Joyce Corporation Ltd
AND CONTROLLED ENTITIES
ABN: 80 009 116 269
Annual Report 2016
Joyce Corporation Ltd 2016 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: Bedshed Central Office
Principal registered office
Share register
Auditors
Solicitors
Bankers
14 Collingwood Street
Osborne Park 6017
Western Australia
time: 10:00am
date: 22 November 2016
14 Collingwood Street,
Osborne Park, WA,
Australia, 6017
Tel: +61 8 9445 1055
Computershare Investor Services Pty Limited
Level 11
172 St Georges Terrace
Perth WA 6000
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Australia
MDS Legal
Level 2, 16 Irwin Street,
Perth WA 6000
Australia
St George Bank
Level 2 Westralia Plaza
167 St Georges Terrace
Perth WA 6000
Australia
Stock exchange listings
Joyce Corporation Ltd shares are listed on the Australian
Securities Exchange (ASX : JYC).
Website address
www.joycecorp.com.au
ABN:
80 009 116 269
Joyce Corporation Ltd 2016 Annual Report I PAGE 2
ANNUAL REPORT CONTENTS
ANNUAL REPORT CONTENTS ................................................................................................................... 3
DIRECTORS’ REPORT ................................................................................................................................ 7
AUDITOR'S INDEPENDENCE DECLARATION .......................................................................................... 20
CORPORATE GOVERNANCE STATEMENT ............................................................................................. 21
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME............ 23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION........................................................................ 24
CONSOLIDATED STATEMENT OF CASH FLOWS .................................................................................... 25
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ........................................................................ 26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .................................................................. 27
CORPORATE INFORMATION ...................................................................................................... 27
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .............................................................. 27
2.
FINANCIAL RISK MANAGEMENT ................................................................................................ 30
3.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS ........................................................ 34
4.
SEGMENT INFORMATION ........................................................................................................... 35
5.
REVENUE, INCOME AND EXPENSES ......................................................................................... 38
6.
INCOME TAX ............................................................................................................................... 40
7.
DISCONTINUED OPERATIONS ................................................................................................... 44
8.
EARNINGS PER SHARE .............................................................................................................. 45
9.
CASH AND CASH EQUIVALENTS ............................................................................................... 46
10.
TRADE AND OTHER RECEIVABLES ........................................................................................... 46
11.
INVENTORIES ............................................................................................................................. 47
12.
OTHER ASSETS .......................................................................................................................... 49
11.
OTHER FINANCIAL ASSETS ....................................................................................................... 49
12.
PROPERTY, PLANT AND EQUIPMENT ....................................................................................... 49
13.
INTANGIBLE ASSETS ................................................................................................................. 50
14.
TRADE AND OTHER PAYABLES ................................................................................................. 53
15.
PROVISIONS ............................................................................................................................... 54
16.
CONTRIBUTED EQUITY .............................................................................................................. 56
17.
RESERVES .................................................................................................................................. 56
18.
CAPITAL AND LEASING COMMITMENTS.................................................................................... 57
19.
FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS ................................................... 57
20.
FAIR VALUE MEASUREMENT OF NON-FINANCIAL INSTRUMENTS .......................................... 58
21.
CONTINGENT LIABILITIES .......................................................................................................... 58
22.
RELATED PARTY DISCLOSURES ............................................................................................... 58
23.
EVENTS SUBSEQUENT TO REPORTING DATE ......................................................................... 60
24.
AUDITORS’ REMUNERATION ..................................................................................................... 60
25.
DIVIDENDS .................................................................................................................................. 60
26.
RECONCILIATION OF NET PROFIT AFTER TAX TO NET CASH FLOWS FROM OPERATIONS . 61
27.
28.
PARENT ENTITY DISCLOSURES ................................................................................................ 62
DIRECTORS’ DECLARATION .................................................................................................................... 63
INDEPENDENT AUDITOR’S REPORT ....................................................................................................... 64
ASX ADDITIONAL INFORMATION ……………………………………………………………………………...……66
Joyce Corporation Ltd 2016 Annual Report I PAGE 3
CHAIRMAN’S REPORT
I am pleased to provide the annual report of Joyce Corporation Ltd for the year ending 30 June 2016.
Joyce Corporation has delivered a solid performance and made great progress in securing growing
opportunities designed to create value for our shareholders. Highlights for the 2016 financial year included
the negotiation for the purchase on 1 July 2016 of 51% of Lloyds Online Auctions Pty Ltd and settlement of
the Moorebank investment property.
It is pleasing to report that revenues for 2016 were up 62.8% year on year to $56.5 million, leading the
Company to record a statutory profit after tax and non-controlling interest of $2.3 million. While this profit is
lower year-on-year, the 2015 profit included a one-off $5.09 million gain booked from discontinued
operations that year, mainly comprised of gains from the sale of our Moorebank property.
Profit from continuing operations after tax, adjusting for gains from one-off sales, was up to $3.46 million in
2016 versus $126,000 in 2015.
The continuing businesses’ EBIT was $3.12 million to 30 June 2016 versus $291,000 to 30 June 2015.
The Company achieved net assets per share attributable to members of 91 cents as at 30 June 2016. The
earnings per share after tax (EPS) were 8.2 cents on a diluted basis and the EPS from continuing
operations was 12.4 cents per share.
Joyce made a strategic acquisition of Lloyd’s Online Auctions after year-end, which complements our other
business units and enables the Company to enter into the rapidly expanding online retail space. With solid
plans for expansion, we expect the business to add an estimated $10 million to our revenues in the coming
financial year.
The Company’s other business units, Bedshed Franchising and KWB Group, both performed better than
forecast. With this in mind, we anticipate the total group network written sales for 2017, including franchisee
and auction gross sales, to be between $170 million and $200 million.
An important achievement during 2016 was investing in our future and our people by acquiring a property
in the tightly held Perth suburb of Osborne Park. We plan to develop this property to house our Corporate
Office and our new integrated high clearance warehouse facility. We plan to complete this development by
31 December 2016.
In line with our 2015 plan and our commitment to providing strong returns to shareholders, we are pleased
to declare a fully franked dividend of 6 cents per share (to be paid on 18 November 2016) to shareholders
and with a record date of 28 October 2016. The dividend comprises a final dividend of 3 cents and special
dividend of 3 cents respectively both fully franked.
Looking ahead, we remain focussed on long-term shareholder value creation. The Company is in an
enviable financial position with profitable businesses, no debt and substantial growth opportunities, which
provides a strong level of security for our shareholders. The recent strategic development and execution of
our plans have been extraordinarily progressive and has set the foundation for further organic growth and
business partnering opportunities.
I would like to take this opportunity to acknowledge the contribution made by my fellow directors. I would
also like to recognise the invaluable contribution made by management and all employees in achieving
consistently strong results. We also thank shareholders for their continued support and we look forward to
another successful year ahead.
Dan Smetana
Chairman
Joyce Corporation Ltd 2016 Annual Report I PAGE 4
EXECUTIVE DIRECTOR’S REPORT
Operational Review
Director’s Operational Review
The Company announced a statutory profit for the year after tax attributable to members of $2.3M
compared to $4.47M to 30thJune 2015. The comparative year 2015 results included gains on the
Moorebank Property sale and provisions with total one-off gain of $5.09M. The year compared favourably
on a continuing business profit after tax basis of $3.46M in 2016 up from $126,000 in 2015.
The group EBIT on a continuing basis including non -controlling interest was $5.49 Million for the period
ending 30th June 2016.
The group grew revenues by 62.8 % on the previous year to $56.5 Million.
Bedshed Franchising & Company Stores (“Bedshed”)
This cash flow generating business unit managed to improve the underlying like for like earnings on the
previous year. Total network written sales maintained modest growth on a like for like basis in a challenging
bulky goods retail environment. During the year two franchise stores in Queensland were converted to
company owned stores with an increase in revenue and profit for stores and a corresponding decrease in
Bedshed franchising revenue and profit.
The Bedshed company owned stores traded up on last year and earnings growth was also up in strong
double-digit growth. The Company stores increased in numbers to 5 stores with 2 in WA and 3 in QLD.
Bedshed has added new Franchise stores in the ACT and in Queensland and new stores are planned in
2017.
We have also fast tracked the new “evolution” fit-out program with 4 more stores completed in this year;
additional Franchise stores have committed to completing this program in 2017.
KWB Group Pty Ltd (“KWB”)
Kitchen Connection and Wallspan kitchen and wardrobes’ retail showrooms were upgraded during the
period and additional showrooms opened. The KWB stores have been fully upgraded to produce an
inspiring contemporary complete kitchen showroom experience for our customers. KWB currently operates
in QLD, NSW and SA with 13 stores. The focus has been on exemplary customer service and delivery of
Kitchens at the highest standards in Australia.
The business grew strongly, with sales revenue up by 29% in 2016.
The Company is fully cash funded, with no bank debt and has considerable orders on its books. The cash
position is strong and this subsidiary managed to pay its first fully franked dividend during this period.
KWB has signed up two new leases for 2017 and is working on additional opportunities. The focus now is
on additional new showrooms and the introduction of new lines and benefits to our customers.
The business is currently trading within expectations and profit growth targets.
Joyce Corporation Ltd 2016 Annual Report I PAGE 5
EXECUTIVE DIRECTOR’S REPORT (contd)
Future Outlook
The Company has maintained steady fast growth in revenue and profitability for continuing operations for
the last three to four years.
The Sale of the Moorebank Property in 2015/16 for $25M has provided the group with the necessary
wherewithal to continue to grow and take on additional opportunities in 2017. The fast growing Lloyds
Online Auction business opportunity and the acquisition of our corporate offices and warehouses in
Osborne Park WA will see additional lifts in earnings before interest and tax (EBIT) during the next twelve-
month period. The Company currently has no bank debt. The opportunity to leverage a strong balance
sheet will provide further growth opportunities into the near term.
The Company’s prospects are positive given the growth in overall business unit performances. The
Company plans to introduce additional Bedshed Franchise stores and will focus on achieving accelerated
growth in this area.
The Company has achieved successful earnings and cash flow development with its related subsidiary
company KWB Group Pty Ltd and there is potential for this to expand initially within its existing
geographical operational areas.
KWB commenced cash dividend payments which are now fully franked. This will aid the Group to lift
franked dividends to shareholders in the near future.
