Joyce Corporation Ltd
AND CONTROLLED ENTITIES
ABN: 80 009 116 269
Annual Report 2017
Joyce Corporation Ltd 2017 Annual Report I PAGE 1
Corporate Directory
Directors
D A Smetana
Chairman
M A Gurry
T R Hantke
A Mankarios
Secretary
K Gray
K Gadsby appointed 1 July 2017
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
75 Howe Street
Osborne Park 6017
Western Australia
time: 10:00am
date: 30 November 2017
75 Howe 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 2017 Annual Report I PAGE 2
ANNUAL REPORT CONTENTS
ANNUAL REPORT CONTENTS ........................................................................................................................ 3
CHAIRMAN’S REPORT ..................................................................................................................................... 4
EXECUTIVE DIRECTOR’S REPORT ................................................................................................................ 6
DIRECTORS’ REPORT ...................................................................................................................................... 8
AUDITOR'S INDEPENDENCE DECLARATION .............................................................................................. 21
CORPORATE GOVERNANCE STATEMENT .................................................................................................. 22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............ 24
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................................................... 25
CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................................ 26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ........................................................................... 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ..................................................................... 28
1. CORPORATE INFORMATION .................................................................................................................... 28
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOT PRESENTED IN SUBSEQUENT NOTES 28
3. FINANCIAL RISK MANAGEMENT ............................................................................................................... 30
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS ..................................................................... 34
5. SEGMENT INFORMATION .......................................................................................................................... 35
6. REVENUE, INCOME AND EXPENSES ....................................................................................................... 38
7. INCOME TAX .............................................................................................................................................. 40
8. EARNINGS PER SHARE ............................................................................................................................. 44
9. CASH AND CASH EQUIVALENTS .............................................................................................................. 45
10. TRADE AND OTHER RECEIVABLES ....................................................................................................... 45
11. INVENTORIES ........................................................................................................................................... 46
12. OTHER ASSETS ........................................................................................................................................ 47
13. OTHER FINANCIAL ASSETS .................................................................................................................... 47
14. PROPERTY, PLANT AND EQUIPMENT.................................................................................................... 48
15. INTANGIBLE ASSETS ............................................................................................................................... 49
16. TRADE AND OTHER PAYABLES .............................................................................................................. 52
17. PROVISIONS ............................................................................................................................................. 52
18. LOANS AND BORROWINGS ..................................................................................................................... 54
19. CONTRIBUTED EQUITY ........................................................................................................................... 54
20. RESERVES ................................................................................................................................................ 55
21. CAPITAL AND LEASING COMMITMENTS................................................................................................ 55
22. BUSINESS COMBINATIONS ..................................................................................................................... 56
23. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS ............................................................. 57
24. CONTINGENT LIABILITIES ....................................................................................................................... 57
25. RELATED PARTY DISCLOSURES ........................................................................................................... 58
26. DIVIDENDS ................................................................................................................................................ 60
27. EVENTS SUBSEQUENT TO REPORTING DATE ..................................................................................... 61
28. AUDITOR’S REMUNERATION .................................................................................................................. 61
29. RECONCILIATION OF NET PROFIT AFTER TAX TO NET CASH FLOWS FROM OPERATIONS .......... 61
30. PARENT ENTITY DISCLOSURES ............................................................................................................. 62
31. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED ............................. 63
DIRECTORS’ DECLARATION ......................................................................................................................... 65
INDEPENDENT AUDITOR’S REPORT ............................................................................................................ 66
ASX ADDITIONAL INFORMATION .................................................................................................................. 70
Joyce Corporation Ltd 2017 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 2017.
Joyce Corporation has delivered a solid performance, successfully integrating newly acquired ventures and
have maximised on the value created from investments for our shareholders. Highlights for the 2017
financial year, was the strong growth in the kitchen and online auctions businesses.
It is pleasing to report that revenues for 2017 were up 43.4% year on year to $81.1 million, leading the
Company to record a statutory profit after tax and non-controlling interest of $2.8 million.
The Company achieved net assets per share attributable to members of 89 cents undiluted as at 30 June
2017. The earnings per share after tax (EPS) were 10 cents on a undiluted basis.
Joyce made a strategic acquisition in Lloyd’s Online Auctions from 1 July 2016, which complements our
other business units and enables the Company to enter into the rapidly expanding online retail space. With
solid plans for expansion, the business added $16.37 million to consolidated revenue in the 2017 financial
year.
In line with our 2015 plan and our commitment to providing strong returns to shareholders, we have
announced a final franked Dividend of 6.0 cents per share payable in late November 17. This will take the
total full year Dividend to 11.5 cents per share fully franked. The dividend comprises a final dividend of 3
cents and special dividend of 3 cents respectively both fully franked.
As a consequence of an acquisition, we have consolidated 51% of Lloyds online Auctions (LOA) and
Lloyds Auctioneers and Valuers into the group. Lloyds Online as a business unit performed well compared
to the comparable period in 2016. We invested in business opportunities growing additional categories in
the online auction business. This has elevated us to leader status in many categories developed in the
Business to Business (B2B) and Business to Consumer (B2C) sectors. Classic cars, yellow equipment,
and consumer goods all setting record prices at auctions during the year. Additional national footprint
investment occurred with additional Auctions taking place in Victoria and NSW during the year.
Both KWB Group Pty Ltd (Kitchen Connection and Wallspan Kitchen and Wardrobes) and Bedshed’s
operations total revenue increased. Kitchens continued with solid double-digit growth of 16 % Like for Like
(L4L) growth achieved in this reporting period and total Bedshed revenue escalating by 10% for financial
year 2017.
Bedshed grew total numbers of stores adding two additional Franchise stores at Northlakes (QLD) and
Hoppers Crossing (VIC) whilst re-opening the Fyshwick (ACT) Franchise store.
There are a number of new sites planned for financial year 2018 across the group. Much of the growth plan
involves an expansion in national footprint across the group consistent with the strategic plans previously
communicated to the market.
Over the last 6 months, Bedshed initiated a compelling campaign to attract suitable Franchisees to NSW
and Sydney. Offering substantial incentives to prospective approved Franchisees wishing to open in
Sydney. We anticipate this will progress in the next period.
The Company finalised development and construction of our new Osborne Park WA Corporate Office and
warehouses. We leased part of the additional warehouse space in August 2017 and our corporate offices
moved to the new facility in late December 2016.
The new property purchased at Lytton in QLD for our Kitchen division is a modern facility occupying over
6,600 square meters on 10,000 square meters of land near the busy Brisbane port side suburb of Lytton.
This has now begun earning revenue from rental streams on long-term lease. Subsequent to year-end an
independent valuation of this property was completed and has shown an increase in value on the original
base purchase price to $9.5m.
The group is poised for further growth and the underlying business units are forecasting performance gains
in financial year 2018. The Company has very low bank debt levels.
Joyce Corporation Ltd 2017 Annual Report I PAGE 4
CHAIRMAN’S REPORT (CONTINUED)
We have announced the appointment of Karen Gadsby as a Director of Joyce Corporation Ltd effective
from 1st July 2017. I welcome Karen and endorse her standing for election at the coming annual general
meeting in November.
I would like to thank all our management team, our partners and our board along with our Executive
Director Anthony Mankarios for consistent improved performances.
I have no hesitation in commending Joyce Corporation Ltd to you.
Dan Smetana
Non- Executive Chairman
Joyce Corporation Ltd 2017 Annual Report I PAGE 5
EXECUTIVE DIRECTOR’S REPORT
Director’s Operational Review
The Company announced a statutory profit for the year after tax attributable to members of $2.8M
compared to $2.3M to 30thJune 2016. The year compared favourably on a continuing business after tax
profit basis of $5.8M in 2017 up from $3.46M in 2016.
The Consolidated group profit on a continuing basis, including non-controlling interest was $5.8 Million for
the period ending 30th June 2017.
The group grew revenues by 43.4 % on the previous year to $81.1 Million.
Cash generated from operations was $5.3 Million in 2017 compared to $2.2 Million in 2016.
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.
Whilst company owned store statutory earnings performance was down on last year, the Bedshed
company owned stores underlying like for like earnings was modestly up on last year and revenue growth
was also up in double-digits. There are five Company stores with two in WA and three in QLD. Three
franchise stores traded for less than the full year with the full year benefit to be realised in the 2017/18
financial year. The business continues to invest in future growth by providing our customers with a leading
customer experience and world-class shopping environment. We have fast tracked the new “Evolution” fit-
out program with eight more stores completed in this year; additional Franchise stores have committed to
completing this program in 2018. Revenues from these stores were initially affected during the fit out
period. However, historic performance shows stores adopting the evolution program expect to obtain
double-digit growth in the period after completion.
