ACCY801 Accounting and Financial Management
Trimester 1 2019
Assessment 2 – Report
Description
You are required to analyse the annual reports and financial statements of two
companies in the Retailing industry and write a report based on the results of your
analysis. Your analysis will include a discussion of each company’s objectives, liquidity,
capital structure, asset utilisation efficiency, profitability and capital expenditures. All
of the necessary information for your report is contained in the 2019 annual reports
of the two companies you will be analysing. All of the background knowledge
necessary to successfully complete the report has been covered in the lectures,
tutorials and readings for ACCY801 before week 5.
Company allocation and Annual Report download
Each student has been allocated two companies. To find the companies you have been
allocated, refer to the file ‘List of students and companies’ on Moodle, in the
‘Assignment’ folder. For example the student with student number 1234567 (a
fictitious student) is required to analyse the companies ‘ABC’ and ‘CBA’1. If you are
unsure about which two companies you should analyse, please contact the subject
coordinator.
Download the 2019 annual report for each of your two companies. All of the annual
reports are available on Moodle, in the ‘Annual Reports’ folder within the
‘Assignment’ folder.
Detailed Instructions
1
These companies are actually not retailers and no student will have to analyse these companies.
Students should complete the ratio analysis first, or at the very least calculate the
return on assets (ROA) of each company. Identify the company with the lowest ROA.
For the purposes of this report, assume you are an internal analyst working for this
company, and the other (higher ROA) company has been identified by management
as your company’s main competitor.
Assume that senior management has asked you for a report comparing your company
with the competitor, and that identifies ways of improving profitability and increasing
returns for shareholders.
Your report must contain the following sections:
i.
Executive Summary
ii.
Objectives and long-term plans
iii.
Financial Ratios
iv.
Liquidity, capital structure and asset management efficiency
v.
Operating profitability
vi.
Returns on shareholders’ investment
vii.
Capital expenditures
viii.
Conclusion and recommendations
A description of the requirements of each section follows.
i.
Executive summary (4 marks)
A brief section that summarizes the important parts of the rest of the document,
including the analysis conducted, key results or findings, recommendations and
limitations of the report.
ii.
Objectives and long-term plans (10 marks)
Discuss the objectives and long-term plans of each company. Include references to
any relevant page numbers in the Annual Reports.
iii.
Financial ratios (28 marks)
Using the relevant financial statements for the 2019 year, calculate the following
ratios for each company:
Current ratio
Quick ratio
Receivables turnover Inventory turnover
Fixed asset turnover
Total asset turnover
Debt ratio
Interest coverage
Gross profit margin
Operating profit margin
Net profit margin
Return on assets
Equity multiplier
Return on equity
Important: Do not include any formulas or discussion in this section.
iv.
Liquidity, capital structure and asset management efficiency (15 marks)
Discuss the differences between your company and its competitor in terms of:
Liquidity
Capital Structure
Asset management efficiency
v.
Operating profitability (18 marks)
Explain how your company (with the lowest ROA) might be able to improve its
operating profitability, relative to its main competitor (as identified by management).
Also discuss any favourable aspects of your company’s operating performance relative
to its competitor.
vi.
Returns on shareholders’ investment (10 marks)
Explain and discuss any differences in return on equity for your company and its
competitor.
vii.
Capital expenditures (10 marks)
Discuss the extent of each company’s capital expenditures in 2019, and how each firm
financed the capital expenditure.
viii. Conclusion and recommendations (5 marks)
Summarise the main points you wish to draw the reader’s attention to, and provide
recommendations to management about possible courses of action.
Style and format
Reports must be typed in 12-point font, with appropriate headings in bold, margins of 2.54cm
(1 inch), double line spacing, and page numbers. There are no restrictions on the choice of
font however the font chosen must be appropriate for business purposes and must be
consistent throughout the report.
Marking guide
This assignment is marked out of 100 and is worth 25% of the total mark for this subject.
Marks are allocated as shown in the ‘Detailed Instructions’ section; however students should
be aware that in general marks will primarily accrue for the following three main aspects: (i)
accuracy of calculations, (ii) demonstration of knowledge of concepts and (iii) correct
application of concepts. Students’ efforts in reading and interpreting the annual report will
also contribute to the total number of marks. Students must demonstrate the ability to
discuss the aspects of financial performance or position represented by each financial ratio in
simple terms that do not include the name of each ratio, and can expect to lose marks if they
fail to do so.
In addition, up to 10% of the maximum total marks may be deducted for poor presentation
and readability including poor layout, formatting, grammar, spelling, and referencing. Further
details will be made available on Moodle.
Plagiarism and other forms of cheating
Plagiarism or any other form of academic misconduct, if detected, may result in a mark of
zero for the whole report, in addition to other serious consequences as discussed in the
subject outline. Students suspected of academic misconduct will be interviewed and
required to defend their assignment.
Beacon Lighting Group Limited
ANNUAL
REPORT
9
201
Contents
Chairman’s and Chief Executive Officer’s Report
1
Board of Directors
4
Management Team
5
Corporate Governance Statement
6
Directors’ Report
12
Auditor’s Independence Declaration
27
Index to the Financial Statements
28
Consolidated Statement of Comprehensive Income
29
Consolidated Balance Sheet
30
Consolidated Statement of Changes in Equity
31
Consolidated Statement of Cash Flows
32
Notes to Consolidated Financial Statements
33
Directors’ Declaration
80
Independent Auditor’s Report to the Members
of Beacon Lighting Group Limited
82
Shareholders’ Information
88
Corporate Directory
90
Store Locations
92
Important Notice
This financial report is the consolidated financial report of the consolidated entity consisting Beacon Lighting Group Limited, ACN 164 122 785 and its subsidiaries. Beacon
Lighting Group Limited is a Company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is 5 Bastow Place
Mulgrave Victoria 3170. A description of the nature of the consolidated entity’s operations and its principal activities is included in the Directors’ report on page 12, which
is not part of the financial report. The financial report was authorized for issue by the Directors on 19 August 2019. The Directors have the power to amend and re-issue
the financial statements.
Chairman’s & Chief Executive Officer’s Report
The Beacon Lighting Group is pleased to announce the sales and profit result for
FY2019. The Board of Directors would like to thank our Customers, Associates,
Suppliers and Shareholders for their support and contribution to our results in FY2019.
FY2019 HIGHLIGHTS
FINANCIAL RESULT
The key highlights which contributed to the 53 weeks ended 30
June 2019 include:
The Beacon Lighting Group sales and profit performance
was challenging during H2 FY2019. As reported in the trading
update to the ASX on 30 April 2019, trading was subdued as
a result of a number of factors including a decline in housing
prices and churn rates, weak consumer confidence, the federal
election and tighter credit availability within the housing sector.
All of these factors impacted upon the Beacon Lighting Group
result for FY2019.
Record sales result of $246.3 million.
EBITDA result of $29.6 million and NPAT result of
$16.0 million.
The opening of five new company stores and the
purchase of two franchised stores.
The purchase of the ex-Masters store in Parkinson (QLD)
and transforming it into a new Distribution Centre to
service the QLD and NSW markets.
Record sales for Beacon Lighting Company stores,
Online Sales Channels, Beacon International, Beacon
Energy Solutions, Light Source Solutions Roadway and
Masson For Light.
GROUP OVERVIEW
The Beacon Lighting Group finished FY2019 with 109 company
stores and 4 franchised stores. During the year, the Group
opened new company stores at Warrnambool (VIC), Mackay
(QLD), Moore Park (NSW), Modbury (SA) and Craigieburn (VIC).
The Beacon Lighting Group also purchased the franchised
stores at Underwood (QLD) and Albury (NSW) and converted
them to company stores. The Subiaco (WA) store was also
closed during FY2019.
The Beacon Lighting Commercial team continues to operate
sales offices in Brisbane (QLD), Sydney (NSW), Melbourne
(VIC), Adelaide (SA) and Perth (WA). Beacon International has
sales offices in Hong Kong, Germany and the United States and
a support office in China. Light Source Solutions Globes has
sales teams in Australia and New Zealand while Light Source
Solutions Roadway services customers across Australia.
Beacon Energy Solutions has a sales office in Melbourne (VIC)
and Masson For Light has one store in Richmond (VIC).
The Beacon Lighting Group achieved a sales result of $246.3
million. The sales result was also reflected in the company
comparative sales which declined by 2.3%, on a 52 week
comparable basis in FY2019. QLD was the better performing
state, whilst sales in NSW, VIC and WA were all disappointing.
The sales increases achieved by Beacon International, Beacon
Energy Solutions, Light Source Solutions Roadway and
Masson For Light were pleasing.
Despite the change in the sales mix and the decline in the
AUD/USD exchange rate, the Beacon Lighting Group was still
able to produce a strong gross profit margin result in FY2019.
The gross profit margin result of 64.0% in FY2019 was a good
outcome despite it declining from the record gross profit
margin result of 65.7% in FY2018.
Although having a strong focus on cost control throughout
FY2019, Beacon Lighting continued to invest in new stores,
Commercial and the emerging businesses. This saw an
increase in the Selling and Distribution expenses as a
percentage of sales whilst the Marketing and Administration
expenses declined as a percentage of sales. As a percentage
of sales, operating expenses (which exclude finance costs,
depreciation and amortisation) were 52.7% in FY2019.
In line with the trading update, the Beacon Lighting Group was
able to achieve an EBITDA result of $29.6 million in FY2019.
The Beacon Lighting Group also achieved a NPAT result of
$16.0 million in FY2019.
CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REPORT
1
KEY GROWTH STRATEGIES
OUTLOOK
The key growth strategies in FY2020 will be:
The Beacon Lighting Group remains committed to being at
the forefront of the changes that are occurring in the lighting
industry and around the world. The Group will continue to
focus on new technologies, fashion and energy efficient lighting
solutions supported by market leading customer service.
Beacon Lighting Group continues to maintain it’s strong market
position as Australia’s leading lighting retailer and combined
with its emerging businesses the Group remains very well
positioned to take advantage of the changes that are occurring
in the lighting industry.
• Continue to enhance the brand and the customer experience
in order to increase differentiation and drive incremental
sales.
• Target the growth of sales and profit through the optimisation
of the existing store network.
•
Target the opening of new company operated stores in
Australia.
• Offer an extensive range of the latest fashion, on trend, energy
efficient and home automation lighting and fan products at
great prices to our customers.
• Continue to enhance our online presence in order to drive
incremental sales.
•
Target the growth of sales and profits in the emerging
businesses.
•
Investigate and pursue local and international business
opportunities that complement the core activities of the
Group.
• Target efficiency gains and productivity improvements as the
store network matures.