The Company’s new premises at Osborne Park is expected to add approximately $380K in EBIT to the
group on an annualised basis post January 2017 as a result of saved rents and additional rental incomes
into the future.
Joyce’s vision is to produce above average market returns to its shareholders through partnering in various
business opportunities; it aims to eventually enhance the group by assisting with the expansion across
Australia. We anticipate that our footprint into the premium “do it for me” and business to consumer “ b2c”
markets will grow consistently in the coming years.
The outlook remains positive whilst continuing to be subject to overall economic activity.
After Balance Date Events
Joyce has announced that it has purchased 51% of the equity in the business of Lloyds Online Auctions
Pty Ltd business on 1 July 2016. The equity was purchased for $6m, it includes the onsite auction and
valuation businesses.
The business is expected to generate auction sales of over $50M and is expected to exceed earnings
before income tax, depreciation and amortisation (EBITDA) of $3M in 2017. The business is currently very
profitable and trading well to August 2016. This business is expected to add over $10M to Joyce’s
consolidated 2017 revenue.
The founder and CEO Andrew Webber has built the business on personal relationships and achieving high
asset sales on a consistent basis. Mr Webber is now part of the group and will stay to continue to grow this
business moving forward.
Mr A. Mankarios
Executive Director
Joyce Corporation Ltd 2016 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 2016.
DIRECTORS
The names of the Company’s Directors in office during the year ended 30 June 2016 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;
(b) An owner of a number of Bedshed retail stores;
(c) Property Investment; and
(d) Majority owner of 51% of KWB Group Pty Ltd
Other than two additional Bedshed company owned stores in North Queensland which were taken over in November
2015, the settlement of the NSW Moorebank property in November 2015 and 51% majority owner of KWB Group, no
other 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 2016 (“the Financial Year”) the Consolidated Entity achieved revenue from
continuing operations of $56.5m (2015: $34.7m) and a profit from continuing operations before tax of $5.28m (2015:
$0.91m) and an overall net profit after tax of $3.98m (2015: $5.22m). The revenue increased from the consolidation
of the KWB Group Pty Ltd from November 2014 and like for like Bedshed sales reduced marginally on the closure of
a Queensland company store due to the end of a lease term. A franchise store was subsequently opened near the
previous location of the company owned store.
Financial Position
At 30 June 2016, the Consolidated Entity had equity of $26.0m (2015: $26.5m); with dividend payments increasing
from $1,297k in 2015 to $3,636k in 2016. Cash and cash equivalents increased to $15.25m (2015: $5.96m).
Unutilised debt facilities were $1.4m (2015: $3.5m).
Bank Facility
The Board is pleased to advise that the Consolidated Entity has its longer term debt funding facility with St George
Bank to 30 June 2019. The bank bill facility was repaid after sale of the NSW property and all debt retired at that
point. A new bank bill facility of $1.26m and an overdraft facility of $150,000 were approved prior to year end and
were both undrawn. A $1.24m multi option facility, which is subject to annual review, was also extended for another
year to June 2016 and with a reduction in bank guarantees post year end, part of this facility will be transferred to the
longer term bank bill facility.
Joyce Corporation Ltd 2016 Annual Report I PAGE 7
DIRECTORS’ REPORT (CONTINUED)
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Consolidated Entity will look to further develop the Bedshed business through the expansion of its network of
franchised stores whilst consolidating the improved financial performance of Company owned and operated stores.
The Board has completed a strategic review of all businesses to ensure maximum return on shareholders’ funds.
The KWB business is investing in additional stores and the expansion will see improvement in profits and a resulting
increase profit from the investment of 51% KWB.
DIVIDENDS
Dividends declared or paid during the financial year are as follows:
Distributions paid or payable
Interim unfranked dividend of 1.5 (2013: 1.0) cents per share
(Paid 31 July 2014)
Final unfranked ordinary dividend of 2.1 (2014: 2.0) cents per share
(Paid 21 November 2014)
Prior year dividends paid on partly paid shares
(Paid 01 March 2015)
Interim unfranked dividend of 2.5 (2014: 1.5) cents per share
(Paid 31 March 2015)
Final fully franked ordinary dividend of 3.0 (2015: 2.1) cents per share
(Paid 23 October 2015)
Special fully franked dividend of 5.0 (2015:Nil) cents per share
(Paid 16 December 2015)
Interim fully franked dividend of 3.0 (2015:2.5) cents per share
(Paid 14 April 2016)
Special fully franked dividend of 2.0 (2015:Nil) cents per share
(Paid 14 April 2016)
2016
$000
2015
$000
-
-
-
-
839
1,399
839
559
420
587
11
699
-
-
-
-
3,636
1,717
The Board will continue to review the Company’s ability to pay dividends and will continue with the payment of
regular dividends as in line with the dividend policy and available liquidity.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The Company had previously announced that the investment property was not part of the longer term strategy and
during the year completed the sale of the Moorebank property with an unconditional sale for $25 M which was
settled in November 2015. Proceeds from the sale were applied to tax payments, repayment of all bank debt and
purchase of a property in Osborne Park to house and consolidate corporate offices and warehouse facilities.
SIGNIFICANT AFTER REPORTING DATE EVENTS
A fully franked dividend of 3 cents per share was declared on 24 August 2016 and payable 18
November 2016. A further special dividend of 3 cents per share fully franked will be paid on the
same date.
The company acquired 51% of business of Lloyds Online Auctions as of 1 July 2016. The acquisition
was for $6,000,000 plus 50% of stamp duty. The amount is subject to final audited net profit before
interest and depreciation of Lloyds achieving $3,000,000 for the year ended 30 June 2016 and the
purchase price adjusted accordingly..
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 2016 Annual Report I PAGE 8
.
INFORMATION ON DIRECTORS
Mr D A Smetana Chairman - Non-executive. Age 72.
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 and has held this position for 30 years. He is a past President of the Industrial Foundation for
Accident Prevention and remains a Director of Polymetalica Australia Ltd and a Director of Korab Resources
Limited.
His past board memberships include: Director of Edge Employment Solutions Inc, 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. Vice President and Councillor of the WA Federation of Police and Community
Youth Centres (Inc.) and Chairman of the Department of Training and Employment, Science & Technology Advisory
Group.
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
Member of the Audit Committee
Interests in shares and options
9,874,129 beneficial fully paid ordinary shares in Joyce Corporation Ltd.
380,000 partly paid (issued at $1.955 and paid to $1.653) unlisted ordinary shares in Joyce Corporation Ltd.
Mr M A Gurry. – Independent, Non-executive Director. Age 69.
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 Organizations, 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 currently Chairman of Foundation Housing Limited,
former Chairman of the Forest Products Commission, and former Chairman of Reignite Pty Ltd, a councilor 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
34,600
Joyce Corporation Ltd 2016 Annual Report I PAGE 9
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS (CONTINUED)
Mr T R Hantke. – Independent, Non-executive Director. Age 68.
Bachelor of Commerce, FAIM, FAICD
Experience and expertise
Tim Hantke is Managing Director of his own consultancy 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, a Member of the Franchise Policy Council 1997 – 2002 and
a Member of the ACCC's Franchise Consultative Committee. Tim is a Non-Executive Director and Chairman
of Central Purchasing Services Ltd and a Non-Executive Director of Mrs Macs Pty Ltd. and Bentech
Assistive Technologies Inc. He also mentors and coaches CEO's and Business Owners for The Executive
Connection and is an accredited commercial mediator. Tim 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
20,000
Mr A Mankarios. – Executive Director Age 49.
MBA, FAICD, CFTP
Experience and expertise
Anthony was appointed Executive Director of Joyce Corporation Ltd (ASX: JYC) and Bedshed Franchising
Pty Ltd in March 2010 after an executive restructure. Prior to this, Anthony was a Non-Executive Director of
Joyce Corporation and Bedshed Franchising Pty Ltd since September 2008. Anthony is an experienced
Director and Manager who has played a key role in Joyce's underlying business growth performance since
2010. He is also a Non-Executive Director of KWB Group Pty Ltd, which is a fast growing Kitchen
Connection and Wallspan business; and Chairman of Man Investments and Consultants as well as being
involved in a number of other private companies.
Anthony is currently a Non-Executive Director of Inventis Limited (ASX: IVT) and holds Non-Executive
positions in a number of private companies. His experience covers multiple sectors and sized companies
across manufacturing, property, wholesale, retail, importing and Franchise businesses in Australia and in
Asia.
Other current Directorships of listed companies
Inventis Limited
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Member of the Remuneration Committee. Member of the Audit Committee.
Interests in shares and options
710,045
Joyce Corporation Ltd 2016 Annual Report I PAGE 10
DIRECTORS’ REPORT (CONTINUED)
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 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, wholesale and
retail.
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 2016, and the numbers of meetings attended by each Director were:
Full meeting
of Directors
A
11
11
11
11
B
10
9
9
11
Meetings of committees
Audit
Remuneration
A
4
4
4
4
B
4
4
4
4
A
-
3
3
3
B
-
3
3
2
D A Smetana
M A Gurry
T R Hantke
A Mankarios
A =
B =
Number of meetings held
Number of meetings attended during the time the Director held office or was a member of the
committee during the year
A Mankarios did not attend one meeting of the remuneration Committee as this meeting 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. Equity instrument disclosures relating to key management personnel
F. Link between remuneration policy and Company performance
G. Voting at the 2015 Annual General Meeting
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.
As well as the Directors previously mentioned in this Directors’ Report, other Key Management personnel of the
Group include:
G Culmsee General Manager Bedshed Franchising Pty Ltd
K Gray
J Bourke Managing Director KWB Group Pty Ltd
C Palin
Chief Financial Officer Joyce Corporation Ltd
Finance Director KWB Group Pty Ltd
Joyce Corporation Ltd 2016 Annual Report I PAGE 11
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
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 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 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.
A. Principles used to determine the nature and amount of remuneration (continued)
The Remuneration Committee is required to assess its effectiveness periodically. In addition the Charter is required
to be reviewed annually and updated as required.
Remuneration Policies
The objective of the Consolidated Entity’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of
strategic objectives and the creation of value for shareholders, and conforms to market practice for delivery of
reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance
practices:
· competitiveness and reasonableness;
· acceptability to shareholders;
· performance linkage / alignment of executive compensation;
· transparency; and
· capital management.