Bedshed added new Franchise stores in Victoria and Queensland during the year and up to three new
stores are planned in the coming year.
KWB Group Pty Ltd (“KWB”)
Kitchen Connection and Wallspan wardrobes’ retail showrooms were upgraded during the period and
additional showrooms opened. The KWB stores are inspiring, contemporary and provide a complete
kitchen showroom experience for our customers. KWB currently operates in QLD, NSW and SA with fifteen
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 16% in 2017, and it is currently exceeding growth
expectations in 2018.
The Company is fully cash funded, with low bank debt secured against the new Lytton property. The
property was purchased for $8M during late financial year 2017. The business has considerable orders on
its books. The cash position is strong and this subsidiary continued to pay fully franked dividends.
KWB has signed up two new leases for 2018 and is working on additional opportunities. There are also
opportunities arising from the purchase of and now fully let Lytton manufacturing and office building.
Additional cost savings derived from freight and procurement will allow this business to continue to invest in
its growth plans.
Joyce Corporation Ltd 2017 Annual Report I PAGE 6
EXECUTIVE DIRECTOR’S REPORT (CONTINUED)
Lloyds Online Auctions (Lloyds)
After an acquisition of 51% of Lloyds Online Auctions, this business unit was consolidated into Joyce
Corporation on 1 July 2016. The business performed well, exceeding revenue growth expectations and
quickly gaining market share in the online market for business to business (B2B) and business to consumer
(B2C) sectors.
The business gross auction sales grew to $88M from $48M in 2016. Lloyds has become a market leader in
classic car auctions and gained exceptional industry top prices for yellow equipment and portable buildings
during the year.
Its traditional B2C market also grew and gained considerable national spread with online auctions
simultaneously used in all its auctions.
Considerable investment of over $1M was made into these new categories and the underlying EBITDA was
just over $4M for FR17 up from $2.77M in 2016. The statutory EBIT was $2.97M also up on last year.
There is considerable growth expected as national expansion is planned in Victoria, NSW and other states.
Future Outlook
The Company has maintained steady fast growth in revenue and profitability for continuing operations for
the last three to four years.
The Company’s revenue growth prospects are positive given the growth in overall business unit
performances. The Company plans to introduce additional Bedshed stores and Kitchen Connection and
Wallspan Kitchen and Wardrobe showrooms.
The Company has achieved successful earnings and cash flow development with its related subsidiary
company KWB Group Pty Ltd and Lloyds Online Auctions Pty Ltd there is potential for this to expand from
its existing geographical operational areas.
KWB continued with increased fully franked cash dividend payments. This will aid the Joyce Group to
continue paying fully franked dividends to shareholders in the future.
The Company’s new premises at Osborne Park WA was completed and a new rent stream from this to
Joyce commenced in August 2018.
Similarly, additional rent streams from KWB Property Holdings Pty Ltd property at Lytton QLD have
commenced in financial year 2018.
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.
Mr A. Mankarios
Executive Director
Joyce Corporation Ltd 2017 Annual Report I PAGE 7
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 2017.
DIRECTORS
The names of the Company’s Directors in office during the year ended 30 June 2017 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
Non-executive Director
appointed 1 July 2017
Mr D A Smetana
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Ms K Gadsby
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;
(d) Majority owner of 51% of KWB Group Pty Ltd operating kitchen and wardrobe supply and installation under
Kitchen Connection and Wallspan Kitchen and wardrobes; and
(e) Majority owner of 51% of Lloyds Online Auctions Pty Ltd an online auctions and valuers.
The significant changes in the nature of the principal activity of the Consolidated Entity were the acquisition of 51%
in Lloyds Online Auctions on 1 July 2016 and the purchase of property in Brisbane by the KWB Group Pty Ltd in
April 2017.
REVIEW AND RESULTS OF OPERATIONS
During the year ended 30 June 2017 (“the Financial Year”) the Consolidated Entity achieved revenue from
continuing operations of $81.1m (2016: $56.5m) and a profit from continuing operations before tax of $8.52m (2016:
$5.28m) and an overall net profit after tax of $5.82m (2016: $3.98m). The revenue increased from the consolidation
of Lloyds Online Auctions Pty Ltd from 1 July 2016 and total Bedshed revenue increased with the full year of two
north Queensland stores.
Financial Position
At 30 June 2017, the Consolidated Entity had equity of $26.5m (2016: $26.0m) including non-controlling interest;
with dividend payments of $3.22m in 2017 ($3.6m in 2016). Cash and cash equivalents decreased from $15.25m in
2016 to $5.3m at 30 June 2017 after acquisition of 51% of Lloyds Online, completion of building work at Osborne
Park in Perth and acquisition by KWB of a property in Brisbane. Unutilised debt facilities were $150k (2016: $1.4m).
Bank Facilities
The Consolidated Entity has its long-term debt funding facility with St George Bank approved to 1 January 2020.
The bank bill facility was fully drawn at 30 June 2017. Subsequent to year-end this approval was increased by $1.0M
and extended to 30 June 2020 with the total reducing $100k per year from 30 June 2019. An annually approved
multi option facility of $900k, including $150k overdraft, was approved in December 2016 and subsequent to year-
end approved for a further year. The overdraft was undrawn at 30 June 2017.
The 51% owned KWB Group completed the purchase of property in Lytton Brisbane for $8m utilising a $5.6m
standalone facility fully drawn in April 2017 from Commonwealth Bank for KWB Property Holdings Pty Ltd a three-
year term. The facility additionally provides bank guarantee facility of $500k which at year-end was undrawn.
Joyce Corporation Ltd 2017 Annual Report I PAGE 8
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 KWB business will continue to invest in additional stores and property in Brisbane, which is fully let. The
property will add significant EBIT during the year with the full benefit being realised during 2018/19 financial year.
Lloyds will continue to expand its footprint to other states and has commenced auctions outside of Queensland.
DIVIDENDS
Dividends declared or paid during the financial year are as follows:
Distributions paid or payable
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)
2017
$000
2016
$000
839
1,399
839
559
Final fully franked ordinary dividend of 3.0 (2016: 3.0) cents per share
(Paid 18 November 2016)
Special fully franked dividend of 3.0 (2016: 5.0) cents per share
(Paid 18 November 2016)
Interim fully franked dividend of 3.5 (2016:3.0) cents per share
(Paid 14 April 2017)
Special fully franked dividend of 2.0 (2016: 2.0) cents per share
(Paid 14 April 2017)
839
839
979
559
3,216
3,636
The Board will continue to review the Company’s ability to pay dividends and will continue with the payment of
regular dividends in line with the dividend policy and available liquidity.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The significant changes in the state of affairs of the Consolidated Entity were the acquisition of 51% in Lloyds Online
Auctions on 1 July 2016 and the purchase of property in Brisbane by the KWB Group Pty Ltd in April 2017.
SIGNIFICANT AFTER REPORTING DATE EVENTS
A fully franked dividend of 3 cents per share was declared on 31 August 2017 and payable 22 November
2017. A further special dividend of 3 cents per share fully franked will be paid on the same date.
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 2017 Annual Report I PAGE 9
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS
Mr D A Smetana Chairman - Non-executive. Age 73.
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 $1.768) unlisted ordinary shares in Joyce Corporation Ltd.
Mr M A Gurry. – Non-executive Director. Age 70.
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
56,878 ordinary shares
Joyce Corporation Ltd 2017 Annual Report I PAGE 10
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS (CONTINUED)
Mr T R Hantke. – Non-executive Director. Age 69.
Bachelor of Commerce, FAIM, FAICD
Experience and expertise
Mr 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. Mr Hantke is a Non-Executive Director of Mrs.
Macs Pty Ltd. and Bentech Assistive Technologies Inc, and a former Non-Executive Director and Chairman
of Central Purchasing Services Ltd. 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 ordinary shares
Mr A Mankarios. – Executive Director Age 50.
MBA, FAICD, CFTP
Experience and expertise
Mr Mankarios 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, Mr Mankarios was a Non-
Executive Director of Joyce Corporation and Bedshed Franchising Pty Ltd since September 2008. Mr
Mankarios 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; a Director of the Lloyds Online Auctions Pty
Ltd Group and Chairman of Man Investments and Consultants as well as being involved in a number of other
private companies.
