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CCeelleebbrraattiinngg 112255 YYeeaarrss iinn BBuussiinneessss
Joyce Corporation Ltd
AND CONTROLLED ENTITIES
ABN: 80 009 116 269
Annual Report 2011
Joyce Corporation Ltd 2011 Annual Report I PAGE 1
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
will be held at Royal Freshwater Bay Yacht Club
Athol Hobbs Room
Keane's Point
Hobb's Place
PEPPERMINT GROVE 6011
Western Australia
PERTH, WA 6000
time:
date:
10:30am
29 November 2011
14 Collingwood Street,
OSBORNE PARK, WA,
AUSTRALIA, 6017
Tel: +61 8 9445 1055
Computershare Investor Services Pty Limited
Level 2, Reserve Bank Building,
45 St Georges Terrace
PERTH, WA 6000
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 2 Westralia Plaza
167 St Georges Terrace
Perth WA 6000
Australia
Principal registered office
Share register
Auditors
Solicitors
Bankers
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 2011 Annual Report I PAGE 2
ANNUAL REPORT CONTENTS
CORPORATE DIRECTORY ......................................................................................................................... 2
ANNUAL REPORT CONTENTS ................................................................................................................... 3
CHAIRMAN’S REPORT ................................................................................................................................ 4
EXECUTIVE DIRECTOR’S REPORT ........................................................................................................... 5
DIRECTORS’ REPORT ................................................................................................................................ 7
AUDITOR'S INDEPENDENCE DECLARATION ......................................................................................... 17
CORPORATE GOVERNANCE STATEMENT ............................................................................................ 18
STATEMENT OF COMPREHENSIVE INCOME ......................................................................................... 33
STATEMENT OF FINANCIAL POSITION .................................................................................................. 34
STATEMENT OF CASHFLOWS ................................................................................................................. 35
STATEMENT OF CHANGES IN EQUITY ................................................................................................... 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS................................................................ 37
CORPORATE INFORMATION ...................................................................................................... 37
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................................ 37
2.
GOING CONCERN ........................................................................................................................ 66
3.
FINANCIAL RISK MANAGEMENT ................................................................................................ 66
4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS ...................................................... 72
5.
SEGMENT INFORMATION ........................................................................................................... 72
6.
REVENUE, INCOME AND EXPENSES ........................................................................................ 75
7.
INCOME TAX ................................................................................................................................ 76
8.
DISCONTINUED OPERATIONS ................................................................................................... 79
9.
EARNINGS PER SHARE .............................................................................................................. 80
10.
CASH AND CASH EQUIVALENTS ............................................................................................... 81
11.
TRADE AND OTHER RECEIVABLES ........................................................................................... 81
12.
INVENTORIES .............................................................................................................................. 82
13.
OTHER ASSETS ........................................................................................................................... 82
14.
NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE .................................................... 83
15.
OTHER FINANCIAL ASSETS ....................................................................................................... 83
16.
PLANT AND EQUIPMENT ............................................................................................................ 83
17.
INVESTMENT PROPERTY ........................................................................................................... 84
18.
INTANGIBLE ASSETS .................................................................................................................. 85
19.
TRADE AND OTHER PAYABLES ................................................................................................. 86
20.
INTEREST BEARING LOANS AND BORROWINGS .................................................................... 87
21.
PROVISIONS ................................................................................................................................ 89
22.
23.
CONTRIBUTED EQUITY ............................................................................................................... 90
RESERVES.....................................................................................................................................91
24.
CAPITAL AND LEASING COMMITMENTS
25.
.................................................................................91
CONTINGENT LIABILITIES .......................................................................................................... 93
26.
RELATED PARTY DISCLOSURES ............................................................................................... 93
27.
EVENTS AFTER REPORTING DATE ........................................................................................... 94
28.
AUDITORS’ REMUNERATION ..................................................................................................... 94
29.
DIVIDENDS ................................................................................................................................... 94
30.
DIRECTOR AND EXECUTIVE DISCLOSURES ............................................................................ 95
31.
RECONCILIATION OF NET LOSS AFTER TAX TO NET CASH FLOWS FROM OPERATIONS 98
32.
PARENT ENTITY DISCLOSURES ................................................................................................ 99
33.
DIRECTORS’ DECLARATION.................................................................................................................. 100
ASX ADDITIONAL INFORMATION .......................................................................................................... 104
Joyce Corporation Ltd 2011 Annual Report I PAGE 3
CHAIRMAN’S REPORT
It is my pleasure to announce a return to strong profits for the Joyce Corporation Ltd Group with a profit
attributable to shareholders of $2.914 Million (14+ cents a share) compared to a loss of ($8.15M) in the
previous 2010 period.
The loss last year was largely due to heavy provisioning as a consequence of the decision to close a number
of company owned stores as well as providing for settlement of franchisee disputes, which have now been
settled.
With the cessation of all legal disputes and a focussed executive team, the group now has maximised
opportunity for future growth.
I have previously announced our shift in strategy toward sustainable franchise network growth, this is still our
main focus. With the cessation of all previous legal disputes and a focused executive team the group has a
much enhanced chance to improve the future growth possibilities of the network.
As at the reporting period the company's net assets per share are $0.87 cents per share including partly paid
shares. The company has a relatively low level of bank debt. Excluding convertible notes, the net bank debt to
total equity was a conservative 25.5%. Assuming conversion of all convertible notes as at 30 June 2011 the
gearing would reduce to 22.7%.
The group now has unfettered opportunity and wherewithal to further undertake its strategic plans.
The company will pay a final unfranked dividend of 2 cents per share in November and has already paid a 2
cent per share interim unfranked dividend. The record date for the final dividend is 2nd November and it is due
to be paid on the 18 November 2011.
Given the current general weakening economic and trading conditions, the group will look to continue to
minimise variable costs and improve its network whilst looking at potential opportunities to deliver
shareholders the best results.
The Company is focused on maximising any opportunities for growth.
I would like to take the opportunity to acknowledge the Executive Team and the Board's efforts in this
achievement. The company has a coherent and focused team. I would particularly like to thank Anthony
Mankarios (the Executive Director) and his executive team for their proactive commitment and resolve.
I would also like to thank all our stakeholders for their cooperation and support and would urge shareholders
who are convertible note holders to convert in November 2011 at the conversion rate of 30 cents per share.
Conversion after the first anniversary date will be based on the share price at the time. Directors holding
convertible notes have indicated that it is their present intention to convert their convertible notes to shares in
November 2011.
It is appropriate to acknowledge that Directors’ have continued with their voluntary 10% reduction in Director’s
fees, which began on 1st July 2010, having no increases since and this will continue until at least 31 December
2011.
I commend the Group’s prospects to you.
Dan Smetana
Chairman
Joyce Corporation Ltd 2011 Annual Report I PAGE 4
EXECUTIVE DIRECTOR’S REPORT
We are pleased to advise that the Company recorded a net profit after tax (NPAT) for the year ending 30th
June 2011 of $2.914 Million compared to a net loss of ($8.15 Million) for the comparative period ending 30th
June 2010. The operating profit for the continuing business was $3.48 Million after tax compared to a loss of
($2.8 Million) previously.
It is important to note that the Company's Asset Value per Share has risen to $0.87 including partly paid
shares and that the group's net bank debt was reduced during the year to a $5.5 Million, after netting off $3.2
Million of secured bank deposits. The company also has $2.18 Million of Convertible Notes (CN) on issue
which may be converted after the first anniversary date starting in November 2011. Excluding CN from debt
then the company would have a net gearing ratio of 25.5% reducing to 22.7% as at 30 June 2011 assuming
conversion of all CN.
The consolidated entity, Joyce Corporation Ltd, reported revenue for continuing operations to $20.7 Million this
period to the 30th June 2011 from $21.9 Million in the previous year. Total revenue reduced from $27.2 Million
to $24.44 Million over the same period as a result of the re-structure decision for company owned store
closures during the reporting year.
The Bedshed network written sales revenues increased by 2% on a year on year, like for like basis despite the
current weak trading conditions. These conditions softened during the second half due to the highly publicised
weakening in retail trading conditions and general economic factors relating to uncertainty with the proposed
Carbon Tax and world economic uncertainty.
Review of Operations
Management focused on continuing to implement our re-structure plan and achieving improvements to overall
efficiency. This resulted in a consolidation and re-structure of the Bedshed organisation to a level which can
ensure ongoing future maintainable profits derived from its franchise network and its residual company stores.
The group ceased trading at five of those six locations and sold one company owned store to an existing
Franchisee, preferring to focus on Franchisee store growth. The Board reviewed the Company's policy toward
multiple franchise store ownership. It now allows franchisees to own more than one franchise store, subject to
strict and transparent policy criteria. The cost of all the re-structure was taken up in provisions in 2010.
The improvement in operating profit is directly attributable to the Company's change in strategy and focus.
The Company continues to own a significant industrial property in a prime location at Moorebank in Sydney's
south west off the major M5- Tollway. The Land parcel is over 41,000 square metres near the Georges River
in the City of Liverpool.
Future Outlook
The current economic outlook and world conditions prohibit any accurate forecasts of activity to be presented
with any certainty. As a result the board has decided to refrain from giving any further outlook toward the
group's 2012 results.
The Company plan is to have its Bedshed business continue to grow its franchise business; we will investigate
opportunities to reach a stronger market position and work to improve general performance.
Joyce Corporation Limited has the opportunity to leverage its strong balance sheet to grow its size from its
present “micro- cap” company status, whilst taking a relatively low risk approach. The Board has undertaken to
continue to review opportunities as they present themselves.
Joyce Corporation Ltd 2011 Annual Report I PAGE 5
EXECUTIVE DIRECTOR’S REPORT (CONTINUED)
After date balance events
The Company has now finalised negotiations and executed a new franchise agreement at one of its prime
locations in WA and has signed an additional franchise agreement in a new Perth location. It has also received
additional applications for further new franchise locations nationally.
The Company's two Directors holding Convertible Notes (CN) have indicated to the board that they will
seriously consider converting the Notes into ordinary shares at the first anniversary in November. It is
anticipated as a result of this occurring that the company's net debt will be reduced further by a minimum
$872,000. The company is optimistic that the remaining CN’s will also be converted. Assuming so, the CN
debt will be reduced by $2.18 Million and move to equity and associated ongoing annual interest payments of
$174,400 will cease.
Anthony Mankarios
Executive Director
Joyce Corporation Ltd 2011 Annual Report I PAGE 6
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 2011.