DIVIDENDS
The Beacon Lighting Group Directors have declared a fully
franked dividend of 2.00 cents per share for H2 FY2019
(compared to 2.50 cents per share for H2 FY2018). Along with
the H1 FY2019 fully franked dividend of 2.55 cents per share
(compared to 2.50 cents per share for H1 FY2018), this brings
the annual Beacon Lighting Group dividend for FY2019 to 4.55
cents per share (compared to 5.00 cents per share in FY2018).
The Directors will continue to target a dividend payout ratio of
between 50% and 60% of the annual Net Profit After Tax result.
Ian Robinson
Executive Chairman
2
BEACON LIGHTING GROUP ANNUAL REPORT 2019
The Beacon Lighting Group is planning for further growth in
FY2020 and has already committed to the following activities:
• The opening of new company stores at Virginia (QLD) and
Belmont (WA).
•
The purchase of the Myaree (WA) franchised store and
conversion to a company store will occur in September 2019.
• The relocation of the Midland (WA) store.
•
Re-platforming of the beaconlighting.com.au website and
online sales channel.
• The expansion of Beacon International into new markets in
Canada and China.
•
The introduction of exciting new product ranges for the
Beacon Lighting Stores, Beacon International, Light Source
Solution Globes, Light Source Solutions Roadway and
Masson For Light businesses.
The Beacon Lighting Group is encouraged that following the
federal election result, interest rate cuts, tax rebates and tax
cuts have provided more optimism within the housing industry
and market confidence going forward into FY2020.
Glen Robinson
Chief Executive Officer
3
Board of Directors
4
Ian Robinson
Glen Robinson
Executive Chairman
Chief Executive
Officer
45 years of service
Ian Robinson purchased the first Beacon Lighting store in 1975. Over
the subsequent 44 years, his role has grown from store management,
to CEO and in July 2013 to his current role as Executive Chairman.
Ian remains actively involved in the operations of the Group. Ian is a
Director of Lighting Council of Australia, Carbonetix Pty Ltd and the
Large Format Retailers Association.
24 years of service
Glen Robinson assumed his current role of Chief Executive Officer
in July 2013 after joining the Group in 1994. Glen has a strong
understanding of the business having started with the Group on the
sales floor, progressing to trainee buyer, merchandising manager
and then taking responsibility for Beacon Lighting’s product range
from development to in-store presentation. Glen holds a Bachelor of
Business (Management).
(James) Eric Barr
Neil Osborne
Deputy Chairman
Non-Executive
Director
Non-Executive
Director
Eric Barr is Deputy Chairman and Chairman of the Remuneration and
Nomination Committee of the Group. Eric retired in 2000 as a Partner
with PricewaterhouseCoopers after 20 years of service. Since then
Eric has been a Director of public companies in the United States and
Australia, including 10 years as lead director of Reading International
Inc. Eric is a Non-Executive director of Generation Life Limited (formerly
known as Austock Group Limited) where he holds the positions of
Chairman of the Audit Committee, Chairman of Risk Committee and
Chairman of the Remuneration Committee. Eric was previously a NonExecutive director of the Sydney Stock Exchange Limited, holding the
positions of Chairman of Directors and Chairman of the Audit Committee.
Eric is a Chartered Accountant.
Neil Osborne is a Non-Executive Director and is also Chairman of the
Group’s Audit Committee. Neil has over 35 years experience in the retail
industry. Neil was formerly an Accenture Partner, leading large strategic
projects in Australia and Asia. Neil also spent 18 years with Coles Myer
Ltd in senior positions including finance (including CFO Myer), operations
and strategic planning. Neil is a Non-Executive Director of Vita Group
(ASX Listed) and Chairman of their Audit and Risk Committee. Neil is
also Chairman of Australian United Retailers (trading as Foodworks). Neil
holds a Bachelor of Commerce, is a CPA and a FAICD.
BEACON LIGHTING GROUP ANNUAL REPORT 2019
Management Team
Ian Bunnett
Prue Robinson
Managing Director
- Sales
Marketing Director
Joined Beacon Lighting in
2004 having had extensive
retail experience including
the GM of Store Operations
with Payless Shoes.
Joined Beacon Lighting in
2006 following a variety of
roles in Sydney and London
and four years in marketing
with Spotlight. Prue holds
a BBus (Management and
Marketing).
David Speirs
Lenore Harris
Chief Financial Officer
Group Human
Resources Manager
Joined Beacon Lighting in 2003
after six years of business
consulting and a career working
with various Coles Myer businesses.
David holds a BBus (Accounting),
MBus (Accounting), Post Grad
Dip (Finance) and is a FCPA.
Joined Beacon Lighting in 2017 having
had extensive retail management,
human resources and communications
experience predominantly at Myer and
Monash University’s Australian
Centre for Retail Studies.
Lenore holds a BA (Psych
/Sociology) and a Diploma
in Investor Relations.
Barry Martens
Tracey Hutchinson
Chief Operating Officer
Financial Controller &
Company Secretary
Joined Beacon Lighting
in 1996 following a retail
advertising career with
Clemenger Harvey
and retail marketing
experience with
Klein’s Jewellery.
Joined Beacon Lighting in 2011
having had senior financial
management roles with various
ASX businesses, including
Eyecare Partners. Tracey holds
a BBus (Accounting), a MBus
(Administration), a Graduate
Diploma of Corporate
Governance and is a CPA.
Michael (Mick) Tan
Rodney Brown
Chief Information Officer
General Manager –
Supply Chain
Joined Beacon Lighting in 2000
and has had more than 30 years
information technology experience
including a career with Fujitsu
Systems. Mick holds a Dip
(Management).
Joined Beacon Lighting in
2012 with extensive supply
chain experience including
management roles with
Cadbury Schweppes and
Fosters Brewing.
MANAGEMENT TEAM
5
Corporate Governance Statement
The Board of Directors of Beacon Lighting Group Limited is responsible for the corporate governance of the Group. This statement
outlines the corporate governance policies and practices formally approved by the Board of Beacon Lighting. This statement is current
as at 19 August 2019. These policies and practices are in accordance with the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (3rd Edition) unless otherwise stated. The Board considers that the Group’s corporate
governance practices and procedures substantially reflect the principles. The full content of the Group’s Corporate Governance
policies and charters can be found on the Group’s website (www.beaconlightinggroup.com.au).
PRINCIPLE 1
PRINCIPLE 2
Lay Solid Foundations for Management and Oversight
Structure the Board to Add Value
The Board’s responsibilities are defined in the Board Charter
and there is a clear delineation between the matters expressly
reserved to the Board and those delegated to the Chief
Executive Officer and senior management.
The experience and expertise relevant to the position of
Director held by each Director in office at the date of the annual
report is included in the Directors’ Report.
The Board Charter outlines:
•
The guidelines for Board composition, including the
processes around Director appointments and resignations.
The term in office held by each Director in office at the date of
this report is as follows:
NAME
TERM IN OFFICE
Ian Robinson
6 years
Eric Barr
5 years
Glen Robinson
5 years
Neil Osborne
5 years
• The operation of the Board and the Board Committees.
• The roles of the Board, the Chairperson, CEO and senior
management.
• Specifically includes risk management responsibilities (rather
than these being delegated to a separate Risk Committee).
A copy of the Group’s Board Charter is available on the Group’s
website.
The Board and Committee Charters sets out the processes for
the annual review of the performance of the Board as a whole,
each Director and the Board Committees.
Note: these terms of office relate to the listed entity Beacon
Lighting Group Limited only and do not relate to the subsidiary
or operating entities.
The Board has established a Remuneration and Nomination
Committee which is responsible for reviewing executive
remuneration and incentive policies and practices.
Ian Robinson is a substantial shareholder. He has been
Executive Chairman since July 2013 having previously held the
position of Executive Chairman and Chief Executive Officer.
The Group has a written agreement with each Director and
senior executive setting out the terms of their appointment.
Eric Barr and Neil Osborne are shareholders of Beacon Lighting
Group Limited. They are Non-Executive Directors and bring
objective judgment to bear on Board decisions commensurate
with their commercial knowledge, experience and expertise.
The Group has adopted a Diversity Policy. The Group does
not propose to establish measurable objectives for achieving
gender diversity in the foreseeable future as recommended
by Recommendation 1.5 of the ASX Corporate Governance
Principles and Recommendations. The Group is strongly
committed to making all selection decisions on the basis of
merit and the setting of specific targets for the proportion
of men and women at any level would potentially influence
decision making to the detriment of the business.
The Diversity Policy affirms the commitment of the Group
to embrace diversity and sets out the principles and work
practices to ensure that all Associates have the opportunity to
achieve their full potential.
6
BEACON LIGHTING GROUP ANNUAL REPORT 2019
Glen Robinson is a senior executive of Beacon Lighting and
has been Chief Executive Officer since July 2013.
Recommendation 2.1 of the ASX Corporate Governance
Principles and Recommendations recommends that the
Board establishes a nomination committee and that the
committee have at least three members, a majority of whom
are independent and be chaired by an independent Director.
The Remuneration and Nominations Committee has four
members. Three are independent: Eric Barr and Neil Osborne,
as independent Directors and Andrew Hanson as an external
consultant. Ian Robinson, Executive Chairman, is the other
member.
The Committee is chaired by Eric Barr.
given the Group's present circumstances.
A copy of the Remuneration and Nomination Committee
Charter is available on the Group’s website.
PRINCIPLE 3
In relation to nominations, the Remuneration and Nomination
Committee is responsible for:
• Assessing current and future Director skills and experiences
and identifying suitable candidates for succession.
• Annually enquiring of the Executive Chairman and the Chief
Executive Officer their processes for evaluating their direct
reports.
An internal process of evaluation is undertaken annually on
the performance, skills and knowledge of the Board and its
committees, utilising a board skills matrix. The review provides
comfort to the Board that its structure and performance is
effective and appropriate to Beacon Lighting and that the
Board has the range of skills, knowledge and experience to
direct the Group.
The Board skills matrix sets out the requisite skills, expertise,
experience and other desirable attributes for the Board. The
following attributes have been identified which Beacon seeks to
achieve across its Board membership: other Board experience,
retail industry experience, financial management experience
and governance experience.
The Directors have been selected for their relevant expertise
and experience. They bring to the Board a variety of skills
and experience, including industry and business knowledge,
financial management, accounting, operational and corporate
governance experience. The annual report includes details of
the Directors, including their specific experience, expertise and
term of office.
To enable performance of their duties, all Directors:
• Are provided with appropriate information in a timely manner
and can request additional information at any time;
• Have access to the Company Secretary;
•
Have access to appropriate
development opportunities; and
continuing
professional
•
Are able to seek independent professional advice at the
Group’s expense in certain circumstances.