Mr Mankarios 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
719,545 ordinary shares
Joyce Corporation Ltd 2017 Annual Report I PAGE 11
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 2017, and the numbers of meetings attended by each Director were:
Full meeting
of Directors
A
11
11
11
11
B
11
10
11
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
The Executive Director attended committee meetings during the year, either in full or part, by invitation of the
relevant Committee. Mr 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 2016 Annual General Meeting
H. Independant salary and incentive review
I. Loans and other transactions with Directors and Executives
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:
Mr G Culmsee
Mr K Gray
Mr J Bourke
Mr C Palin
Mr A Webber
Mr M L Hames
General Manager Bedshed Franchising Pty Ltd
Chief Financial Officer Joyce Corporation Ltd
Managing Director KWB Group Pty Ltd
Finance Director KWB Group Pty Ltd
Director Lloyds Online Auctions Pty Ltd and its subsidiaries
Chief Operating Officer Lloyds Online Auctions Pty Ltd
Joyce Corporation Ltd 2017 Annual Report I PAGE 12
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.
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 2017 Annual Report I PAGE 13
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
Non-executive Directors
Fees and payments to non-executive Directors reflect the demands that 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 in December 2016. 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.
Variable Remuneration - Long Term Incentives
The present scheme consists of specific financial goals for the Executive Director to achieve over a 3-year period
ending 30 June 2017, amount has been fully provisioned. Should these be achieved a cash bonus is payable.
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 2017 Annual Report I PAGE 14
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
Mr A Webber
Mr M L Hames
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
Director of Lloyds Online Auctions Pty Ltd and its subsidiaries
Chief Operating Officer Lloyds Online Auctions 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 are 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. Andrew Webber is paid a salary for his auction licence.
The Executive Director has a service contract, which at the date of this report runs to 30 June 2018 at a rate
adjusted for CPI current at 30 June 2018. This is an at call 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.
Related party transactions with Key Management Personnel
Please refer to Note 25 related party transactions.
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.
2017
Mr G Culmsee
Mr K Gray
Mr C Palin
Mr J Bourke
Mr A Webber
Mr M L Hames
Term of agreement
Notice Period
In months
Termination
payment in
months
rolling
rolling
rolling
rolling
3 years
rolling
3
3
3
3
-
3
3
3
3
3
-
3
For base salary and superannuation, see table at C below
Joyce Corporation Ltd 2017 Annual Report I PAGE 15
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (CONTINUED)
C. Details of remuneration
Employment benefits
Post-
Short-term
Employment
benefits
Salary &
Fees
Cash
Bonus
Non-
Monetary
benefits
Superannuatio
n
Long-
term
benefits
Term
Benefits
AL &
LSL
Total
% relating to
performanc
e
30-Jun-17
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
Mr A Webber4
Mr M L Hames 5
Total Other Key
Management personnel
175,494
77,598
77,598
330,690
-
-
-
-
223,917 250,000
554,607 250,000
242,355
58,446
211,023
46,885
310,000
78,963
231,444
62,113
66,346
124,615
-
-
1,185,783 246,407
Total Remuneration:
1,740,390 496,407
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
174,634
69,853
69,853
314,340
-
-
-
-
181,041 330,000
495,381 330,000
230,814
61,946
188,208
60,926
263,207
207,046
-
-
Total Other Key
Management personnel
889,275 122,872
Total Remuneration:
1,384,656 452,872
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,672
7,371
7,371
31,414
-
31,414
23,023
20,047
35,604
29,162
6,303
11,838
-
-
-
-
-
-
-
-
-
-
-
-
192,166
84,969
84,969
362,104
473,917
836,021
323,824
277,955
424,567
322,719
72,649
136,453
-
-
-
-
52.75%
18.05%
16.87%
18.60%
19.25%
-
-
125,977
- 1,558,167
157,391
- 2,394,188
19.41%
16,590
6,636
6,636
29,862
29,862
21,927
17,879
25,005
19,669
-
-
-
-
-
-
-
-
-
-
191,224
76,489
76,489
344,202
511,041
855,243
314,687
267,013
288,212
226,715
84,480
- 1,096,627
-
-
-
-
64.57%
-
19.68%
22.82%
-
-
-
114,342
- 1,951,870
23.20%
Joyce Corporation Ltd 2017 Annual Report I PAGE 16
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 that is
performance based on meeting board approved targets. He is contracted to 30 June 2018.
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.
4. Mr A Webber was a Director of Lloyds Online Auctions Pty Ltd prior to Lloyds Online Auctions Pty Ltd
becoming a subsidiary of Joyce Corporation Ltd in July 2016, and continues to be a Director at the date of
this report.
5. Mr M L Hames is the Chief Operating Officer of Lloyds Online Auctions Pty Ltd.
Other Key Management Personnel were paid a cash bonus based on key performance criteria, which requires
performance to meet or exceed the group budget and achieve successful completion of predetermined targets.
D. Share-based compensation
There was no share-based compensation of Key Management Personnel during the year ended 30 June 2017
(2016: 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 2017 no options (2016: 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 2017 (2016:
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 (2016: Nil).
2017
Mr D A Smetana*
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Mr J Bourke
Mr C Palin
Mr A Webber
Total
Balance
01-Jul-16
Ord
Granted as
Remuneration
Ord
On
Exercise of
Options
Ord
Net Change
Other
Ord
Balance
30-June-17
Ord
9,874,129
20,000
-
705,045
-
-
-
-
-
10,599,174
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,878
13,500
-
-
65,359
6,615
-
142,352
9,874,129
20,000
56,878
718,545
-
-
65,359
6,615
-
10,741,526
* Beneficial holding only. Mr Smetana controls 10,854,829 fully paid ordinary shares (2016: 10,854,829)
Joyce Corporation Ltd 2017 Annual Report I PAGE 17
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 (2016: Nil).
2017
Mr D A Smetana1
Mr T R Hantke
Mr M A Gurry
Mr A Mankarios
Mr G Culmsee
Mr K Gray
Mr J Bourke
Mr C Palin
Mr A Webber
Total
Grante
d as
Remun
eration
Ord
On
Exercise of
Options
Ord
Balance
01-Jul-16
Ord
Net Change
Other
Ord
Balance
30-June-17
Ord
380,000
-
-
-
-
-
-
-
-
380,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 $1.768) (2016 paid to: $1.653) 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 2017 Annual Report I PAGE 18
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT – AUDITED (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 dividend includes a special dividend paid
during 2016 from the sale of the NSW property.
Revenue (a)
Net profit attributable to members
Share Price at Year-end $
2017
$000
81,099
2,764
1.60
2016
$000
56,543
2,301
1.06
Dividends (Cents) paid or payable
Dividend payout ratio %
11.50
116.0
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
(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
were 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 and further increased in 2017
from consolidation of Lloyds Online Auctions Pty Ltd.
G. Voting at the 2016 Annual General Meeting on the Remuneration report
The Remuneration report in the 2016 Annual Report to shareholders was approved by 99.9% of shareholders at the
2016 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 2017/18 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 undertaken by the independent
professional firm of Gerard Daniels Australia for the amount of $15,000. 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.
LOANS OR OTHER TRANSACTIONS TO DIRECTORS AND EXECUTIVES
There were no loans outstanding to Directors and executives as at 30 June 2017 (2016: nil).
There were no other transactions with key management personnel not in the ordinary course of business.
The Executive directors fees for Mr A Mankarios are paid to Starball Pty Ltd, a company in which Mr Mankarios has
significant influence - $473,917 (2016: $511,042). As at year end the amount owing to this related party was $23,805
(2016: $26,341).
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, of $26,231 owing to Joyce Corporation Ltd for amounts paid on behalf of
Pynland Pty Ltd (2016: $26,131).
During the year ended 30th June 2017, LAAV Management Pty Ltd, a company of which Mr A Webber is a director,
was paid $163,900 by Lloyds Online Auctions Pty Ltd for the provision of management services to be provided to the
business by Mr A Webber and Mr M Fitzpatrick. This amount is in addition to the remuneration disclosed in the key
management personnel remuneration disclosures.
End of Audited Remuneration Report.
Joyce Corporation Ltd 2017 Annual Report I PAGE 19
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 fees of $22,608 paid or payable to the auditors for non-audit services for the year ended 30 June 2017,
which did not impede on the auditors independence.
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 21.
