ANNUAL REPORT
2019
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 2019
2
The year in review
“Prosper in business together”
Growth
Through
Partnerships
2
KWB and Bedshed
opened a combined 7
new stores in FY19
The
Joyce
Way
Annual Compound
Growth
(FY14 – FY19)
Earnings: +59%1
Lloyds bring to
market the Brock
and Gosford
Museum
3
1 – for current continuing operations
2– New KWB store in Toowoomba
3 – Lloyds charity auction at Bathurst supporting Farmers in Need
CONTENTS
CHAIRMAN’S LETTER
ACTING CEO’S REPORT
DIVISIONAL REVIEW
DIRECTORS’ REPORT
REMUNERATION REPORT
4
5
9
18
24
CORPORATE GOVERNANCE STATEMENT
ANNUAL FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENT
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
36
37
38
93
94
Joyce Corporation Ltd Annual Report 2019
3
Chairman’s Letter
PARTNER, DEVELOP, GROW
“We prosper in business together”
We will continue to identify and scope new
opportunities to partner and take advantage
of our model. High on our selection criteria
is alignment to our values and people with
whom we can work to maximise our joint
growth potential.
focus on
With our
improvement and
working to maximise growth for our brands
and partners, I can see that we are even
better positioned today to successfully bring
new opportunities into the Entity than we
were 12 months ago.
The Board and Executive team at Joyce
have enjoyed working alongside our
divisional leaders to maximise results for all
look forward to
stakeholders, and we
maintaining the same level of engagement
in FY20 and beyond.
Acknowledgements
to not
It would be remiss of me
acknowledge the tremendous contribution
our outgoing Chairman Dan Smetana has
made to Joyce Corporation in his 34 years
of service.
The Company has undergone many
changes in that time and under Dan’s
careful guidance, we see an organisation
that is stronger, in possession of a more
robust balance sheet and poised for future
growth.
I would also
like to acknowledge the
dedication and commitment of the senior
executives in each of the Joyce Corporation
subsidiaries. We are fortunate in having a
dedicated group of highly driven managers
striving to achieve exceptional results in a
challenging economic environment. With
plans for continued expansion in mind, the
Mike Gurry AM
Dear Shareholder,
We are pleased to report that Joyce Corporation
has delivered another successful year with a
statutory revenue of $100 million and network
sales revenue reaching $288 million, which is a
12.9% increase on the previous year. Sales
revenue includes sales through franchisees and
gross auction revenue which is a better indicator
of the scale of the Joyce business.
The significance of this achievement is magnified
when you consider the recent decrease
in
consumer spending. On 2 August 2019 CommSec
released an Economics Insights report for the
June 2019 quarter – the title of which read:
‘Slowest retail spending in 28 years’1. Our ability
to grow our revenue base during such a
tumultuous period is a testament to the talent
and commitment of the entire Joyce Corporation
team.
This result has been achieved through our
‘partnership’ model, encapsulated in Our Values
of openness,
integrity, professionalism and
performance accountability. This model has
given us the ability to continuously deliver value
to our customers resulting in a corresponding
uplift in earnings, rising by 7.1 per cent on the
prior year to $9.8 million2.
Our Business Model
At Joyce Corporation, we look to partner with
maturing organisations and together reach and
maximise their earnings potential.
The Executive Team has been optimising our
planned integration process to simplify and focus
new partner organisations on accelerating
earnings growth. Our operational performance
over the past 12 months reflects the success of
this model and in what could have been a difficult
in
year, considering the national decrease
consumer
Corporation
continued to grow.
spending,
Joyce
Board has concluded that the CEO role
should transition to being full- time.
To this end, Anthony Mankarios has
stepped down in preparation for the change
to Joyce Corporation’s CEO role. On behalf
of the Board, I would like to thank Anthony
for stepping into the Executive Director
role and for his commitment over the last
nine years. Anthony will remain on the
Board until November 2019 in a non-
executive
fully
transitioning from the Company.
capacity,
before
Keith Smith, our Chief Operating Officer
and Finance Executive, has assumed the
role of Acting CEO. Since joining Joyce
Corporation
in 2018, Keith has been
instrumental in driving productivity and
efficiency
the
organisation. He has formed strong and
effective working relationships with all our
subsidiary executives which is critical to
our growth and financial performance. The
Board is confident Joyce Corporation will
be in reliable hands with Keith at the helm.
throughout
gains
Finally, I would like to acknowledge the
contributions of my colleagues on the
Board. The Joyce Board is very actively
involved with our subsidiaries. We are
fortunate in having very competent Board
members who are highly committed and
hardworking.
the
partnership of Board members working
with our Executive team which is one of the
secrets to Joyce’s success. I would also like
to welcome Travis McKenzie to the Board.
We look forward to his contribution for
many years to come.
In my view
is
it
With best wishes,
Mike Gurry
Chairman
Joyce Corporation Ltd Annual Report 2019
4
Acting CEO
Keith Smith
“A year of growth, change and achievement”
The past 12 months has seen significant
growth, change and achievement for Joyce.
Our nationally recognised brands – Kitchen
Connection, Lloyds Online Auctions and
Bedshed – have benefitted from strategic
investments which will allow them to
continue to mature and grow.
This investment has helped lift our revenue
in FY19,
to more than $100 million
something we have been working towards
and of which we should all be very proud. It
sets a new base from which we plan to
continue building on in the coming years
As one of Australia’s oldest ASX-listed
companies, we continue to
judge our
performance over extended periods of time,
being responsive and resilient to market
changes and continuing to operate in a
sustainable and ethical manner.
In the past five financial years (FY14 to FY19)
we have seen revenue increase by more
than 700 per cent, which is an annual
compound growth rate of 50-plus per cent.
Our Partner Organisations
KWB - expanded geographically during the
year, following the shared strategy to deliver
earnings growth by opening up in key markets
located in new regions.
In FY19 the team delivered an EBIT result of
$9.5 million, representing a 14.0 per cent
increase on the prior financial year1. There
remains significant geography to expand
into and drive earnings still further.
in
With 20 showrooms now in the KWB portfolio
and strong coverage
the state of
Queensland, expansion plans for KWB in the
2020 Financial Year are focused on New
South Wales and, more specifically, Northern
Sydney.
Lloyds - The auction market sector, where
Lloyds Online Auctions division
our
larger competitors
operates, has seen
struggle due to insolvencies reaching a 31-
year low.
e-Commerce offering, which is expected to
increase revenue growth from December,
when the online store launches.
Joyce – We have been refining plans to select
and integrate new organisations into the
Joyce portfolio. There
is now more
opportunity and capability to grow the
Organisation through acquisition than we
have historically had.
The efforts of our leaders and teams across
the Organisation over the past financial year,
and execution of our strategic plan, have
delivered positive earnings growth for our
businesses and shareholders.
Like Mike, I see great potential for Joyce and
look forward to supporting the wider team
and overseeing the delivery of our strategy
through FY20.
Sincerely,
Keith Smith Acting CEO
During this downturn the Lloyds team has
focused on the Classic Car (vehicle 20 or more
years old) vertical, delivering multi-million-
dollar auctions like the Brock Racing Car
Collection and the vehicles held by the Gosford
Motor Museum.
This segment of Lloyds’ business delivered
auction sales growth of more than 40 per cent
compared to the previous 12 months. This
growth was supported by proprietary software
deployed over the past 24 months, providing us
with a rich dataset that ultimately allows us to
better understand our customers and their
needs.
This strategic focus is supported by interest in
and demand for Classic Cars remaining strong,
as investors continue to look for alternatives to
putting cash into the stock market or on
deposit.
To capitalize on this, Lloyds has recently
secured motor vehicle auction licenses in
Western Australia and Victoria—two states
that are key to the continued expansion of
Classic Car sales within Lloyds
Bedshed - continues to add value to Joyce with
earnings in the past financial year growing by
12.9 per cent to $2.1 million, which follows the
44 per cent growth in earnings recorded in the
previous year.
This impressive result has to be understood in
the market context where other ‘Large Format
Retailers’ have indicated a significant drop in
sales and franchisees have passed agreements
back to the franchisor.
Counter to the broader market, demand for
Bedshed franchises remains strong with four
stores opening in the past 12 months. As
franchise demand has grown the team has
invested in ‘on boarding’ new franchisees.
their
franchisee
The Bedshed team will continue to execute
on
recruitment plan,
exceptional marketing plan and utilisation of
new reporting technology to deliver further
positive earnings growth through FY20. The
team are also currently progressing an
1When the one-time property revaluation is removed from the prior year.
Joyce Corporation Ltd Annual Report 2019
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OPERATIONAL AND FINANCIAL REVIEW
ORGANISATIONAL OVERVIEW
THE JOYCE BUSINESS MODEL
We identify emerging corporates, partner to unlock potential, ultimately
creating wealth for all parties.
WHO WE ARE
Our Company, with its solid portfolio of nationally-recognised brands, continues to
grow despite a challenging macro-economic environment. To continue our growth,
we are working to identify additional partners to work with in the future. Our
partnering model works across diverse industries and organisations.
In FY20, we will invest in the talent of our Executive Team to further support our
partners and identify future growth opportunities. We are committed to reaching
the full potential of our partnerships.
KWB GROUP PTY LTD (KWB)
KWB delivers outstanding solutions to customers looking to renovate their homes.
They have a rapidly expanding kitchen and wardrobe showroom network closing
the year with 20 showrooms.
(See Note 5) $M’s
Continuing Revenue
Segmental EBIT
FY19
$65.0
$9.5
FY18
$56.3
$8.3
GROWTH
+15.3%
+14.0%
LLOYDS ONLINE AUCTIONS (LLOYDS)
Lloyds is one of Australia’s premier auctioneering and valuation firms, selling items
valued at a few dollars through to multi-millions of dollars. Lloyds online and
simulcast auctions are some of the most popular on the internet and they operate
throughout Australia, across eleven dedicated auction facilities.
(See Note 5) $M’s
FY19
Continuing Revenue
Segmental EBIT
$17.0
$0.2
FY18
$15.9
$0.7
GROWTH
+6.8%
-65.4%
The EBITDA earnings improved from $0.66m in FY18 to $0.92m in FY19 a 39% increase.
BEDSHED FRANCHISING & COMPANY STORES (BEDSHED)
Beshed is a leading Australian household name, renowned for delivering high-
quality, made-to-order products. Much of the 37-store network is owned by
franchisees, with five company-owned outlets. All stores enjoy the advantages of
being part of a major buying and marketing group.
(See Note 5) $Ms
Continuing Revenue
Segmental EBIT
FY19
$19.2
$2.1
FY18
$21.1
$1.9
GROWTH
-8.7%
+12.9%
Joyce Corporation Ltd Annual Report 2019
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OPERATIONAL AND FINANCIAL REVIEW CONTINUED
EXCEPTIONAL AND SUSTAINABLE GROWTH
By identifying and partnering with high-quality corporates and
making appropriate investments we have delivered consistent
rates of growth over an extended period.
With our experienced Board and talented Executive Team, we
plan to continue our growth, and by 2023 deliver earnings that
support a $100 million market capitalization.
$m's
120.00
100.00
80.00
60.00
40.00
20.00
0.00
Revenue
Annual
Compound
Growth
+52%
$m's
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
EBIT Growth
Annual
Compound
Growth
+59%
FY19
FY14
FY19
FY14
The growth delivered over the past five years has come from deployment of the Joyce Business Model that has
seen several successful acquisitions, the development of like-for-like sales and the addition of new lines of
business. All the businesses we partner with are delivering growth—KWB and Bedshed through store network
expansion plans and Lloyds through the development and growth of new ‘verticals’.
The best example of how Lloyds has successfully launched a new vertical is the Classic Car Auction division
which did not exist at the time Joyce Corporation bought into Lloyds in 2016. Today the Classic Car division has
a larger auction revenue than the entire entity had at the point Joyce bought in during 2016. This is testament
to the growth potential within the organisation. In FY20, Lloyds will be expanding its car operations in Western
Australia and Victoria; further realising its potential and building new opportunities for growth.
KWB successfully opened three showrooms in FY19 as planned and are looking to continue this pace of growth
going forward. In FY20 this expansion will focus on establishing a presence in the growing region of Northern
Sydney. Establishing here demonstrates the KWB team’s ongoing ability to open up sites in new population
centres.
Bedshed continues to expand its franchise network with four stores opening in FY19. Owing to our future
growth plans, the Bedshed team is expanding, with new team members being employed to accelerate future
expansion plans and support new franchisees as they come onboard.
The sales chart below demonstrates the FY19 divisional growth and reflect where most of the investment has
been made, namely KWB and Lloyds:
Joyce Corporation Ltd Annual Report 2019
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Joyce Corporation Ltd Annual Report 2019
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DIVISIONAL REVIEW
KWB – Managing Director’s Report
KWB had another successful year supported by our team and customers, consolidating our
position as a leader in the home renovation retail market.
Our model, which provides great customer experiences, has increased our ratings on sites
company providing kitchens across Australia and is supported by more than 1,400 reviews.
In the 2018–19 Financial Year, our geographic reach increased with three new showrooms
opening in strategically key locations of Toowoomba, Helensvale and West Gosford.
Customer demand in these showrooms has been strong and as planned. Historically, new
stores in our Group have returned their initial investment in the first year of trading—we
expect this to continue as we continue with our geographic expansion.
EBIT performance was strong, with double digit growth like the sales increase to achieve 14
per cent growth over the previous year and improving 2.2 points on the budgeted
contribution margin.
OUTLOOK
The infrastructure currently in place for the KWB Group provides us with solid foundations
to continue the successful roll-out of our new showroom program over the next 12 months.
Three new showrooms are planned for 2019–20, and we have plans to secure a presence in
the as yet untapped Sydney market over the coming three years. Our historic success has
been based on delivering our consumer-centric model consistently across our network. As
we grow, we recognise the need to ensure we are consistent and so we are developing a
specialised training centre which we will launch in the next 12 months to support our
consistent and well-regarded service.
Retail showroom visitor numbers are expected to grow from our current base, buoyed by
ongoing brand building led by advertising and positive online consumer product reviews that
create referrals.
In the 2019–20 Financial Year we anticipate the KWB Group will continue to experience
strong growth, supported by Joyce.
Joyce Corporation Ltd Annual Report 2019
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Joyce Corporation Ltd Annual Report 2019
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DIVISIONAL REVIEW
LLOYDS ONLINE AUCTIONS—Founder’s Report
In FY19 Lloyds grew overall auction turnover by 12.4 per cent (year on-year) to $125 million,
despite operating during a 31-year low in insolvency rates – a key source of inventory for
our historic business.