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.
Chairman (non-executive)
Non-executive Director
Non-executive Director
Executive Director
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
SECRETARY
Mr K Gray
PRINCIPAL ACTIVITIES
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.
(c) Property Investment
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 2011 (“the Financial Year”) the Consolidated Entity, achieved revenue from continuing
operations of $20,730,000,000 (2010: $21,990,000) and a profit from continuing operations after taxation of
$3,481,000 (2010: loss $2,838,000) and a net profit after tax of $2,914,000 (2010; loss $8,147,000). The reduction in
revenue primarily resulted from imported furniture being arranged through an external agent.
Profit before tax – continuing operations
The operations of the Consolidated Entity remain strong with a continuing operations profit before tax of $1,203,000
(2010; loss $3,012,000).
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 provisions for the cost of the above factors at 30 June 2011 and
remaining provisions, in 2 above, reflect the outstanding amounts still to be paid.
Closure of Company-owned stores
During the year ended 30 June 2011, the Consolidated Entity completed the closure of all unprofitable company
owned stores that had been planned and provided for.
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 which 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 and a provision for the remaining settlement was maintained at 30
June 2011.
Joyce Corporation Ltd 2011 Annual Report I PAGE 7
DIRECTORS’ REPORT (CONTINUED)
REVIEW AND RESULTS OF OPERATIONS (CONTINUED)
Financial Position
At 30 June 2011 the Consolidated Entity had equity of $17,918,000 (2010: $15,691,000); cash and cash equivalents
of $3,780,000 (2010: $4,180,000) and unutilised debt facilities of $58,000 which has been subsequently increased by
$300,000 post balance date (2010: $323,000) (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 were substantially used to retire bank debt 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 renewed 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. Since the year end St George have also provided additional accommodation and agreed some
improved covenants, Refer Events after balance date in this Director’s Report and notes 3 and 21.
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 nil (2010: 2.0 ) cents per share
Interim unfranked ordinary dividend of 2.0 cents (2010 nil) cents per share
2011
$000
-
406
406
2010
$000
405
-
405
After the year end the directors have declared the payment of a final dividend out of retained profits at 30 June 2011
of 2.0 cents per share unfranked (30 June 2010: 2.0 cents unfranked). 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
Subsequent to year end the Consolidated Entity successfully obtained further reduction in interest cover
covenant to 1.25 times reverting to the previous covenant in (f) above from 31 March 2012. St George Bank
has also provided further accommodation of $300,000 since the year end. Refer notes 3 and 21 in the
Financial Report.
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 2011 Annual Report I PAGE 8
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS
Mr D A Smetana Chairman - Non-executive. Age 67.
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
-
-
7,082,932 beneficial 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 64.
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, Chairman of
the Forest Products Commission, and Chairman of Reignite Pty Ltd, a councillor of HBF 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
Member of the Remuneration Committee
Interests in shares and options
None
Joyce Corporation Ltd 2011 Annual Report I PAGE 9
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS (CONTINUED)
Mr T R Hantke. – Independent, Non-executive Director. Age 63.
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 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
Member of the Audit Committee
Interests in shares and options
None
Mr A Mankarios. – Executive Director. Age 44.
MBA, FAICD, CFTP, Cer OH&S
Experience and expertise
Anthony Mankarios was appointed in March 2010, after a board decision was made to restructure the executive. He
was a Non- Executive prior, appointed in Feb 2008. He has over 26 years of Business experience in a diverse range
of industries specialising in M&A's and financial restructuring. He has been involved in both private and Listed
Companies as CEO and as Non -Executive director. He previously worked as CEO of Oldfields Holdings Limited since
2002, and prior for an aggregate 16 years with Companies within the paint and surface coating industry.
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
Oldfields Holdings Ltd
Special responsibilities
Executive Director since March 2010.
Member of the Remuneration Committee
Interests in shares and options
-
516,119 fully paid ordinary shares in Joyce Corporation Ltd.
COMPANY SECRETARY
The Company Secretary is Mr K Gray.
Mr Gray was appointed to the position of Chief Financial Officer and Company Secretary on 19 January 2010. Mr
Gray i holds a Bachelor of Economics and is a qualified CPA. An experienced Chief Financial Officer and Company
Secretary having acted in these roles with a number of listed companies in mining services, industrial and retail in the
past.
Joyce Corporation Ltd 2011 Annual Report I PAGE 10
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS (CONTINUED)
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 2011, and the numbers of meetings attended by each Director were:
Full meeting
of Directors
Meetings of committees
Audit
Remuneration
A
8
8
8
8
B
8
8
8
8
A
4
4
4
4
B
4
4
4
4
A
-
6
6
6
B
-
3
6
3
D A Smetana
M A Gurry
T R Hantke
A Mankarios
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
A Mankarios did not attend three meeting of the remuneration Committee as these meetings related to his contract
and remuneration.
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, Executive 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.
Joyce Corporation Ltd 2011 Annual Report I PAGE 11
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
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.
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 2011. 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.
Joyce Corporation Ltd 2011 Annual Report I PAGE 12
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT - AUDITED (CONTINUED)
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 remuneration committee 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, or the relevant segment, 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.
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 G Culmsee
Mr K Gray
Ms S Freedman
Director and Chairman
Director - Chairman of Audit Committee
Director - Chairman of Remuneration Committee
Executive Director
Chief Operating Officer
Chief Financial Officer & Company Secretary
National Marketing Manager
The employment conditions of all specified executives are formalised in contracts of employment. Other than the
Executive Director, who was engaged by Joyce Corporation Ltd all other executives are permanent employees of
Bedshed Franchising Pty Ltd.
Joyce Corporation Ltd 2011 Annual Report I PAGE 13
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
Other Executives
All executives have rolling contracts. The Consolidated Entity can terminate each contract by providing from two
months to six 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.
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 2011
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Ms S Freedman
Total Remuneration:
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
119
38
52
157
183
124
90
763
281
32
62
66
282
173
69
48
37
126
177
Total Remuneration:
1,353
D. Share-based compensation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
36
-
50
29
15
-
18
14
8
53
134
-
-
-
-
-
26
6
-
2
-
17
11
35
5
-
33
15
7
4
4
11
19
51
144
-
-
-
-
-
-
-
-
-
-
-
-
157
-
-
-
25
-
-
182
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
169
67
67
157
218
174
98
950
292
67
67
66
472
214
82
52
68
137
213
1,730
There was no share-based compensation of Key Management Personnel during the year ended 30 June 2011 (2010:
Nil).
Joyce Corporation Ltd 2011 Annual Report I PAGE 14
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
2011
$000
24,441
2,914
0.45
2.0
2010
$000
2009
$000
2008
$000
2007
$000
28,089
(8,147)
0.40
2.0
27,906
(1,329)
0.41
4.50
18,068
2,066
1.08
9.00
15,092
3,197
1.26
9.50
(a) Revenue and net profit in respect of the 2011 and 2010 financial years include discontinued operations. The 2011
financial performance has been impacted by a number of non-recurring losses from stores that were closed during
the year associated with closure of some unprofitable Company-owned stores. 2010 was impacted by significant
provisions for restructure costs and the settlement of legal actions with franchisees.
End of Remuneration Report.
LOANS TO DIRECTORS AND EXECUTIVES
There were no loans outstanding to Directors and executives as at 30 June 2011.
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 2011 Annual Report I PAGE 15
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
2011:
Taxation services
AUDITOR'S INDEPENDENCE DECLARATION
$
53,992
53,992
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 17.
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, 29 September 2011
Joyce Corporation Ltd 2011 Annual Report I PAGE 16
Grant Thornton Audit Pty Ltd
ABN 94 269 609 023
10 Kings Park Road
West Perth WA 6005
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E admin.wa@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Joyce Corporation Ltd
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Joyce Corporation Ltd for the year ended 30 June 2011, I declare
that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
P W Warr
Director - Audit & Assurance
Perth, 29 September 2011
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.
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
Liability limited by a scheme approved under Professional Standards Legislation
Joyce Corporation Ltd 2011 Annual Report I PAGE 17
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 2011 ("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 that have been implemented throughout management
and governance.
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 2011 Annual Report I PAGE 18
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 Executive Director and assisting the
Executive 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 Executive 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 Executive 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 Executive Director in June 2011. The
remuneration committee conducted an evaluation of Senior Executives in June 2011. 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 2011 Annual Report I PAGE 19
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. The
Executive Director (Anthony Mankarios) has taken over all operational and corporate supervision
responsibility.
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 2011 Annual Report I PAGE 20
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 2011 Annual Report I PAGE 21
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 2011 Annual Report I PAGE 22
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
behavior 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 2011 Annual Report I PAGE 23
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 2011 Annual Report I PAGE 24
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 2011 Annual Report I PAGE 25
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 requires 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 discloses that management has reported to it as to the effectiveness of the Company's
management of its material business risks.
Disclosure:
The Company has completed the formalisation of its risk management system and reporting on identified
material business risks.
Following the development of the Risk Management and Oversight Policy the Board has determined to
review, the management of its material business risks each year. This system includes 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 has been
allocated to members of senior management. The risk register is formally reviewed at least annually and
updated as required.
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.
Joyce Corporation Ltd 2011 Annual Report I PAGE 26
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 7: Recognise and Manage Risk (continued)
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 Executive 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.
Recommendation 8.3:
Companies should provide the information indicated in the “Guide to reporting on Principle 8.”
Disclosure:
Details of remuneration,
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.
the Company’s policy on remuneration, are contained
including
in
Joyce Corporation Ltd 2011 Annual Report I PAGE 27
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Principle 8: Remunerate Fairly and Responsibly (continued)
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 six 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 2011)
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 2011 Annual Report I PAGE 28
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Disclosure of Corporate Governance Practices Summary Statement
No. Recommendation
1.1: Companies should establish the functions reserved to the
Board and those delegated to senior executives and
disclose those functions.
Disclosure
Comply
1.2 Companies should disclose the process for evaluating the
Comply
performance of senior executives.
1.3 Companies should provide the information indicated in the
Comply
“Guide to 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 the Board, its committees and individual
Directors.
Comply
2.6 Companies should provide the information indicated in the
Comply
“Guide to 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
the
Company's integrity, the practices necessary to take into
account
the reasonable
legal obligations and
expectations of their stakeholders and the responsibility
and accountability of
reporting and
investigating reports of unethical practices.
to maintain confidence
individuals
their
for
in
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
Comply
“Guide to reporting on Principle 3.”