In consultation with external remuneration consultants, where appropriate, the Consolidated Entity has structured an
executive remuneration framework that is market competitive and complementary to the reward strategy of the
organisation. There was no remuneration consultant used during the financial year.
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.
Joyce Corporation Ltd 2016 Annual Report I PAGE 12
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
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 independently reviewed with effect from 30 June 2011. The remuneration of
Directors was reduced in 2009 and has subsequently been reinstated without escalation during the 2013 to 2015
financial years. 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 $500,000 per annum and was
approved by shareholders at the Annual General Meeting on 22 November 2012.
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 the 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. There are no long term incentives.
B. Service Agreements
This remuneration report outlines the director and executive remuneration arrangements of the Consolidated Entity
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
Consolidated Entity, directly or indirectly, including any Director (whether executive or otherwise) of the Company.
For the purposes of this report, the term "executive" encompasses the Executive Director, Senior Executives and
Company Secretary of the Consolidated Entity.
Joyce Corporation Ltd 2016 Annual Report I PAGE 13
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT - AUDITED (CONTINUED)
Details of key management personnel (including the Senior 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
Mr J Bourke
Mr C Palin
Non-Executive Director and Chairman
Non-Executive Director - Chairman of Audit Committee
Non-Executive Director - Chairman of Remuneration Committee
Executive Director
General Manager Bedshed Franchising Pty Ltd
Chief Financial Officer and Company Secretary
Executive Director KWB Group Pty Ltd
Executive Director KWB Group Pty Ltd
The employment conditions of all Key Management Personnel are formalised in contracts of employment. Other
than Directors, the Executive Director and the CFO, who were engaged by Joyce Corporation Ltd all other
executives are permanent employees of Bedshed Franchising Pty Ltd. KWB Group Pty executives are engaged as
permanent employees
The Executive Director has a service contract, which at the date of this report runs to 30 June 2017 at the rate
adjusted for CPI current at 30 June 2016. This is a part time role, which allows a Directors fee and hourly charge for
work undertaken above this and paid monthly. All out of pocket expenses in connection with carrying out the role are
reimbursable.
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.
2016
Mr G Culmsee
Mr K Gray
Mr C Palin
Mr J Bourke
Term of agreement
Notice Period
In months
Termination payment
in months
rolling
rolling
rolling
rolling
2
2
3
3
2
2
3
3
For base salary and superannuation, see table at C below
Joyce Corporation Ltd 2016 Annual Report I PAGE 14
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
C. Details of remuneration
Short-term
Employment benefits
Post-
Employment
benefits
Salary &
Fees
Cash
Bonus
Non-
Monetary
benefits
Superannuation
Long-
term
benefits
Term
Benefits
AL & LSL
Total
% relating to
performance
30-Jun-16
Non-Executive Directors
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Total Non-Executive
Directors
Executive Director
Mr A Mankarios1
Total Directors
Mr G Culmsee2
Mr K Gray2
Mr J Bourke3
Mr C Palin3
Total Other Key
Management personnel
Total Remuneration:
30-Jun-15
Non-Executive Directors
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Total Non-Executive
Directors
Executive Director
Mr A Mankarios1
Total Directors
Mr G Culmsee2
Mr K Gray2
Mr J Bourke3
Mr C Palin3
Total Other Key
Management personnel
174,634
69,853
69,853
314,340
-
-
-
-
181,041 330,000
495,381 330,000
230,814
188,208
263,207
207,046
61,946
60,926
-
-
889,275 122,872
1,384,656 452,872
161,761
59,821
61,741
283,323
-
-
-
-
174,724
30,387
458,047
30,387
225,667
30,319
183,843
36,760
272,366
63,500
191,671
63,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
622
675
-
-
16,590
6,636
6,636
29,862
-
29,862
21,927
17,879
25,005
19,669
84,480
114,342
26,637
15,538
13,618
55,793
55,793
21,497
17,529
10,419
8,195
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
191,224
76,489
76,489
344,202
-
-
-
-
511,041
64.57%
855,243
314,687
267,013
288,212
226,715
1,096,627
19.68%
22.82%
-
-
1,951,870
23.20%
188,398
75,359
75,359
339,116
205,111
544,227
278,105
238,807
346,285
263,366
-
-
-
-
14.82%
14.82%
-
10.90%
15.39%
18.34%
24.11%
873,547 194,079
1,297
57,640
-
1,126,563
-
Total Remuneration:
1,331,594 224,466
1,297
113,433
- 1,670,790
13.43%
Joyce Corporation Ltd 2016 Annual Report I PAGE 15
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
C. Details of remuneration (continued)
1. Mr A Mankarios was paid a cash bonus based on key performance criteria, which requires performance
meets or exceeds the group budget and also achieves successful completion of predetermined events at the
discretion of the Directors. There is an annual short-term bonus and long-term three year incentive which is
performance based on meeting board approved budgets. He is contracted to 30 June 2017.
2. Bonuses paid to other key management personnel were at the discretion of the Directors.
3. Mr J Bourke and Mr C Palin were Directors of KWB Group Pty Ltd prior to KWB Group Pty Ltd becoming a
subsidiary of Joyce Corporation Ltd in November 2014, they continue as Directors of KWB Group Pty Ltd at
the date of this report. Their remuneration above is for the entire current and comparative financial years.
Other Key Management Personnel were paid a cash bonus based on key performance criteria which requires
performance meets or exceeds the group budget and also achieves successful completion of predetermined events.
D. Share-based compensation
There was no share-based compensation of Key Management Personnel during the year ended 30 June 2016
(2015: Nil).
E. Equity instrument disclosures relating to key management personnel
i. Option and rights holdings granted as compensation
During the financial year ended 30 June 2016 no options (2015: Nil) were granted or vested as equity compensation
benefits to any director or executive of the Consolidated Entity.
ii. Option holdings
There were no options on issue to key management personnel during the year ended 30 June 2016 (2015:
Nil).
iii. Share Holdings
The number of shares in the company held during the financial year by each director of the company and the other
key management personnel of the Group, including their personally related parties, are set out below. There were
no shares granted during the reporting period as compensation (2015: Nil).
2016
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Mr C Palin
Mr J Bourke
Total
Balance
01-Jul-15
Ord
Granted as
Remuneration
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-16
Ord
9,850,696
-
-
700,485
-
-
-
-
10,551,181
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,433
20,000
-
4,560
-
-
-
-
47,993
9,874,129
20,000
-
705,045
-
-
-
-
10,599,174
* Beneficial holding only. Mr Smetana controls 10,854,829 fully-paid ordinary shares (2015
10,893,438).
Joyce Corporation Ltd 2016 Annual Report I PAGE 16
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
iv. Partly Paid Ordinary Shares Share Holding
The number of partly paid ordinary shares in the company held during the financial year by each director of the
company and the other key management personnel of the Group, including their personally related parties, is set out
below. There were no shares granted during the reporting period as compensation (2015: Nil).
2016
Mr D A Smetana1
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Mr C Palin
Mr J Bourke
Total
Granted
as
Remuner
ation
Ord
On Exercise of
Options
Ord
Net Change
Other
Ord
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
01-Jul-15
Ord
380,000
-
-
-
-
-
-
-
380,000
Balance
30-June-16
Ord
380,000
-
-
-
-
-
-
-
380,000
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.
(1) Mr D A Smetana holds 380,000 partly paid (issued at $1.955 and paid to $1.653) (2015 paid to: $1.523) 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.
Joyce Corporation Ltd 2016 Annual Report I PAGE 17
DIRECTORS’ REPORT (CONTINUED)
F. 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. The dividends include a special dividend paid
during 2016 from the sale of the NSW property.
Revenue (a)
Net Profit after tax
Share Price at Year-end $
Dividends (Cents) Paid
Dividend payout ratio %
2016
$000
56,543
2,301
1.06
13.00
158.0
2015
$000
36,544
4,472
1.05
6.10
38.2
2014
$000
15,056
1,570
0.52
3.00
52.6
2013
$000
18,921
668
0.40
2.15
90.0
2012
$000
19,956
3,035
0.42
2.00
18.2
(a) Revenue and net profit in respect of the 2016, 2015, 2014 and 2013 financial years include discontinued
operations. The 2013 and 2014 financial performance was impacted by a non-recurring provision for stores that
are to be closed during the financial year ending the 30 June 2013 and 2014 financial years. Revenue and profit
increased in 2015 from consolidation of KWB Group from November 2014
G. Voting at the 2015 Annual General Meeting on the Remuneration report
The Remuneration report in the 2015 Annual Report to shareholders was approved by 99.9% of shareholders at the
2015 Annual General Meeting. No specific feedback was received at the Annual General Meeting or throughout the
year.
H. Independent Salary and Incentive Review
During the 2012 financial year the company undertook an independent management salary and incentive review so
as to benchmark existing salary and incentive policies and levels. The Review was undertaken by the independent
professional firm of Gerard Daniels Australia. In general the company policies and remuneration levels were found to
be consistent with the markets in which we operate, although some changes have been made to ensure greater
consistency in some aspects of our remuneration practices. During the financial year ended 30 June 2016, the
Company did not engage any remuneration consultants.
LOANS OR OTHER TRANSACTIONS TO DIRECTORS AND EXECUTIVES
There were no loans outstanding to Directors and executives as at 30 June 2016 (2015: nil).
There were no other transactions with key management personnel.
The Executive directors fees for Mr A Mankarios are paid to Starball Pty Ltd, a company in which Mr Mankarios has
significant influence - $511,042 (2015: $205,111). As at year end the amount owing to this related party was $26,341
(2015: $19,437).
The Group is also owed a receivable from Pynland Pty Ltd, a company with shares held in trust by Dan Smetana for
the suspended employee share scheme, for $26,231 owing to Joyce Corporation Ltd for amounts paid on behalf of
Pynland Pty Ltd (2015: $26,131).
End of Audited Remuneration Report.
Joyce Corporation Ltd 2016 Annual Report I PAGE 18
DIRECTORS’ REPORT (CONTINUED)
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.
PERFORMANCE IN RELATION TO ENVIRONMENTAL REGULATION
Joyce Corporation is party to 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 new or material known breaches associated with the Consolidated Entity’s licence conditions.
NON-AUDIT SERVICES
There were no fees paid or payable to the auditors for non-audit services for the year ended 30th June 2016.
AUDITOR'S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 20.
