ANNUAL REPORT
2018
ABN: 80 009 116 269
Email: investors@joycecorp.com.au
Website: joycecorp.com.au
Tel: +61 8 9445 1055
75 Howe Street
Osborne Park, WA 6017 Australia
Joyce Corporation Ltd Annual Report 2018
1
PAGE INTENTIONALLY LEFT BLANK
Joyce Corporation Ltd Annual Report 2018
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The year in review
“Prosper in Business together”
Annual Compounded
Growth (FY14 – 18)
Revenue : +66% 1
EBIT : +79% 1
JYC Dividend Yield
8.3% 2
ASX Consumer
Discretionary Yield
3.8%
The
Joyce
Way
Lloyds continues to
break Classic Car
sales records 3
Joyce partners
with
organisations to
focus on
growth
1 – for continuing operations
2 – values as at 24/7/2018
3 – 1971 Ford Falcon GTHO Phase III
sold at auction 17 June 2018
Contents
CHAIRMAN’S MESSAGE
EXECUTIVE DIRECTOR’S REPORT
OPERATIONAL AND FINANCIAL REVIEW
DIRECTORS’ REPORT
REMUNERATION REPORT
4
5
6
18
22
CORPORATE GOVERNANCE STATEMENT
ANNUAL FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENT
DIRECTORS’ DECLARATION
INDEPENDENT AUDITORS REPORT
33
34
39
79
80
Joyce Corporation Ltd Annual Report 2018
3
Chairman’s Message
Dan Smetana
DEVELOP. PARTNER. GROW
“We Prosper in Business
together”
Dear Shareholder,
We are pleased to announce another
successful year for the Joyce Group.
The highlights of the Company’s results
for the financial year 2018 were a:
increase
22% increase in net profit after tax to
$3.38m
22%
in revenue growth
from continuing operations to $96m
21% increase in total network sales
including auction
turnover and
commissions to $255m
22% increase in earnings per share to
12.3 cents on an undiluted basis
net assets per share increased to
$0.93 cents fully diluted, and a
steady
payout, with
dividend
directors declaring a final 6 cent
dividend payable in November 2018;
bringing the total full year dividend
payment fully franked to 11 cents per
share.
growth
strategy
The results for the year support the
Company’s
and
partnering philosophy and we are
confident that by adopting this approach
we can continue to provide strong
returns to shareholders.
We are very proud of the outstanding and
continued profitable growth of the KWB
Group. The team, led by John Bourke and
Chris Palin, has worked smart and hard to
deliver 26% revenue growth leading to
profit gains of over of 40%. Three new
showrooms were opened this year,
bringing
in
total
Queensland, NSW and South Australia to
18. A further three new showrooms are
planned over the next 12 months.
showrooms
the
KWB also completed the capital works
program at the Lytton property
in
Queensland, which was a strategic
purchase in 2017. This allowed KWB to
enter into a long‐term lease agreement
with their cabinetry supplier, KT3 leading
to cost savings, synergies and a profitable
partnership for both businesses. The
Lytton property was revalued this year
realising a $459k gain for the Joyce
Group.
Our other partnership, with Lloyds
Online, run by Andrew Webber is also
showing substantial growth potential.
On June 30, 2018 Lloyds Online acquired
Burns Auctions Group which gave us
access to their 2 sites at Bathurst and
Dubbo to further grow the premier
“Classic Car” Auction sales side of the
business and provide further reach for
equipment sales. The car enthusiasts
amongst you will be aware of the Lloyds
Online auction of a 1971 Ford Falcon
GTHO for over $1m and a prototype
Torana A9X for $500k during the year.
Over the past 15 months, Lloyds Online
has invested $2.4m in proprietary IP
Software and a customer data base
resulting in a world class online platform
that will meet the needs of their diverse
and growing business. In the past 6
months online participation on the Lloyds
Online website grew astronomically by
+280%
With auction turnover increasing by 27%
after adjusting for the one‐off investment
in business systems, the Lloyds Online
profit is in line with last year’s result and
revenue grew by 30%
run by Gavin Culmsee,
Bedshed,
continues to add value to the Joyce
Group with profitability growing by 44%
and revenue growing by 5%.
The completion of the majority of the
Evolution store fitouts this year provides
an enhanced customer retail experience.
Backed by our knowledgeable staff and
with the launch of our exciting and
engaging new TV ads campaign we will
see a number of new franchises open in
NSW, Victoria and Queensland this
coming year.
It has been an exciting year and the Board
is committed to its growth and partnering
strategy. We are also committed to
ensuring that we have the appropriate
structure to enable us to achieve this. To
this end, Mike Gurry who has been Chair
of the Audit and Risk Committee of Joyce
for an extended period, has been
appointed Deputy Chair of the Joyce
Board. Mike has significant executive and
Board experience and has made an
invaluable contribution to the Board to
date. Karen Gadsby, who was appointed
to the Board in July 2017, will take over
the role of Chair of the Audit and Risk
Committee. Karen has a strong finance
background and has previously chaired
several Audit and Risk Committee’s.
With a strong board and executive/
leadership team, Joyce is positioned for a
positive future. We are committed to the
Joyce Way of doing business and the
Joyce Values. This ensures we are an
inclusive organisation as demonstrated
by increases in the proportion of females
in our workforce at every level within the
organisation in the past 12 months.
I thank the board, management, our
business unit partners and staff for their
dedication and commitment to the
Company, along with our Executive
for
Director
consistently improving performance.
Anthony Mankarios
I have no hesitation in commending Joyce
Corporation Ltd to you.
Joyce Corporation Ltd Annual Report 2018
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Executive Director’s Report
“Another year of double
digit growth.”
Net cash from Operating Activities rose to
$9.1m in FY18, up 70% on prior year.
to
FY14
FY18,
The Group has delivered total revenue
growth of over 650% in the last four years
excluding
(from
discontinued operations) which equates
to a compound growth rate of over 66%
per annum. In FY18 the Group grew its
statutory revenue by +22% to achieve
$96.4m for the year.
Management across the divisions set in
place solid growth plans for the future
and delivered planned revenue growth
for the year. Joyce Corporation’s total
business written network sales including
auction turnover and commissions from
Franchisees grew to $255m from $211m
last year, up 21% YOY.
of
this
year’s
One
outstanding
performances was delivered by our
Kitchen Division growing revenue by 26%
YOY by taking the total number of
showroom sites to 18 which, with cost
management, delivered a +40% YOY
Earnings Before Interest & Tax (EBIT) lift.
The cost efficiency strategy encompassed
the new Lytton property and further
partnering arrangements with KT3, one
of our suppliers of cabinetry. This 10,000
square metre investment property will be
key to our supply chain into the future.
The property is fully leased and houses
our administration office, as well as our
wardrobe facility. The larger majority of
this property is leased to KT3 on arms‐
length commercial terms.
The Group took the strategic decision to
invest in our recently acquired Lloyds
Online Auctions business. In the past 15
months over $2.4m has been invested in
acquiring and further developing our
online software IP, to enhance capability
and place our Group into an enviable
position next year.
This business grew total commissions
earned by +30% (YOY) and achieved some
key operational highlights listed below:
Integrated the new Art Division,
which is growing in solid double‐digit
percentage growth;
Completed the asset acquisition of
Burns Auctions/ Macquarie auction
group on 30 June 2018. With two key
ongoing locations in Bathurst and
Dubbo NSW;
Expanded the Classic Car Division to
become the number one classic car
online auction business
the
Southern Hemisphere;
Set‐up its International Classic Car
online business selling to the EU;
Opened multiple state branches;
Won the Commonwealth Games
contract to sell off all ex Games
assets; and
in
Grew
key
its onsite businesses and
completed
of
development in its own proprietary
software that
is world class and
exclusive to Lloyds Online.
elements
In addition to the capital investment
spend there was significant operational
expenditure, which impacted the FY18
EBIT result bringing it down to $0.8m. We
expect that this will rebound relatively
quickly as we see enhanced net results in
FY19. In FY19 we also expect Lloyds
Online to deliver solid cashflow earnings
and pay its first significant cash dividend
prior to the end of the 2018 calendar
year.
lifted EBIT
Total Bedshed operations
performance on a YOY basis by +44% to
$2.0m in FY18.
The Bedshed network grew with the
opening of two new Franchise stores with
the latest new Franchise store being
established
inner city
in Hawthorn,
Melbourne. This store has a new, smaller
format to allow entry into inner city
locations going forward. In addition to
increasing store numbers, the Group
invested in the evolution fitout program.
This aligns
focus on
the Group’s
delivering an inspiring retail experience
to our valued customers with quality
bedding products delivered with reduced
lead times.
Bedshed delivered on the following key
areas:
technology,
Continued to excel in rolling out our
evolution store concepts;
Partnered with the world’s smartest
introducing
bedding
Kingsdown to our stores;
Introduced the new 60‐day Comfort
Guarantee to all Bedshed stores, to
increased
customers
provide
assurance in their purchase decision;
and
Enhanced choice with the online
mattress
to
Bedshed and the new Bedroom
planner tool, which is also available
online.
exclusive
selector
Bedshed has set an aggressive growth
plan for the next five years and subject to
site availability will grow its network into
NSW in FY19.
We are proud to have developed and
communicated our set of core values. The
“Joyce Way” is set to help guide and align
all stakeholders with our values. This will
drive continual
in our
partnering model, set guidelines in our
decision making and assist prospective
new partners
to align with our
expectations.
improvements
We undertook an executive search this
year and announced on the 17 July that
Mr Keith S. Smith would join the Group as
the new Finance Executive/ COO. This
role is critical to us developing and
implementing our current and future
growth plans within the framework of our
“Joyce Way” set of values. We welcome
Keith on board. I truly look forward to
working with him to further develop our
business and enhance our Company to a
new level of excellence nationwide.
Joyce Corporation Ltd Annual Report 2018
5
OPERATIONAL AND FINANCIAL REVIEW
ORGANISATIONAL OVERVIEW & BUSINESS MODEL
OUR BUSINESS MODEL
Is to partner with good businesses and unlock their full
potential.
We believe this model works in many industries and for many
organisations.
WHO WE ARE
Our Group and solid business portfolio continues to grow, through both organic
and inorganic means. We continue to identify potential partners to work with in
the future.
KWB GROUP PTY LTD (“KWB”)
Continues to roll out its extremely successful model ending the FY18 with 18
stores. A further 3 store openings are planned for FY19.
(See Note 5) $M’s
Continuing Revenue
Segmental EBIT
FY18
$59.9
$8.3
FY17
$47.4
$5.9
GROWTH
26.4%
40.0%
LLOYDS ONLINE AUCTIONS (“LLOYDS”)
The Executive, supported by the Board have focused investment dollars into
Lloyds Online during FY18. These investments have been both capital and
operational expense in nature. Returns on these investments will be seen from
FY19.
(See Note 5) $M’s
Continuing Revenue
Segmental EBIT
FY18
$18.3
$0.8
FY17
$14.0
$2.7
GROWTH
30.3%
‐72.0%
Management have calculated the underlying Adjusted EBIT number of $2.9m (as
detailed on page 11) as a more appropriate base to judge FY19 results on.
BEDSHED FRANCHISING & COMPANY STORES (“BEDSHED”)
Operate two models – a very successful franchising operation and, where it
makes more economic sense a small number of company owned stores.
(See Note 5) $M’s
Continuing Revenue
Segmental EBIT
FY18
$18.1
$2.0
FY17
$17.3
$1.4
GROWTH
4.7%
43.8%
FY18/19
Joyce has made further investment in the talent of the Executive Team to increase
the support provided to current partners and identify future growth opportunities.
‘
Joyce Corporation Ltd Annual Report 2018
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OPERATIONAL AND FINANCIAL REVIEW CONTINUED
JOYCE GROWTH OVER THE FY14 ‐ FY18 TIME FRAME
THE COMPOUND GROWTH HAS BEEN EXCEPTIONAL
By working with the right partners and making appropriate
increases to
investments Joyce has delivered significant
revenue and earnings.
With our experienced Board and talented Executive future
plans look to deliver double digit earnings growth.