Lloyds’ growth has been achieved through strategic planning and management, including
the deployment of new ‘verticals’ in the last three-years targeting the classic car and fine art
segments.
Over the past 12 months we have set new records for classic car auction values and been
selected to facilitate major events such as the iconic Peter Brock and Gosford Museum
collection sales. This has established Lloyds as the ‘go to’ seller for classic cars and,
collectively, represent significant milestones as we reach the mid-point of our five-year
strategy.
This year has also been a year of ‘giving back’, with Lloyds hosting a very successful charity
auction in Bathurst supporting Farmers in Need. During the Supercar race event at Bathurst
Lloyds partnered with race teams to bring to auctions many items of racing memorabilia. It
is an important part of our culture that we volunteer to carry out events like this.
Lee Hames has taken a wider leadership role at Lloyds this year, supporting the businesses’
growth as Chief Operating Officer and being elected as a director of Lloyds Online Auctions
Pty Ltd.
Andrew Webber, Founder
Lee Hames,
Chief Operating Officer
and Director
With the downturn across the auction sector, Lloyds ‘traditional’ business was impacted. In
response, the team has undertaken a significant cost reduction program, which will be
completed prior to the end of the 2019 calendar year. As a result, since October 2018 we
have seen a 20-plus per cent reduction in staff numbers.
OUTLOOK
Lloyds is positioned for profitable growth in FY20 with the expected resurgence in yellow
and green goods, like the equipment pictured above, coming to market over the next 12
months. The expected earnings growth will be underpinned by the cost base reduction, the
leveraging our cutting-edge technology platform and the further simplification of our
business processes.
Joyce Corporation Ltd Annual Report 2019
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Joyce Corporation Ltd Annual Report 2019
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DIVISIONAL REVIEW
BEDSHED – General Manager’s Report
Throughout FY19 there was a lot of commentary around the challenges
facing retailers, particularly those operating in the high-value discretionary
spend sector. Despite this backdrop, Bedshed has improved year-on-year
sales and profit, as reported in our FY19 financial results.
In the past year Bedshed opened four franchised stores, highlighting the
demand for our franchisee services and support, and we have recently
appointed two key staff to drive our continued growth over the coming
years. One of our new team members is focused on our range and the other
will work to accelerate the pace at which we can onboard new franchisees.
These resources are key investments in the future growth of the Bedshed
business.
OUTLOOK
Against the challenging backdrop in the retail sector generally, a significant number of
new initiatives have been deployed to complement the strength we have shown in our
marketing, staff training and franchise programs. These activities have delivered growth
in EBIT of 12.9 per cent compared to the prior year.
With the launch of new bedroom furniture ranges, the deployment of enhanced systems
across the remaining franchisee stores and the launch of a new eCommerce platform in
this coming year we anticipate further growth. In addition, there are plans to extend our
franchise network as we continue to experience demand for new stores from both new
and existing franchisees.
Joyce Corporation Ltd Annual Report 2019
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DIVISIONAL REVIEW
DELIVERING VALUE TO OUR PARTNERS OR STAKEHOLDERS
PARTNERSHIP CASE STUDY—KWB earnings growth
As we celebrate KWB’s earnings growth, we are reminded that the level of earnings is significantly higher than
it was in the financial year that Joyce Corporation went into partnership with the business. In FY15, earnings
were reported at $1.7 million. In the year just gone, earnings were $9.5 million.
Joyce Corporation partners with businesses to help them see their full potential. Our investment in KWB has
supported their growth thus far. With KWB having, and retaining, an exceptional management team, the
initial partnership saw financial support as the key objective of the relationship. Our first injection of financial
support took place in February 2013 and a second investment took place in November 2013. At that point in
time, Joyce Corporation had a 57 per cent stake in the organisation. Through management exceeding growth
expectations, their ownership percentage has increased to 49 per cent over time, with Joyce retaining 51 per
cent.
Following the initial investment, the Joyce Executive and Board has worked with the KWB team to support
and increase their earnings potential—leading to the declared earnings of $9.5 million reported in this Annual
Report.
Over the 5-year period in which Joyce and KWB have been partners, the earnings growth of KWB has been
exceptional. To continue to grow the business, in 2019–20, Joyce and KWB are furthering their partnership,
with Joyce supporting the deployment of structures and systems to carry the organisation’s growth plans
forward into future years.
Joyce is providing thought leadership and strategic support to explore all organisational opportunities and
maximise financial outcomes for all the shareholders in KWB. We are proud of the history we have with KWB
and excited by the opportunities to engage with the business into the future to maximise wealth.
RETURN ON EQUITY
Delivering value to our shareholders is important to us. As noted by
Investopedia, return on equity (ROE) is a measure used to assess how
effectively management is using a company’s assets to create profits. This
ratio is often used to compare a company to its competitors or to the overall
market.
Across the finance industry, it is acknowledged that a ROE of 15 per cent is
good. Joyce Corporation is exceeding this ROE benchmark, returning 19 per
cent in FY19.
This performance is also greater than the broader specialty retail sector -
which is performing around 12.7 per cent ROE (as reported by CommSec).
Joyce Corporation Ltd Annual Report 2019
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OPERATIONAL AND FINANCIAL REVIEW CONTINUED
THE JOYCE WAY
Our values define how we do business.
We value business partners and staff alike, and we engage in an open and honest way.
True to our values we aim to develop long-term relationships with our partners to drive growth for all
parties. By developing our culture to support our longer-term business outcomes we expect to optimise
future earnings—through the next financial year and beyond.
Joyce Corporation Ltd Annual Report 2019
15
LEADERSHIP TEAM
BOARD TEAM
MIKE GURRY AM
Chairman
Mike was appointed Chair in Dec 2018 and has been a Non- Executive Director
since 2008. He has 34 years Chair/Non-Executive Director experience and has
held directorships across the publicly listed, private, government and not-for-
profit sectors within Australia and internationally including Foundation Housing
Ltd, Australian Health Insurance Association (AHIA), the Australian Information
Industry Association (AIIA), the West Australian Ballet and Integrated Group Ltd.
He is currently a Non- Executive Director of St John Ambulance WA and a
Councilor of HBF Ltd. Mike is a pure mathematician and statistician who has
worked as a senior executive for IBM and CEO of both an international
management consulting company and a large WA based insurance company.
He has consulted to Government at both State and Federal level and worked in
numerous industries including Banking, Insurance, Health, Manufacturing,
Mining, Transport and Energy. Mike was awarded the Order of Australia (AM)
in 2018.
KAREN GADSBY
Deputy Chair
Karen was appointed Deputy Chair in May 2019 and has been a Non-Executive
Director since July 2017. She has 18 years Chair/Non-Executive Director
experience and has held directorships across the publicly listed, private,
government and not- for-profit sectors within Australia including Strategen
Environmental Consulting Pty Ltd, Landgate, Forest Products Commission,
Western Health (Vic.), Community First International, GMHBA (Vic). She is
currently a Non-Executive Director of Talisman Mining Ltd and Mindful
Meditation Australia. Karen is a Chartered Accountant who worked as a senior
executive with North Limited for 13 years across finance, commercial, risk, IT
and human resources.
DAN SMETANA
Non-Executive Director
Dan was Chair of Joyce Corporation Ltd for 34 years, stepping down in Nov 2018,
and has been a Non-Executive Director since 1984. He has had 50 years
Chair/Non- Executive Director experience and has held directorships across the
publicly listed, private, government and not-for-profit sectors within Australia
and internationally including Defence Reserves Support Council – WA, Youth
Focus. Western Power, West Australian Symphony Orchestra, Edge
Employment and WA Federation of PCYC. He is currently a Non- Executive
Director of Korab Resources Limited. Dan is a Certified Practicing Accountant
(CPA) who has worked across many industries including mining, manufacturing
and retail. Dan was awarded the Centenary Medal for Service to Commerce and
the Community in 2003.
TIM HANTKE
Non-Executive Director
Tim has been a Non-Executive Director since 2006. He has 29 years Non-
Executive Director experience across the publicly listed, private, government
and not-for-profit sectors within Australia including Snap Printing and Lifeline,
as well as serving on various advisory boards for the Federal Government. He is
currently a Non-Executive Director of Mrs Macs Pty Ltd and Bentech Assistive
Technologies Inc. Tim has a B Comm. (UWA) degree, and is a Fellow Member of
AICD, AIM and a Member of AMA. He has worked in a wide variety of industries
including building materials, food manufacturing, government relations,
printing and franchising.
Joyce Corporation Ltd Annual Report 2019
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LEADERSHIP TEAM
ANTHONY MANKARIOS
Non-Executive Director
Anthony was appointed a Non-Executive Director in 2008. He was Executive
Director from March 2010 until June 2019 and is currently one of the Non-
Executive Directors. He has over 30 years’ experience as a Company Director
and has been Chair of several private companies. These directorships have been
across the publicly listed and private sectors within Australia and internationally
including Inventis Limited, Oldfields Holdings Limited, Tangshan Hengfen
Painting Accessories Co LTD (China) and Foshan Advcorp Scaffold LTD (China).
He is currently a Non-Executive director of Inventis Limited and the Chair of
their Audit and Risk committee. Anthony is a Certified Finance and Treasury
Professional (CFTP) and has worked as a senior executive, leading businesses
both nationally and
including retail,
manufacturing, property and wholesale.
in multiple sectors
internationally
LEADERSHIP TEAM
TRAVIS McKENZIE
Non-Executive Director
Travis was appointed a Non-Executive Director in July 2019. He has had 5 years
Executive Director experience on private boards within Australia including
Celsius Developments Pty Ltd. He is currently an Executive Director of Alma
Road Rise Pty Ltd and 78 Degrees Pty Ltd. Travis is a Qualified Lawyer who has
worked in derivatives and foreign exchange trading in Europe and the Americas
as well as in Australia. He has worked in multiple industries and more recently
has focused on property and property development.
KEITH SMITH
Acting CEO / Company Secretary
Keith joined the team in May 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 Finance, Technology, Operations and Company Secretarial functions for
publicly listed and not-for-profit (NFP) organisations. Exposure to technology in
its broadest form and recent emerging technology has provided Keith with
unique experiences and awareness of the potential ‘digitalisation’ has for
commercial and NFP entities.
Keith has led divisions of a large international Corporate during his time in the
United States. From this he has extensive experience in successfully leading
businesses in diverse industries achieve their commercial and cultural goals.
ANITA HOLLENBERG
Group Financial Controller
Anita joined the team in February 2019 and has 13 years of experience as a
Chartered Accountant, working across listed and private companies in Australia
and the United Kingdom. She has held senior roles in property, funds
management and infrastructure sectors, and to date at Joyce she has led project
and organisational change.
Anita has been able to add value to Joyce through her ability to deliver ‘back
office’ change and Group synergies. She leads the Joyce Corporation Finance
team which supports the Group and its wider initiatives.
The Board and Leadership team look forward to taking Joyce Corporation into a new phase of growth.
Joyce Corporation Ltd Annual Report 2019
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 2019.
DIRECTORS
The names of the Company’s Directors in office during the year ended 30 June 2019 and until the date of this report are as
stated below. Directors were in office for this entire period unless otherwise stated.
Mike Gurry
Karen Gadsby
Dan Smetana
Tim Hantke
Travis McKenzie
Anthony Mankarios
SECRETARY
Keith Smith
Non-executive Director (Chair from 27 November 2018)
Non-executive Director (Deputy Chair from 1 May 2019)
Non-executive Director (Chair to 27 November 2018)
Non-executive Director
Non-executive Director (from 1 July 2019)
Executive Director (to 30 June 2019), Non-executive Director (1 July 2019 to
24 November 2019)
PRINCIPAL ACTIVITIES
During the year the principal continuing activities of the Consolidated Entity consisted of being:
(a) Majority owner of 51% of KWB Group Pty Ltd, a kitchen and wardrobe supply and installation operator;
(b) Majority owner of 56% (increased from 51% holding on 22 January 2019) of Lloyds Online Auctions Pty Ltd, online
auctioneers and valuers;
(c) Franchisor of the Bedshed chain of retail bedding stores; and
(d) Owner of five Bedshed retail stores;
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 2019 (“the Financial Year”) the Consolidated Entity achieved revenue from continuing
operations of $101.16m (2018: $91.42m) and a profit from continuing operations before tax of $9.53m (2018: $9.82m) and
an overall net profit after tax of $6.73m (2018: $6.72m).
Financial Position
At 30 June 2019, the Consolidated Entity had total equity of $27.42m (2018: $28.11m) including non-controlling interest, with
dividend payments of $3.55m in 2019 (2018: $3.08m). Cash and cash equivalents increased from $6.21m at 30 June 2018 to
$6.97m at 30 June 2019. Un-utilised debt facilities were $250k (2018: $150k).
Joyce Corporation Ltd Annual Report 2019
18
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 2019, with the total reducing by $434.8k per year. An annually approved multi option
facility of $900k, including $210k overdraft, was approved on 30 January 2018. The overdraft was undrawn at 30 June 2019.
The Consolidated Entity has contracted to transition banking facilities from St George to Commonwealth Bank on a date
subsequent to the signing of these accounts. The Commonwealth Bank facilities are approved for a two-year rolling term.
Prior to 30 June 2019 a $300k overdraft facility was established with the Commonwealth Bank of which $40k was undrawn
at reporting date.
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 $27k
was undrawn at the end of the Financial Year. KWB Property Holdings Pty Ltd have contracted with the National Australia
Bank to transition banking facilities over from the Commonwealth Bank. The full transition of banking arrangements is to
occur subsequent to the signing of these financial statements.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Consolidated Entity will look to further develop the KWB business and continue to invest in additional stores down the
East Coast of Australia. Lloyds will continue to expand its online presence and focus on the rapidly expanding Classic Car and
Fine Art verticals. The Bedshed business will develop through the expansion of its network of franchised stores and improving
the financial performance of the five Company owned and operated stores.
DIVIDENDS
Dividends declared or paid during the financial year are as follows:
Distributions paid or payable
Final fully franked ordinary dividend of 3.0 cents per share
(Paid 22 November 2017)
Special fully franked dividend of 3.0 cents per share
(Paid 22 November 2017)
Interim fully franked dividend of 5.0 cents per share
(Paid 11 April 2018)
Final fully franked ordinary dividend of 6.0 cents per share
(Paid 21 November 2018)
Interim fully franked dividend of 5.0 cents per share
(Paid 10 April 2019)
Second interim fully franked dividend of 1.7 cents per share
(Paid 28 June 2019)
2019
$000
2018
$000
839
839
1,399
1,678
1,399
475
3,552
3,077
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.