Recommendations 2.4 and 2.5 of the ASX Corporate
Governance Principles and Recommendations recommends
that the Board comprise a majority of Directors who are
independent, and that
the Chairperson should be an
independent Director. The Board, as currently composed,
does not comply with these recommendations. The Board
considers that the composition of the Board is appropriate
Act Ethically and Responsibly
The Group has adopted a written Code of Conduct which
applies to the Directors and all associates employed by
the Group, including senior management. The objective of
this Code is to ensure that high standards of corporate and
individual behavior are observed by all associates in the context
of their employment.
In summary, the Code requires associates to always act:
• In a professional, fair and ethical manner, in accordance with
Group values.
• In accordance with applicable legislation and regulations,
and internal policies and procedures.
• In a manner that protects the Group interests, reputation,
property and resources.
The Code also reminds associates of their responsibility to
raise any concerns in relation to suspected or actual breaches
of the Code.
Beacon Lighting has in place a policy concerning trading in
Beacon Lighting Group securities. The Securities Trading
policy includes detailed requirements for Directors, Officers
and senior management regarding when they can trade
Beacon Lighting securities.
PRINCIPLE 4
Safeguard Integrity in Corporate Reporting
Principle 4.1 of the ASX Corporate Governance Principals and
Recommendations, recommends that the Audit Committee
consist only of Non-Executive Directors and consists of a
majority of independent Directors. The Audit Committee
as currently composed does not comply with these
recommendations. Beacon Lighting has an Audit Committee
comprising of four members, three of whom are considered
independent. The Audit Committee presently comprises Neil
Osborne (Chairman), Eric Barr, Glen Robinson (Directors) and
Andrew Hanson (external consultant). Two of the four members
of the committee are Non-Executive Directors and have
experience in, and knowledge of, the industry in which Beacon
Lighting operates. Neil Osborne, Eric Barr and Andrew Hanson
each have accounting qualifications.
The details of the number of Audit Committee meetings held
and attended are included in the Directors’ Report. Minutes
are taken at each Audit Committee meeting, with the minutes
tabled in the following full Board meeting.
CORPORATE GOVERNANCE STATEMENT
7
The Audit Committee has adopted a formal charter which
outlines its role in assisting the Board in the Group’s governance
and exercising of due care, diligence and skill in relation to:
• Reporting of financial information;
• The application of accounting policies;
• Financial risk management;
• The Group’s internal control system; and
• Its relationship with the external auditor.
In accordance with Recommendation 4.2 the Board, before
it approves the Group's statements for a financial period,
ensures that it receives from its Chief Executive Officer and
Chief Financial Officer a declaration that, in their opinion, the
financial records of the Group have been properly maintained
and that the financial statements comply with the appropriate
accounting standards and give a true and fair view of the
financial position and performance of the entity and that the
opinion has been formed on the basis of a sound system of risk
management and internal control which is operating effectively.
In accordance with Principle 4.3, the Group’s external auditor
attends each annual general meeting and is available to answer
shareholder questions about the audit.
PRINCIPLE 5
Make Timely and Balanced Disclosure
Principle 5.1 of the ASX Corporate Governance Principles
and Recommendations recommends that companies should
establish a written policy designed to ensure compliance
with ASX Listing Rule disclosure requirements and to ensure
accountability at a senior management level for that compliance
and disclose that policy or a summary of it. The Group has
adopted a Continuous Disclosure Policy. This Policy sets out the
standards, protocols and the detailed requirements expected
of all Directors, Officers, senior management and associates
of the Group for ensuring the Group immediately discloses all
price-sensitive information in compliance with the Listing Rules
and Corporations Act relating to continuous disclosure.
PRINCIPLE 6
Respect the Rights of Security Holders
The Group has adopted a Communications Policy governing
its approach to communicating with its shareholders, market
participants, customers, associates and other stakeholders.
This policy specifically includes:
• The approach to briefing institutional investors, brokers and
analysts.
• The approach to communications with investors whether by
meetings, via the Group’s websites, electronically or by any
other means.
8
BEACON LIGHTING GROUP ANNUAL REPORT 2019
Beacon Lighting provides a printed copy of its annual report
to all requesting shareholders. The annual report contains
relevant information about the Group’s operations during the
year, changes in the state of affairs and, other disclosures
required by the Corporations Act and Accounting Standards.
The half year report contains summarised financial information
and a review of Beacon Lighting operations during the period.
The Beacon Lighting Corporate website provides all
shareholders and the public access to our announcements to
the ASX, and general information about Beacon Lighting and
its business. It also includes a section specifically dedicated
to governance, which includes links to the Company's
Constitution, Code of Conduct and its various corporate
governance charters and policies.
The format of general meetings aims to encourage shareholders
to actively participate in the meeting through being invited to
comment, or raise questions of Directors on any matter relevant
to the performance and operation of the Group.
PRINCIPLE 7
Recognise and Manage Risk
Principle 7.1 of the ASX Corporate Governance Principles and
Recommendations recommends that a listed company either
have a committee to oversee risk or otherwise disclose the
processes it employs to for overseeing the Company's risk
management framework.
The Board does not currently have a committee to oversee
risk. Instead, the Board Charter specifically includes risk
management responsibilities (rather than these being delegated
to a separate Risk Committee).
The Board evaluates all risks to the Group on an annual basis.
The risk matrix is then reviewed at regular intervals throughout
the year to ensure that the Group is not being exposed to any
new risks and that all existing risks are being monitored and
managed effectively.
The Board retains oversight responsibility for assessing the
effectiveness of the Group’s systems for the management of
material business risks. The Board reviews the Group's risk
management on an annual basis to ensure it continues to be
sound.
The Board does not consider a separate internal audit function
is necessary at this stage. One of the Audit Committee
responsibilities is to evaluate compliance with the Group’s risk
management and internal control processes.
The Board has received written assurances from management
as to the effectiveness of the Group’s management of its
material business risks.
The Chief Executive Officer and Chief Financial Officer provide
a written assurance in the form of a declaration in respect
of each relevant financial period that, in their opinion, the
declaration is founded on a sound system of risk management
and internal control and that the system is operating effectively
in all material respects in relation to financial reporting risks.
Principle 7.4 of the ASX Corporate Governance Principles
and Recommendations requires the Group to disclose details
about whether it has any material exposure to economic,
environmental and social sustainability risks (if any). The Group
has considered the following risks and has risk mitigation
strategies in place.
Economic Risks include impacts to consumers’ willingness to
spend on discretionary retail and lighting products in particular.
The Group mitigates the risk through the constant monitoring
of the macro-economic environment and adjusting capital
expenditure, new projects and operating expenses accordingly.
Consumer sentiment was lower in 2019 which affected general
retail demand, housing activity was also subdued which
resulted in lower consumer sentiment towards discretionary
expenditure for the Group.
Exchange Rate Volatility can impact upon the Group’s
ability to grow margins. The Group can also lock in a forward
position for this foreign exchange exposure for a period of up
to 12 months. The Board believes this mitigates the Group’s
exchange rate volatility risk to an acceptable level.
Environmental Sustainability Risks include impacts on
the Group’s supply chain from suppliers through to stores.
These risks can be reputational, regulatory and financial. The
Boards assesses its primary exposure to be in the production
of its products. The Group through its supply chain operates
responsibly within the community and expects the same from
its suppliers.
Social Sustainability Risks include workplace health and
safety as well as personnel management and corporate
conduct. The Group has an extensive workplace health and
safety policy incorporating the early identification and correction
of potential risks, both in store and at the support offices. The
Board is informed of all incidents and material potential risks at
each Board meeting and the appropriate action taken.
PRINCIPLE 8
Remunerate Fairly and Responsibly
Principle 8.1 of the Corporate Governance Principles and
Recommendations, recommends that the remuneration
committee should comprise a majority of independent Directors.
The Remuneration and Nomination Committee as currently
composed does not comply with this recommendation. The
Remuneration and Nomination Committee has four members.
Three are independent: Eric Barr and Neil Osborne, as
independent Directors, and Andrew Hanson as an external
consultant. Ian Robinson, Executive Chairman, is the other
member. The Committee is chaired by Eric Barr.
In relation to remuneration, the Remuneration and Nomination
Committee is responsible for:
• Ensuring the Group has remuneration policies and practices
appropriate to attracting and retaining key talent.
• Reviewing and making recommendations in relation to the
remuneration of Directors and senior management.
• Reviewing and recommending the design of any executive
incentive plans and approving the proposed awards to each
executive under those plans.
In accordance with its Charter, the Remuneration and
Nomination Committee clearly distinguishes the structure of
Non-Executive Directors’ remuneration from that of Executive
Directors and senior executives.
Details of Directors’ and executives’ remuneration, including
the principles used to determine the nature and amount of
remuneration, are disclosed in the remuneration report section
of the annual report.
The Group's Securities Trading Policy expressly prohibits
relevant participants from entering into arrangements that
limit the economic risk of participating in the Group's incentive
schemes prior to the relevant securities becoming fully vested.
Corporate Conduct Risks could impact regulatory,
reputational and financial performance. It includes stock loss
and theft. The Group has a dedicated store operations team
to regularly monitor and assess store related risks. The Group
undertakes regular inventory counts and analysis of store
performance to reduce the risk of material loss.
9
10
Directors' Report
The Directors of Beacon Lighting Group Limited (the ‘Group’) present their
report together with the Consolidated Financial Statements of the Group and
its controlled entities (the ‘Consolidated Entity’) for the 53 weeks ended 30
June 2019.
1. DIRECTORS
4. OPERATING AND FINANCIAL REVIEW
The Directors of the Group during the whole financial period
and up to the date of the report were:
4.1. Overview of Operations
Ian Robinson
Executive Chairman
Chairman of the Board, Member of the Remuneration and
Nomination Committee.
Glen Robinson
Chief Executive Officer
Member of the Audit Committee.
Eric Barr
Non-Executive Director
Deputy Chairman of the Board, Chairman of the Remuneration
and Nomination Committee and Member of the Audit
Committee.
Neil Osborne
Non-Executive Director
Chairman of the Audit Committee and Member of the
Remuneration and Nomination Committee.
At the end of FY2019, Beacon Lighting operated the following
trading businesses:
• 109 Beacon Lighting company stores
• 4 Beacon Lighting franchised stores
Details of the expertise and experience of the Directors are
outlined on page 4 of this annual report.
• 5 Commercial sales offices
2. PRINCIPAL ACTIVITIES
• Light Source Solutions Globes Australia and New Zealand
During the financial period the principal continuing activities
of the Group consisted of the selling of light fittings, globes,
ceiling fans and energy efficient products in the Australian
market.