The growth enjoyed by Joyce during the past five years has come about because of acquisitions and subsequent development of like
for like sales growth and new lines of business. This has been most pronounced in KWB where their business model has been
optimised and Lloyds Online where Management have developed an entirely new ‘vertical’ within the business which did not exist
at the time of purchase in July 2016. The Classic Car Auction division in that short period has become Lloyds Online largest division
by sales and through investment in supporting technology is set to continue its rapid growth profile. The recent investment in Burns
Auctions has strategically established the Bathurst site as the second Classic Car centre for Lloyds Online. This growth has come at a
short‐term cost, and despite this investment Management have still delivered the above levels of annual compound growth for Joyce
in both sales and earnings. The sales chart below demonstrates the divisional growth during FY18, with the majority of investment
dollars being allocated to the fastest growing divisions, KWB and Lloyds Online.
Joyce Corporation Ltd Annual Report 2018
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OPERATIONAL AND FINANCIAL REVIEW CONTINUED
KWB GROUP
2017/18 HIGHLIGHTS
The past 12 months have been another outstanding year for the KWB Group with the
marquee brands of ‘Kitchen Connection’ and ‘Wallspan’ further cementing their brand
leadership in the kitchen and wardrobe renovation market. Both orders and sales grew
in excess of 20%, while same store sales were up 12%. This was further supported by the
opening of new showrooms in Robina and Kawana Qld. Rutherford NSW and the opening
of our Morphett Vale showroom in Noarlunga in SA. Strong growth was also seen in our
Wardrobe and flooring categories with orders now exceeding $5M.
EBIT performance was also very strong, outstripping both sales and order increases to
achieve 40.0% growth over the previous year (see Note 5: Segmental reporting FY18 ‐ $8,316k and
FY17 ‐ $5,938k) and improving 1.7 points on the budgeted margin.
John Bourke
Managing Director
Chris Palin
Finance Director
OUTLOOK
Having established a robust and sustainable infrastructure through ongoing investments
in proprietary software, employee digital services and sales training, KWB Group can
continue to roll‐out their successful new showroom program over the next 12 months.
With 3 new showrooms planned (2 in Qld and 1 in NSW) and the refit and expansion of
our existing Capalaba showroom, we are planning for another year of solid growth.
Retail showroom visitor numbers are expected to grow, buoyed by existing low interest
rates and driven by brand building through advertising and positive on‐line consumer
product reviews that create referral from customer experiences second to none.
Joyce Corporation Ltd Annual Report 2018
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OPERATIONAL AND FINANCIAL REVIEW CONTINUED
LLOYDS ONLINE
Andrew Webber
Founder
2017/18 HIGHLIGHTS
Lloyds Online grew overall auction turn over by 26.7% year on year as anticipated,
however in FY18 we saw continued trading decline in our traditional asset liquidation
arm of our business due to macro‐economic events, mainly in the banking and
insolvency sectors. This has resulted in less trade for the sector overall. Conscious of
the down‐turn exposure in the base business Management invested in the new
‘vertical’ of Classic Cars. In addition to the direct investment in the Classic Cars and
Fine Art ‘verticals’ Lloyds Online completed the purchase of the Burns Auction Group,
securing presence in Bathurst and Dubbo NSW. The Bathurst site delivers the second
large physical centre for Classic Car auctions and Dubbo delivers further access to
‘Yellow’ equipment sales. The extended reach provided by Dubbo allows national
clients to access Lloyds Online superior sales capabilities in the AG Insolvency and
Industrial
These
represent significant mile stones
in the achievement of the five‐
year earnings plan that is being
enacted.
spaces.
In FY18 we saw the completion of two significant phases of software IP development with the
next two scheduled for completion in FY19. The investment, which has been initially focused on
Classic Cars, has been validated as Lloyds Online continues to break records for the value of the
vehicles being auctioned (recently achieving $1.03m for a GTHO Phase III auctioned at the new
Bathurst site). It has also driven significant increases in the site ‘views’ increasing by 280% in the
second half of FY18 (Jan’18 to Jun’18).
To deliver the significant auction sales growth, the IP development and change support has
required short term expense which in the future will not be repeated. This includes not
recovering direct expenses from sellers and buyers and project support costs. Removing these,
the adjusted underlying EBIT number is $2.9m and Management believe this to be a better base
from which to measure future growth off (see table below).
We expect to see continued interest growing in Classic Cars as an investment type, with ongoing
reports stating Classic Cars have out‐performed property and stock markets over the last two,
five and ten‐year time horizons.
Underlying EBIT is not a statutory or audited number but represents a
number which removes discontinued operations and investment
spend which has been made in the short term to build up markets and
drive rapid growth. This underlying EBIT number is disclosed to
provide readers a broader understanding of the Lloyds Online
performance.
OUTLOOK
.
Joyce Corporation Ltd Annual Report 2018
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OPERATIONAL AND FINANCIAL REVIEW CONTINUED
BEDSHED
2017/18 HIGHLIGHTS
2018 was another strong year for the well‐established specialty Bedroom retailer.
Bedshed opened two new franchise stores and relocated one other store. The Bedshed
“Evolution” store fitout continued to be rolled out to drive sales growth and enhance
the Bedshed shopping experience for the consumer. EBIT growth was the main focus
for the Management team, delivering +43.8% on a YOY basis (see Note 5: Segmental reporting
FY18 ‐ $1,998k and FY17 ‐ $1,389k).
Gavin Culmsee
General Manager
OUTLOOK
The outlook for Bedshed is strong, with the continuing rollout of the Bedshed
“Evolution” fitout into existing stores, this rollout continues to drive sales. Growth in the
bedding category has been solid with the performance of the exclusive Kingsdown brand
driving transaction values up strongly. Bedshed has recently launched its revamped
brand positioning, highlighting Bedshed’s value proposition of providing the best
shopping environment, the best sales and advice and the best product range and
availability in the specialty bedding category. Bedshed launched the Bedroom Report, a
survey of Australian behaviors in the bedroom and this allows Bedshed to continue to
refine the offer and cater better to the Australian consumer
Enquiry for Bedshed franchising opportunities continues to be strong and Bedshed
expects to open new stores in this financial year.
Joyce Corporation Ltd Annual Report 2018
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OPERATIONAL AND FINANCIAL REVIEW CONTINUED
HOW WE DELIVER VALUE TO OUR CUSTOMERS
With a mission to 'Create Referral', KWB Group has developed a unique customer
experience unmatched in the retail industry. From sleek and sophisticated contemporary
showrooms displaying the latest in Kitchen and Wardrobe design to consumer driven
software and VR applications that helps the customer to visualise their new kitchen.
Customers are taken on a journey of discovery and learning via highly trained retail
specialist using the latest in 3D CAD design software to bring their dream kitchen to life.
The experience continues through the installation phase of their project in which all
scheduling, co‐ordination and quality management is provided. This ensures that the
entire experience is orchestrated in such a way it creates enduring value to the customer,
and hence biased referral to our brands.
Source: www.productreview.com.au
The 2018 Commonwealth Games were held this year on the
Gold Coast. 300 para‐athletes were involved as over 4,400
athletes from 71 Commonwealth Games Associations took
part in the highly successful Games. Once it is all over what
happens to all the assets?
The State Government appointed Lloyds Online to organise the logistics and auction of
the assets left over from the Games. In the end over 3,000 pallets were collated,
catalogued and put up on Lloyds Online website for sale. The auction attracted a lot of
attention and in some cases second hand items were sold for prices higher than the
equivalent would cost at retail. Many of the bidders were international and multiple
containers have been sent to NZ, Fiji and PNG. The furthest afield was seating equipment
which ended up going to an organisation in the UK. Most items though were sold direct
to Australian consumers in individual lots ‐ confirming the retail power of online auctions
and the ability to draw end users and consumers rather than resellers who are seen at
traditional auctions.
The success of this event clearly demonstrates the extensive capabilities of the Lloyds
Online logistics and marketing arms. With the extended national coverage in the year
Lloyds Online are well positioned to support large disposal programs.
Bedshed has recently launched the Bedroom report, a survey into Australian bedroom
behaviour. This report allows Bedshed to communicate to the consumer in a more
relevant, modern and integrated way.
E
ED
This integrates the instore experience, via our world class Evolution store fitout with
online and social channels and is reinforced via television and radio advertising
highlighting Bedshed the bedding specialist of choice in Australia.
Joyce Corporation Ltd Annual Report 2018
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OPERATIONAL AND FINANCIAL REVIEW CONTINUED
THE JOYCE WAY
Our values define how Joyce goes to business. It values business parties and staff alike and engages in an
open and honest way.
Through our values we aim to develop long term relationships with our partners to drive growth for both
parties. By developing our culture to support our longer‐term business outcomes we expect to optimise
future earnings.
Joyce Corporation Ltd Annual Report 2018
15
OPERATIONAL AND FINANCIAL REVIEW CONTINUED
BOARD TEAM
DAN SMETANA
Chairman
Dan is the Chairman of Joyce Corporation Ltd and Bedshed Franchising Pty
Ltd. He is a Director of the Industrial Foundation for Accident Prevention,
Polymetallic Australia Ltd and Korab Resources Limited. Dan is a visionary
leader who has effectively lead the Joyce Corporation Ltd as Chairman since
1984.
MIKE GURRY
Deputy Chairman
Mike has over 25 years experience as a chairman and non‐executive Director.
He has served on numerous Boards, including listed, Government and not‐for‐
Profit organisations. Currently, he serves on the St John Ambulance Board and
is a Councilor of HBF Ltd. Mike’s business career included involvement in a
broad range of industries in which he enjoyed considerable success. Mike is
an exceptional business strategist with outstanding stakeholder and change
management skills. In 2018 he was awarded the Order of Australia (AM).
TIM HANTKE
Non‐Executive Director and Chair of Remuneration Committee
Tim specialises in mentoring and coaching CEOs, senior executives and
business owners, along with being a commercial mediator and professional
company director. Having held a broad variety of roles within organisations of
all sizes, Tim now focuses on key board positions and mentoring others. His
focus is to work with leaders and to get to the source of their thinking and
behaviours, and help them find new ways of communicating, collaborating,
and negotiating to meet their organisational, professional and personal goals.
KAREN GADSBY
Non‐Executive Director and Chair of Audit and Risk Committee
Karen has had 17 years Chair/Non‐Executive Director experience and has held
directorships across the publicly listed, private, government and not‐for‐profit
sectors in Western Australia and Victoria. Karen has a finance background.
She was a Chartered Accountant with Coopers and Lybrand and then worked
as a senior executive with North Limited for 13 years, in various executive
roles across the areas of finance, commercial, risk, IT and human resources.
ANTHONY MANKARIOS
Executive Director
Anthony is experienced in leading national and international businesses in
multiple sectors and sized companies across manufacturing, property,
wholesale and retail. He has played a key role in Joyce's underlying business
growth performance since 2010. One of his key strengths is his visionary
leadership style. Anthony has the ability to identify growth opportunities and
work with the business to develop and implement strategies to maximise their
potential. He is effective at leading a team toward achieving a common goal;
through promoting learning, creativity, and developing strong relationships
within the team.
Joyce Corporation Ltd Annual Report 2018
16
OPERATIONAL AND FINANCIAL REVIEW CONTINUED
LEADERSHIP TEAM
KEITH SMITH
Finance Executive / COO
Keith has joined the team in 2018 and has previously worked across Europe
and the Americas which allows a global perspective to be taken and the ability
to present different solutions to local issues. Since coming to Australia, he has
led the Finance, Technology and Company Secretarial functions for publicly
listed and not‐for‐profit organisations. Exposure to technology in its broadest
form and recent emerging technology has provided Keith with unique
experiences and great awareness of the potential ‘digitalisation’ has for
commercial entities and NFP’s. These skills will be leveraged as a part of his
broad role.
KEITH GRAY
CFO / Company Secretary
Keith Gray has 35 years’ experience in finance and accounting positions. Keith
has been CFO and company secretary of a number of ASX listed companies and
large private companies. Keith’s industry experience includes mining services,
agribusinesses, bio‐fuels, construction, mining logistics and supply, services,
FMCG and retail. Keith has been the Company Secretary and Chief Financial
Officer of Joyce Corporation Ltd since 2010.
The Board and Leadership team look forward to taking Joyce into a new phase of growth over the next 5
years.