4.1
The Board should establish an Audit Committee.
Comply
Joyce Corporation Ltd 2011 Annual Report I PAGE 29
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 reporting
Comply
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 reporting
Comply
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 reporting
Comply
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 requires management
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 discloses that management has reported to it as to the
effectiveness of the Company's management of its material business risks.
to design and
implement
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
Comply
Joyce Corporation Ltd 2011 Annual Report I PAGE 30
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 2011 Annual Report I PAGE 31
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2011
Joyce Corporation Ltd 2011 Annual Report I PAGE 32
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
Notes
Consolidated
30 June 2011
$000
30 June 2010
$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 disposal of assets
Finance costs
Restructuring provisions
Other expenses
Profit/(loss) from continuing operations before income tax
Income tax benefit
Profit/(loss) from continuing operations after tax
Discontinued operations
Loss for the year from discontinued operations
Net profit/(loss) attributable to the members of Joyce
Corporation Ltd
7
7
7
7
7
7
7
8
9
20,730
(8,427)
12,303
21,990
(9,427)
12,563
1,184
1,116
(1,069)
(839)
(2,839)
(6,948)
(109)
(739)
300
(41)
(868)
(968)
(1,817)
(8,528)
-
(740)
(3,728)
(42)
1,203
(3,012)
2,278
174
3,481
(2,838)
(567)
(5,309)
2,914
(8,147)
Other comprehensive income net of tax
-
-
Total Comprehensive Income attributable to the members of
Joyce Corporation Ltd
2,914
(8,147)
Overall Operations
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share including convertible notes (cents
per share)
Continuing Operations
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share including convertible notes (cents
per share)
10
10
10
10
10
10
14.1
14.1
10.4
16.8
16.8
12.5
(39.4)
(39.4)
(39.4)
(13.7)
(13.7)
(13.7)
The statement of comprehensive income is to be read in conjunction with the notes to the consolidated
financial statements set out on pages 37 to 99.
Joyce Corporation Ltd 2011 Annual Report I PAGE 33
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
Notes
Consolidated
30 June 2011
$000
30 June 2010
$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
Convertible Notes
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
24
3,780
1,166
4,275
560
9,781
-
9,781
480
39
1,120
1,606
10,416
10,225
23,886
33,667
5,266
-
635
1,194
7,095
4,869
2,180
1,120
485
8,654
15,749
17,918
15,634
2,678
(394)
17,918
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
The statement of financial position is to be read in conjunction with the notes to the consolidated financial
statements set out on pages 37 to 99.
Joyce Corporation Ltd 2011 Annual Report I PAGE 34
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2011
Notes
Consolidated
30 June 2011
$000
30 June 2010
$000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Operating cash flow
Franchisee settlement paid
Store closure costs
Net cash flows (used in)/from 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 issue of Convertible Notes
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
32
30
11
26,783
(23,606)
79
(752)
2,504
(1,875)
(2,828)
(2,199)
7,350
136
(77)
-
7,409
2,180
(7,384)
(406)
(5,610)
(400)
4,180
3,780
29,292
(27,210)
155
(922)
1315
-
-
1,315
-
26
(110)
-
(84)
-
(165)
(405)
(570)
661
3,519
4,180
3,780
3,780
4,180
4,180
The statement of cashflows is to be read in conjunction with the notes to the consolidated financial
statements set out on pages 37 to 99.
Joyce Corporation Ltd 2011 Annual Report I PAGE 35
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
CONSOLIDATED
Contributed
Equity
Note
$000
Retained
Earnings /
(Accumulated
Losses)
$000
Asset
Revaluation
Reserve
Financial
Assets
Reserve
Total
Equity
$000
$000
$000
At 1 July 2009
15,634
3,915
1,735
2,959
24,243
Loss for the year
Other comprehensive
income
Payment received on partly
paid shares
Dividends paid or provided
for
30
-
-
-
-
(8,147)
-
-
(405)
-
-
-
-
-
-
-
-
(8,147)
-
-
(405)
At 30 June 2010
15,634
(4,637)
1,735
2,959
15,691
At 1 July 2010
15,634
(4,637)
1,735
2,959
15,691
Profit for the year
Other comprehensive
income
Transfer to & from reserves
- Asset revaluation
- Financial assets
Dividends paid or provided
for
30
-
-
-
-
-
2,914
-
-
-
1,735
-
(1,735)
-
(406)
-
-
-
-
-
(281)
-
2,914
-
-
(281)
(406)
2,678
17,918
At 30 June 2011
15,634
(394)
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 99.
Joyce Corporation Ltd 2011 Annual Report I PAGE 36
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 2011 were authorised for issue in accordance with a resolution of the directors of the Company
dated 27 September 2011. 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 2011 Annual Report I PAGE 37
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 2011 Annual Report I PAGE 38
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 2011 Annual Report I PAGE 39
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 2011 Annual Report I PAGE 40
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 2011 Annual Report I PAGE 41
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 2011 Annual Report I PAGE 42
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 2011 Annual Report I PAGE 43
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 2011 Annual Report I PAGE 44
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 2011 Annual Report I PAGE 45
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 2011 Annual Report I PAGE 46
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
these financial instruments 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 2011 Annual Report I PAGE 47
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.
Application date of
standard*
1 January 2010
Application date for
the company
1 July 2010
Reference
Title
AASB 2009-5
Further amendments
to Australian
Accounting Standards arising from the
Annual Improvements Project – The
subject of amendments to the standards
are set out below:
• AASB 5 – Disclosures in relation to
non-current assets
(or disposal
groups) classified as held for sale or
discontinued operations
• AASB 8 – Disclosure of information
about segment assets
• AASB 101 – Current/non-current
convertible
of
classification
instruments
• AASB 107 – Classification of
expenditures that does not give rise
to an asset
• AASB 117 – Classification of leases
of land
• AASB 118 – Determining whether an
entity is acting as a principle or an
agent
• AASB 136 – Clarifying the unit of
account for goodwill impairment test
than an operating
is not
segment before aggregation
larger
• AASB
–
139
Treating
loan
prepayment penalties as closely
related embedded derivatives, and
revising the scope exemption for
forward contract
into a
business combination contract
to enter
Joyce Corporation Ltd 2011 Annual Report I PAGE 48
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations adopted with no effect on the financial statements
(continued)
Reference
Title
AASB 2010-3 Amendments To Australian Accounting
from The Annual
Standards arising
Improvements Project.
Application date of
standard*
1 July 2010
Application date for
the company
1 July 2010
[AASB 3,AASB 7,AASB 121, AASB 128,
AASB 131, AASB 132 & AASB 139]
Limits the scope of the measurement
choices of non-controlling interest to
instruments that are present ownership
interests and entitle their holders to a
proportionate share of the entity’s net
assets in the event of liquidation. Other
components of NCI are measured at fair
value.
to account
(in a business
Required an entity
combination)
the
for
replacement of the acquiree’s share-
based payment transactions (whether
obliged or voluntarily), in a consistent
manner
between
consideration and post combination
expenses.
allocate
i.e.
Clarifies that contingent consideration
from a business combination
that
occurred before the effective date of
AASB 3 Revised is not restated.
Clarifies that the revised accounting for
loss of significant
joint
IFRS 3
control (from
the
applicable
Revised)
prospectively.
influence or
issue of
only
is
Joyce Corporation Ltd 2011 Annual Report I PAGE 49
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations adopted with no effect on the financial statements
(continued)
Reference
Title
Interpretation
19
Interpretation 19 Extinguishing Financial
Liabilities with Equity Instruments.
Application date of
standard*
1 July 2010
Application date for
the company
1 July 2010
issued
to a creditor
This interpretation clarifies that equity
instruments
to
extinguish a
liability are
financial
“consideration paid” in accordance with
paragraph 41 or IAS 39. As a result, the
financial liability is derecognised and the
equity instruments issued are treated as
consideration paid to extinguish that
financial liability.
interpretation states
The
that equity
instruments issued as payment of a debt
should be measured at the fair value of
the equity instruments issued, if this can
be determined reliably. If the fair value
of the equity instruments issued is not
equity
reliably
instruments should be measured by
reference
the
financial liability extinguished as of the
date of extinguishment.
fair value of
determinable,
the
the
to
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.
Joyce Corporation Ltd 2011 Annual Report I PAGE 50
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
Explanation of amendments
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
AASB 9 Financial
Instruments
AASB 2009-11
Amendments to Australian
Accounting Standards
arising from AASB 9
AASB 139 Financial
Instruments:
Recognition and
Measurement (part)
AASB 9 introduces new requirements for the
classification and measurement of financial assets and
liabilities. AASB 9 uses a single approach to
determine whether a financial asset is measured at
amortised cost or fair value, replacing the many
different rules in AASB 139 and removes the
impairment requirement for financial assets held at
fair value.
In addition, the majority of requirements from AASB
139 for the classification and measurement of
financial liabilities has been carried forward
unchanged, except in relation to own credit risk
where an entity takes the option to measure financial
liabilities at fair value. AASB 9 requires the amount
of the change in fair value due to changes in the
entity’s own credit risk to be presented in other
comprehensive income (OCI), unless there is an
accounting mismatch in the profit or loss, in which
case all gains or losses are to be presented in the
profit or loss.
The requirements from AASB 139 related to the
derecognition of financial assets and liabilities have
been incorporated unchanged into AASB 9.
31 December 2013
AASB 9 amends the
classification and measurement
of financial assets; the effect
on the entity will be that more
assets are held at fair value and
the need for impairment testing
has been limited to assets held
at amortised cost only.
Minimal changes have been
made in relation to the
classification and measurement
of financial liabilities, except
‘own credit risk’ instruments.
The effect on the entity will be
that the volatility in the profit
or loss will be moved to the
OCI, unless there is an
accounting mismatch.
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 2009-11
AASB 2010-7
Likely impact
Depending on assets
held, there may be
significant movement of
assets between fair
value and cost
categories and ceasing
of impairment testing on
available for sale assets.
If the entity holds any
‘own credit risk’
financial liabilities, the
fair value gain or loss
will be incorporated in
the OCI, rather than
profit or loss, unless
accounting mismatch.
Joyce Corporation Ltd 2011 Annual Report I PAGE 51
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
Explanation of amendments
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
AASB 124 Related Party
Disclosures
AASB 124 Related
Party Disclosures
This revision amends the disclosure requirements for
government related entities and the definition of a
related party.