Joyce Corporation Ltd Annual Report 2019
19
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
On 22 January 2019, Lloyds Online Auctions Pty Limited issued an additional 699,000 ordinary shares. These were purchased
by Joyce International Pty Ltd (a 100% owned subsidiary of Joyce Corporation Ltd). The investment was paid for by the
capitalisation of existing loans. This brings Joyce’s holding in Lloyds to 56%.
Other than the disclosed above, there were no other significant changes in the state of affairs of the Consolidated Entity
during the year ended 30 June 2019.
SIGNIFICANT AFTER REPORTING DATE EVENTS
A fully franked dividend of 5.0 cents per share was declared on 27 August 2019 payable on 18 November 2019.
The Consolidated Entity has contracted to transitioned loan facilities from St George to Commonwealth Bank on a date
subsequent to the signing of these accounts.
KWB Property Holdings Pty Ltd entered into contractual arrangements with the National Australia Bank to transition loan
facilities over from the Commonwealth Bank on a date subsequent to the signing of these accounts.
In the ASX announcement dated 24 July 2019 the Company communicated the following payments and arrangements with
the former Executive Director, Anthony Mankarios:
•
•
•
$245,966 (plus GST) will be paid to Starball Pty Ltd (Mr Mankarios’ private company) in addition to payments for
services up to when the contract with Starball ended on 30th June 2019.
All of Starball Pty Ltd's and Mr Mankarios' Short Term Incentive Plan participation and performance rights have
been cancelled (including as approved at the 2018 Joyce AGM);
The Board will propose a resolution for the shareholders to consider at the upcoming 2019 AGM to consider
whether to issue 131,579 fully paid ordinary Joyce shares to Starball Pty Ltd in recognition of Mr Mankarios’
contribution.
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:
(i)
the Consolidated Entity’s operations, or
(ii) the results of those operations, or
(iii) the Consolidated Entity’s state of affairs.
Joyce Corporation Ltd Annual Report 2019
20
INFORMATION ON DIRECTORS
Mike Gurry - Chair. Age 72.
Bachelor of Science (UWA), Dip AICD, FAIM, SF Fin, FAICD
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Chair Lloyds Board
Director Bedshed
Member of the Audit and Risk Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Chair KWB Board until 13 August 2019
Member KWB Board
Interests in shares and options
56,878 ordinary shares
_________________________________________________________________________________________________
Karen Gadsby – Deputy Chair. Age 56.
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
Deputy Chair from 1 May 2019
Chair KWB Board from 13 August 2019
Alternate Director Lloyds Board
Director Bedshed
Chair of the Audit and Risk Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Interests in shares and options:
20,000 shares ordinary shares
_________________________________________________________________________________________________
Dan Smetana Non-Executive Director, Former Chair (January 1985 to November 2018). Age 75.
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
Director Bedshed
Member of the Audit and Risk Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Interests in shares and options
10,254,129 beneficial fully paid ordinary shares.
Joyce Corporation Ltd Annual Report 2019
21
INFORMATION ON DIRECTORS (CONTINUED)
Tim Hantke – Non-Executive Director. Age 71.
Bachelor of Commerce, FAIM, FAICD
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Director Lloyds Board
Director KWB Board
Chair Bedshed
Member of the Audit and Risk Committee
Chair of the Remuneration Committee
Chair of the Nomination Committee
Interests in shares and options
20,000 ordinary shares
Travis McKenzie – Non-Executive Director. Age 41.
Bachelor of Law, Bachelor of Commerce
Other current Directorships of listed companies
None
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Member of the Audit and Risk Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Interests in shares and options
None
Anthony Mankarios – Executive Director (to 30 June 2019), Non-Executive Director (from 1 July 2019 to
24 November 2019) Age 52.
MBA, FAICD, CFTP
Other current Directorships of listed companies
Inventis Limited
Former Directorships of listed companies in last 3 years
None
Special responsibilities
Director Lloyds Board (to 26 August 2019)
Director KWB Board (to 13 August 2019)
Director Bedshed (to 26 August 2019)
Member of the Audit and Risk Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Interests in shares and options
741,323 ordinary shares
COMPANY SECRETARY
Keith Smith – Acting CEO (from 1 July 2019), Company Secretary. Age 53.
Accounting BSc (Hons), ACA, CA ANZ, AICD, GIA (Cert)
Joyce Corporation Ltd Annual Report 2019
22
INFORMATION ON DIRECTORS (CONTINUED)
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and of each Board committee held during the year ended
30 June 2019, and the number of meetings attended by each Director were:
Directors
Full meeting of Directors
Audit
Remuneration
Mike Gurry
Karen Gadsby
Dan Smetana
Tim Hantke
Anthony Mankarios
A
11
11
11
11
11
B
11
11
10
11
8
A
5
5
5
5
5
B
5
5
2
5
5
A
7
7
7
7
7
B
7
7
6
7
7
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
Two of the Board Meetings the Executive Director did not attend were related to his contract of employment and
remuneration, and a third meeting due to annual leave taken.
Joyce Corporation Ltd Annual Report 2019
23
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 Consolidated Entity performance
G. Voting at the 2018 Annual General Meeting
H. Independent salary and incentive review
I. Loans or 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
Keith Gray
John Bourke
Chris Palin
Andrew Webber
Lee Hames
Gavin Culmsee
Acting CEO / COO / Finance Executive and Group Company
Secretary
Chief Financial Officer and Company Secretary Joyce
Corporation Ltd to 10 October 2018
Managing Director KWB Group Pty Ltd
Finance Director KWB Group Pty Ltd
Founder of Lloyds Online Auctions Pty Ltd
Director and COO Lloyds Online Auctions Pty Ltd
General Manager Bedshed Franchising 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 Chair of
the Remuneration Committee is appointed by the Board and is a non-executive director.
The Remuneration Committee meets as and when required by the Chair 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 Chair to 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 2019
24
A. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
(CONTINUED)
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. A remuneration consultant was used during the Financial Year to review the executive 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.
It 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 Chair’s fees are determined independently to the fees of non-executive
directors based on comparative roles in the external market. The Chair is not present at any discussions relating to the
determination of their 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 increased by the rate of 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 2019
25
A. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
(CONTINUED)
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 one or more 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 offers Performance Rights in the Long-Term Incentive Scheme.
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.
Joyce Corporation Ltd Annual Report 2019
26
B. SERVICE AGREEMENTS (CONTINUED)
Details of key management personnel (including the senior executives of the Consolidated Entity):
Name
Mike Gurry
Karen Gadsby
Dan Smetana
Tim Hantke
Position Held
Chair of Audit Committee to 30 June 2018, Non-Executive Director, Chair from
27 November 2018
Non-Executive Director, Chair of Audit Committee from 1 July 2018
Non-Executive Director and Chair to 27 November 2018
Non-Executive Director, Chair of Remuneration Committee
Travis McKenzie
Non-Executive Director from 1 July 2019
Anthony Mankarios
Executive Director to 30 June 2019, Non-Executive Director from 1 July 2019 to
Keith Smith
Keith Gray
John Bourke
Chris Palin
Andrew Webber
Lee Hames
Gavin Culmsee
24 November 2019
Acting CEO / COO / Finance Executive and Group Company Secretary
Chief Financial Officer and Company Secretary Joyce Corporation Ltd to 10
October 2018
Managing Director KWB Group Pty Ltd
Finance Director KWB Group Pty Ltd
Founder of Lloyds Online Auctions Pty Ltd
Director and COO of Lloyds Online Auctions Pty Ltd
General Manager Bedshed Franchising Pty Ltd
The employment conditions of all KMP’s are formalised in contracts. The directors and Acting CEO are engaged by Joyce
Corporation Ltd. All other executives, except for Andrew Webber (who has a fixed term contract), are permanent
employees of subsidiaries within the Consolidated Entity.
The Executive Director, Anthony Mankarios, had a service contract, which expired at 30 June 2019 and was not renewed
by the Board. This was an at call role, which provided a director’s fee and an hourly charge for work undertaken above this
and was paid monthly. All out of pocket expenses in connection with carrying out the role have been reimbursed.
As disclosed in the ASX announcement on 24 July 2019 Starball Pty Ltd, a company under significant control by Anthony
Mankarios, received certain cash payments. The Performance Rights approved at the 2018 AGM to Anthony Mankarios
were cancelled.
Joyce Corporation Ltd Annual Report 2019
27
B. SERVICE AGREEMENTS (CONTINUED)
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 2019
Term of agreement
In months
months
Notice Period
Termination payment in
3
3
3
3
-
3
3
3
3
3
3
-
3
3
Keith Smith
rolling
Keith Gray (to 10 October
rolling
2018)
Chris Palin
John Bourke
Andrew Webber
Lee Hames
Gavin Culmsee
rolling
rolling
3 years
rolling
rolling
For base salary and superannuation, see table at C below.
Related party transactions with KMP’s
Please refer to Note 26 related party disclosures.
C. DETAILS OF REMUNERATION
30-Jun-19
Short-term employment benefits
Post
employment
benefit
Long- term
benefits
Share based
payment
Total
% relating to
performance
Mi ke Gurry
Ka ren Ga ds by
Da n Smeta na
Ti m Ha ntke
Total Non-Executive
Directors
Executive Director
Anthony Ma nka ri os 1
Total Directors
Kei th Smi th
Kei th Gra y2
John Bourke 3
Chri s Pa l i n3
Andrew Webber4
Lee Ha mes 5
Ga vi n Cul ms ee 2
Total Other Key
Management Personnel
Salary & Fees
115,982
86,073
120,772
86,073
Cash Bonus
-
-
-
-
Non-Cash
-
-
-
-
408,900
-
321,572
730,472
242,149
114,003
326,946
258,393
50,000
185,433
236,210
120,000
120,000
-
19,752
94,767
74,897
-
-
61,683
-
-
-
-
-
-
-
-
4,099
-
Super
11,018
8,177
11,473
8,177
38,845
6,637
45,482
23,004
11,073
40,063
31,663
4,750
15,894
23,421
LSL & AL
-
-
-
-
-
-
-
-
48,383
-
-
-
4,183
-
1,413,134
251,099
4,099
149,868
52,566
Total Remuneration
2,143,606
371,099
4,099
195,350
52,566
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
127,000
94,250
132,245
94,250
447,745
448,209
895,954
265,153
193,211
461,776
364,953
54,750
209,609
321,314
-
-
-
-
0.0%
26.8%
-
-
10.2%
20.5%
20.5%
-
-
19.2%
1,870,766
13.4%
2,766,720
13.4%
Joyce Corporation Ltd Annual Report 2019
28
C. DETAILS OF REMUNERATION (CONTINUED)
30-Jun-18
Short-term employment benefits
Salary & Fees
85,000
75,000
175,494
Cash Bonus
-
-
-
Non-Cash
-
-
9,789
Mi ke Gurry
Ka ren Ga ds by
Da n Smeta na
Ti m Ha ntke 6
Total Non-Executive
Directors
Executive Director
Anthony Ma nka ri os 1
Total Directors
Kei th Smi th
Kei th Gra y2
John Bourke 3
Chri s Pa l i n3
Andrew Webber4
Lee Ha mes 5
Ga vi n Cul ms ee 2
63,750
399,244
249,451
648,695
18,500
216,907
315,890
234,057
50,000
145,000
256,054
-
-
288,750
288,750
-
50,801
93,000
73,500
-
-
15,922
Total Other Key
Management personnel
1,236,408
233,223
Post
employment
benefit
Super
8,075
7,125
16,672
6,056
37,928
-
37,928
1,758
20,606
38,844
32,704
4,750
13,775
25,838
138,275
Long- term
benefits
Total
% relating to
performance
LSL & AL
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
93,075
82,125
201,955
69,806
446,961
538,201
985,162
20,258
288,314
447,734
340,261
54,750
158,775
297,814
-
-
-
-
-
53.6%
29.3%
-
17.6%
20.8%
21.6%
-
-
5.3%
1,607,906
14.5%
-
9,789
-
9,789
-
-
-
-
-
-
-
-
Total Remuneration
1,885,103
521,973
9,789
176,203
0
2,593,068
20.1%
1. Anthony Mankarios was paid a cash bonus at the start of the financial year based on the achievement of key performance
criteria related to the year ended 30 June 2018. These include profit goals and the successful completion of predetermined
events set by the non-executive directors. For the year ended 30 June 2019 the short-term incentive bonus performance
targets were not met and no payment will be made related to this incentive. Anthony Mankarios was contracted to 30 June
2019; the Board have not renewed this contract. In the announcement made to the ASX on 24 July 2019 the Board indicated
that the Performance Rights voted at the 2018 AGM had been cancelled.
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 are both directors of KWB Group Pty Ltd, their cash bonuses are related to meeting key
performance criteria related to KWB Group Pty Ltd at the date of this report.
4. Andrew Webber’s consultancy company was paid $240k for consulting services performed by his staff members for the
Lloyds Online group of companies.
5. Lee Hames is a Director and COO of Lloyds Online Auctions Pty Ltd.
6. Tim Hantke’s remuneration reduced in 2018 due to extended unpaid leave taken during the year.
Joyce Corporation Ltd Annual Report 2019
29
D. SHARE-BASED COMPENSATION
Recognition and Measurement
The schemes in place can only be equity-settled and are accounted for accordingly. The cost of equity-settled
transactions with employees is measured using their fair value at the date which they were granted. In determining the fair
value, no account is taken of any performance conditions.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which any performance conditions are met, ending on the date on which the employee becomes fully entitled to the award
(vesting date).The cumulative expense recognised for these transactions at each reporting date reflects the extent to which
the vesting period has expired and the proportion of the awards that are expected to ultimately vest.
No expense is recognised for awards that do not ultimately vest due to a performance condition not being met.
In the ASX announcement dated 24 July 2019 the Company communicated the Performance Rights allocated at the 2018
AGM had been cancelled.