Joyce Corporation Ltd Annual Report 2018
17
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 2018.
DIRECTORS
The names of the Company’s Directors in office during the year ended 30 June 2018 and until the date of this report are as
below. Directors were in office for this entire period unless otherwise stated.
Dan Smetana
Tim Hantke
Mike Gurry
Karen Gadsby
Chairman (Non‐executive)
Non‐executive Director
Non‐executive Director
Non‐executive Director
Anthony Mankarios
Executive Director
SECRETARY
Keith Gray
PRINCIPAL ACTIVITIES
During the year the principal continuing activities of the Consolidated Entity consisted of being:
(a) Franchisor of the Bedshed chain of retail bedding stores;
(b) Owner of five Bedshed retail stores;
(c) Majority owner of 51% of KWB Group Pty Ltd, a kitchen and wardrobe supply and installation operator; and
(d) Majority owner of 51% of Lloyds Online Auctions Pty Ltd, online auctions and valuers.
There were no significant changes in the nature of the principal activities of the Consolidated Entity.
REVIEW AND RESULTS OF OPERATIONS
During the year ended 30 June 2018 (“the Financial Year”) the Consolidated Entity achieved revenue from continuing
operations of $96.39m (2017: $78.7m) and a profit from continuing operations before tax of $9.82m (2017: $8.27m) and
an overall net profit after tax of $6.72m (2017: $5.64m).
Financial Position
At 30 June 2018, the Consolidated Entity had the total equity of $28.11m (2017: $26.5m) including non‐controlling interest;
with dividend payments of $3.08M in 2018 ($3.22M in 2017). Cash and cash equivalents increased from $5.3M in 2017 to
$6.2M at 30 June 2018. Un‐utilised debt facilities were $150k (2017: $150k).
Bank Facilities
The Consolidated Entity has its long‐term debt funding facility with St George Bank approved to 31 January 2021. The bank
bill facility was fully drawn at 30 June 2018, with the total reducing $434.8k per year. An annually approved multi option
facility of $900k, including $150k overdraft, was approved on 30 January 2018. The overdraft was undrawn at 30 June 2018.
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. The facility has been provided by the Commonwealth Bank for a term of three years to
KWB Property Holdings Pty Ltd. In addition to property purchase facility there is a bank guarantee facility of $500k of which
$251k at year‐end was undrawn.
Joyce Corporation Ltd Annual Report 2018
18
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 in Brisbane. Lloyds Online 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 (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)
Final fully franked ordinary dividend of 3.0 (2017: 3.0) cents per share
(Paid 22 November 2017)
Special fully franked dividend of 3.0 (2017: 3.0) cents per share
(Paid 22 November 2017)
Interim fully franked dividend of 5.0 (2017: 3.5) cents per share
(Paid 11 April 2018)
2018
$000
2017
$000
839
839
979
559
839
839
1,399
3,077
3,216
The Board will continue to review the Company’s ability to pay dividends. Future payments will be in line with the dividend
policy where there is sufficient liquidity available.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In the year the LAAV business operations ceased, refer to Note 7 Discontinued Operations.
SIGNIFICANT AFTER REPORTING DATE EVENTS
A fully franked dividend of 6.0 cents per share was declared on 30 August 2018 and payable 21 November 2018.
A KWB Q4 FY18 fully franked dividend of $1,288,672 was declared and paid on 13 July 2018.
The 380,000 partly paid shares were fully paid on 16 July 2018 by a party related to Dan Smetana.
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) the Consolidated Entity’s operations, or
(b) the results of those operations, or
(c)
the Consolidated Entity’s state of affairs.
Joyce Corporation Ltd Annual Report 2018
19
INFORMATION ON DIRECTORS
Dan Smetana Chairman ‐ Non‐executive Director. Age 74.
Dip Comm FCPA FAIM FAICD
Other current Directorships of listed companies
Korab Resources Limited
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Board
Member of the Audit and Risk Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Interests in shares and options
9,874,129 beneficial fully paid ordinary shares in Joyce Corporation Ltd.
380,000 partly paid unlisted ordinary shares held on 30 June 2018 in Joyce Corporation Ltd, were converted to fully paid
ordinary shares on 16 July 2018.
Mike Gurry. – Deputy Chairman. Age 71.
Bachelor of Science Dip AICD FAICD FAIM SF Fin
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Audit and Risk Committee to 30 June 2018 and from 1 July 2018 a Member of the Audit and Risk
Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Interests in shares and options
56,878 ordinary shares
Tim Hantke. – Non‐executive Director. Age 70.
Bachelor of Commerce, FAIM, FAICD
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chairman of the Remuneration Committee
Chairman of the Nomination Committee
Member of the Audit and Risk Committee
Interests in shares and options
20,000 ordinary shares
Karen Gadsby. – Non‐executive Director Age 55.
B.Comm, FCA, MAICD
Other current Directorships of listed entities
Talisman Mining Ltd
Former Directorships of listed companies in the last 3 years
None.
Special responsibilities
Member of the Audit and Risk Committee to 30 June 2018 and Chair of the Audit and Risk Committee from 1 July
2018.
Member of the Remuneration Committee
Member of the Nomination Committee
Interests in shares and options:
20,000 shares ordinary shares
Joyce Corporation Ltd Annual Report 2018
20
INFORMATION ON DIRECTORS (CONTINUED)
Anthony Mankarios. – Executive Director Age 51.
MBA, FAICD, CFTP
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 and Risk Committee.
Member of the Nomination Committee
Interests in shares and options
723,823 ordinary shares
COMPANY SECRETARY
Keith Gray – Company Secretary. Age 62.
Bachelor of Economics
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 2018, and the number of meetings attended by each Director were:
Directors
Full meeting of Directors
Audit
Remuneration
Dan Smetana
Mike Gurry
Tim Hantke
Karen Gadsby
Anthony Mankarios
A
10
10
10
10
10
B
10
10
8
9
10
A
4
4
4
4
4
B
4
4
2
4
3
A
5
5
5
5
5
B
4
5
4
5
4
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. Anthony did not attend one meeting of the remuneration Committee, as this meeting related to his contract
of employment and remuneration.
Joyce Corporation Ltd Annual Report 2018
21
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 (KMPs’)
F. Link between remuneration policy and Company performance
G. Voting at the 2017 Annual General Meeting
H. Independent 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 KMPs of the Group include:
Key Management Personnel
Position Held
Keith Smith
Gavin Culmsee
Keith Gray
John Bourke
Chris Palin
Andrew Webber
Lee Hames
Finance Executive / COO Joyce Corporation Ltd
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
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 include reviewing and making recommendations on
remuneration policies for the company including 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 Remuneration Committee is appointed by the Board and must be a non‐executive director.
The Remuneration Committee meets as and when required by the Chairman and at least twice annually. The Committee
may invite persons deemed appropriate to attend meetings and may take any independent advice as it considers necessary
or appropriate. Any Committee member may request the Chairman call a meeting.
During the year the Remuneration Committee reviewed and revised its Charter and Policy and reviewed its effectiveness.
Joyce Corporation Ltd Annual Report 2018
22
Remuneration Policies
The objective of the Consolidated Entity’s executive reward framework is to ensure reward 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 to organizational results;
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. One remuneration consultant was used during the financial year to review the executive director’s
remuneration compared to the market.
The framework aligns to shareholders’ interests by:
having economic profit as a core component of plan design;
focusing 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
attracting and retaining high calibre executives.
And aligns to program participants’ interests by:
rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth;
providing a clear structure for earning rewards; and
providing recognition for contribution.
Non‐executive director’s remuneration
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 the
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 fees for membership of the committee. Non‐executive directors receive additional
fees for the Chairing of a committee. Since that time fees have been adjusted by CPI.
Non‐executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically
recommended for approval by shareholders. The limit currently stands at $700,000 per annum and was approved by
shareholders at the Annual General Meeting on 30 November 2017.
Joyce Corporation Ltd Annual Report 2018
23
Executive remuneration
Fixed Component
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 both the performance of the Consolidated Entity and the individual.
Variable Component ‐ Short Term Incentives
Goals are set at the start of each financial year and 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 targets for
profit, cash balances 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 KPI targets.
When the Consolidated Entity, or the relevant segment, and the individual achieve their KPIs, the Board will reward the
KMP with a bonus paid after the end of the financial year being assessed. A percentage of a pre‐determined maximum
amount is awarded depending on the results achieved. No bonus is awarded where performance falls below the minimum.
Variable Component ‐ Long Term Incentives
The Remuneration Committee is currently developing a new Long‐Term Incentive Scheme to be taken to the 2018 AGM for
ratification.
B. SERVICE AGREEMENTS
This remuneration report outlines the director and executive remuneration arrangements with the organisation in
accordance with the requirements of the Corporations Act 2001 and its regulations.
For the purposes of this report, KMP’s 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, Company Secretary and other
senior executives of the Consolidated Entity.
Details of key management personnel (including the senior executives of the Consolidated Entity):
Name
Dan Smetana
Mike Gurry
Tim Hantke
Karen Gadsby
Position Held
Non‐Executive Director and Chairman
Non‐Executive Director ‐ Chairman of Audit Committee to 30 June 2018
Non‐Executive Director ‐ Chairman of Remuneration Committee
Non‐Executive Director – Chairman of Audit Committee from 1 July 2018
Anthony Mankarios
Executive Director
Keith Smith
Keith Gray
Finance Executive / COO Joyce Corporation Ltd
Chief Financial Officer / Company Secretary Joyce Corporation Ltd
Gavin Culmsee
General Manager Bedshed Franchising Pty Ltd
John Bourke
Chris Palin
Managing Director KWB Group Pty Ltd
Finance Director KWB Group Pty Ltd
Andrew Webber
Director Lloyds Online Auctions Pty Ltd and its subsidiaries
Lee Hames
Chief Operating Officer Lloyds Online Auctions Pty Ltd
Joyce Corporation Ltd Annual Report 2018
24
The employment conditions of all KMP’s are formalised in contracts of employment. The directors and CFO are engaged by
Joyce Corporation Ltd all other executives, except for Andrew Webber, are permanent employees of subsidiaries within the
Group.
The Executive Director has a service contract, which at the date of this report runs to 30 June 2019. This is an at call role,
which provides a director’s fee and an hourly charge for work undertaken above this and is paid monthly. All out of pocket
expenses in connection with carrying out the role are reimbursed.
Other Executives
All executives have rolling contracts, except for Andrew Webber who has a fixed term contract, as per the table below. The
Consolidated Entity can terminate each contract by providing three 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.
30 June 2018
Gavin Culmsee
Keith Smith
Keith Gray
Chris Palin
John Bourke
Andrew Webber
Lee Hames
Term of agreement
In months
Notice Period
Termination payment in
months
rolling
rolling
rolling
rolling
rolling
3 years
rolling
3
3
3
3
3
‐
3
3
3
3
3
3
‐
3
For base salary and superannuation, see table at C below.
Related party transactions with KMP’s
Please refer to Note 27 related party transactions.