31 December 2011
AASB 2009-12
Amendments to Australian
Accounting Standards
arising from AASB 124
Since the entity is not a
government related entity;
there are not expected to be
any changes arising from this
standard.
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 2009-12
Likely impact
Unlikely to have
significant impact in
Australia.
AASB 2009-14
Prepayments of a Minimum
Funding Requirement
(Amendments to
Interpretation 14)
Interpretation 14
This amendment to Interpretation 14 addresses the
unintended consequences that can arise from the
previous requirements when an entity prepays future
contributions into a defined benefit pension plan.
31 December 2011
None
As the entity does not have a
defined benefit pension plan
this amendment to
Interpretation 14 is not
expected to have any impact
on the entity’s financial report.
Possibly significant if
the entity has a defined
benefit
Joyce Corporation Ltd 2011 Annual Report I PAGE 52
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
Explanation of amendments
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
None
AASB 2010-2 Amendments
to Australian Accounting
Standards arising from
reduced disclosure
requirements
This Standard gives effect to Australian Accounting
Standards - Reduced Disclosure Requirements.
AASB 1053 provides further information regarding
the differential reporting framework and the two tiers
of reporting requirements for preparing general
purpose financial statements.
30 June 2014
AASB 2010-2 sets out the
relevant disclosures that will
not be required to be made if it
is a Tier 2 entity that
nominates to comply.
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 1053
Likely impact
Reduced note
disclosures in the
following main areas:
AASB 7 Financial
Instruments;
Disclosures
AASB 101 Presentation
of Financial Statements
AASB 108 Accounting
Policies
AASB 123 Borrowing
Costs
AASB 124 Related
Party Disclosures
AASB 128 Accounting
for Associates
Joyce Corporation Ltd 2011 Annual Report I PAGE 53
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
a) Explanation of amendments
None
AASB 2010-4 Further
Amendments to Australian
Accounting Standards
arising from the Annual
Improvements Project
[AASB1, AASB7, AASB
101, AASB 134 and
interpretation 13}
Emphasises the interaction between quantitative
and qualitative AASB 7 disclosures and the
nature and extent of risks associated with
financial instruments.
Clarifies that an entity will present an analysis of
other comprehensive income for each component
of equity, either in the statement of changes in
equity or in the notes to the financial statements.
Provides guidance to illustrate how to apply
disclosure principles in AASB 134 for significant
events and transactions.
Clarify that when the fair value of award credits
is measure based on the value of the award for
which they could be redeemed, the amount of
discounts or incentives otherwise granted to
customers not participating in the award credit
scheme, is to be taken in account.
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
Likely impact
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
31 December 2011
Given the number of
standards amended by AASB
2010-4, an example
disclosure is not included.
None
Varies depending on
relevance; however
impact is unlikely to be
significant.
Entities assess the impact of
each of the amendments on
their organisation
Joyce Corporation Ltd 2011 Annual Report I PAGE 54
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 1053
Likely impact
Reduced disclosures.
Refer to comments in
AASB 2010-2 above.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
b) Explanation of amendments
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
AASB 1053 Application of
Tiers of Australian
Accounting Standards
None
30 June 2014
This depends on the
classification of the entity as a
Tier 1 or 2.
For Tier 1 entities or Tier 2
that prepare special purpose
financial reports, there will be
no impact on the financial
statements as the reduced
disclosure will not be available
to apply.
Tier 2 entities that prepare
general purpose financial
reports will be able to apply
the reduced disclosures within
the financial instruments,
related parties, accounting
policies, borrowing costs, and
financial statement disclosures
This Standard establishes a differential financial
reporting framework consisting of two Tiers of
reporting requirements for preparing general purpose
financial statements:
a) Tier 1: Australian Accounting Standards;
and
b) Tier 2: Australian Accounting Standards -
Reduced Disclosure Requirements.
Tier 2 comprises the recognition, measurement and
presentation requirements of Tier 1 and substantially
reduced disclosures corresponding to those
requirements.
c) The following entities apply Tier 1
requirements in preparing general purpose
financial statements:
for-profit entities in the private sector that
have public accountability (as defined in
this Standard); and
the Australian Government and State,
Territory and Local Governments
a)
b)
The following entities apply either Tier 2 or Tier 1
requirements in preparing general purpose financial
statements:
a)
for-profit private sector entities that do not
have public accountability;
b) all not-for-profit private sector entities; and
public sector entities other than the Australian
Government and State, Territory & Local
Governments
Joyce Corporation Ltd 2011 Annual Report I PAGE 55
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
c) Explanation of amendments
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
Likely impact
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 1053 Application of
Tiers of Australian
Accounting Standards
(continued)
AASB 1054 Australian
Additional Disclosures
None
all not-for-profit private sector
The following entities apply either
for-profit private sector entities that
d)
Tier 2 or Tier 1 requirements in preparing
general purpose financial statements:
e)
do not have public accountability;
f)
entities; and
g)
public sector entities other than the
Australian Government and State, Territory &
Local Governments
This standard is as a consequence of phase 1 of the
joint Trans-Tasman Convergence project of the
AASB and FRSB.
This standard relocates all Australian specific
disclosures from other standards to one place and
revises disclosures in the following areas:
d) Compliance with Australian Accounting
Standards
e) The statutory basis or reporting framework
for financial statements
f) Whether the financial statements are general
purpose or special purpose
Imputation credits
g) Audit fees
h)
reconciliation of net operating cash flow to profit
(loss)
30 June 2012
AASB 2011-01
This Standard sets out the
Australian-specific
disclosures for entities that
have adopted Australian
Accounting Standards. This
Standard contains disclosure
requirements that are
additional to IFRSs.
Not expected to have
significant impact, as
only relocating
Australian specific
disclosures from
existing standards to
this new standard.
Joyce Corporation Ltd 2011 Annual Report I PAGE 56
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
The Standard makes numerous editorial amendments
to a range of Australian Accounting Standards and
Interpretations, including amendments to reflect
changes made to the text of International Financial
Reporting Standards by the International Accounting
Standards Board.
31 December 2011
These amendments have no
major impact on the
requirements of the amended
pronouncements
Likely impact
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 2010-5
No major impact
The Standard amends the disclosures required, to help
users of financial statements evaluate the risk
exposures relating to more complex transfers of
financial assets (e.g. securitisations) and the effect of
those risks on an entity’s financial position.
30 June 2012
AASB 7
The Amendments will
introduce more extensive and
onerous quantitative and
qualitative disclosure
requirements for de-
recognition of financial assets.
More extensive and
onerous quantitative and
qualitative disclosure
requirements for de-
recognition of financial
assets.
None
AASB 2010-05
Amendments to Australian
Accounting Standards
[AASB 1, 3, 4, 5, 101, 107,
112, 118, 119, 121, 132,
133, 134, 137, 139, 140,
1023 & 1038 and
Interpretations 112, 115,
127, 132 & 1042]
None
AASB 2010-6 Amendments
to Australian Accounting
Standards - Disclosures on
Transfers of Financial
Assets (AASB 1 & AASB
7)
Joyce Corporation Ltd 2011 Annual Report I PAGE 57
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
31 December 2013
This Standard makes
amendments to a range of
Australian Accounting
Standards and Interpretations
as a consequence of the
issuance of AASB 9: Financial
Instruments in December
2010. Accordingly, these
amendments will only apply
when the entity adopts AASB
9.
Likely impact
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 9
AASB 2009-11
Unlikely to have
significant impact in
Australia.
None
AASB 2010-7 Amendments
to Australian Accounting
Standards arising from
AASB 9 (December 2010)
[AASB 1, 3, 4, 5, 7, 101,
102, 108, 112, 118, 120,
121, 127, 128, 131, 132,
136, 137, 139, 1023, & 1038
and interpretations 2, 5, 10,
12, 19 & 127]
The requirements for classifying and measuring
financial liabilities were added to AASB 9. The
existing requirements for the classification of
financial liabilities and the ability to use the fair value
option have been retained. However, where the fair
value option is used for financial liabilities the change
in fair value is accounted for as follows:
a) The change attributable to changes in credit risk
are presented in other comprehensive income
(OCI)
b) The remaining change is presented in profit or
loss
If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the
changes in credit risk are also presented in profit or
loss.
Joyce Corporation Ltd 2011 Annual Report I PAGE 58
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
None
AASB 2010-8 Amendments
to Australian Accounting
Standards - Deferred Tax:
Recovery of Underlying
Assets [AASB 112]
31 December 2012
These amendments address the determination of
deferred tax on investment property measured at fair
value and introduce a rebuttable presumption that
deferred tax on investment property measured at fair
value should be determined on the basis that the
carrying amount will be recoverable through sale. The
amendments also incorporate SIC-21 Income Taxes -
Recovery of Revalued Non-Depreciable Assets into
AASB 112.
The amendments brought in by
this Standard introduce a more
practical approach for
measuring deferred tax
liabilities and deferred tax
assets when investment
property is measured using the
fair value model under AASB
140: Investment Property.
Under the current AASB 112,
the measurement of deferred
tax liabilities and deferred tax
assets depends on whether an
entity expects to recover an
asset by using it or by selling
it. The amendments introduce
a presumption that an
investment property is
recovered entirely through
sale. This presumption is
rebutted if the investment
property is held within a
business model whose
objective is to consume
substantially all of the
economic benefits embodied in
the investment property over
time, rather than through sale.
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
None
Likely impact
Unlikely to have
significant impact in
Australia
Joyce Corporation Ltd 2011 Annual Report I PAGE 59
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
AASB 2011-1 Amendments
to Australian Accounting
Standards arising from the
Trans-Tasman Convergence
project [AASB 1, AASB 5,
AASB 101, AASB 107,
AASB 108, AASB 121,
AASB 128, AASB 132,
AASB 134, Interpretation 2,
Interpretation 112,
Interpretation 113]
None
This Standard amendments many Australian
Accounting Standards, removing the disclosures
which have been relocated to AASB 1054.
30 June 2012
This Standard makes
amendments to a range of
Australian Accounting
Standards and Interpretations
for the purpose of closer
alignment to IFRSs and
harmonisation between
Australian and New Zealand
Standards.
Likely impact
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 1054
Refer to comments
above under
Joyce Corporation Ltd 2011 Annual Report I PAGE 60
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
None
AASB 2011-2 Amendments
to Australian Accounting
Standards arising from the
Trans-Tasman Convergence
project - Reduced disclosure
regime [AASB 101, AASB
1054]
This Standard makes amendments to the application
of the revised disclosures to Tier 2 entities, that are
applying AASB
1053.