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, 27 September 2017
Joyce Corporation Ltd 2017 Annual Report I PAGE 20
AUDITOR'S INDEPENDENCE DECLARATION
Joyce Corporation Ltd 2017 Annual Report I PAGE 21
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 2017 corporate governance policy and statement reflects the corporate governance practices in place
throughout the 2017 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 2017 Annual Report I PAGE 22
Joyce Corporation Ltd
AND CONTROLLED ENTITIES
ABN: 80 009 116 269
Annual Financial Report
For the Year Ended 30 June 2017
Joyce Corporation Ltd 2017 Annual Report I PAGE 23
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Continuing operations
Revenue
Cost of sales
Gross Profit
Other income
Expenses from continuing operations
Administration expenses
Distribution expenses
Marketing expenses
Occupancy expenses
Profit/(Loss) on disposal of assets
Finance costs
Impairment of intangible assets
Other expenses
Profit from continuing operations before income tax
Income tax (expense)
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)
Notes
Consolidated
30 June 2017
$000
30 June 2016
$000
0
0
0
0
0
0
0
81,099
(40,693)
40,406
56,544
(30,812)
25,732
94
224
(22,386)
(944)
(3,547)
(4,592)
(37)
(75)
(350)
(51)
(14,169)
(755)
(2,046)
(3,448)
-
(90)
(120)
(48)
8,518
5,280
(2,702)
(1,819)
5,816
3,461
-
520
5,816
3,981
2,764
3,052
2,301
1,680
5,816
3,981
10.0
9.9
8.3
8.2
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 28 to 64.
Joyce Corporation Ltd 2017 Annual Report I PAGE 24
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Notes
Consolidated
30 June 2017
$000
30 June 2016
$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
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
TOTAL EQUITY
0
0
0
12
13
0
0
14
0
15
16
17
18
0
17
19
20
25
5,296
634
4,908
504
380
11,722
568
1,307
18,589
528
15,933
36,925
48,647
10,073
1,361
1,153
12,587
8,600
262
712
9,574
22,161
26,486
18,019
2,699
1,930
3,838
26,468
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
The consolidated statement of financial position is to be read in conjunction with the notes to the
consolidated financial statements set out on pages 28 to 64.
Joyce Corporation Ltd 2017 Annual Report I PAGE 25
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Notes
Consolidated
30 June 2017
$000
30 June 2016
$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
Secured loan
Purchase of non-current assets
Payments for business acquisitions net of cash acquired
Net cash from / (used in) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from partly paid share dividend
Dividends paid
Dividends paid to non controlling interest
Net cash from / (used in) financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Reconciliation of cash
Cash at bank and in hand
29
26
9
89,413
(80,779)
94
(75)
8,653
(3,318)
-
5,335
46
-
77
(12,578)
(6,000)
(18,455)
8,600
-
44
(3,216)
(2,261)
3,167
(9,953)
15,249
5,296
63,821
(57,640)
509
(90)
6,600
(4,368)
(59)
2,173
9
22,500
77
(5,292)
-
17,294
-
(5,322)
49
(3,636)
(1,271)
(10,180)
9,287
5,962
15,249
5,296
5,296
15,249
15,249
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated
financial statements set out on pages 28 to 64.
Joyce Corporation Ltd 2017 Annual Report I PAGE 26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Contributed
Equity
Reserves
Retained
Earnings
Non-
controlling
Equity
Interest
Total
Note
$’000
17,926
$’000
2,699
$’000
5,314
$’000
$’000
511
26,450
Balance at 1 July 2015
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
Balance at 30 June 2016
Balance at 1 July 2016
Total comprehensive income
for the period
Profit attributable to members
of the parent entity
Profit attributable to non-
controlling interests
Non-controlling interest on
acquisition of subsidiary
Subtotal
Transactions with owners in
their capacity as owners
Payment partly paid shares
Dividends paid or provided for
26
Balance at 30 June 2017
-
-
-
-
2,301
-
2,301
-
1,680
1,680
17,926
2,699
7,615
2,191
30,431
49
-
-
-
-
-
17,975
2,699
-
-
-
106
49
106
(3,325)
4,290
(1,271)
(4,596)
1,026
25,990
17,975
2,699
4,290
1,026
25,990
-
-
-
-
-
-
2,764
-
2,764
-
-
3,052
3,052
113
113
17,975
2,699
7,054
4,191
31,919
44
-
-
-
-
-
44
(3,216)
(2,261)
(5,477)
18,019
2,699
3,838
1,930
26,486
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 28 to 64.
Joyce Corporation Ltd 2017 Annual Report I PAGE 27
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 2017 were authorised for issue in accordance with a resolution of the directors of the Company
dated 27 September 2017. 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 Directors’ Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOT PRESENTED IN SUBSEQUENT
NOTES
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 2017 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 of 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.
(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 0 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.
Joyce Corporation Ltd 2017 Annual Report I PAGE 28
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE PRESENTED IN SUBSEQUENT
NOTES (CONTINUED)
(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.
(ii) Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective
interest method.
(e) Comparatives
When required by applicable accounting standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
(f) Rounding of Amounts
The Company has applied the relief available to it under ASIC Corporate Legislative Instrument
CO98/100 and accordingly, amounts in the financial report have been rounded off to the nearest $1,000.
(g) 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.
As per AASB3(42), if a 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 re-measurement are recognised in profit or loss.
Joyce Corporation Ltd 2017 Annual Report I PAGE 29
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:
Notes
Consolidated
30 June 2017
$000
30 June 2016
$000
0
0
0
0
18
5,296
1,202
380
6,878
10,073
8,600
18,673
15,249
1,131
850
17,230
8,864
-
8,864
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest-bearing loans and borrowings
(a) Market risk
(i) Foreign exchange risk
The Consolidated Entity’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.
Joyce Corporation Ltd 2017 Annual Report I PAGE 30
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
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
2017
$000
30 June
2016
$000
0.03%
5,296
0.03%
15,249
5,296
15,249
Financial assets
Cash and cash equivalents
Financial liabilities
Commercial bill –secured – variable (ii)
Bank loan – secured (iii)
4.93%
3.84%
3,000,000
5,600,000
n/a
n/a
8,600,000
-
-
-
(i) The overdraft facility pays interest at variable interest rates plus a line fee.
(ii) The Commercial bill facility is approved to 1 January 2020. This debt facility is bank bill based and
incurs a line fee and an on use fee.
(iii) The bank loan facility is approved to 9 April 2020.
An analysis by maturities is provided in (c) below.
The Consolidated Entity analyses its interest rate exposure on a dynamic basis. Various scenarios are
modelled taking into consideration refinancing, renewal of existing positions and alternative financing.
Based on these scenarios, the Consolidated Entity calculates the impact on profit or 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
The major debt facility drawn at 30 June 2017 is at a variable interest rate (see above). Variable interest
rates apply to the overdraft and cash and cash equivalents. On balances held at 30 June 2017, 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 $86k higher or $86k lower (2016 – no debt facility was held).
This is a result of a higher or lower interest expense arising from borrowings, offset by higher or lower
interest income from cash and cash equivalents. Equity would have been $86k higher or $86k lower
(2016 - no debt facility was held) for the same reasons as above.
Joyce Corporation Ltd 2017 Annual Report I PAGE 31
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(b)
Credit risk
Credit risk is limited to high credit quality financial institutions with which deposits are held and high credit
quality wholesale customers with which the Consolidated Entity trades.
Credit risk is managed on a Consolidated Entity basis. Credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and financial institutions, as well as credit
exposures to wholesale customers, including outstanding receivables and committed transactions. For
banks and financial institutions, only independently rated parties with a minimum rating of 'A' are
accepted. If wholesale customers are independently rated, these ratings are used. Otherwise, if there is
no independent rating, risk control assesses the credit quality of the customer, taking into account its
financial position, past experience and other factors. Individual risk limits are set based on internal or
external ratings in accordance with limits set internally. The compliance with credit limits by wholesale
customers is regularly monitored by line management.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets
as summarised in each applicable note. For wholesale customers without credit rating the Consolidated
Entity generally retains title over the goods sold until full payment is received. For some trade receivables
the Consolidated Entity may also obtain security in the form of guarantees, deeds of undertaking or letters
of credit which can be called upon if the counterparty is in default under the terms of the agreement. The
Consolidated Entity does not hold any credit derivatives to offset its credit exposure. The Consolidated
Entity trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is
it the Consolidated Entity's policy to securitise its trade and other receivables.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to external credit ratings (if available) or to historical information about counterparty default rates:
Cash and cash equivalents
AA
Trade and other receivables
Non-rated
Other financial assets
Non-rated
CONSOLIDATED
2017
$000
2016
$000
5,296
15,249
1,202
1,131
380
850
6,878
17,230
Joyce Corporation Ltd 2017 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 2017
Consolidated financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
≤ 6 months
$000
6-12
months
$000
1-5 years
$000
>5
years
$000
5,296
634
380
6,310
-
-
-
-
-
568
-
568
Consolidated financial liabilities
Trade and other payables
Interest bearing loans & borrowings
Net maturity
10,073
175
10,248
(3,938)
-
175
175
(175)
-
9,125
9.125
(8,557)
-
-
-
-
-
-
-
-
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
1,110
850
17,209
8,864
-
8,864
8,345
-
-
-
-
-
-
-
-
-
21
-
21
-
-
-
21
-
-
-
-
-
-
-
-
Total
$000
5,296
1,202
380
6,878
10,073
9,475
19,548
(12,670)
Total
$000
15,249
1,131
850
17,230
8,864
-
8,864
8,366
Joyce Corporation Ltd 2017 Annual Report I PAGE 33
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Liquidity risk (continued)
Financing arrangements
The Consolidated Entity had access to the following bank borrowing facilities at the reporting date:
30 June 2017
Consolidated
30 June 2016
Consolidated
Facility limit
$000
9,935
Used
$000
9,364
Available
$000
571
1,410
-
1,410
The Consolidated Entity had a $5,600,000 bank loan facility, a $3,000,000 bank bill facility, a $900,000
multi-option facility of which $150,000 available for overdrafts (2016: $1,410,000) The consolidated entity
had $5,296,000 (2016 $15,249,000) cash at bank as at the reporting date including funds held in trust set
out at note 0. In addition, the Consolidated Entity had a net investment in inventories of $4,908,000 as at