C. DETAILS OF REMUNERATION
30 June 18
Short‐term employment
benefits
Post‐
Long‐
employment
term
Total
benefit
benefits
% relating to
performance
Salary &
Cash
Fees
Bonus
Non‐
Cash
Super
LSL &
AL
Dan Smetana
175,494
Tim Hantke6
Mike Gurry
Karen Gadsby
Total Non‐Executive
Directors
Executive Director
63,750
85,000
75,000
399,244
‐
‐
‐
‐
‐
9,789
16,672
‐
‐
‐
6,056
8,075
7,125
9,789
37,928
Anthony Mankarios1
249,451
288,750
‐
‐
Total Directors
648,695
288,750
9,789
37,928
‐
‐
‐
‐
‐
‐
‐
201,955
69,806
93,075
82,125
446,961
‐
‐
‐
‐
‐
538,201
985,162
53.6%
29.3%
Joyce Corporation Ltd Annual Report 2018
25
C. DETAILS OF REMUNERATION (CONTINUED)
30 June 2018
Short‐term employment
benefits
Post‐
Long‐
employment
term
Total
benefit
benefits
% relating to
performance
30 June 18
Salary &
Cash
Fees
Bonus
Non‐
Cash
Keith Smith
18,500
‐
Gavin Culmsee2
256,054
15,922
Keith Gray2
John Bourke3
Chris Palin3
Andrew Webber4
Lee Hames 5
Total Other Key
216,907
50,801
315,890
93,000
234,057
73,500
50,000
145,000
‐
‐
Management
1,236,408
233,223
personnel
‐
‐
‐
‐
‐
‐
‐
‐
Super
1,758
25,838
20,606
38,844
32,704
4,750
13,775
138,275
Total Remuneration:
1,885,103
521,973
9,789
176,203
LSL &
AL
‐
‐
‐
‐
‐
‐
‐
‐
‐
20,258
297,814
288,314
447,734
340,261
54,750
158,775
‐
5.3%
17.6%
20.8%
21.6%
‐
‐
1,607,906
14.5%
2,593,068
20.1%
30 June 17
Short‐term employment
benefits
Post‐
Long‐
employment
term
Total
benefit
benefits
% relating to
performance
Salary &
Cash
Non‐
Fees
Bonus
Cash
Dan Smetana
Tim Hantke
Mike Gurry
Karen Gadsby
Total Non‐Executive
Directors
Executive Director
175,494
77,598
77,598
‐
330,690
‐
‐
‐
‐
‐
Anthony Mankarios1
223,917
250,000
Total Directors
554,607
250,000
Keith Smith
‐
‐
Gavin Culmsee2
242,355
58,446
Keith Gray2
John Bourke3
Chris Palin3
Andrew Webber4
Lee Hames 5
Total Other Key
211,023
46,885
310,000
78,963
231,444
62,113
66,346
124,615
‐
‐
Management
1,185,783
246,407
personnel
Total Remuneration:
1,740,390
496,407
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Super
16,672
7,371
7,371
‐
31,414
‐
31,414
‐
23,023
20,047
35,604
29,162
6,303
11,838
125,977
157,391
LSL &
AL
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
192,166
84,969
84,969
‐
362,104
473,917
836,021
‐
323,824
277,955
424,567
322,719
72,649
136,453
‐
‐
‐
‐
‐
52.7%
29.9%
‐
18.0%
16.9%
18.6%
19.2%
‐
‐
1,558,167
15.8%
2,394,188
20.7%
Joyce Corporation Ltd Annual Report 2018
26
C. DETAILS OF REMUNERATION (CONTINUED)
1. Anthony Mankarios was paid a cash bonus based on the achievement of key performance criteria. These include profit
goals and the successful completion of predetermined events set by the non‐executive directors. There is an annual short‐
term bonus and long‐term three‐year incentive that are performance based and subject to achieving Board approved
targets. He is contracted to 30 June 2019, this contract is reviewed and renewed annually.
2. Cash bonuses paid to other KMP’s were at the discretion of the directors and were based on key performance criteria,
which required performance to meet or exceed the group budget and successfully complete predetermined targets.
3. John Bourke and Chris 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. Andrew Webber’s consultancy company, was paid $190k for consulting services performed by his staff members for the
Lloyds Online group of companies.
5. Lee Hames is the Chief Operating Officer of Lloyds Online Auctions Pty Ltd.
6. Tim Hantke remuneration reduced in 2018 due to extended unpaid leave taken during the year.
D. SHARE‐BASED COMPENSATION
There was no share‐based compensation to KMP’s during the year ended 30 June 2018 (2017: Nil).
E. EQUITY INSTRUMENT DISCLOSURES RELATING TO KMP’S
i. Option and holding rights granted as compensation
During the financial year ended 30 June 2018 no options (2017: 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 KMP’s during the year ended 30 June 2018 (2017: Nil).
Joyce Corporation Ltd Annual Report 2018
27
E. EQUITY INSTRUMENT DISCLOSURES RELATING TO KMP’S (CONTINUED)
iii. Share Holdings
The number of shares in the Company held during the financial year by each director and other KMP’s of the Group,
including their personally related parties, are set out below. There were no shares granted during the reporting period as
compensation (2017: Nil).
30 June 2018
Balance
Granted as
On Exercise of
Net Change
Balance
01‐Jul‐17
Remuneration
Options
Other
30‐June‐18
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
20,000
5,278
‐
‐
‐
‐
‐
‐
‐
9,874,129
20,000
56,878
20,000
723,823
‐
‐
‐
65,359
6,615
‐
‐
25,278
10,766,804
Balance
Granted as
On Exercise of
Net Change
Balance
01‐Jul‐16
Remuneration
Options
Other
30‐June‐17
Dan Smetana*
9,874,129
Tim Hantke
Mike Gurry
Karen Gadsby
20,000
56,878
‐
Anthony Mankarios
718,545
Keith Smith
Gavin Culmsee2
Keith Gray2
John Bourke3
Chris Palin3
Andrew Webber4
Lee Hames 5
TOTAL
30 June 2017
Dan Smetana*
Tim Hantke
Mike Gurry
Karen Gadsby
‐
‐
‐
65,359
6,615
‐
‐
10,741,526
9,874,129
20,000
‐
‐
Anthony Mankarios
705,045
Keith Smith
Gavin Culmsee2
Keith Gray2
John Bourke3
Chris Palin3
Andrew Webber4
Lee Hames 5
TOTAL
‐
‐
‐
‐
‐
‐
‐
10,599,174
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
56,878
‐
9,874,129
20,000
56,878
‐
13,500
718,545
‐
‐
‐
65,359
6,615
‐
‐
‐
‐
‐
65,359
6,615
‐
‐
142,352
10,741,526
Joyce Corporation Ltd Annual Report 2018
28
E. EQUITY INSTRUMENT DISCLOSURES RELATING TO KMP’S (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 KMP’s of the Group, including their personally related parties, is set out below. There were no shares granted
during the reporting period as compensation (2017: Nil).
30 June 2018
Balance
Granted as
On Exercise of
Net Change
Balance
01‐Jul‐17
Remuneration
Options
Other
30‐June‐18
Dan Smetana*
380,000
Tim Hantke
Mike Gurry
Karen Gadsby
Anthony Mankarios
Keith Smith
Gavin Culmsee2
Keith Gray2
John Bourke3
Chris Palin3
Andrew Webber4
Lee Hames
TOTAL
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
380,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
380,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
380,000
*On 16 July 2018 Dan Smetana settled the final payment for the 380,000 partly‐paid ordinary shares held at 30 June 2018, paid to $1.878 (2017: 380,000
issued at $1.955 and paid to $1.768). Please refer to subsequent events note
30 June 2017
Balance
Granted as
On Exercise of
Net Change
Balance
01‐Jul‐16
Remuneration
Options
Other
30‐June‐17
Dan Smetana*
380,000
Tim Hantke
Mike Gurry
Karen Gadsby
Anthony Mankarios
Keith Smith
Gavin Culmsee2
Keith Gray2
John Bourke3
Chris Palin3
Andrew Webber4
Lee Hames
TOTAL
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
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 favorable than those the Company would have adopted if dealing at arm’s length.
Partly paid shares are unquoted until they become fully paid. Partly paid shares carry voting rights and rights to participate
in entitlement issues and dividends although any shares acquired under a rights issue cannot be quoted until the partly
paid shares become fully paid.
Joyce Corporation Ltd Annual Report 2018
29
F. LINK BETWEEN REMUNERATION POLICY AND COMPANY PERFORMANCE
The Consolidated Entity provided executives with variable remuneration in the form of short‐term and long‐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 profit, 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 ordinary and special dividends paid or
payable in respect of each financial year (FY).
Revenue from continuing operations
Profit from continuing operations after tax
Share Price at Year‐end $
Dividends (Cents) paid or payable
FY18
$000
96,392
6,723
1.42
11.0
FY17
$000
FY16
$000
FY15
$000
FY14
$000
78,770
56,544
34,737
12,657
5,640
3,461
1.60
11.5
1.01
16.0
126
0.96
5.5
374
0.46
3.6
The FY14 numbers were restated based on operations ceased in the FY15 year. Revenue and net profit exclude discontinued
operations in the current business. 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 2017 ANNUAL GENERAL MEETING ON THE REMUNERATION REPORT
The Remuneration Report in the 2017 Annual Report to shareholders was approved by 99.7% of shareholders at the 2017
Annual General Meeting. No specific feedback was received at the Annual General Meeting or throughout the year.
H. INDEPENDENT SALARY AND INCENTIVE REVIEW
During FY18 the Company undertook an independent review of executive salary and incentive levels to benchmark against
market. The review was undertaken by the independent professional firm of Godfrey Remuneration Group for the sum of
$6,000. Recommended changes are the subject of an ongoing project.
I. LOANS OR OTHER TRANSACTIONS TO DIRECTORS AND EXECUTIVES
There is a $29,450 loan outstanding to a Director as at 30 June 2018 (2017: Nil).
There were no other transactions with KMP’s not in the ordinary course of business.
The Executive Directors fees are paid to Starball Pty Ltd, a company in which Anthony Mankarios has significant influence ‐
$538,201 (2017: $473,917). As at year end the amount owing to this related party was $26,773 (2017: $23,805).
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 (2017: $26,131).
During the year ended 30 June 2018, LAAV Management Pty Ltd, a company of which Andrew Webber is a director, was
paid $190,000 (2017: $163,900) by Lloyds Online Auctions Pty Ltd for the provision of management services by Andrew
Webber and Mark Fitzpatrick. This amount is in addition to the remuneration disclosed in the KMP remuneration
disclosures.
End of Audited Remuneration Report.
Joyce Corporation Ltd Annual Report 2018
30
INSURANCE OF OFFICERS
During FY18, Joyce Corporation Ltd paid a premium to insure the directors, secretaries and KMP’s of the Company and its
Australian‐based controlled entities. 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 of the Company, 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 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 licenses issued by the Environmental Protection Authority as per NGER Act 2007 and various
other authorities throughout Australia. These licenses 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 license conditions.
NON‐AUDIT SERVICES
There were no fees paid or payable to the auditors for non‐audit services for the year ended 30 June 2018, which did not
impede on the auditor’s independence. The Company may deploy auditors for non‐audit services in the future.
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 32.
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, 30 August 2018
Joyce Corporation Ltd Annual Report 2018
31
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY NEIL SMITH TO THE DIRECTORS OF JOYCE CORPORATION LTD
As lead auditor of Joyce Corporation Ltd for the year ended 30 June 2018, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Joyce Corporation Ltd and the entities it controlled during the year.
Neil Smith
Director
BDO Audit (WA) Pty Ltd
Perth, 30 August 2018
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
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 2018 corporate governance policy and statement reflects the corporate governance practices in place throughout the 2018
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 Annual Report 2018
33
ANNUAL FINANCIAL REPORT
Joyce Corporation Ltd
AND CONTROLLED ENTITIES
ABN: 80 009 116 269
Annual Financial Report
For the Year Ended 30 June 2018
Joyce Corporation Ltd Annual Report 2018
34
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
CONSOLIDATED
Continuing operations
Revenue
Cost of sales
Gross Profit
Gain on property investment revaluation
Other income
Expenses from continuing operations
Administration expenses
Distribution expenses
Marketing expenses
Occupancy expenses
Profit/(Loss) on disposal of assets
Finance costs
Impairment of assets
Other expenses
Profit from continuing operations before income tax
Income tax (expense)
Profit from continuing operations after tax
Discontinued operations
(Loss) / 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)
Note
6
6
16
6
6
6
6
8
7
9
9
2018
$000
96,392
(42,562)
53,830
933
64
(35,674)
(754)
(3,112)
(5,011)
(41)
(351)
‐
(60)
2017
$000
78,770
(38,617)
40,153
‐
94
(22,385)
(944)
(3,547)
(4,592)
(37)
(75)
(350)
(51)
9,824
8,266
(3,101)
(2,626)
6,723
5,640
(140)
6,583
3,380
3,203
6,583
12.3
12.1
176
5,816
2,764
3,052
5,816
10.0
9.9
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 39 to 78.
