and therefore has not made publicly available) a formal Policy and
Procedure for Selection and (Re)/Appointment of Directors.
In determining candidates for the Board, the Nomination Committee (or equivalent) considers the balance
of independent Directors on the Board as well as the skills and qualifications of potential candidates that
will best enhance the Board's effectiveness.
The Board recognises that Board renewal is critical to performance and the impact of Board tenure on
succession planning. Under the Company's constitution, at every annual general meeting one third of the
Directors (except the Managing Director) must retire from office and is eligible for re-election at that
meeting. The Directors to retire must be those who have been longest in office since their last election
and, in any event, Directors cannot hold office for more than three years without submitting themselves for
re-election. Re-appointment of Directors is not automatic.
Principle 3: Promote Ethical and Responsible Decision Making
Recommendation 3.1:
Companies should establish a Code of Conduct and disclose the code or a summary of the code as to the
practices necessary to maintain confidence in the Company's integrity, the practices necessary to take into
account their legal obligations and the reasonable expectations of their stakeholders and the responsibility
and accountability of individuals for reporting and investigating reports of unethical practices.
Disclosure:
The Board has adopted a Code of Conduct for Directors to promote ethical and responsible decision
making by Directors. The Code is based on a code of conduct for Directors prepared by the Australian
Institute of Company Directors and embraces the values of honesty, integrity, enterprise, excellence,
accountability, justice, independence and equality of shareholder opportunity.
The principles of the Code are:
•
•
•
•
•
•
•
•
A Director must act honestly, in good faith and in the best interests of the Company as a whole.
A Director has a duty to use due care and diligence in fulfilling the functions of office and
exercising the powers attached to that office.
A Director must use the powers of office for a proper purpose, in the best interests of the
Company as a whole.
A Director must not take improper advantage of the position of Director.
A Director must not allow personal interests, or the interests of any associated person, to conflict
with the interests of the Company.
A Director has an obligation to be independent in judgment and actions and to take all reasonable
steps to be satisfied as to the soundness of all decisions taken by the Board.
Confidential information received by a Director in the course of the exercise of directional duties
remains the property of the Company and it is improper to disclose it, or allow it to be disclosed,
unless that disclosure has been authorised by the Company, or the person from whom the
information is provided, or is required by law.
A Director should not engage in conduct likely to bring discredit upon the Company.
Joyce Corporation Ltd 2010 Annual Report I PAGE 24
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 3: Promote Ethical and Responsible Decision Making (continued)
•
A Director has an obligation at all times, to comply with the spirit, as well as the letter of the law
and with the principles of the Code.
The Managing Director or in his absence the Executive Director is responsible to the Board for the day-to-
day management of the Company.
The Company has adopted a Code of Ethics and Conduct for all employees and Directors of the Company
which details policies, procedures and guidelines aimed at maintaining high ethical standards, corporate
behaviour and accountability. The Directors of the Company are also obliged to comply with the Code of
Conduct for Directors.
Objective
The code of Ethics and Conduct confirms that the Company’s primary objective is to provide a satisfactory
return to shareholders. The Company aims to achieve this by:
•
•
•
•
•
Satisfying the needs of the customers and Franchisees through the provision of goods and
services on a competitive and professional basis;
Providing a safe and fulfilling working environment for employees, rewarding good performance
and providing opportunities for advancement;
Conducting existing operations in an efficient manner and by seeking out opportunities for
expansion;
Responding to the attitudes and expectations of the communities in which the Company operates;
Acting with integrity and honesty in dealings both inside and outside the group.
Values
All employees are expected to:
•
•
•
•
•
•
•
•
•
Respect the law and act in accordance with it;
Respect confidentiality and not misuse information, assets or facilities;
Value and maintain professionalism;
Avoid real or perceived conflicts of interest;
Act in the best interests of shareholders;
By their actions contribute to the Company’s reputation as a good corporate citizen which seeks
the respect of the communities and environments in which it operates;
Perform their duties in ways that minimise environmental impacts and maximise workplace safety;
Exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their
workplace and with Franchisees, customers, suppliers, and the public generally; and
Act with honesty, integrity, decency and responsibility at all times.
Under the Code of Ethics and Conduct, all employees are required to comply with the letter and spirit of all
applicable laws and regulations in performance of their duties and their dealings with fellow employees,
customers, Franchisees, suppliers and all third parties with whom they have contact in the performance of
their duties. In addition, all employees have a responsibility to adhere to the Code and ensure that no
breaches occur. An employee who breaches the Code may face disciplinary action.
If an employee suspects that a breach of the Code has occurred or will occur, he or she must report that
breach to the appropriate Company manager.
No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All
reports will be acted upon and kept confidential. In addition, the whistleblower provisions of the
Corporations Act 2001 provide specific protection to employees who report breaches or suspected
breaches of Corporations Legislation under certain circumstances.
Responsibility for the administration, implementation and periodic review of the Code of Ethics and
Conduct lies with the Company Secretary, in consultation with the Managing Director/Executive Director.
Joyce Corporation Ltd 2010 Annual Report I PAGE 25
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 3: Promote Ethical and Responsible Decision Making (continued)
Recommendation 3.2:
Companies should establish a policy concerning trading in Company securities by Directors, senior
executives and employees, and disclose the policy or a summary of that policy.
Disclosure:
Apart from observing all legal requirements, it is the policy of the Board that all Directors and Senior
Executives advise the Board before dealing in Joyce Corporation Ltd shares. In order to encourage as
active a market as possible in Company shares Directors and Senior Executives are encouraged to trade
in Company shares except during periods when they are aware of material matters or activities which are
not yet known by the market in general. For example during the period from the finalisation of the annual
and half yearly results and their release, The Board will not authorise trading in Joyce Corporation Ltd
shares by Directors or Senior Executives if, in its opinion, that Director or Executive has knowledge of any
fact that may affect the share price. The Board also accepts responsibility for reviewing any transactions
between the Company and Directors or any interest associated with Directors, to ensure the structure and
the terms of the transaction is in compliance with the Corporations Act 2001 and is properly disclosed.
Recommendation 3.3:
Companies should provide the information indicated in the “Guide to reporting on Principle 3.”
Disclosure:
Please refer to the disclosure in Recommendation 3.1 and Recommendation 3.2 above for a summary of
the Code of Conduct and Trading Policy.
Principle 4: Safeguard Integrity in Financial Reporting
Recommendation 4.1:
The Board should establish an Audit Committee.
Disclosure:
The Company has established an Audit Committee.
Recommendation 4.2:
The Audit Committee should be structured so that it:
•
•
•
•
consists only of non-executive Directors
consists of a majority of independent Directors
is chaired by an independent Chair, who is not Chair of the Board
has at least three members.
Disclosure:
The Company considers that it complies with this requirement.
The Audit Committee comprises of:
•
•
•
Mr M A Gurry (Chairman of the Audit Committee)
Mr T R Hantke
Mr D Smetana
Recommendation 4.3:
The Audit Committee should have a formal charter.
Disclosure:
The Company has adopted an Audit Committee Charter.
Joyce Corporation Ltd 2010 Annual Report I PAGE 26
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 4: Safeguard Integrity in Financial Reporting (continued)
Recommendation 4.4:
Companies should provide the information indicated in the “Guide to reporting on Principle 4.”
Disclosure:
Details of each of Director's qualifications and attendance at the Audit Committee meetings are set out in
the Directors' Report. All Directors are financially literate and have an understanding of the industry in
which the Company operates.
Appointment of Auditor
The effectiveness, performance and independence of the external auditor are reviewed by the Audit
Committee. If it becomes necessary to replace the external auditors for performance or independence
reasons, the Audit Committee will formalise the procedure and policy for selecting a new external auditor.
Audit Committee
The Audit Committee monitors internal control policies and procedures designed to safeguard Company
assets and to maintain the integrity of financial reporting, which is consistent with ASX Principle 4. A copy
of the Audit Committee Charter is available on the Company’s website under Governance.
The Audit Committee has the following responsibilities as set out in its Charter:
•
•
•
•
•
the main responsibilities include oversight and making recommendations on internal and external
reporting,
the oversight of risk management activities, and external audit; as well as
communication between the external auditors and the Board
the Audit Committee will comprise only non-executive Directors and at least three members. The
Chairman of the Committee is appointed by the Board and cannot be the Chairman of the Board
the Audit Committee may invite any person deemed appropriate to attend meetings and may take
such independent advice as it considers appropriate.
The Audit Committee is required to meet as and when required by the Chairman of the
Committee. Any member of the Committee may request the Chairman to call a meeting.
The Audit Committee is required to assess its effectiveness periodically. In addition the Charter is
required to be revised annually and updated as required.
Principle 5: Make Timely and Balanced Disclosure
Recommendation 5.1:
Companies should establish written policies designed to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure accountability at a senior executive level for that compliance and
disclose those policies or a summary of those policies.
Disclosure:
The Company has established procedures to ensure there is timely disclosure to the ASX of price
sensitive information which may have a material effect on the price or value of the entity’s securities.
The Company also posts announcements on its web site to complement the official release of information
to the market.
Recommendation 5.2:
Companies should provide the information indicated in the “Guide to reporting on Principle 5.”
Disclosure:
A copy of the Continuous Disclosure Policy is available on the Company’s website in the Governance
section.
Joyce Corporation Ltd 2010 Annual Report I PAGE 27
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 6: Respect the Right of Shareholders
Recommendation 6.1:
Companies should design a communications policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose their policy or a
summary of that policy.
Disclosure:
The Company has an effective shareholder communication procedure. Communication of information to
shareholders is through the distribution of an annual report and half yearly report, announcements through
the ASX and the media regarding changes in its business.
The Company’s annual general meeting is a major forum for shareholders to ask questions about the
Company performance and the external auditors also are invited to attend the annual general meeting and
answer shareholder questions.
The Company maintains a web site which includes copies of all Corporate Governance policies and
procedures as well as all shareholder communications both current and historical.
Recommendation 6.2:
Companies should provide the information indicated in the “Guide to reporting on Principle 6.”
Disclosure:
A copy of the Shareholders Communications Policy is available on the Company’s website in the
Governance section.
Principle 7: Recognise and Manage Risk
Recommendation 7.1:
Companies should establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
Disclosure:
The Company has developed a Risk Management and Oversight Policy, which sets out systems for risk
oversight, management and internal control. A copy of this policy is available on the Company website.
Recommendation 7.2:
The Board should require management to design and implement the risk management and internal control
system to manage the Company's material business risks and report to it on whether those risks are being
managed effectively. The Board should disclose that management has reported to it as to the
effectiveness of the Company's management of its material business risks.
Disclosure:
The Company is yet to complete the formalisation of its risk management system and reporting on
identified material business risks, accordingly the Board has not received a report as to the effectiveness
of the management of its material business risks.
Following the recent development of the Risk Management and Oversight Policy the Board has
determined to review, formalise and document the management of its material business risks and expects
to implement this system by the end of this year. This system will include the preparation of a risk register
by management to identify the Company's material business risks and risk management strategies for
these risks. In addition, the process of management of material business risks will be allocated to
members of senior management. The risk register will be formally reviewed at least annually and updated
as required.
Joyce Corporation Ltd 2010 Annual Report I PAGE 28
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 7: Recognise and Manage Risk (continued)
Recommendation 7.2 (continued):
During this process the Board will continue to monitor the Company’s risk management through ongoing
monitoring of management and operational performance, a comprehensive system of budgeting,
forecasting and reporting to the Board, regular presentations to the Board by management on the
management of risks associated with pending and existing legal issues, approval procedures for
significant expenditures, the functioning of the Audit Committee, comprehensive written policies on
specific activities and corporate governance, and regular communication between Directors on compliance
and risk.
Recommendation 7.3:
The Board should disclose whether it has received assurance from the Chief Executive Officer (or
equivalent) and the Chief Financial Officer (or equivalent) that the declaration provided in accordance with
section 295A of the Corporations Act is founded on a sound system of risk management and internal
control and that the system is operating effectively in all material respects in relation to financial reporting
risks.
Disclosure:
The Board requires assurance from the Managing Director and Chief Financial Officer that the declaration
in relation to section 295A of the Corporations Act is founded in a sound system of risk management and
internal control and that the system is operating effectively in all material aspects in relation to financial
reporting risks.
Recommendation 7.4:
Companies should provide the information indicated in the “Guide to reporting on Principle 7.”
Disclosure:
The Board has not received the report from management under Recommendation 7.2. Additional
information regarding this departure and the departure from Recommendation 7.2 is detailed above.
The Board has received the assurance from the Chief Executive Officer (or equivalent) and the Chief
Financial Officer (or equivalent) under Recommendation 7.3.
A copy of the Risk Management and Oversight Policy is available on the Company’s website in the
Governance section.
Principle 8: Remunerate Fairly and Responsibly
Recommendation 8.1:
The Board should establish a Remuneration Committee.
Disclosure:
The Company has established a Remuneration Committee.
Recommendation 8.2:
Companies should clearly distinguish the structure of non-executive Directors’ remuneration from that of
executive Directors and senior executives.
Disclosure:
Non-executive Directors are remunerated at a fixed fee for time, commitment and responsibilities.
Remuneration for non-executive Directors is not linked to the performance of the Company.
Pay and rewards for executive Directors and senior executives consists of a base salary and performance
incentives. Executives are offered a competitive level of base pay at market rates and are reviewed
annually to ensure market competitiveness.
Joyce Corporation Ltd 2010 Annual Report I PAGE 29
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 8: Remunerate Fairly and Responsibly (continued)
Recommendation 8.3:
Companies should provide the information indicated in the “Guide to reporting on Principle 8.”
Disclosure:
Details of remuneration, including the Company’s policy on remuneration, are contained in the
“Remuneration Report” which forms a part of the Directors’ Report. The Company's remuneration policies
are reflected in the Company's Remuneration Committee Charter.
These policies are to establish competitive remuneration, including performance incentives, consistent
with long term development and success, to ensure remuneration is fair and reasonable, taking into
account all relevant factors, and within appropriate controls or limits, ensure performance and
remuneration are appropriately linked, that all remuneration packages are reviewed annually or on an
ongoing basis in accordance with management's remuneration packages and that retirement benefits or
termination payments (other than notice periods) will not be provided or agreed other than in exceptional
circumstances.
A copy of the Remuneration Committee Charter is available on the Company’s website under
Governance.
The Remuneration Committee held seven meetings during the Reporting Period. The Remuneration
Committee comprises of the following Directors:
Mr T R Hantke (Chairman of the Remuneration Committee)
Mr A Mankarios
Mr M A Gurry (from 23 March 2010)
Mr R Mahoney (until his resignation on 12 March 2010)
Details of each of the Director's attendance at the Remuneration Committee meeting are set out in the
Directors' Report. There are no termination or retirement benefits for non-executive Directors (other than
superannuation).
During the Reporting Period the Company did not publicly disclose its policy on prohibiting transactions in
associated products which limit the risk of participating in unvested entitlements under any equity based
remuneration schemes. However, the Company's position is that such transactions are prohibited.
The Remuneration Committee is responsible for the performance review process for both the Board and
the Managing Director.
The Board undertakes an ongoing review in relation to its composition and skills mix of the Directors of the
Company.
Joyce Corporation Ltd 2010 Annual Report I PAGE 30
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Disclosure of Corporate Governance Practices Summary Statement
No. Recommendation
Disclosure
1.1: Companies should establish the functions reserved to the Board and those
Comply
delegated to senior executives and disclose those functions.
1.2 Companies should disclose the process for evaluating the performance of
Comply
senior executives.
1.3 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 1.”
2.1 A majority of the Board should be independent Directors.
2.2
The Chair should be an independent Director.
Departure from the
recommendation. Refer
to Corporate
Governance Statement
Departure from the
recommendation. Refer
to Corporate
Governance Statement
2.3
The roles of the Chair and Managing Director should not be exercised by
the same individual.
Comply
2.4
The Board should establish a Nomination Committee.
Departure from the
recommendation. Refer
to Corporate
Governance Statement
2.5 Companies should disclose the process for evaluating the performance of
Comply
the Board, its committees and individual Directors.
2.6 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 2.”
3.1 Companies should establish a Code of Conduct and disclose the code or a
summary of the code as to the practices necessary to maintain confidence
in the Company's integrity, the practices necessary to take into account
their legal obligations and the reasonable expectations of their stakeholders
and the responsibility and accountability of individuals for reporting and
investigating reports of unethical practices.
Comply
3.2 Companies should establish a policy concerning trading in Company
securities by Directors, senior executives and employees, and disclose the
policy or a summary of that policy.
Comply
3.3 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 3.”
4.1
The Board should establish an Audit Committee.
Comply
Joyce Corporation Ltd 2010 Annual Report I PAGE 31
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Disclosure of Corporate Governance Practices Summary Statement
No. Recommendation
4.2
The Audit Committee should be structured so that it:
consists only of non-executive Directors
-
consists of a majority of independent Directors
-
is chaired by an independent Chair, who is not Chair of the Board
-
has at least three members.
-
Disclosure
Comply
4.3
The Audit Committee should have a formal charter.
Comply
4.4 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 4.”
5.1 Companies should establish written policies designed to ensure compliance
with ASX Listing Rule disclosure requirements and to ensure accountability
at a senior executive level for that compliance and disclose those policies or
a summary of those policies.