E. EQUITY INSTRUMENT DISCLOSURES RELATING TO KMP’S
i. Option and holding rights granted as compensation
During the financial year ended 30 June 2019 no options (2018: 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 2019 (2018: Nil).
iii. Performance rights granted as compensation
During the financial year ended 30 June 2019, 263,158 FY18 performance rights and 272,109 FY19 performance rights were
granted to Anthony Mankarios (2018: Nil), as equity compensation benefits.
iv. Performance right holdings
During the financial year ended 30 June 2019, 263,158 FY18 performance rights and 272,109 FY19 performance rights were
granted to Anthony Mankarios which are subject to continued employment with Joyce Corporation Ltd and to the Group
meeting predetermined performance criteria. On 24 July 2019 his contract was not renewed and did not continue beyond
30 June 2019. The performance rights have been cancelled as announced to the ASX on 24 July 2019. Therefore, no amount
is recorded as a share-based payment expense for the year ended 30 June 2019.
Joyce Corporation Ltd Annual Report 2019
30
E. EQUITY INSTRUMENT DISCLOSURES RELATING TO KMP’S (CONTINUED)
v. Share Holdings
The number of shares in the Company held during the financial year by each director and other KMP’s of the Consolidated
Entity, including their personally related parties, are set out below. There were no shares granted during the reporting
period as compensation (2018: Nil).
Balance
Granted as
On Exercise of
Net Change
Balance
01-Jul-18
Remuneration
Options
Other
30-June-19
30 June 2019
Mike Gurry
Karen Gadsby
Dan Smetana
Tim Hantke
Travis McKenzie
56,878
20,000
9,874,129
20,000
-
Anthony Mankarios
723,823
Keith Smith
Keith Gray
John Bourke
Chris Palin
Andrew Webber
Lee Hames
Gavin Culmsee
-
-
65,359
6,615
-
-
-
TOTAL
10,766,804
30 June 2018
Mike Gurry
Karen Gadsby
Dan Smetana
Tim Hantke
Anthony Mankarios
Keith Smith
Keith Gray
John Bourke
Chris Palin
Andrew Webber
Lee Hames
Gavin Culmsee
56,878
-
9,874,129
20,000
718,545
-
-
65,359
6,615
-
-
-
TOTAL
10,741,526
Balance
Granted as
On Exercise of
Net Change
Balance
01-Jul-17
Remuneration
Options
Other
30-June-18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,878
20,000
380,000
10,254,129
-
-
17,500
40,000
-
-
(6,615)
-
-
20,000
-
741,323
40,000
-
65,359
-
-
-
10,000
10,000
440,885
11,207,689
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
-
-
5,278
-
-
-
-
-
-
-
56,878
20,000
9,874,129
20,000
723,823
-
-
65,359
6,615
-
-
-
25,278
10,766,804
Joyce Corporation Ltd Annual Report 2019
31
E. EQUITY INSTRUMENT DISCLOSURES RELATING TO KMP’S (CONTINUED)
vi. Partly Paid Ordinary 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 Consolidated Entity, including their personally related parties, is set out below. There were no
shares granted during the reporting period as compensation (2018: Nil).
30 June 2019
Mike Gurry
Karen Gadsby
Dan Smetana*
Anthony Mankarios
Keith Smith
Keith Gray
John Bourke
Chris Palin
Andrew Webber
Lee Hames
Gavin Culmsee
Balance
Granted as
On Exercise of
Net Change
Balance
01-Jul-18
Remuneration
Options
Other
30-June-19
-
-
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.
Balance
Granted as
On Exercise of
Net Change
Balance
01-Jul-17
Remuneration
Options
Other
30-June-18
30 June 2018
Mike Gurry
Karen Gadsby
Dan Smetana
Tim Hantke
Anthony Mankarios
Keith Smith
Keith Gray
John Bourke
Chris Palin
Andrew Webber
Lee Hames
Gavin Culmsee
-
-
380,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
380,000
-
-
-
-
-
-
-
-
-
380,000
TOTAL
380,000
All equity transactions with specified directors and Other KMP’s of the Consolidated Entity 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 2019
32
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).
FY19
$000
FY181
$000
FY171
$000
FY16
$000
FY15
$000
Revenue from continuing operations
101,161
91,419
78,7702
56,544
34,737
Profit from continuing operations after tax
6,734
6,723
5,6402
3,461
Share price at year-end $
Dividends (Cents) paid or payable
1.53
12.7
1.42
11.0
1.60
11.5
1.01
16.0
126
0.96
5.5
1 Revenue and net profit exclude discontinued operations in the current business.
2 Revenue and profit increased in 2017 from consolidation of Lloyds Online Auctions Pty Ltd from July 2016.
G. VOTING AT THE 2018 ANNUAL GENERAL MEETING ON THE REMUNERATION REPORT
The Remuneration Report in the 2018 Annual Report to shareholders was approved by 97.7% of shareholders at the 2018
Annual General Meeting. No specific feedback was received at the Annual General Meeting or throughout the year.
H. INDEPENDENT SALARY AND INCENTIVE REVIEW
During FY19 the Company undertook an independent review of executive salary and incentive levels to benchmark against
market. Additional work was also undertaken to establish the Long-Term Incentive Scheme, approved at the 27 November
2018 Annual General Meeting. The review and work were undertaken by the independent professional firm of Godfrey
Remuneration Group for the sum of $34,000. Recommended changes are the subject of an ongoing project.
I. LOANS OR OTHER TRANSACTIONS WITH DIRECTORS AND EXECUTIVES
There are no loans outstanding with any Director as at 30 June 2019 (2018: $29,450).
During FY19 an unsecured loan from Dan Smetana of $400k was entered into, with an interest rate of 7.22% pa. This was
repaid in full in March 2019. In FY18 an unsecured loan for the same amount was received, of which $371k was repaid in
July 2018 and the remaining $29k loan balance was subsequently used by Dan Smetana as the final payment towards the
partly paid shares.
There were no other transactions with KMP’s not in the ordinary course of business.
The Executive Directors fees were paid to Starball Pty Ltd, a company in which Anthony Mankarios has significant influence
FY19 - $485,350 (2018: $538,201). As at year end the amount owing to this related party was $nil (2018: $26,773).
At 30 June 2018 the receivable from Pynland Pty Ltd was $26,231, a company with shares held in trust by Dan Smetana for
the suspended employee share scheme, was received in full on 16 May 2019.
During the year ended 30 June 2019, LAAV Management Pty Ltd, a company of which Andrew Webber is a director, was
paid $240,000 (2018: $190,000) 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 2019
33
INSURANCE OF OFFICERS
During FY19, Joyce Corporation Ltd paid a premium to insure the directors, secretaries and KMP’s of the Consolidated
Entity. A clause in the relevant insurance policy prevents the disclosure of the amount of the premium.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers of the Consolidated Entity, and any other payments arising from liabilities incurred by the officers in
connection with such proceedings. This does not include such liabilities that arise from conduct involving a willful breach of
duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves
or someone else or to cause detriment to the Company or more broadly to the Consolidated Entity. 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.
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 2019. 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 35.
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 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.
M A Gurry
Chair
Perth, 27 August 2019
Joyce Corporation Ltd Annual Report 2019
34
Joyce Corporation Ltd Annual Report 2019
35
CORPORATE GOVERNANCE STATEMENT
Joyce Corporation Ltd (“the Company”) and the Board are committed to achieving and demonstrating a high standard of corporate
governance. The Company has reviewed its corporate governance practices against the Corporate Governance Principles and
Recommendations (3rd edition) published by the ASX Corporate Governance Council.
The 2019 corporate governance policy and statement reflects the corporate governance practices in place throughout the 2019
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 2019
36
ANNUAL FINANCIAL REPORT
Joyce Corporation Ltd
AND CONTROLLED ENTITIES
ABN: 80 009 116 269
Annual Financial Report
For the Year Ended 30 June 2019
Joyce Corporation Ltd Annual Report 2019
37
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Variable costs
Contribution margin
Expenses from continuing operations
Employment expenses
Occupancy expenses
Marketing expenses
Administration expenses
Earnings before depreciation, interest, tax and revaluation
Depreciation and amortisation
Earnings before interest, tax and revaluation
Investment property revaluation
Earnings before interest and tax
Net interest expense
Earnings before tax
Income tax expense
Profit from continuing operations after tax
Discontinued operations
Profit/(Loss) for the year from discontinued operations
Profit for the year
Profit is attributable to:
Ordinary equity holders of the company
Non-controlling interests
Earnings per share (cents per share) for profit attributable
to ordinary equity holders of the company:
Overall operations basic earnings per share
Overall operations diluted earnings per share
Overall operations basic earnings per share excluding
property revaluation
Note
6
6
6
6
6
6
8
7
9
9
9
2019
$000
101,161
(42,834)
58,327
3,886
(7,801)
54,412
(28,101)
(5,799)
(3,189)
(5,783)
11,540
(1,713)
9,827
-
9,827
(298)
9,529
(2,795)
6,734
4
6,738
3,453
3,285
6,738
12.3
12.3
12.3
2018
$000
91,419
(39,097)
52,322
3,901
(8,509)
47,714
(23,761)
(5,421)
(3,261)
(5,050)
10,221
(1,043)
9,178
933
10,111
(287)
9,824
(3,101)
6,723
(140)
6,583
3,380
3,203
6,583
12.3
12.1
10.9
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial statements
set out on pages 43 to 92.
Joyce Corporation Ltd Annual Report 2019
38
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED
Profit for the year
Other comprehensive income
Items that will not be reclassified to profit or loss
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable
to:
Ordinary equity holders of the company
Non-controlling interests
Total comprehensive income for the year
Total comprehensive income for the year is attributable to
ordinary equity holders of the company arises from:
Continuing operations
Discontinued operations
Total comprehensive income for the year
2019
$000
6,738
-
-
6,738
3,453
3,285
6,738
3,449
4
3,453
2018
$000
6,583
-
-
6,583
3,380
3,203
6,583
3,520
(140)
3,380
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the consolidated financial statements
set out on pages 43 to 92.
Joyce Corporation Ltd Annual Report 2019
39
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Note
10
11
12
13
14
11
8
15
12
16
17
18
19
20
8
20
8
19
21
26
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
Non-controlling interests
Retained earnings
TOTAL EQUITY
CONSOLIDATED
2019
$000
6,975
2,125
3,204
1,573
31
13,908
399
1,543
11,194
544
9,623
18,306
41,609
55,517
14,141
1,613
894
155
16,803
9,809
570
914
11,293
28,096
27,421
18,090
3,197
6,134
27,421
2018
$000
6,215
1,918
3,645
1,260
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
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial statements
set out on pages 43 to 92.
Joyce Corporation Ltd Annual Report 2019
40
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Net cash flows (used in) / 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 flows (used in) / from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from related party loan
Repayment of related party loan
Proceeds from partly paid share dividend
Dividends paid
Dividends paid to non-controlling interest
Net cash flows (used in) / from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Reconciliation of cash
Cash at bank and in hand
Note
30
27
10
2019
$000
108,465
(94,678)
85
(334)
(3,542)
9,996
60
-
(1,800)
(528)
-
(2,268)
738
(575)
400
(400)
30
(3,552)
(3,609)
(6,968)
760
6,215
6,975
6,975
6,975
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
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial statements
set out on pages 43 to 92.
Joyce Corporation Ltd Annual Report 2019
41
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Non-
Note
Contributed
Equity
$000
18,019
Reserves
$000
2,699
Retained
Earnings
$000
3,838
Total
Controlling
Interest
$000
1,930
Equity
$000
26,486
Balance at 1 July 2017
Total comprehensive income for
the year:
Profit attributable to members of
the parent entity
Profit attributable to non-
controlling interests
Transfer of reserve to retained
earnings and tax adjustments
Total comprehensive income for
the year
Transactions with owners in their
capacity as owners:
Payment partly paid shares
Dividends paid or provided for
Balance at 30 June 2018
21
Balance at 1 July 2018
Change in accounting policy
2
Restated total equity at the
beginning of the financial year
Total comprehensive income for
the year:
Profit attributable to members of
the parent entity
Profit attributable to non-
controlling interests
Total comprehensive income for
the year
Transactions with owners in their
capacity as owners:
Transactions with non-controlling
interests
Payment partly paid shares
Dividends paid or provided for
26(b)
Balance at 30 June 2019
21
-
-
-
18,019
41
-
18,060
18,060
-
18,060
-
-
-
-
30
-
18,090
-
-
3,380
-
3,380
-
3,203
3,203
(2,699)
2,834
-
135
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,052
5,133
33,204
-
(3,077)
6,975
6,975
(95)
-
41
(2,060)
3,073
(5,137)
28,108
3,073
28,108
-
(95)
6,880
3,073
28,013
3,453
-
3,453
-
3,285
3,285
3,453
3,285
6,738
(647)
-
(3,552)
6,134
448
-
(3,609)
3,197
(199)
30
(7,161)
27,421
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 43 to 92.
Joyce Corporation Ltd Annual Report 2019
42
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 2019 were authorised for issue in accordance with a resolution of the directors of the Company
dated 27 August 2019. 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
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 2019 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 and certain other financial instruments which are measured at fair value.
New or revised Standards and Interpretations that are first effective in the current reporting period
A number of new or amended standards became applicable for the current reporting period and the
Consolidated Entity had to change its accounting policies as a result of the adoption of the following
standards:
•
•
AASB 9 Financial Instruments; and
AASB 15 Revenue from Contracts with Customers.
The impact of the adoption of these standards and the new accounting policies is disclosed below. The
impact of these standards, and the other new and amended standards adopted by the Consolidated
Entity, has not had a material impact on the amounts presented in the Consolidated Entity’s financial
statements.
Joyce Corporation Ltd Annual Report 2019
43
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Changes in accounting policies
This note explains the impact of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from
Contracts with Customers on the Consolidated Entity’s financial statements and also discloses the new
accounting policies that have been applied from 1 July 2018, where they are different to those applied in
prior periods.
(i) AASB 9 Financial Instruments
Classification
From 1 July 2018, the Consolidated Entity classifies its financial assets in the following measurement
categories:
-
-
those to be measured subsequently at fair value (either through OCI, or through profit or loss); and
those to be measured at amortised cost.
The classification depends on how the Consolidated Entity manages the financial assets and the
contractual terms of the cash flows.
Measurement
At initial recognition, the Consolidated Entity measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL
are expensed in profit or loss.
Impairment
From 1 July 2018, the Consolidated Entity assesses expected credit losses associated on a forward-looking
basis. For trade receivables, the Consolidated Entity applies the simplified approach permitted by AASB
9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Impact of Adoption
The Consolidated Entity’s financial assets subject to AASB 9’s new expected credit loss model. The assets
assessed are trade receivables, which arise from the provision of services and sale of goods.
The impact of the impairment requirements of AASB 9 on trade receivables has not resulted in a material
impact to the financial statements.