ROUNDING OF AMOUNTS
The Consolidated entity has applied the relief available to it in ASIC Corporate Legislative Instrument
2016/191 and accordingly certain amounts in the financial report and the Directors’ Report have been
rounded off to the nearest $1,000.
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 2016
Joyce Corporation Ltd 2016 Annual Report I PAGE 19
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF JOYCE CORPORATION
LIMITED
As lead auditor of Joyce Corporation Limited for the year ended 30 June 2016, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Joyce Corporation Limited and the entities it controlled during the
period.
Glyn O’Brien
Director
BDO Audit (WA) Pty Ltd
Perth, 29 September 2016
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Joyce Corporation Ltd 2016 Annual Report I PAGE 20
CORPORATE GOVERNANCE STATEMENT
Joyce Corporation Ltd (“the Company”) and the Board are committed to achieving and demonstrating a high
standard of corporate governance. Joyce Corporation Ltd have reviewed its corporate governance practices
against the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX
Corporate Governance Council.
The 2016 corporate governance policy and statement reflects the corporate governance practices in place
throughout the 2016 financial year. A description of the Company’s current corporate governance practices is
set out in the Company’s corporate governance statements which can be viewed at www.joycecorp.com.au
Joyce Corporation Ltd 2016 Annual Report I PAGE 21
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Joyce Corporation Ltd 2016 Annual Report I PAGE 22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Continuing operations
Revenue
Cost of sales
Gross Profit
Other income
Share of net profit of associate
Expenses from continuing operations
Administration expenses
Distribution expenses
Marketing expenses
Occupancy expenses
Finance costs
Impairment of intangible assets
Other expenses
Profit from continuing operations before income tax
Income tax (expense) / benefit
Profit from continuing operations after tax
Discontinued operations
Profit for the year from discontinued operations
Profit for the year
Profit is attributable :
Ordinary equity holders of the company
Non-controlling interests
Total Comprehensive Income for the year
Earnings per share for profit attributable to the members of
Joyce Corporation Ltd
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Earnings per share for profit from continuing operations
attributable to members of Joyce Corporation Ltd
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Notes
Consolidated
30 June 2016
$000
30 June 2015
$000
6
6
6
6
7
8
9
9
9
9
56,544
(30,812)
25,732
224
-
(14,169)
(755)
(2,046)
(3,448)
(90)
(120)
(48)
5,280
(1,819)
3,461
520
3,981
34,737
(17,478)
17,259
97
215
(10,492)
(850)
(1,273)
(2,366)
(262)
(1,375)
(45)
908
(782)
126
5,095
5,221
2,301
1,680
4,472
749
3,981
5,221
8.3
8.2
12.5
12.4
16.2
16.0
0.5
0.5
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction
with the notes to the consolidated financial statements set out on pages 27 to 62.
Joyce Corporation Ltd 2016 Annual Report I PAGE 23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Notes
Consolidated
30 June 2016
$000
30 June 2015
$000
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Other financial assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Deferred tax asset
Plant and equipment
Inventories
Intangible assets
Total Non-Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Provisions
Provision for income tax
Total Current Liabilities
Non-Current Liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Non-controlling interests
Retained earnings/(Accumulated losses)
TOTAL EQUITY
10
11
12
13
14
11
7
15
12
16
17
18
7
18
19
20
15,249
560
3,642
339
850
20,640
571
1,110
6,243
546
9,500
17,970
38,610
8,864
-
1,000
1,477
11,341
-
317
962
1,279
12,620
25,990
17,975
2,699
1,026
4,290
25,990
5,962
577
2,185
22,890
1,252
32,866
558
918
1,294
558
9,620
12,948
45,814
8,771
22
814
3,769
13,376
5,300
317
371
5,988
19,364
26,450
17,926
2,699
511
5,314
26,450
The consolidated statement of financial position is to be read in conjunction with the notes to the
consolidated financial statements set out on pages 27 to 62.
Joyce Corporation Ltd 2016 Annual Report I PAGE 24
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Notes
Consolidated
30 June 2016
$000
30 June 2015
$000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Operating cash flow
Income tax paid
Store closure costs
Net cash flows from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of other assets
Proceeds from security deposit
Secured loan
Purchase of non-current assets
Cash acquired from business combination, net of cash
consideration
Net cash from / (used in) investing activities
Cash flows from financing activities
Repayment of borrowings
Dividends paid
Net cash (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
29
28
10
63,403
(59,086)
509
(90)
4,736
(3,775)
(59)
902
9
22,500
-
77
(5,292)
-
17,294
(5,322)
(3,587)
(8,909)
9,287
5,962
15,249
42,195
(37,714)
86
(262)
4,305
-
(137)
4,168
1
2,508
1,100
76
(564)
2,587
5,708
(2,803)
(1,927)
(4,730)
5,146
816
5,962
15,249
15,249
5,962
5,962
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated
financial statements set out on pages 27 to 62.
Joyce Corporation Ltd 2016 Annual Report I PAGE 25
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Contributed
Equity
Reserves
Retained
Earnings /
(Accumulated
Losses)
Note
$’000
17,891
-
-
-
$’000
5,321
(2,622)
-
-
Balance at 1 July 2014
Transfers to and from retained
earnings
Total comprehensive income
for the period
Profit attributable to members of
the parent entity
Profit attributable to non-
controlling interests
Subtotal
Transactions with owners in their
capacity as owners
Payment partly paid shares
Dividends paid or provided for
28
Balance at 30 June 2015
Balance at 1 July 2015
Transfers to and from retained
earnings
Total comprehensive income
for the period
Profit attributable to members of
the parent entity
Profit attributable to non-
controlling interests
Subtotal
Transactions with owners in their
capacity as owners
Payment partly paid shares
Share base payment
Dividends paid or provided for
28
17,891
2,699
35
-
-
-
17,926
2,699
-
-
-
-
-
-
17,926
2,699
49
-
-
-
-
-
Balance at 30 June 2016
17,975
2,699
Non-
controlling
Interest
$’000
-
-
-
729
729
Total
Equity
$’000
22,730
-
4,492
729
27,951
-
24
(218)
(1,525)
511
26,450
$’000
(482)
2,622
4,472
-
6,612
(11)
(1,287)
5,314
-
2,301
-
7,615
-
-
1,680
2,191
-
2,301
1,680
30,431
-
-
-
106
49
106
(3,325)
4,290
(1,271)
(4,596)
1,026
25,990
17,926
2,699
5,314
511
26,450
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated
financial statements set out on pages 27 to 62.
Joyce Corporation Ltd 2016 Annual Report I PAGE 26
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 2016 were authorised for issue in accordance with a resolution of the directors of the Company
dated 29 September 2016. Joyce Corporation Ltd is a Company incorporated in Australia and limited by
shares which are publicly traded on the Australian Securities Exchange. The company is a for-profit entity
for the purpose of this financial report.
The nature of the operation and principal activities of the Company and its controlled entities are
described in note 7.
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’). Below is a summary of generic significant accounting
policies. More accounting policies are presented in following notes to the consolidated financial
statements.
(a) Basis of preparation
These general purpose financial statements for the year ended 30 June 2016 have been prepared in
accordance with requirements of the Corporations Act 2001 and Australian Accounting Standards.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also
comply with International Financial Reporting Standards.
Historical cost convention
These financial statements have been prepared under the historical cost convention.
New or revised Standards and Interpretations that are first effective in the current reporting period
The consolidated entity has adopted all of the new and revised Standards and Interpretations issued by
the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for the
current reporting period.
The adoption all the new and revised Standards and Interpretations has not resulted in any changes to
the consolidated entity’s accounting policies and has had no effect on the amounts reported for the
current or prior periods.
New accounting standards and interpretations not yet adopted
The following applicable accounting standards and interpretations have been issued or amended but are
not yet effective. These standards have not been adopted by the Group for the year ended 30 June 2016,
and no change to the Group’s accounting policy is required:
The Group has not elected to early adopt any new Standards or Interpretations.
Joyce Corporation Ltd 2016 Annual Report I PAGE 27
Application
date for
Group
1 July
2017
Impact on
Group’s
financial
report
The Group has
considered
these standards
and determined
that there is no
impact on the
Group’s
financial
statements.
Reference Title
Summary
AASB 9
Financial
Instruments
AASB 9 includes requirements for the classification
and measurement of financial assets. It was
further amended by AASB 2010-7 to reflect
amendments to the accounting for financial
liabilities.
These requirements improve and simplify the
approach for classification and measurement of
financial assets compared with the requirements of
AASB 139. The main changes are described
below.
(a) Financial assets that are debt instruments will
be classified based on (1) the objective of the
entity’s business model for managing the
financial assets; (2) the characteristics of the
contractual cash flows.
(b) Allows an irrevocable election on initial
recognition to present gains and losses on
investments in equity instruments that are not
held for trading in other comprehensive
income. Dividends in respect of these
investments that are a return on investment
can be recognised in profit or loss and there
is no impairment or recycling on disposal of
the instrument.
(c) Financial assets can be designated and
measured at fair value through profit or loss
at initial recognition if doing so eliminates or
significantly reduces a measurement or
recognition inconsistency that would arise
from measuring assets or liabilities, or
recognising the gains and losses on them, on
different bases.
(d) Where the fair value option is used for
financial liabilities the change in fair value
is to be accounted for as follows:
§ The change attributable to changes in
credit risk are presented in other
comprehensive income (OCI)
§ The remaining change is presented in
profit or loss
AASB 15
Revenue
from
Contracts
with
Customers
AASB 16
Leases
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.
Consequential amendments were also made to
other standards as a result of AASB 9, introduced
by AASB 2009-11 and superseded by AASB 2010-
7 and 2010-10.
An entity will recognise revenue to depict the
transfer of promised goods or services to
customers in an amount that reflects the
consideration to which the entity expects to be
entitled in exchange for those goods or services.
This means that revenue will be recognised when
control of goods or services is transferred, rather
than on transfer of risks and rewards as is currently
the case under IAS 18 Revenue.
IFRS 16 eliminates the operating and finance lease
classifications for lessees currently accounted for
under AASB 117 Leases. It instead requires an
entity to bring most leases onto its statement of
financial position in a similar way to how existing
finance leases are treated under AASB 117. An
entity will be required to recognise a lease liability
and a right of use asset in its statement of financial
position for most leases.
There are some optional exemptions for leases
with a period of 12 months or less and for low
value leases.