• Light Source Solutions Roadway
The consolidated profit for the year attributable to the members
of Beacon Lighting Group Limited was:
CONSOLIDATED ENTITY
Profit before Income Tax
Income Tax Expense
Operating profit after tax
attributable to the members of
Beacon Lighting Group Limited
BEACON LIGHTING GROUP ANNUAL REPORT 2019
• Beacon International Hong Kong, Germany, USA and China
• Masson For Light
• Beacon Lighting Wholesale
During FY2019, Beacon Lighting continued to invest in the
growth of the Group. These investments included:
3. RESULTS
12
Beacon Lighting is Australia’s leading lighting retailer and also
an emerging supplier of lighting and energy efficient products
to the commercial industry throughout Australia and other
international markets. As a vertically integrated business,
Beacon Lighting designs, develops, sources, imports,
distributes, merchandises, promotes and sells its own product
range to meet the demands of its retail and commercial
customers. More than 95% of the lighting and fan products
sold by the Beacon Lighting Group are supplied through the
Beacon Lighting supply chain with approximately 85% of the
products are exclusively branded.
Actual
FY2019
$’000
Actual
FY2018
$’000
23,118
27,705
7,074
8,115
16,044
19,590
• The opening of five new company stores at Warrnambool
(VIC), Mackay (QLD), Moore Park (NSW), Modbury (SA) and
Craigieburn (VIC).
• The Underwood (QLD) and Albury (NSW) franchised stores
were purchased and converted to company stores.
• The purchase of the ex-Masters site in Parkinson (QLD) and
then transformed it into a Distribution Centre to service the
QLD and NSW markets.
• Designed, developed and released 600 new products for
Beacon Lighting stores.
4.2. Financial Summary
4.2.1. Financial Performance
A summary of the Beacon Lighting Group FY2019 statutory result compared to the FY2018 statutory result is presented in the
following table:
Statutory
FY2018
$’000
Statutory
FY2019
$’000
Change
Change
Sales
235,964
246,304
10,340
4.4%
Gross Profit
155,065
157,711
2,646
1.7%
1,819
1,655
(164)
(9.0%)
(123,712)
(129,768)
(6,056)
4.9%
EBITDA
33,172
29,598
(3,574)
(10.8%)
EBIT
29,308
25,088
(4,220)
(14.4%)
Net Profit After Tax
19,590
16,044
(3,546)
(18.1%)
Consolidated Entity
Other Income
Operating Expenses (1)
(1) Operating Expenses excludes interest, depreciation and amortisation
It is difficult to compare the FY2019 statutory result to the FY2018 statutory result because the FY2019 statutory result had 53 weeks
and the FY2018 statutory result had 52 weeks. Additionally, there were also one-off set up costs associated with the establishment of
the Parkinson (QLD) Distribution Centre. A reconciliation of the FY2019 statutory result to the FY2019 underlying result is presented
in the following table:
Statutory
FY2019
$’000
Less
53rd week(1)
$’000
Less
Parkinson DC (2)
$’000
Underlying
FY2019 (3)
$’000
246,304
4,520
-
241,784
157,711
2,966
-
154,745
1,655
25
-
1,630
(129,768)
(2,522)
(605)
(126,641)
EBITDA
29,598
469
(605)
29,734
EBIT
25,088
375
(605)
25,318
Net Profit After Tax
16,044
241
(424)
16,227
Consolidated Entity
Sales
Gross Profit
Other Income
Operating Expenses (4)
(1) Eliminating 53rd week in FY2019 based on the alignment to the retail marketing program to FY2018
(2) Eliminating one off non recurring costs associated with the establishment of the new Parkinson (QLD) Distribution Centre
(3) FY2019 52 Week Proforma result to be used as comparison to the FY2018 Statutory Result
(4) Operating Expenses excludes interest, depreciation and amortisation
DIRECTORS’ REPORT
13
4.2.2. Sales
Beacon Lighting achieved a sales result of $246.3 million in
FY2019. The best sales increases were achieved by the
Online Sales Channels, Beacon International, Beacon Energy
Solutions, Light Source Solutions Roadway and Masson
For Light. Company Store sales and Commercial sales were
disappointing with Company comparative sales declining by
2.3% in FY2019 on a 52 week comparable basis.
4.2.3. Gross Profit Margin
The gross profit margin was 64.0% for FY2019 compared to
the gross profit margin of 65.7% for FY2018. The decline in
the margin was a result of the change in the margin mix of
the Beacon Lighting Group and the decline in the AUD/USD
exchange rate.
4.2.4. Other Income & Other Revenue
Other income was $1.6 million in FY2019. Other income
received from franchised stores continues to decline as
franchised stores are purchased and converted to company
operated stores.
4.2.5. Operating Expenses
Operating Expenses were $129.8 million in FY2019. As a
percentage of sales, Operating Expenses were 52.7% for
FY2019. With the continued investment in new stores and the
emerging businesses, the Selling and Distribution Expenses
increased as a percentage of sales in FY2019. Expense
productivity improvements were achieved for Marketing
Expenses and General and Administration Expenses.
4.2.6. Earnings
The Beacon Lighting Group Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA) was $29.6 million
in FY2019. As a percentage of sales, the EBITDA margin of
12.0% in FY2019 decreased from the EBITDA margin of 14.1%
in FY2018. The Net Profit After Tax (NPAT) result decreased
to $16.0 million or 6.5% of sales from a NPAT result of $19.6
million or 8.3% of sales in FY2018.
4.2.7. Dividends
The Directors of Beacon Lighting have declared an annual fully
franked divided of 4.55 cents per share for FY2019. For H1
FY2019, the Directors declared a fully franked dividend of 2.55
cents per share and for H2 FY2019, the Directors declared a
fully franked dividend of 2.50 cents per share. Going forward,
it is expected that the Beacon Lighting Group will target an
annual NPAT dividend payout ratio of between 50% and 60%.
4.2.8. Financial Position
In FY2019, the Beacon Lighting Group made the first property
acquisition for the Group with the purchase of the ex-Masters
site in Parkinson (QLD). This facility has been converted into
a distribution centre to service the QLD and NSW markets.
The purchase price of the property was $11.8 million plus
purchasing on costs and was funded by additional finance
from the ANZ Bank.
In FY2019, the Beacon Lighting Group has increased the
investment in inventory by $6.3 million, particularly to support
the growth opportunities of the emerging businesses. Trade
14
BEACON LIGHTING GROUP ANNUAL REPORT 2019
receivables have increased by $2.2 million, also reflecting
the growth in sales of the emerging businesses. Excluding
the land and building investment associated with Parkinson
(QLD) Distribution Centre, the Group has increased capital
expenditure by $5.0 million in FY2019.
Beyond the new finance associated with the Parkinson (QLD)
Distribution Centre and additional inventory finance, the
additional investments in FY2019 have been funded by retained
earnings which has been supported by the Beacon Lighting
Group dividend reinvestment program. In FY2019, the Beacon
Lighting Group continued to operate comfortably within all of
its bank covenants.
4.3. Business Strategies
Beacon Lighting continues to strengthen its market position
as Australia’s leading specialist retailer of light fittings, ceiling
fans and light globes. The Group has also continued to expand
in the wholesale / commercial lighting industry with growth in
the Beacon Lighting Commercial, Beacon International, Light
Source Solutions (Globes and Roadway), Beacon Energy
Solutions and the Masson For Light businesses.
Beacon Lighting intends to drive sales and profit growth
through a number of different business strategies.
4.3.1. Brand and Customer
Beacon Lighting will continue to enhance the brand and the
customer experience in order to increase differentiation and
drive incremental sales. Beacon Lighting continues to design,
develop and release uniquely branded products with a core
range of more than 3,000 products. With over 300 Accredited
Lighting Design Consultants across the store network and 28
Premium Lighting Design Studios, Beacon Lighting are able
to offer a unique customer service experience. Our VIP and
Trade Club customers also enjoy additional offers and benefits.
A fan installation service is also available to our customers.
The 113 retail stores and online web presence provides an
omni-channel offering making it easy for customers to shop at
Beacon Lighting any time.
4.3.2. Store Optimisation
Beacon Lighting will target the growth of sales and profits
through the optimisation of the existing store network. Since
FY2014, Beacon Lighting has opened 31 new company stores
which are yet to reach full maturity and consequently increased
sales growth from these stores. The Group closed the Subiaco
(WA) store and expects to maintain the majority of those sales
through other stores within the state. Ongoing operational
refinements including the marketing plans, roster management,
merchandise changes and refurbishments all provide the store
network with further optimisation opportunities.
4.3.3. New Store Rollout
Beacon Lighting plans to open new company stores in
Australia each year. In FY2019, Beacon Lighting opened five
new company stores and closed one store. Currently with
113 Beacon Lighting stores and with the Store Network Plan
from August 2018 identifying 175 store opportunities, Beacon
Lighting still has the opportunity for the planned store roll out
for a number of years to come.
4.3.4. New Product Ranges
and how they are managed are set out below.
Beacon Lighting will offer an extensive range of the latest
fashion, on trend, technologically advanced and energy efficient
products to our customers. With the introduction of more than
600 new products in FY2019, Beacon Lighting aims to refresh
its core product range in all stores each year, complemented by
the online range extension. The continuing demand for greater
energy efficiency, along with the growth of internet enabled
smart lighting, continues to represent additional opportunities
for the Beacon Lighting Group.
4.4.1. Retail Environment and General Economic
Conditions
4.3.5. Online and Social Media Presence
Beacon Lighting will continue to enhance our online and
social media presence in order to drive incremental sales. The
introduction of store stock on hand balances on the website
plus the splitting of online orders based on stock availability has
enhanced our customer online experience. A variety of online
and social media channels continue to offer significant growth
opportunities for the Group which are closely aligned to the 113
Beacon Lighting stores. Beacon Lighting continues to nurture
strong relationships with social influencers who engage and
endorse Beacon Lighting.
4.3.6. Emerging Businesses
Beacon Lighting will continue to target the growth of sales
and profits of the emerging businesses. Beacon International,
Light Source Solutions (Globes and Roadway), Beacon Energy
Solutions and Masson For Lights continue to offer significant
growth opportunities for the Group, including synergies with the
retail businesses and to strengthen the market opportunities for
the Beacon Lighting brand within Australia and internationally.
4.3.7. New Business Opportunities
Beacon Lighting will investigate and pursue local and
international business opportunities that complement the core
business activities of the Group. During FY2019, the Beacon
Lighting Group purchased the Underwood (QLD) and Albury
(NSW) franchised stores and converted them into company
stores. New business opportunities may include other lighting
stores, franchised stores, wholesaling and other opportunities.