Comply
5.2 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 5.”
6.1 Companies should design a communications policy for promoting effective
communication with shareholders and encouraging their participation at
general meetings and disclose their policy or a summary of that policy.
Comply
6.2 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 6.”
7.1 Companies should establish policies for the oversight and management of
Comply
material business risks and disclose a summary of those policies.
7.2
7.3
The Board should require management to design and implement the risk
management and internal control system to manage the Company's
material business risks and report to it on whether those risks are being
managed effectively. The Board should disclose that management has
reported to it as to the effectiveness of the Company's management of its
material business risks.
Departure from the
recommendation. Refer
to Corporate
Governance Statement
The Board should disclose whether it has received assurance from the
Chief Executive Officer (or equivalent) and the Chief Financial Officer (or
equivalent) that the declaration provided in accordance with section 295A of
the Corporations Act is founded on a sound system of risk management and
internal control and that the system is operating effectively in all material
respects in relation to financial reporting risks.
Comply
Joyce Corporation Ltd 2010 Annual Report I PAGE 32
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Disclosure of Corporate Governance Practices Summary Statement
No. Recommendation
Disclosure
7.4 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 7.”
8.1
The Board should establish a Remuneration Committee.
8.2 Companies should clearly distinguish the structure of non-executive
Directors’ remuneration from that of executive Directors and senior
executives.
Comply
Comply
8.3 Companies should provide the information indicated in the “Guide to
Comply
reporting on Principle 8.”
Joyce Corporation Ltd 2010 Annual Report I PAGE 33
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2010
Joyce Corporation Ltd 2010 Annual Report I PAGE 34
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2010
Notes
Consolidated
30 June 2010
$000
30 June 2009
$000
Continuing operations
Revenue
Cost of sales
Gross Profit
Other income
Expenses from continuing operations
Distribution expenses
Marketing expenses
Occupancy expenses
Administration expenses
Loss on revaluation of investment property
Finance costs
Restructuring provisions
Other expenses
Loss from continuing operations before income tax
Income tax benefit
Loss from continuing operations after tax
Discontinued operations
Loss for the year from discontinued operations
Net loss attributable to the members of Joyce Corporation
Ltd
Other comprehensive income
Total Comprehensive Income attributable to the members of
Joyce Corporation Ltd
Overall Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Continuing Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
7
7
7
18
7
7
7
8
9
10
10
10
10
21,990
(9,427)
12,563
20,663
(7,756)
12,907
1,116
1,174
(868)
(968)
(1,817)
(8,528)
-
(740)
(3,728)
(42)
(3,012)
174
(2,838)
(801)
(676)
(1,338)
(8,395)
(2,820)
(932)
-
(30)
(911)
376
(535)
(5,309)
(794)
(8,147)
(1,329)
-
-
(8,147)
(1,329)
(39.4)
(39.4)
(13.7)
(13.7)
(6.4)
(6.4)
(2.6)
(2.6)
Underlying Operating Profit Before Tax – Continuing Operations
The underlying profit before tax for the Consolidated Entity for the year ended 30 June 2010 (continuing operations) was
$1,550,000 (2009: $2,738,000). Refer to note 7(d) for a reconciliation of underlying profit to net loss before tax.
The statement of comprehensive income is to be read in conjunction with the notes to the consolidated
financial statements set out on pages 39 to 86.
Joyce Corporation Ltd 2010 Annual Report I PAGE 35
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2010
Notes
Consolidated
30 June 2010
$000
30 June 2009
$000
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total Current Assets
Non-current assets classified as held for sale
Total Current Assets
Non-Current Assets
Trade and other receivables
Other financial assets
Deferred tax asset
Plant and equipment
Investment property
Intangible assets
Total Non-Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Current tax liabilities
Interest-bearing loans and borrowings
Provisions
Total Current Liabilities
Non-Current Liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
(Accumulated losses) / retained earnings
TOTAL EQUITY
11
12
13
14
15
12
16
8
17
18
19
20
21
22
21
8
22
23
4,180
2,593
5,886
607
13,266
7,350
20,616
420
6
387
2,289
10,506
10,225
23,833
44,449
6,888
83
12,602
5,180
24,753
286
2,321
1,398
4,005
28,758
15,691
15,634
4,694
(4,637)
15,691
3,519
3,021
6,090
1,218
13,848
7,550
21,398
377
6
250
2,721
10,430
10,225
24,009
45,407
4,859
83
4,578
590
10,110
8,475
2,358
221
11,054
21,164
24,243
15,634
4,694
3,915
24,243
The statement of financial position is to be read in conjunction with the notes to the consolidated financial
statements set out on pages 39 to 86.
Joyce Corporation Ltd 2010 Annual Report I PAGE 36
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2010
Notes
Consolidated
30 June 2010
$000
30 June 2009
$000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes paid
Net cash flows from (used in) operating activities
Cash flows from investing activities
Proceeds from sale of investment property
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Purchase of intangible assets
Net cash flows from (used in) investing activities
Cash flows from financing activities
Proceeds from partly paid shares
Repayment of borrowings
Dividends paid
Net cash flows from (used in) financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Reconciliation of cash
Cash at bank and in hand
31
29
11
29,292
(27,210)
155
(922)
-
1,315
-
26
(110)
-
(84)
-
(165)
(405)
(570)
661
3,519
4,180
34,231
(35,564)
16
(1,172)
-
(2,489)
4,200
-
(436)
(1,109)
2,655
17
(419)
(932)
(1,334)
(1,168)
4,687
3,519
4,180
4,180
3,519
3,519
The statement of cashflows is to be read in conjunction with the notes to the consolidated financial
statements set out on pages 39 to 86.
Joyce Corporation Ltd 2010 Annual Report I PAGE 37
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2010
CONSOLIDATED
Contributed
Equity
Note
$000
Retained
Earnings /
(Accumulated
Losses)
$000
Asset
Revaluation
Reserve
Financial
Assets
Reserve
Total
Equity
$000
$000
$000
At 1 July 2008
15,617
6,176
1,735
2,959
26,487
Loss for the year
Other comprehensive
income
Payment received on partly
paid shares
Dividends paid or provided
for
23
29
-
-
17
-
(1,329)
-
-
(932)
-
-
-
-
-
-
-
-
(1,329)
-
17
(932)
At 30 June 2009
15,634
3,915
1,735
2,959
24,243
At 1 July 2009
15,634
3,915
1,735
2,959
24,243
Loss for the year
Other comprehensive
income
Dividends paid or provided
for
29
-
-
-
(8,147)
-
(405)
-
-
-
-
-
-
(8,147)
-
(405)
At 30 June 2010
15,634
(4,637)
1,735
2,959
15,691
The statement of changes in equity is to be read in conjunction with the notes to the consolidated financial
statements set out on pages 39 to 86.
Joyce Corporation Ltd 2010 Annual Report I PAGE 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The consolidated financial statements of Joyce Corporation Ltd (“the Company”) for the year ended 30
June 2010 were authorised for issue in accordance with a resolution of the directors of the Company
dated 30 September 2010. Joyce Corporation Ltd is a Company incorporated in Australia and limited by
shares which are publicly traded on the Australian Securities Exchange.
The nature of the operation and principal activities of the Company and its controlled entities are
described in note 6.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements comprise the financial statements of Joyce Corporation Ltd and its
controlled subsidiaries (‘the Consolidated Entity’).
(a)
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board (including
Australian Accounting Interpretations) and the Corporations Act 2001.
The Consolidated Entity has implemented the Corporations Amendment Regulations 2010 (No 6)
regarding the requirement to disclose parent entity information as a note to the consolidated financial
statements. Parent entity information is presented in note 32.
Compliance with IFRS
Australian Accounting Standards include Australian equivalents to International Financial Reporting
Standards (“AIFRS”). Compliance with AIFRS ensures that the financial report of the Consolidated Entity
complies with International Financial Reporting Standards (“IFRS”).
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical
accounting estimates. It also requires Management to exercise judgement in the process of applying the
Consolidated Entity’s accounting policies. Areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial statements are disclosed in note
5.
(b)
Principles of consolidation
Subsidiaries are all those entities (including special purpose entities) over which the Company has the
power to govern the financial and operating policies, generally accompanying a shareholding of more
than one-half of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Consolidated Entity controls
another entity.
A list of controlled entities is contained in Note 26 to the financial statements."
The consolidation accounting method used for the consolidated financial statements that include the
financial statements made up to the reporting date each year of the Company and its subsidiaries is
disclosed under the note on 'Business Combinations' below. Consolidated financial statements are the
financial statements of the Consolidated Entity presented as those of a single economic entity. The
consolidated financial statements are prepared using uniform accounting policies for like transactions and
other events in similar circumstances.
Joyce Corporation Ltd 2010 Annual Report I PAGE 39
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b)
Principles of consolidation (continued)
All significant intra-Consolidated Entity balances and transactions, including income, expenses and
dividends, are eliminated in full on consolidation. The results of the investees acquired or disposed of
during the financial year are accounted for from the respective dates of acquisition or up to the dates of
disposal. On disposal, the attributable amount of goodwill, if any, is included in the determination of the
gain or loss on disposal.
Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable to
equity interests held by persons outside the group, are shown separately within the Equity section of the
consolidated Statement of Financial Position and in the consolidated Statement of Comprehensive
Income.
Business combinations
(c)
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The
consideration for each acquisition is measured at the aggregate of the fair values (at the date of
exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the
Consolidated Entity in exchange for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a
contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes
in such fair values are adjusted against the cost of acquisition where they qualify as measurement period
adjustments (see below). All other subsequent changes in the fair value of contingent consideration
classified as an asset or liability are accounted for in accordance with relevant accounting standards.
Changes in the fair value of contingent consideration classified as equity are not recognised.
Where a business combination is achieved in stages, the Consolidated Entity’s previously held interests
in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Consolidated
Entity attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising
from interests in the acquiree prior to the acquisition date that have previously been recognised in other
comprehensive income are reclassified to profit or loss, where such a treatment would be appropriate if
that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under AASB 3 (2008) are recognised at their fair value at the acquisition date, except that:
• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements
are recognised and measured in accordance with AASB 112 Income Taxes and AASB 119
Employee Benefits respectively;
liabilities or equity instruments related to the replacement by the Consolidated Entity of an
acquiree’ share-based payment awards are measured in accordance with AASB 2 Share-based
Payment; and
•
• assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non-
current Assets Held for Sale and Discontinued Operations are measured in accordance with that
standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Consolidated Entity reports provisional amounts for the terms for which
the accounting is incomplete. Those provisional amounts are adjusted during the measurement period
(see below), or additional assets or liabilities are recognised, to reflect new information obtained about
facts and circumstances that existed as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete
information about facts and circumstances that existed as of the acquisition date – and is subject to a
maximum of one year.
Joyce Corporation Ltd 2010 Annual Report I PAGE 40
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d)
Segment reporting
Operating segments are identified on the basis of internal reports about components of the Consolidated
Entity that are regularly reviewed by the chief operating decision makers in order to allocate resources to
the segments and to assess their performance.
Foreign currency translation
(e)
Functional and presentation currency
Items included in the financial statements of each of the Consolidated Entity’s 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
Consolidated Entity’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation, at year end exchange rates, of monetary assets
and liabilities denominated in foreign currencies are recognised in the statement of comprehensive
income, except when they are deferred in equity as qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part of the net investment in a foreign operation.
Translation differences on non-monetary financial assets and liabilities are reported as part of the fair
value gain or loss. Translation differences on non-monetary financial assets and liabilities such as
equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain
or loss. Translation differences on non-monetary financial assets such as equities classified as available
for sale financial assets are included in the fair value reserve in equity.
All companies of the Consolidated Entity have Australian Dollars as a functional currency.
Revenue recognition
(f)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Consolidated Entity and the revenue can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer
of significant risks and rewards of ownership of the goods and the cessation of all involvement in those
goods.
Rendering of services
Revenue from the rendering of a service is recognised upon completion of the service to customers.
Interest income
Interest income is recognised using the effective interest rate method, which, for floating rate financial
assets is the rate inherent in the instrument.
Dividend income
Dividend income is recognised when the right to receive a dividend has been established.
Franchise revenue
Revenue from franchising activities is recognised based on business written sales from franchised stores.
Rental revenue
Rental revenue is recognised monthly as defined in the relevant lease agreements.
All revenue is stated net of the amount of goods and services tax (GST).
Joyce Corporation Ltd 2010 Annual Report I PAGE 41
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income tax
(g)
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 for each jurisdiction adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting, nor taxable profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the reporting date and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
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 tax 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
Joyce Corporation Ltd and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under tax consolidation legislation. Each entity in the group recognises its own
current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’
approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused tax
losses and tax credits in the subsidiaries are immediately transferred to the head entity.
The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply
from 1 July 2003. The tax consolidated group has entered a tax funding arrangement whereby each
company in the group contributes to the income tax payable by the group in proportion to their
contribution to the group’s taxable income. Differences between the amounts of net tax assets and
liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are
recognised as either a contribution by, or distribution to the head entity.
Joyce Corporation Ltd 2010 Annual Report I PAGE 42
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Hire purchases and leases
(h)
Hire purchases and leases of property, plant and equipment where the Consolidated Entity, as lessee,
has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases
are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present
value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are
included in other short term and long term payables. Each lease payment is allocated between the
liability and finance cost. The finance cost is charged to the statement of comprehensive income over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period. The property, plant and equipment acquired under finance leases are depreciated over
the shorter of the asset’s useful life and the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the
Consolidated Entity as lessee are classified as operating leases. Payments made under operating leases
(net of any incentives received from the lessor) are charged to the statement of comprehensive income
on a straight line basis over the period of the lease.
Lease income from operating leases where the Consolidated Entity is a lessor is recognised as income
on a straight line basis over the lease term.
Impairment of non-financial assets
(i)
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 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 inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash generating units). Non-financial assets other than goodwill that suffered impairment are
reviewed for possible reversal of the impairment at each reporting date.
Cash and cash equivalents
(j)
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value,
and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of
financial position.
Trade receivables
(k)
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less a provision for impairment. Trade receivables are generally due
for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off. A provision for impairment of trade receivables is established when there is
objective evidence that the Consolidated Entity will not be able to collect all amounts due according to the
original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30
days overdue) are considered indicators that the trade receivable is impaired.
Joyce Corporation Ltd 2010 Annual Report I PAGE 43
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Trade receivables (Continued)
(k)
The amount of the provision is the difference between the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to
short term receivables are not discounted if the effect of discounting is immaterial. The amount of the
provision is recognised in the statement of comprehensive income in other expenses.
Inventories
(l)
Inventories are stated at the lower of cost and net realisable value. Cost comprises expenditure incurred
in acquiring the inventories and in bringing them to their existing condition and location.
Costs are assigned to individual items of inventory on a basis of weighted average costs. Costs of
purchased inventory are determined after deducting rebates and discounts. Net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
Fair value estimation
(m)
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values due to their short term nature. The fair value of financial liabilities for
disclosure purposes is estimated by discounting the future contractual cash flows at the current market
interest rate that is available to the Consolidated Entity for similar financial instruments.
(n)
Investments and other financial assets
Classification
The Consolidated Entity classifies its financial assets in the following categories: financial assets at fair
value through profit or loss, 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, in the case of assets classified as
held-to-maturity, re-evaluates this designation at each reporting date.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is
classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are
classified as held for trading unless they are designated as hedges. Assets in this category are classified
as current assets.
(ii) Loans and receivables
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 trade and other receivables in the statement of financial position.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that the Consolidated Entity’s management has the positive intention and ability to hold to
maturity. If the Consolidated Entity were to sell other than an insignificant amount of held-to-maturity
financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-
maturity financial assets are included in non-current assets, except for those with maturities less than 12
months from the reporting date, which are classified as current assets.
Joyce Corporation Ltd 2010 Annual Report I PAGE 44
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n)
Investments and other financial assets (Continued)
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives
that are either designated in this category or not classified in any of the other categories. They are
included in non-current assets unless management intends to dispose of the investment within 12 months
of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities
and fixed or determinable payments and management intends to hold them for the medium to long term.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date - the date on which the
Consolidated Entity commits to purchase or sell the asset. Investments are initially recognised at fair
value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial
assets carried at fair value through profit or loss, are initially recognised at fair value and transaction costs
are expensed in the statement of comprehensive income. Financial assets are derecognised when the
rights to receive cash flows from the financial assets have expired or have been transferred and the
Consolidated Entity has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments
recognised in equity are included in the statement of comprehensive income as gains and losses from
investment securities.
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective
interest method.
Available-for-sale financial assets and financial assets at fair value through profit and loss are
subsequently carried at fair value. Gains or losses arising from changes in the fair value of the 'financial
assets at fair value through profit or loss' category are presented in the statement of comprehensive
income within other income or other expenses in the period in which they arise. Dividend income from
financial assets at fair value through profit and loss is recognised in the statement of comprehensive
income as part of revenue from continuing operations when the Consolidated Entity’s right to receive
payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as
available-for-sale are analysed between translation differences resulting from changes in amortised cost
of the security and other changes in the carrying amount of the security. The translation differences
related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying
amount are recognised in equity. Changes in the fair value of other monetary and non-monetary
securities classified as available-for-sale are recognised in equity.