Under AASB 9, the Consolidated Entity was required to revise the impairment methodology used in the
calculation of its provision for doubtful debts to the expected credit loss model. This change in
methodology has not had a material impact on the financial statements.
The Consolidated Entity applies the AASB 9 simplified approach to measuring expected credit losses which
uses a lifetime expected loss allowance for all trade receivables. Trade receivables are written off when
there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of
recovery include, amongst others, the failure or a debtor to engage in a repayment plan with the
Consolidated Entity, and a failure to make contractual payments for a period of greater than 120 days
past due.
Joyce Corporation Ltd Annual Report 2019
44
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(ii) AASB 15 Revenue from Contracts with Customers
The Consolidated Entity revenues consist of the following elements:
Sale of goods – Bedshed owned and operated retail stores
The Group operates five retail stores selling mattresses, bedroom furniture and goods. Revenue
from the sale of goods is recognised when the product is sold to the customer.
It is the Group’s policy to sell its mattresses with a right of substitution within 60 days, the 60-
day Comfort Guarantee to all mattresses sold at Bedshed stores. Therefore, a return liability
(included in trade and other payables) and a right to the returned goods (included in other
current assets) are recognised for the products expected to be returned.
Accumulated experience is used to estimate such returns at the time of sale at a Group level
(expected value method). Because the number of products returned has been steady for years,
it is highly probable that a significant reversal in the cumulative revenue recognised will not
occur.
The validity of this assumption and the estimated amount of returns are reassessed at each
reporting date.
Franchise revenues – Bedshed franchisees
Joyce provides franchisor services to franchisees, as performance obligations are satisfied
revenue is recognised. Revenue is based on a percentage of franchisees sales.
Sale of goods – Kitchen Division
Revenues from the Kitchen Group (KWB) are recognised when control of the goods passes to the
customer, which is when the product is delivered to the client’s premises. KWB does not provide
installation services.
Auction services
The Group acts as an agent in providing auction services and commission revenue is earned at
the point the online auction closes, provided funds are subsequently received from the
successful buyer.
The Group has no material contracts where the period between the transfer of the promised
goods or services to the customer and payment by the customer exceeds one year. As a
consequence, the Group does not adjust any of the transaction prices for the time value of
money.
Impact of Adoption
The Consolidated Entity has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018,
which resulted in changes to accounting policies but no material adjustments to the amounts recognised
in the financial statements. See Notes 5 Segment Information and 6 (a) Revenue from Continuing
Operations for additional disclosure and disaggregation of revenue.
Joyce Corporation Ltd Annual Report 2019
45
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impact of AASB 9 and AASB 15 on the financial statements
The Consolidated Entity took the modified transitional approach to implementation of AASB 9 and AASB
15 where transitional adjustments have been recognised in retained earnings at 1 July 2018 without
adjustment of comparatives and the new standard has been applied to contracts that remain in force at
that date.
The following table shows the adjustments recognised for each individual line item. Line items that were
not affected by the changes have not been included. As a result, the sub-totals and totals disclosed cannot
be recalculated from the numbers provided.
30.06.2018 As
originally stated
AASB 9
AASB 15
1.07.2018
Restated
$000
$000
$000
$000
ASSETS
Current Assets
Trade receivables
Total Current Assets
1,918
13,106
(95)
(95)
TOTAL ASSETS
54,098
(95)
NET ASSETS
EQUITY
Retained earnings
TOTAL EQUITY
28,108
(95)
6,975
28,108
(95)
(95)
-
-
-
-
-
-
1,823
13,011
54,003
28,013
6,880
28,013
The total impact on the Consolidated Entity’s retained earnings as at 1 July 2018 is as follows:
Retained earnings as reported previously as at 30 June 2018
Adjustment to retained earnings from adoption of AASB 9 on 1 July 2018
Opening retained earnings 1 July 2018
1.07.2018
Restated
$000
6,975
(95)
6,880
The Consolidated Entity’s comparative financial information has not been restated.
There is nil impact on the profit for the year ended 30 June 2019 and a $95k impact on Retained Earnings
as at 1 July 2018 on adoption of AASB 9.
Joyce Corporation Ltd Annual Report 2019
46
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The following table summarises the impacts of adopting AASB 9 and 15 on the Consolidated Entity’s
statement of financial position as at 30 June 2018 for each of the line items affected. There was no
impact on the Consolidated Entity’s statement of profit or loss and other comprehensive income and
statement of cash flows for the year ended 30 June 2019.
Restated to
AASB 9 and
As Reported with
AASB 118 and
AASB 15
Adoption of AASB 9
AASB 139
Impacts
and AASB 15
$000
1,808
28,161
6,736
$000
(95)
(95)
(95)
$000
1,713
28,066
6,641
Accounts receivable
Net asset impact
Retained profits
(b) Principles of consolidation
The Company controls an entity when the Company 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.
A list of controlled entities is provided in Note 26 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.
Non-controlling interests, being that portion of the profit or loss and net assets of subsidiaries attributable
to equity interests held by persons outside the Consolidated Entity, 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.
Amounts held on trust for the ‘Marketing Fund’, ‘Approved Purposes Fund’ and the Lloyds ‘Auction Trust’
account are not the funds of the Consolidated Entity and have not been consolidated.
Joyce Corporation Ltd Annual Report 2019
47
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The carrying value less impairment provision of trade receivables and payables are assumed to
approximate their fair values due to their short-term nature. The fair value of financial liabilities for
disclosure purposes is estimated by discounting the future contractual cash flows at the current market
interest rate that is available to the Consolidated Entity for similar financial instruments.
(d) Investments and other financial assets
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are included in current assets, except for those with maturities
greater than 12 months after the reporting date which are classified as non-current assets. Loans and
receivables are included in trade and other receivables in the statement of financial position.
(ii) Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective
interest method.
(e) Comparatives
When required by applicable accounting standards, comparative figures have been adjusted to conform
to changes in presentation for the current financial year.
(f) Rounding of Amounts
The Company has applied the relief available to it under ASIC Corporate Legislative Instrument 2016/191
and accordingly, amounts in the financial report have been rounded off to the nearest $1,000.
(g) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The Statement of Cash Flows includes cash flows on a gross basis.
The net amount of GST recoverable from, or payable to, the taxation authority is included with other
receivables or payables in the statement of financial position.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit
or loss.
Joyce Corporation Ltd Annual Report 2019
48
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 Finance Executive under the supervision of the Board of Directors.
The Board provides principles for overall risk management, as well as policies and supervision covering
specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments, and investment of excess liquidity.
The Consolidated Entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities
Trade and other payables
Interest-bearing loans and borrowings
(a) Market risk
(i) Foreign exchange risk
Note
10
11
14
18
20
CONSOLIDATED
2019
$000
6,975
2,524
31
9,530
14,141
10,703
24,844
2018
$000
6,215
2,506
68
8,789
11,779
10,491
22,270
The Consolidated Entity’s exposure to foreign currency risk is not material. It is principally limited to goods
sold in the five Company owned Bedshed stores.
(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
polices seek to manage both risks, interest rate and liquidity (see below), by assessment of the current
state of the yield curve and expectations about interest rates in the medium term and the Entity’s need
for flexibility to minimise the Consolidated Entity’s interest expense.
Joyce Corporation Ltd Annual Report 2019
49
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
As at the reporting date, the Consolidated Entity had the following variable and fixed rate financial
instruments:
Weighted
Average
Interest rate
%
Weighted
Average
Interest rate
%
2019
$000
2018
$000
0.03%
6,975
0.03%
6,215
6,975
6,215
Financial assets
Cash and cash equivalents (i)
Financial liabilities
Commercial bill –secured – variable (ii)
Bank loan – secured (iii)
4.73%
3.77%
5,103
5,600
10,703
4.84%
3.61%
4,891
5,600
10,491
(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
expires 31 January 2021.
(iii) The bank loan facility is approved to 9 April 2020. Contractual arrangements have been entered into to roll this facility over to the National
Australian Bank.
An analysis by maturities is provided in (c) below.
The Consolidated Entity analyses its interest rate exposure on a dynamic basis. Various scenarios are
modelled taking into consideration refinancing, renewal of existing positions and alternative financing.
Based on these scenarios, the Consolidated Entity calculates the impact on profit or loss of a defined
interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing
positions.
Based on the various scenarios, the Consolidated Entity manages its cash flow interest rate risk adopting
an appropriate mix of fixed versus variable rate debt and 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 2019 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 2019, 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 $75k higher or $75k lower (2018 – $97k). 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 $75k higher or $75k lower (2018 - $97k) for the same
reasons as above.
Joyce Corporation Ltd Annual Report 2019
50
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(b)
Credit risk
Credit risk is limited to high credit quality financial institutions with which deposits are held and high credit
quality wholesale customers with which the Consolidated Entity trades.
Credit risk is managed on a Consolidated Entity basis. Credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and financial institutions, as well as credit
exposures to wholesale customers, including outstanding receivables and committed transactions. For
banks and financial institutions, only independently rated parties with a minimum rating of 'A' are
accepted. If wholesale customers are independently rated, these ratings are used. Otherwise, if there is
no independent rating, risk control assesses the credit quality of the customer, 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.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to external credit ratings (if available) or to historical information about counterparty default rates:
Cash and cash equivalents
AA
Trade and other receivables
Non-rated
Other financial assets
Non-rated
CONSOLIDATED
2019
$000
2018
$000
6,975
6,215
2,524
2,506
31
68
9,530
8,789
Joyce Corporation Ltd Annual Report 2019
51
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the
availability of funding through an adequate amount of committed credit facilities and the ability to close
out market positions. The Consolidated Entity manages liquidity risk by continuously monitoring forecast
and actual cash flows and matching the maturity profiles of financial assets and liabilities. Due to the
dynamic nature of the underlying businesses, the Consolidated Entity aims at maintaining flexibility in
funding by keeping committed credit lines available and, where possible, with a variety of counterparties.
Surplus funds are generally invested in term 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.
Consolidated disclosures
Year ended 30 June 2019
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 2018
Consolidated financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
≤ 6 months
$000
6-12
months
$000
1-5
years
$000
>5 years
$000
6,975
2,125
31
9,131
14,141
895
15,036
(5,905)
-
-
-
-
-
-
-
-
-
399
-
399
-
9,808
9,808
(9,409)
-
-
-
-
-
-
-
-
≤ 6 months
$000
6-12
months
$000
1-5
years
$000
>5
years
$000
6,215
1,918
68
8,201
-
-
-
-
-
588
-
588
Total
$000
6,975
2,524
31
9,530
14,141
10,703
24,844
(15,314)
Total
$000
6,215
2,506
68
8,789
11,779
11,704
23,483
(14,694)
-
-
-
-
-
-
-
-
Joyce Corporation Ltd Annual Report 2019
52
Consolidated financial liabilities
Trade and other payables
Interest bearing loans & borrowings
Net maturity
11,779
215
11,994
(3,793)
-
220
220
(220)
-
11,269
11,269
(10,681)
3. FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Liquidity risk (continued)
Financing arrangements
The Consolidated Entity had access to the following bank borrowing facilities at the reporting date:
30 June 2019
Consolidated
30 June 2018
Consolidated
Facility limit
$000
10,131
Used
$000
9,881
Available
$000
250
10,641
10,491
150
As at 30 June 2019 the Consolidated Entity had facilities in place of $10,131,700 (2018: $10,641,300). The
Consolidated Entity had utilised $9,881,493 consisting of the $5,600,000 bank loan, $4,021,700 bank bill
facility and $259,793 in temporary facility (2018: $10,491,300). The consolidated entity had $6,975,000
(2018: $6,215,000) cash at bank as at the reporting date including funds held in trust set out at Note 10.
In addition, the Consolidated Entity had a net investment in inventories of $3,748,000 as at 30 June 2019
(2018: $4,040,000).
(d)
Capital risk management
Management controls the capital of the Consolidated Entity to maintain a good debt to equity ratio, to
provide 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 remains 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.
Joyce Corporation Ltd Annual Report 2019
53
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) Judgement in determining control of subsidiaries (AASB 10)
In determining whether the Company has control over subsidiaries that are not wholly owned, judgement
is applied to assess the ability of the Company 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 Company has with other owners of partly owned subsidiaries are taken into consideration. Whilst
the Company is not able to control all activities of a partly owned subsidiary, the partly owned subsidiary
is consolidated within the Consolidated Entity where it is determined that the Company 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 Company, 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.
(c) 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.
(d) 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 software development costs over 5 years, refer to Note 17 Intangible
Assets for the company policy.
Joyce Corporation Ltd Annual Report 2019
54
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
(e) Treatment of investment property in QLD
The KWB property located at 97 Trade Street, Lytton has the majority of the site rented to third parties at
market rates. KWB occupy a minority of the site (42%). Management have determined the occupation of
the majority of the site by third parties is the key factor in determining its treatment as an investment
property.
(f) Treatment of Franchise Fee Income
The Bedshed franchising operations undertake a number of support functions for franchisees and in the
main these are related to the ongoing ability of franchisees to operate. There is a further, separate service
obligation which occurs prior to a franchisee commencing trading. Management have determined that
these are two different service obligations and are accounted for separately.
(g) Share based payments
At the 2018 AGM 263,158 FY18 performance rights and 272,109 FY19 performance rights were granted
to the Executive Director. The vesting criteria mean that these are ‘off market’ options and they have
been accounted for in accordance with AASB-2 (Accounting for share based payments).
The likelihood of achieving the vesting criteria was assessed during the year and an expense booked for
the proportion of the time that had elapsed compared to the total vesting period.
The Executive Director’s contract was not renewed and ended on 30 June 2019. In the announcement to
the ASX on 24 July 2019 it was noted all the performance rights were cancelled, $Nil was expensed in the
year ending 30 June 2019.
(h) AASB 9 – Expected credit loss
Debtors in each part of the organisation have been reviewed for the potential of non-recovery.
Management have reviewed the various circumstances of each entity and determined that full recovery
has a high potential likelihood. These circumstances are as follows:
•
•
•
•
In Bedshed and KWB Group the customer has to pay for the goods being purchased prior to
delivery;
In Lloyds auction business revenue is only recognised when purchaser of the item has paid; and
In Lloyds the discontinued owned inventory debtor is a well backed entity and a material sum
has already been paid.