30 June 2014
This Standard makes
amendments to the following
Australian Accounting
Standards:
1. AASB 101 Presentation
of Financial Statements
2. AASB 1054 Australian
Additional Disclosures,
to establish reduced disclosure
requirements for entities
preparing general purpose
financial statements under
Australian Accounting
Standards - Reduced
Disclosure Requirements in
relation to the Australian
additional disclosures arising
from the Trans-Tasman
Convergence Project.
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
AASB 1053
AASB 1054
AASB 2011-1
Likely impact
Not expected to have
significant impact, as
only relocating
Australian specific
disclosures from
existing standards to
this new standard
Joyce Corporation Ltd 2011 Annual Report I PAGE 61
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
Consolidated Financial
Statements
IAS 27
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
Likely impact
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
31 December 2013
IFRS 10 establishes a new control model that applies
to all entities. It replaces parts of IAS 27
Consolidated and Separate Financial Statements
dealing with the accounting for consolidated financial
statements and SIC-12 Consolidation - Special
Purpose Entities.
The new control model broadens the situations when
an entity is considered to be controlled by another
entity and includes new guidance for applying the
model to specific situations, including when acting as
a manager may give control, the impact of potential
voting rights and when holding less than a majority
voting rights may give control. This is likely to lead to
more entities being consolidated into the group.
Entities most likely to
be impacted are those
that:
-
have significant,
but not a majority
equity interests in
other entities;
hold potential voting
rights over investments ,
such as options
IFRS 11
IFRS 12
IAS 27
IAS 28
IAS 31
It introduces a new, principle-
based definition of control
which will apply to all
investees to determine the
scope of consolidation.
Traditional control
assessments based on majority
ownership of voting rights will
very rarely be affected.
However, 'borderline'
consolidation decisions will
need to be reviewed and some
will need to be changed taking
into consideration potential
voting rights and substantive
rights.
Joyce Corporation Ltd 2011 Annual Report I PAGE 62
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
Explanation of amendments
Joint Arrangements1
IAS 31
SIC 13
IFRS 11 replaces IAS 31 Interests in Joint Ventures
and SIC-13 Jointly- controlled Entities - Non-
monetary Contributions by
Ventures. IFRS 11 uses the principle of control in
IFRS 10 to define joint control, and therefore the
determination of whether joint control exists may
change. In addition IFRS 11 removes the option to
account for jointly controlled entities (JCEs) using
proportionate consolidation. Instead, accounting for a
joint arrangement is dependent on the nature of the
rights and obligations arising from the arrangement.
Joint operations that give the venturers a right to the
underlying assets and obligations themselves is
accounted for by recognising the share of those assets
and obligations. Joint ventures that give the venturers
a right to the net assets is accounted for using the
equity method. This may result in a change in the
accounting for the joint arrangements held by the
group.
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
Likely impact
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
31 December 2013
Entities with existing joint
arrangements or that plan to
enter into new joint
arrangements will be affected
by the new standard. These
entities will need to assess
their arrangements to
determine whether they have
invested in a joint operation or
a joint venture upon adoption
of the new standard or upon
entering into the arrangement.
IFRS 10
IFRS 12
IAS 27
IAS 28
IAS 31
For entities, that have
joint ventures that have
been previously
accounted using
proportionate
consolidation, they will
need to change to equity
accounting.
Entities that have been
accounting for their interest in
a joint venture using
proportionate consolidation
will no longer be allowed to
use this method; instead they
will account for the joint
venture using the equity
method. In addition, there may
be some entities that
previously equity-accounted
for investments that may need
to account for their share of
assets and liabilities now that
there is less focus on the
structure of the arrangement.
Joyce Corporation Ltd 2011 Annual Report I PAGE 63
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
Explanation of amendments
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
Disclosure of Interests in
Other Entities1
IAS 27
IAS 28
IAS 31
31 December 2013
IFRS 12 includes all disclosures relating to an entity’s
interests in subsidiaries, joint arrangements,
associates and structures entities. New disclosures
have been introduced about the judgements made by
management to determine whether control exists, and
to require summarised information about joint
arrangements, associates and structured entities and
subsidiaries with non-controlling interests.
IFRS 12 combines the
disclosure requirements for
subsidiaries, joint
arrangements, associates and
structured entities within a
comprehensive disclosure
standard.
It aims to provide more
transparency on 'borderline'
consolidation decisions and
enhance disclosures about
unconsolidated structured
entities in which an investor or
sponsor has involvement.
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
None
Likely impact
There are some
additional enhanced
disclosures centred
around significant
judgements and
assumptions made
around determining
control, joint control
and significant
Joyce Corporation Ltd 2011 Annual Report I PAGE 64
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(dd)
Standards and Interpretations on issue but not yet effective (continued)
New/revised
pronouncement
Superseded
pronouncement
Explanation of amendments
Effective date (i.e.
annual reporting
periods ending on or
after)
Example disclosure of impact
of new standard on the
financial report (if standard
is not adopted early)
Fair Value Measurement1
None
31 December 2013
IFRS 13 establishes a single source of guidance under
IFRS for determining the fair value of assets and
liabilities. IFRS 13 does not change when an entity is
required to use fair value, but rather, provides
guidance on how to determine fair value under IFRS
when fair value is required or permitted by IFRS.
Application of this definition may result in different
fair values being determined for the relevant assets.
IFRS 13 also expands the disclosure requirements for
all assets or liabilities carried at fair value. This
includes information about the assumptions made and
the qualitative impact of those assumptions on the fair
value determined.
-
-
IFRS 13 has been created to:
establish a single source
-
of guidance for all fair
value measurements;
clarify the definition of
fair value and related
guidance; and
enhance disclosures about
fair value measurements
(new disclosures increase
transparency about fair
value measurements,
including the valuation
techniques and inputs
used to measure fair
value)
Related
pronouncement
which must be
early adopted if
this standard is
early adopted
None
Likely impact
For financial assets,
IFRS 13's guidance is
broadly consistent with
existing practice. It will
however also apply to
the measurement of fair
value for non-financial
assets and will make a
significant change to
existing guidance in the
applicable
1 The AASB has not issued this standard, which was finalised by the IASB in May 2011.
Joyce Corporation Ltd 2011 Annual Report I PAGE 65
3. GOING CONCERN
At 30 June 2011, the Consolidated Entity has recorded a profit before tax of $1,203,000 for continuing
operations and $636,000 after tax before including discontinued operations and reported an overall profit
after tax of $2,914,000 with positive operating cash flows totalling $2,504,000 before franchisee legal
settlement payments and store closure costs.
There were no breaches of bank lending covenants (refer Note 21) at reporting date and no breaches up
to the date of this report.
A convertible note rights issue was undertaken during the year to support company restructuring and the
convertible notes were fully subscribed for the issue of $2.18 million.
Subsequent to the year end the Consolidated Entity has continued to service the loan facilities to the date
of these financial statements in accordance with the terms of that facility and further accommodation of
$300,000 has been approved by St George Bank to assist with working capital and legal settlement
purposes. Existing working capital resources 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 2012.
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.
Joyce Corporation Ltd 2011 Annual Report I PAGE 66
4. FINANCIAL RISK MANAGEMENT (CONTINUED)
The Consolidated Entity holds the following financial instruments:
Notes
Consolidated
30 June 2011
$000
30 June 2010
$000
11
12
16
20
21
3,780
1,646
39
5,465
5,266
7,683
12,949
4,180
3,013
6
7,199
6,888
12,888
19,776
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest-bearing loans and borrowings
(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 via
the use of foreign currency contracts. The current policy is to forward buy USD contracts equivalent to fifty
percent of six months forward US dollar denominated orders.
(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
2010
2011
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 2011 was 1.0523.
Joyce Corporation Ltd 2011 Annual Report I PAGE 67
4 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
the
financial
instruments held at 30 June 2011, had
Based on
the Australian dollar
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 form would have been $60,000 higher/
$60,000 lower (2010: $8,487/ $6,499), as a result of foreign exchange gains/losses on forward contracts.
The US dollar orders are ultimately invoiced in Australian Dollars and the forward hedges used to partially
offset the exposure to movement in exchange rates on order commitments. The forward contracts are
marked to market.
(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.
(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
2011
$000
30 June
2010
$000
Financial liabilities
Overdraft – secured (i)
Commercial bill –secured – variable
Commercial bill –secured – fixed (ii)
Convertible Notes – unsecured (1v)
Dan Smetana Loan – unsecured -
variable
9.30%
n/a
7.88%
8.00%
n/a
Bank guarantees (contingent liabilities) (v)
1.65%
530
-
4,800
2,180
-
7,510
1,080
8,590
9.80%
6.43%
9.01%
-
9.80%
1.65%
295
3,900
7,939
-
300
12,434
1,178
13,612
(i) The overdraft facility pays interest at variable interest rates plus a line fee is renewed annually.
(ii) The Commercial bill facility (fixed) debt attracts interest at a fixed annual interest rate and has a term
which expires on 11 March 2013. The facility has a secured deposit of $3.2 million netted off which
accrues and interest income at 6.2% fixed until October 2011.
(iii) Bank guarantees attract a variable interest rate plus a line fee and have a term of 1 year from the
first draw down date.
(iv) Convertible notes attract a monthly in arrears interest of 8% fixed. The notes have a term of 5 years
from date of issue commencing November 2010 and can convert to shares in Joyce Corporation Ltd
from the first anniversary of issue at $0.30 or thereafter at an average of the market price at
conversion. The notes are redeemable for cash at the end of five years.
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.
Joyce Corporation Ltd 2011 Annual Report I PAGE 68
4.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
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
The major debt facility is a fixed interest rate (see above). Variable interest rates apply to the overdraft
and cash and cash equivalents. On balances at 30 June 2011, 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 $480 higher/lower (2010 - $38,577 higher/lower), mainly as a result of a higher/lower
interest expense arising from borrowings offset by lower/higher interest income from cash and cash
equivalents. Equity would have been $480 higher/lower (2010 - $38,577 higher/lower) for the same
reasons as above.
(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
CONSOLIDATED
2011
$000
2010
$000
3,780
4,180
1,646
3,013
39
6
5,465
7,199
Joyce Corporation Ltd 2011 Annual Report I PAGE 69
4.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Liquidity risk
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.