Impairment
The Consolidated Entity assesses at each reporting date whether there is objective evidence that a
financial asset or a group of financial assets is impaired. In the case of equity securities classified as
available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is
considered as an indicator that the securities are impaired. If any such evidence exists for available-for-
sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and
the current fair value, less any impairment loss on that financial asset previously recognised in profit or
loss - is removed from equity and recognised in the statement of comprehensive income. Impairment
losses recognised in the statement of comprehensive income on equity instruments classified as
available-for-sale are not reversed through the statement of comprehensive income.
Joyce Corporation Ltd 2010 Annual Report I PAGE 45
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n)
Investments and other financial assets (Continued)
Financial Guarantees
Where material, financial guarantees issued, which requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are
recognised as a financial liability at fair value on initial recognition.
The guarantee is subsequently measured at the higher of the best estimate of the obligation and the
amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB
118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under
AASB 118.
The fair value of financial guarantee contracts has been assessed using a probability weighted
discounted cash flow approach. The probability has been based on:
–
–
–
the likelihood of the guaranteed party defaulting in a year period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed party
defaulting; and
the maximum loss exposed if the guaranteed party were to default.
Derivatives and hedging activities
(o)
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each reporting date. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged. The Consolidated Entity designates certain derivatives as either:
• hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value
hedges),
• hedges of the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges), or
• hedges of a net investment in a foreign operation (net investment hedges).
The Consolidated Entity documents at the inception of the hedging transaction the relationship between
hedging instruments and hedged items, as well as its risk management objective and strategy for
undertaking various hedge transactions. The Consolidated Entity also documents its assessment, both 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 values or cash
flows of hedged items.
Property, plant and equipment
(p)
Land and buildings are shown at fair value, based on periodic, but at least triennial, valuations by external
independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the
date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is
restated to the revalued amount of the asset. All other property, plant and equipment are stated 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
Consolidated Entity and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repairs and maintenance are charged to the statement of
comprehensive income during the reporting period in which they are incurred.
Depreciation is calculated over the estimated useful life of the asset as follows:
• Plant and equipment - 1 to 20 years;
• Leased plant and equipment - over 5 to 6 years; and
• Leasehold improvements – 3 to 20 years.
Joyce Corporation Ltd 2010 Annual Report I PAGE 46
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property, plant and equipment (continued)
(p)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting
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. Gains and losses on disposals are
determined by comparing proceeds with the carrying amount. These are included in the statement of
comprehensive income. When revalued assets are sold, it is the Consolidated Entity’s policy to transfer
the amounts included in other reserves in respect of those assets to retained earnings.
Investment property
(q)
Investment property, which is property held to earn rentals and/or for capital appreciation (including
property under construction for such purposes), is measured initially at its cost, including transaction
costs. Subsequent to initial recognition, investment property is measured at fair value. Gains and losses
arising from changes in the fair value of investment property are included in profit or loss in the period in
which they arise.
(r)
Intangible assets
Acquired both separately and from a business combination
Intangible assets acquired separately are capitalised at cost. Following initial recognition, the cost model
is applied to the class of intangible assets. Where amortisation is charged on assets with finite lives, this
expense is taken to the statement of comprehensive income through the ‘amortisation expenses’ line
item.
Intangible assets, excluding development costs, created within the business are not capitalised and
expenditure is charged against profits in the period in which the expenditure is incurred. Intangible assets
are tested for impairment where an indicator of impairment exists and in the case of indefinite lived
intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined
on an annual basis and adjustments, where applicable, are made on a prospective basis.
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Consolidated
Entity’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of
associates is included in investments in associates. 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. Gains and losses on the disposal of
an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-
generating units represents the Consolidated Entity’s investment in each country of operation by each
operating segment. Cash-generating units to which goodwill is allocated is as follows:
• Bedshed Franchising cash generating unit
• Bedshed Claremont cash generating unit
• Bedshed Joondalup cash generating unit
(ii) IT development and software
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses
that will contribute to future period financial benefits through revenue generation and/or cost reduction are
capitalised to software and systems. Costs capitalised include external direct costs of materials and
service, direct payroll and payroll related costs of employees’ time spent on the project. Amortisation is
calculated on a straight-line basis over periods generally ranging from 3 to 5 years. IT development costs
include only those costs directly attributable to the development phase and are only recognised following
completion of technical feasibility and where the Consolidated Entity has an intention and ability to use
the asset.
Joyce Corporation Ltd 2010 Annual Report I PAGE 47
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Trade and other payables
(s)
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the
reporting date which are unpaid. The amounts are unsecured and are usually paid within 45 days of
recognition.
Provisions
(t)
Provisions for legal claims, service warranties and make good obligations are recognised when the
Consolidated Entity 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 has been reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item included in the same class of obligations
may be small.
Provisions are measured at the present value of Management’s best estimate of the expenditure required
to settle the present obligation at the reporting date. The discount rate used to determine the present
value reflects current market assessments of the time value of money and the risks specific to the liability.
The increase in the provision due to the passage of time is recognised as interest expense.
Employee benefits
(u)
(i) Wages and salaries and annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be
settled within 12 months of the reporting date are recognised in other payables in respect of employees'
services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as
the present value of expected future payments to be made in respect of services provided by employees
up to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the reporting date on national government bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
(iii) Profit-sharing and bonus plans
The Consolidated Entity recognises a liability and an expense for bonuses and profit-sharing based on a
formula that takes into consideration the profit attributable to the Company’s shareholders after certain
adjustments. The Consolidated Entity recognises a provision where contractually obliged or where there
is a past practice that has created a constructive obligation.
(iv) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Consolidated Entity
recognises termination benefits when it is demonstrably committed to either terminating the employment
of current employees according to a detailed formal plan without possibility of withdrawal or providing
termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due
more than 12 months after reporting date are discounted to present value.
Joyce Corporation Ltd 2010 Annual Report I PAGE 48
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Borrowings
(v)
Borrowings 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 statement of comprehensive income over the
period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised
as prepayments and amortised on a straight-line basis over the term of the facility. Bank loans are carried
at amortised cost. Transaction costs are deducted against the outstanding principal amount at amortised
cost using the effective interest rate method.
Convertible notes
(w)
Convertible notes are compound financial instruments with separate liability and equity components
identified on initial recognition. Transaction costs are deducted against the liability component of the
compound financial instrument at amortised cost using the effective interest rate method.
Contributed equity
(x)
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 the proceeds. Incremental costs directly attributable to the issue of new
shares or options for the acquisition of a business are not included in the cost of the acquisition as part of
the purchase consideration.
If the entity reacquires its own equity instruments, e.g. as the result of a share buy-back, those
instruments are deducted from equity and the associated shares are cancelled. No gain or loss is
recognised in the profit or loss and the consideration paid including any directly attributable incremental
costs (net of income taxes) is recognised directly in equity.
Dividends
(y)
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of the financial year but not distributed at reporting
date.
Earnings per share
(z)
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the year.
(ii) 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.
Comparatives
(aa)
When required by applicable accounting standards, comparative figures have been adjusted to conform
to changes in presentation for the current financial year.
Rounding of Amounts
(bb)
The Company has applied the relief available to it under ASIC Class Order 98/100 and accordingly,
amounts in the financial report and directors' report have been rounded off to the nearest $1,000.
Joyce Corporation Ltd 2010 Annual Report I PAGE 49
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(cc) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the
taxation authority is included with other receivables or payables in the statement of financial position.
Standards and Interpretations adopted with no effect on the financial statements
(dd)
The following new and revised Standards and Interpretations have also been adopted in these financial
statements. Their adoption has not had any significant impact on the amounts reported in these financial
statements but may affect the accounting for future transactions or arrangements.
Pronouncement
Summary
101 Presentation
AASB
of Financial
Statements (as revised in September 2007),
to Australian
AASB 2007-8 Amendments
Accounting Standards arising from AASB 101
and AASB 2007-10 Further Amendments to
Australian Accounting Standards arising from
AASB 101
AASB 8 Operating Segments
AASB 2008-7 Amendments
to Australian
Accounting Standards – Cost of an
Investment in a Subsidiary, Jointly Controlled
Entity or Associate
AASB 101(September 2007) has introduced terminology changes
(including revised titles for the financial statements) and changes in
the format and content of the financial statements. In addition, the
revised Standard has required the presentation of a third statement
of financial position at 1 July 2008, because the entity has applied
new accounting policies retrospectively (see below).
that has resulted
is a disclosure Standard
AASB 8
redesignation of the Group’s reportable segments (see note 6).
The amendments deal with the measurement of the cost of
jointly controlled entities and
investments
associates when adopting A-IFRS for the first time and with the
recognition of dividend income from subsidiaries in a parent’s
separate financial statements.
in subsidiaries,
in a
Vesting
Standard
Conditions
to Australian
-Share-based
and
AASB 2008-1 Amendments
Accounting
Payments:
Cancellations
AASB 123 Borrowing Costs (as revised in
2007) and AASB 2007-6 Amendments to
Australian Accounting Standards arising from
AASB 123
AASB 2008-2 Amendments
to Australian
Accounting Standards – Puttable Financial
Instruments and Obligations Arising on
Liquidation
The amendments clarify the definition of vesting conditions for the
purposes of AASB 2, introduce the concept of ‘non-vesting’
conditions, and clarify the accounting treatment for cancellations.
The principal change to AASB 123 was to eliminate the option to
expense all borrowing costs when incurred. This change has had
no impact on these financial statements because it has always
been the Group’s accounting policy to capitalise borrowing costs
incurred on qualifying assets.
The revisions to AASB 132 Financial Instruments: Presentation
amend the criteria for debt/equity classification by permitting
certain puttable
(or
components of instruments) that impose on an entity an obligation
to deliver to another party a pro-rata share of the net assets of the
entity only on liquidation, to be classified as equity, subject to
specified criteria being met.
instruments and
instruments
financial
AASB 2008-8 Amendments
to Australian
Accounting Standards–Eligible Hedged Items
The amendments provide clarification on two aspects of hedge
accounting: identifying inflation as a hedged risk or portion, and
hedging with options.
Joyce Corporation Ltd 2010 Annual Report I PAGE 50
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations adopted with no effect on the financial statements
(continued)
Pronouncement
Summary
Interpretation 15 Agreements
Construction of Real Estate
for
the
AASB 2009-2 Amendments
Accounting
Standards
Disclosures about Financial Instruments
to Australian
Improving
–
Amendments to AASB 5 Noncurrent Assets
Held for Sale and Discontinued Operations
(adopted in advance of effective date of 1
January 2010
Interpretation 16 Hedges of a Net Investment
in a Foreign Operation
Interpretation 17 Distributions of Non-cash
to Owners and AASB 2008-13
Assets
Amendments
to Australian Accounting
Standards arising from AASB Interpretation
17 Distributions of Non-cash Assets
to
Owners
Interpretation 18 Transfers of Assets from
Customers
to Australian
AASB 2008-5 Amendments
Accounting Standards arising from the Annual
Improvements Project and AASB
2008-6 Further Amendments to Australian
Accounting Standards arising from the Annual
Improvements Project
AASB 2009-4 Amendments
to Australian
Accounting Standards arising from the Annual
Improvements Project and AASB 2009-5
Australian
Further
Accounting Standards arising from the Annual
Improvements Project
Amendments
to
The Interpretation addresses how entities should determine
whether an agreement for the construction of real estate is within
the scope of AASB 111 Construction Contracts or AASB 118
Revenue and when revenue from the construction of real estate
should be recognised. The requirements have not affected the
accounting for the Group’s construction activities.
The amendments to AASB 7 expand the disclosures required in
respect of fair value measurements and liquidity risk. The Group
has elected not to provide comparative information for these
expanded disclosures in the current year in accordance with the
transitional reliefs offered in these amendments.
Disclosures in these financial statements have been modified to
reflect the clarification in AASB 2009-5 Further Amendments to
Australian Accounting Standards arising
the Annual
in
Improvements Project
Standards other than AASB 5 do not generally apply to
noncurrent assets classified as held for sale and discontinued
operations.
the detailed
The
requirements for net investment hedging for certain hedge
accounting designations.
The
the appropriate
accounting treatment when an entity distributes assets other than
cash as dividends to its shareholders.
Interpretation provides guidance on
Interpretation provides guidance on
the disclosure requirements
from
that
The Interpretation addresses the accounting by recipients for
transfers of property, plant and equipment from ‘customers’ and
concludes that when the item of property, plant and equipment
transferred meets the definition of an asset from the perspective
of the recipient, the recipient should recognise the asset at its fair
value on the date of the transfer, with the credit recognised as
revenue in accordance with AASB 118 Revenue.
In addition to the changes affecting amounts reported in the
financial statements described at 2.1 above, the amendments
have led to a number of changes in the detail of the Group’s
accounting policies – some of which are changes in terminology
only, and some of which are substantive but have had no
material effect on amounts reported.
In addition to the amendments to AASB 5 and AASB 107
described earlier in this section, and the amendments to AASB
117 discussed in section 2.3 below, the amendments have led to
a number of changes in the detail of the Group’s accounting
policies – some of which are changes in terminology only, and
some of which are substantive but have had no material effect on
amounts reported. Except as noted in 2.3 below, the changes in
AASB 2009-5 have been adopted in advance of their effective
dates of 1 January 2010.
Joyce Corporation Ltd 2010 Annual Report I PAGE 51
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations adopted with no effect on the financial statements
(continued)
At the date of authorisation of the financial statements, the Standards and Interpretations listed below
were in issue but not yet effective.
Summary
Application
date of
standard
AASB 2009-5 Further Amendments to Australian Accounting Standards arising
from the Annual Improvements Project
1 January
2010
Application
date for
Consolidated
Entity
1 July 2010
AASB 2009-8 Amendments to Australian Accounting Standards –
Group Cash-Settled Share-based Payment Transactions
AASB 2009-10 Amendments to Australian Accounting Standards –
Classification of Rights Issues
1 January
2010
1 February
2010
1 July 2010
1 July 2010
AASB 124 Related Party Disclosures (revised December 2009), AASB 2009-12
Amendments to Australian Accounting Standards
1 January 2011 1 July 2011
AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian
Accounting Standards arising from AASB 9
1 January 2013 1 July 2014
AASB 2009-14 Amendments to Australian Interpretation –Prepayments of a
Minimum Funding Requirement
1 January 2011 1 July 2011
Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments
1 January
2010
1 July 2010
The following IASB Standards and IFRIC Interpretations are also in issue but not yet effective, although
Australian equivalent Standards/Interpretations have not yet been issued.
Summary
Application
date of
standard
Application
date for
Consolidated
Entity
None at time of publication.
3. GOING CONCERN
At 30 June 2010, the Consolidated Entity has recorded an underlying profit of $1,550,000 (refer Note 7a)
and reported an overall loss of $8,147,000 with positive operating cash flows totalling $1,315,000.
A deficiency in current assets of $4,137,000 at 30 June 2010 was impacted by the reclassification of
interest bearing loans from non-current to current liabilities, resultant from technical breaches of bank
lending covenants (refer Note 21) which required $11,839,000 to be included in current liabilities. Since
year end a property sale contract in Queensland has settled which allow the Consolidated Entity to
reduce its interest bearing debt by approximately $7.1 million. The Consolidated Entity’s financiers (St
George Bank) have advised there will be no action in relation to the above technical breaches. The
financiers require the Consolidated Entity to meet its lending covenants by 30 June 2011.
Joyce Corporation Ltd 2010 Annual Report I PAGE 52
3.
GOING CONCERN (CONTINUED)
The loss incurred for the period ended 30 June 2010 includes the effects of significant restructuring and
settlement provisions. As of the date of this report, the Board has announced a rights issue of $2.18
million by way of convertible notes.
Subsequent to the year end the Consolidated Entity has continued to service the loan facility in
accordance with the terms of that facility. Existing working capital resources and the capital raising are
expected to be sufficient to cover the Consolidated Entity’s funding requirements for a period of not less
than twelve months from the date of these financial statements to the date of signature of the next
financial statements.
The Directors have prepared a budget for the Consolidated Entity that indicates that it will be profitable for
the year ending 30 June 2011.
Based on the Directors’ cash flow forecasts, an expected capital raising and the understanding that St
George Bank will continue to provide the current loan facility to the Consolidated Entity and the Parent
Entity, the Directors are satisfied that, the going concern basis of preparation is appropriate. These
financial statements have therefore been prepared on a going concern basis, which assumes continuity of
normal business activities and the realisation of assets and the settlement of liabilities in the ordinary
course of business.
4. FINANCIAL RISK MANAGEMENT
The Consolidated Entity's activities expose it to a variety of financial risks: market risk (including currency
risk and interest rate risk), credit risk and liquidity risk. The Consolidated Entity'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 Consolidated Entity.
The Consolidated Entity makes occasional use of derivative financial instruments such as foreign
exchange contracts to manage foreign currency risk. Derivatives are exclusively used for hedging
purposes, i.e. not as trading or other speculative instruments. The Consolidated Entity uses different
methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis in the case of interest rate, foreign exchange and other price risks and aging analysis for credit
risk.