Included in the financial position of Lloyds is a receivable of $795,000 (ex-GST) held in respect of
the sales recorded under the discontinued operations line disclosed in Note 7. Management have
assessed that the expected credit loss on this item to be immaterial, due to the counter-party
being well funded, and that payments, including the initial $200k deposit, being made in line with
the agreed terms.
Joyce Corporation Ltd Annual Report 2019
55
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 and the Acting
CEO) 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; and
• Operation of valuation, online and physical auction sales.
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 2019
56
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 2019.
Continuing Operations
Discontinued
Operations
Bedshed
Franchise
$000
Retail
Bedding
Stores
$000
Retail
Kitchen
Stores
$000
Online
Auction
Total
Lloyds’
Stock
Total
$000
$000
$000
$000
Year ended 30 June 2019
Revenue
Revenue
Inter-segment sales
Total consolidated revenue
Timing of revenue recognition
At a point in time
Over time
Unallocated revenue
Total consolidated revenue
Result
Segment result
Unallocated expenses net of
unallocated income
Income tax expense
Net consolidated profit for the year
Assets and liabilities
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
5,465
13,776
64,964
16,956
101,161
-
-
-
-
-
101,161
146
5,319
5,465
13,776
64,964
16,956
-
-
-
95,842
5,319
13,776
64,964
16,956
101,161
-
101,161
1,645
492
9,452
242
11,831
7,099
5,965
20,130
13,234
1,052
4,646
15,964
2,998
(2,302)
(2,795)
6,734
46,428
9,089
55,517
24,660
3,436
28,096
Other segment information
Capital expenditure
Depreciation and amortisation
23
21
90
171
1,074
753
1,127
660
2,314
1,605
183
101,344
-
-
183
101,344
183
-
96,025
5,319
183
101,344
-
-
183
101,344
5
-
(1)
4
-
-
-
-
-
-
-
-
11,836
(2,302)
(2,796)
6,738
46,428
9,089
55,517
24,660
3,436
28,096
2,314
1,605
Joyce Corporation Ltd Annual Report 2019
57
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 2018.
Continuing Operations
Discontinued
Operations
Bedshed
Franchise
$000
Retail
Bedding
Stores
$000
Retail
Kitchen
Stores
$000
Online
Auction
Total
Lloyds’
Stock
Total
$000
$000
$000
$000
5,286
15,800
56,324
15,880
93,290
3,314
96,604
-
-
-
-
75
15,800
56,324
15,880
5,211
5,286
-
-
-
15,800
56,324
15,880
-
93,290
88,079
5,211
93,290
(1,871)
91,419
-
-
3,314
96,604
3,314
-
3,314
-
3,314
91,393
5,211
96,604
(1,871)
94,733
1,435
457
8,290
700
10,882
(200)
10,682
933
(1,991)
(3,101)
6,723
44,048
8,618
52,666
21,059
3,552
24,611
-
-
60
(140)
1,432
-
1,432
1,379
-
1,379
933
(1,991)
(3,041)
6,583
45,480
8,618
54,098
22,438
3,552
25,990
6,884
5,967
20,227
10,970
704
4,005
14,695
1,655
12
31
131
188
1,341
589
504
131
1,988
939
-
-
1,988
939
Year ended 30 June 2018
Revenue
Revenue
Inter-segment sales
Total consolidated revenue
Timing of revenue recognition
At a point in time
Over time
Unallocated revenue
Total consolidated revenue
Result
Segment result
Gain on property investment
revaluation
Unallocated expenses net of
unallocated income
Income tax expense
Net consolidated profit for the year
Assets and liabilities
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation and amortisation
Joyce Corporation Ltd Annual Report 2019
58
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 2019.
6. REVENUE, INCOME AND EXPENSES
(a) Revenue from Continuing Operations
Revenue from contracts with customers
Sale of goods
Franchise revenue
Provision of services
Other income
Rental income
Other income
CONSOLIDATED
2019
$000
90,675
3,457
7,029
101,161
420
3,466
3,886
2018
$000
80,574
3,403
7,442
91,419
513
3,388
3,901
Total revenue
105,047
95,320
Disaggregation of revenue
The Executive review the business at the level of disaggregation shown in our segmental reporting (see
Note 5). At this level it has grouped together similar activities and arrangements as follows:
•
•
Similar contractual arrangements with our customer cohorts. At Lloyds Online Auctions all
auction customers are required to complete a ‘Form 9’ which is a legislative defined document
laying out the contractual arrangements.
Similar types of revenue. At Bedshed Franchising the vast majority is earnt through payments
made by the Franchisees for the services Bedshed provide in connection with the Franchise.
In understanding the segments, the organisation rarely considers the geographic location of the customer
as being the driver to an increased understanding.
In the Bedshed company owned stores entity we have three trading locations in Queensland. Their
geography is not the driver of the business understanding demand, a greater understanding comes from
consideration of the broader macro-economic factors in play that would influence demand, and in the
case of the three stores this would be the mining and resource cycle.
We see in KWB, our retail kitchen provider, exposed to fluctuations in overall consumer renovation spend.
Joyce Corporation Ltd Annual Report 2019
59
6. REVENUE, INCOME AND EXPENSES (CONTINUED)
(a) Revenue from Continuing Operations (continued)
The following table lays out the facts and circumstances that pertain to the Company’s contracts with
customers and depicts how the nature, amount, timing and uncertainty of revenue and cash flows are
affected by economic factors.
Operating
segment /
Factor
Bedshed
Franchise
Nature of the
revenue
Franchise
revenue
Market
Franchising in
specialty
retail
Retail
Bedding
Stores
Sale of
goods
Specialty
retail
Online Auction
Joyce Corp
Retail
Kitchen
Stores
Sale of goods
Provision of
services
Rental
revenue
Renovations Online products
Commercial
real estate
Property
cycle.
Economic
drivers of
revenue
Consumer
confidence;
and
Growth in
disposable
income.
Consumer
confidence;
Consumer
confidence;
Growth in
disposable
income; and
Growth in
disposable
income; and
Mining cycle.
Growth in
disposable
income; and
Online vs
terrestrial
retailing
transition.
Consumer
spend on
renovations.
Contractual
arrangements
Standard
form contract
Standard
form
contract
Standard
form contract
Standard form
contract
Lease
agreement
Specific
revenue
recognition
criteria
Contractual
assets or
liabilities
Recognition
at the point
of product
delivery
Recognition
at the point
of product
delivery
Recognition
based on
business
written sales
from
franchised
stores
Recognition is
monthly as
defined in the
relevant lease
agreement
Recognition at
the point
auction services
are provided
(and cash is
subsequently
received from
the buyer)
Nil
Nil
Nil
Nil
Nil
The recognition of revenue for lease income from the KWB Investment property is made in line with the
contractual terms laid out in the leasing arrangements, principally paid on the first of the month in
advance.
(b) Expenses from Continuing Operations
Cost of sales
Cost of goods
Cost of services
Total cost of sales
Net interest expense
Interest income
Interest expense
Net interest expense
CONSOLIDATED
2019
$000
(40,528)
(2,306)
(42,834)
85
(383)
(298)
2018
$000
(38,559)
(538)
(39,097)
64
(351)
(287)
Joyce Corporation Ltd Annual Report 2019
60
6. REVENUE, INCOME AND EXPENSES (CONTINUED)
(b) Expenses from Continuing Operations (continued)
Variable costs
Freight
Wages – casual staff
Auction costs
Warranty costs
Total variable costs
CONSOLIDATED
2019
$000
(239)
(3,240)
(3,557)
(765)
(7,801)
2018
$000
(220)
(2,831)
(4,640)
(818)
(8,509)
Administrative Expenses – continuing operations
IT, communications and network costs
(1,386)
(1,096)
Bank charges
Consultancy fees
Travel expenses
Postage & stationery
Insurance
Accounting & audit fees
Motor vehicle expenses
Legal fees
Other administration expenses
Total administration expenses
(679)
(644)
(574)
(534)
(464)
(310)
(281)
(144)
(767)
(727)
(112)
(535)
(530)
(381)
(375)
(285)
(109)
(900)
(5,783)
(5,050)
Lease payments and other expenses included in the statement of profit or loss and other
comprehensive income – continuing operations
Minimum lease payments - operating lease
(4,849)
(4,560)
Joyce Corporation Ltd Annual Report 2019
61
7. DISCONTINUED OPERATIONS
On 22 June 2018, the Consolidated Entity 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:
Discontinued Operations
Revenue
Expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
Profit/(loss) attributable to owners of the parent entity
CONSOLIDATED
2019
$000
183
(178)
5
(1)
4
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
5
-
-
5
-
(231)
-
-
(231)
-
Joyce Corporation Ltd Annual Report 2019
62
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 2019 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
Under/(over) provision in respect of prior years
CONSOLIDATED
2019
$000
2018
$000
2,878
2,955
(130)
37
10
130
-
16
Income tax expense relating to continuing operations
2,795
3,101
Joyce Corporation Ltd Annual Report 2019
63
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
2019
$000
2018
$000
2,795
3,101
1
(60)
2,796
3,041
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 2019 and 30 June 2018 is as follows:
CONSOLIDATED
2019
$000
2018
$000
Profit before income tax – continuing operations
9,525
9,824
Income tax expense calculated at the statutory income tax rate of 30%
(2018: 30%)
Expenditure not allowable for income tax purposes
Impairment of goodwill not allowable for income tax purposes
Under provision in respect of prior years
2,857
2,947
(72)
-
10
123
9
22
Income tax expense recognised in profit or loss – continuing operations
2,795
3,101
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.
Joyce Corporation Ltd Annual Report 2019
64
8. INCOME TAX (CONTINUED)
In addition to its own current and deferred tax amounts, the head entity also recognises current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits
assumed from controlled entities in the tax Consolidated Entity.
Tax consolidation contributions/(distributions)
The Consolidated Entity has recognised no consolidation contribution adjustments.
Taxation of financial arrangements (TOFA)
Legislation is in place which changes the tax treatment of financial arrangements including the tax
treatment of hedging transactions. The Consolidated Entity has assessed the potential impact of these
changes on the Consolidated Entity's tax position. No impact has been recognised and no adjustments
have been made to the deferred tax and income tax balances at 30 June 2019 (2018: Nil).
Deferred income tax
Deferred income tax at 30 June 2019 relates to the following:
CONSOLIDATED
Opening
balance
Charged to
income
Recognised
in Business
Combination
Closing
balance
30 June 19
$000
$000
$000
$000
Deferred tax liabilities
Investment Property
Trade & other receivables
Fair value gains on other
intangible assets
(291)
(3)
(260)
(13)
(3)
-
Balance at 30 June 2019
(554)
(16)
Deferred tax assets
Plant and equipment
Trade and other payables
Pensions and other employer obligations
Provisions
Other
Unused Tax losses
Balance at 30 June 2019
251
241
753
90
6
104
1,445
74
(86)
89
72
(3)
(48)
98
The Consolidated Entity has accounted for all deferred tax assets and liabilities.
-
-
-
-
-
-
-
-
-
-
-
(304)
(6)
(260)
(570)
325
155
842
162
3
56
1,543
Joyce Corporation Ltd Annual Report 2019
65
8. INCOME TAX (CONTINUED)
Deferred income tax at 30 June 2018 relates to the following:
Deferred tax liabilities
Investment Property
Trade & other receivables
Fair value gain on other
intangible assets
Balance at 30 June 2018
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
Provision for income tax
Provision for income tax relates to the following:
Balance at 30 June
CONSOLIDATED
Opening
balance
Charged to
income
Recognised
in Business
Combination
Closing
balance
30 June 18
$000
$000
$000
$000
-
(2)
(260)
(262)
167
219
539
189
20
173
1,307
(291)
(1)
-
(292)
84
22
214
(99)
(14)
(69)
138
-
-
-
-
-
-
-
-
-
-
-
(291)
(3)
(260)
(554)
251
241
753
90
6
104
1,445
CONSOLIDATED
2019
$000
155
2018
$000
820
Joyce Corporation Ltd Annual Report 2019
66
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 by the weighted average number of ordinary shares outstanding during the year. As the
performance rights have been cancelled, there are no potential ordinary shares, and therefore there is no
dilution.
The following reflects the income and share data used in the total operations basic and diluted earnings
per share computations:
Net profit attributable to ordinary Joyce shareholders from
Continuing Operations
Weighted average number of ordinary shares for basic earnings per
share including partly paid
CONSOLIDATED
2019
$000
3,453
2018
$000
3,380
Number of
shares
Number of
shares
27,968,255
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) included in basic and diluted earnings
per share1.
-
-
-
380,000
Earnings per share are included at the foot of the Consolidated Statement of Profit or Loss.
In the Financial Year ended 30 June 2018 results, there was $933k shown as a revaluation of the KWB
investment property. After removal of the NCI and tax, the amount attributable to the ordinary
shareholders of Joyce Corporation Ltd was $327k. The current Financial Year ended on 30 June 2019 had
no revaluation, so to provide a better comparison an EPS figure has been calculated after removing the
$327k from the comparative calculation. Once removed the EPS for the prior Financial Year is 10.9 cents
per ordinary share.
1 The Performance Rights have not been included in the denominator of the diluted shares.
Joyce Corporation Ltd Annual Report 2019
67
9. EARNINGS PER SHARE (CONTINUED)
On 16 July 2018, Dan Smetana settled the final payment of $30k for the 380,000 partly paid ordinary
shares held at 30 June 2018. The 380,000 shares were converted from partly paid to fully paid ordinary
shares. No other share movements during the period. Basic and diluted earnings per share are calculated
based on a weighted average of any shares issued during the reporting period.
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.
Consolidated cash and cash equivalents balance exclude funds allocated for the specific use of operating
the Approved Purposes activities on behalf of the Company’s franchisees. Approved Purposes cash is
included in Other Current Assets. At 30 June 2019, the total of this balance was $31k (30 June 2018: $68k).
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
2019
$000
2018
$000
6,975
6,215
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.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure or a debtor to engage
in a repayment plan with the Consolidated Entity, and a failure to make contractual payments for a period
of greater than 120 days past due.
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.
Joyce Corporation Ltd Annual Report 2019
68
11. TRADE AND OTHER RECEIVABLES (CONTINUED)
Current
Trade receivables
Allowance for impairment loss (a)
Non-current
Trade receivables
Other receivables
CONSOLIDATED
2019
$000
2,145
(20)
2,125
-
399
399
2018
$000
1,918
-
1,918
-
588
588
2,524
2,506
(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 $20k (2018: $Nil) 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
1,822
1,765
229
41
29
63
-
-
65
49
-
-
Total
$000
2,145
1,918
2019
Consolidated
2018
Consolidated
* Past due not impaired (‘PDNI’)
* Considered impaired (‘CI’)
Receivables past due but not considered impaired are: Consolidated Entity: $94,000 (2018: $112,000).