1 July
2018
1 July
2019
The Group has
not yet
determined the
impact on the
Group’s
financial
statements.
The Group has
not yet
determined the
impact on the
Group’s
financial
statements.
Joyce Corporation Ltd 2016 Annual Report I PAGE 28
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Principles of consolidation
The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its
investment with the entity and has the ability to affect those returns through its power to direct the
activities of the entity. All controlled entities have a 30 June financial year end. 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 25 to the financial statements.
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.
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 Profit or Loss and
Other Comprehensive Income.
(c) 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.
(d) Investments and other financial assets
(i) 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.
(e) Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective
interest method.
.
(f) Comparatives
When required by applicable accounting standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
(g) Rounding of Amounts
The Company has applied the relief available to it under ASIC Corporate Legislative Instrument 2016/19
and accordingly, amounts in the financial report have been rounded off to the nearest $1,000.
Joyce Corporation Ltd 2016 Annual Report I PAGE 29
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) 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 Statement of Cash Flows includes cash flows on a gross
basis. 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.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or
loss.
AASB3(42) If the business combination is achieved in stages, the acquisition date carrying value of the
acquirer’s previously held equity interest in the acquire is remeasured to fair value at the acquisition date.
Any gains or losses arising from such remeasurement are recognised in profit or loss.
3. FINANCIAL RISK MANAGEMENT
The Consolidated Entity's activities expose it to a variety of financial risks: market risk (including currency
risk and interest rate risk), credit risk and liquidity risk. The Consolidated Entity's overall risk management
program focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the financial performance of the Consolidated Entity.
The Consolidated Entity makes occasional use of derivative financial instruments such as foreign
exchange contracts to manage foreign currency risk. Derivatives are exclusively used for hedging
purposes, i.e. not as trading or other speculative instruments. The Consolidated Entity uses different
methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis in the case of interest rate, foreign exchange and other price risks and aging analysis for credit
risk.
Risk management is carried out by the CFO under the supervision of the Board of Directors. The Board
provides principles for overall risk management, as well as policies and supervision covering specific
areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments
and non-derivative financial instruments, and investment of excess liquidity.
The Consolidated Entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest-bearing loans and borrowings
Notes
Consolidated
30 June 2016
$000
30 June 2015
$000
10
11
14
17
15,249
1,176
850
17,275
8,864
-
8,864
5,962
1,135
1,252
8,349
8,771
5,322
14,093
Joyce Corporation Ltd 2016 Annual Report I PAGE 30
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk
(i) Foreign exchange risk
The Consolidated Entity’s exposure to foreign currency risk is not material.
(ii) Cash flow 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. 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.
As at the reporting date, all of the Consolidated Entity had the following variable and fixed rate financial
instruments:
Weighted
Average
Interest rate
%
Weighted
Average
Interest
rate
%
30 June
2016
$000
30 June
2015
$000
0.03%
15,249
0.03%
5,962
15,249
5,962
Financial assets
Cash and cash equivalents
Financial liabilities
Overdraft – secured (i)
Commercial bill –secured – variable
Commercial bill –secured – variable (ii)
n/a
n/a
n/a
n/a
n/a
3.72%
-
-
-
-
-
-
5,300
5,300
(i) The overdraft facility pays interest at variable interest rates plus a line fee and is renewed annually.
(ii) The Commercial bill facility is approved to 30 June 2019. This debt facility is bank bill based and
incurs a line fee and an on use fee.
An analysis by maturities is provided in (c) below.
Joyce Corporation Ltd 2016 Annual Report I PAGE 31
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
The Consolidated Entity analyses its interest rate exposure on a dynamic basis. Various scenarios are
modelled taking into consideration refinancing, renewal of existing positions, alternative financing and
hedging. Based on these scenarios, the Consolidated Entity calculates the impact on profit and loss of a
defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-
bearing positions.
Based on the various scenarios, the Consolidated Entity manages its cash flow interest rate risk adopting
an appropriate mix of fixed versus variable rate debt and also an appropriate mix of debt maturities to
provide it with flexibility to repay debt as quickly as possible whilst having liquidity available to take
advantage of business opportunities as they arise.
Consolidated Entity sensitivity
There was no debt facility drawn at 30 June 2016. When drawn the facility is at a variable interest rate
plus usage fee and has a line fee when unused. (see above). Variable interest rates apply to the overdraft
and cash and cash equivalents. On balances at 30 June 2016, 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 $0k/$0k higher/lower (2015 - $53k/$53k 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 $0k/$0k higher/lower (2014 - $53k/$53k 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
2016
$000
2015
$000
15,249
5,962
1,176
1,135
850
1,252
17,275
8,349
Joyce Corporation Ltd 2016 Annual Report I PAGE 32
3. 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 2016
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
≤ 6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
15,249
1,155
850
17,254
8,864
-
8,864
8,390
-
-
-
-
-
-
-
-
-
21
-
21
-
-
-
21
-
-
-
-
-
-
-
-
Year ended 30 June 2015
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
≤ 6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
5,962
1,114
1,252
8,328
8,771
22
8,793
(465)
-
-
-
-
-
-
-
-
-
21
-
21
-
5,300
5,300
(5,279)
-
-
-
-
-
-
-
-
Total
$000
15,249
1,176
850
17,275
8,864
-
8,864
8,411
Total
$000
5,962
1,135
1,252
8,349
8,771
5,322
14,093
(5,744)
Joyce Corporation Ltd 2016 Annual Report I PAGE 33
3. 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 2015
Consolidated
30 June 2016
Consolidated
Facility limit
$000
8,900
Used
$000
5,300
Available
$000
3,600
1,410
-
1,410
The Consolidated Entity had $150,000 of available overdraft and $1,260,000 bank bill facilities to manage
its liquidity as at 30 June 2016 (2015: $3,500,000) The consolidated entity had $15,249,000 (2015
$5,962,000) cash at bank as at the reporting date including funds held in trust set out at note 10. In
addition, the Consolidated Entity had a net investment in inventories of $3,642,000 as at 30 June 2016
(2015: $2,185,000). The Consolidated Entity has the ability to draw additional bank guarantees against
the available undrawn facility.
(d) 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.
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 remain below 40%.
4. 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.
(a) Impairment 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.
(b) Provision for environmental testing
As part of the ongoing testing of Joyce Corporation owned sites it was found that traces of a chemical
used by the leasee, 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. The Department of Environment and Protection has not
required any remediation work due to the low level of risk. An ongoing monitoring program has been
established to monitor the nature, extent and movement of the chemical found. The trace level of
chemical found has generally been decreasing according to independent environmental reports.
Joyce Corporation Ltd 2016 Annual Report I PAGE 34
5. 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, Victoria, New
South Wales and Queensland; and
· The operation of retail kitchen stores
Refer to note 8 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 2016 Annual Report I PAGE 35
5.
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 2016.
Continuing Operations
Bedshed
Franchise
$’000
Retail
Bedding
Stores
$’000
Retail
Kitchen
Stores
$’000
Discontinued
Operations
Joyce
Corporate
$’000
Total
‘$000
Store
Closures
$’000
Invest
Prop
$’000
Total
$’000
Year ended 30 June 2016
Revenue
Sales to external
customers
4,283
11,484
40,736
41 56,544
329
306 57,179
Inter-segment sales
-
-
-
-
-
-
-
-
Total segment revenue
4,283
11,484
40,736
41 56,544
329
306 57,179
Unallocated revenue
Total consolidated revenue
Result
224
-
286
510
56,768
329
592 57,689
Segment result
1,183
924
4,800
(1,630)
5,277
Unallocated expenses net
of unallocated income
Profit before tax and
finance costs
Unallocated finance costs
Profit before income tax
Income tax expense
Net Profit for the year
Assets and liabilities
Segment assets
Unallocated assets
Total assets
-
-
-
-
93
5,370
(90)
5,280
(1,819)
-
(65)
(1,884)
3,461
-
520
3,981
12,756
1,986
11,142
11,616 37,500
-
1,110
38,610
Segment liabilities
1,855
1,230
6,855
887 10,827
Unallocated liabilities
Total liabilities
Other segment
information
Capital expenditure
Depreciation and
amortisation
1,793
12,620
9
11
123
192
847
230
-
-
979
433
-
-
-
-
-
299
5,576
286
379
585
5,955
-
(90)
585
5,865
- 37,500
-
1,110
- 38,610
- 10,827
-
1,793
- 12,620
979
433
-
-
-
-
-
-
-
-
Joyce Corporation Ltd 2016 Annual Report I PAGE 36
5. 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 2015.
Continuing Operations
Discontinued
Operations
Bedshed
Franchise
$’000
Retail
Bedding
Stores
$’000
Retail
Kitchen
Stores
$’000
Invest
Prop /
Joyce
$’000
Total
‘$000
Store
Closures
$’000
Invest
Prop
$’000
Total
$’000
Year ended 30 June 2015
Revenue
Sales to external
customers
4,591
8,801
21,306
39 34,737
2,159
754 37,650
Inter-segment sales
-
-
-
-
-
-
-
-
Total segment revenue
4,591
8,801
21,306
39 34,737
2,159
754 37,650
Inter-segment elimination
Unallocated revenue
Total consolidated revenue
Result
97
-
-
97
34,834
2,159
754 37,747
Segment result
1,230
696
1,715
(1,352)
2,289
(95)
742
2,936
Unallocated expenses net
of unallocated income
Share of net profit of
associate
Profit before tax and
finance costs
Finance costs
Profit before income tax
Income tax expense
Net Profit (loss)for the year
Assets and liabilities
-
-
-
-
(1,334)
215
-
-
6,640
5,306
-
215
1,170
(95)
7,382
8,457
(262)
908
(782)
126
-
-
(262)
(95)
7,382
8,195
-
(2,192)
(2,974)
(95)
5,190
5,221
Segment assets
13,492
932
7,598
334 22,356
Unallocated assets
Total assets
918
23,274
Segment liabilities
2,329
939
5,385
5,577 14,230
-
-
-
-
-
-
22,540 44,896
-
918
22,540 45,814
1,048 15,278
-
4,086
1,048 19,364
4,086
18,316
Unallocated liabilities
Total liabilities
Other segment
information
Capital expenditure
Depreciation and
amortisation
10
23
313
147
361
133
-
-
684
303
-
12
-
-
684
315
Joyce Corporation Ltd 2016 Annual Report I PAGE 37
(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 2016 (2015: None).