Risk management is carried out by the CFO under the supervision of the Board of Directors. The Board
provides principles for overall risk management, as well as policies and supervision covering specific
areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments
and non-derivative financial instruments, and investment of excess liquidity.
The Consolidated Entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest-bearing loans and borrowings
Notes
Consolidated
30 June 2010
$000
30 June 2009
$000
11
12
16
20
21
4,180
3,013
6
7,199
6,888
12,888
19,776
3,519
3,398
6
6,923
4,859
13,053
17,912
Joyce Corporation Ltd 2010 Annual Report I PAGE 53
4.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk
(i) Foreign exchange risk
The Consolidated Entity makes purchases some of which are exposed to foreign exchange risk arising
from various currency exposures, primarily with respect to the US dollar, in the ordinary course of
business. Foreign exchange risk arises from future commercial transactions and recognised assets and
liabilities denominated in a currency that is not the Consolidated Entity’s functional currency. The risk is
measured using sensitivity analysis and cash flow forecasting.
Management has a standard policy for dealing with foreign currency risk in the purchasing function of the
Consolidated Entity in order to manage foreign exchange risk against the Consolidated Entity’s functional
currency. Material purchase contracts which are denominated in foreign currency are regularly reviewed
by management and when it is considered necessary the currency risk exposure may be managed either
via use of existing US dollar cash deposits or via the use of foreign currency contracts.
(i) Foreign exchange risk (continued)
The Consolidated Entity’s exposure to foreign currency risk with respect to the US Dollar at the reporting
date was as follows:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Net exposure
(ii) Consolidated Entity - sensitivity
CONSOLIDATED
2009
2010
USD$000 USD$000
-
93
93
-
-
93
-
-
-
-
-
-
The US Dollar/Australian Dollar exchange rate used to translate balances denominated in USD as at 30
June 2010 was 0.8523.
the
financial
instruments held at 30 June 2010, had
the Australian dollar
Based on
weakened/strengthened by 10% against the US dollar with all other variables held constant, the
Consolidated Entity's post-tax profit for the year and equity would have been $8,487 higher/ $6,944 lower
(2009: Nil), mainly as a result of foreign exchange gains/losses on translation of US dollar denominated
financial instruments as detailed in the above table.
(iii) Cash flow and fair value interest rate risks
The Consolidated Entity's main interest rate risk arises from long-term borrowings. Borrowings issued at
variable rates expose the Consolidated Entity to cash flow interest rate risk. Borrowings issued at fixed
rates expose the Consolidated Entity to fair value interest rate risk. The Consolidated Entity policy is to
manage both risks as appropriate in conjunction with considerations about minimising the Consolidated
Entity’s liquidity risk (see below), the current state of the yield curve and expectations about interest rates
in the medium term and the need for flexibility so as to minimise the Consolidated Entity’s interest
expense.
Joyce Corporation Ltd 2010 Annual Report I PAGE 54
4.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
(iii) Cash flow and fair value interest rate risk (continued)
As at the reporting date, all of the Consolidated Entity had the following variable and fixed rate
borrowings:
Weighted
Average
Interest rate
%
Weighted
Average
Interest
rate
%
30 June
2010
$000
30 June
2009
$000
Financial liabilities
Overdraft – secured (i)
Commercial bill –secured – variable (ii)
Commercial bill –secured – fixed (iii)
Dan Smetana Loan – unsecured -
variable (iv)
9.80%
6.43%
9.01%
9.80%
Bank guarantees (contingent liabilities) (v)
1.65%
295
3,900
7,939
300
12,434
1,178
13,612
8.30%
-
9.01%
-
1.65%
4,462
-
7,939
-
12,401
1,046
13,447
(i) The overdraft facility pays interest at variable interest rates plus a line fee is renewed annually.
(ii) The Commercial bill facility (variable) debt attracts interest at variable BBSY interest rates plus a line
fee and has a term which expires on 4 May 2013.
(iii) The Commercial bill facility (fixed) debt attracts interest at a fixed annual interest rate and has a term
which expires on 11 March 2013.
(iv) The unsecured loan is from D Smetana, a Director of the Consolidated Entity and attracts interest at
equivalent rates to the overdraft facility and is repayable at the earlier of (a) a future capital raising of
the Consolidated Entity and (b) 4 May 2012.
(v) Bank guarantees attract a variable interest rate plus a line fee and have a term of 1 year from the
first draw down date.
An analysis by maturities is provided in (c) below.
The Consolidated Entity analyses its interest rate exposure on a dynamic basis. Various scenarios are
modelled taking into consideration refinancing, renewal of existing positions, alternative financing and
hedging. Based on these scenarios, the Consolidated Entity calculates the impact on profit and loss of a
defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-
bearing positions.
Based on the various scenarios, the Consolidated Entity manages its cash flow interest rate risk adopting
an appropriate mix of fixed versus variable rate debt and also an appropriate mix of debt maturities to
provide it with flexibility to repay debt as quickly as possible whilst having liquidity available to take
advantage of business opportunities as they arise.
Consolidated Entity sensitivity
At 30 June 2010, if interest rates had changed by -/+ 100 basis points from the year-end rates with all
other variables held constant, post-tax profit for the year would have been $39,711 higher/lower (2009 -
$38,577 higher/lower), mainly as a result of a higher/lower interest expense arising from borrowings offset
partially by lower/higher interest income from cash and cash equivalents. Equity would have been
$39,711 higher/lower (2009 - $38,577 higher/lower) for the same reasons as above.
Joyce Corporation Ltd 2010 Annual Report I PAGE 55
4.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(b)
Credit risk
Credit risk is limited to high credit quality financial institutions with which deposits are held and high credit
quality wholesale customers with which the Consolidated Entity trades.
Credit risk is managed on a Consolidated Entity basis. Credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and financial institutions, as well as credit
exposures to wholesale customers, including outstanding receivables and committed transactions. For
banks and financial institutions, only independently rated parties with a minimum rating of 'A' are
accepted. If wholesale customers are independently rated, these ratings are used. Otherwise, if there is
no independent rating, risk control assesses the credit quality of the customer, taking into account its
financial position, past experience and other factors. Individual risk limits are set based on internal or
external ratings in accordance with limits set internally. The compliance with credit limits by wholesale
customers is regularly monitored by line management.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets
as summarised in each applicable note. For wholesale customers without credit rating the Consolidated
Entity generally retains title over the goods sold until full payment is received. For some trade receivables
the Consolidated Entity may also obtain security in the form of guarantees, deeds of undertaking or letters
of credit which can be called upon if the counterparty is in default under the terms of the agreement. The
Consolidated Entity does not hold any credit derivatives to offset its credit exposure. The Consolidated
Entity trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is
it the Consolidated Entity's policy to securitise its trade and other receivables.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to external credit ratings (if available) or to historical information about counterparty default rates:
Cash and cash equivalents
AA
Trade and other receivables
Non-rated
Other financial assets
Non-rated
(c)
Liquidity risk
CONSOLIDATED
2009
2010
$000
$000
4,180
3,519
3,013
3,398
6
6
7,199
6,923
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the
availability of funding through an adequate amount of committed credit facilities and the ability to close
out market positions. The Consolidated Entity manages liquidity risk by continuously monitoring forecast
and actual cash flows and matching the maturity profiles of financial assets and liabilities. Due to the
dynamic nature of the underlying businesses, the Consolidated Entity aims at maintaining flexibility in
funding by keeping committed credit lines available and, where possible, with a variety of counterparties.
Surplus funds are generally only invested in overnight deposits or used to repay debt.
Joyce Corporation Ltd 2010 Annual Report I PAGE 56
4.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Liquidity risk (continued)
Maturities of financial assets and financial liabilities
The tables below analyse the Consolidated Entity’s financial liabilities, net and gross settled derivative
financial instruments into relevant maturity groupings based on the remaining period at the reporting date
to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows.
Consolidated disclosures
Year ended 30 June 2010
Consolidated financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Consolidated financial liabilities
Trade and other payables
Interest bearing loans & borrowings
Net maturity
Year ended 30 June 2009
Consolidated financial assets
Cash and cash equivalents
Trade and other receivables
Other assets
Other financial assets
Consolidated financial liabilities
Trade and other payables
Interest bearing loans & borrowings
Net maturity
(cid:2)6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
4,180
2,593
-
6,773
6,888
12,518
19,406
(12,633)
-
-
-
-
-
84
84
(84)
-
420
6
426
-
286
286
140
-
-
-
-
-
-
-
-
(cid:2)6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
3,519
3,021
1,218
-
7,758
4,859
4,520
9,379
(1,621)
-
-
-
-
-
-
377
-
6
383
-
58
58
(58)
-
8,475
8,475
(8,092)
-
-
-
-
-
-
-
-
-
Total
$000
4,180
3,013
6
7,199
6,888
12,888
19,776
(12,577)
Total
$000
3,519
3,398
1,218
6
8,141
4,859
13,053
17,912
(9,771)
Joyce Corporation Ltd 2010 Annual Report I PAGE 57
4.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Liquidity risk (continued)
Financing arrangements
The Consolidated Entity had access to the following undrawn borrowing facilities at the reporting date:
30 June 2010
Consolidated
30 June 2009
Consolidated
Facility limit
$000
13,935
Used
$000
13,612
Available
$000
323
13,500
13,447
53
The Consolidated Entity had $323,000 of available facilities to manage its liquidity as at 30 June 2010
(2009: $53,000). In addition the Consolidated Entity had a net investment in inventories of $5,886,000 as
at 30 June 2010 (2009: $6,090,000).
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes. The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their fair values due to their short-term nature.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Consolidated Entity for
similar financial instruments. The fair value of forward exchange contracts is determined using forward
exchange market rates at the reporting date.
(e) Capital risk management
Management controls the capital of the Consolidated Entity in order to maintain a good debt to equity
ratio, provide the shareholders with adequate returns and ensure that the Consolidated Entity can fund its
operations and continue as a going concern. The Consolidated Entity’s debt and capital includes ordinary
share capital and financial liabilities, supported by financial assets. The Consolidated Entity is not subject
to any externally imposed capital requirements other than as disclosed in note 21 (f).
Management effectively manages the Consolidated Entity’s capital by assessing the Consolidated Entity’s
financial risks and adjusting its capital structure in response to changes in these risks and in the market.
These responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the
Consolidated Entity since the prior year. This strategy is to ensure that the Consolidated Entity’s gearing
ratio remains between 30% and 50%. The gearing ratio for the year ended 30 June 2010 and 30 June
2009 is as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Gearing ratio
Note
20,21
11
CONSOLIDATED
2010
$000
18,903
(4,180)
14,723
15,554
30,277
2009
$000
17,912
(3,519)
14,393
24,243
38,636
95%
59%
The increase in the gearing ratio is attributable to restructuring provisions brought to account at 30 June
2010. Management is actively exploring ways of reducing the gearing ratio in-line with strategy.
Joyce Corporation Ltd 2010 Annual Report I PAGE 58
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
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 entity and that are
believed to be reasonable under the circumstances.
The Consolidated Entity makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below.
Impairment testing of goodwill
The Consolidated Entity assesses impairment at each reporting date by evaluating conditions specific to
the Consolidated Entity that may lead to impairment of assets. Where an impairment trigger exists, the
recoverable amount of the asset is determined. Value-in-use calculations performed in assessing
recoverable amounts incorporate a number of key estimates. No impairment has been recognised in
respect of goodwill for the year ended 30 June 2010.
Valuation of investment property
The Consolidated Entity assesses investment property values at each reporting date by obtaining
certificates of valuations from licensed valuers in accordance with applicable accounting standards.
During the year ended 30 June 2010 the investment property values increased by $76,000 (2009:
decrease of $2,820,000) and this value was bought to account to reflect the current market value of the
properties in the financial statements.
Recognition of deferred taxation assets
The Consolidated Entity has deferred tax assets at 30 June 2010 of $546,000 (2009: Nil) which were not
brought to account, associated with tax losses arising in Australia the benefits of which will only be
realised if the conditions for deductibility set out in note 1(b) occur.
Restructuring costs
The Consolidated Entity brought to account a number of provisions associated with a restructuring of its
operations and an expected settlement of all franchisee legal actions. Refer to note 22 for further
information
6. SEGMENT INFORMATION
(a) Adoption of AASB 8 Operating Segments
The Consolidated Entity has adopted AASB 8 Operating Segments with effect from 1 July 2009. AASB 8
requires operating segments to be identified on the basis of internal reports about components of the
Consolidated Entity that are regularly reviewed by the chief operating decision makers in order to allocate
resources to the segments and to assess their performance. In contrast, the predecessor Standard
(AASB 114 Segment Reporting) required an entity to identify two sets of segments (business and
geographical), using a risks and returns approach, with the entity’s ‘system of internal financial reporting
to key management personnel’ serving only as the starting point for the identification of such segments.
The Consolidated Entity has considered the requirements of AASB 8 and has concluded that the
segments presented in prior years continue to satisfy the requirements of AASB 8.
(b) Products and services from which reportable segments derive their revenues
The operating businesses are organised and managed separately according to the nature of the products
and services provided, with each segment representing a strategic business unit that offers different
products and serves different markets.
Joyce Corporation Ltd 2010 Annual Report I PAGE 59
6.
SEGMENT INFORMATION (CONTINUED)
(b) Products and services from which reportable segments derive their revenues (continued)
The Consolidated Entity has the following three operating segments:
• The Bedshed retail bedding franchise operation;
• The operation of Consolidated Entity owned Bedshed stores in Western Australia, South
Australia, Victoria, New South Wales and Queensland; and
• The properties in New South Wales and Queensland which are leased under the sale agreement
of the Foam Business.
Refer to note 9 for a description of discontinued operations. Transfer prices between operating segments
are set at an arms-length basis in a manner similar to transactions with third parties.
(c) Operating segments
The following table presents revenue and profit information and certain asset and liability information
regarding operating segments for the year ended 30 June 2010.
Year ended 30 June 2010
Revenue
Sales to external customers
Inter-segment sales
Total segment revenue
Inter-segment elimination
Unallocated revenue
Total consolidated revenue
Result
Segment result
Unallocated expenses net of
unallocated income
Loss before tax and finance
costs
Finance costs
Loss before income tax
Income tax benefit
Net loss for the year
Assets and liabilities
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Continuing Operations
Discontinued
Operations
Bedshed
Franchising
$000
Bedshed
Stores
$000
Investment
Properties
/ Joyce
$000
Total
$000
Store
Closures
$000
5,323
-
5,323
-
-
16,658
-
16,658
-
-
835
-
835
-
-
22,816
-
22,816
-
290
23,106
5,273
-
5,273
-
5,273
Total
$000
28,089
-
28,089
-
290
28,379
(1,654)
(50)
(847)
(2,551)
(4,963)
(7,514)
115
(2,272)
(740)
(3,012)
174
(2,838)
40,769
388
41,157
8,427
16,271
24,698
12,786
9,014
18,969
6,393
1,520
514
-
115
(5,127)
(182)
(5,309)
-
(5,309)
3,292
-
3,292
584
3,476
4,060
-
156
(7,399)
(922)
(8,321)
174
(8,147)
44,061
388
44,449
9,011
19,747
28,758
124
363
Other segment information
Capital expenditure
Depreciation and amortisation
Other non-cash segment
expenses
124
59
3,276
-
148
-
-
-
124
207
576
3,852
3,476
7,328
Joyce Corporation Ltd 2010 Annual Report I PAGE 60
6.
SEGMENT INFORMATION (CONTINUED)
(c) Operating segments (continued)
The following table presents revenue and profit information and certain asset and liability information
regarding operating segments for the year ended 30 June 2009.
Continuing Operations
Discontinued
Operations
Bedshed
Franchising
$000
Bedshed
Stores
$000
Investment
Properties
/ Joyce
$000
Sub-total
$000
Store
Closures
$000
6,801
-
6,801
-
-
14,140
-
14,140
-
-
878
-
878
-
-
2,240
1,133
(3,372)
12,429
9,777
18,966
3,592
1,596
695
29
81
-
1,597
157
-
-
-
2,820
21,819
-
21,819
-
18
21,837
1
20
21
(932)
(911)
376
(535)
41,172
250
41,422
5,883
14,841
20,724
1,626
238
2,820
6,069
-
6,069
-
-
6,069
(895)
-
(895)
(240)
(1,135)
341
(794)
3,985
-
3,985
440
-
440
187
-
Total
$000
27,888
-
27,888
-
18
27,906
(894)
20
(874)
(1,172)
(2,046)
717
(1,329)
45,157
250
45,407
6,323
14,841
21,164
1,626
425
2,820
Year ended 30 June 2009
Revenue
Sales to external customers
Inter-segment sales
Total segment revenue
Inter-segment elimination
Unallocated revenue
Total consolidated revenue
Result
Segment result
Unallocated expenses net of
unallocated income
Loss before tax and finance
costs
Finance costs
Loss before income tax
Income tax benefit
Net loss for the year
Assets and liabilities
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation and amortisation
Other non-cash segment
expenses
(d) Geographic segments
The Consolidated Entity operates in one principal geographical area namely that of Australia (country of
domicile).