30 June 2017 (2016: $3,642,000).
(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 2017 Annual Report I PAGE 34
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
(c) Judgement in determining control of subsidiaries (AASB 10)
In determining whether the consolidated group has control over subsidiaries that are not wholly owned,
judgement is applied to assess the ability of the consolidated group to control the day-to-day activities of
the partly owned subsidiary and its economic outcomes. In exercising judgement, the commercial and
legal relationships that the consolidated group has with other owners of partly owned subsidiaries are
taken into consideration. Whilst the consolidated group is not able to control all activities of a partly owned
subsidiary, the partly owned subsidiary is consolidated within the consolidated group where it is
determined that the consolidated group controls the day-to-day activities and economic outcomes of a
partly owned subsidiary. Changes in agreements with other owners of partly owned subsidiaries could
result in a loss of control and subsequently de-consolidation.
Upon acquisition of partly owned subsidiaries by the consolidated group, judgement is exercised
concerning the value of net assets acquired on the date of acquisition. minority owner interest share of net
assets acquired, fair value of consideration transferred and subsequent period movements in value
thereof, are disclosed as outside equity interest.
On 1 July 2016, the Company acquired 51% interest in Lloyds Online Auctions Pty Ltd and from October
2014 the Company has been majority holder of KWB Group Pty Ltd. Under the terms of the shareholder
agreements in place with the minority interest holders, the Company has judged that the Company has
sufficient capability under the shareholder agreements to control the day-to-day activities and economic
outcomes of both Lloyds Online Auctions Pty Ltd and the KWB Group Pty Ltd. Future changes to the
shareholder agreements may impact on the ability of the Company to control either Lloyds Online
Auctions Pty Ltd and the KWB Group Pty Ltd.
(d) Net realisable value of inventory
In determining the amount of write-downs required for inventory, management has made judgements
based on the expected net realisable value of that inventory. Historic experience and current knowledge
of the products has been used in determining any write-downs to net realisable value.
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 operating segments:
• Franchising
• The Bedshed retail bedding franchise operation.
• Company owned stores
• The operation of Bedshed stores.
• The operation of retail kitchen stores.
• The operation of valuation, online auction sales and physical auctions.
Transfer prices between operating segments are set at an arms-length basis in a manner similar to
transactions with third parties.
Joyce Corporation Ltd 2017 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 2017.
Continuing Operations
Discontinued
Operations
Bedshed
Franchise
$’000
Retail
Bedding
Stores
$’000
Retail
Kitchen
Stores
$’000
Online
Auction
$’000
Invest
Prop /
Joyce
$’000
Total
‘$000
Store
Closure
$’000
Invest
Prop
$’000
Total
$’000
Year ended 30 June 2017
Revenue
Sales to external
customers
4,262
13,045
47,404
16,373
15
81,099
Total segment revenue
4,262
13,045
47,404
16,373
15
81,099
Unallocated revenue
Total consolidated revenue
Result
Segment result
Impairment
Unallocated expenses net
of unallocated income
Profit before tax and
finance costs
Finance costs
Profit before income tax
Income tax expense
Net Profit for the year
Assets and liabilities
Segment assets
Unallocated assets
Total assets
56
81,155
1,301
438
5,938
2,957
(1,748)
8,886
-
-
(350)
-
-
-
-
-
-
-
(350)
57
8,593
(75)
8,518
(2,702)
-
5,816
-
7,266
6,334
14,742
4,076
14,920
47,338
-
1,309
48,647
Segment liabilities
1,197
1,163
13,114
2,006
4,571
22,051
Unallocated liabilities
Total liabilities
Other segment
information
Capital expenditure
Depreciation and
amortisation
110
22,161
10
9
30
9,320
840
2,779
12,979
230
338
34
9
620
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 81,099
- 81,099
-
56
- 81,155
-
-
-
-
-
-
-
-
8,886
(350)
57
8,593
(75)
8,518
(2,702)
5,816
- 47,338
-
1,309
- 48,647
- 22,051
-
110
- 21,161
- 12,979
-
620
Joyce Corporation Ltd 2017 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 2016.
Continuing Operations
Discontinued
Operations
Bedshed
Franchise
$’000
Retail
Bedding
Stores
$’000
Retail
Kitchen
Stores
$’000
Online
Auction
$’000
Invest
Prop /
Joyce
$’000
Total
‘$000
Store
Closures
Invest
Prop
$’000 $’000
Total
$’000
41 56,544
329
306 57,179
41 56,544
329
306 57,179
224
-
286
510
56,768
329
592 57,689
4,283
11,484
40,736
4,283
11,484
40,736
1,183
924
4,800
-
-
-
-
-
-
-
Year ended 30 June
2016
Revenue
Sales to external
customers
Total segment revenue
Inter-segment
elimination
Unallocated revenue
Total consolidated
revenue
Result
Segment result
Unallocated expenses
net of unallocated
income
Profit before tax and
finance costs
Finance costs
Profit before income
tax
Income tax expense
Net Profit for the year
Assets and liabilities
(1,630)
5,277
-
93
5,370
(90)
5,280
(1,819)
3,461
Segment assets
12,756
1,986
11,142
-
11,616 37,500
Unallocated assets
Total assets
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
(65)
(1,884)
520
3,981
- 37,500
-
1,110
- 38,610
- 10,827
-
1,793
- 12,620
-
-
979
433
Joyce Corporation Ltd 2017 Annual Report I PAGE 37
5. SEGMENT INFORMATION (CONTINUED)
Operating segments (continued)
(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 2017 (2016: 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 2017 Annual Report I PAGE 38
6. REVENUE, INCOME AND EXPENSES (CONTINUED)
(b) Revenue, Income and Expenses from Continuing Operations
Revenue
Sale of goods
Provision of services
Total revenue
Other income
Interest received
Other
Total other income
Finance costs
Bank loans and overdrafts
Total finance costs
CONSOLIDATED
2017
$000
77,606
3,493
81,099
94
-
94
(75)
(75)
2016
$000
52,826
3,718
56,544
223
1
224
(90)
(90)
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
.
CONSOLIDATED
2017
$000
(620)
(350)
2016
$000
(433)
(120)
(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
2017
$000
4,095
2016
$000
3,298
CONSOLIDATED
2017
$000
542
12,755
297
1,584
28
1,440
50
16,696
2016
$000
239
7,543
285
1,039
27
1,017
35
10,185
Joyce Corporation Ltd 2017 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 2017 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
Income tax expense relating to continuing operations
Consolidated Statement of Profit or loss and Other
Comprehensive Income – discontinued operations
Income tax expense relating to discontinued operations
Income tax expense relating to overall operations
CONSOLIDATED
2017
$000
2016
$000
2,858
1,687
(166)
-
10
(35)
-
167
2,702
1,819
-
65
2,702
1,883
Joyce Corporation Ltd 2017 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 2017 and 30 June 2016 is as follows:
Profit before income tax
Income tax expense calculated at the statutory income tax rate of
30% (2016: 30%)
Expenditure not allowable for income tax purposes
Impairment of stores not allowable for income tax purposes
Under provision in respect of prior years
CONSOLIDATED
2017
$000
2016
$000
8,518
5,280
2,555
1,584
32
105
10
32
36
167
2,702
1,819
Income tax expense recognised in profit or loss – continuing
operations
2,702
1,819
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 2017 (2016: Nil).