Joyce Corporation Ltd Annual Report 2018
35
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
Note
10
11
12
13
14
11
8
15
12
16
17
18
19
20
8
20
8
19
21
22
27
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
Investment Property
Intangible assets
Total Non‐Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Interest bearing loans and borrowings
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
CONSOLIDATED
2018
$000
6,215
1,918
3,703
1,202
68
13,106
588
1,445
10,778
395
9,623
18,163
40,992
54,098
11,779
1,528
435
820
14,562
10,056
554
818
11,428
25,990
28,108
18,060
‐
3,073
6,975
28,108
2017
$000
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
26,486
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial statements
set out on pages 39 to 78.
Joyce Corporation Ltd Annual Report 2018
36
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
CONSOLIDATED
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Secured loan
Purchase of non‐current assets
Purchase of intangible assets
Payments for business acquisitions net of cash acquired
Net cash (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 (used) / from 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
Note
31
26
28
10
2018
$000
104,116
(91,647)
64
(351)
(3,157)
9,025
111
78
(2,074)
(2,230)
(815)
(4,930)
2,400
(479)
41
(3,077)
(2,061)
(3,176)
919
5,296
6,215
6,215
6,215
2017
$000
89,413
(80,779)
94
(75)
(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
5,296
5,296
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial statements
set out on pages 39 to 78.
Joyce Corporation Ltd Annual Report 2018
37
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Note
Contributed
Equity
$’000
17,975
Reserves
$’000
2,699
Retained
Earnings
$’000
4,290
Non‐
controlling
Interest
$’000
1,026
Total
Equity
$’000
25,990
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
Balance at 30 June 2017
21
‐
‐
‐
‐
2,764
‐
2,764
‐
3,052
3,052
‐
17,975
‐
2,699
‐
7,054
113
4,191
113
31,919
44
‐
18,019
‐
‐
2,699
‐
(3,216)
3,838
‐
(2,261)
1,930
44
(5,477)
26,486
Balance at 1 July 2017
18,019
2,699
3,838
1,930
26,486
Total comprehensive income for
the period:
Profit attributable to members of
the parent entity
Profit attributable to non‐
controlling interests
Transfer of reserve to retained
earnings and tax adjustments
Subtotal
Transactions with owners in their
capacity as owners:
Payment partly paid shares
Dividends paid or provided for
Balance at 30 June 2018
21
‐
‐
‐
‐
3,380
‐
3,380
‐
3,203
3,203
‐
18,019
(2,699)
‐
2,834
10,052
‐
5,133
135
33,204
41
‐
18,060
‐
‐
‐
‐
(3,077)
6,975
‐
(2,060)
3,073
41
(5,137)
28,108
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 39 to 78.
Joyce Corporation Ltd Annual Report 2018
38
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The consolidated financial statements of Joyce Corporation Ltd (“the Company”) for the year ended 30 June 2018
were authorised for issue in accordance with a resolution of the directors of the Company dated 30 August 2018.
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 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 2018 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, except for the investment
property which is measured at fair value.
New or revised Standards and Interpretations that are first effective in the current reporting period
The consolidated entity has adopted all 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.
There has been no early adoption of the new and revised Standards and Interpretations.
(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 can 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.
Joyce Corporation Ltd Annual Report 2018
39
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOT PRESENTED IN SUBSEQUENT NOTES
(CONTINUED)
A list of controlled entities is contained in Note 27 to the financial statements.
Consolidated financial statements are the financial statements of the Consolidated Entity presented as those of a
single economic entity. The consolidated financial statements are prepared using uniform accounting policies for
like transactions and other events in similar circumstances.
All significant intra‐Consolidated Entity balances and transactions, including income, expenses and dividends, are
eliminated in full on consolidation. The results of the investees acquired or disposed of during the financial year are
accounted for from the respective dates of acquisition or up to the dates of disposal. On disposal, the attributable
amount of goodwill, if any, is included in the determination of the gain or loss on disposal.
Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity
interests held by persons outside the group, are shown separately within the Equity section of the consolidated
Statement of Financial Position and in the consolidated Statement of Profit or Loss and Other Comprehensive
Income.
(c) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their
fair values due to their short‐term nature. The fair value of financial liabilities for disclosure purposes is estimated
by discounting the future contractual cash flows at the current market interest rate that is available to the
Consolidated Entity for similar financial instruments.
(d) Investments and other financial assets
(i) Loans and receivables
Loans and receivables are non‐derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for those with maturities greater than 12 months
after the reporting date which are classified as non‐current assets. Loans and receivables are included in trade and
other receivables in the statement of financial position.
(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 2016/191 and
accordingly, amounts in the financial report have been rounded off to the nearest $1,000.
Joyce Corporation Ltd Annual Report 2018
40
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOT PRESENTED IN SUBSEQUENT NOTES
(CONTINUED)
(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.
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.
Joyce Corporation Ltd Annual Report 2018
41
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
The Consolidated Entity holds the following financial instruments:
CONSOLIDATED
Note
2018
$000
2017
$000
10
11
14
18
20
6,215
2,506
68
8,789
11,779
10,491
22,270
5,296
1,202
380
6,878
10,073
8,600
18,673
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 to minimise the Consolidated Entity’s interest expense.
As at the reporting date, all the Consolidated Entity had the following variable and fixed rate financial instruments:
Weighted
Average
Interest rate
%
Weighted
Average
Interest
rate
%
2018
$000
2017
$000
0.03%
6,215
0.03%
5,296
6,215
5,296
Financial assets
Cash and cash equivalents (i)
Financial liabilities
Commercial bill –secured – variable (ii)
Bank loan – secured (iii)
4.84%
3.61%
4.93%
3.84%
4,891
5,600
10,491
3,000
5,600
8,600
(i)
(ii)
The overdraft facility pays interest at variable interest rates plus a line fee.
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. Facility expire 31 January
2021.
(iii) The bank loan facility is approved to 9 April 2020.
An analysis by maturities is provided in (c) below.
Joyce Corporation Ltd Annual Report 2018
42
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
The Consolidated Entity analyses its interest rate exposure on a dynamic basis. Various scenarios are modelled taking
into consideration refinancing, renewal of existing positions 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 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 2018 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 2018, 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 $97k higher or $97k lower (2017 – $86k). 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 $97k
higher or $97k lower (2017 ‐ $86k) for the same reasons as above.
(b)
Credit risk
Credit risk is limited to high credit quality financial institutions with which deposits are held and high credit quality
wholesale customers with which the Consolidated Entity trades.
Credit risk is managed on a Consolidated Entity basis. Credit risk arises from cash and cash equivalents, derivative
financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale
customers, including outstanding receivables and committed transactions. For banks and financial institutions, only
independently rated parties with a minimum rating of 'A' are accepted. If wholesale customers are independently
rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of
the customer, considering 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.
Joyce Corporation Ltd Annual Report 2018
43
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(b) Credit risk (continued)
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external
credit ratings (if available) or to historical information about counterparty default rates:
Cash and cash equivalents
AA
Trade and other receivables
Non‐rated
Other financial assets
Non‐rated
(c)
Liquidity risk
CONSOLIDATED
2018
$000
2017
$000
6,215
5,296
2,506
1,202
68
380
8,789
6,878
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 analyses 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.
Joyce Corporation Ltd Annual Report 2018
44
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(c) Liquidity risk (continued)
Consolidated disclosures
Year ended 30 June 2018
Consolidated financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Consolidated financial liabilities
Trade and other payables
Interest bearing loans & borrowings
Net maturity
Year ended 30 June 2017
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
Financing arrangements
≤ 6 months
$000
6‐12
months
$000
1‐5
years
$000
>5 years
$000
6,215
1,918
68
8,201
11,779
215
11,994
(3,793)
‐
‐
‐
‐
‐
588
‐
588
‐
220
220
(220)
‐
11,269
11,269
(10,681)
‐
‐
‐
‐
‐
‐
‐
≤ 6 months
$000
6‐12
months
$000
1‐5
years
$000
>5
years
$000
5,296
634
380
6,310
‐
‐
‐
‐
‐
568
‐
568
10,073
175
10,248
(3,938)
‐
175
175
(175)
‐
9,125
9,125
(8,557)
‐
‐
‐
‐
‐
‐
‐
‐
Total
$000
6,215
2,506
68
8,789
11,779
11,704
23,483
(14,694)
Total
$000
5,296
1,202
380
6,878
10,073
9,475
19,548
(12,670)
The Consolidated Entity had access to the following bank borrowing facilities at the reporting date:
30 June 2018
Consolidated
30 June 2017
Consolidated
Facility limit
$000
10,641
Used
$000
10,491
Available
$000
150
8,750
8,600
150
The Consolidated Entity had a $5,600,000 bank loan facility, a $4,891,300 bank bill facility, a $900,000 multi‐option
facility of which $150,000 available for overdrafts and a bank guarantee facility of $500,000 (2017: $8,750,000) The
consolidated entity had $6,215,000 (2017 $5,296,000) cash at bank as at the reporting date including funds held in
trust set out at Note 10. In addition, the Consolidated Entity had a net investment in inventories of $4,098,000 as at
30 June 2018 (2017: $5,436,000).
Joyce Corporation Ltd Annual Report 2018
45
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(d) Capital risk management
Management controls the capital of the Consolidated Entity 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%.
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.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
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.
(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
Joyce Corporation Ltd Annual Report 2018
46
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUTED)
(c) Judgement in determining control of subsidiaries (AASB 10) (Continued)
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. The 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.
(d) Net realisable value of inventory
In determining the number 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.
(e) Judgment on capital development investments
Discounted cash flow models are used for business cases, these include assumptions and estimates of business
outcomes and are used for capital investments, such as software. The Consolidated Entity has made an assessment
to amortise development costs over 5 years, please refer to Note 17 Intangible Assets for the company policy.
5. SEGMENT INFORMATION
(a) AASB 8 Operating segments
Operating Segments are identified based on 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:
Bedshed retail bedding franchise operation
Company owned retail bedding stores
Operation of retail kitchen stores
Operation of valuation, online auction sales and physical auctions
Corporate operations
Transfer prices between operating segments are set at an arms‐length basis in a manner consistent with transactions
with third parties.
Joyce Corporation Ltd Annual Report 2018
47
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 2018.
Continuing Operations
Discont’d
Operation
Bedshed
Franchise
$’000
Retail
Bedding
Stores
$’000
Retail
Kitchen
Stores
$’000
Online
Auction
$’000
Joyce
Corp
$’000
Total
‘$000
Lloyds’
Stock
$’000
Total
$’000
Year ended 30 June
2018
Revenue
Sales to external
customers
Total consolidated
revenue
Result
Underlying Profit /
(loss)
One‐Off Transactions
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
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment
information
Tangible capital
expenditure
Depreciation and
amortisation
4,462
13,651
59,937
18,300
42
96,392
3,314
99,706
96,392
3,314
99,706
1,562
‐
1,562
436
‐
8,672
(300)
2,933
(2,175)
(1,801)
(15)
436
8,372
758
(1,816)
11,802
(2,490)
9,312
(200)
‐
(200)
11,602
(2,490)
9,112
863
‐
863
10,175
(200)
(351)
‐
9.975
(351)
9,824
(3,101)
(200)
9,624
60
(3,041)
6,723
(140)
6,583
6,884
5,967
20,227
10,970
7,173
51,221
1,432
52,653
1,445
‐
1,445
52,666
1,432
54,098
704
4,005
14,695
1,655
2,177
23,236
1,379
24,615
1,375
‐
1,375
24,611
1,379
25,990
12
31
131
1,341
188
589
504
131
86
2,074
104
1,043
‐
‐
2,074
1,043
Joyce Corporation Ltd Annual Report 2018
48
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 2017.