Payment terms on these amounts have not been re-negotiated however credit has been stopped until
full payment is made. Each operating unit has been in direct contact with the relevant debtor and is
satisfied that payment will be received in full. Other balances within trade and other receivables do not
contain impaired assets and are not past due. It is expected that these other balances will be received
when due.
Joyce Corporation Ltd Annual Report 2019
69
11. TRADE AND OTHER RECEIVABLES (CONTINUED)
Movement in the provision for impairment of receivables is as follows:
Note
2
CONSOLIDATED
2019
$000
95
(75)
-
20
2018
$000
25
-
(25)
-
Opening balance at 1 July
(Credit)/Charge for the year
Amounts written-off
Closing balance at 30 June
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 to make the sale.
Current
Stock on hand at cost
Provision for impairment (a)
(a) Provision for impairment
CONSOLIDATED
2019
$000
3,301
(97)
3,204
2018
$000
3,749
(104)
3,645
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2019 amounted to $Nil (2018: $Nil).
Non-current
Stock on hand at cost
Provision for impairment (b)
CONSOLIDATED
2019
$000
758
(214)
544
2018
$000
582
(187)
395
This inventory are the assets used in KWB showrooms and is reduced in value over five years and at that
point sold.
(b) Provision for impairment
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30
June 2019 amounted to $Nil (2018: $Nil).
Joyce Corporation Ltd Annual Report 2019
70
13. OTHER ASSETS
Current
Accrued revenue
Prepayments
Other receivables
14. OTHER FINANCIAL ASSETS
Current
Funds held in trust
CONSOLIDATED
2019
$000
807
452
314
1,573
2018
$000
775
203
282
1,260
CONSOLIDATED
2019
$000
31
31
2018
$000
68
68
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 Consolidated
Statement of Profit or Loss. On the sale of revalued assets, the profit element of the revalued amount is
taken through the Consolidated Statement of Profit or Loss.
Joyce Corporation Ltd Annual Report 2019
71
15. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
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
CONSOLIDATED
Property&
Buildings
$000
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
At 30 June 2018
Cost
Accumulated depreciation and impairment
Net carrying amount
6,838
(70)
6,768
3,502
(1,457)
2,045
3,183
(1,218)
1,965
13,523
(2,745)
10,778
Year ended 30 June 2019
At 1 July 2018,
Net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
At 30 June 2019
Net of accumulated depreciation
At 30 June 2019
Cost
Accumulated depreciation and impairment
Net carrying amount
CONSOLIDATED
Property&
Buildings
$000
Plant and
equipment
$000
Leasehold
improvements
$000
6,768
6
-
(65)
2,045
914
(56)
(653)
1,965
880
-
(610)
Total
$000
10,778
1,800
(56)
(1,328)
6,709
2,250
2,235
11,194
6,844
(135)
6,709
4,005
(1,755)
4,063
(1,828)
14,912
(3,718)
2,250
2,235
11,194
The carrying value of plant and equipment held under finance leases and hire purchase contracts at 30
June 2019 is $377k (2018: $Nil). Leased assets and assets under hire purchase contracts are pledged as
security for the related finance lease and hire purchase liabilities.
Joyce Corporation Ltd Annual Report 2019
72
16. INVESTMENT PROPERTY
Balance at beginning of year
Transfer from property, plant & equipment
Fair value adjustments
Balance at end of year
CONSOLIDATED
2019
$000
9,623
-
-
9,623
2018
$000
-
8,690
933
9,623
During the prior 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 income.
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 an immaterial fair value change
in the carrying value of the investment property. In accordance to AASB 140, a revaluation gain/(loss) of
$nil (2018: gain of $933k) was included in the Consolidated Statement of Profit and Loss.
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 Consolidated Statement of Profit or Loss through the ‘depreciation and
amortisation’ expense 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, it 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 2019
73
17. INTANGIBLE ASSETS (CONTINUED)
Goodwill is allocated to cash-generating units (CGU’s) for impairment testing. Each of those CGU’s
represents the Consolidated Entity’s investment in Australia by each operating segment. CGU’s to which
goodwill is allocated to are 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
2019
$000
15,933
2,373
18,306
2018
$000
15,933
2,230
18,163
Joyce Corporation Ltd Annual Report 2019
74
17. INTANGIBLE ASSETS (CONTINUED)
An analysis of intangible assets is presented below:
Goodwill
2019
$000
2018
$000
Software
Development
2018
$000
2019
$000
Consolidated
2019
$000
2018
$000
15,933
15,933
2,230
-
18,163
15,933
-
-
-
-
-
-
528
-
(385)
2,230
-
-
528
-
(385)
2,230
-
-
15,933
15,933
2,373
2,230
18,306
18,163
17,778
(1,845)
-
15,933
17,778
(1,845)
-
15,933
2,758
-
(385)
2,373
2,230
-
-
2,230
20,536
(1,845)
(385)
18,306
20,008
(1,845)
-
18,163
Year ended 30 June
At 1 July
net of accumulated impairment and
amortisation
Acquired intangible assets
Impairment
Amortisation
At 30 June
net of accumulated impairment and
amortisation
At 30 June
Cost (gross carrying amount)
Accumulated impairment
Accumulated amortization
Net carrying amount
Goodwill
(a) Initial Goodwill
Goodwill as at 30 June 2019 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 in October 2014 and the 51% interest in Lloyds Online Auctions
Pty Ltd purchased July 2016 and additional 5% in January 2019.
(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 (2018: $Nil) has been
recognised in respect of goodwill for the year ended 30 June 2019.
Goodwill is allocated to cash-generating units which are based on the Consolidated Entity’s operating
segments:
CONSOLIDATED
Bedshed Franchising segment
Bedshed Stores segment
Kitchen Stores segment
Online Auctions segment
2019
$000
6,307
1,820
1,023
6,783
15,933
2018
$000
6,307
1,820
1,023
6,783
15,933
Joyce Corporation Ltd Annual Report 2019
75
17. INTANGIBLE ASSETS (CONTINUED)
(b) Impairment of Goodwill Disclosures (continued)
The recoverable amount of each CGU 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 FY20 extrapolated using estimated growth rates. The cash flows
are discounted using risk-adjusted pre-tax discount rate.
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
2019
10.7%
10.7%
10.7%
10.7%
2018
10.7%
10.7%
10.7%
10.7%
2019
5.0%
5.0%
5.0%
5.0%
2018
6.0%
8.0%
8.0%
10.0%
2019
1.5%
1.5%
1.5%
1.5%
2018
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 and Online Auctions 6) before interest, taxation, depreciation and amortisation
for the year ended 30 June 2019.
Impairment of Goodwill for the year ended 30 June 2019 was $Nil (2018: $Nil), 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 $Nil.
If the growth rate applied was 10% lower than used in management’s estimates, then the
Consolidated Entity would recognised an impairment of $Nil.
The discount rate above which an impairment could occur is 13.5%, which is above the rate used
in both FY18 and FY19.
Software development
Software developments as at 30 June 2019 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 capitalised when first in use.
Joyce Corporation Ltd Annual Report 2019
76
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
Customer deposits
Accruals and other payables
Amounts held in trust for Bedshed marketing and other funds (a)
CONSOLIDATED
2019
$000
3,565
6,288
4,139
149
14,141
2018
$000
2,709
4,867
3,763
440
11,779
(a) 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.
Joyce Corporation Ltd Annual Report 2019
77
19. PROVISIONS (CONTINUED)
Employee benefits (continued)
(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)
Environmental testing (b)
Total Current
Non-current
Employee benefits (a)
Total Non-Current
CONSOLIDATED
2019
$000
1,613
-
1,613
914
914
2018
$000
1,518
10
1,528
818
818
2,527
2,346
(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
The Consolidated Entity no longer considers it necessary to carry out environmental testing on historic
sites owned by the Entity and as at 30 June 2019 no provision was considered necessary (2018: $10k).
Joyce Corporation Ltd Annual Report 2019
78
19. PROVISIONS (CONTINUED)
Consolidated Group
Opening balance at 1 July 2018
Additional/ (amount released)
Amounts used
Closing balance at 30 June 2019
20. LOANS AND BORROWINGS
Employee
Benefits
$000
2,336
529
(338)
2,527
Environmental
Testing
$000
10
(10)
-
-
Total
$000
2,346
519
(338)
2,527
Bank loans
Finance lease liabilities
Total loans and borrowings
CONSOLIDATED
2019
Current
$’000
694
200
894
Non-current
$’000
9,622
187
9,809
Total
$’000
10,316
387
10,703
2018
Current
$’000
435
-
435
-
Non-current
$’000
10,056
-
10,056
Total
$’000
10,491
-
10,491
The bank loans are secured by first mortgages over the Consolidation Entity’s freehold land and buildings,
including those classified as investment properties. Refer to Note 3 for management of financial risks on
loans and borrowings.
During the year ended 30 June 2019 the Consolidated Entity entered into Hire Purchase agreements to
fund the acquisition of plant and equipment. The net value of the Hire Purchase agreements at the
reporting date was $360k (2018: nil).
During FY19 an unsecured loan from Dan Smetana of $400k was entered into, with an interest rate of
7.22% pa. This was repaid in full in March 2019.
The Joyce Corporation Ltd has entered into contractual arrangements to transition its banking facilities
from St George to the Commonwealth Bank. Pertinent terms of the bank new loans are annual
repayments of $333k and a rolling 2-year term.
KWB Property Holdings Pty Ltd has entered into contractual arrangements to transition its banking
facilities from the Commonwealth Bank to the National Australia Bank. This new loan allows for offset
against relevant cash balances which will reduce interest expense.
Compliance with loan covenants
The Consolidated Entity has complied with the financial covenants of its borrowing facilities during the
2019 Financial Year. The financier assesses the financial covenants bi-annually based on the audited
annual report and reviewed half-yearly report.
Joyce Corporation Ltd Annual Report 2019
79
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.
Opening share capital:
Issued and fully paid ordinary shares 27,588,255 (2018: 27,588,255)
Unissued partly paid ordinary shares 380,000 (2018: Nil)
Receipts for partly paid ordinary shares - $0.077 on 380,000 shares (2018:
$1.878 on 380,000 shares)
Closing share capital
CONSOLIDATED
2019
$000
2018
$000
17,347
17,347
713
30
-
713
18,090
18,060
Movement in ordinary shares on issue
Number
$000
At 1 July 2018
Issued and fully paid ordinary shares
Final payment on partly paid ordinary shares (a)
At 30 June 2019
Issued and fully paid ordinary shares
Issued and partly paid ordinary shares (a)
(a) Partly paid ordinary shares
27,588,255
18,060
380,000
30
27,968,255
-
27,968,255
18,090
-
18,090
At 30 June 2018 there were 380,000 partly paid shares on issue. 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.
On 16 July 2018, Dan Smetana settled the final payment of $30k for the 380,000 partly paid ordinary
shares held at 30 June 2018. The 380,000 shares were converted from partly paid to fully paid ordinary
shares. No other share movements occurred during the period. Basic and diluted earnings per share are
calculated based on a weighted average of any shares issued during the reporting period.
Joyce Corporation Ltd Annual Report 2019
80
22. CAPITAL AND LEASING COMMITMENTS
There have been significant changes to commitments during the financial year ended 30 June 2019.
These are driven by the following changes:
•
•
•
Three new showroom leases in our Retail Kitchen showroom segment;
The renewal of a further 5 leases for existing stores in the Retail Kitchen Showroom segment;
The renewal of the main Carrara site lease for the Online Auction segment; and
• New hire purchase lease arrangements to fund capital investment in the Online Auction
segment.
Property lease payable – Consolidated Entity as lessee
Within one year
After one year but not more than five years
More than five years
CONSOLIDATED
2019
$000
5,298
11,392
464
17,154
2018
$000
3,757
4,686
47
8,490
Property leases are non-cancellable leases and have remaining terms of up to seven 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.
23. CONTINGENT LIABILITIES
Financial Guarantees
Where material, financial guarantees are 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 amount determined in accordance with the
expected credit loss model under AASB 9 Financial Instruments and the amount initially recognised less,
where appropriate, cumulative amounts recognised in accordance with AASB 15 Revenue from Contracts
with Customers. Where the entity gives guarantees in exchange for a fee, revenue is recognised under
AASB 15.
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.
Joyce Corporation Ltd Annual Report 2019
81
23. CONTINGENT LIABILITIES (CONTINUED)
Financial Guarantees (continued)
(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 (2018: $689,429).
KWB Group have bank guarantees and rent deposits supporting store leases of $550,716 at 30 June 2019
($351,366 at 30 June 2018). Rent deposits are included in Non-current Trade and Other Receivables, see
Note 11.
24. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
The Consolidated Entity 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
314
399
314
399
Interest bearing loans & borrowings
9,622
9,622
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 Consolidated Entity 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 2019
82
25. SHARE BASED PAYMENTS
Key Management Personnel Performance Rights
During the reporting period, 263,158 FY18 performance rights and 272,109 FY19 performance rights were
granted to the Executive Director which are subject to continued employment with Joyce Corporation Ltd
and to the Consolidation Entity meeting predetermined performance criteria. The details of the Long-
Term Incentive (LTI) Plan which these performance rights are a component were approved by
shareholders at the 2018 AGM Notice of Meeting on 27 November 2018. Details of the fair value of the
performance rights issued are summarised below:
Scheme
Number Grant Date
Fair Value
of right
FY18 (1)
FY19 (2)
263,158
27/11/2018
272,109
27/11/2018
1.55
1.55
Weighted
Average
Probability (3)
0% - 100%
Total Fair
Value
Expense to 30
June 2019
$200,000
0% - 100%
$200,000
$0
$0
1. Vesting in three traches based on each milestone being met for each 30 June 2018, 30 June 2019 and 30 June 2020 reporting
year;
2. Vesting in three traches based on each milestone being met for each 30 June 2019, 30 June 2020 and 30 June 2021 reporting
year.