Joyce Corporation Ltd 2017 Annual Report I PAGE 41
7. INCOME TAX (CONTINUED)
Deferred income tax
Deferred income tax at 30 June 2017 relates to the following:
Deferred tax liabilities
Investment property
Trade & Other
Receivables
Fair value gain other
intangible assets
Inventory
Balance at 30 June 2017
Deferred tax assets
Plant and equipment
Trade and other payables
Pensions and other employer
obligations
Provisions
Other
Unused Tax losses
Balance at 30 June 2017
Opening
balance
Charged to
income
Recognised
in Business
Combination
Closing
balance
30 June 17
$000
$000
$000
$000
(5)
-
(260)
(52)
(317)
5
(2)
-
52
55
-
-
-
-
-
-
(2)
(260)
-
(262)
$000
$000
$000
$000
145
55
388
445
77
-
1,110
22
164
67
(256)
(57)
173
113
-
-
84
-
-
-
84
167
219
539
189
20
173
1,307
The Consolidated Entity has deferred tax assets and liabilities of $Nil (2016: $Nil) which were not brought
to account.
Joyce Corporation Ltd 2017 Annual Report I PAGE 42
7. INCOME TAX (CONTINUED)
Deferred income tax at 30 June 2016 relates to the following:
Deferred tax liabilities
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
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)
-
5
-
-
-
-
-
(5)
(260)
(52)
(317)
$000
$000
$000
$000
136
12
353
284
133
918
9
43
35
161
(56)
192
-
-
-
-
-
-
145
55
388
445
77
1,110
Joyce Corporation Ltd 2017 Annual Report I PAGE 43
8. 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
CONSOLIDATED
2017
$000
5,816
-
2016
$000
3,461
-
5,816
3,461
-
520
5,816
3,981
(3,052)
(1,680)
2,764
2,301
Effect of dilutive equity instruments
Net profit attributable to ordinary shareholders for diluted
earnings per share
-
-
2,764
2,301
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 $1.768) (2016:$1.653) 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 2017 Annual Report I PAGE 44
9. 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. Refer to Note 3 for management of financial risks on cash and cash equivalents.
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
2017
$000
5,296
5,296
2016
$000
15,249
15,249
10. 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. Refer to Note 3 for management of financial risks on receivables.
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
2017
$000
659
(25)
634
-
568
568
2016
$000
594
(34)
560
21
550
571
1,202
1,131
(a) Allowance for impairment loss
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 $25k (2016: $34k) has been recognised by the Consolidated Entity.
Joyce Corporation Ltd 2017 Annual Report I PAGE 45
0. TRADE AND OTHER RECEIVABLES (CONTINUED)
At 30 June, the ageing analysis of current trade receivables is as follows:
Total
$000
659
0-30
Days
31-60
Days
$000
427
$000
143
61-90
Days
PDNI*
$000
49
61-90
Days
CI*
$000
-
+91
Days
PDNI*
$000
15
+91
Days
CI*
$000
25
2017 Consolidated
2016 Consolidated
594
455
73
4
-
28
34
* Past due not impaired (‘PDNI’)
Considered impaired (‘CI’)
Receivables past due but not considered impaired are: Consolidated Entity: $63,999 (2016: $31,820).
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
2017
$000
31
-
(6)
25
2016
$000
39
-
(5)
34
11. 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
2017
$000
5,012
(104)
4,908
2016
$000
3,767
(125)
3,642
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2017 amounted to $Nil (2016: $Nil). The reduction in provision has been written back to cost of
goods sold as losses were realised.
Joyce Corporation Ltd 2017 Annual Report I PAGE 46
11. INVENTORIES (CONTINUED)
Non-current
Stock on hand at cost
Provision for impairment (a)
(a) Provision for impairment
CONSOLIDATED
2017
$000
691
(163)
528
2016
$000
675
(129)
546
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2017 amounted to $50,133 (2016: $55,083). The increase in provision has been written back to cost
of goods sold as losses were realised.
12. OTHER ASSETS
Current
Accrued Revenue
Prepayments
Rental Deposits
13. OTHER FINANCIAL ASSETS
Current
Funds held in trust
CONSOLIDATED
2017
$000
181
243
80
504
2016
$000
102
160
77
339
CONSOLIDATED
2017
$000
380
380
2016
$000
850
850
Joyce Corporation Ltd 2017 Annual Report I PAGE 47
14. 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;
• Leasehold improvements – 3 to 15 years.
• Buildings – 30 to 50 years; and
• Motor Vehicles – 3 to 6 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.
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
Property&
Buildings
$000
CONSOLIDATED
Plant and
equipment
$000
Leasehold
improvements
$000
-
4,471
-
-
380
431
(1)
(168)
914
426
-
(210)
Total
$000
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
1,580
(450)
1,130
7,836
(1,593)
6,243
Joyce Corporation Ltd 2017 Annual Report I PAGE 48
14. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
At 1 July 2016,
Net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
Fixed Assets – work in progress
At 30 June 2017
Net of accumulated depreciation
At 30 June 2017
Cost
Accumulated depreciation and
impairment
CONSOLIDATED
Property&
Buildings
$000
Plant and
equipment
$000
Leasehold
improvements
$000
4,471
10,314
-
(31)
-
642
1,675
-
(227)
83
1,130
907
(13)
(362)
-
Total
$000
6,243
12,896
(13)
(620)
83
14,754
2,173
1,662
18,589
14,785
3,271
2,464
20,520
(31)
(1,098)
(802)
(1,931)
Net carrying amount
14,754
2,173
1,662
18,589
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30
June 2017 is $Nil (2016: $Nil). Leased assets and assets under hire purchase contracts are pledged as
security for the related finance lease and hire purchase liabilities.
15. 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.
(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
• Lloyds Online Auctions Pty Ltd cash generating unit
Joyce Corporation Ltd 2017 Annual Report I PAGE 49
15. INTANGIBLE ASSETS (CONTINUED)
(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
2017
$000
15,933
15,933
2016
$000
9,500
9,500
An analysis of intangible assets is presented below:
CONSOLIDATED
Year ended 30 June 2017
At 1 July 2016
net of accumulated impairment
Acquired goodwill from business combination
Impairment
At 30 June 2017,
net of accumulated impairment
At 30 June
Cost (gross carrying amount)
Accumulated impairment
Net carrying amount
(a) Goodwill
2017
$000
9,500
6,783
(350)
2016
$000
9,620
-
(120)
15,933
9,500
17,778
(1,845)
15,933
10,995
(1,495)
9,500
Intangible assets as at 30 June 2017 reflects the value of the Bedshed activities for the Bedshed
Joondalup store which was purchased in May 2007, the remaining 51% of Bedshed Franchising Pty Ltd
purchased in 2006, the 51% interest in KWB Group purchased 31 October 2014 and the 51% interest in
Lloyds Online Auctions Pty Ltd purchased 01 July 2016.
Joyce Corporation Ltd 2017 Annual Report I PAGE 50
15. INTANGIBLE ASSETS (CONTINUED)
(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 $350,000 (2016: $120,000)
has been recognised in respect of goodwill for the year ended 30 June 2017.
Goodwill is allocated to cash-generating units which are based on the Consolidated Entity’s operating
segments
CONSOLIDATED
Bedshed Franchising segment
Bedshed Stores segment
Kitchen Stores segment
Online Auctions segment
Total
2017
$000
6,307
1,820
1,023
6,783
15,933
2016
$000
6,307
2,170
1,023
-
9,500
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 2016/17 and 2017/18 financial years
extrapolated using estimated growth rates. The cash flows are discounted using risk-adjusted pre-tax
discount rates.
The following assumptions were used in the value-in-use calculations:
Pre –tax
Discount
Rate
Pre –tax
Discount
Rate
Sales
Growth
Rate
Sales
Growth
Rate
Expense
Growth
Rate
Expense
Growth
Rate
Bedshed Franchising segment
Bedshed Stores segment
Kitchen Stores segment
Online Auctions segment
2017
10.8%
10.8%
10.8%
10.8%
2016
19.5%
19.5%
19.5%
-
2017
4%
5.3%
6%
6%
2016
4%
3-5%
4%
-
2017
1.5%
1.5%
1.5%
1.5%
2016
2-3%
2-3%
2%
-
The Consolidated Entity’s value-in-use calculations incorporated a terminal value component beyond the
5-year projection period for all of the operating segments. The principal assumption used to estimate the
terminal value of each operating segment was a multiple of three to six times earnings before interest,
taxation, depreciation and amortisation for the year ended 30 June 2017..