Continuing Operations
Retail
Kitchen
Stores
$’000
Retail
Bedding
Stores
$’000
Online
Auction
$’000
Bedshed
Franchise
$’000
Discont’d
Operation
Joyce
Corp
$’000
Lloyds’
Stock
$’000
Total
‘$000
Total
$’000
Year ended 30 June
2017
Revenue
Sales to external
customers
Total consolidated
revenue
Result
Segment result
Impairment
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
Segment assets
Unallocated assets
Total assets
4,262
13,045
47,404
14,044
15
78,770
2,329
81,099
78,770
2,329
81,099
1,301
‐
1,301
438
(350)
88
5,938
‐
5,938
2,705
‐
(1,748)
‐
2,705
(1,748)
8,634
(350)
8,284
252
‐
252
8,886
(350)
8,536
57
‐
57
8,341
252
8,593
(75)
‐
(75)
8,266
(2,626)
5,640
252
(76)
176
8,518
(2,702)
5,816
7,266
6,334
14,742
2,512
14,920
45,774
1,564
47,338
1,309
‐
1,309
47,083
1,564
48,647
Segment liabilities
1,197
1,163
13,114
695
4,571
20,740
1,311
22,051
Unallocated liabilities
Total liabilities
Other segment
information
Tangible capital
expenditure
Depreciation and
amortisation
110
‐
110
20,850
1,311
22,161
10
9
30
9,320
840
2,779
12,979
230
338
34
9
620
‐
‐
12,979
620
Joyce Corporation Ltd Annual Report 2018
49
5. SEGMENT INFORMATION (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 2018.
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 Annual Report 2018
50
6. REVENUE, INCOME AND EXPENSES (CONTINUED)
(b) Revenue, Income and Expenses from Continuing Operations
Revenue
Sale of goods
Provision of services
Total revenue
Cost of Goods Sold
Cost of goods
Cost of services
Total revenue
Other income
Interest received
Total other income
Finance costs
Bank loans and overdrafts
Total finance costs
Impairment of goodwill
Impairment of goodwill
Total impairment of goodwill
(c) Administrative Expenses – 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)
Total employee benefit expenses
Depreciation Expense
Other administration expenses
Total Administration Expenses
CONSOLIDATED
2018
$000
69,823
26,569
96,392
2017
$000
60,448
18,322
78,770
(35,040)
(7,522)
(42,562)
(34,175)
(4,442)
(38,617)
64
64
(351)
(351)
‐
‐
94
94
(75)
(75)
(350)
(350)
CONSOLIDATED
2018
$000
(1,344)
2017
$000
(542)
(21,026)
(12,755)
(360)
(2,158)
(35)
(3,716)
(58)
(297)
(1,584)
(28)
(1,440)
(50)
(28,697)
(16,696)
(1,043)
(5,934)
(620)
(5,069)
(35,674)
(22,385)
Joyce Corporation Ltd Annual Report 2018
51
6. REVENUE, INCOME AND EXPENSES (CONTINUED)
(d) Lease payments and other expenses included in the statement of profit or loss and other comprehensive
income – continuing operations
Minimum lease payments ‐ operating lease
7. DISCONTINUED OPERATIONS
CONSOLIDATED
2018
$000
4,553
2017
$000
4,095
On 22 June 2018, the consolidated group ceased operations of its LAAV Group Pty Ltd business division, thereby
discontinuing its operations in this business segment.
The financial performance of the discontinued operation, which is included in the profit/(loss) from discontinued
operations per the statement of comprehensive income, is as follows:
CONSOLIDATED
Discontinued Operations
Revenue
Expenses
Profit before income tax
Income tax (expense)/benefit
Profit/(loss) attributable to owners of the parent entity
Profit/(loss) on sale before income tax
Income tax expense
Profit/(loss) on sale after income tax
Total profit/(loss) after tax attributable to the discontinued
operation
2018
$000
3,314
(3,514)
(200)
60
(140)
‐
‐
‐
‐
The net cash flows of the discontinued division, which have been incorporated into the statement of
cash flows, are as follows:
Net cash inflow/(outflow) from operating activities
Net cash inflow from investing activities
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash generated by the
discontinued division
Gain/(Loss) on disposal of the division included in gain
from discontinued operations per the statement of
comprehensive income.
(231)
‐
‐
(231)
‐
2017
$000
2,329
(2,077)
252
(76)
176
‐
‐
‐
‐
243
‐
‐
243
‐
Joyce Corporation Ltd Annual Report 2018
52
8. 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 2018 are:
Consolidated Statement of Profit or Loss and Other Comprehensive Income
– continuing operations
Current Income tax
Current income tax expense
Deferred income tax
Relating to origination and reversal of temporary differences
Utilisation of unused tax losses
Expense/(over) provision in respect of prior years
CONSOLIDATED
2018
$000
2017
$000
2,955
2,782
130
‐
16
(166)
‐
10
Income tax expense relating to continuing operations
3,101
2,626
Joyce Corporation Ltd Annual Report 2018
53
8. INCOME TAX (CONTINUED)
Income tax expense relating to continuing operations
Income tax expense relating to discontinued operations
Income tax expense relating to overall operations
CONSOLIDATED
2018
$000
3,101
(60)
3,041
2017
$000
2,626
76
2,702
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 2018
and 30 June 2017 is as follows:
CONSOLIDATED
2018
$000
2017
$000
Profit before income tax – continuing operations
9,824
8,266
Income tax expense calculated at the statutory income tax rate of 30%
(2017: 30%)
Expenditure not allowable for income tax purposes
Impairment of goodwill not allowable for income tax purposes
Under provision in respect of prior years
2,947
2,479
123
9
22
32
105
10
Income tax expense recognised in profit or loss – continuing operations
3,101
2,626
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.
Joyce Corporation Ltd Annual Report 2018
54
8. INCOME TAX (CONTINUED)
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 2018 (2017: Nil).
Deferred income tax
Deferred income tax at 30 June 2018 relates to the following:
CONSOLIDATED
Opening
balance
Charged to
income
Recognised
in Business
Combination
Closing
balance
30 June 18
$000
$000
$000
$000
Deferred tax liabilities
Investment Property
Trade & other
receivable
Fair value gains on
other intangible assets
‐
(2)
(260)
(291)
(1)
‐
Balance at 30 June 2018
(262)
(292)
Deferred tax assets
Plant and equipment
Trade and other payables
Pensions and other employer obligations
Provisions
Other
Unused Tax losses
Balance at 30 June 2018
167
219
539
189
20
173
1,307
84
22
214
(99)
(14)
(69)
138
The Consolidated Entity has accounted for all deferred tax assets and liabilities.
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(291)
(3)
(260)
(554)
251
241
753
90
6
104
1,445
Joyce Corporation Ltd Annual Report 2018
55
8. INCOME TAX (CONTINUED)
Deferred income tax at 30 June 2017 relates to the following:
CONSOLIDATED
Opening
balance
Charged to
income
Recognised
in Business
Combination
Closing
balance
30 June 17
$000
$000
$000
$000
Deferred tax liabilities
Investment Property
Trade & other
receivable
Fair value gain on
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
(5)
‐
(260)
(52)
(317)
145
55
388
445
77
‐
1,110
5
(2)
‐
52
55
22
164
67
(256)
(57)
173
113
Provision for income tax
Provision for income tax at 30 June 2018 relates to the following:
Balance at 30 June 2018
‐
‐
‐
‐
‐
‐
‐
84
‐
‐
‐
84
‐
(2)
(260)
‐
(262)
167
219
539
189
20
173
1,307
CONSOLIDATED
2018
$000
2017
$000
820
1,153
Joyce Corporation Ltd Annual Report 2018
56
9. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders
(after deducting interest on the convertible redeemable preference shares) by the weighted average number of
ordinary shares outstanding during the year (adjusted for the effects of dilutive options and dilutive convertible non‐
cumulative redeemable preference shares).
The following reflects the income and share data used in the total operations basic and diluted earnings per share
computations:
Net profit 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
(Loss) / Profit attributable to equity holders from discontinued
operations
Profit for year
CONSOLIDATED
2018
$000
2017
$000
6,723
5,640
‐
‐
6,723
5,640
(140)
6,583
176
5,816
Non‐controlling interests
Net profit attributable to ordinary shareholders for basic earnings
per share
(3,203)
(3,052)
3,380
2,764
Effect of dilutive equity instruments
Net profit attributable to ordinary shareholders for diluted
earnings per share
‐
‐
3,380
2,764
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 $1.878) (2017: $1.768) 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 Annual Report 2018
57
10. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include 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
11. TRADE AND OTHER RECEIVABLES
CONSOLIDATED
2018
$000
2017
$000
6,215
5,296
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.
Current
Trade receivables
Allowance for impairment loss (a)
Non‐current
Trade receivables
Other receivables
CONSOLIDATED
2018
$000
2017
$000
1,918
‐
1,918
‐
588
588
659
(25)
634
‐
568
568
2,506
1,202
Joyce Corporation Ltd Annual Report 2018
58
11. TRADE AND OTHER RECEIVABLES (CONTINUED)
(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 Nil (2017: $25k) has been recognised by the Consolidated Entity.
At 30 June, the ageing analysis of current trade receivables is as follows:
0‐30
Days
31‐60
61‐90
61‐90
Days
Days
Days
+91
Days
PDNI*
CI*
PDNI*
+91
Days
CI*
$000
$000
$000
$000
$000
$000
1,765
427
41
143
63
49
‐
‐
49
15
‐
25
Total
$000
1,918
659
2018
Consolidated
2017
Consolidated
* Past due not impaired (‘PDNI’)
Considered impaired (‘CI’)
Receivables past due but not considered impaired are: Consolidated Entity: $112,129 (2017: $63,999). 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 2017
Charge for the year
Amounts written‐off
Closing balance at 30 June 2018
CONSOLIDATED
2018
$000
2017
$000
25
‐
(25)
‐
31
‐
(6)
25
Joyce Corporation Ltd Annual Report 2018
59
12. INVENTORIES
Inventories are stated at the lower of cost and net realisable value. Cost comprises expenditure incurred in acquiring
the inventories and in bringing them to their existing condition and location.
Costs are assigned to individual items of inventory on a basis of weighted average costs. Costs of purchased inventory
are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the
sale.
Current
Stock on hand at cost
Provision for impairment (a)
(a) Provision for impairment
CONSOLIDATED
2018
$000
3,807
(104)
3,703
2017
$000
5,012
(104)
4,908
Write‐downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2018
amounted to $Nil (2017: $Nil).
Non‐current
Stock on hand at cost
Provision for impairment (b)
(b) Provision for impairment
CONSOLIDATED
2018
$000
2017
$000
582
(187)
395
691
(163)
528
Write‐downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2018
amounted to $Nil (2017: $Nil). The increase in provision has been written back to cost of goods sold as losses were
realised.
13. OTHER ASSETS
Current
Accrued Revenue
Prepayments
Other receivables
CONSOLIDATED
2018
$000
2017
$000
775
203
224
1,202
181
243
80
504
Joyce Corporation Ltd Annual Report 2018
60
14. OTHER FINANCIAL ASSETS
Current
Funds held in trust
CONSOLIDATED
2018
$000
68
68
2017
$000
380
380
15. PROPERTY, PLANT AND EQUIPMENT
Land and buildings are shown at fair value, based on periodic, but at least triennial, valuations by external
independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of
revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the
revalued amount of the asset. All other property, plant and equipment are stated at historical cost less depreciation.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity and
the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other
repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the
reporting period in which they are incurred.
Depreciation is calculated over the estimated useful life of the asset as follows:
Plant and equipment – 1 to 20 years;
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.
Joyce Corporation Ltd Annual Report 2018
61
15. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
Year ended 30 June 2017
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
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
At 30 June 2017
Cost
Accumulated depreciation and impairment
Net carrying amount
14,785
(31)
14,754
3,271
(1,098)
2,173
2,464
(802)
1,662
20,520
(1,931)
18,589
Year ended 30 June 2018
At 1 July 2017,
Net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
Transfer to investment property
Fixed Assets – work in progress
At 30 June 2018
Net of accumulated depreciation
At 30 June 2018
Cost
Accumulated depreciation and impairment
Net carrying amount
Property&
Buildings
$000
CONSOLIDATED
Plant and
equipment
$000
Leasehold
improvements
$000
14,754
259
‐
(105)
(8,140)
‐
2,173
1,033
(176)
(491)
(550)
56
1,662
782
(32)
(447)
‐
‐
Total
$000
18,589
2,074
(208)
(1,043)
(8,690)
56
6,768
2,045
1,965
10,778
6,838
(70)
6,768
3,502
(1,457)
2,045
3,183
(1,218)
13,523
(2,745)
1,965
10,778
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30 June 2018 is
$Nil (2017: $Nil). Leased assets and assets under hire purchase contracts are pledged as security for the related
finance lease and hire purchase liabilities.