4.3.8. Efficiency Gains
Beacon Lighting will continue to target expense efficiency gains
and manage the growth of expenses. However, the Group still
plans to invest in the opening of new stores and emerging
businesses. The Beacon Lighting Group has installed solar
systems on 50 Beacon Lighting locations and continue with a
cost-conscious approach to operating expenses.
4.4 Business Risks
Beacon Lighting is subject to both specific risks to the Group
and risks of a general nature which may threaten both the
current and future operating and financial performance of the
Group and the outcome of an investment in Beacon Lighting. A
number of the Group risks are beyond the control and influence
of the Directors and management of Beacon Lighting, but the
Group has in place mitigation strategies to manage the impact
of the risks should those risks occur.
The Beacon Lighting Group is sensitive to the current state and
future changes in the retail environment and general economic
conditions. This includes but is not limited to interest rates,
consumer confidence, business confidence, property prices,
housing churn, dwelling approvals, government policy and
natural disasters. Beacon Lighting plans to manage the Group
according to the current environment and maintain a capital
structure capable of supporting the Group in any anticipated
operating environment.
4.4.2. Foreign Currency Rates
The majority of goods purchased and imported by Beacon
Lighting into Australia are purchased in US dollars. As a result,
the Group is exposed to fluctuations in the AUD/USD exchange
rate. Beacon Lighting mitigates this risk by adjusting prices,
releasing new products, negotiating with manufactures and
carrying all domestic stock in Australia in AUD and by using FX
forward contracts to secure future FX positions.
4.4.3. Growth Strategies
Beacon Lighting has a number of different growth strategies
to generate future growth and earnings. There is no guarantee
that the planned benefits of these strategies will be realised.
Beacon Lighting will continue to invest in and support growth
strategies that can continue to increase Group value in the long
term. If these opportunities do not have this capability, then
resources will be reallocated to other strategies.
4.4.4. Operating Expenses
As the Beacon Lighting Group continues to grow, the Group’s
operating expenses continue to increase. The Group’s ability to
maintain and improve profitability is based on the economies of
scale of the operation, reasonable stock turns and maintaining
a suitable cost structure.
4.4.5. Competition
Beacon Lighting operates in a competitive retail market which
is subject to moderate barriers to entry, changing competitor
tactics and consumer preferences. Beacon Lighting believes
that with its vertically integrated business model and its business
strategies, the Group remains well positioned to maintain
its leading retail market position and emerging commercial
position in Australia and other international markets.
4.4.6. Management Systems
The Beacon Lighting Group has a number of management
systems which are critical to the ongoing operations of
the Group. It is critical that these management systems
are secure and fit for purpose. The Group needs to ensure
that there are appropriate security and disaster recovery
capabilities are in place to ensure the ongoing operations of
our management systems.
The specific material business risks faced by Beacon Lighting
DIRECTORS’ REPORT
15
5. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the financial year there were no significant changes in the state of the affairs of the Group.
6. DIRECTORS’ MEETINGS
The numbers of meetings of the Group’s Board of Directors held during the financial period ended 30 June 2019, and the numbers of
meetings attended by each Director were:
COMMITTEE MEETINGS
DIRECTOR’S
MEETINGS
REMUNERATION
& NOMINATION
AUDIT
DIRECTOR
H
A
H
A
H
A
I Robinson
11
11
-
-
4
4
G Robinson
11
11
4
4
-
-
E Barr
11
11
4
4
4
4
N Osborne
11
11
4
4
4
4
H = Number of meetings held during the time the Director held office or was a member of the committee during the period.
A = Number of meetings attended.
7. DIRECTORS’ INTERESTS IN SHARES
The relevant interest of each Director in the Company, as notified by the Directors to the ASX in accordance with section 205G(l) of the
Corporations Act 2001 (Cth), at the date of the report is as follows:
Director
Ordinary Shares in the Company
121,054,088
I Robinson (1)
G Robinson
121,054,088
(1)
E Barr
200,000
N Osborne
300,000
(1) Heystead Nominees and other Robinson Family member interests
8. DIRECTORS’ INTERESTS IN CONTRACTS
Directors’ interests in contracts are disclosed in Note 32 of the financial statements.
9. DIVIDENDS
Dividends paid to members during the financial period were as follows:
Consolidated Entity
Fully franked dividends provided or paid during the period
16
BEACON LIGHTING GROUP ANNUAL REPORT 2019
Actual FY2019
$'000
Actual FY2018
$'000
10,986
10,577
10. INSURANCE OF OFFICERS
10.1. Indemnification of Directors
The Group has indemnified each Director and external
consultant referred to in this Report, the Company Secretary
and previous Directors and Officers against all liabilities or
loss (other than to the Group or a related body corporate) that
may arise from their position as Officers of the Group and
its controlled entities, except where the liability arises out of
conduct involving a lack of good faith or where indemnification
is otherwise not permitted under the Corporations Act. The
indemnity stipulates that the Group will meet the full amount
of any such liabilities, including costs and expenses, and
covers a period of seven years after ceasing to be an Officer
of the Group. The indemnity is contained in a Deed of Access,
Insurance and Indemnity, which also gives each officer access
to the Group’s books and records.
The Group has also indemnified the current and previous
Directors of its controlled entities and certain members of the
Company’s senior management for all liabilities or loss (other
than to the Group or a related body corporate) that may arise
from their position, except where the liability arises out of
conduct involving a lack of good faith or where indemnification
is otherwise not permitted under the Corporations Act.
10.2. Insurance Premiums
12. PROCEEDINGS ON BEHALF OF THE
COMPANY
No person has applied to the Court under section 237 of the
Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the
Company is a party, for the purpose of taking responsibility on
behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf
of the Group with leave of the Court under section 237 of the
Corporations Act 2001 (Cth).
13. EVENTS SUBSEQUENT TO REPORTING
DATE
In July 2019 the Group entered into an agreement to purchase a
property for the value of $1,580,000 located in Epping, Victoria
for Masson Manufacturing.
In July 2019 both the Sunshine (Vic) and Mandurah (WA) stores
were closed.
In September 2019 the Group will be purchasing the Myaree
(WA) franchisee store.
A fully franked dividend of $4,384,299 was declared on 19
August, 2019.
During the financial period, Beacon Lighting Group Limited
paid a premium of $139,500 to insure the Directors and Officers
of the Group against any loss which he/she becomes legally
obligated to pay on account of any claim first made against
him/her during the policy period.
Other than the above, there has been no other matter or
circumstance that has occurred subsequent to period end
that has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations or the
state of affairs of the Group or economic entity in subsequent
financial periods.
11. INDEMNITY OF AUDITORS
14. AUDIT SERVICES
Beacon Lighting Group Limited has agreed to indemnify
their auditors, PricewaterhouseCoopers (PwC), to the extent
permitted by law, against any claim by a third party arising from
Beacon Lighting Group Limited’s breach of their agreement.
The indemnity stipulates that Beacon Lighting Group Limited
will meet the full amount of any such liabilities including a
reasonable amount of legal costs.
14.1. Auditor’s Independence Declaration
The auditor’s independence declaration to the Directors of
the Consolidated Entity in relation to the auditor’s compliance
with the independence requirements of the Corporations Act
2001 (Cth) and the professional code of conduct for external
auditors, forms part of the Directors’ Report.
No person who was an officer of the Consolidated Entity during
the financial year was a Director or Partner of the Consolidated
Entity’s external auditor.
DIRECTORS’ REPORT
17
14.2. Audit and Non-Audit Services Provided by the External Auditor
During the 53 weeks ended 30 June 2019, the following fees were paid or were due and payable for services provided by the external
auditor, PwC, of the Consolidated Entity:
FY2019
$
FY2018
$
236,900
222,100
-
69,580
Tax compliance services
22,390
28,235
Other Services
10,000
49,489
269,290
369,404
Consolidated Entity
Audit & Assurance Services
Audit & review of financial statements
Other assurance services
Other Services
Total Remuneration of PwC
In addition to their statutory audit duties, PwC provided taxation
and other assurance related services to the Group.
The Board has a review process in relation to non-audit services
provided by the external auditor. The Board considered the
non-audit services provided by PwC and, in accordance with
written advice provided, and endorsed, by a resolution of the
Audit Committee, is satisfied that the provision of these nonaudit services by the auditor is compatible with, and does not
compromise, the auditor independence requirements of the
Corporations Act 2001 (Cth) for the following reasons:
• All non-audit services are subject to the corporate governance
procedures adopted by the Group and are reviewed by the
Audit Committee to ensure they do not impact the integrity
and objectivity of the auditor.
• Non-audit services provided do not undermine the general
principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants, as
they do not involve reviewing or auditing the auditor’s own
work, aiding in a management or decision making capacity
for the Group, acting as an advocate for the Company or
jointly sharing risks and rewards with the Group.
15. AUDITOR
PricewaterhouseCoopers continues in office in accordance
with section 327 of the Corporations Act 2001 (Cth).
16. ROUNDING OF AMOUNTS
The Group has relied on the relief provided by ASIC Corporations
Instrument 2016/191, and in accordance with that Instrument,
amounts in the financial statements have been rounded off
to the nearest thousand dollars, or in certain cases, to the
nearest dollar.
18
BEACON LIGHTING GROUP ANNUAL REPORT 2019
17. REMUNERATION REPORT
17.1. Remuneration Policy and Link to Performance
The Board recognises that the performance of the Group
depends on the quality and motivation of our Associates,
including the senior management and our more than 1,000
Associates employed by the Group across Australia and
Internationally. The Group remuneration strategy therefore
seeks to appropriately attract, reward and retain Associates at
all levels in the business, but in particular for management and
key executives. The Board aims to achieve this by establishing
executive remuneration packages that include a mix of fixed
remuneration and short term incentives.
The Board has appointed the Remuneration and Nomination
Committee whose objective is to assist the Board in relation
to the Group remuneration strategy, policies and actions.
In performing this responsibility, the Committee must give
appropriate consideration to the Group’s performance and
objectives, employment conditions and external remuneration
relativities. The Committee reviews and determines our
remuneration policy and structure annually to ensure it remains
aligned to business needs and meets the Group’s remuneration
principles. No specific advice or recommendations were
sought from remuneration consultants during the 53 weeks
ended 30 June 2019.
The remuneration framework for senior executives comprises
a mix of both fixed and variable remuneration components.
Variable remuneration may be delivered in the form of cash and
performance rights or options, subject to the achievement of
short term performance targets. An outline of the remuneration
framework is set out on page 19.