Impairment of Goodwill for the year ended 30 June 2017 was $350,000 (2016: $120,000), 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
$126,736.
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 $126,736.
Joyce Corporation Ltd 2017 Annual Report I PAGE 51
16. 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
2017
$000
2,194
7,437
442
10,073
2016
$000
2,633
5,308
923
8,864
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.
17. 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 2017 Annual Report I PAGE 52
17. PROVISIONS (CONTINUED)
Provisions are comprised of the following:
Current
Employee benefits (a)
Sub-lease rental shortfall
Store lease termination
Environmental testing (b)
Total Current
Non-current
Employee benefits (a)
Environmental testing (b)
Total Non-Current
CONSOLIDATED
2017
$000
1,159
-
167
35
1,361
636
76
712
2016
$000
796
9
145
50
1,000
460
502
962
2,073
1,962
(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. An executive decision was
made to release $420,000 of the environmental testing provision based on third party expert advice
received from an environmental testing company that the chemical contamination is non-existent. An
environmental testing provision of $111,000, has been provided for future expected testing costs.
Sub-let
Provision
Store Lease
Termination
Employee
Benefits
Environmental
Testing
Total
$000
$000
$000
$000
$000
Consolidated Group
Opening balance at 1 July
2016
Additional/(amount released)
Amounts used
Balance at 30 June 2017
9
-
(9)
-
145
22
-
167
1,256
1,458
(919)
1,795
552
(420)
(21)
111
1,962
1,060
(949)
2,073
Joyce Corporation Ltd 2017 Annual Report I PAGE 53
18. LOANS AND BORROWINGS
Bank loans
Total loans and borrowings
2017
Current
$’000
-
-
Non-current
$’000
8,600
8,600
Total
$’000
8,600
8,600
2016
Current
$’000
-
-
Non-current
$’000
-
-
Total
$’000
-
-
The bank loans are secured by first mortgages over the group’s freehold land and buildings, including
those classified as investment properties. Refer to Note 3 for management of financial risks on loans and
borrowings.
Compliance with loan covenants
The Consolidated entity has complied with the financial covenants of its borrowing facilities during the 2017 financial
year. The financier assesses the financial covenants bi-annually based on audited financial reports.
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 (2016: 27,588,255) Issued and fully paid ordinary shares
17,347
17,347
CONSOLIDATED
2017
$000
2016
$000
380,000 (2016: 380,000) Partly paid ordinary shares, issued at $1.955
and paid to $1.768 (2016: $1.653) (a)
Movement in ordinary shares on issue
At 1 July 2016
Issued shares:
Payment partly paid shares
At 30 June 2017
(a) Partly-paid ordinary shares
672
628
18,019
17,975
2017
Number
27,588,255
-
-
27,588,255
2017
$000
17,975
-
44
18,019
Partly paid ordinary shares are unquoted until they become fully paid. Partly paid ordinary shares carry
voting rights and rights to participate in entitlement issues although any ordinary shares acquired under a
rights issue cannot be quoted until the partly paid ordinary shares become fully paid.
Joyce Corporation Ltd 2017 Annual Report I PAGE 54
20. RESERVES
Financial assets reserve
Balance at 30 June 2017
21. CAPITAL AND LEASING COMMITMENTS
Property lease payable – Consolidated Entity as lessee
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2017
$000
2016
$000
2,699
2,699
2,699
2,699
CONSOLIDATED
2017
$000
3,427
6,449
211
2016
$000
3,682
9,805
2,452
10,087
15,939
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.
Joyce Corporation Ltd 2017 Annual Report I PAGE 55
22. BUSINESS COMBINATIONS
On 1 July 2016, the group acquired 51% of the equity of Lloyds Online Auctions Pty Ltd (“LOA”) by a
cash offer for shares held by one of its subsidiaries. The business contributed revenues of $16.4 million
and net profit before tax of $2.957M for the year ended 30 June 2017 before non-controlling interests.
The acquisition was a profitable business with significant profit and growth potential that has gained an
exposure into online retailing. The business has counter cyclical aspects that add balance to the overall
Company risk profile and investment strategy. The goodwill is attributable to the consistent
demonstrated earnings achieved over a number of years and reflects a multiple of those earnings.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
$’000
Purchase consideration
Cash paid
Settlement consideration payable
Total purchase consideration for 51% of Lloyds Online Auctions Pty Ltd
The assets and liabilities recognised as a result of the acquisition are:
Cash & cash equivalents
Other current assets
Fixed assets
Deferred tax asset
Employee entitlements
Net identifiable assets acquired
Add: goodwill
Non-controlling interest on acquisition of subsidiary
Total purchase consideration for 51% of Lloyds Online Auctions Pty Ltd
6,000
900
6,900
Fair Value
$’000
1
110
275
84
(240)
230
6,783
(113)
6,900
Settlement consideration payable
The directors have agreed to pay in September 2017, a $0.9m final consideration settlement of the
acquisition, which was part of the original agreement and contingent on Lloyds performance during
the year.
Treatment of non-controlling interests
The group recognises non-controlling interests in an acquired entity either at fair value or at non-
controlling interest's proportionate share of the acquired entity's net identifiable assets. The decision
is made on an acquisition-by-acquisition basis. For the non-controlling interests (49%) in Lloyds
Online Auctions Pty Ltd, the group elected to recognise the non-controlling interest at the non-
controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Joyce Corporation Ltd 2017 Annual Report I PAGE 56
23. 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
33
171
8,600
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.
(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.
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 $689,429 (2016: $826,589).
KWB Group have bank guarantees and rent deposits supporting store leases of $380,597 at 30 June
2017 ($391,747 at 30 June 2016).
Joyce Corporation Ltd 2017 Annual Report I PAGE 57
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
Joyce Consolidated Holdings Pty Ltd
Lloyds Online Auctions Pty Ltd
1
1
1
1
1
1
Country of incorporation % Equity interest
2016
100
100
100
100
100
100
100
100
100
51
50
-
-
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
Australia
2017
-
-
100
-
100
-
-
100
100
51
-
100
51
Joyce Corporation Ltd is the ultimate parent of the Consolidated Entity.
1. These companies have been deregistered during the financial year ended 30 June 2017.
a) Related Party Transactions
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 2017.
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 - $473,917 (2016: $511,041). As at year end the amount
owing to this related party was $23,805 (2016: $26,341).
(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 (2016: $26,131).
(v)
Key management personnel compensation
Short Term Benefits
Post Employment Benefits
2017
$000
2,237
157
2,394
2016
$000
1,838
114
1,952
Detailed remuneration disclosures are provided in the remuneration report on pages 12 to 19.
(vi)
(vii)
Loans to key management personnel
At 30 June 2017 or at any time during the financial year there were no loans (2016: Nil)
outstanding to specified directors and specified executives.
During the year ended 30th June 2017, LAAV Management Pt yLtd, a company of which Mr A
Webber is a director, was paid $163,900 by Lloyds Online Auctions Pty Ltd for the provision of
management services to be provided to the business by Mr A Webber and Mr M Fitzpatrick. This
amount is in addition to the remuneration disclosed in the key management personnel
remuneration disclosures.
Joyce Corporation Ltd 2017 Annual Report I PAGE 58
25. RELATED PARTY DISCLOSURES (CONTINUED)
b) Non Controlling Interest
Set out below is summarised financial information for each subsidiary that has non-controlling interests
that are material to the group. The amounts disclosed for each subsidiary are before inter-company
eliminations.
Summarised balance sheet
KWB Consolidated Group
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Accumulated NCI
2017
$’000
3,651
(7,363)
(3,712)
11,764
(5,751)
6,013
2,301
832
2016
$’000
8,256
(8,105)
151
2,168
(168)
2,000
2,151
1,026
Summarised statement of
comprehensive income
KWB Consolidated Group
Revenue
Profit for the period
Total comprehensive income
Profit allocated to NCI
Dividends paid to NCI
2017
$’000
47,482
4,218
4,218
2,067
(2,261)
2016
$’000
40,861
3,484
3,484
1,680
(1,271)
Summarised cash flows
KWB Consolidated Group
2017
$’000
2016
$’000
Lloyds Consolidated Group
2016
$’000
-
-
-
2017
$’000
3,166
(1,842)
1,324
1,075
(165)
910
2,234
1,098
-
-
-
-
-
Lloyds Consolidated Group
2016
$’000
-
-
-
2017
$’000
16,373
2,011
2,011
985
-
-
-
Lloyds Consolidated Group
2016
$’000
2017
$’000
Cash flow from operating activities
4,032
6,051
2,268
Cash flow from investing activities
(9,375)
(672)
(565)
Cash flow from financing activities
1,043
(2,629)
-
Net increase/(decrease) in cash and
cash equivalents
(4,300)
2,750
1,703
-
-
-
-
Joyce Corporation Ltd 2017 Annual Report I PAGE 59
25. RELATED PARTY DISCLOSURES (CONTINUED)
b) Transactions with non-controlling interests
The effect on the equity attributable to the owner of Joyce Corporation Limited during the year us
summarised as follows:
Carrying amount of non-controlling interests acquired
Acquired non-controlling interest during the year (i)
Share based payment to non-controlling interest
Profits attributable to non-controlling interests
Dividends paid to non-controlling interest
Closing carrying amount of non-controlling interest
2017
$000
1,026
113
-
3,052
(2,261)
1,930
2016
$000
511
-
106
1,680
(1,271)
1,026
(i) On 1 July 2016, the group acquired 51% of the issued capital in Lloyds Online Auctions for $6,900,000.