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 2011
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 2010
Consolidated financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
≤6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
3,780
1,166
-
4,946
5,266
583
5,849
(903)
-
-
-
-
-
52
52
(52)
-
480
39
519
-
7,048
7,048
(6,529)
-
-
-
-
-
-
-
-
≤6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
4,180
2,593
-
6,773
-
-
-
-
-
420
6
426
Total
$000
3,780
1,646
39
5,465
5,266
7,683
12,949
(7,484)
Total
$000
4,180
3,013
6
7,199
6,888
12,888
19,776
(12,577)
-
-
-
-
-
-
-
-
Joyce Corporation Ltd 2011 Annual Report I PAGE 70
Consolidated financial liabilities
Trade and other payables
Interest bearing loans & borrowings
Net maturity
6,888
12,518
19,406
(12,633)
-
84
84
(84)
-
286
286
140
4.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Liquidity risk (continued)
Financing arrangements
The Consolidated Entity had access to the following undrawn bank borrowing facilities at the reporting
date:
30 June 2010
Consolidated
30 June 2011
Consolidated
Facility limit
$000
13,935
Used
$000
13,612
Available
$000
323
6,400
6,342
58
The Consolidated Entity had$58,000 of available facilities to manage its liquidity as at 30 June 2011
(2010: $323,000) The consolidated entity had $942,000 cash at bank as at the reporting date excluding
funds held in trust set out at note 7. In addition the Consolidated Entity had a net investment in
inventories of $4,275,000 as at 30 June 2011 (2010: $5,886,000). Subsequent to year end a further
$300,000 of additional facility had been agreed to be released by St George and $55,979 in additional
overdraft facility had been available from return of a bank guarantee from a closed store. The total facility
was reduced on settlement of the Queensland property in September 2010.
(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 2011 and 30 June
2010 is as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Gearing ratio
Note
21
11
CONSOLIDATED
2011
$000
7,684
(3,780)
3,904
17,918
2010
$000
12,888
(4,180)
8,708
15,691
22%
56%
The decrease in gearing ratio is attributable to the sale of the Queensland property in September 2010.
Joyce Corporation Ltd 2011 Annual Report I PAGE 71
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 2011.
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 2011 the investment property values increased by $102,544 (2010:
decrease of $76,000) 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 2011of $1,070,000 (2010: $546,000) 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) AASB 8 Operating segments
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 (The Board of Directors) in order
to allocate resources to the segments and to assess their performance.
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.
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
Joyce Corporation Ltd 2011 Annual Report I PAGE 72
6.
SEGMENT INFORMATION (CONTINUED)
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 2011.
Continuing Operations
Discontinued
Operations
Bedshed
Franchising
$000
Bedshed
Stores
$000
Investment
Properties
/ Joyce
$000
Total
$000
Store
Closures
$000
Year ended 30 June 2011
Revenue
Sales to external customers
Inter-segment sales
Total segment revenue
Inter-segment elimination
Unallocated revenue – Interest
received
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
4,574
-
4,574
-
-
16,185
-
16,185
-
-
823
-
823
-
-
1,956
(39)
(70)
10,455
10,074
11,811
4,644
1,321
7,778
8
33
-
7
205
-
62
-
-
21,582
-
21,582
-
230
21,812
1,847
108
1,955
(752)
1,203
2,278
3,481
32,340
1,327
33,667
13,743
2,006
15,749
77
238
-
Total
$000
25,292
-
25,292
-
230
3,710
-
3,710
3,710
25,522
(567)
(567)
-
(567)
-
(567)
-
-
-
-
-
-
-
69
-
1,280
108
1,388
(752)
636
2,278
2,914
32,340
1,327
33,667
13,743
2,006
15,749
77
307
-
Joyce Corporation Ltd 2011 Annual Report I PAGE 73
6.
SEGMENT INFORMATION (CONTINUED)
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 2010.
Continuing Operations
Discontinued
Operations
Bedshed
Franchising
$000
Bedshed
Stores
$000
Investment
Properties
/ Joyce
$000
Sub-total
$000
Store
Closures
$000
5,323
-
5,323
-
-
15,291
-
15,291
-
-
835
-
835
-
-
21,449
-
21,449
-
290
21,739
6,641
-
6,641
-
-
6,641
Total
$000
28,090
-
28,090
-
290
28,380
(1,654)
294
(847)
(2,207)
(5,307)
(7,514)
115
(2,092)
(740)
(2,832)
174
(2,658)
40,302
388
40,690
8,280
16,271
24,551
124
207
-
-
115
(5,307)
(182)
(5,489)
-
(5,489)
3,759
-
3,759
731
3,476
4,207
156
-
(7,399)
(922)
(8,321)
174
(8,147)
44,061
388
44,449
9,011
19,747
28,758
124
363
-
12,786
8,547
18,969
6,393
1,373
514
124
59
-
-
148
-
-
-
-
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
Other segment information
Capital expenditure
Depreciation and amortisation
Other non-cash segment
expenses
(b) Geographic segments
The Consolidated Entity operates in one principal geographical area namely that of Australia (country of
domicile).
(c) 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 2011 (2010: None).
Joyce Corporation Ltd 2011 Annual Report I PAGE 74
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
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
2011
$000
16,464
4,266
20,730
227
822
103
-
32
1,184
705
34
739
2010
$000
16,690
5,300
21,990
154
826
76
-
60
1,116
711
29
740
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 disposal of assets
Cost of sales
Restructuring provisions
Franchisee settlements related legal costs
Inventory obsolescence costs
Termination costs
Other costs (provision write back)
Total
307
-
109
8,427
-
-
-
(300)
(300)
207
117
-
9,427
3,117
290
240
81
3,728
(b) Lease payments and other expenses
included in the statement of comprehensive income – overall operations
Minimum lease payments - operating lease
(c) Employee benefits expense – overall operations
Wages and salaries
Defined contribution superannuation expense
Other employee benefits expense
CONSOLIDATED
2011
$000
4,062
4,882
453
212
5,547
2010
$000
4,988
5,771
587
357
6,715
Joyce Corporation Ltd 2011 Annual Report I PAGE 75
8. INCOME TAX
The major components of income tax expense for the year ended 30 June 2011 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
Under provision in respect of prior years
CONSOLIDATED
2011
$000
2010
$000
-
-
(2,194)
(84)
-
-
(174)
Income tax benefit relating to continuing operations
(2,278)
(174)
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
-
-
-
-
Income tax benefit relating to overall operations
(2,278)
(174)
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 2011 and 30 June 2010 is as follows:
Profit (loss)before income tax
Income tax expense /(benefit) calculated at the statutory income tax
rate
of 30% (2010: 30%)
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
Deferred tax asset temporary differences not previously brought to
account
Deferred tax asset losses not previously brought to account
Under provision in respect of prior years
CONSOLIDATED
2011
$000
2010
$000
1,203
(3,012)
361
2
(193)
-
(2,322)
(233)
(84)
(904)
86
-
644
-
(2,278)
(174)
Income tax benefit recognised in profit or loss – continuing operations
(2,278)
(174)
The reduction in the rate of effective income tax in the year ended 30 June 2011 is attributable to the
decision not to bring to account a deferred tax asset relating accumulated losses.
Joyce Corporation Ltd 2011 Annual Report I PAGE 76
8.
INCOME TAX (CONTINUED)
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:
Taxation of financial arrangements (TOFA)
PARENT
2011
$000
2010
$000
-
-
-
-
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
Joyce Corporation Ltd 2011 Annual Report I PAGE 77
8. INCOME TAX (CONTINUED)
Deferred income tax at 30 June relates to the following:
Opening
balance
Charged
to income
Charged
directly to
Equity
Changes
in tax rate
Exchange
differences
Closing
balance,
30 June 11
Deferred income
tax liabilities
$000
$000
$000
$000
$000
Investment property
Plant and equipment
Fair value gain
Other
(2,286)
(35)
-
-
1,518
(12)
-
(45)
-
-
(260)
-
(2,321)
1,461
(260)
-
-
-
-
-
-
-
-
-
$000
(768)
(47)
(260)
(45)
(1,120)
Balance at 30 June
2011
Deferred tax assets
Other
Losses
Balance at 30 June
2010
$000
$000
$000
$000
$000
$000
387
-
500
233
387
733
-
-
-
-
-
-
-
-
-
887
233
1,120
The Consolidated Entity has deferred tax assets of $1,070,000 (2010: $546,000) 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 2011, there is no recognised or unrecognised deferred income tax liability (2010: 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 2011 Annual Report I PAGE 78
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 completed all planned store
closures within the provisions made.
(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
2011
$000
3,608
(2,453)
1,155
2010
$000
5,272
(3,013)
2,259
12
1
(1,734)
(567)
(7,569)
(5,309)
-
-
(567)
(5,309)
-
-
Loss for the year from discontinued operations (attributable to owners
of Joyce Corporation Ltd).
(567)
(5,309)
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
(491)
-
-
(1,705)
-
-
(491)
(1,705)
Joyce Corporation Ltd 2011 Annual Report I PAGE 79
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 profit/(loss) attributable to equity holders from
continuing operations for basic earnings per share
Effect of dilutive equity instruments
Net loss attributable to equity holders from continuing
operations for diluted earnings per share
CONSOLIDATED
2011
$000
2010
$000
3,481
(2,838)
-
-
3,481
(2,838)
Profit/(loss) attributable to equity holders from discontinued
operations
(567)
(5,309)
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
2,914
(8,147)
-
-
2,914
(8,147)
Number of
shares
Number of
shares
Weighted average number of ordinary shares for basic
earnings per share including partly paid
20,701,623
20,701,623
Assuming Convertible Notes on issue of $2,180,000 are
converted to ordinary shares on their first anniversary at
$0.30 cents per share. Conversion is not mandatory and after
the first anniversary Convertible Notes are converted at the
an average market price (VWAP) prior to notice of
conversion. Where not converted notes are redeemable at
the end of five years from issue
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
7,266,666
-
27,968,289
20,701,623
-
-
380,000
380,000
Earnings per share are included at the foot of the Statement of Comprehensive Income
Joyce Corporation Ltd 2011 Annual Report I PAGE 80
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
2011
$000
3,780
3,780
2010
$000
4,180
4,180
(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 franchise owned and Company
owned stores. At 30 June 2011 the total of this balance was $2,838,682 (30 June 2010: $2,453,594). The
funds held in trust are specifically excluded and released from the registered charge over the entity held
by St George bank. 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
1,186
(20)
1,166
480
480
2,658
(65)
2,593
420
420
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 $20,248 (2010: $65,000) has been recognised by the Consolidated Entity.