An asset acquisition of Burns Auctions/Macquarie Auction Group was completed on 30 June 2018. The Group
operates from two key ongoing locations in Bathurst and Dubbo NSW. Included in the property, plant and equipment
additions of $1,033k was $151k assets acquired relating to the Burns Auction acquisition.
Joyce Corporation Ltd Annual Report 2018
62
16. INVESTMENT PROPERTY
Balance at beginning of year
Transfer from property, plant & equipment
Fair value adjustments
Balance at end of year
CONSOLIDATED
2018
$000
‐
8,690
933
9,623
2017
$000
‐
‐
‐
‐
During the year, in accordance with AASB 140, the KWB property located at Lytton Brisbane was classified as an
investment property. An insignificant portion of the Lytton premise is owner‐occupied, being 42%, as the significant
portion is under an operating lease to an external third‐party manufacturer earning rental.
In accordance with AASB 13 Fair value measurement, during the year, a Third‐party expert valuation company valued
the Lytton property in Brisbane. The valuation resulted in a fair value increase in the value of the investment property
and in accordance to AASB 140, a revaluation gain of $933k was included in the Statement of Profit and Loss and
Other Comprehensive Income.
17. 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.
Joyce Corporation Ltd Annual Report 2018
63
17. INTANGIBLE ASSETS (CONTINUED)
Goodwill is allocated to cash‐generating units for impairment testing. Each of those cash‐generating units represents
the Consolidated Entity’s investment in Australia 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
(ii) Software development
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
Software development
CONSOLIDATED
2018
$000
2017
$000
15,933
2,230
18,163
15,933
‐
15,933
Joyce Corporation Ltd Annual Report 2018
64
17. INTANGIBLE ASSETS (CONTINUED)
An analysis of intangible assets is presented below:
Goodwill
2018
$000
2017
$000
Software
Development
2017
$000
2018
$000
Consolidated
2018
$000
2017
$000
15,933
9,500
‐
‐
‐
‐
6,783
‐
(350)
‐
2,230
‐
15,933
15,933
2,230
17,778
(1,845)
15,933
17,778
(1,845)
15,933
2,230
‐
2,230
‐
‐
‐
‐
‐
‐
‐
‐
15,933
9,500
‐
2,230
‐
6,783
‐
(350)
18,163
15,933
20,008
(1,845)
18,163
17,778
(1,845)
15,933
Year ended 30 June 2018
At 1 July
net of accumulated impairment
Acquired goodwill from business
combination
Acquired intangible assets
Impairment
At 30 June
net of accumulated impairment
At 30 June
Cost (gross carrying amount)
Accumulated impairment
Net carrying amount
Goodwill
(a) Initial Goodwill
Goodwill as at 30 June 2018 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.
(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 several key estimates. Impairment of Nil (2017: $350,000) has been recognised in respect of goodwill
for the year ended 30 June 2018.
Goodwill is allocated to cash‐generating units which are based on the Consolidated Entity’s operating segments
Bedshed Franchising segment
Bedshed Stores segment
Kitchen Stores segment
Online Auctions segment
CONSOLIDATED
2018
$000
2017
$000
6,307
1,820
1,023
6,783
15,933
6,307
1,820
1,023
6,783
15,933
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 the existing budget for the 2018/19 financial year extrapolated using estimated growth rates. The
cash flows are discounted using risk‐adjusted pre‐tax discount rate.
Joyce Corporation Ltd Annual Report 2018
65
17. INTANGIBLE ASSETS (CONTINUED)
The following assumptions were used in the value‐in‐use calculations:
Bedshed Franchising segment
Bedshed Stores segment
Kitchen Stores segment
Online Auctions segment
Pre –tax
Discount
Rate
Pre –tax
Discount
Rate
Sales
Growth
Rate
Sales
Growth
Rate
Expense
Growth
Rate
Expense
Growth
Rate
2018
10.7%
10.7%
10.7%
10.7%
2017
10.8%
10.8%
10.8%
10.8%
2018
6.0%
8.0%
8.0%
10.0%
2017
4.0%
5.3%
6.0%
6.0%
2018
1.5%
1.5%
1.5%
1.5%
2017
1.5%
1.5%
1.5%
1.5%
The Consolidated Entity’s value‐in‐use calculations incorporated a terminal value component beyond the 5‐year
projection period for all 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 (Store 3, Franchising 6, Kitchen 6 & Online
Auctions 6) before interest, taxation, depreciation and amortisation for the year ended 30 June 2018.
Impairment of Goodwill for the year ended 30 June 2018 was Nil (2017: $350,000), 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 all CGU’s, from this the Bedshed store segment was identified as having the
lowest headroom and is the only one reported. For the Bedshed store segment:
-
-
If the pre‐tax discount rate applied was 10% higher than used in management’s estimates, then the
Consolidated Entity would recognised an impairment of $56,188.
If the growth rate applied was 10% lower than used in management’s estimates, then the Consolidated
Entity would recognised an impairment of $166,486.
Software development
Software developments as at 30 June 2018 reflects the value of the Auctionator platform, Lead Generation Platform
and the European Union Bidding Platform. Software developments are amortised in line with the company policy
mentioned above, being straight‐line basis over periods generally ranging from 3 to 5 years. Software developments
were capitalized on 30 June 2018, when first in use.
18. 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.
Unsecured liabilities
Trade payables
Deferred Income
Accruals and other payables
Amounts held in trust for Bedshed marketing and other funds (a)
CONSOLIDATED
2018
$000
2017
$000
2,709
3,352
5,278
440
11,779
2,194
2,671
4,766
442
10,073
Joyce Corporation Ltd Annual Report 2018
66
Amounts held in trust for Bedshed funds
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.
19. 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 several 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.
Provisions are comprised of the following:
Current
Employee benefits (a)
Store lease termination
Environmental testing (b)
Total Current
Non‐current
Employee benefits (a)
Environmental testing (b)
Total Non‐Current
CONSOLIDATED
2018
$000
2017
$000
1,518
‐
10
1,528
818
‐
818
1,159
167
35
1,361
636
76
712
2,346
2,073
Joyce Corporation Ltd Annual Report 2018
67
19.
PROVISIONS (CONTINUED)
(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 $101,000 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 $10,000, has been provided for future expected testing costs.
Store Lease
Termination
Employee
Benefits
Environmental
Testing
$000
$000
$000
Consolidated Group
Opening balance at 1 July 2017
Additional/ (amount released)
Amounts used
Closing balance at 30 June 2018
167
(167)
‐
‐
1,795
1,547
(1,006)
2,336
111
(101)
‐
10
Total
$000
2,073
1,279
(1,006)
2,346
20. LOANS AND BORROWINGS
CONSOLIDATED
2018
Current
$’000
435
435
Non‐current
$’000
10,056
10,056
Total
$’000
10,491
10,491
2017
Current
$’000
‐
‐
Non‐current
$’000
8,600
8,600
Total
$’000
8,600
8,600
Bank loans
Total loans and borrowings
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. Loan
repayment of $435k per annum, finance facility reducing by $109k per quarter.
Compliance with loan covenants
The Consolidated entity has complied with the financial covenants of its borrowing facilities during the 2018 financial
year. The financier assesses the financial covenants bi‐annually based on audited and reviewed financial reports.
Joyce Corporation Ltd Annual Report 2018
68
21. 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.
CONSOLIDATED
2018
$000
2017
$000
27,588,255 (2017: 27,588,255) Issued and fully paid ordinary shares
17,347
17,347
380,000 (2017: 380,000) Partly paid ordinary shares, issued at $1.955 and paid
to $1.878 (2017: $1.768) (a)
Movement in ordinary shares on issue
At 1 July 2017
Issued shares:
Payment partly paid shares
At 30 June 2018
(1) Partly‐paid ordinary shares
713
672
18,060
18,019
2018
Number
27,588,255
‐
‐
27,588,255
2018
$000
18,019
‐
41
18,060
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.
22. RESERVES
Financial assets reserve
Financial asset reserve transferred to retained earnings.
CONSOLIDATED
2018
$000
2017
$000
‐
‐
2,699
2,699
Joyce Corporation Ltd Annual Report 2018
69
23. 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
2018
$000
3,757
4,686
47
8,490
2017
$000
3,427
6,449
211
10,087
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.
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 recognised 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. the likelihood of the guaranteed party defaulting in a year period;
ii. the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting;
and
iii. the maximum loss exposed if the guaranteed party were to default.
(a) Rental Guarantees
Joyce Corporation Ltd has provided bank 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 (2017: $689,429).
KWB Group have bank guarantees and rent deposits supporting store leases of $351,366 at 30 June 2018 ($380,597
at 30 June 2017). Rent deposits are included in Non‐current Trade and Other Receivables, see note 11.
Joyce Corporation Ltd Annual Report 2018
70
25. 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
Loans
Non‐current Receivables
Deposit
Non‐current Borrowings
Carrying
Amount
$’000
Fair Value
Amount in
$’000
435
588
435
588
Interest bearing loans & borrowings
10,056
10,056
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, except for the Investment Property
which is based on a level 2 fair value method, using a third‐party expert valuer.
(1) 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.
Joyce Corporation Ltd Annual Report 2018
71
26. BUSINESS COMBINATION
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.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Settlement consideration payable
Total purchase consideration for 51% of Lloyds Online Auctions Pty Ltd
The assets and liabilities recognised at fair value, 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
$’000
6,000
900
6,900
$’000
1
110
275
84
(240)
230
6,783
(113)
6,900
Settlement consideration paid
The directors approved $900k as the final consideration settlement of the acquisition, which was part of the original
agreement and contingent on Lloyds group performance during the 2017 financial year. $815k has been paid,
remaining $85k payable on demand.
Treatment of non‐controlling interests
The group recognised 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 Annual Report 2018
72
27. RELATED PARTY DISCLOSURES
The consolidated financial statements include the financial statements of Joyce Corporation Ltd and the subsidiaries
listed in the following table.
Joyce Industries Pty Ltd
Sierra Bedding Pty Ltd
Bedshed Franchising Pty Ltd
Joyce International Pty Ltd
Joyce Consolidated Holdings Pty Ltd
KWB Group Pty Ltd
KWB Property Pty Ltd
Brisbane Investment Holdings Pty Ltd
Trade Gold Installations Qld Pty Ltd
Trade Gold Installations NSW Pty Ltd
Trade Gold Installations SA Pty Ltd
Lloyds Online Auctions Pty Ltd
Lloyds Auctions & Valuers Pty Ltd
LAAV Group Pty Ltd
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
% Equity interest
2017
100
100
100
100
100
51
51
51
51
51
51
51
51
51
2018
100
100
100
100
100
51
51
51
51
51
51
51
51
51
Joyce Corporation Ltd is the ultimate parent of the Consolidated Entity.
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)
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 2018.
(ii)
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.
(iii)
The Executive Directors fees for Anthony Mankarios are paid to Starball Pty Ltd, a company in which
Anthony has significant influence ‐ $538,201 (2017: $473,917). As at year end the amount owing to this
related party was $26,773 (2017: $23,805).
(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 (2017: $26,231).
(v)
Key management personnel compensation
Short Term Benefits
Post‐Employment Benefits
CONSOLIDATED
2018
$000
2,417
176
2,593
2017
$000
2,237
157
2,394
Detailed remuneration disclosures are provided in the remuneration report on pages 22 to 30.
Joyce Corporation Ltd Annual Report 2018
73
27. RELATED PARTY DISCLOSURES (CONTINUED)
(vi)
Loans to key management personnel
During the financial year, there was a $400k (2017: Nil) loan from Dan Smetana, of which $371k was repaid
in the year and $29k remained as at 30 June 2018. The remaining $29k loan balance was subsequently used
by Dan Smetana as the final payment towards the partly paid shares.
$85k loan from Andrew Webber, outstanding as the final earn out balance of the Lloyds business acquisition
settlement, which was contingent on the Lloyds Group 2017 financial performance.