6. REVENUE, INCOME AND EXPENSES
(a) Revenue recognition
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 2016 Annual Report I PAGE 38
6. REVENUE, INCOME AND EXPENSES (CONTINUED)
(b) Revenue, Income and Expenses from Continuing Operations
CONSOLIDATED
Revenue
Sale of goods
Provision of services
Total revenue
Other income
Interest received
Other
Total other income
Finance costs
Bank loans and overdrafts
Finance charges payable under finance leases and hire
purchase contracts
Total finance costs
2016
$000
52,826
3,718
56,544
223
1
224
(90)
-
(90)
2015
$000
30,680
4,057
34,737
97
-
97
(259)
(3)
(262)
Depreciation and other significant items of expenditure included in statement of profit or loss and other
comprehensive income
Included in expenses:
Depreciation and amortisation
Impairment of goodwill
1 Includes depreciation for continued and discontinued operations.
CONSOLIDATED
2016
$000
(433)
(120)
2015
$000
(315)1
(1,375)
(c) Lease payments and other expenses included in the statement of profit or loss and other
comprehensive income – continuing operations
Minimum lease payments - operating lease
(d) Employee benefits expense – continuing operations
Management bonus (admin)
Wages and salaries (admin costs)
Wages and salaries (included in distribution costs)
Defined contribution superannuation expense
Superannuation (included within distribution costs)
Other employee benefits expense (admin)
Other (included within distribution costs)
CONSOLIDATED
2016
$000
3,298
239
7,543
285
1,039
27
1,017
35
10,185
2015
$000
2,325
197
5,216
380
673
35
634
72
7,207
Joyce Corporation Ltd 2016 Annual Report I PAGE 39
7.
INCOME TAX
The income tax expense or revenue for the period is the tax payable on the current period’s taxable
income based on the national income tax rate 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.
The major components of income tax expense for the year ended 30 June 2016 are:
Consolidated Statement of Profit or Loss and Other
Comprehensive Income – continuing operations
Current Income tax
Current income tax expense
Deferred income tax
Relating to origination and reversal of temporary differences
Utilisation of unused tax losses
Expense/(over) provision in respect of prior years
CONSOLIDATED
2016
$000
2015
$000
1,687
836
(35)
-
167
(1,661)
52
(9)
Income tax (expense)/benefit relating to continuing operations
1,819
(782)
Consolidated Statement of Profit or loss and Other
Comprehensive Income – discontinued operations
Income tax (expense)/benefit relating to discontinued operations
Income tax (expense)/benefit relating to overall operations
65
(2,192)
1,883
(2,974)
Joyce Corporation Ltd 2016 Annual Report I PAGE 40
7. INCOME TAX (CONTINUED)
A reconciliation of income tax expense applicable to accounting profit before income tax at the statutory
income tax rate to income tax expense at the Consolidated Entity’s effective income tax rate for the years
ended 30 June 2016 and 30 June 2015 is as follows:
CONSOLIDATED
Profit before income tax
Income tax (expense)/benefit calculated at the statutory income tax
rate of 30% (2015: 30%)
Expenditure not allowable for income tax purposes
Impairment of stores not allowable for income tax purposes
Deferred tax asset losses not previously brought to account, now
brought to account
Under provision in respect of prior years
2016
$000
5,280
(1,584)
(32)
(36)
-
(167)
2015
$000
908
(272)
(141)
(412)
52
(9)
(1,819)
(782)
Income tax (expense)/benefit recognised in profit or loss – continuing
operations
(1,819)
(782)
Tax consolidation
Joyce Corporation Ltd and its 100% Australian 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 continues 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 no consolidation contribution adjustments.
Taxation of financial arrangements (TOFA)
Legislation is in place which changes the tax treatment of financial arrangements including the tax
treatment of hedging transactions. The Consolidated Entity has assessed the potential impact of these
changes on the Consolidated Entity's tax position. No impact has been recognised and no adjustments
have been made to the deferred tax and income tax balances at 30 June 2016 (2015: Nil).
Joyce Corporation Ltd 2016 Annual Report I PAGE 41
7. INCOME TAX (CONTINUED)
Deferred income tax
Deferred income tax at 30 June 2016 relates to the following:
Deferred tax liabilities
Investment property
Trade and other
receivables
Fair value gain
Other
Balance at 30 June 2016
Deferred tax assets
Plant and equipment
Trade and other receivables
Pensions and other employer
obligations
Provisions
Other
Unused tax losses
Balance at 30 June 2016
Opening
balance
Charged to
income
Recognised
in Business
Combination
Closing
balance,
30 June 16
$000
$000
$000
$000
-
-
(260)
(57)
(317)
-
(5)
-
6
1
-
-
-
-
-
-
(5)
(260)
(51)
(316)
$000
$000
$000
$000
136
12
353
284
133
-
918
9
43
35
161
(56)
-
192
-
-
-
-
-
-
145
55
388
445
77
-
-
1,110
The Consolidated Entity has deferred tax assets and liabilities of $Nil (2015: $Nil) which were not brought
to account.
Joyce Corporation Ltd 2016 Annual Report I PAGE 42
7. INCOME TAX (CONTINUED)
Deferred income tax at 30 June 2015 relates to the following:
Balance at 30 June 2015
(2,765)
2,397
Deferred tax liabilities
Investment property
Fair value gain
Other
Deferred tax assets
Plant and equipment
Trade and other receivables
Pensions and other employer
obligations
Provisions
Other
Unused tax losses
Opening
balance
Charged to
income
Recognised
in Business
Combination
Closing
balance,
30 June 15
$000
$000
$000
$000
(2,425)
2,425
(260)
(80)
-
23
-
-
51
51
-
(260)
(57)
(317)
$000
$000
$000
$000
74
1
128
183
279
1,615
(3)
11
100
52
(146)
(1,615)
65
-
125
49
-
-
239
136
12
353
284
133
-
918
Balance at 30 June 2015
2,280
(1,601)
Joyce Corporation Ltd 2016 Annual Report I PAGE 43
8. DISCONTINUED OPERATIONS
A discontinued operation is a component of the entity that has been disposed of or is classified as held
for sale and that represents a separate major line of business or geographical area of operations, is
part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a
subsidiary acquired exclusively with a view to resale. The results of discontinued operations are
presented separately in the Statement of Profit or Loss and Other Comprehensive Income.
(a) Investment property sale
The investment property was contracted for unconditional sale in March 2015. As this business ceased
from 31 October 2015 the operation has been included as a discontinuing operation.
(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 profit or loss and other comprehensive income are set out below.
Profit/(loss) for the year from discontinued operations
Revenue
Cost of sales
Gross profit
Other income
Sale of Investment Property
2016
Stores
Property
$000
$000
-
-
-
329
-
-
-
-
592
-
2015
Stores
Property
$000
1,807
(1,091)
716
$000
-
-
-
352
-
753
6,640
Total
$000
-
-
-
921
-
Total
$000
1,807
(1,091)
716
1,105
6,640
Expenses
(329)
(7)
(336)
(1,163)
(11)
(1,174)
from discontinued operations
Profit
before tax
Attributable income tax benefit
Other comprehensive income
-
-
-
-
585
(65)
520
-
585
(65)
520
-
(95)
7,382
7,287
-
(2,192)
(2,192)
(95)
5,190
5,095
-
-
-
for
Profit/(loss)
from
discontinued operations (attributable to
owners of Joyce Corporation Ltd)
year
the
-
520
520
(95)
5,190
5,095
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
2016
$000
584
-
-
584
2015
$000
659
-
-
659
Joyce Corporation Ltd 2016 Annual Report I PAGE 44
9. 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 profit attributable to equity holders from continuing
operations for diluted earnings per share
Profit/(loss) attributable to equity holders from discontinued
operations
Profit for year
Non-controlling interests
Net profit attributable to ordinary shareholders for basic
earnings per share
Effect of dilutive equity instruments
Net profit attributable to ordinary shareholders for diluted
earnings per share
CONSOLIDATED
2016
$000
3,461
-
3,461
520
3,981
(1,680)
2,301
-
2015
$000
126
-
126
5,095
5,221
(749)
4,472
-
2,301
4,472
Number of
shares
Number of
shares
Weighted average number of ordinary shares for basic
earnings per share including partly paid
27,588,255
27,588,255
Adjusted weighted average number of ordinary shares for
diluted earnings per share including partly paid
27,968,255
27,968,255
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 $1.653) (2015:$1.523) included
in basic and diluted earnings per share.
380,000
380,000
Earnings per share are included at the foot of the Statement of Profit or Loss and Other Comprehensive Income.
Joyce Corporation Ltd 2016 Annual Report I PAGE 45
10. CASH AND CASH EQUIVALENTS
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.
For the purposes of the statement of cash flows, cash and cash equivalents are comprised of the
following:
Cash at bank and in hand
CONSOLIDATED
2016
$000
15,249
15,249
2015
$000
5,962
5,962
11. TRADE AND OTHER RECEIVABLES
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.
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 profit or loss and other comprehensive income in other
expenses.
CONSOLIDATED
Current
Trade receivables
Allowance for impairment loss (a)
Non-current
Trade receivables
Other receivables
(a) Allowance for impairment loss
2016
$000
594
(34)
560
21
550
571
2015
$000
616
(39)
577
21
537
558
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 $34k (2015: $39k) has been recognised by the Consolidated Entity.
Joyce Corporation Ltd 2016 Annual Report I PAGE 46
11. TRADE AND OTHER RECEIVABLES (CONTINUED)
At 30 June, the ageing analysis of current trade receivables is as follows:
Total
$000
594
0-30
Days
$000
455
31-60
Days
$000
73
61-90
Days
PDNI*
$000
4
61-90
Days
CI*
$000
-
+91
Days
PDNI*
$000
28
+91
Days
CI*
$000
34
2016 Consolidated
2015 Consolidated
616
419
119
18
-
21
39
* Past due not impaired ('PDNI')
Considered impaired ('CI')
Receivables past due but not considered impaired are: Consolidated Entity: $31,820 (2015: $39,500).
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.
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
CONSOLIDATED
2016
$000
39
-
(5)
34
2015
$000
3
36
-
39
12. INVENTORIES
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.
Current
Stock on hand at cost
Provision for impairment (a)
(a) Provision for impairment
CONSOLIDATED
2016
$000
3,767
(125)
3,642
2015
$000
2,325
(140)
2,185
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2016 amounted to $Nil (2015: $140,091). The reduction in provision has been written back to cost of
goods sold as losses were realised.