3. Refer to below for board’s assessment of probabilities applied against milestone vesting conditions.
The LTI cost of performance rights will be expensed based on board’s assessment that ‘Target’ earnings
(as disclosed in the AGM Notice of Meetings) will be achieved. This is at a rate of 50% of the ‘Stretch and
above’ number. The FY18 Performance rights vest based on the cumulative Net profit after tax (‘NPAT’)
for the financial years ended 30 June 2018, 30 June 2019 and 30 June 2020 and continued employment
proportional at each reporting date. The FY19 Performance rights vest based on the cumulative Net profit
after tax (‘NPAT’) for the financial years ended 30 June 2019, 30 June 2020 and 30 June 2021 and
continued employment proportional at each reporting date.
Details of the vesting conditions of the performance rights issued are summarised below:
FY18 Performance Rights
Milestone1
$000's
Vesting
%
Probability
%
Fair Value
$
Threshold
Target
Stretch and above
$10,274
$11,415
$13,698
25%
25%
50%
Total Expense
0%
0%
0%
0
0
0
0
FY19 Performance Rights
Milestone2 % Vesting Probability Fair Value
Threshold
$11,610
25%
Target
Stretch and above
$12,900
$15,480
25%
50%
Total Expense
0%
0%
0%
0
0
0
0
1. Consolidated Entity achieving a cumulative NPAT for years ended 30 June 2018, 30 June 2019 and 30 June 2020; and
2. Consolidated Entity achieving a cumulative NPAT for years ended 30 June 2019, 30 June 2020 and 30 June 2021.
Joyce Corporation Ltd Annual Report 2019
83
25. SHARE BASED PAYMENTS (CONTINUED)
Key Management Personnel Performance Rights (Continued)
Recognition and Measurement
The schemes in place can only be equity-settled and are accounted for accordingly. The cost of equity-
settled transactions with employees is measured using their fair value at the date which they were
granted. In determining the fair value, no account is taken of any performance conditions.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which any performance conditions are met, ending on the date on which the employee
becomes fully entitled to the award (vesting date). The cumulative expense recognised for these
transactions at each reporting date reflects the extent to which the vesting period has expired and the
proportion of the awards that are expected to ultimately vest.
No expense is recognised for awards that do not ultimately vest due to a performance condition not being
met. The Executive Director’s contract ended on 30 June 2019 and the Board did not renew the contract.
Therefore, no amount is recorded as a share-based payment expense for the year ended 30 June 2019
because they were cancelled subsequent to reporting date.
Joyce Corporation Ltd Annual Report 2019
84
26. RELATED PARTY DISCLOSURES
The consolidated financial statements include the financial statements of Joyce Corporation Ltd and the
subsidiaries listed in the following table.
Joyce 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 Holdings 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 EU Online 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
Australia
% Equity interest
2018
100
100
100
100
100
51
51
51
51
51
51
-
51
51
51
2019
100
100
100
100
100
51
51
51
51
51
51
45
56
56
56
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 2019.
(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 were paid to Starball Pty Ltd, a company in
which Anthony has significant influence - $448,209 (2018: $538,201). As at year end the amount
owing to this related party was $nil (2018: $26,773).
(iv)
Key management personnel compensation
Short Term Benefits
Post-Employment Benefits
CONSOLIDATED
2019
$000
2,349
191
2,540
2018
$000
2,417
176
2,593
Detailed remuneration disclosures are provided in the remuneration report on pages 24 to 33.
Joyce Corporation Ltd Annual Report 2019
85
26. RELATED PARTY DISCLOSURES (CONTINUED)
(v)
Loans to key management personnel
There were no loans to key management personnel during the financial year (2018: Nil).
(vi)
Loans from key management personnel
During FY19 an unsecured loan from Dan Smetana of $400k was entered into, with an interest
rate of 7.22% pa. This was repaid in full in March 2019. In FY18 an unsecured loan for the same
amount was received, of which $371k was repaid in July 2018 and the remaining $29k loan
balance was subsequently used by Dan Smetana as the final payment towards the partly paid
shares.
The loan of $85k 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 30 June 2019, LAAV Management Pty Ltd, a company of which Andrew
Webber is a director, was paid $240k by Lloyds Online Auctions Pty Ltd for the provision of
management services by Andrew Webber and other designated employees of LAAV
Management Pty Ltd. 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
Transactions with non-controlling interests
Profits attributable to non-controlling interests
Dividends paid to non-controlling interest
Closing carrying amount of non-controlling interest
2019
$000
3,073
448
3,285
(3,609)
3,197
2018
$000
1,930
-
3,203
(2,060)
3,073
On 22 January 2019, Joyce Corporation Limited acquired an additional 5% of the issued capital in Lloyds
Online Auctions for $1,155k. The consideration for the acquisition was offset against the loan owed by
Lloyds Online Auctions to the Company. Immediately prior to the purchase, the carrying amount of the
existing 49% non-controlling interest was $1,064k.
Set out below is summarised financial information for each subsidiary that has non-controlling interests
that are material to the Consolidated Entity. The amounts disclosed for each subsidiary are before inter-
company eliminations.
Statement of financial position
KWB Consolidated Group
Lloyds Consolidated Group
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Accumulated NCI
2019
$000
6,129
(10,062)
(3,933)
13,475
(6,283)
7,192
3,259
1,597
2018
$000
6,395
(9,478)
(3,083)
13,203
(6,135)
7,068
3,985
1,860
2019
$000
2,626
(2,560)
66
4,063
(493)
3,570
3,636
1,600
2018
$000
2,557
(3,407)
(850)
3,538
(182)
3,356
2,506
1,213
Joyce Corporation Ltd Annual Report 2019
86
26. RELATED PARTY DISCLOSURES (CONTINUED)
(b) Non-Controlling Interest (continued)
Statement of financial performance
KWB Consolidated Group
Lloyds Consolidated Group
(including discontinued operations)
Revenue
Profit for the period
Total comprehensive income
Profit allocated to NCI
Dividends paid to NCI
2019
$000
64,964
6,642
6,642
3,255
(3,609)
2018
$000
56,324
6,146
6,146
3,088
(2,060)
2019
$000
2018
$000
17,139
19,194
69
69
30
-
235
235
115
-
Statement of cash flow
KWB Consolidated Group
Lloyds Consolidated Group
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net increase/(decrease) in cash and cash
equivalents
2019
$000
8,549
(1,216)
(7,366)
2018
$000
7,951
(1,326)
(4,205)
2019
$000
(261)
(1,082)
1,384
2018
$000
1,019
(2,647)
-
(33)
2,420
41
(1,628)
27. DIVIDENDS
Dividends declared or paid during the financial year are as follows:
Distributions paid or payable
Final fully franked ordinary dividend of 3.0 cents per share
(Paid 22 November 2017)
Special fully franked dividend of 3.0 cents per share
(Paid 22 November 2017)
Interim fully franked dividend of 5.0 cents per share
(Paid 11 April 2018)
Final fully franked ordinary dividend of 6.0 cents per share
(Paid 21 November 2018)
Interim fully franked dividend of 5.0 cents per share
(Paid 10 April 2019)
Second interim fully franked dividend of 1.7 cents per share
(Paid 28 June 2019)
2018
$000
839
839
1,399
2019
$000
1,678
1,399
475
3,552
3,077
On 27 August 2019, the directors declared the payment of a final dividend of 5.0 cents out of retained
profits and will continue to monitor performance and review resources and liquidity to determine future
dividend payments.
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28. EVENTS SUBSEQUENT TO REPORTING DATE
A fully franked dividend of 5.0 cents per share was declared on 27 August 2019 and payable 18 November
2019.
The Consolidated Entity has contracted to transition loan facilities from St George to Commonwealth Bank
on a date subsequent to the signing of these accounts.
KWB Property Holdings Pty Ltd entered into contractual arrangements with the National Australia Bank
to transition loan facilities over from the Commonwealth Bank, however the transition date was not set
by the date the accounts were signed.
In the ASX announcement dated 24 July 2019 the Company communicated the following payments and
arrangements with the former Executive Director, Anthony Mankarios:
• $245,966 (plus GST) will be paid to Starball Pty Ltd (a private company Mr Mankarios has
substantial influence over) in addition to payments for services up to when the contract with
Starball ceased.
• All of Starball Pty Ltd's and Mr Mankarios' Short Term Incentive Plan participation and
performance rights have been cancelled (including those approved at the 2018 Joyce AGM);
• The Board will propose a resolution for the shareholders to consider at the upcoming 2019 AGM
to issue 131,579 fully paid ordinary Joyce shares to Starball Pty Ltd in recognition of Mr
Mankarios’ contribution.
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:
(i)
(ii)
the Consolidated Entity’s operations, or
the results of those operations, or
(iii)
the Consolidated Entity’s state of affairs.
29. 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
CONSOLIDATED
2019
$000
115
115
2018
$000
110
110
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30. 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
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
2019
$000
2018
$000
6,738
6,583
1,713
(4)
-
292
(330)
37
(82)
2,116
(484)
1,043
41
(933)
(1,171)
1,284
484
3,013
(879)
(440)
Net cash flows from operating activities
9,996
9,025
31. PARENT ENTITY DISCLOSURES
a. Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Retained earnings
Net Equity
b. Financial performance
Profit for the year
Total comprehensive profit
As at 30 June
2019
$000
1,001
23,619
24,620
1,083
4,097
5,180
2018
$000
379
24,414
24,793
480
4,945
5,425
19,440
19,368
18,090
1,350
19,440
18,060
1,308
19,368
Year ended 30 June
2019
$000
2,586
2,586
2018
$000
2,057
2,057
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31. PARENT ENTITY DISCLOSURES (CONTINUED)
c. Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
No such guarantees existed at 30 June 2019 (30 June 2018: Nil).
d. Contingent liabilities of the parent entity.
No contingent liabilities existed within the parent entity as at 30 June 2019 (30 June 2018: Nil).
e. Commitments for the acquisition of property plant and equipment by the parent entity
No commitments existed for the acquisition of property plant and equipment by the parent entity as at
30 June 2019 (30 June 2018: Nil).
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32. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
The following new/amended accounting standards and interpretations have been issued but are not
mandatory for financial years ended 30 June 2019. They have not been adopted in preparing the financial
statements for the year ended 30 June 2019.
Of those standards that are not yet effective, AASB 16 is expected to have a material impact on the
Consolidated Entity’s financial statements in the period of initial application.
a) AASB 16 Leases
The Consolidated Entity is required to adopt AASB 16 Leases from 1 July 2019 and has assessed the
estimated impact that initial application of AASB 16 will have on its consolidated financial statements as
described below. The actual impacts of adopting the standard on 1 July 2019 may change because:
-
-
The Consolidated Entity has not finalised the testing and assessment of controls over its lease
accounting system;
The new accounting policies are subject to change until the Consolidated Entity presents its first
financial statements that include the date of initial application.
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 into 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. Lessor accounting remains largely unchanged from AASB 117.
To the extent that the Consolidated Entity, as lessee, has significant operating leases outstanding at the
date of initial application, 1 July 2019, right-of-use assets will be recognised for the amount of the
unamortised portion of the useful life, and lease liabilities will be recognised at the present value of the
outstanding lease payments.
Thereafter, earnings before interest, depreciation, amortisation and tax (EBITDA) will increase because
operating lease expenses currently included in EBITDA will be recognised instead as amortisation of the
right-of-use asset, and interest expense on the lease liability. However, there will be an overall reduction
in net profit before tax in the early years of a lease because the amortisation and interest charges will
exceed the current straight-line expense incurred under AASB 117 Leases. This trend will reverse in the
later years.
There will be no change to the accounting treatment for short-term leases less than 12 months and leases
of low value items, which will continue to be expensed on a straight-line basis.
The Consolidated Entity has not yet determined the impact on its financial statements.
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91
32. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
(CONTINUED)
b) Other standards
The following amended standards and interpretations are not expected to have a significant impact on
the Consolidated Entity’s consolidated financial statements.
- AASB 17 Insurance Contracts.
- AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty over Income Tax
Treatments (AASB 1 impact only).
- AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with
Negative Compensation.
- AASB 2017-7 Amendments to Australian Accounting Standards - Long-term Interests in
Associates and Joint Ventures.
- AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015-
2017 Cycle.
- AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendment, Curtailment
or Settlement.
- AASB 2018-6 Amendments to Australian Accounting Standards - Definition of a Business.
- AASB 2018-7 Amendments to Australian Accounting Standards - Definition of Material.
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92
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 have
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 2019
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 Acting CEO and Group Financial Controller
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.
M A Gurry
Chair
Perth, 27 August 2019
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ASX ADDITIONAL INFORMATION
AS AT 25 AUGUST 2019
Additional information is required by the Australian Securities Exchange Limited Listing Rules and not
disclosed elsewhere in this report. The information is provided below:
(a)
Distribution of Shareholders
Category
As at 23 August 2019
1 - 1,000
1,001 – 5,000
5,001 - 10,000
10,001 – 100,000
100,001 – and over
Total
Holders
252
201
97
185
30
765
Fully Paid
Ordinary Shares
95,805
530,006
760,788
5,687,568
20,894,088
27,968,255
%
0.34
1.90
2.72
20.34
74.41
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
2,650,000
%
40.2
9.5
13,884,829
49.7
*As at 25 August 2019 Mr. Smetana has beneficial interest in 10,254,129 fully paid ordinary shares (2018:
9,874,129). On 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.
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98
ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 25 AUGUST 2019
(a) 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
13
STARBALL PTY LTD
TREASURE ISLAND HIRE BOAT COMPANY PTY LTD
VANWARD INVESTMENTS LIMITED
CONARD HOLDING PTY LTD
FARROW RD PTY LTD
14 MARTEHOF PTY LTD
15 MAN INVESTMENTS (NSW) PTY LTD
16
EPIC TRUSTEES LIMITED
17 MR FELIX SMETANA
18
19
20
DMX CAPITAL PARTNERS LIMITED
FLINGMO PTY LTD
LOG-IT PTY LTD
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
488,056
347,940
300,000
223,300
207,292
201,695
190,050
174,362
167,106
166,666
8.32
6.97
3.58
3.54
3.54
2.62
2.02
1.91
1.80
1.60
1.24
1.07
0.80
0.74
0.72
0.68
0.62
0.60
0.60
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES
Total Remaining Holders Balance
19,730,650
8,237,605
70.55
29.45
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ASX ADDITIONAL INFORMATION (CONTINUED)
AS AT 27 AUGUST 2019
(b) Company Secretary
Mr. Keith Smith
(c) Registered Office
75 Howe Street,
Osborne Park, WA,
AUSTRALIA, 6017
Tel: +61 8 9445 1055
(d) 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
(e) Auditors
BDO Australia – Perth
38 Station Street
Subiaco, WA 6008
Tel: +61 8 6382 4600
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