Remuneration Framework
Performance
Metrics
Changes
for FY2019
Element
Purpose
Fixed
Remuneration
Provide competitive
market salary
including
superannuation
and non-monetary
benefits
Nil
Positioned at
competitive
market rates
No change
Consolidated Group as well
as individual performance
are considered during
the annual review of fixed
remuneration
Short Term
Incentive (Cash
Bonus)
Reward for in year
performance
Budgeted
Earnings
before Interest
& Tax (EBIT)
200% of the
executives on
target cash
bonus
No change
EBIT measures as
determined by the Board
Short Term
Incentive
(Performance
Rights or Options)
Reward for in year
performance
Budgeted
Earnings
before Interest
& Tax (EBIT)
125% of the
executives on
target cash
bonus
No change
Grants are subject to
achieving budgeted
performance and vesting
is subject to the executive
remaining employed by the
Group at the vesting date
Potential Value
Link to Performance
Remuneration Approach
The proportion of fixed and variable remuneration is established for Key Management Personnel (KMP) by the Board following
recommendations from the Remuneration and Nomination Committee which are subject to Board approval. For FY2019 these are:
Fixed
Remuneration
%
Executive Chairman
Short Term
Incentive (Cash
Bonus) %
Short Term Incentive
(Performance Rights or
Options) %
Total %
100.0%
0.0%
0.0%
100.0%
Chief Executive Officer
80.2%
0.0%
19.8%
100.0%
Managing Director – Sales
86.8%
0.0%
13.2%
100.0%
Chief Financial Officer
86.2%
0.0%
13.8%
100.0%
Chief Operating Officer
85.2%
0.0%
14.8%
100.0%
DIRECTORS’ REPORT
19
17.2
Principles Used to Determine the Nature and
Amount of Remuneration
(a) Directors’ Fees
The Executive Chairman and the Chief Executive Officer do
not receive Directors’ fees but are remunerated as executives
within the business.
The Deputy Chairman and the Non-Executive Director are
entitled to receive annual fees of $110,000 and $100,000
respectively. These fees are inclusive of their relevant
responsibilities on the various Group Committees, and are also
inclusive of superannuation. These fees exclude any additional
fees for special services which may be determined from time to
time. No additional retirement benefits are payable.
The Non-Executive Director fees are reviewed annually
to ensure that the fees reflect market rates. There are no
guaranteed annual increases in any Directors’ fees. The
Executive Chairman and Non-Executive Directors do not
participate in the short or long term incentive schemes.
The Group’s Earnings Before Interest and Tax (EBIT) result has
been determined as the appropriate financial performance
target to trigger the payment of cash incentives for each period.
The amount of any short term cash incentive paid in a year is
dependent upon the level of performance achieved against the
Group’s EBIT budget for the year. The Board considers EBIT
to be an appropriate performance measure as it aligns the
Group’s remuneration philosophy with creating value, and is
within the scope of influence of participants.
Structure of Short Term Cash Incentive Plan
Feature
Description
Maximum
Opportunity
200% of on target cash bonus
value
Performance Metric
Budgeted EBIT
Delivery of STI
100% of STI award is paid
in cash after the financial
results have been audited and
approved by the Board
Board Discretion
The Board has discretion to
adjust remuneration outcomes
up or down to prevent any
inappropriate reward outcomes,
including reducing down to zero
if appropriate
(b) Executive Remuneration
The current executive salary and reward framework has three
components:
1. Fixed Remuneration.
2. Short Term Incentive (Cash Bonus).
3. Short Term Incentive (Performance Rights or Options).
The combination of these components comprises the
executives’ total remuneration.
For the 53 weeks ended 30 June 2019, the Group did not a
have long term incentive program in place.
1. Fixed Remuneration
Executive base salaries are structured as a part of the total
employment remuneration package which comprises the
fixed component of pay and other financial benefits being
car allowances. Fixed remuneration includes superannuation
which is paid in accordance with legislated amounts.
Fixed remuneration for executives is reviewed annually to
provide competitiveness with the market, whilst also taking into
account capability, experience, value to the organization and
performance of the individual. There are no guaranteed base
salary increases included in executive contracts. An executive’s
remuneration is also reviewed on promotion.
In FY2019 fixed remuneration was increased for the five
executives at an average of increase of 3.81%. This was done
to align remuneration with comparative roles.
2. Short Term Incentive (Cash Bonus)
Executives including the Chief Executive Officer but not the
Executive Chairman are eligible to participate in an annual short
term cash incentive which delivers rewards by way of cash
bonuses, subject to the achievement of the Group financial
performance targets.
20
BEACON LIGHTING GROUP ANNUAL REPORT 2019
3. Short Term Incentive (Performance Rights or Options).
17.3 FY2019 Performance and Impact on Remuneration
During the 53 weeks ended 30 June 2019 the Group continued
with the short term performance rights incentive plan and
the short term incentive option plan for selected senior
management. The Executive Chairman does not participate in
either plan. The Chief Executive Officer (subject to shareholder
approval) and one executive are eligible to participate in the
annual short term performance rights incentive plan, subject
to the achievement of the Group financial performance targets.
Other executives are eligible to participate in the annual short
term options incentive plan, subject to the achievement of the
Group financial performance targets. Performance rights and
options provide selected senior executives the opportunity
to acquire shares or potentially be cash settled, subject to
meeting the relevant conditions for vesting including remaining
an employee of the Group at that time, at no cost to the
senior executive. 100% of the grants are assessed by financial
measures. The financial measure used is the Group’s EBIT
result against the Group’s EBIT budget. This is tested annually.
The Board considers EBIT to be an appropriate performance
measure as it aligns the Group’s remuneration philosophy
with creating value, and is within the scope of influence of
participants.
Beacon Lighting's financial performance in FY2019 was below
that of the FY2019 budget. For the 53 weeks ended 30 June
2019, the Group's financial performance targets were not
met. The annual short term cash incentive and the short term
incentive (performance rights or options) targets were not
achieved for the financial year.
The Board will review the nature of potential issues of
performance incentives moving forward to reflect market
practice and to reflect the principles underlying the Group's
remuneration policy.
Structure of Short Term Performance Rights and Options Incentive Plans
Feature
Description
Maximum
Opportunity
125% of on target cash bonus value
Performance
Metric
Budgeted EBIT
Delivery of STI
100% of STI performance rights and
options award vests after the financial
results have been audited and
approved by the Board if the executive
remains an employee of the Group at
that time
17.4 Statutory Performance Indicators
Beacon Lighting aims to align executive remuneration
to strategic and business objectives and the creation of
shareholder wealth. The table below shows measures of
the Group’s financial performance over the last two years as
required by the Corporations Act 2001 (Cth). However these
measures are not necessarily consistent with measures used
in determining the variable amounts of remuneration awarded
to executives. As a consequence there may not always be a
direct correlation between the statutory key performance
measures and the variable remuneration awarded.
Statutory Key Performance Indicators of the Group
FY2019
FY2018
Profit for the year
attributable to owners of
Beacon Lighting Group
Limited ($’000)
16,044
19,590
Basic earnings per share
(cents)
7.37
9.09
10,986
10,577
1.04
1.54
Dividend payments ($’000)
Board
Discretion
Share Price (Year End)
The Board has discretion to adjust
remuneration outcomes up or down
to prevent any inappropriate reward
outcomes, including reducing down
to zero if appropriate, subject to the
terms of the plan
17.5. Details of Remuneration
The following executives along with the Directors are
identified as key management personnel with the authority
and responsibility for planning, directing and controlling
the activities of the Group, directly and indirectly, during the
financial year.
Ian Robinson
Executive Chairman
Glen Robinson
Chief Executive Officer
Ian Bunnett
Managing Director – Sales
David Speirs
Chief Financial Officer
Barry Martens
Chief Operating Officer
All of the above executives were employed by Beacon Lighting
and were key management personnel for the entire 53 weeks
ended 30 June 2019 and the 52 weeks ended 24 June 2018
unless otherwise stated.
DIRECTORS’ REPORT
21
The details of the remuneration of the Directors and other key management personnel for the Beacon Lighting Group Limited and the
consolidated entity for the current and prior financial periods are set out in the following table:
Fixed Remuneration
Cash Salary
& Fees
NonMonetary
Benefits
$
2019
2018
Variable Remuneration
Annual &
Long
Service
Leave
$
Cash
Performance
Based
Payment
$
Share Based
Payments
$
Post
Employment
Super
Contributions
$
192,728
-
17,397
(7,586)
-
-
202,539
192,728
-
17,397
(28,166)
-
181,959
Total
$
DIRECTORS
I Robinson (Executive Chairman)
G Robinson (Chief Executive Officer)
2019
356,957
-
20,531
2,444
-
93,939
473,871
2018
352,278
-
20,048
(8,522)
109,140
46,557
519,501
2019
100,457
-
9,543
-
-
-
110,000
2018
100,457
-
9,543
-
-
-
110,000
2019
100,000
-
-
-
-
-
100,000
2018
100,000
-
-
-
-
-
100,000
E Barr (Non-Executive)
N Osborne (Non-Executive)
Total Remuneration Directors
2019
750,142
-
47,471
(5,142)
-
93,939
886,410
2018
745,463
-
46,988
(36,688)
109,140
46,557
911,460
EXECUTIVES
I Bunnett (Managing Director – Sales)
2019
271,628
-
20,531
25,345
-
48,207
365,711
2018
262,006
-
20,049
(3,556)
51,000
24,068
353,567
D Speirs (Chief Financial Officer)
2019
272,225
-
20,531
9,169
-
48,207
350,132
2018
262,356
-
20,049
3,015
51,000
24,068
360,488
B Martens (Chief Operating Officer)
2019
237,371
-
20,531
18,602
-
48,207
324,711
2018
228,174
-
20,049
(9,069)
51,000
24,068
314,222
Total Remuneration Executives
22
2019
781,224
-
61,593
53,116
-
144,621
1,040,554
2018
752,536
-
60,147
(9,610)
153,000
72,204
1,028,277
BEACON LIGHTING GROUP ANNUAL REPORT 2019
17.6. Share Based Compensation
The number of performance rights over shares in the Group granted to the Chief Executive Officer during the current financial period,
together with prior period grants which vested during the period are set out below:
Grant
Date
Quantity
Granted
Vest Date
Value at
Grant
Date $
Vest %
Quantity
Vested
Quantity
Unvested
Value
Expensed
this Year $
G Robinson
24/06/2016
22,107
28-Aug-17
43,750
100.00%
22,107
0
-
G Robinson
18/08/2016
23,603
28-Aug-17
32,100
100.00%
23,603
0
753
G Robinson
24/08/2017
39,338
13-Oct-17
53,500
66.67%
26,227
13,111
11,332
G Robinson
16/08/2018
71,333
09-Oct-18
109,140
33.34%
23,783
47,550
81,854
Total
156,381
238,490
93,939
The fair value of performance rights granted on 24 June 2016 (grant date) was $1.979, with a final vesting date of 28 August 2017.