Joyce Corporation Ltd 2016 Annual Report I PAGE 47
12. INVENTORIES (CONTINUED)
Non-current
Stock on hand at cost
Provision for impairment (a)
(a) Provision for impairment
675
(129)
546
647
(89)
558
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2016 amounted to $55,083 (2015: $89,592). The increase in provision has been written back to cost
of goods sold as losses were realised.
Joyce Corporation Ltd 2016 Annual Report I PAGE 48
13. OTHER ASSETS
Current
Accrued revenue
Prepayments
Other receivables
Other receivables 30.06.2015 include $22,500 being the balance receivable on
sale of the Moorebank investment property
14. OTHER FINANCIAL ASSETS
Current
Funds held in trust
CONSOLIDATED
2016
$000
102
160
77
339
2015
$000
52
183
22,655
22,890
CONSOLIDATED
2016
$000
850
850
2015
$000
1,252
1,252
15. PROPERTY, PLANT AND EQUIPMENT
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 profit or
loss and other 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.
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
profit or loss and other 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.
Joyce Corporation Ltd 2016 Annual Report I PAGE 49
15. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
CONSOLIDATED
Plant and
equipment
$000
Leasehold
improvements
$000
Property
$000
Year ended 30 June 2015
At 1 July 2014,
Net of accumulated depreciation
Acquired from business combination net
of accumulated depreciation
Additions
Disposals
Transfer to assets held for sale
Transfers
Depreciation charge for the year
At 30 June 2015,
Net of accumulated depreciation
At 30 June 2015
Cost
Accumulated depreciation and impairment
Net carrying amount
Year ended 30 June 2016
At 1 July 2015
Net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
At 30 June 2016
Net of accumulated depreciation
Total
$000
497
578
560
(26)
-
-
(315)
192
460
422
-
-
-
(160)
914
1,294
1,154
(240)
914
2,528
(1,234)
1,294
-
-
-
-
-
-
-
-
-
-
-
305
118
138
(26)
-
-
(155)
380
1,374
(994)
380
-
4,471
-
-
380
431
(1)
(168)
914
426
-
(210)
1,294
5,328
(1)
(378)
4,471
642
1,130
6,243
At 30 June 2016
Cost
Accumulated depreciation and impairment
Net carrying amount
4,471
-
4,471
1,785
(1,143)
642
1,579
(450)
1,130
7,836
(1,593)
6,243
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30
June 2016 is $Nil (2015: $124,006). Leased assets and assets under hire purchase contracts are pledged
as security for the related finance lease and hire purchase liabilities.
16. 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 profit or loss and other 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 annually in the case of intangible
assets with indefinite lives, 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.
Joyce Corporation Ltd 2016 Annual Report I PAGE 50
16.
INTANGIBLE ASSETS (CONTINUED)
(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 Stores cash generating unit
· KWB Group Pty Ltd 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.
Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment or more frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised 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.
Goodwill (a)
CONSOLIDATED
2016
$000
2015
$000
9,500
9,620
9,500
9,620
Joyce Corporation Ltd 2016 Annual Report I PAGE 51
16. INTANGIBLE ASSETS (CONTINUED)
An analysis of intangible assets is presented below:
Year ended 30 June 2016
At 1 July 2015
net of accumulated impairment
Acquired goodwill from business combination
Impairment
At 30 June 2016,
net of accumulated impairment
At 1 July 2015
Cost (gross carrying amount)
Accumulated impairment
Net carrying amount
At 30 June 2016
Cost (gross carrying amount)
Accumulated impairment
Net carrying amount
(a) Goodwill
CONSOLIDATED
2016
$000
9,620
-
(120)
2015
$000
9,972
1,023
(1,375)
9,500
9,620
10,995
(1,375)
9,620
10,995
(1,495)
9,500
10,569
(597)
9,972
10,995
(1,375)
9,620
Intangible assets as at 30 June 2016 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, the remaining 51% of Bedshed Franchising Pty Ltd purchased in 2006 and the 51%
interest in KWB Group purchased 31 October 2014.
(b) Impairment of Goodwill Disclosures
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. Impairment of $120,000 (2015: $1,375,000)
has been recognised in respect of goodwill for the year ended 30 June 2016.
Goodwill is allocated to cash-generating units which are based on the Consolidated Entity’s operating
segments
Bedshed Franchising segment
Bedshed Stores segment
Kitchen Stores segment
Total
CONSOLIDATED
2016
$000
6,307
2,170
1,023
9,500
2015
$000
6,307
2,290
1,023
9,620
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 2015/16 and 2016/17 financial years
extrapolated using estimated growth rates. The cash flows are discounted using risk-adjusted pre-tax
discount rates.
Joyce Corporation Ltd 2016 Annual Report I PAGE 52
16.
INTANGIBLE ASSETS (CONTINUED)
(b) Impairment Disclosures (continued)
The following assumptions were used in the value-in-use calculations:
Bedshed Franchising segment
Bedshed Stores segment
Pre –tax
Discount
Rate
19.5%
19.5%
Sales
Growth
Rate
4%
3-5%
Expense
Growth
Rate
2-3%
2-3%
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 one
times earnings before interest, taxation, depreciation and amortisation for the year ended 30 June 2016
budget discounted at a rate of 11% per annum.
Impairment of Goodwill for the year ended 30 June 2016 was $120,000 (2015: $1375,000), due to
changes in the estimates of future results and terminal value for the Bedshed stores segment.
(c) Impact of possible changes in key assumptions
Sensitivity analysis was conducted on the Bedshed stores segment:
-
-
If budgeted sales growth rate used in the value in use calculation has been 10% lower than
management’s estimates, the Consolidated Entity would have recognised further impairment of
$120,000.
If pre-tax discount rate applied was 10% higher than used in management’s estimates, then the
Consolidated Entity would have recognised further impairment of $120,000.
17. TRADE AND OTHER PAYABLES
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.
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 funds
CONSOLIDATED
2016
$000
2,633
5,308
923
8,864
2015
$000
1,748
5,673
1,350
8,771
Included within the Total Current Assets balance are funds allocated for the specific use of the Bedshed
Approved Purposes fund on behalf of the Consolidated Entity’s franchisee-owned and Company-owned
stores.
Joyce Corporation Ltd 2016 Annual Report I PAGE 53
18. PROVISIONS
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
(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.
Joyce Corporation Ltd 2016 Annual Report I PAGE 54
18. PROVISIONS (CONTINUED)
Provisions are comprised of the following:
Current
Employee benefits (a)
Sub-lease rental shortfall (b)
Store lease termination (c)
Environmental testing (d)
Total Current
Non-current
Employee benefits (a)
Sub-lease rental shortfall (b)
Environmental testing (d)
Total Non-Current
CONSOLIDATED
2015
$000
796
9
145
50
1,000
460
-
502
962
2015
$000
642
59
113
-
814
358
10
3
371
1,962
1,185
(a) Provision for employee benefits
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.
(b) Provision for environmental testing
As part of the ongoing testing of Joyce Corporation owned sites it was found that traces of a chemical
used by the lease, 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. The Department of Environment and Protection has not
required any remediation work due to the low level of risk. An ongoing monitoring program has been
established to monitor the nature, extent and movement of the chemical found. The trace level of
chemical found has generally been decreasing according to independent environmental reports. The
costs of ongoing testing have been allowed for in the costs of sale of property.
Sub-let
Provision
Store Lease
Termination
Employee
Benefits
Environmental
Testing
Total
$000
$000
$000
$000
$000
Consolidated Group
Opening balance at 1 July
2015
Additional provisions
Amounts used
Balance at 30 June 2016
69
-
(60)
9
113
32
-
145
1,000
838
(582)
1,256
3
567
(18)
552
1,185
1,437
(660)
1,962
Joyce Corporation Ltd 2016 Annual Report I PAGE 55
19. CONTRIBUTED EQUITY
Ordinary shares carry one vote per share and carry the right to dividends.
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.
27,588,255 (2015: 27,588,255) Issued and fully paid ordinary shares
17,347
17,347
CONSOLIDATED
2016
$000
2015
$000
380,000 (2015: 380,000) Partly paid ordinary shares, issued at $1.955
and paid to $1.653 (2015: $1.523) (a)
Movement in ordinary shares on issue
At 1 July 2015
Issued shares:
Payment partly paid shares
At 30 June 2016
(a) Partly-paid ordinary shares
628
579
17,975
17,926
2016
Number
27,588,255
-
-
27,588,255
2016
$000
17,926
-
49
17,975
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.
20. RESERVES
Financial assets reserve
Asset revaluation reserve
Balance at 30 June
Asset revaluation reserve
Opening Balance
Transfer to retained earnings upon
sale of investment property
Balance at 30 June
CONSOLIDATED
2016
$000
2,698
-
2,698
-
-
-
2015
$000
2,698
-
2,698
2,623
(2,623)
-
Joyce Corporation Ltd 2016 Annual Report I PAGE 56
21. CAPITAL AND LEASING COMMITMENTS
(a) Property lease receivable – Consolidated Entity as lessor
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2016
$000
208
567
-
775
2015
$000
662
721
45
1,428
The property leases are non-cancellable leases expiring 2020 for a portion of a bedding store, with rent
receivable monthly in advance. Contingent rental provisions within the lease agreement require the
minimum lease payments to be increased by 3.5% per annum.
(b) Property lease payable – Consolidated Entity as lessee
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2016
$000
3,682
9,805
2,452
2015
$000
3,415
10,014
2,373
15,939
15,802
Property leases are non-cancellable leases and have remaining terms of up to five 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.
22. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
The Group has a number of financial instruments which are not measured at fair value in the Statement of
Financial Position.
Current Receivables
Loan
Non-current Receivables
Loan
Deposit
Non-current Borrowings
Interest bearing loans & borrowings
Carrying
Amount in
$’000
Fair Value
Amount in
$’000
77
154
50
-
77
154
50
-
Due to their short term nature, the carrying amount of the current receivables, current financial assets,
current assets and current borrowings are assumed to approximate their fair value.