The carrying amount of Lloyds Online on acquisition was $231,000, please refer to Note 22 Business
Combinations. The carrying amount of the existing 49% non-controlling interest was $113,000.
26. DIVIDENDS
Dividends declared or paid during the financial year are as follows:
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)
Final fully franked ordinary dividend of 3.0 (2016: 3.0) cents per share
(Paid 18 November 2016)
Special fully franked dividend of 3.0 (2016: 5.0) cents per share
(Paid 18 November 2016)
Interim fully franked dividend of 3.5 (2016:3.0) cents per share
(Paid 14 April 2017)
Special fully franked dividend of 2.0 (2016: 2.0) cents per share
(Paid 14 April 2017)
2016
$000
839
1,399
839
559
2017
$000
839
839
979
559
3,216
3,636
At 30 June 2017, 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
2017
$000
2016
$000
Cash payments in relation to dividends paid in the financial year
3,216
3,636
Joyce Corporation Ltd 2017 Annual Report I PAGE 60
27. EVENTS SUBSEQUENT TO REPORTING DATE
The directors have agreed to pay in September 2017, a $0.9m final consideration for the settlement of the
51% Lloyds Online Auctions acquisition.
A fully franked dividend of 3 cents per share was declared on 31 August 2017 and payable 22 November
2017. A further special dividend of 3 cents per share fully franked will be paid on the same date.
Other than disclosed above no event has occurred since the reporting date to the date of this report that
has significantly affected, or may significantly affect:
(a)
(b)
(c)
the Consolidated Entity’s operations, or
the results of those operations, or
the Consolidated Entity’s state of affairs.
28. AUDITOR’S REMUNERATION
Amounts received or due and receivable by the auditor’s for:
Audit or review of the financial report of the Consolidated Entity
Non-audit services
CONSOLIDATED
2017
$000
2016
$000
96
23
119
110
-
110
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
Impairment of goodwill
Net loss / (profit) on disposal of plant and equipment
Changes in assets and liabilities
(increase)/decrease in inventories
(increase)/decrease in trade and other receivables
(increase)/decrease in other assets
(increase)/decrease in net deferred tax assets and liabilities
(decrease)/increase in trade and other payables
(decrease)/increase in provisions
2017
$000
5,816
746
350
37
(1,236)
(83)
73
(575)
1,126
(919)
2016
$000
3,981
433
120
16
(1,153)
22
368
(2,485)
94
777
Net cash flows used in operating activities
5,335
2,173
Joyce Corporation Ltd 2017 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
Net Equity
b. Financial performance
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive profit/(loss)
As at 30 June
2017
$000
2016
$000
124
23,620
23,744
281
3,123
3,404
7,144
18,168
25,312
600
592
1,192
20,340
24,120
18,019
2,321
20,340
17,975
6,145
24,120
Year ended 30 June
2017
$000
(550)
-
(550)
2016
$000
14,474
-
14,474
c. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No such guarantees existed at 30 June 2017.
d. Contingent liabilities of the parent entity.
No contingent liabilities existed within the parent entity as at 30 June 2017 (30 June 2016: 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 2017 for the value of $Nil (30 June 2016: Nil).
Joyce Corporation Ltd 2017 Annual Report I PAGE 62
31. 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 2017,
and no change to the Group’s accounting policy is required:
The Group has not elected to early adopt any new Standards or Interpretations.
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 material
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.
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.
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.
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.
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
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.
AASB 15
Revenue
from
Contracts
with
Customers
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.
1 July 2018
The group are in
the process of
assessing the
impact on the
financial statements
and currently not
sable to estimate
the impact. The
group will conclude
the assessment of
the impact over the
next 12 months
Joyce Corporation Ltd 2017 Annual Report I PAGE 63
31. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED (CONTINUED)
Reference Title
Summary
AASB 16
Leases
AASB 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.
Impact on
Group’s
financial report
Application
date for
Group
1 July 2019
The Group has
not yet
determined the
impact on the
Group’s financial
statements.
AASB
2017-1
Transfers of
Investment
Property
Amendments to AASB 140 Investment Property
The amendments clarify the principle that an entity
can only transfer a property to, or from, investment
property when there is a change in use of the
property, supported by evidence that a change in use
has occurred.
The Group has
not yet
determined the
impact on the
Group’s financial
statements.
1 July 2018
They also clarify that the situations specified in AASB
140, paragraph 57 are examples of evidence of
change in use, and not an exhaustive list.
Joyce Corporation Ltd 2017 Annual Report I PAGE 64
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 other
mandatory professional reporting requirements; and
(ii) give a true and fair view of the financial position of the Consolidated Entity as at 30 June 2017
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, 27 September 2017
Joyce Corporation Ltd 2017 Annual Report I PAGE 65
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF JOYCE CORPORATION LTD AND ITS CONTROLLED ENTITIES
Joyce Corporation Ltd 2017 Annual Report I PAGE 66
INDEPENDENT AUDITOR’S REPORT
To the members of Joyce Corporation Ltd AND ITS CONTROLLED ENTITIES
Joyce Corporation Ltd 2017 Annual Report I PAGE 67
INDEPENDENT AUDITOR’S REPORT
To the members of Joyce Corporation Ltd AND ITS CONTROLLED ENTITIES
Joyce Corporation Ltd 2017 Annual Report I PAGE 68
INDEPENDENT AUDITOR’S REPORT
To the members of Joyce Corporation Ltd AND ITS CONTROLLED ENTITIES
Joyce Corporation Ltd 2017 Annual Report I PAGE 69
ASX ADDITIONAL INFORMATION
AS AT 26 SEPTEMBER 2017
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 26 September 2017
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
223
181
73
156
30
663
81,011
459,903
585,501
5,607,177
20,854,663
%
0.29
1.67
2.12
20.32
75.59
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 (2016: 9,874,129) 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 2017 Annual Report I PAGE 70
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 26 September 2017
(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>
5. TRAFALGAR PLACE NOMINEES PTY LTD
6. MR DONALD TEO
7. MR DANIEL ALEXANDER SMETANA
8. STARBALL PTY LTD
9. TREASURE ISLAND HIRE BOAT COMPANY PTY LTD
10. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
11. BNP PARIBAS NOMINEES PTY LTD
12. MR DAN SMETANA
13. CONARD HOLDINGS PTY LTD
14. SANDHURST TRUSTEES LTD
15. P B L INVESTMENTS PTY LTD
16. BELLPAM PTY LIMITED
17. EPIC TRUSTEES LIMITED
18. MAN INVESTMENTS (NSW) PTY LTD
19. FALCON FIRE PROTECTION PTY LTD
Fully paid
Ordinary
Shares
7,711,568
2,328,000
1,948,312
1,000,000
990,233
990,000
563,726
534,031
504,291
456,534
435,174
354,022
347,940
282,519
265,203
207,500
201,695
185,514
%
27.95
8.44
7.06
3.62
3.59
3.59
2.04
1.94
1.83
1.65
1.58
1.28
1.26
1.02
0.96
0.75
0.73
0.67
166,666
0.60
20. SELSTOCK PTY LIMITED
150,012
0.54
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES
Total Remaining Holders Balance
19,622,940
7,965,315
71.13
28.87
(e)
Unquoted Partly Paid Shares holdings greater than 20%
Ordinary Shareholder
Mr D A Smetana
Total
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 2017 Annual Report I PAGE 71
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 26 SEPTEMBER 2017
(f)
Company Secretary
Mr Keith Gray
(g)
Registered Office
75 Howe 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 2017 Annual Report I PAGE 72