The fair value of performance rights granted on 18 August 2016 (grant date) was $1.360, with a final vesting date of 25 August 2018. All
unvested performance rights will vest on 25 August 2018 provided the executive remains employed by the Group at the vesting date.
The fair value of performance rights granted on 24 August 2017 (grant date) was $1.360, with a final vesting date of 25 August 2020. All
unvested performance rights will vest on 25 August 2020 provided the executive remains employed by the Group at the vesting date.
The fair value of performance rights granted on 16 August 2018 (grant date) was $1.530, with a final vesting date of 16 August 2020. All
unvested performance rights will vest on 16 August 2020 provided the executive remains employed by the Group at the vesting date.
The performance rights have a zero exercise price. Subject to meeting the relevant vesting conditions, shares will be issued at no
cost to the executive. In the event an executive leaves the Group prior to the vesting date the performance rights will generally lapse.
DIRECTORS’ REPORT
23
The number of options over shares in the Group granted to the Key Management Personnel during the current financial period,
together with prior period grants which vested during the period are set out below.
I Bunnett
D Speirs
B Martens
Total
Vest Date
Value at
Grant
Date $
Vest %
Quantity
Vested &
Exercisable
Quantity
Unvested
Value
Expensed
this Year $
31,582
Refer below
40,740
100.00%
31,582
-
797
18/08/2016
11,029
Refer below
15,000
70.00%
7,720
3,309
1,696
24/08/2017
18,382
Refer below
25,000
40.00%
7,353
11,029
7,465
16/08/2018
33,333
Refer below
51,000
33.33%
11,110
22,223
38,249
24/06/2016
31,582
Refer below
40,740
100.00%
31,582
-
797
18/08/2016
11,029
Refer below
15,000
70.00%
7,720
3,309
1,696
24/08/2017
18,382
Refer below
25,000
40.00%
7,353
11,029
7,465
16/08/2018
33,333
Refer below
51,000
33.33%
11,110
22,223
38,249
24/06/2016
31,582
Refer below
40,740
100.00%
31,582
-
797
18/08/2016
11,029
Refer below
15,000
70.00%
7,720
3,309
1,696
24/08/2017
18,382
Refer below
25,000
40.00%
7,353
11,029
7,465
16/08/2018
33,333
Refer below
51,000
33.33%
11,110
22,223
38,249
Grant
Date
Quantity
Granted
24/06/2016
282,978
395,220
144,621
The fair value of options granted on 24 June 2016 (grant date) was $1.290. 40% vested on 26 June 2017, 30% vested on 25 August
2017 and 30% vest on 25 August 2018, in each case provided that the executive remains employed by the Group at the vesting date.
The options expire on 24 June 2031.
The fair value of options granted on 18 August 2016 (grant date) was $1.360. 40% vested on 18 August 2017, 30% vest on 18 August
2018 and 30% vest on 18 August 2019, in each case provided that the executive remains employed by the Group at the vesting date.
The options expire on 24 June 2031.
The fair value of options granted on 24 August 2017 (grant date) was $1.360. 40% vest on 24 August 2018, 30% vest on 24 August
2019 and 30% vest on 24 August 2020, in each case provided that the executive remains employed by the Group at the vesting date.
The options expire on 24 June 2031.
The fair value of options granted on 16 August 2018 (grant date) was $1.530. 33.33% vest on 16 August 2018, 33.33% vest on 16
August 2019 and 33.33% vest on 16 August 2020, in each case provided that the executive remains employed by the Group at the
vesting date. The options expire on 24 June 2031.
The options have a zero exercise price. Subject to meeting the relevant vesting conditions, shares will be issued at no cost to the
executive. In the event an executive leaves the Group prior to the vesting date the options will generally lapse.
24
BEACONLIGHTING
LIGHTING
GROUP
ANNUAL
REPORT
BEACON
GROUP
ANNUAL
REPORT
20182019
17.7 Share Holdings
The numbers of ordinary voting shares in the Company held during the financial year by each director of Beacon Lighting Group and
other key management personnel of Beacon Lighting Group, including their personally related parties, are set out below.
Balance
at Start
of Year
Received
During
the Year(1)
Purchase
of Shares
DRP
Issue(2)
Sales of
Shares
Balance at
End of the
Year
2019
119,584,748
-
-
1,343,584
-
120,928,332
2018
118,659,353
10,779
41,500
873,116
-
119,584,748
DIRECTORS
I Robinson (Executive Chairman)(3)
G Robinson (Chief Executive Officer)
2019
124,264
-
-
1,492
-
125,756
2018
93,386
28,352
-
2,526
-
124,264
2019
200,000
-
-
-
-
200,000
2018
150,000
-
50,000
-
-
200,000
2019
300,000
-
-
-
-
300,000
2018
300,000
-
-
-
-
300,000
2019
63,974
-
-
-
-
63,974
2018
63,974
-
-
-
-
63,974
2019
76,473
-
-
3,108
-
79,581
2018
73,974
-
-
2,499
-
76,473
2019
68,519
-
-
-
-
68,519
2018
68,519
-
-
-
-
68,519
2019
120,417,978
-
-
1,348,184
-
121,766,162
2018
119,409,206
39,131
91,500
878,141
-
120,417,978
E Barr (Non-Executive)
N Osborne (Non-Executive)
EXECUTIVES
I Bunnett (Managing Director – Sales)
D Speirs (Chief Financial Officer)
B Martens (Chief Operating Officer)
Total
(1) Shares received during the year were a result of performance rights vesting under the STI plan.
(2) Shares received during the year as a result of participating in the Dividend re-investment plan.
(3) Heystead Nominees Pty Ltd and other Robinson Family member interests, excluding Glen Robinson.
DIRECTORS’ REPORT
25
17.8 Service Agreements
All executives are employed on terms consistent with the remuneration framework outlined in this report. Each of the relevant
executive agreements is for a continuing term but may be terminated by either party with a required notice period of 12 weeks. These
agreements do not provide for any termination payments other than payment in lieu of notice.
17.9 Voting of Shareholders at Last Year’s Annual General Meeting
Beacon Lighting Group received more than 90% of yes votes on its remuneration report for the 2018 financial year. The Company did
not receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration practices.
Signed in accordance with a resolution of Directors
Ian Robinson
Executive Chairman
Melbourne,
19 August 2019
26
BEACON LIGHTING GROUP ANNUAL REPORT 2019
Glen Robinson
Chief Executive Officer
Auditor’s Independence Declaration
Index to the Financial Statements
Page
Page
Consolidated Statement of Comprehensive Income
29
18. Current Borrowings
59
Consolidated Balance Sheet
30
19. Current Provisions
59
Consolidated Statement of Changes in Equity
31
20. Current Tax Liabilities
61
Consolidated Statement of Cash Flows
32
21. Non Current Borrowings
61
22. Non Current Provisions
62
Notes to the Financial Statements
28
1. Summary of Significant Accounting Policies
33
23. Contributed Equity
63
2. Changes in Accounting Policies
39
24. Reserves and Retained Profits
64
3. Financial Risk Management
40
25. Dividends
66
4. Segment Information
46
26. Key Management Personnel Disclosures
67
5. Revenue from Ordinary Activities and Other Revenue
47
27. Share Based Payments
68
6. Other Income
47
28. Earnings Per Share
71
7.
48
29. Remuneration of Auditors
71
8. Income Tax Expense
49
30. Contingencies
71
9. Cash and Cash Equivalents
50
31. Commitments
72
10. Trade and Other Receivables
50
32. Related Party Transactions
73
11. Inventories
52
33. Subsidiaries
74
12. Derivative Financial Instruments
53
34. Events Occurring After the Reporting Period
74
13. Other Current Assets
54
35. Cash Flow Information
75
14. Property, Plant and Equipment
55
36. Critical Accounting Estimates
76
15. Deferred Tax Assets
56
37. Parent Entity Financial Information
76
16. Intangible Assets
57
38. Deed of Cross Guarantee
77
17. Trade and Other Payables
58
Expenses
BEACON LIGHTING GROUP ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 53 weeks ended 30 June 2019 and the 52 weeks ended 24 June 2018. Beacon Lighting Group and its controlled entities.
Notes
FY2019
$’000
FY2018
$’000
Sale of goods
5
246,304
235,964
Other revenue
5
1,375
1,716
Total revenue from ordinary activities and other revenue
5
247,679
237,680
Other income
6
280
103
EXPENSES
7
(88,592)
(80,899)
(13,738)
(13,722)
(104,211)
(97,243)
(16,329)
(16,611)
(1,971)
(1,603)
23,118
27,705
(7,074)
(8,115)
16,044
19,590
Consolidated Entity
REVENUE FROM ORDINARY ACTIVITIES
Cost of sales of goods
Other expenses from ordinary activities
Marketing
Selling and distribution
General and administration
Finance costs
7
PROFIT BEFORE INCOME TAX
Income tax expense
8
PROFIT FOR THE PERIOD ATTRIBUTABLE TO THE MEMBERS
OF THE PARENT ENTITY
Other comprehensive income
Items that may be reclassified to profit or loss
Changes in the fair value of derivatives
24(a)
(1,499)
483
Exchange differences on translation of foreign operations
24(a)
239
176
377
(198)
(883)
461
15,161
20,051
CENTS
CENTS
Income tax relating to these items
Other comprehensive income for the period, net of tax
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
ATTRIBUTABLE TO THE MEMBERS OF THE PARENT ENTITY
EARNINGS PER SHARE
Basic earnings per share
28
7.37
9.09
Diluted earnings per share
28
7.37
9.09
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying Notes.
FINANCIAL STATEMENTS
29
CONSOLIDATED BALANCE SHEET
As at 30 June 2019 and as at 24 June 2018. Beacon Lighting Group and its controlled entities.