(vii)
During the year ended 30th June 2018, LAAV Management Pty Ltd, a company of which Andrew Webber is
a director, was paid $190k by Lloyds Online Auctions Pty Ltd for the provision of management services to
be provided to the business by Andrew Webber and Mark Fitzpatrick. This amount is in addition to the
remuneration disclosed in the key management personnel remuneration disclosures.
b) Non‐Controlling Interest
The effect on the equity attributable to the owner of Joyce Corporation Limited during the year 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
2018
$000
1,930
‐
‐
3,203
(2,060)
3,073
2017
$000
1,026
113
‐
3,052
(2,261)
1,930
(1) 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 26 Business
Combinations. The carrying amount of the existing 49% non‐controlling interest was $113,000.
Set out below is recognized 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.
Statement of financial position
Current assets
Current liabilities
Current net assets
Non‐current assets
Non‐current liabilities
Non‐current net assets
Net assets
Accumulated NCI
KWB Consolidated Group
2018
$’000
2017
$’000
6,395
(9,478)
(3,083)
13,203
(6,135)
7,068
3,985
1,860
3,651
(7,363)
(3,712)
11,352
(5,751)
5,601
1,889
832
Lloyds Consolidated Group
2018
$’000
2,557
(3,407)
(850)
3,538
(182)
3,356
2,506
1,213
2017
$’000
3,166
(1,842)
1,324
1,075
(165)
910
2,234
1,098
Joyce Corporation Ltd Annual Report 2018
74
27. RELATED PARTY DISCLOSURES (CONTINUED)
Statement of financial performance
(including discontinued operations)
Revenue
Profit for the period
Total comprehensive income
Profit allocated to NCI
Dividends paid to NCI
Statement of cash flow
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net increase/(decrease) in cash and cash
equivalents
28. DIVIDENDS
KWB Consolidated Group
2017
$’000
2018
$’000
Lloyds Consolidated Group
2017
$’000
2018
$’000
60,919
6,146
6,146
3,088
(2,060)
47,482
4,218
4,218
2,067
(2,261)
21,614
235
235
115
‐
16,373
2,011
2,011
985
‐
KWB Consolidated Group
2017
$’000
2018
$’000
Lloyds Consolidated Group
2017
$’000
2018
$’000
7,951
(1,326)
(4,205)
4,032
(9,375)
1,043
1,019
(2,647)
‐
2,268
(565)
‐
2,420
(4,300)
(1,628)
1,703
Dividends declared or paid during the financial year are as follows:
Distributions paid or payable
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)
Final fully franked ordinary dividend of 3.0 (2017: 3.0) cents per share
(Paid 22 November 2017)
Special fully franked dividend of 3.0 (2017: 5.0) cents per share
(Paid 22 November 2017)
Interim fully franked dividend of 5.0 (2017:3.0) cents per share
(Paid 11 April 2018)
2018
$000
2017
$000
839
839
979
559
839
839
1,399
3,077
3,216
At 30 June 2018, 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
2018
$000
2017
$000
Cash payments in relation to dividends paid in the financial year
3,077
3,216
Joyce Corporation Ltd Annual Report 2018
75
29. EVENTS SUBSEQUENT TO REPORTING DATE
A fully franked dividend of 6.0 cents per share was declared on 30 August 2018 and payable 21 November 2018.
A KWB Q4 FY18 fully franked dividend of $1,288,672 was declared and paid on 13 July 2018.
On 16 July 2018 Dan Smetana settled the final payment for the 380,000 partly‐paid ordinary shares held at 30 June
2018, paid to $1.878 (2017: 380,000 issued at $1.955 and paid to $1.768).
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)
©
the Consolidated Entity’s operations, or
the results of those operations, or
the Consolidated Entity’s state of affairs.
30. 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
2018
$000
110
‐
110
2017
$000
96
23
119
31. 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
Net profit after taxation
Adjustments for:
Depreciation and amortisation
Impairment of goodwill
Net loss / (profit) on disposal of plant and equipment
Property investment revaluation
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
CONSOLIDATED
2018
$000
2017
$000
6,583
5,816
1,043
‐
41
(933)
(1,171)
1,284
484
3,013
(879)
(440)
746
350
37
‐
(1,236)
(83)
73
(575)
1,126
(919)
Net cash flows used in operating activities
9,025
5,335
Joyce Corporation Ltd Annual Report 2018
76
32. PARENT ENTITY DISCLOSURES
a. Financial position
Assets
Current assets
Non‐current assets
Total assets
Liabilities
Current liabilities
Non‐current liabilities
Total liabilities
Net Assets
Equity
Issued capital
(Accumulated losses) / Retained earnings
Net Equity
b.
Financial performance
Profit / (Loss) for the year
Total comprehensive profit / (loss)
As at 30 June
2018
$000
379
24,414
24,793
480
4,945
5,425
2017
$000
124
23,620
23,744
281
3,123
3,404
19,368
20,340
18,060
1,308
19,368
18,019
2,321
20,340
Year ended 30 June
2017
2018
$000
$000
2,057
2,057
(550)
(550)
c. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No such guarantees existed at 30 June 2018 (30 June 2017: Nil).
d. Contingent liabilities of the parent entity.
No contingent liabilities existed within the parent entity as at 30 June 2018 (30 June 2017: 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 2018
for the value of $Nil (30 June 2017: Nil).
Joyce Corporation Ltd Annual Report 2018
77
33. 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 2018, and no change
to the Group’s accounting policy is required:
The Group has not elected to early adopt any new Standards or Interpretations.
Reference
Title
Summary
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.
Application
date for
the Group
1 July 2018
Impact on Group’s
financial report
The Group has
assessed that
there will be no
material impact on
financial reports.
AASB 9
Financial
Instruments
and
associated
Amending
Standards
The key changes include certain simplifications
to the classification of financial assets,
simplifications to the accounting of embedded
derivatives, upfront accounting for expected
credit loss, and the irrevocable election to
recognise gains and losses on investments in
equity instruments that are not held for
trading in other comprehensive income
1 July 2018
The Group has not
yet determined
the impact on the
Group’s financial
statements.
AASB
2017‐1
Transfers of
Investment
Property
AASB 16
Leases
1 July 2018
The Group has
made an
assessment and
identified the
Lytton property as
an investment
property.
1 July 2019
The Group has not
yet determined
the impact on the
Group’s financial
statements.
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.
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.
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.
Joyce Corporation Ltd Annual Report 2018
78
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 2018 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, 30 August 2018
Joyce Corporation Ltd Annual Report 2018
79
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Joyce Corporation Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Joyce Corporation Ltd (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Capitalised Development Costs
Key audit matter
How the matter was addressed in our audit
Our procedures included, but were not limited to the
following:
•
•
•
•
Discussing business plans with management to
develop an understanding of the nature and
feasibility of the development projects at 30
June 2018;
Agreeing a sample of capitalised costs to
supporting documentation including payroll
records and assessed the determination of
these as development in nature;
Assessing the key inputs that support future
income, including post year end revenues
attributable to the expansion of the auction
platform; and
Assessing the adequacy of the Group’s related
disclosures in the financial report.
During the year, the Group capitalised
software development project costs
related to the auction platform, Lloyds
Online Auctions.
As set out in notes 4(e) and 17, the
capitalisation of software development
project costs was a key audit matter due
to the amount of the costs capitalised and
the judgement involved in assessing
whether the criteria set out in the
Australian Accounting Standard AASB 138
required for capitalisation of such costs
had been met, particularly:
• The technical feasibility of the
project; and
• The likelihood of the project
delivering sufficient future economic
benefits.
The Group’s judgements also included
whether capitalised costs were
developmental rather than research in
nature and whether costs, including
payroll costs, were directly attributable to
the relevant projects.
Carrying Value of Goodwill
Key audit matter
How the matter was addressed in our audit
The Group is required under Australian
Accounting Standard AASB 136 Impairment
of Assets to perform an annual impairment
test of the carrying value of goodwill.
As set out in notes 4(a) and 17, the
director’s assessment of the recoverability
of goodwill requires the exercise of
significant judgement, in particular in
estimating future growth rates, discount
rates and the expected cash flows of cash
generating units (“CGUs”) to which the
goodwill has been allocated.
Our procedures included, but were not limited to
the following:
•
•
Evaluating the Group’s categorisation of CGUs
and the allocation of goodwill to the carrying
value of the CGUs based on our understanding
of the Group’s businesses;
Evaluating management’s ability to accurately
forecast cash flows by assessing the precision
of the prior year forecasts against actual
outcomes;
• Comparing the Group’s forecast cash flows to
the board approved budget;
•
•
•
•
Assessing the reasonableness of discount rates
used by management;
Performing sensitivity analysis on the growth
and discount rates;
Testing the mathematical accuracy of the
impairment models; and
Assessing the adequacy of the Group’s related
disclosures in the financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2018, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
If, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_files/ar2.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 22 to 30 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Joyce Corporation Ltd, for the year ended 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Neil Smith
Director
Perth, 30 August 2018
ASX ADDITIONAL INFORMATION
AS AT 28 AUGUST 2018
Additional information required by the Australian Securities Exchange Limited ‘s Listing Rules and not disclosed elsewhere in
this report. The information is provided below:
(a) Distribution of Shareholders
Category
As at 28 August 2018
1 ‐ 1,000
1,001 – 5,000
5,001 ‐ 10,000
10,001 – 100,000
100,001 – and over
Total
Holders
229
197
85
187
29
727
Fully Paid
Ordinary Shares
84,691
516,280
692,836
6,122,020
20,552,428
27,968,255
%
0.30
1.85
2.48
21.89
73.48
100.00
(b)
Shareholdings ‐ Substantial Shareholdings
The number of shares held or controlled at the report date by substantial shareholders were as follows:
Ordinary Shareholder
1. Mr. Dan Smetana *
2. John Roy Westwood
Total
Fully Paid
Ordinary Shares
11,234,829
2,328,000
%
40.2
8.3
13,562,829
48.5
* As at 28 August 2018 Mr Smetana has beneficial interest in 10,254,129 fully‐paid ordinary shares (2017: 9,874,129). On
the 16 July 2018, 380,000 partly paid shares were converted to fully paid ordinary 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 Annual Report 2018
84
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 28 AUGUST 2018
(d)
Shareholdings ‐ Twenty Largest Holders of Quoted Equity Securities ‐ ungrouped
The number of shares held at the report date by the twenty largest holders of quoted equity securities:
Ordinary Shareholder
ADAMIC PTY LTD
UFBA PTY LTD
PEDUNCLE PTY LTD
ONE MANAGED INVT FUNDS LTD <1 A/C>
TRAFALGAR PLACE NOMINEES PTY LTD
1
2
3
4
5
6 MR DONALD TEO
7 MR DAN SMETANA
8 MR DANIEL ALEXANDER SMETANA
9
10
11
12
STARBALL PTY LTD
TREASURE ISLAND HIRE BOAT COMPANY PTY LTD
CONARD HOLDINGS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
13 MR ROSS SYDNEY ANDERSON + MS MAW MAW WYNN
14 MARTEHOF PTY LTD
15
EPIC TRUSTEES LIMITED
16 MAN INVESTMENTS (NSW) PTY LTD
17
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
18 MRS JANINE ALEXANDRA SIAN HOFFMAN
19
LOG‐IT PTY LTD
20 MR FELIX SMETANA
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES
Total Remaining Holders Balance
Fully paid
Ordinary Shares
7,711,568
%
27.57
2,328,000
1,948,312
1,000,000
990,233
990,000
734,022
563,726
534,031
504,291
347,940
281,879
240,000
210,000
201,695
189,792
180,710
170,000
166,666
160,050
8.32
6.97
3.58
3.54
3.54
2.62
2.02
1.91
1.80
1.24
1.01
0.86
0.75
0.72
0.68
0.65
0.61
0.60
0.56
19,452,915
8,515,340
69.55
30.45
Joyce Corporation Ltd Annual Report 2018
85
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 30 AUGUST 2018
(e) Company Secretary
Mr. Keith Gray
(f) Registered Office
75 Howe Street,
Osborne Park, WA,
AUSTRALIA, 6017
Tel: +61 8 9445 1055
(g) Share Registry
Computershare Investor Services Pty Limited
Level 11,
172 St Georges Terrace
Perth, WA 6000
(Within Australia) 1300 850 505
(Outside Australia) +61 3 9415 4000
(h) Auditors
BDO Australia – Perth
38 Station Street
Subiaco, WA 6008
Tel: +61 8 6382 4600
Joyce Corporation Ltd Annual Report 2018
86