Joyce Corporation Ltd 2016 Annual Report I PAGE 57
23. FAIR VALUE MEASUREMENT OF NON-FINANCIAL INSTRUMENTS
(i) Fair value hierarchy
This note explains the judgements and estimates made in determining the fair values of the non-financial
assets that are recognised and measured at fair value in the financial statements. To provide an indication
about the reliability of the inputs used in determining fair value, the group has classified its non-
financial assets and liabilities into the three levels prescribed under the accounting standards.
Level 1: The fair value is based on quoted market prices (unadjusted) in active markets for identical
assets or liabilities at the end of the reporting period.
Level 2: The fair value is determined using valuation techniques which maximise the use of observable
market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the asset is
included in level 3.
There were no assets measured using level 2 or level 3 fair value valuation techniques. In the prior year
the company owned an investment property which was valued at market value.
24. CONTINGENT LIABILITIES
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:
i.
ii.
iii.
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.
(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 $826,589 (2015: $826,589).
25. 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
Bedshed Franchising Pty Ltd
Joyce International Pty Ltd
KWB Group Pty Ltd
Furniture World (HK) Pty Ltd
Country of
incorporation
% Equity interest
2015
2016
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
100
100
100
100
100
100
100
100
100
51*
50
100
100
100
100
100
100
100
100
100
57
50
*The equity in KWB Group Pty Ltd was reduced by 6% by the finallisation of a share bonus agreement.
Joyce Corporation Ltd 2016 Annual Report I PAGE 58
25. RELATED PARTY DISCLOSURES (CONTINUED)
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)
(ii)
(iii)
Disclosures relating to KMP:-
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 2016.
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.
The Executive directors fees for Mr A Mankarios are paid to Starball Pty Ltd, a company in which
Mr Mankarios has significant influence - $205,112 (2015: $205,112). As at year end the amount
owing to this related party was $19,437 (2015: $19,437).
(iv)
A receivable from Pynland Pty Ltd, a company owned by Dan Smetana, for $26,231 owing to
Joyce Corporation Ltd for amounts paid on behalf of Pynland Pty Ltd (2015: $26,131).
(v)
Key management personnel compensation
Short Term Benefits
Post Employment Benefits
Share Based Payment
2016
$000
1,838
114
-
1,952
2015
$000
1,557
113
-
1,670
Detailed remuneration disclosures are provided in the remuneration report on pages 11 to 17.
(vi)
Loans to key management personnel
At 30 June 2016 or at any time during the financial year there were no loans (2015: Nil)
outstanding to specified directors and specified executives.
Joyce Corporation Ltd 2016 Annual Report I PAGE 59
26. EVENTS SUBSEQUENT TO REPORTING DATE
A fully franked dividend of 3 cents per share was declared on 24 August 2016 and payable 18 November
2016. A further special dividend of 3 cents per share fully franked will be paid on the same date.
The company acquired 51% of business of Lloyds Online Auctions as of 1 July 2016. The acquisition was
for $6,000,000 plus 50% of stamp duty. The amount is subject to final audited net profit before interest
and depreciation of Lloyds achieving $3,000,000 for the year ended 30 June 2016 and the purchase price
adjusted accordingly..
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.
27. AUDITORS’ REMUNERATION
Amounts received or due and receivable by the auditor’s for:
(cid:127)
an audit or review of the financial report of the Consolidated Entity
110
132
CONSOLIDATED
2016
$000
2015
$000
28. DIVIDENDS
Dividends declared or paid during the financial year are as follows:
Distributions paid or payable
Interim unfranked dividend of 1.5 (2013: 1.0) cents per share
(Paid 31 July 2014)
Final unfranked ordinary dividend of 2.1 (2014: 2.0) cents per share
(Paid 21 November 2014)
Prior year dividends paid on partly paid shares
(Paid 01 March 2015)
Interim unfranked dividend of 2.5 (2014: 1.5) cents per share
(Paid 31 March 2015)
Final fully franked ordinary dividend of 3.0 (2015: 2.1) cents per share
(Paid 23 October 2015)
Special fully franked dividend of 5.0 (2015:Nil) cents per share
(Paid 16 December 2015)
Interim fully franked dividend of 3.0 (2015:2.5) cents per share
(Paid 14 April 2016)
Special fully franked dividend of 2.0 (2015:Nil) cents per share
(Paid 14 April 2016)
110
132
2016
$000
2015
$000
-
-
-
-
839
1,399
839
559
420
587
11
699
-
-
-
-
3,636
1,717
At 30 June 2016 the directors have not declared the payment of a final dividend out of retained profits
and will continue to monitor performance and review resources and liquidity to determine when a
dividend will be paid.
Dividends Paid
2016
$000
2015
$000
Cash payments in relation to dividends paid in the financial year
3,587
1,927
Joyce Corporation Ltd 2016 Annual Report I PAGE 60
29. RECONCILIATION OF NET PROFIT 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 after taxation
Adjustments for:
Depreciation and amortisation
Interest receivable
Interest paid
Other income
Goodwill – tax effect
Non-controlling interest (after dividend paid)
Impairment of goodwill
Net loss / (profit) on disposal of plant and equipment
(Profit) on disposal of investment property
Share of net profit of associate
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 tax assets and liabilities
(decrease)/increase in trade and other payables
(decrease)/increase in provisions
2016
$000
2,301
433
-
7
-
-
720
120
10
-
-
(1,445)
22
368
(2,485)
74
777
2015
$000
4,472
315
11
-
(12)
231
511
1,375
56
(6,640)
(215)
121
6
689
2,683
697
(132)
Net cash flows used in operating activities
902
4,168
Joyce Corporation Ltd 2016 Annual Report I PAGE 61
30. 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/(Accumulated losses)
Net Equity
b. Financial performance
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive profit/(loss)
As at 30 June
2016
$000
7,144
18,168
25,312
600
592
1,192
2015
$000
375
22,203
22,578
4,023
5,323
9,346
24,120
13,232
17,975
6,145
24,120
17,926
(4,694)
13,232
Year ended 30 June
2016
$000
14,474
-
14,474
2015
$000
(699)
-
(699)
c. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No such guarantees existed at 30 June 2016.
d. Contingent liabilities of the parent entity.
No contingent liabilities existed within the parent entity as at 30 June 2016 (30 June 2015: 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 2016 for the value of $Nil (30 June 2015: Nil).
Joyce Corporation Ltd 2016 Annual Report I PAGE 62
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 2016
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
(d) the financial report also complies with International Financial Reporting Standards as disclosed in
note 2(a).
Signed in accordance with a resolution of the Directors made pursuant to s.295 (5) of the Corporations
Act 2001.
D A Smetana
Chairman
Perth, 29 September 2016
Joyce Corporation Ltd 2016 Annual Report I PAGE 63
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Joyce Corporation Limited
Report on the Financial Report
We have audited the accompanying financial report of Joyce Corporation Limited, which comprises the
consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, 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 in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 2(a), the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view 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.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Joyce Corporation Ltd 2016 Annual Report I PAGE 64
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of Joyce Corporation Limited, would be in the same terms if given to
the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of Joyce Corporation Limited is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016
and of its performance for the year ended on that date; and
(ii) 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
Note 2(a).
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 18 of the directors’ report for the
year ended 30 June 2016. 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.
Opinion
In our opinion, the Remuneration Report of Joyce Corporation Limited for the year ended 30 June 2016
complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Glyn O’Brien
Director
Perth, 29 September 2016
Joyce Corporation Ltd 2016 Annual Report I PAGE 65
ASX ADDITIONAL INFORMATION
AS AT 28 SEPTEMBER 2016
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
As at 28 September 2016
Holders
Fully Paid
Ordinary Shares
1 - 1,000
1,001 – 5,000
5,001 - 10,000
10,001 – 100,000
100,001 – and over
Rounding
Total
205
171
61
151
31
619
69,886
422,684
502,293
5,377,401
21,215,991
%
0.25
1.53
1.82
19.49
76.90
0.01
27,588,255
100.00
(b) Shareholdings - Substantial Shareholdings
The number of shares held or controlled at the report date by substantial shareholders was as follows:
Ordinary Shareholder
1. Mr D A Smetana* (excluding partly paid)
2. John Roy Westwood
Total
Fully Paid
Ordinary
Shares
10,854,829
2,350,000
%
39.4
8.4
13,204,829
47.8
* Mr Smetana has beneficial interest in 9,874,129 fully-paid ordinary shares (2015: 9,850,696) and
380,000 partly paid shares.
(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 2016 Annual Report I PAGE 66
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 28 September 2016
(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
1. ADAMIC PTY LTD
2. UFBA PTY LTD
3. PEDUNCLE PTY LTD
4. ONE MANAGED INVT FUNDS LTD <1 A/C>
TRAFALGAR PLACE NOMINEES PTY LTD
5.
6. MR DONALD TEO
7. MR DANIEL ALEXANDER SMETANA
8.
9.
TREASURE ISLAND HIRE BOAT COMPANY PTY LTD
BT PORTFOLIO SERVICES LIMITED
10. STARBALL PTY LTD
11. SANDHURST TRUSTEES LTD
12. MR DAN SMETANA
13. MOAT INVESTMENTS PTY LTD
14. CONARD HOLDINGS PTY LTD
15. P B L INVESTMENTS PTY LTD
16. ASB NOMINEES LIMITED <208357 – ML A/C>
17.
BELLPAM PTY LIMITED
18. EPIC TRUSTEES LIMITED
19.
20.
JET INVEST PTY LTD
MAN INVESTMENTS (NSW) PTY LTD
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES
Total Remaining Holders Balance
(e)
Unquoted Partly Paid Shares holdings greater than 20%
Ordinary Shareholder
Mr D A Smetana
Total
Fully paid
Ordinary
Shares
7,711,568
2,328,000
1,948,312
1,000,000
990,233
990,000
563,726
%
27.95
8.44
7.06
3.62
3.59
3.59
2.04
504,291
1.83
450,450
430,029
383,570
354,022
348,681
347,940
265,203
225,388
207,500
201,695
188,364
172,014
1.63
1.56
1.39
1.28
1.26
1.26
0.96
0.82
0.75
0.73
0.68
0.62
19,610,986
7,977,269
71.08
28.92
Partly Paid
Ordinary
Shares
380,000
380,000
%
100
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 2016 Annual Report I PAGE 67
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 28 SEPTEMBER 2016
(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 11,
172 St Georges Terrace
Perth, WA 6000
Tel: 1300 557 010
Joyce Corporation Ltd 2016 Annual Report I PAGE 68