(e) Information about major customers
No single customer of the Consolidated Entity generated more than 10% of the Consolidated Entity’s
revenue during the year ended 30 June 2010 (2009: None).
Joyce Corporation Ltd 2010 Annual Report I PAGE 61
7. REVENUE, INCOME AND EXPENSES
(a) Revenue, Income and Expenses from Continuing Operations
CONSOLIDATED
Revenue
Sale of goods
Provision of services
Total revenue
Other income -
Interest received
Rental income
Gain on revaluation of investment property
Subsidies received
Profit on disposal of assets
Other
Total other income
Finance costs
Bank loans and overdrafts
Finance charges payable under finance leases and hire
purchase contracts
Total finance costs
2010
$000
16,690
5,300
21,990
154
826
76
-
-
60
1,116
711
29
740
2009
$000
13,920
6,743
20,663
14
878
-
223
4
55
1,174
908
24
932
Depreciation, costs of sales and other significant items of expenditure included in statement of
comprehensive income
Included in expenses:
Depreciation and amortisation
Impairment of property, plant and equipment
Loss on revaluation of investment property
Cost of sales
Restructuring provisions
Franchisee settlements related legal costs
Inventory obsolescence costs
Termination costs
Other costs
Total
207
117
-
9,427
3,117
290
240
81
3,728
238
-
2,820
7,756
-
-
-
-
-
Joyce Corporation Ltd 2010 Annual Report I PAGE 62
7.
REVENUE, INCOME AND EXPENSES (CONTINUED)
(b) Lease payments and other expenses
included in the statement of comprehensive income – overall operations
CONSOLIDATED
2010
$000
2009
$000
Included in administrative expenses:
Minimum lease payments - operating lease
(c) Employee benefits expense – overall operations
Wages and salaries
Defined contribution superannuation expense
Other employee benefits expense
4,988
3,112
5,771
587
357
6,715
5,590
729
12
6,331
(d) Underlying operating profit before tax – continuing operations
Loss before tax per statement of comprehensive income –continuing
operations.
(3,012)
(911)
Adjustments to arrive at underlying profit
Restructuring costs (including legal costs associated with franchisee
actions)
Expenses relating to sale of Queensland property
Revaluation of investment property
Inventory obsolescence costs
Impairment of plant and equipment
Other
3,728
364
(76)
290
117
139
829
-
2,820
-
-
-
Underlying profit before tax – continuing operations
1,550
2,738
INCOME TAX
8.
The major components of income tax expense for the year ended 30 June 2010 are:
Consolidated Statement of comprehensive income – continuing
operations
Current Income tax
Current income tax expense
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax benefit relating to continuing operations
Consolidated Statement of comprehensive income – discontinued
operations
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax benefit relating to discontinued operations
CONSOLIDATED
2010
$000
2009
$000
-
-
83
24
(174)
(483)
(174)
(376)
-
-
(341)
(341)
Income tax benefit relating to overall operations
(174)
(717)
Joyce Corporation Ltd 2010 Annual Report I PAGE 63
8.
INCOME TAX (CONTINUED)
A reconciliation of income tax expense applicable to accounting profit before income tax at the statutory
income tax rate to income tax expense at the Consolidated Entity’s effective income tax rate for the years
ended 30 June 2010 and 30 June 2009 is as follows:
Loss from continuing operations before income tax
CONSOLIDATED
2010
$000
(3,012)
2009
$000
(911)
Income tax benefit calculated at the statutory income tax rate
of 30% (2009: 30%)
(904)
(273)
Expenditure not allowable for income tax purposes
Recoupment of prior-year tax losses not previously brought to
account
Deferred tax asset not brought to account
At effective income tax rate of 4.1% (2009: 43.9%)
86
-
644
(174)
4
(131)
-
(400)
Adjustments recognised in the current year in relation to the current
tax of prior years
-
24
Income tax benefit recognised in profit or loss – continuing operations
(174)
(376)
The reduction in the rate of effective income tax in the year ended 30 June 2010 is attributable to the
decision not to bring to account a deferred tax asset relating accumulated losses.
Tax consolidation
Joyce Corporation Ltd and its 100% owned subsidiaries are a tax Consolidated Entity. Members of the
Consolidated Entity have not entered into any tax sharing or tax funding arrangements. At the reporting
date, the possibility that the head entity will default on its tax payment obligations is remote. The head
entity of the tax Consolidated Entity is Joyce Corporation Ltd.
Measurement method adopted under UIG 1052 Tax Consolidation Accounting
The head entity and the controlled entities in the tax Consolidated Entity continue to account for their own
current and deferred tax amounts. The Consolidated Entity has applied the Consolidated Entity allocation
approach in determining the appropriate amount of current taxes and deferred taxes to allocate to
members of the tax Consolidated Entity. The current and deferred tax amounts are measured in a
systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.
In addition to its own current and deferred tax amounts, the head entity also recognises 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 Entity.
Tax consolidation contributions/(distributions)
The Consolidated Entity has recognised the following amounts as tax consolidation contribution
adjustments:
Total Increase/(reduction) to tax payable of Joyce Corporation Ltd:
Total increase/(reduction) to intercompany assets of Joyce
Corporation Ltd:
PARENT
2010
$000
2009
$000
-
-
-
-
Joyce Corporation Ltd 2010 Annual Report I PAGE 64
8.
INCOME TAX (CONTINUED)
Taxation of financial arrangements (TOFA)
Legislation is in place which changes the tax treatment of financial arrangements including the tax
treatment of hedging transactions. The Consolidated Entity has assessed the potential impact of these
changes on the Consolidated Entity's tax position. No impact has been recognised and no adjustments
have been made to the deferred tax and income tax balances at 30 June 2010 (2009: Nil).
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred income
tax liabilities
Investment property
Plant and equipment
Deferred income
tax assets
Other
Opening
balance,
1 July 09
Charged
to profit or
loss
Charged
to Equity
Changes
in tax rate
Exchange
differences
Closing
balance,
30 June 10
$000
$000
$000
$000
$000
$000
(2,323)
(35)
(2,358)
37
-
37
-
-
-
-
-
-
-
-
-
(2,286)
(35)
(2,321)
$000
$000
$000
$000
$000
$000
250
250
137
137
-
-
-
-
-
-
387
387
The Consolidated Entity has deferred tax assets of $546,000 (2009: Nil) which were not brought to
account, associated with tax losses arising in Australia the benefits of which will only be realised if the
conditions for deductibility set out in note 1(b) occur.
At 30 June 2010, there is no recognised or unrecognised deferred income tax liability (2009: Nil) for taxes
that would be payable on the unremitted earnings of certain of the Consolidated Entity’s subsidiaries, as
the Consolidated Entity has no liability for additional taxation should such amounts be remitted.
Joyce Corporation Ltd 2010 Annual Report I PAGE 65
9. DISCONTINUED OPERATIONS
(a) Plan to close some unprofitable Company owned stores
During the year ended 30 June 2010, the Consolidated Entity became committed to the closure of some
unprofitable company owned stores. In consequence the Directors have brought to account a number of
provisions to cover the associated costs of closing these stores. Some Company store closures are being
negotiated with landlords and surrender costs are anticipated to equate to inventory liquidation value.
(b) Analysis of loss for the year from discontinued operations
The combined results of the discontinued operations (i.e. all the stores committed to the closure) included
in the statement of comprehensive income are set out below. The comparative profit or loss and cash
flows from discontinued operations have been re-presented to include those operations classified as
discontinued in the current period
Loss for the year from discontinued operations
Revenue
Cost of sales
Gross profit
Other income
Expenses
Loss from discontinued operations before tax
Attributable income tax benefit
Other comprehensive income
2010
$000
5,272
(3,013)
2,259
2009
$000
5,995
(3,158)
2,837
1
74
(7,569)
(5,309)
(4,046)
(1,135)
-
341
(5,309)
(794)
-
-
Loss for the year from discontinued operations (attributable to owners
of Joyce Corporation Ltd).
(5,309)
(794)
Cash flows from discontinued operations
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
Net cash flows
(1,677)
-
-
(1,677)
(607)
-
-
(607)
Joyce Corporation Ltd 2010 Annual Report I PAGE 66
10. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary
equity holders of the parent by the weighted average number of ordinary shares outstanding during the
year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary
shareholders (after deducting interest on the convertible redeemable preference shares) by the weighted
average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options
and dilutive convertible non-cumulative redeemable preference shares).
The following reflects the income and share data used in the total operations basic and diluted earnings
per share computations:
Net loss attributable to equity holders from continuing
operations for basic earnings per share
Effect of dilutive equity instruments
CONSOLIDATED
2010
$000
2009
$000
(2,838)
(535)
-
-
Net loss attributable to equity holders from continuing
operations for diluted earnings per share
(2,838)
(535)
Loss attributable to equity holders from discontinued
operations
Net loss attributable to ordinary shareholders for basic
earnings per share
Effect of dilutive equity instruments
Net loss attributable to ordinary shareholders for diluted
earnings per share
(5,309)
(794)
(8,147)
(1,329)
-
-
(8,147)
(1,329)
Number of
shares
Number of
shares
Weighted average number of ordinary shares for basic
earnings per share
20,701,623
20,701,623
Effect of dilution
Adjusted weighted average number of ordinary shares for
diluted earnings per share
Weighted average number of converted, lapsed or cancelled
potential ordinary shares included in diluted earnings per
share
Weighted average number of partly paid ordinary shares
(issued at $1.955 and paid to $1.215) included in basic and
diluted earnings per share
-
-
20,701,623
20,701,623
-
-
380,000
380,000
Joyce Corporation Ltd 2010 Annual Report I PAGE 67
11. CASH AND CASH EQUIVALENTS
For the purposes of the statement of cashflows, cash and cash equivalents are comprised of the
following:
Cash at bank and in hand (a)
CONSOLIDATED
2010
$000
4,180
4,180
2009
$000
3,519
3,519
(a) Amounts held in trust for Bedshed marketing and other funds
Included within the cash and cash equivalents balance are funds allocated for the specific use of the
Bedshed marketing and other funds on behalf of the Consolidated Entity’s franchisee-owned and
Company-owned stores. At 30 June 2010 the total of this balance was $2,453,594 (30 June 2009:
$2,296,145). Refer to note 20 for further information.
12. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Allowance for impairment loss (a)
Non-current
Trade receivables
(a) Allowance for impairment loss
2,658
(65)
2,593
420
420
3,036
(15)
3,021
377
377
Trade receivables are non-interest bearing and are generally on 30 day terms. A provision for impairment
loss is recognised when there is objective evidence that an individual trade receivable is impaired. An
impairment provision of $65,000 (2009: $15,000) has been recognised by the Consolidated Entity.
At 30 June, the ageing analysis of trade receivables is as follows:
Total
$000
2,658
0-30
Days
31-60
Days
$000
1,281
$000
727
61-90
Days
PDNI*
$000
195
61-90
Days
CI*
$000
-
+91
Days
PDNI*
$000
390
+91
Days
CI*
$000
65
2010 Consolidated
2009 Consolidated
3,036
2,843
45
57
-
76
15
* Past due not impaired ('PDNI')
Considered impaired ('CI')
Receivables past due but not considered impaired are: Consolidated Entity: $585,000 (2009: $133,000).
Payment terms on these amounts have not been re-negotiated however credit has been stopped until full
payment is made. Each operating unit has been in direct contact with the relevant debtor and is satisfied
that payment will be received in full. Other balances within trade and other receivables do not contain
impaired assets and are not past due. It is expected that these other balances will be received when due.
Joyce Corporation Ltd 2010 Annual Report I PAGE 68
12. TRADE AND OTHER RECEIVABLES (CONTINUED)
Movement in the provision for impairment of receivables is as follows:
Opening balance at 1 July
Charge for the year
Amounts written-off
Closing balance at 30 June
(b) Fair value and credit risk
CONSOLIDATED
2010
$000
15
50
-
65
2009
$000
27
-
(12)
15
Due to the short term nature of these receivables, their carrying value is assumed to approximate their
fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as
security, nor is it the Consolidated Entity's policy to transfer (on-sell) receivables to special purpose
entities.
(c) Foreign exchange and interest rate risk
Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 4.
13. INVENTORIES
Stock on hand at cost
Provision for impairment (a)
(a) Provision for impairment
CONSOLIDATED
2010
$000
6,176
(290)
5,886
2009
$000
6,090
-
6,090
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2010 amounted to $290,000 (2009: $Nil). The expense has been included in ‘restructuring
provisions’ in the statement of comprehensive income.
14. OTHER ASSETS
Current
Prepayments
CONSOLIDATED
2010
$000
607
607
2009
$000
1,218
1,218
Joyce Corporation Ltd 2010 Annual Report I PAGE 69
15. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Current
Property
CONSOLIDATED
2010
$000
7,350
7,350
2009
$000
7,550
7,550
Company has accepted a conditional offer on the Brendale property in Queensland for $7.5m. The
agreement was subject to the purchaser undertaking due diligence on the property which has now
occurred though the settlement had not yet occurred at 30 June 2010. On 28 September 2010 the sale of
this property was completed.
16. OTHER FINANCIAL ASSETS
Current
Investments in shares
17. PLANT AND EQUIPMENT
CONSOLIDATED
2010
$000
2009
$000
6
6
6
6
CONSOLIDATED
Leasehold
improvements
$000
Plant and
equipment
$000
Leased
Plant and
Equipment
$000
Year ended 30 June 2010
At 1 July 2009,
Net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
Impairment
At 30 June 2010,
Net of accumulated depreciation
At 1 July 2009
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2010
Cost
Accumulated depreciation and impairment
Net carrying amount
-
-
-
-
-
16
(16)
-
16
(16)
-
Total
$000
2,721
110
(62)
(363)
(117)
2,145
110
(30)
(243)
(117)
576
-
(32)
(120)
-
1,865
424
2,289
3,533
(1,388)
2,145
3,539
(1,674)
1,865
776
(200)
576
721
(297)
424
4,325
(1,604)
2,721
4,276
(1,987)
2,289
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30
June 2010 is $424,000 (2009: $576,000). Leased assets and assets under hire purchase contracts are
pledged as security for the related finance lease and hire purchase liabilities.
For assets pledged as collateral for the Consolidated Entity’s banking facilities refer to note 21.
Joyce Corporation Ltd 2010 Annual Report I PAGE 70
17.
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Year ended 30 June 2009
At 1 July 2008,
Net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
Assets transferred from leased plant &
equipment
At 30 June 2009,
Net of accumulated depreciation
At 1 July 2008
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2009
Cost
Accumulated depreciation and impairment
Net carrying amount
CONSOLIDATED
Leasehold
improvements
$000
Plant and
equipment
$000
Leased
Plant and
Equipment
$000
4
-
-
(4)
1,922
361
-
(285)
779
80
-
(136)
Total
$000
2,705
441
-
(425)
147
(147)
-
-
2,145
576
2,721
16
(12)
4
16
(16)
-
3,166
(1,244)
1,922
3,533
(1,388)
2,145
831
(52)
779
776
(200)
576
4,013
(1,308)
2,705
4,325
(1,604)
2,721
18. INVESTMENT PROPERTY
CONSOLIDATED
Year ended 30 June
Balance at 1 July
Additions
Disposals
Transfer to non-current assets held for sale
Fair value adjustments
,
Balance at 30 June
2010
$000
2009
$000
10,430
-
-
-
76
20,800
-
-
(7,550)
(2,820)
10,506
10,430
The fair value model is applied to all investment properties. The investment property was valued by
registered independent valuers as at 30 June 2010 and at 30 June 2009. Joyce Corporation Ltd leases its
properties to Joyce Foam Pty Ltd (the Company which acquired the foam businesses in November 2005)
at a rental less than the current market value.
In the 30 June 2010 the valuer arrived at the above property valuation after deducting an amount of
$2,614,000 because the existing lease attracts rent at approximately 50% of current market rental yields
and the lease has another 4.5 years to run. But for the existence of this lease, the valuation of the above
property would have been stated at $13,120,000.
Joyce Corporation Ltd 2010 Annual Report I PAGE 71
19. INTANGIBLE ASSETS
Goodwill (a)
CONSOLIDATED
2010
$000
2009
$000
10,225
10,225
10,225
10,225
An analysis of intangible assets is presented below:
CONSOLIDATED
Year ended 30 June
At 1 July,
net of accumulated amortisation
Additions
Amortisation
At 30 June,
net of accumulated amortisation
At 1 July
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
At 30 June
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
(a) Goodwill
2010
$000
10,225
-
-
2009
$000
9,116
1,109
-
10,225
10,225
10,569
(344)
10,225
10,569
(344)
10,225
9,460
(344)
9,116
10,569
(344)
10,225
Intangible assets as at 30 June 2010 reflects the value of the Bedshed activities for the Bedshed
Joondalup store which was purchased in May 2007, the Bedshed Claremont store that was purchased in
October 2008 and the remaining 51% of Bedshed Franchising Pty Ltd purchased in 2006.
(b) Impairment Disclosures
Goodwill is allocated to cash-generating units which are based on the Consolidated Entity’s operating
segments
CONSOLIDATED
Bedshed Franchising segment
Bedshed Stores segment
Total
2010
$000
6,306
3,919
10,225
2009
$000
6,306
3,919
10,225
The recoverable amount of each cash-generating unit above is determined based on value-in-use
calculations. Value-in-use is calculated based on the present value of cash flow projections over a 5-year
period with the period extending beyond existing budgets for the 2010/11 and 2011/12 financial years
extrapolated using estimated growth rates. The cash flows are discounted using risk-adjusted pre-tax
discount rates.