At 30 June, the ageing analysis of trade receivables is as follows:
Total
$000
1,186
0-30
Days
31-60
Days
$000
510
$000
380
61-90
Days
PDNI*
$000
244
61-90
Days
CI*
$000
-
+91
Days
PDNI*
$000
32
+91
Days
CI*
$000
20
2011 Consolidated
2010 Consolidated
2,658
1,281
727
195
-
390
65
* Past due not impaired ('PDNI')
Considered impaired ('CI')
Receivables past due but not considered impaired are: Consolidated Entity: $276,000 (2010: $585,000).
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 2011 Annual Report I PAGE 81
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
2011
$000
65
-
(45)
20
2010
$000
15
50
-
65
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
2011
$000
4,370
(95)
4,275
2010
$000
6,176
(290)
5,886
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2011 amounted to $94,943(2010: $290,000). The reduction in provision has been written back to
cost of goods sold as losses were realised.
14. OTHER ASSETS
Current
Prepayments
CONSOLIDATED
2011
$000
560
560
2010
$000
607
607
Joyce Corporation Ltd 2011 Annual Report I PAGE 82
15. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Current
At 1 July 2010,
Property
Disposals
At 30 June 2011
CONSOLIDATED
2011
$000
2010
$000
7,350
-
(7,350)
-
7,350
7,350
On 28 September 2010 the sale of the Brendale property in Queensland was finalised for $7.5m gross.
16. OTHER FINANCIAL ASSETS
CONSOLIDATED
Current
Investments in listed shares at fair value through profit or loss
17. PLANT AND EQUIPMENT
2011
$000
39
39
CONSOLIDATED
Leasehold
improvements
$000
Plant and
equipment
$000
Leased
Plant and
Equipment
$000
Year ended 30 June 2011
At 1 July 2010,
Net of accumulated depreciation
Additions
Disposals
Transfers
Transfer from investment properties
Depreciation charge for the year
Impairment
At 30 June 2011,
Net of accumulated depreciation
At 1 July 2010
Cost
Accumulated depreciation and impairment
Net carrying amount
At 30 June 2011
Cost
Accumulated depreciation and impairment
Net carrying amount
-
21
-
-
-
(4)
-
17
16
(16)
-
21
(4)
17
1,865
77
(579)
18
223
(213)
-
424
-
(118)
(18)
-
(90)
-
1,391
198
1,606
3,539
(1,674)
1,865
2,401
(1,010)
1,391
721
(297)
424
482
(284)
198
4,276
(1,987)
2,289
2,904
(1,298)
1,606
2010
$000
6
6
Total
$000
2,289
98
(697)
-
223
(307)
-
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30
June 2011 is $197,845 (2010: $424,000). 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 22.
Joyce Corporation Ltd 2011 Annual Report I PAGE 83
17.
PLANT AND EQUIPMENT (CONTINUED)
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
18. INVESTMENT PROPERTY
-
-
-
-
-
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
CONSOLIDATED
Year ended 30 June 2011
Balance at 1 July 2010
Additions
Disposals
Transfer to plant and equipment
Fair value adjustments
,
Balance at 30 June 2011
2011
$000
2010
$000
10,506
30
-
(223)
103
10,430
-
-
-
76
10,416
10,506
The fair value model is applied to all investment properties. The investment property was valued by
registered independent valuers as at 30 June 2011 and at 30 June 2010. The gross valuation at 30 June
2011 was $11,100,000 with the remaining value not included above included in Property Plant and
Equipment. Joyce Corporation Ltd leases its property to Joyce Foam Pty Ltd (the Company which
acquired the foam businesses in November 2005) at a rental less than the current market value.
For the 30 June 2011, an independent valuer arrived at the above property valuation after deducting an
amount of $2,668,000 because the existing lease attracts rent at approximately 50% of current market
rental yields and the lease has another 4.4 years to run. But for the existence of this lease, the valuation
of the above property would have been stated at $13,761,000.
Joyce Corporation Ltd 2011 Annual Report I PAGE 84
19. INTANGIBLE ASSETS
Goodwill (a)
CONSOLIDATED
2011
$000
2010
$000
10,225
10,225
10,225
10,225
An analysis of intangible assets is presented below:
CONSOLIDATED
Year ended 30 June 2011
At 1 July,
net of accumulated amortisation
Additions
Amortisation
At 30 June 2011,
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
2011
$000
2010
$000
10,225
-
-
10,225
-
-
10,225
10,225
10,569
(344)
10,225
10,569
(344)
10,225
10,569
(344)
10,225
10,569
(344)
10,225
Intangible assets as at 30 June 2011 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
2011
$000
6,306
3,919
10,225
2010
$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 2011/12 and 2012/13 financial years
extrapolated using estimated growth rates. The cash flows are discounted using risk-adjusted pre-tax
discount rates.
Joyce Corporation Ltd 2011 Annual Report I PAGE 85
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%
5-7%
3-10%
3-4%
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 2011.
There has been no impairment of Goodwill for the year ended 30 June 2011 (2010: Nil).
(c) Impact of possible changes in key assumptions
Sensitivity analysis is conducted on changes to discount factors and growth, which do not highlight any
material impairment.
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
2011
$000
1,864
563
2,839
5,266
2010
$000
3,297
1,137
2,454
6,888
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 2011 Annual Report I PAGE 86
21. INTEREST BEARING LOANS AND BORROWINGS
Interest bearing loans and borrowings are comprised of the following:
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 – secured (c)
Convertible Notes
CONSOLIDATED
2011
$000
105
-
530
-
-
635
69
4,800
2,180
7,049
2010
$000
168
3,900
295
7,939
300
12,602
286
-
-
286
7,684
12,888
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. The outstanding is $8,000,000 less a $3,200,000 secured deposit.
(d)
Loan from related party - unsecured
The unsecured loan at 2010 is from Mr Smetana, a Director of the Consolidated Entity was fully repaid
during the reporting year.
(e)
Collateral provided
The available St George bank cash and guarantee facility is $1,600,000 (2010: $6,400,000). The unused
cash facility at 30 June 2011 is $58,000(2010: $323,000) with as cash and cash equivalents held of
$941,000. Further details on the facility are provided in note 4. There is first registered real property
mortgage over the investment property owned by the Consolidated Entity, together with a fixed and
floating charge over the Consolidated Entity assets and cross guarantees from operating subsidiaries 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
2011
$000
10,416
1,606
12,022
2010
$000
17,856
2,289
20,145
Joyce Corporation Ltd 2011 Annual Report I PAGE 87
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 2.0 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 abnormal or one off transactions.
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
2011
$000
3,780
1,166
4,946
2010
$000
4,180
2,593
6,773
There was no breach of the Company’s interest cover and gearing ratio debt covenants at 30 June 2011.
As a result, the Consolidated Entity’s bank debt has been classified as non-current at 30 June 2011, in
accordance with applicable accounting standards. Subsequent to year end, the Consolidated Entity
successfully obtained further reduction in interest cover covenant to 1.25 times reverting to the previous
covenant in (f) above from 31 March 2012. St George Bank has also provided further accommodation of
$300,000 since the year end.
(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 2011 Annual Report I PAGE 88
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)
Environmental testing (e)
Other
Total Non-Current
(a) Provision for employee benefits
CONSOLIDATED
2011
$000
309
200
601
-
84
1,194
5
421
-
3
56
485
2010
$000
274
102
1,875
2,860
69
5,180
5
718
625
9
41
1,398
1,679
6,578
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 closure of a company
owned store. The property has been sublet and a provision for a rental shortfall was made at 30
June 2010 and this arrangement continues completing in October 2014.
(c) Provision for franchisee settlement
During the year ended 30 June 2011, 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 were 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 maintained a provision for the
remaining payable and related costs of this settlement at 30 June 2011.
(d) Restructuring provisions
During the year ended 30 June 2011, the Consolidated Entity substantially completed restructure that
were provisioned at the 30 June 2010. Some unprofitable company owned stores were closed In
consequence and this has been achieved within the provision made.
Joyce Corporation Ltd 2011 Annual Report I PAGE 89
22. PROVISIONS (CONTINUED)
Sub-let
provison
Store
Closure
Stock
Provision
Other
Total
Franchisee
Settlement
Long-
term
Employee
Benefits
$000
$000
$000
$000
$000
$000
$000
840
2,635
290 279
2,500
34
6,578
Consolidated Group
Opening balance at 1 July
2010
Additional provisions
8
-
- 278
-
14
300
Amounts used
(233)
(2,335)
(195)
(243)
(1,899)
Unused amounts reversed
Increase in the discounted
amount arising because of
time and the effect of any
change in the discount rate
-
6
Balance at 30 June 2011
621
(300)
-
-
(e) Provision for environmental testing
-
-
-
-
-
-
-
-
-
(5,199)
-
-
95
314
601
48
1,679
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 (2010: 20,321,623) Issued and fully paid ordinary shares (a)
15,167
15,167
CONSOLIDATED
2011
$000
2010
$000
380,000 (2010: 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 2010
At 30 June 2011
At 30 June 2011
467
467
15,634
15,634
Number
$000
20,321,623
15,634
20,321,623
15,634
20,321,623
15,634
Joyce Corporation Ltd 2011 Annual Report I PAGE 90
23. CONTRIBUTED EQUITY (CONTINUED)
(a) Par value
The ordinary shares have no par value.
(b) Partly-paid ordinary shares
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.
24. RESERVES
The reserve is a financial asset reserve that resulted from the acquisition of the remaining 51% of the
Bedshed Trust in 2006.
25. 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
2011
2010
Minimum
payments
$000
Present
value of
payments
$000
Minimum
payments
$000
Present
value of
payments
$000
118
72
190
(16)
-
-
-
-
208
314
522
(68)
-
-
-
-
174
174
454
454
(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
2011
$000
689
2,356
-
2010
$000
747
2,669
278
3,045
3,694
Joyce Corporation Ltd 2011 Annual Report I PAGE 91
25. CAPITAL AND LEASING COMMITMENTS (CONTINUED)
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
2011
$000
3,118
7,724
49
2010
$000
4,062
11,481
677
10,891
16,220
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
2011
$000
42
73
-
115
2010
$000
30
39
-
69
Motor vehicle leases are non-cancellable leases for Consolidated Entity motor vehicles.