Notes
FY2019
$’000
FY2018
$’000
Cash and cash equivalents
9
18,305
10,671
Trade and other receivables
10
12,053
10,091
Inventories
11
68,698
62,446
Derivative financial instruments
12
-
401
Other current assets
13
2,277
2,324
101,333
85,933
Consolidated Entity
CURRENT ASSETS
Total current assets
Non-current assets
Property, plant and equipment
14
46,009
29,862
Deferred tax assets
15
5,834
5,941
Intangible assets
16
11,646
10,870
63,489
46,673
164,822
132,606
Total non-current assets
Total assets
CURRENT LIABILITIES
Trade and other payables
17
17,848
18,166
Borrowings
18
31,480
19,965
Derivative financial instruments
12
649
-
Provisions
19
7,667
6,978
Current tax liabilities
20
658
1,436
58,302
46,545
Total current liabilities
Non-current liabilities
Borrowings
21
19,459
6,365
Provisions
22
3,881
3,367
Total non-current liabilities
23,340
9,732
Total liabilities
81,642
56,277
Net assets
83,180
76,329
23
68,229
65,690
Other reserves
24(a)
(43,333)
(42,587)
Retained earnings
24(b)
58,282
53,226
83,180
76,329
EQUITY
Contributed equity
Total equity
The above consolidated balance sheet should be read in conjunction with the accompanying Notes.
30
BEACON LIGHTING GROUP ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 53 weeks ended 30 June 2019 and the 52 weeks ended 24 June 2018. Beacon Lighting Group and its controlled entities.
Consolidated Entity
Notes
Balance as at 24 June 2018
Contributed
Equity
$’000
Reserves
$’000
Retained
Earnings
$’000
Total
Equity
$’000
65,690
(42,587)
53,226
76,329
-
-
16,044
16,044
-
(883)
-
(883)
(883)
16,044
15,161
Profit for the year
Other comprehensive income
24(a)
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Issue of shares to employees
23
-
-
-
-
Issue of shares via dividend re-investment plan
23
2,539
-
-
2,539
Employee share scheme
24(a)
-
329
-
329
Treasury share reserve
24(a)
-
(192)
-
(192)
25
-
-
(10,986)
(10,986)
2,539
136
(10,986)
(8,312)
Balance as at 30 June 2019
68,229
(43,333)
58,284
83,180
Balance as at 25 June 2017
62,870
(42,965)
44,213
64,118
-
-
19,590
19,590
-
461
-
461
-
461
19,590
20,051
Dividends provided for or paid
Total contributions by and distributions to owners
Profit for the year
Other comprehensive income
24(a)
Total comprehensive income for the period
Transactions with owners in their capacity as owners:
Issue of shares to employees
23
251
-
-
251
Issue of shares via dividend re-investment plan
23
2,569
-
-
2,569
Employee share scheme
24(a)
-
(83)
-
(83)
Treasury share reserve
24(a)
-
-
-
-
25
-
-
(10,577)
(10,577)
2,820
(83)
(10,577)
(7,840)
65,690
(42,587)
53,226
76,329
Dividends provided for or paid
Total contributions by and distributions to owners
Balance as at 24 June 2018
The above consolidated statement of changes in equity should be read in conjunction with the accompanying Notes.
FINANCIAL STATEMENTS
31
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 53 weeks ended 30 June 2019 and the 52 weeks ended 24 June 2018. Beacon Lighting Group and its controlled entities.
FY2019
$’000
FY2018
$’000
269,876
259,833
(247,766)
(236,360)
Interest received
45
43
Borrowing costs
(2,014)
(1,603)
Income taxes paid
(7,393)
(6,370)
12,748
15,543
(1,138)
(782)
(20,146)
(5,075)
8
6
(21,276)
(5,851)
24,609
(3,938)
(8,447)
(8,008)
Net cash inflow / (outflow) from financing activities
16,162
(11,946)
Net increase / (decrease) in cash and cash equivalents
7,634
(2,254)
10,671
12,925
18,305
10,671
Consolidated Entity
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods
and services tax)
Net cash inflow from operating activities
35
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisitions
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash (outflow) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayment)/Proceeds from borrowings (net)
Dividends paid to Company's shareholders
25
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
The above consolidated statement of cash flows should be read in conjunction with the accompanying Notes.
32
BEACON LIGHTING GROUP ANNUAL REPORT 2019
9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the 53 weeks ended 30 June 2019 and the 52 weeks ended 24 June 2018. Beacon Lighting Group and its controlled entities.
1. S
ummary of Significant Accounting
Policies
The principal accounting policies adopted in the preparation
of this consolidated financial report is set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated. The financial report is for
the consolidated entity consisting of Beacon Lighting Group
Limited and its subsidiaries.
(a) Basis of Preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards and
interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001 (Cth). Beacon Lighting
Group Limited is a for-profit entity for the purpose of preparing
the financial report.
Beacon Lighting Group Limited operates within a retail financial
period. The current financial period was a 53 week retail period
ending on the 30 June 2019 (2018: 52 week period ending 24
June 2018). This treatment is consistent with section 323D of
Corporations Act 2001 (Cth).
(i) New, revised or amended accounting standards and
interpretations adopted by the group
The company has applied the following standards and
amendments for first time in their annual reporting period
commencing 25 June 2018.
centres, retail stores and support office facilities. The nature
of expenses related to those leases will now change because
the Group will recognise a depreciation charge for right-of-use
assets and interest expense on lease liabilities. Previously, the
Group recognised operating lease expense on a straight-line
basis over the term of the lease, and recognised assets and
liabilities only to the extent that there was a timing difference
between actual lease payments and the expense recognised.
Based on the information currently available, the Group
estimates that it will recognise right-of-use assets within
a range of approximately $83.0 million to $85.0 million on 1
July 2019, lease liabilities within a range of $101.0 million to
$103.0 million and lease receivables within a range of $2.5
million to $3.5 million. The estimated impact was calculated
using a discount rate derived from the incremental borrowing
rate when the interest rate implicit in the lease was not readily
available. The Group does not expect the adoption of AASB
16 to impact its ability to comply with its financial covenants.
The Group plans to apply AASB 16 on 1 July 2019, using the
modified retrospective approach. Therefore, the cumulative
effect of adopting AASB 16 will be recognised as a reduction to
the opening balance of retained earnings at 1 July 2019 within
a range of $14.5 million to $16.5 million, with no restatement of
comparative information.
• AASB 9 Financial Instruments
There are no other standards that are not yet effective and
that would be expected to have a material impact on the entity
in the current or future reporting periods and on foreseeable
future transactions.
• AASB 15 Revenue from Contracts with Customers
(iii) Compliance with IFRS
The company had to change its accounting policies following the
adoption of AASB 9 & 15, refer to Note 2 for further information.
The adoption of the new Standards and amendments did not
have any impact on the amounts recognised in prior years, did
not impact the current year and is not expected to significantly
affect future years.
The consolidated financial report of the Group also complies
with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
(ii) Impact of Standards Issued but Not Yet Applied
by Group
The Group is required to adopt AASB 16 Leases from 1 July
2019. AASB 16 replaces existing leases guidance, including
AASB 117 Leases and related Interpretations. The Group
has assessed the estimated impact that initial application of
AASB 16 will have on its consolidated financial statements, as
described below.
AASB 16 introduces a single, on-balance sheet lease
accounting model for lessees. A lessee recognises a right ofuse asset representing its right to use the underlying asset
and a lease liability representing its obligation to make lease
payments. There are recognition exemptions for short-term
leases and leases of low-value items. The Group will recognise
new assets and liabilities for its operating leases of distribution
(iv) Historical Cost Convention
This financial report has been prepared in accordance with the
historical cost convention.
(v) Critical Accounting Estimates
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the Group’s accounting policies. Refer to Note 36
Critical Accounting Estimates for detailed explanation of items
requiring assumptions and estimates.
(b) Comparative Financial Information
Unless otherwise stated, the accounting policies adopted
are consistent with those of the previous year. Comparative
information is reclassified where appropriate to enhance
comparability and provide more appropriate information to
users.
NOTES TO THE FINANCIAL STATEMENTS
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the 53 weeks ended 30 June 2019 and the 52 weeks ended 24 June 2018. Beacon Lighting Group and its controlled entities.
(c) Principles of Consolidation
The consolidated financial report incorporates the assets and
liabilities of all subsidiaries of Beacon Lighting Group Limited
(‘Group’ or ‘parent entity’) as at 30 June 2019 and the results
of all subsidiaries for the period then ended. Beacon Lighting
Group Limited and its subsidiaries together are referred to in
this financial report as the Group or the consolidated entity.
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to
the Group. They are deconsolidated from the date that control
ceases.
The acquisition method of accounting is used to account for
business combinations by the Group (refer to Note 1(i)).
Intercompany transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by
the Group.
Where control of an entity is obtained during a financial
period, its results are included in the consolidated statement
of comprehensive income from the date on which control
commences. Where control of an entity ceases during a
financial period its results are included for that part of the
period during which control existed.
Investments in subsidiaries are accounted for at cost in
accounting records of Beacon Lighting Group Limited.
(d) Segment Reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operating decision
maker. The chief operating decision maker for Beacon
Lighting Group Limited and its controlled entities (the Group),
is the Chief Executive Officer (CEO). The Group determines
operating segments based on information provided to the
CEO in assessing performance and determining the allocation
of resources within the Group. Consideration is given to the
manner in which products are sold, nature of the products
supplied, the organisational structure and the nature of
customers.
Reportable segments are based on the aggregated operating
segments determined by the manner in which products are
sold, similarity of products, nature of the products supplied,
the nature of customers, the methods used to distribute the
34
BEACON LIGHTING GROUP ANNUAL REPORT 2019
product and materiality. The Group purchases goods in USD
for sales into Australia. The Group’s one reportable segment is
the selling of light fittings, fans and energy efficient products.
(e) Foreign Currency Translation
(i) Functional and Presentation Currency
Items included in the financial report of each of the Group’s
entities are measured using the currency of the primary
economic environment in which the entity operates (‘the
functional currency’). The consolidated financial report is
presented in Australian dollars, which is Beacon Lighting Group
Limited’s functional and presentation currency.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or
loss, except when they are deferred in equity as qualifying cash
flow hedges.
(iii) Specific Commitments
Hedging is undertaken in order to avoid or minimise possible
adverse financial effects of movements in exchange rates.
Gains or costs arising upon entry into a hedging transaction
intended to hedge the purchase or sale of goods and services,
together with subsequent exchange gains or losses resulting
from those transactions are deferred in the consolidated
statement of comprehensive income from the inception of the
hedging transaction up to the date of the purchase or sale
and included in the measurement of the purchase or sale. Any
gains or losses arising on the hedging transaction after the
recognition of the hedge purchase or sale are included in the
consolidated statement of comprehensive income.
In the case of hedges of monetary items, exchange gains or
losses are brought to account in the financial period in which
the exchange rates change.
(iv) Group Companies
The results and financial position of foreign operations (none
of which has the currency of a hyper inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
• Assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet.
•
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