Joyce Corporation Ltd 2010 Annual Report I PAGE 72
19.
INTANGIBLE ASSETS (CONTINUED)
(b) Impairment Disclosures (continued)
The following assumptions were used in the value-in-use calculations:
Bedshed Franchising segment
Bedshed Stores segment
Discount
Rate
Sales
Growth
Rate
Expense
Growth
Rate
12%
12%
5%
3%
3-10%
3-5%
The Consolidated Entity’s value-in-use calculations incorporated a terminal value component beyond the
5 year projection period for both the Bedshed Franchising and Bedshed Stores operating segments. The
principal assumption used to estimate the terminal value of each operating segment was a multiple of 3
times earnings before interest, taxation, depreciation and amortisation for the year ended 30 June 2010.
There has been no impairment of Goodwill for the year ended 30 June 2010 (2009: Nil).
(c) Impact of possible changes in key assumptions
The recoverable amount of goodwill is estimated to be in excess to the carrying amount of the relevant
CGUs goodwill at 30 June 2010 as follows:
Bedshed Franchising segment
Bedshed Stores segment
Excess of recoverable amount
over carrying amount
$8,923,853
$2,753,370
An unfavourable change in the pre-tax discount rate would cause the recoverable amount of goodwill to
reduce as follows:
- A 1% increase in the pre-tax discount rate from 12% to 13% causes a $208,514 reduction in the
recoverable amount of goodwill.
20. TRADE AND OTHER PAYABLES
Current
Unsecured liabilities
Trade payables
Accruals and other payables
Amounts held in trust for Bedshed marketing and other funds (a)
(a) Amounts held in trust for Bedshed marketing and other funds
CONSOLIDATED
2010
$000
3,297
1,137
2,454
6,888
2009
$000
2,440
123
2,296
4,859
Included within the cash and cash equivalents balance are funds allocated for the specific use of the
Bedshed marketing and other funds on behalf of the Consolidated Entity’s franchisee-owned and
Company-owned stores. Refer to note 11 for further information.
(b) Risk exposure
Information about the Consolidated Entity's exposure to foreign exchange risk is provided in note 4.
Joyce Corporation Ltd 2010 Annual Report I PAGE 73
21. INTEREST BEARING LOANS AND BORROWINGS
Interest bearing loans and borrowings are comprised of the following:
CONSOLIDATED
Current
Finance leases
Commercial bill - secured (a)
Bank overdrafts – secured (b)
Bank loans – secured (c)
Loan from related party – unsecured (d)
Non-current
Secured liabilities
Finance leases
Bank loans (c)
2010
$000
168
3,900
295
7,939
300
12,602
286
-
286
2009
$000
116
-
4,462
-
-
4,578
536
7,939
8,475
12,888
13,053
The commercial bills have been accounted for under AASB 139 ‘Financial Instruments – Recognition &
Measurement’ using the effective interest method.
(a)
Commercial bill - secured
The Commercial bill facility debt attracts variable interest at variable BBSY interest rates plus a line fee
and has a term which expires on 4 May 2013.
(b)
Bank overdraft - secured
The overdraft facility attracts interest at variable interest rates plus a line fee is renewed annually.
(c)
Bank loans - secured
The Commercial bill facility (fixed) debt attracts interest at a fixed annual interest rate and has a term
which expires on 11 March 2013.
(d)
Loan from related party - unsecured
The unsecured loan is from Mr Smetana, a Director of the Consolidated Entity and attracts interest at
equivalent rates to the overdraft facility and is repayable at the earlier of (a) a future capital raising of the
Consolidated Entity and (b) 4 May 2012.
(e)
Collateral provided
The available St George bank facility is $13,635,000 (2009: $13,500,000). The unused facility at 30 June
2010 is $323,000 (2009: $53,000). Further details on the facility are provided in note 4. There is first
registered real property mortgage over the investment properties owned by the Consolidated Entity,
together with a fixed and floating charge over the Consolidated Entity assets as security over the facility.
The carrying amounts of non-current assets pledged as security are:
Freehold land and buildings (Notes 15 & 18)
Plant and equipment
CONSOLIDATED
2010
$000
17,856
2,289
20,145
2009
$000
17,980
2,721
20,701
Joyce Corporation Ltd 2010 Annual Report I PAGE 74
21.
INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)
(f)
Debt covenants
The covenants with St George bank includes:
• an interest rate cover ratio of 2.00 times where the cover is earnings before interest, tax,
depreciation, amortisation and abnormals divided by interest charged,
• a gearing ratio of a maximum of 1.00 times where gearing is Total Liabilities divided by Total
Equity; and
• a limit on dividend payments where these cannot be greater than 60% of net profit before interest,
tax, depreciation, amortisation and abnormals.
Lease liabilities are secured by the underlying leased assets.
Financial assets that have been pledged as part of the total collateral for the benefit of the bank debt are
as follows:
Cash and cash equivalents
Trade receivables
(g)
Debt classification
CONSOLIDATED
2010
$000
4,180
2,593
6,773
2009
$000
3,519
3,021
6,540
There was a technical breach of the Company’s interest cover and gearing ratio debt covenants at 30
June 2010. As a result of the covenant breach, the Consolidated Entity’s debt has been classified as
current at 30 June 2010, in accordance with applicable accounting standards. Subsequently, the
Consolidated Entity successfully obtained a ‘no-action’ agreement from St George Bank in relation to the
above covenant breach, confirming the continuation of the debt banking facility.
(h) Risk exposure
Details of the Consolidated Entity's exposure to risks arising from current and non-current borrowings are
set out in note 4.
(i) Fair values
The carrying amount of the Consolidated Entity’s current and non-current borrowings approximate their
fair value
Joyce Corporation Ltd 2010 Annual Report I PAGE 75
22. PROVISIONS
Provisions are comprised of the following:
Current
Employee benefits (a)
South Australia rental shortfall (b)
Franchise settlement (c)
Store closure provision (d)
Other
Total Current
Non-current
Employee benefits (a)
South Australia rental shortfall (b)
Franchisee settlement (c)
Restructuring provisions (d)
Environmental testing (e)
Other
Total Non-Current
(a) Provision for employee benefits
CONSOLIDATED
2010
$000
274
102
1,875
2,860
69
5,180
5
-
625
718
9
41
1,398
6,578
2009
$000
303
287
-
-
-
590
37
111
-
-
73
-
221
811
A provision has been recognised for employee benefits relating to long service leave and annual leave. In
calculating the present value of future cash flows in respect of long service leave, the probability of long
service leave being taken is based on historical data. The measurement and recognition criteria relating
to employee benefits have been included in note 2 to this report.
(b) Provision for rental shortfall
A provision has been recognised for the payment of rental shortfall following the sale of the South
Australian investment property. Under the lease arrangement rent was charged at lower than market
value until November 2010. The rent shortfall will be paid in monthly instalments until November 2010.
(c) Provision for franchisee settlement
During the year ended 30 June 2010, the Consolidated Entity reached a settlement with franchisees of all
outstanding legal cases. The terms of the settlement deed have been finalised and the settlement deed
was signed on 20 September 2010. The terms of this settlement are a payment of $2,500,000 plus legal
fees with 50% payable in 60 days 20 September 2010 and remaining 50% payable quarterly in arrears
over 18 months from 20 September 2010. The Consolidated Entity has brought to account a provision for
the related costs of this settlement at 30 June 2010.
(d) Restructuring provisions
During the year ended 30 June 2010, the Consolidated Entity became committed to the closure of some
unprofitable company owned stores. In consequence the Directors have brought to account a number of
provisions to cover the associated costs of closing these stores as well as other restructuring provisions
associated with lease closure costs that are currently being negotiated with landlords. Cash outflows
associated with elements of this provision were discounted using discount rates of between 5.36% and
12% per annum.
Joyce Corporation Ltd 2010 Annual Report I PAGE 76
22.
PROVISIONS (CONTINUED)
(e) Provision for environmental testing
As part of the ongoing testing of Joyce Corporation owned sites it was found that traces of a chemical
used by Joyce Foam Products was detected in the groundwater at the South Australian and New South
Wales properties. The levels found were not high and to be prudent the Department of Environment and
Conservation were notified. Confirmation has been received from the Department of Environment and
Protection that no remediation work is required due to the low risk of harm to the environment, however
an ongoing monitoring program has been established to monitor the nature, extent and movement of the
chemical found.
23. CONTRIBUTED EQUITY
Ordinary shares carry one vote per share and carry the right to dividends.
20,321,623 (2009: 20,321,623) Issued and fully paid ordinary shares (a)
15,167
15,167
CONSOLIDATED
2010
$000
2009
$000
380,000 (2009: 380,000) Partly paid ordinary shares, issued at $1.955
and paid to $1.215 (2009: $1.215) (b)
Movement in ordinary shares on issue
At 1 July 2008
At 30 June 2009
At 30 June 2009
467
467
15,634
15,634
Number
$000
20,321,623
15,167
20,321,623
15,167
20,321,623
15,167
Movement in partly-paid shares on issue (Issued at $1.955)
Number
$000
At 1 July 2008
Payment received on partly paid shares
At 30 June 2009
At 30 June 2009
(a) Par value
The ordinary shares have no par value.
(b) Partly-paid ordinary shares
380,000
-
380,000
380,000
450
17
467
467
Partly paid ordinary shares are unquoted until they become fully paid. Partly paid ordinary shares carry
voting rights and rights to participate in entitlement issues although any ordinary shares acquired under a
rights issue cannot be quoted until the partly paid ordinary shares become fully paid.
Joyce Corporation Ltd 2010 Annual Report I PAGE 77
24. CAPITAL AND LEASING COMMITMENTS
(a)
Finance lease and hire purchase commitments
The Consolidated Entity has finance leases and hire purchase contracts for various items of plant and
machinery, these leases have no terms of renewal or purchase options and escalation clauses.
Future minimum lease payments under finance leases and hire purchase contracts together with the
present value of the net minimum lease payments are as follows:
CONSOLIDATED
Within one year
After one year but not more than five
years
Total minimum lease payments
Less amounts representing finance
charges
Present value of minimum lease
payments
2010
2009
Minimum
payments
$000
Present
value of
payments
$000
Minimum
payments
$000
Present
value of
payments
$000
208
314
522
(68)
224
560
784
(132)
454
454
652
652
(b) Property lease receivable – Consolidated Entity as lessor
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2010
$000
747
2,669
278
2009
$000
506
2,712
926
3,694
4,144
The property leases are non-cancellable leases expiring in 2010 for a property in Queensland, 2014 for a
property in South Australia and 2015 for a property New South Wales respectively, with rent receivable
monthly in advance. Contingent rental provisions within the lease agreement require the minimum lease
payments to be increased by CPI per annum and or in accordance with a formula linked to turnover of the
lessee.
(c) Property lease payable – Consolidated Entity as lessee
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2010
$000
4,062
11,481
677
2009
$000
4,228
15,301
3,008
16,220
22,537
Joyce Corporation Ltd 2010 Annual Report I PAGE 78
24.
CAPITAL AND LEASING COMMITMENTS (CONTINUED)
(c) Property lease receivable – Consolidated Entity as lessee (continued)
Property leases are non-cancellable leases and have remaining terms of up to six years, with rent
payable monthly in advance. Provisions within the lease agreements require that the minimum lease
payments shall be increased by the CPI per annum. An option exists for most of the leases to renew the
lease at the end of the lease term for an additional term equal to the period of the original lease. If the
lease is renewed the rental rate is adjusted to market value.
(d) Motor vehicle lease payable – Consolidated Entity as lessee
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2010
$000
2009
$000
30
39
-
69
28
7
-
35
Motor vehicle leases are non-cancellable leases for Consolidated Entity motor vehicles.
(e)
Capital expenditure commitments
CONSOLIDATED
2010
$000
2009
$000
-
-
238
238
Capital expenditure commitment for store development
- plant and equipment
Payable:
- within one year
25. CONTINGENT LIABILITIES
(a) Rental Guarantees
Joyce Corporation Ltd has provided guarantees to third parties in relation to property leases for Bedshed
Company owned stores. These guarantees will be required while the stores remain company operated
and currently total $1,178,006 (2009: $1,046,177).
Joyce Corporation Ltd 2010 Annual Report I PAGE 79
26. RELATED PARTY DISCLOSURES
The consolidated financial statements include the financial statements of Joyce Corporation Ltd and the
subsidiaries listed in the following table.
Joyce Rural Pty Ltd
Bedding Investments Pty Ltd
Joyce Industries Pty Ltd
Marfoam Pty Ltd
Sierra Bedding Pty Ltd
Joyce Indpac Limited
Votraint No. 611 Pty Ltd
Joyce Asia Pty Ltd
Bedshed Franchising Pty Ltd
Country of
incorporation
% Equity interest
2009
2010
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Joyce Corporation Ltd is the ultimate parent of the Consolidated Entity.
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated.
Transactions with related parties:
(a)
Key Management Personnel
(i)
Disclosures relating to directors:-
(ii)
(iii)
(iv)
(v)
Those Directors or their Director-related entities received dividend payments, which were made
on the same basis as those made to other shareholders, during the year ended 30 June 2010.
Transactions entered into during the year between the Company and its controlled entities and
Directors of the Company and their Director-related entities were within normal customer or
employee relationships on terms and conditions no more favourable than those available to other
customers or employees.
Consulting fees paid to Anatems Pty Ltd ATF The Forrest Trust in which Mr D Smetana has a
beneficial interest $157,050 (2009: $188,024). As at year end there was no amount owing to this
related party (2009: Nil).
The Non-Executive directors fees for Mr A Mankarios are paid to Starball Pty Ltd, a company in
which Mr Mankarios has significant influence - $65,924 (2009 - $55,000). As at year end there
was no amount owing to this related party (2009: Nil).
During the year ended 30 June 2010 the Consolidated Entity paid interest of $4,123 (2009: Nil) to
Anatems Pty Ltd ATF The Forrest Trust in which Mr D Smetana has a beneficial interest, in
respect of a $300,000 unsecured loan. The unsecured loan attracts interest at equivalent rates to
the overdraft facility of the Consolidated Entity with St George bank and is repayable at the earlier
of (a) a future capital raising of the Consolidated Entity and (b) 4 May 2012. Refer to note 4 for
further details.
(vi)
Consulting fees paid to Franchising Solutions Pty Ltd for Mr T Hantke - $10,750 (2009: Nil). As at
year end there was no amount owing to this related party (2009: Nil).
Joyce Corporation Ltd 2010 Annual Report I PAGE 80
27. EVENTS AFTER REPORTING DATE
On 20 September 2010, the Consolidated Entity executed a Deed of Settlement in relation to the previous
legal action with franchisees. The terms of this Deed are consistent with provisions made by the
Consolidated Entity at 30 June 2010.
On 28 September 2010 the sale of the Queensland property classified as ‘held for sale’ at 30 June 2010
was completed.
On 30 September 2010, the Consolidated Entity announced a rights issue for convertible notes to raise
approximately $2.18 million to enable the Consolidated Entity to settle on the agreed legal settlements
with franchisees as well as for general working capital purposes.
Other than disclosed above no event has occurred since the reporting date to the date of this report that
has significantly affected, or may significantly affect:
(a)
(b)
(c)
the Consolidated Entity’s operations, or
the results of those operations, or
the Consolidated Entity’s state of affairs.
28. AUDITORS’ REMUNERATION
Amounts received or due and receivable by the auditor, Grant
Thornton Audit Pty Ltd for:
•
•
an audit or review of the financial report of the Consolidated
Entity
other services in relation to the Parent Entity and any other entity
in the Consolidated Entity
(a) tax compliance
(b) assurance related
(c) special audits required by regulators
29. DIVIDENDS
Distributions paid
Final unfranked ordinary dividend of 2.0 (2009: 3.0 cents) cents per
share
Interim unfranked ordinary dividend of Nil (2009: 1.5 cents) cents per
share
CONSOLIDATED
2010
$000
2009
$000
135
121
35
-
-
170
37
-
-
158
2010
$000
2009
$000
405
621
-
405
311
932
To date the directors are yet to recommend the payment of a final dividend out of retained profits at 30
June 2010.
Joyce Corporation Ltd 2010 Annual Report I PAGE 81
30. DIRECTOR AND EXECUTIVE DISCLOSURES
(a) Details of key management personnel
(i)Specified directors
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr R Mahoney
(ii)Specified executives
Chairman (non-executive)
Non-executive Director
Non-executive Director
Executive Director
Managing Director - resigned 12 March 2010
Mr G Culmsee
Mr K Gray
Mr J Armes
Mr M McLean
Ms S Freedman
Mr S Jones
Chief Operating Officer
Chief Financial Officer & Company Secretary – appointed 19 January 2010
Chief Financial Officer & Company Secretary - appointed 10 August 2009,
resigned 6 November 2009
Chief Financial Officer & Company Secretary - resigned 28 August 2009
National Marketing Manager
National Merchandise Manager – resigned 28 February 2010
(b) Remuneration of key management personnel
(i) Remuneration Policy
The Remuneration Committee of the Board of Directors of the Company is responsible for determining
and reviewing compensation arrangements for the directors, the Managing Director and the executive
team. The Remuneration Committee assesses the appropriateness of the nature and amount of
emoluments of such officers on a periodic basis by reference to relevant employment market conditions
with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality
Board and executive team. Such officers are given the opportunity to receive their base emolument in a
variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It
is intended that the manner of payment chosen will be optimal for the recipient without creating undue
cost for the Company.