(e)
Capital expenditure commitments
Capital expenditure commitment for investment property
- plant and equipment
Payable:
- within one year
CONSOLIDATED
2011
$000
290
290
290
2010
$000
-
-
-
Joyce Corporation Ltd 2011 Annual Report I PAGE 92
26. 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 $1,012,109 (2010: $1,178,006).
27. 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
Furniture World Marketing Pty Ltd
Sierra Bedding Pty Ltd
Joyce Indpac Limited
Votraint No. 611 Pty Ltd
Joyce Asia Pty Ltd
Bedshed Franchising Pty Ltd
Furniture World (HK) Pty Ltd
Country of
incorporation
% Equity interest
2010
2011
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Hong Kong
100
100
100
50
100
100
100
100
100
50
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:
(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 2011.
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 $Nil (2010: $157,050). As at year end there was no amount owing to this
related party (2010: Nil).
The Executive directors fees for Mr A Mankarios are paid to Starball Pty Ltd, a company in which
Mr Mankarios has significant influence - $157,920 (2010: $65,924). As at year end there was no
amount owing to this related party (2010: Nil). Interest payment of $811.59 on Convertible Notes
was paid during the year to Starball Pty Ltd (2010: Nil) and $1,962.47 to Mr Mankarios for
Convertible Notes (2010: Nil).
During the year ended 30 June 2011 the Consolidated Entity paid interest of $9,521 (2010:
$4,123) 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 earned 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. The loan was repaid.
Joyce Corporation Ltd 2011 Annual Report I PAGE 93
(vi)
(vii)
Consulting fees paid to Franchising Solutions Pty Ltd for Mr T Hantke - Nil (2010: $10,750). As at
year end there was no amount owing to this related party (2010: Nil).
A receivable from Pynland Pty Ltd, a company owned by Dan Smetana, for $13,402.54 owing to
Joyce Corporation Ltd for amounts paid on behalf of Pynland Pty Ltd.
(viii) Mr Smetana has earned interest from Convertible notes which were from an entitlement issue in
2010 of $46,417.82. Interest is payable monthly at 8%per annum.
28. EVENTS AFTER REPORTING DATE
The Consolidated Entity has renegotiated facilities and covenants with St George Bank with further
accommodation of $300,000 subsequently approved.
A dividend was declared on 17 August 2011 for an unfranked 2.0 cent per share dividend with a record
date of 2 November 2011 and payable 18 November 2011.
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.
29 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
30. DIVIDENDS
Distributions paid
Final unfranked ordinary dividend of Nil (2010: 2.0 cents) cents per
share
Interim unfranked ordinary dividend of 2.0 (2010: Nil) cents per share
CONSOLIDATED
2011
$000
2010
$000
103
135
53
10
166
35
-
170
2011
$000
2010
$000
-
405
406
406
-
405
To date the directors have declared the payment of a final dividend out of retained profits at 30 June
2011 with a record date of 2 November 2011 and a payment date of 18 November 2011.
Joyce Corporation Ltd 2011 Annual Report I PAGE 94
31. 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
Chairman (non-executive)
Non-executive Director
Non-executive Director
Executive Director
(ii)Specified executives
Mr G Culmsee
Mr K Gray
Ms S Freedman
Chief Operating Officer
Chief Financial Officer & Company Secretary
National Marketing Manager
(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
Executive Director and all other executives.
Joyce Corporation Ltd 2011 Annual Report I PAGE 95
31
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 2011
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Ms S Freedman
Total Remuneration:
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
119
38
52
157
183
124
90
763
281
32
62
66
282
173
69
48
37
126
177
Total Remuneration:
1,353
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
36
-
50
29
15
-
18
14
8
53
134
-
-
-
-
-
26
6
-
2
-
17
11
35
5
-
33
15
7
4
4
11
19
-
-
-
-
-
-
-
-
-
-
-
-
157
-
-
-
25
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
169
67
67
157
218
174
98
950
292
67
67
66
472
214
82
52
68
137
213
51
144
182
1,730
(c) Remuneration options: Granted and vested during the year
During the financial year ended 30 June 2011 no options (2010: 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 2011 no shares (2010: Nil) were issued on exercise of
remuneration options to any director or executive of the Consolidated Entity.
Joyce Corporation Ltd 2011 Annual Report I PAGE 96
31. DIRECTOR AND EXECUTIVE DISCLOSURES (CONTINUED)
(e) Shareholdings of key management personnel
Ordinary Shares held in Joyce Corporation Ltd
2011
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Ms S Freedman
Total
2010
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Ms S Freedman
Total
Balance
01-Jul-10
Ord
Granted as
Remuneration
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-11
Ord
7,079,932
-
-
505,289
-
-
-
7,585,221
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,000
-
-
10,830
-
-
-
7,082,932
-
-
516,119
-
-
-
13,830
7,599,051
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
-
-
-
7,585,221
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,079,932
-
-
505,289
-
-
-
7,585,221
* Beneficial holding only. Mr Smetana controls 7,960,359fully-paid ordinary shares (2010: 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 2011 or at any time during the financial year there were no loans (2010: Nil) outstanding to
specified directors and specified executives.
Joyce Corporation Ltd 2011 Annual Report I PAGE 97
32. RECONCILIATION OF NET LOSS AFTER TAX TO NET CASH FLOWS FROM OPERATIONS
Reconciliation of net profit (loss) after tax to the net cash
flows from operations
CONSOLIDATED
Net profit/(loss) after taxation
Adjustments for:
Depreciation and amortisation
Interest receivable
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
Franchisee settlement paid
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
2011
$000
2,914
307
(151)
359
(133)
122
(1,875)
1,611
1,367
14
(1,934)
(83)
(1,622)
(3,095)
2010
$000
(8,147)
363
-
117
124
36
-
204
385
611
(174)
-
2,029
5,767
Net cash flows used in operating activities
(2,199)
1,315
Joyce Corporation Ltd 2011 Annual Report I PAGE 98
33. 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
2011
$000
2010
$000
271
20,877
21,148
819
6,977
7,796
166
27,365
27,531
12,972
143
13,115
13,352
14,416
15,634
(2,282)
13,352
15,634
(1,218)
14,416
Year ended 30 June
2011
$000
(660)
-
(660)
2010
$000
(838)
-
(838)
(c) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No such guarantees existed at 30 June 2011, 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 2011 (30 June 2010: Nil).
(e) Commitments for the acquisition of property plant and equipment by the parent entity
Commitments for the acquisition of property plant and equipment by the parent entity existed as at 30
June 2011for the value of $290,000 (30 June 2010: Nil).
Joyce Corporation Ltd 2011 Annual Report I PAGE 99
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 thereto of 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 Executive 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
(c) 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, 29 September 2011
Joyce Corporation Ltd 2011 Annual Report I PAGE 100
Grant Thornton Audit Pty Ltd
ABN 94 269 609 023
10 Kings Park Road
West Perth WA 6005
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E admin.wa@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Joyce Corporation Ltd
Report on the financial report
We have audited the accompanying financial report of Joyce Corporation Ltd (the
“Company”), which comprises the consolidated statement of financial position as at 30 June
2011, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory information
and the directors’ declaration of the consolidated entity comprising the Company and the
entities it controlled at the year’s end or from time to time during the financial year.
Directors responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view of the financial report in accordance with Australian
Accounting Standards and the Corporations Act 2001. This responsibility includes such
internal controls as the Directors determine are necessary to enable the preparation of the
financial report to be free from material misstatement, whether due to fraud or error. The
Directors also state, in the notes to the financial report, in accordance with Accounting
Standard AASB 101 Presentation of Financial Statements, that compliance with the
Australian equivalents to International Financial Reporting Standards ensures that the
financial report, comprising the financial statements and notes, complies with International
Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards which require us to
comply with relevant ethical requirements relating to audit engagements and plan and
perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
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 2011 Annual Report I PAGE 101
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation and fair presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of
the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
a
the financial report of Joyce Corporation Ltd is in accordance with the Corporations
Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2011 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.
Report on the remuneration report
We have audited the remuneration report included in pages 11 to 15 of the directors’ report
for the year ended 30 June 2011. The Directors of the Company are responsible for the
preparation and presentation of the remuneration report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
report, based on our audit conducted in accordance with Australian Auditing Standards.
Joyce Corporation Ltd 2011 Annual Report I PAGE 102
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Joyce Corporation Ltd for the year ended 30
June 2011, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
P W Warr
Director - Audit & Assurance
Perth, 29 September 2011
Joyce Corporation Ltd 2011 Annual Report I PAGE 103
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
222
181
67
114
24
608
255
Fully Paid
Ordinary
Shares
72,588
452,425
493,281
3,408,611
15,894,718
%
0.36
2.23
2.43
16.77
78.21
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
7,960,359
2,000,000
%
39.17
9.84
9,960,359
49.01
* Mr Smetana has beneficial interest in 7,082,932fully-paid ordinary shares (2010: 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 2011 Annual Report I PAGE 104
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 21 SEPTEMBER 2011
(d)
Shareholdings - Twenty Largest Holders of Quoted Equity Securities - ungrouped
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
UFBA Pty Ltd
Peduncle Pty Ltd
1.
2.
3.
4. Wallbay Pty Ltd
Mr D Teo
5.
Trafalgar Place Nominees Pty Ltd
6.
Parks Australia Pty Ltd
7.
Mr R H Bartlett
8.
Pynland Pty Limited
9.
10. Mr D A Smetana
11. Conard Holdings Pty Ltd
12. Mr A Mankarios and Mrs C Mankarios
13. ASB Nominees Limited
14. Mr J M Wright
15. Mr K Knowles
16. PBL Investments Pty Ltd
Argus Clothing Pty Ltd
17.
18. Mrs E Knowles
19. Brazil Farming Pty Ltd
20. Ms Julia Roberman
Fully Paid
Ordinary
Shares
5,697,694
2,000,000
1,442,106
998,356
990,000
723,567
600,204
355,400
314,886
280,000
257,540
250,000
236,293
229,463
209,380
200,000
196,050
178,800
170,000
126,500
%
28.04
9.84
7.10
4.91
4.87
3.56
2.95
1.75
1.55
1.38
1.27
1.23
1.16
1.13
1.03
0.98
0.96
0.88
0.84
0.62
Total
15,456,239 76.05%
(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 2011 Annual Report I PAGE 105
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 2011 Annual Report I PAGE 106