It is the Remuneration Committee’s policy that employment agreements shall be entered into with the
Managing Director and all other executives.
Joyce Corporation Ltd 2010 Annual Report I PAGE 82
30.
DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
(ii)Remuneration of key management personnel
Short-term
Post-Employment
Total
Share
based
payment
Salary &
Fees
$000
Cash
Bonus
$000
Non-
Monetary
benefits
$000
Superann
uation
$000
Retirement
benefits
$000
Options
$000
$000
30 June 2010
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr R Mahoney
Mr G Culmsee
Mr K Gray
Mr J Armes
Mr M McLean
Ms S Freedman
Mr S Jones
281
32
62
66
282
173
69
48
37
126
177
Total Remuneration:
1,353
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26
6
-
2
-
17
11
35
5
-
33
15
7
4
4
11
19
51
144
30 June 2009
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr R Mahoney
Mr G Culmsee
Mr M McLean
Ms S Freedman
Mr S Jones
23
-
67
55
273
125
117
126
143
-
-
-
-
122
-
5
23
24
-
-
-
-
-
23
14
-
25
Total Remuneration:
929
174
62
119
73
6
-
50
13
40
13
22
336
-
-
-
-
157
-
-
25
-
-
182
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
292
67
67
66
472
214
82
52
68
137
213
1,730
142
73
73
55
445
161
176
162
214
1,501
(c) Remuneration options: Granted and vested during the year
During the financial year ended 30 June 2010 no options (2009: Nil) were granted or vested as equity
compensation benefits to any director or executive of the Consolidated Entity.
(d) Shares issued on exercise of remuneration options
During the financial year ended 30 June 2010 no shares (2009: Nil) were issued on exercise of
remuneration options to any director or executive of the Consolidated Entity.
Joyce Corporation Ltd 2010 Annual Report I PAGE 83
30.
DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
(e) Shareholdings of key management personnel
Ordinary Shares held in Joyce Corporation Ltd
2010
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr R Mahoney
Mr G Culmsee
Mr K Gray
Mr J Armes
Mr M McLean
Ms S Freedman
Mr S Jones
Total
2009
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr R Mahoney
Mr G Culmsee
Mr M McLean
Ms S Freedman
Mr S Jones
Total
Balance
01-Jul-09
Ord
Granted as
Remuneration
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-10
Ord
7,079,932
-
-
505,289
18,000
-
-
-
-
-
-
7,603,221
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(18,000)
-
-
-
-
-
-
7,079,932
-
-
505,289
-
-
-
-
-
-
-
(18,000)
7,585,221
Balance
01-Jul-08
Ord
Granted as
Remuneration
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-09
Ord
6,890,310
-
-
505,289
-
-
-
-
5,000
7,400,599
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
189,622
-
-
-
18,000
-
-
-
(5,000)
7,079,932
-
-
505,289
18,000
-
-
-
-
202,622
7,603,221
* Beneficial holding only. Mr Smetana controls 7,957,359 fully-paid ordinary shares (2009: 7,957,359).
All equity transactions with specified directors and specified executives have been entered into under
terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s
length.
Mr D A Smetana also holds 380,000 partly paid (issued at $1.955 and paid to $1.215) ordinary shares of
the Company.
Partly paid shares are unquoted until they become fully paid. Partly paid shares carry voting rights and
rights to participate in entitlement issues although any shares acquired under a rights issue cannot be
quoted until the partly paid shares become fully paid.
(f) Loans to key management personnel
At 30 June 2010 or at any time during the financial year there were no loans (2009: Nil) outstanding to
specified directors and specified executives.
Joyce Corporation Ltd 2010 Annual Report I PAGE 84
31. RECONCILIATION OF NET LOSS AFTER TAX TO NET CASH FLOWS FROM OPERATIONS
Reconciliation of net loss after tax to the net cash flows from
operations
Net loss after taxation
Adjustments for:
Depreciation and amortisation
Impairment of plant & equipment
Revaluations of investment properties including those classified
as held for sale
Net loss / (profit) on disposal of property, plant and equipment
Changes in assets and liabilities
(increase)/decrease in inventories
(increase)/decrease in trade and other receivables
(increase)/decrease in other assets
(increase)/decrease in net deferred income tax assets and
liabilities
(decrease)/increase in income taxes payable
(decrease)/increase in trade and other payables
(decrease)/increase in provisions
CONSOLIDATED
2010
$000
2009
$000
(8,147)
(1,329)
363
117
124
36
204
385
611
(174)
-
2,029
5,767
425
-
2,820
(4)
(1,942)
1,186
151
(799)
83
(2,721)
(359)
Net cash flows used in operating activities
1,315
(2,489)
Joyce Corporation Ltd 2010 Annual Report I PAGE 85
32. PARENT ENTITY DISCLOSURES
(a) Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Retained earnings
Net Equity
(b) Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss
As at 30 June
2010
$000
166
27,365
27,531
12,972
143
13,115
2009
$000
7,630
21,069
28,699
4,912
8,128
13,040
14,416
15,659
15,634
(1,218)
14,416
15,634
25
15,659
Year ended 30 June
2010
$000
(838)
-
(838)
2009
$000
(1,569)
-
(1,569)
(c) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No such guarantees existed at 30 June 2010, other than security arrangement with St George Bank in
respect of interest bearing liabilities discussed in note 21.
(d) Contingent liabilities of the parent entity.
No contingent liabilities existed within the parent entity as at 30 June 2010 (30 June 2009: Nil).
(e) Commitments for the acquisition of property plant and equipment by the parent entity
No commitments for the acquisition of property plant and equipment by the parent entity existed as at 30
June 2010 (30 June 2009: Nil).
Joyce Corporation Ltd 2010 Annual Report I PAGE 86
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Joyce Corporation Ltd, I state that:
(a) in the Directors’ opinion the financial statements and notes the Consolidated Entity has been
prepared in accordance with the Corporations Act 2001, including that they:
(i) comply with Australian Accounting Standards and Corporations Regulations 2001; and
(ii) give a true and fair view of the financial position of the Consolidated Entity as at 30 June 2010
and of its performance as represented by the results of its operations and its cash flows for the
year ended on that date; and
(b) the Directors have been given the declarations by the Managing Director and Chief Financial Officer
required by Section 295A;
(c) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable; and
(d) the financial report also complies with International Financial Reporting Standards as disclosed in
note 2(a).
Signed in accordance with a resolution of the Directors made pursuant to s.295 (5) of the Corporations
Act 2001.
D A Smetana
Chairman
Perth, 30 September 2010
Joyce Corporation Ltd 2010 Annual Report I PAGE 87
(cid:2)
(cid:2)
(cid:12)(cid:13)(cid:5)(cid:14)(cid:15)(cid:14)(cid:13)(cid:5)(cid:14)(cid:13)(cid:7)(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:10)(cid:11)(cid:2)(cid:28)(cid:14)(cid:15)(cid:8)(cid:9)(cid:7)(cid:2)
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Grant Thornton Audit Pty Ltd
Grant Thornton Audit Pty Ltd
ACN 130 913 594
ACN 130 913 594
10 Kings Park Road
10 Kings Park Road
West Perth WA 6005
West Perth WA 6005
PO BOX 570
PO BOX 570
West Perth WA 6872
West Perth WA 6872
T +61 8 9480 2000
T +61 8 9480 2000
F +61 8 9322 7787
F +61 8 9322 7787
E admin@gtwa.com.au
E admin@gtwa.com.au
W www.grantthornton.com.au
W www.grantthornton.com.au
2(cid:10)(cid:4)(cid:14)(cid:5)$(cid:10)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)(cid:10)(cid:9)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:5)(cid:6)(cid:6)(cid:7)(cid:17)(cid:24)(cid:5)(cid:3)(cid:31)(cid:12)(cid:3)#(cid:4)(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)(cid:8)(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:4)(cid:7)(cid:19)(cid:4)(cid:30)(cid:7)(cid:31)(cid:6)(cid:10)(cid:4)(cid:23)(cid:7)(cid:8)(cid:24)(cid:7)(cid:8)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4) (cid:12)(cid:17)(cid:12)(cid:13)(cid:10)(cid:9)(cid:4)5(cid:13)(cid:14)(cid:10)(cid:4)
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(cid:24)(cid:8)(cid:10)(cid:18)(cid:10)(cid:3)(cid:13)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4)(cid:7)(cid:19)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)(cid:8)(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:4)(cid:13)(cid:14)(cid:5)(cid:13)(cid:4)(cid:5)(cid:8)(cid:10)(cid:4)(cid:19)(cid:8)(cid:10)(cid:10)(cid:4)(cid:19)(cid:8)(cid:7)(cid:17)(cid:4)(cid:17)(cid:5)(cid:13)(cid:10)(cid:8)(cid:12)(cid:5)(cid:29)(cid:4)(cid:17)(cid:12)(cid:18)(cid:18)(cid:13)(cid:5)(cid:13)(cid:10)(cid:17)(cid:10)(cid:3)(cid:13)(cid:28)(cid:4)(cid:11)(cid:14)(cid:10)(cid:13)(cid:14)(cid:10)(cid:8)(cid:4)(cid:9)(cid:16)(cid:10)(cid:4)(cid:13)(cid:7)(cid:4)
(cid:19)(cid:8)(cid:5)(cid:16)(cid:9)(cid:4)(cid:7)(cid:8)(cid:4)(cid:10)(cid:8)(cid:8)(cid:7)(cid:8)&(cid:4)(cid:18)(cid:10)(cid:29)(cid:10)(cid:6)(cid:13)(cid:12)(cid:3)#(cid:4)(cid:5)(cid:3)(cid:9)(cid:4)(cid:5)(cid:24)(cid:24)(cid:29)(cid:31)(cid:12)(cid:3)#(cid:4)(cid:5)(cid:24)(cid:24)(cid:8)(cid:7)(cid:24)(cid:8)(cid:12)(cid:5)(cid:13)(cid:10)(cid:4)(cid:5)(cid:6)(cid:6)(cid:7)(cid:16)(cid:3)(cid:13)(cid:12)(cid:3)#(cid:4)(cid:24)(cid:7)(cid:29)(cid:12)(cid:6)(cid:12)(cid:10)(cid:18)&(cid:4)(cid:5)(cid:3)(cid:9)(cid:4)(cid:17)(cid:5)"(cid:12)(cid:3)#(cid:4)
(cid:5)(cid:6)(cid:6)(cid:7)(cid:16)(cid:3)(cid:13)(cid:12)(cid:3)#(cid:4)(cid:10)(cid:18)(cid:13)(cid:12)(cid:17)(cid:5)(cid:13)(cid:10)(cid:18)(cid:4)(cid:13)(cid:14)(cid:5)(cid:13)(cid:4)(cid:5)(cid:8)(cid:10)(cid:4)(cid:8)(cid:10)(cid:5)(cid:18)(cid:7)(cid:3)(cid:5)!(cid:29)(cid:10)(cid:4)(cid:12)(cid:3)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:6)(cid:12)(cid:8)(cid:6)(cid:16)(cid:17)(cid:18)(cid:13)(cid:5)(cid:3)(cid:6)(cid:10)(cid:18)’(cid:4)+(cid:14)(cid:10)(cid:4)(cid:9)(cid:12)(cid:8)(cid:10)(cid:6)(cid:13)(cid:7)(cid:8)(cid:18)(cid:4)(cid:5)(cid:29)(cid:18)(cid:7)(cid:4)(cid:18)(cid:13)(cid:5)(cid:13)(cid:10)(cid:28)(cid:4)(cid:12)(cid:3)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)
(cid:3)(cid:7)(cid:13)(cid:10)(cid:18)(cid:4)(cid:13)(cid:7)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)(cid:8)(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:28)(cid:4)(cid:12)(cid:3)(cid:4)(cid:5)(cid:6)(cid:6)(cid:7)(cid:8)(cid:9)(cid:5)(cid:3)(cid:6)(cid:10)(cid:4)(cid:11)(cid:12)(cid:13)(cid:14)(cid:4)(cid:25)(cid:6)(cid:6)(cid:7)(cid:16)(cid:3)(cid:13)(cid:12)(cid:3)#(cid:4)4(cid:13)(cid:5)(cid:3)(cid:9)(cid:5)(cid:8)(cid:9)(cid:4)(cid:25)(cid:25)4;(cid:4)(cid:27)(cid:21)(cid:27)(cid:4)
0(cid:8)(cid:10)(cid:18)(cid:10)(cid:3)(cid:13)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4)(cid:7)(cid:19)(cid:4)<(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)4(cid:13)(cid:5)(cid:13)(cid:10)(cid:17)(cid:10)(cid:3)(cid:13)(cid:18)(cid:28)(cid:4)(cid:13)(cid:14)(cid:5)(cid:13)(cid:4)(cid:6)(cid:7)(cid:17)(cid:24)(cid:29)(cid:12)(cid:5)(cid:3)(cid:6)(cid:10)(cid:4)(cid:11)(cid:12)(cid:13)(cid:14)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:25)(cid:16)(cid:18)(cid:13)(cid:8)(cid:5)(cid:29)(cid:12)(cid:5)(cid:3)(cid:4)(cid:10)(cid:15)(cid:16)(cid:12)$(cid:5)(cid:29)(cid:10)(cid:3)(cid:13)(cid:18)(cid:4)(cid:13)(cid:7)(cid:4)
(cid:2)(cid:3)(cid:13)(cid:10)(cid:8)(cid:3)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:5)(cid:29)(cid:4)<(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4))(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:12)(cid:3)#(cid:4)4(cid:13)(cid:5)(cid:3)(cid:9)(cid:5)(cid:8)(cid:9)(cid:18)(cid:4)(cid:10)(cid:3)(cid:18)(cid:16)(cid:8)(cid:10)(cid:18)(cid:4)(cid:13)(cid:14)(cid:5)(cid:13)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)(cid:8)(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:28)(cid:4)(cid:6)(cid:7)(cid:17)(cid:24)(cid:8)(cid:12)(cid:18)(cid:12)(cid:3)#(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)
(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)(cid:18)(cid:13)(cid:5)(cid:13)(cid:10)(cid:17)(cid:10)(cid:3)(cid:13)(cid:18)(cid:4)(cid:5)(cid:3)(cid:9)(cid:4)(cid:3)(cid:7)(cid:13)(cid:10)(cid:18)(cid:28)(cid:4)(cid:6)(cid:7)(cid:17)(cid:24)(cid:29)(cid:12)(cid:10)(cid:18)(cid:4)(cid:11)(cid:12)(cid:13)(cid:14)(cid:4)(cid:2)(cid:3)(cid:13)(cid:10)(cid:8)(cid:3)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:5)(cid:29)(cid:4)<(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4))(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:12)(cid:3)#(cid:4)4(cid:13)(cid:5)(cid:3)(cid:9)(cid:5)(cid:8)(cid:9)(cid:18)’(cid:4)
(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:10)(cid:11)(cid:2)(cid:9)(cid:14)(cid:11)(cid:15)(cid:8)(cid:13)(cid:11)(cid:6)(cid:30)(cid:6)(cid:18)(cid:6)(cid:7)(cid:24)(cid:2)
-(cid:16)(cid:8)(cid:4)(cid:8)(cid:10)(cid:18)(cid:24)(cid:7)(cid:3)(cid:18)(cid:12)!(cid:12)(cid:29)(cid:12)(cid:13)(cid:31)(cid:4)(cid:12)(cid:18)(cid:4)(cid:13)(cid:7)(cid:4)(cid:10)9(cid:24)(cid:8)(cid:10)(cid:18)(cid:18)(cid:4)(cid:5)(cid:3)(cid:4)(cid:7)(cid:24)(cid:12)(cid:3)(cid:12)(cid:7)(cid:3)(cid:4)(cid:7)(cid:3)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)(cid:8)(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:4)!(cid:5)(cid:18)(cid:10)(cid:9)(cid:4)(cid:7)(cid:3)(cid:4)(cid:7)(cid:16)(cid:8)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)’(cid:4)(cid:4)2(cid:10)(cid:4)
(cid:6)(cid:7)(cid:3)(cid:9)(cid:16)(cid:6)(cid:13)(cid:10)(cid:9)(cid:4)(cid:7)(cid:16)(cid:8)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)(cid:4)(cid:12)(cid:3)(cid:4)(cid:5)(cid:6)(cid:6)(cid:7)(cid:8)(cid:9)(cid:5)(cid:3)(cid:6)(cid:10)(cid:4)(cid:11)(cid:12)(cid:13)(cid:14)(cid:4)(cid:25)(cid:16)(cid:18)(cid:13)(cid:8)(cid:5)(cid:29)(cid:12)(cid:5)(cid:3)(cid:4)(cid:25)(cid:16)(cid:9)(cid:12)(cid:13)(cid:12)(cid:3)#(cid:4)4(cid:13)(cid:5)(cid:3)(cid:9)(cid:5)(cid:8)(cid:9)(cid:18)(cid:4)(cid:11)(cid:14)(cid:12)(cid:6)(cid:14)(cid:4)(cid:8)(cid:10)(cid:15)(cid:16)(cid:12)(cid:8)(cid:10)(cid:4)(cid:16)(cid:18)(cid:4)(cid:13)(cid:7)(cid:4)
(cid:6)(cid:7)(cid:17)(cid:24)(cid:29)(cid:31)(cid:4)(cid:11)(cid:12)(cid:13)(cid:14)(cid:4)(cid:8)(cid:10)(cid:29)(cid:10)$(cid:5)(cid:3)(cid:13)(cid:4)(cid:10)(cid:13)(cid:14)(cid:12)(cid:6)(cid:5)(cid:29)(cid:4)(cid:8)(cid:10)(cid:15)(cid:16)(cid:12)(cid:8)(cid:10)(cid:17)(cid:10)(cid:3)(cid:13)(cid:18)(cid:4)(cid:8)(cid:10)(cid:29)(cid:5)(cid:13)(cid:12)(cid:3)#(cid:4)(cid:13)(cid:7)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)(cid:4)(cid:10)(cid:3)#(cid:5)#(cid:10)(cid:17)(cid:10)(cid:3)(cid:13)(cid:18)(cid:4)(cid:5)(cid:3)(cid:9)(cid:4)(cid:24)(cid:29)(cid:5)(cid:3)(cid:4)(cid:5)(cid:3)(cid:9)(cid:4)
(cid:24)(cid:10)(cid:8)(cid:19)(cid:7)(cid:8)(cid:17)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)(cid:4)(cid:13)(cid:7)(cid:4)(cid:7)!(cid:13)(cid:5)(cid:12)(cid:3)(cid:4)(cid:8)(cid:10)(cid:5)(cid:18)(cid:7)(cid:3)(cid:5)!(cid:29)(cid:10)(cid:4)(cid:5)(cid:18)(cid:18)(cid:16)(cid:8)(cid:5)(cid:3)(cid:6)(cid:10)(cid:4)(cid:11)(cid:14)(cid:10)(cid:13)(cid:14)(cid:10)(cid:8)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)(cid:8)(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:4)(cid:12)(cid:18)(cid:4)(cid:19)(cid:8)(cid:10)(cid:10)(cid:4)(cid:19)(cid:8)(cid:7)(cid:17)(cid:4)
(cid:17)(cid:5)(cid:13)(cid:10)(cid:8)(cid:12)(cid:5)(cid:29)(cid:4)(cid:17)(cid:12)(cid:18)(cid:18)(cid:13)(cid:5)(cid:13)(cid:10)(cid:17)(cid:10)(cid:3)(cid:13)’(cid:4)(cid:4)
(cid:25)(cid:3)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)(cid:4)(cid:12)(cid:3)$(cid:7)(cid:29)$(cid:10)(cid:18)(cid:4)(cid:24)(cid:10)(cid:8)(cid:19)(cid:7)(cid:8)(cid:17)(cid:12)(cid:3)#(cid:4)(cid:24)(cid:8)(cid:7)(cid:6)(cid:10)(cid:9)(cid:16)(cid:8)(cid:10)(cid:18)(cid:4)(cid:13)(cid:7)(cid:4)(cid:7)!(cid:13)(cid:5)(cid:12)(cid:3)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)(cid:4)(cid:10)$(cid:12)(cid:9)(cid:10)(cid:3)(cid:6)(cid:10)(cid:4)(cid:5)!(cid:7)(cid:16)(cid:13)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:5)(cid:17)(cid:7)(cid:16)(cid:3)(cid:13)(cid:18)(cid:4)(cid:5)(cid:3)(cid:9)(cid:4)
(cid:9)(cid:12)(cid:18)(cid:6)(cid:29)(cid:7)(cid:18)(cid:16)(cid:8)(cid:10)(cid:18)(cid:4)(cid:12)(cid:3)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)(cid:8)(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)’(cid:4)+(cid:14)(cid:10)(cid:4)(cid:24)(cid:8)(cid:7)(cid:6)(cid:10)(cid:9)(cid:16)(cid:8)(cid:10)(cid:18)(cid:4)(cid:18)(cid:10)(cid:29)(cid:10)(cid:6)(cid:13)(cid:10)(cid:9)(cid:4)(cid:9)(cid:10)(cid:24)(cid:10)(cid:3)(cid:9)(cid:4)(cid:7)(cid:3)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)(cid:7)(cid:8):(cid:18)(cid:4)
=(cid:16)(cid:9)#(cid:10)(cid:17)(cid:10)(cid:3)(cid:13)(cid:28)(cid:4)(cid:12)(cid:3)(cid:6)(cid:29)(cid:16)(cid:9)(cid:12)(cid:3)#(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:5)(cid:18)(cid:18)(cid:10)(cid:18)(cid:18)(cid:17)(cid:10)(cid:3)(cid:13)(cid:4)(cid:7)(cid:19)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:8)(cid:12)(cid:18)"(cid:18)(cid:4)(cid:7)(cid:19)(cid:4)(cid:17)(cid:5)(cid:13)(cid:10)(cid:8)(cid:12)(cid:5)(cid:29)(cid:4)(cid:17)(cid:12)(cid:18)(cid:18)(cid:13)(cid:5)(cid:13)(cid:10)(cid:17)(cid:10)(cid:3)(cid:13)(cid:4)(cid:7)(cid:19)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:19)(cid:12)(cid:3)(cid:5)(cid:3)(cid:6)(cid:12)(cid:5)(cid:29)(cid:4)
(cid:8)(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:28)(cid:4)(cid:11)(cid:14)(cid:10)(cid:13)(cid:14)(cid:10)(cid:8)(cid:4)(cid:9)(cid:16)(cid:10)(cid:4)(cid:13)(cid:7)(cid:4)(cid:19)(cid:8)(cid:5)(cid:16)(cid:9)(cid:4)(cid:7)(cid:8)(cid:4)(cid:10)(cid:8)(cid:8)(cid:7)(cid:8)’(cid:4)(cid:4)
Grant Thornton Audit Pty Ltd ACN 130 913 594, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389.
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member
firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services
independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation.
Joyce Corporation Ltd 2010 Annual Report I PAGE 88
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(cid:13)(cid:14)(cid:10)(cid:4)(cid:24)(cid:8)(cid:10)(cid:24)(cid:5)(cid:8)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4)(cid:5)(cid:3)(cid:9)(cid:4)(cid:24)(cid:8)(cid:10)(cid:18)(cid:10)(cid:3)(cid:13)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4)(cid:7)(cid:19)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4))(cid:10)(cid:17)(cid:16)(cid:3)(cid:10)(cid:8)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4))(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:4)(cid:12)(cid:3)(cid:4)(cid:5)(cid:6)(cid:6)(cid:7)(cid:8)(cid:9)(cid:5)(cid:3)(cid:6)(cid:10)(cid:4)(cid:11)(cid:12)(cid:13)(cid:14)(cid:4)(cid:18)(cid:10)(cid:6)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4)
(cid:20)(cid:21)(cid:21)(cid:25)(cid:4)(cid:7)(cid:19)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:23)(cid:7)(cid:8)(cid:24)(cid:7)(cid:8)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:18)(cid:4)(cid:25)(cid:6)(cid:13)(cid:4)(cid:26)(cid:21)(cid:21)(cid:27)’(cid:4)-(cid:16)(cid:8)(cid:4)(cid:8)(cid:10)(cid:18)(cid:24)(cid:7)(cid:3)(cid:18)(cid:12)!(cid:12)(cid:29)(cid:12)(cid:13)(cid:31)(cid:4)(cid:12)(cid:18)(cid:4)(cid:13)(cid:7)(cid:4)(cid:10)9(cid:24)(cid:8)(cid:10)(cid:18)(cid:18)(cid:4)(cid:5)(cid:3)(cid:4)(cid:7)(cid:24)(cid:12)(cid:3)(cid:12)(cid:7)(cid:3)(cid:4)(cid:7)(cid:3)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)
)(cid:10)(cid:17)(cid:16)(cid:3)(cid:10)(cid:8)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4))(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:28)(cid:4)!(cid:5)(cid:18)(cid:10)(cid:9)(cid:4)(cid:7)(cid:3)(cid:4)(cid:7)(cid:16)(cid:8)(cid:4)(cid:5)(cid:16)(cid:9)(cid:12)(cid:13)(cid:4)(cid:6)(cid:7)(cid:3)(cid:9)(cid:16)(cid:6)(cid:13)(cid:10)(cid:9)(cid:4)(cid:12)(cid:3)(cid:4)(cid:5)(cid:6)(cid:6)(cid:7)(cid:8)(cid:9)(cid:5)(cid:3)(cid:6)(cid:10)(cid:4)(cid:11)(cid:12)(cid:13)(cid:14)(cid:4)(cid:25)(cid:16)(cid:18)(cid:13)(cid:8)(cid:5)(cid:29)(cid:12)(cid:5)(cid:3)(cid:4)(cid:25)(cid:16)(cid:9)(cid:12)(cid:13)(cid:12)(cid:3)#(cid:4)
4(cid:13)(cid:5)(cid:3)(cid:9)(cid:5)(cid:8)(cid:9)(cid:18)’(cid:4)
(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:10)(cid:11)(cid:2)(cid:8)(cid:15)(cid:6)(cid:13)(cid:6)(cid:8)(cid:13)(cid:2)(cid:8)(cid:13)(cid:2)(cid:7)(cid:21)(cid:14)(cid:2)(cid:9)(cid:14)(cid:27)(cid:4)(cid:13)(cid:14)(cid:9)(cid:19)(cid:7)(cid:6)(cid:8)(cid:13)(cid:2)(cid:9)(cid:14)(cid:15)(cid:8)(cid:9)(cid:7)(cid:2)
(cid:2)(cid:3)(cid:4)(cid:7)(cid:16)(cid:8)(cid:4)(cid:7)(cid:24)(cid:12)(cid:3)(cid:12)(cid:7)(cid:3)(cid:28)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4))(cid:10)(cid:17)(cid:16)(cid:3)(cid:10)(cid:8)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4))(cid:10)(cid:24)(cid:7)(cid:8)(cid:13)(cid:4)(cid:7)(cid:19)(cid:4)(cid:30)(cid:7)(cid:31)(cid:6)(cid:10)(cid:4)(cid:23)(cid:7)(cid:8)(cid:24)(cid:7)(cid:8)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4) (cid:12)(cid:17)(cid:12)(cid:13)(cid:10)(cid:9)(cid:4)(cid:19)(cid:7)(cid:8)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:31)(cid:10)(cid:5)(cid:8)(cid:4)(cid:10)(cid:3)(cid:9)(cid:10)(cid:9)(cid:4)
(cid:20)(cid:21)(cid:4)(cid:30)(cid:16)(cid:3)(cid:10)(cid:4)(cid:26)(cid:21)(cid:27)(cid:21)(cid:28)(cid:4)(cid:6)(cid:7)(cid:17)(cid:24)(cid:29)(cid:12)(cid:10)(cid:18)(cid:4)(cid:11)(cid:12)(cid:13)(cid:14)(cid:4)(cid:18)(cid:10)(cid:6)(cid:13)(cid:12)(cid:7)(cid:3)(cid:4)(cid:20)(cid:21)(cid:21)(cid:25)(cid:4)(cid:7)(cid:19)(cid:4)(cid:13)(cid:14)(cid:10)(cid:4)(cid:23)(cid:7)(cid:8)(cid:24)(cid:7)(cid:8)(cid:5)(cid:13)(cid:12)(cid:7)(cid:3)(cid:18)(cid:4)(cid:25)(cid:6)(cid:13)(cid:4)(cid:26)(cid:21)(cid:21)(cid:27)’(cid:4)
(cid:4)
(cid:4)
()(cid:25)*+(cid:4)+,-)*+-*(cid:4)(cid:25)./(cid:2)+(cid:4)0+1(cid:4) +/(cid:4)
(cid:23)(cid:14)(cid:5)(cid:8)(cid:13)(cid:10)(cid:8)(cid:10)(cid:9)(cid:4)(cid:25)(cid:6)(cid:6)(cid:7)(cid:16)(cid:3)(cid:13)(cid:5)(cid:3)(cid:13)(cid:18)(cid:4)
(cid:4)
(cid:4)
(cid:4)
(cid:4)
0(cid:4)2(cid:4)2(cid:5)(cid:8)(cid:8)(cid:4)(cid:4)
/(cid:12)(cid:8)(cid:10)(cid:6)(cid:13)(cid:7)(cid:8)(cid:4)3(cid:4)(cid:25)(cid:16)(cid:9)(cid:12)(cid:13)(cid:4)(cid:5)(cid:3)(cid:9)(cid:4)(cid:25)(cid:18)(cid:18)(cid:16)(cid:8)(cid:5)(cid:3)(cid:6)(cid:10)(cid:4)4(cid:10)(cid:8)$(cid:12)(cid:6)(cid:10)(cid:18)(cid:4)(cid:4)
(cid:4)
0(cid:10)(cid:8)(cid:13)(cid:14)(cid:28)(cid:4)(cid:20)(cid:21)(cid:4)4(cid:10)(cid:24)(cid:13)(cid:10)(cid:17)!(cid:10)(cid:8)(cid:4)(cid:26)(cid:21)(cid:27)(cid:21)
Joyce Corporation Ltd 2010 Annual Report I PAGE 89
ASX ADDITIONAL INFORMATION
AS AT 20 SEPTEMBER 2010
Additional information required by the Australian Securities Exchange Limited‘s Listing Rules and not
disclosed elsewhere in this report. The information is provided below:
(a) Distribution of Shareholders
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total
Holding less than a marketable parcel
(b) Shareholdings - Substantial Shareholdings
Holders
228
188
66
113
26
621
255
Fully Paid
Ordinary
Shares
75,423
470,628
480,329
3,267,471
16,027,772
%
0.37
2.32
2.36
16.08
78.87
20,321,623
100.00
106,076
0.52
The number of shares held at the report date by substantial shareholders was as follows:
Ordinary Shareholder
1. Mr D A Smetana*
2. John Roy Westwood
Total
Fully Paid
Ordinary
Shares
7,957,359
2,034,000
%
39.16
10.01
9,113,932
49.17
* Mr Smetana has beneficial interest in only 7,079,932 fully-paid ordinary shares (2009: 7,079,932).
(c) Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of hands.
Joyce Corporation Ltd 2010 Annual Report I PAGE 90
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 20 SEPTEMBER 2010
(d)
Shareholdings - Twenty Largest Holders of Quoted Equity Securities
The number of shares held at the report date by the twenty largest holders of quoted equity securities:
Ordinary Shareholder
Adamic Pty Ltd - Adamic Super Fund
Peduncle Pty Ltd
UFBA Pty Ltd
1.
2.
3.
4. Wallbay Pty Ltd
Mr D Teo
5.
Trafalgar Place Nominees Pty Ltd
6.
Parks Australia Pty Ltd
7.
Divpass Pty Limited
8.
Mr D A Smetana & Mrs J G Smetana –Smetana Family Trust
9.
10. Mr A Mankarios and Mrs C Mankarios
11. Mr R H Bartlett
12. Pynland Pty Limited
13. Mr D A Smetana
14. Mr K Knowles
15. Conard Holdings Pty Ltd
16. ASB Nominees Limited
17. Mr J M Wright
18. Mr R G Yannis
19. PBL Investments Pty Ltd
20. Argus Clothing Pty Ltd
Fully Paid
Ordinary
Shares
3,781,905
2,967,728
1,516,500
996,086
990,000
723,567
538,204
517,500
390,167
360,289
355,400
314,886
280,000
269,380
257,540
256,293
229,463
201,014
200,000
196,050
%
18.61
14.60
7.46
4.90
4.87
3.56
2.65
2.55
1.92
1.77
1.75
1.55
1.38
1.33
1.27
1.26
1.13
0.99
0.98
0.96
Total
15,341,972
75.49
(e)
Unquoted Partly Paid Shares holdings greater than 20%
Ordinary Shareholder
Mr D A Smetana
Total
Partly Paid
Ordinary
Shares
%
380,000
100
380,000
100
Partly paid shares are unquoted until they become fully paid. Partly paid shares carry voting rights and
rights to participate in entitlement issues although any shares acquired under a rights issue cannot be
quoted until the partly paid shares become fully paid.
Joyce Corporation Ltd 2010 Annual Report I PAGE 91
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 20 SEPTEMBER 2010
(f)
Company Secretary
Mr Keith Gray
(g)
Registered Office
14 Collingwood Street,
OSBORNE PARK, WA,
AUSTRALIA, 6017
Tel: +61 8 9445 1055
(h)
Share Registry
Computershare Investor Services Pty Limited
Level 2, Reserve Bank Building,
45 St Georges Terrace
PERTH, WA 6000
Tel: 1300 557 010
Joyce Corporation Ltd 2010 Annual Report I PAGE 92
Joyce Corporation Ltd 2010 Annual Report I PAGE 93